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EXHIBIT 4.3
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LOAN AND SECURITY AGREEMENT
by and between
AP CENTURY III, L.P.,
AP CENTURY IV, L.P.,
AP CENTURY V, L.P.,
AP CENTURY VI, L.P.,
and
AP CENTURY VIII L.P.,
as Lenders
and
NEW VALLEY CORPORATION,
as Borrower,
dated
January 11, 1996
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TABLE OF CONTENTS
Section Page
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1. DEFINITIONS....................................................... 4
2. TERMS OF LOAN..................................................... 19
2.1 Loan and Note............................................ 19
2.1.1 Agreement to Lend................................. 19
2.2 Interest Accrual......................................... 19
2.3 Interest................................................. 19
2.4 Collection Accounts...................................... 20
2.5 Repayment on Maturity Date............................... 20
2.6 Application of Payments.................................. 20
2.6.1 Order of Application.............................. 21
2.6.2 Exceptions........................................ 21
2.6.2.1 Event of Default....................... 21
2.6.2.2 Failure to Specify..................... 21
2.6.2.3 No Specification by Borrower........... 22
2.6.2.4 Limitation of Liability................ 22
2.7 Principal Repayment Allocations.......................... 22
2.7.1 Site-Specific Reductions.......................... 22
2.7.2 General Reductions................................ 22
2.8 Reversal of Payments..................................... 22
2.9 Prepayment or Payment upon Maturity or Acceleration...... 22
2.9.1 Property Releases................................. 23
2.9.1.1 Minimum Property Release Price......... 23
2.9.1.2 Intentionally Deleted.................. 23
2.9.2 Application of Prepayments........................ 23
2.9.3 Oak Grove Cinema.................................. 24
2.10 Single Loan.............................................. 24
2.11 Effect of Disbursement of Monies......................... 24
2.12 Taxes.................................................... 25
2.12.1 No Deductions for General Taxes.................. 25
2.12.2 Transaction Taxes................................ 25
2.12.3 Right to Contest................................. 25
2.12.4 Indemnification.................................. 25
2.12.5 Proof of Payment................................. 26
2.12.6 Survival......................................... 26
2.13 Indemnity................................................ 26
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Section Page
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2.13.1 Generally....................................... 26
2.13.2 Intentionally Deleted........................... 26
2.14 Access.................................................. 27
3. CLOSING AND POST-CLOSING CONDITIONS.............................. 27
3.1 Conditions to Making of Loan............................ 27
3.1.1 The Notes........................................ 27
3.1.2 Formation, Organization, Etc..................... 27
3.1.3 Opinion of Counsel............................... 27
3.1.4 Mortgages........................................ 27
3.1.5 Title Insurance.................................. 27
3.1.6 Insurance........................................ 28
3.1.7 Lockbox.......................................... 28
3.1.8. Other Documents................................. 28
3.2 Post Closing Conditions................................. 28
3.2.1 Establishment of Lockbox......................... 28
3.2.2 Letters to Tenants............................... 28
3.3 No Revolver............................................. 28
4. SECURITY FOR LOAN, ETC........................................... 29
4.1 Grant of Security Interest.............................. 29
4.2 Further Documentation................................... 29
4.3 Security Agreement; UCC Remedies........................ 29
4.4 Security for Loan....................................... 29
4.4.1 Senior Mortgages................................. 29
4.4.2 Subordinate Mortgages............................ 29
4.4.3 Security Documents............................... 29
4.5 GECC Wrap............................................... 30
4.5.1 Payment of GECC Second Mortgages................. 30
4.5.2 Timing of Payment................................ 30
4.5.3 Restrictions..................................... 30
4.5.4 Wrap Provisions.................................. 30
5. BORROWER'S REPRESENTATIONS AND WARRANTIES........................ 31
5.1 Due Organization........................................ 31
5.2 Authorization and Enforceability........................ 31
5.3 No Litigation........................................... 31
5.4 Compliance with Law..................................... 31
5.5 No Conflict............................................. 32
5.6 Ownership............................................... 32
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Section Page
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5.7 Place of Business....................................... 32
5.8 Financial Statements.................................... 32
5.9 Intentionally Deleted................................... 33
5.10 Intentionally Deleted................................... 33
5.11 Intentionally Deleted................................... 33
5.12 Intentionally Deleted................................... 33
5.13 Security Interest....................................... 33
5.14 Solvency................................................ 33
5.15 Intentionally Deleted................................... 33
5.16 Intentionally Deleted................................... 33
5.17 Intentionally Deleted................................... 33
5.18 Leases.................................................. 33
5.19 Intentionally Deleted................................... 34
5.20 Environmental Protection................................ 34
5.21 Intentionally Deleted................................... 34
5.22 Employment, Labor and Management Agreements............. 34
5.23 Intentionally Deleted................................... 34
5.24 Intentionally Deleted................................... 34
5.25 Opinion of Counsel...................................... 34
6. BORROWER'S COVENANTS............................................. 34
6.1 Protection of Collateral................................ 34
6.2 Intentionally Deleted................................... 34
6.3 Compliance.............................................. 34
6.4 Lockbox................................................. 35
6.5 Books and Records....................................... 35
6.6 Audit and Inspection.................................... 35
6.7 Management.............................................. 36
6.8 No Relocation........................................... 36
6.9 Financial Statements.................................... 36
6.9.1 Quarterly Financials............................. 36
6.9.2 Annual Financials................................ 37
6.9.3 Accountants' Reports............................. 37
6.9.4 Budgets.......................................... 37
6.9.5 Other Information................................ 37
6.10 Notification of Lender.................................. 37
6.10.1 Default or Event of Default..................... 37
6.10.2 Property-Related Litigation..................... 38
6.10.3 Material Adverse Change or Breach............... 38
6.10.4 Loan-Related Litigation......................... 38
6.11 Cost Overruns........................................... 38
6.12 Conduct of Business..................................... 38
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Section Page
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6.13 Restrictive Covenants................................... 39
6.13.1 Transfer........................................ 39
6.13.1.1 Sell, convey, assign ................ 39
6.13.1.2 Other than the Leases................ 39
6.13.2 Intentionally Deleted........................... 40
6.13.3 Dissolution..................................... 40
6.13.4 Other Indebtedness.............................. 40
6.13.5 Financial Reports............................... 40
6.13.6 Intentionally Deleted........................... 40
6.13.7 New Leases...................................... 40
6.13.8 Existing Leases................................. 40
6.13.9 Rents........................................... 40
6.13.10 Security Instruments........................... 41
6.14 Borrower Action......................................... 41
6.15 Intentionally Deleted................................... 41
6.16 Defense of Lien......................................... 41
6.17 Further Assurances...................................... 41
6.17.1 Correction of Errors............................ 41
6.17.2 Notice of Inaccuracies.......................... 42
6.17.3 Further Documentation........................... 42
6.18 Intentionally Deleted................................... 42
6.19 Intentionally Deleted................................... 42
6.20 Intentionally Deleted................................... 42
6.21 Intentionally Deleted................................... 42
6.22 Liens, Etc.............................................. 42
6.23 Intentionally Deleted................................... 42
6.24 Intentionally Deleted................................... 42
6.25 Intentionally Deleted................................... 42
6.26 Status Reports.......................................... 42
6.27 SEC Filings............................................. 43
6.27.1 Lender Consent.................................. 43
6.27.2 Copies of Filings............................... 43
6.28 Intentionally Deleted................................... 43
6.29 Agreements.............................................. 43
6.30 Intentionally Deleted................................... 43
6.31 Intentionally Deleted................................... 43
6.32 Change in Accountants................................... 43
6.33 Effect of Payment and Performance....................... 44
6.34 Shopping Center Use..................................... 44
7. EVENTS OF DEFAULT AND REMEDIES................................... 44
7.1 Definition.............................................. 44
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Section Page
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7.1.1 Nonpayment....................................... 44
7.1.2 Representations and Warranties................... 45
7.1.3 Nonmonetary Default.............................. 45
7.1.4 Financial Matters................................ 45
7.1.4.1 Voluntary Proceedings................. 45
7.1.4.2 Appointment of Trustee................ 45
7.1.4.3 Involuntary Proceedings............... 45
7.1.5 Cross-Default.................................... 46
7.1.6 Transfer......................................... 46
7.1.7 Other Documents.................................. 46
7.1.8 Intentionally Deleted............................ 46
7.1.9 Other Financings................................. 46
7.2 Acceleration............................................ 46
7.3 Additional Remedies..................................... 46
7.3.1 Set-Off.......................................... 47
7.3.2 UCC Remedies..................................... 47
7.3.3 Real Property Foreclosure........................ 48
7.3.4 Possession of Collateral......................... 49
7.3.5 Delivery of Collateral........................... 50
7.3.6 Miscellaneous.................................... 50
7.4 No Oral Waivers......................................... 50
7.4.1 Generally........................................ 50
7.4.2 State of Washington.............................. 51
8. INTENTIONALLY DELETED............................................ 51
9. NONRECOURSE...................................................... 51
9.1 Generally............................................... 51
9.2 Nonrecourse Carve-Outs.................................. 51
9.3 Lenders' Security....................................... 52
9.4 Guaranties and Other Rights............................. 52
9.5 Bankruptcy; Continued Security.......................... 53
9.6 Intentionally Deleted................................... 53
9.7 Definition.............................................. 53
10. MULTIPLE NOTES................................................... 53
10.1 Multiple Mortgages and Notes............................ 53
10.1.1 Amounts of Notes................................ 53
10.1.2 Intentionally Deleted........................... 53
10.1.3 Separate Foreclosures........................... 53
10.1.4 Insolvency...................................... 53
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Section Page
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10.2 Separate Exercise of Remedies........................... 54
10.3 Waivers................................................. 54
10.4 Waivers of Rights and Defenses.......................... 55
10.5 Additional Waivers...................................... 55
10.6 Full Knowledge.......................................... 55
10.7 Deferral of Subrogation and Contribution................ 56
10.8 Effect of Invalidation.................................. 56
10.9 Definitions............................................. 56
10.10 Intentionally Deleted................................... 56
10.11 Intentionally Deleted................................... 56
10.12 Lenders' Disgorgement of Payments....................... 56
10.13 Assignment.............................................. 57
11. MISCELLANEOUS.................................................... 57
11.1 Term of Agreement....................................... 57
11.2 Subordination, Attornment and Non-Disturbance........... 57
11.3 Effectiveness of Representations and Warranties......... 57
11.4 Expenses and Attorneys' Fees............................ 57
11.4.1 Closing Costs................................... 58
11.4.2 Post Closing Costs.............................. 58
11.5 Agents, Etc............................................. 59
11.6 No Lenders Obligations.................................. 59
11.7 Parties................................................. 60
11.8 Notices................................................. 60
11.8.1 Lenders......................................... 60
11.8.2 Borrower........................................ 61
11.9 Borrower and Lender Communications...................... 61
11.9.1 Borrower's Communication........................ 61
11.9.2 Lender's Communication.......................... 61
11.10 Amendments.............................................. 61
11.11 Governing Law........................................... 62
11.12 Joint and Several....................................... 62
11.13 Brokerage Indemnification............................... 62
11.14 Jury Trial Waiver; Jurisdiction......................... 62
11.14.1 Jury Trial..................................... 63
11.14.2 New York Jurisdiction.......................... 63
11.15 Conflicts............................................... 63
11.16 Date of Performance..................................... 64
11.17 Power of Attorney....................................... 64
11.18 No Waiver; Remedies..................................... 64
11.19 Severability............................................ 64
11.20 Injunctive Relief....................................... 64
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Section Page
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11.21 Relationship of Parties................................... 65
11.21.1 Lender's Role.................................. 65
11.21.2 No Partnership................................. 65
11.22 Interpretation............................................ 66
11.23 Counterparts.............................................. 66
11.24 Usury Savings............................................. 66
11.25 Future Loans, Etc......................................... 67
11.26 Offset Rights............................................. 69
11.27 Lenders' Estoppels........................................ 69
EXHIBITS
Exhibit A Mortgaged Properties
Exhibit B Leases and Amendments
Exhibit B-1 Rental Arrearages and Security Deposits
Exhibit B-2 Tenant Offsets
Exhibit C Intentionally Deleted
Exhibit D Intentionally Deleted
Exhibit E Intentionally Deleted
Exhibit F Form of Lockbox Agreement
Exhibit G GECC Loan Payments
SCHEDULES
Schedule A Intentionally Deleted
Schedule B Intentionally Deleted
Schedule C Proceedings
Schedule D Pending Leases
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LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT, dated as of January 11, 1996 (the "Closing
Date"), is entered into by and between the five limited partnerships listed
below, all of which are organized and existing under the laws of the State of
Delaware and all of which have an office at c/o Apollo Real Estate Advisors,
L.P., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (each, individually,
and all, collectively, as the context may require, a "Lender" or the "Lenders"),
and NEW VALLEY CORPORATION, a New York corporation having an office at ▇▇▇ ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower"):
A. AP CENTURY III, L.P., a limited partnership whose general
partner is AP-GP Century III, L.P.;
B. AP CENTURY IV, L.P., a limited partnership whose general
partner is AP-GP Century IV, L.P.;
C. AP CENTURY V, L.P., a limited partnership whose general
partner is AP- GP Century V, L.P.;
D. AP CENTURY VI, L.P., a limited partnership whose general
partner is AP-GP Century VI, L.P.; and
E. AP CENTURY VIII, L.P., a limited partnership whose general
partner is AP-GP Century VIII, L.P.
BACKGROUND
A. Borrower owns the Mortgaged Properties described in
Exhibit "A".
B. Subject to the terms, covenants and conditions herein,
the Lenders have agreed to provide purchase money financing (the "Loan") to
Borrower in the aggregate sum of $40,447,684 to acquire the Mortgaged Properties
pursuant to the Contract of Sale.
C. Subject to the terms, covenants and conditions of that
certain Loan and Security Agreement dated the date hereof between the Other AP
Sellers and Borrower ("Loan Agreement II"), the Other AP Sellers have agreed to
provide purchase money financing (the "Other Loan") to Borrower in the aggregate
sum of $19,552,316 to acquire other properties more particularly described in
Loan Agreement II (the "Other Properties").
D. The Lenders would not be willing to make, and would not
be obligated to make, the Loan to Borrower unless Borrower granted to the
Lenders the security interests and other rights provided for under this
Agreement and the Security Documents as defined in this Agreement.
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E. To induce the Lenders to make the Loan, Borrower desires
to enter into this Agreement and the Security Documents.
F. Borrower expects and intends to derive a substantial
economic and financial benefit from the Lenders' making of the Loan to Borrower.
G. On the Closing Date, Borrower is delivering to the
Lenders the following documentation:
1. Promissory Notes. The following five promissory
notes, each dated as of the Closing Date and executed and delivered by Borrower
(each, individually, and all, collectively, as the context may require, in each
case as the same may be modified, amended, consolidated, refinanced, restated,
or extended, a "Note" or the "Notes"), each evidencing and representing
Borrower's obligation to repay a portion of the Loan:
A. A Promissory Note payable to AP Century III, L.P. in the amount
of Six Million Three Hundred Fifty Seven Thousand Sixty Three
Dollars ($6,357,063) ("Note I").
B. A Promissory Note payable to AP Century IV, L.P. in the amount
of Three Million Four Hundred Five Thousand Five Hundred Sixty
Nine Dollars ($3,405,569) ("Note II").
C. A Promissory Note payable to AP Century V, L.P. in the amount
of Ten Million Seven Hundred Eighty Four Thousand Three Hundred
Three Dollars ($10,784,303) ("Note III").
D. A Promissory Note payable to AP Century VI, L.P. in the amount
of Eleven Million Three Hundred Eight Thousand Two Hundred
Thirty Six Dollars ($11,308,236) ("Note IV").
E. A Promissory Note payable to AP Century VIII, L.P. in the
amount of Eight Million Five Hundred Ninety Two Thousand Five
Hundred Thirteen Dollars ($8,592,513) ("Note V").
2. Senior Mortgages. The following five senior
deeds of trust or senior mortgages (each, individually, and all, collectively,
as the context may require, in each case as the same may be modified, amended,
consolidated, refinanced, restated or extended, a "Senior Mortgage" or the
"Senior Mortgages") each dated as of the Closing Date and executed and delivered
by Borrower to secure the principal amount of the corresponding Note and any
other sums as are specified in such Note and in each Senior Mortgage:
A. Wrap-Around First Deed of Trust and Security Agreement by
Borrower, as grantor, to AP Century III, L.P., as beneficiary,
covering the ▇▇▇▇▇ Farm Shopping Center Property as security
for Note I.
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B. Wrap-Around Senior Mortgage and Security Agreement by Borrower,
as grantor, to AP Century IV, L.P., as beneficiary, covering
the Marathon Shopping Center Property as security for Note II.
C. Wrap-Around Senior Deed of Trust and Security Agreement by
Borrower, asgrantor, to AP Century V, L.P., as beneficiary,
covering the Marysville Towne Center Property as security for
Note III.
D. Wrap-Around First Deed of Trust, Credit Line Deed of Trust and
Security Agreement by Borrower, as grantor, to AP Century VI,
L.P., as beneficiary, covering the Kanawha Mall Property as
security for Note IV.
E. Wrap-Around Senior Mortgage and Security Agreement by Borrower,
as grantor, to AP Century VIII, L.P., as beneficiary, covering
the Village Royale Shopping Center Property as security for
Note V.
3. Subordinate Mortgages. The following five
subordinate deeds of trust or subordinate mortgages (each, individually, and
all, collectively, as the context may require, in each case as the same may be
modified, amended, consolidated, refinanced restated or extended, a "Subordinate
Mortgage" or the "Subordinate Mortgages") each dated as of the Closing Date and
executed and delivered by Borrower, in each case, to secure all obligations
under this Agreement, but excluding the Note corresponding to the Senior
Mortgage covering the Mortgaged Property covered by the Subordinate Mortgage:
A. Second Deed of Trust and Security Agreement by Borrower, as
grantor, to the Lenders, as beneficiary, covering the ▇▇▇▇▇
Farm Shopping Center Property.
B. Subordinate Mortgage and Security Agreement by Borrower, as
grantor, to the Lenders, as beneficiary, covering the Marathon
Shopping Center Property.
C. Subordinate Deed of Trust and Security Agreement by Borrower,
as grantor, to the Lenders, as beneficiary, covering the
Marysville Towne Center Property.
D. Second Deed of Trust, Credit Line Deed of Trust and Security
Agreement by Borrower, as grantor, to the Lenders, as
beneficiary, covering the Kanawha Mall Property.
E. Subordinate Mortgage and Security Agreement by Borrower, as
grantor, to the Lenders, as beneficiary, covering the Village
Royale Shopping Center Property.
4. Senior Assignments of Leases. Five senior
assignments of leases and rents, each dated the Closing Date and executed by
Borrower (each, individually, and all collectively, as the context may require,
in each case as the same may be modified, amended, consolidated, refinanced,
restated, or extended, a "Senior Assignment of Lease" or the "Senior
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Assignments of Lease") to secure the principal amount of the applicable Note and
any other sums as is specified in such Note and in each Senior Mortgage.
5. Subordinate Assignments of Leases. Five
subordinate assignments of leases and rents, each dated the Closing Date and
executed by Borrower (each, individually, and all collectively, as the context
may require, in each case as the same may be modified, amended, consolidated,
refinanced, restated, or extended, a "Subordinate Assignment of Lease" or the
"Subordinate Assignments of Lease"), to secure the obligations under the
corresponding Subordinate Mortgage.
6. Other. Such other documents as may by their
terms evidence, secure or otherwise relate to the Loan or any portion thereof.
NOW, THEREFORE, in consideration of the foregoing Recitals and
to induce the Lenders to make the Loan, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Lenders and Borrower agree as follows:
1. DEFINITIONS
The following capitalized terms shall have the meanings set forth
below. In addition, certain other capitalized terms are defined elsewhere in
this Agreement, as more fully described in the "Index of Defined Terms"
following the signature page.
"Accelerated Maturity Date" means the date as of which Borrower is
required to pay or repay the Obligations in full pursuant to the Financing
Documents, because an Event of Default has occurred and the Obligations have
become immediately due and payable automatically, or the Lenders has elected to
exercise its rights under the Financing Documents to require the immediate
payment or repayment in full of the Obligations.
"Accounting Principles," wherever the character or amount of any item
of income or expense or of any asset or liability, contingent or otherwise, is
required to be determined, or where any consolidation or other accounting
computation is required to be made for purposes of this Agreement, means proper
accounting practices consistently applied that are substantially the same as the
accounting practices employed by Borrower immediately before the Closing Date.
"Accounts" means all "accounts," as such term is defined in UCC Section
9-106, now or hereafter owned by, or pledged to, Borrower, whether or not any
such account has been earned by performance, including all accounts, accounts
receivable and contract rights.
"Affiliate" of any specified Person means a Person that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by or is
under common Control with such specified Person.
"Agreement" means this Loan and Security Agreement, including all
Exhibits hereto, as the same may be amended, modified and restated from time to
time.
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"Borrower Affiliate" means any Affiliate of Borrower.
"Borrower's Representative" means an officer of Borrower involved in or
responsible for Borrower or Borrower's asset management, which officer is duly
authorized to take action and execute certificates on behalf of Borrower as
evidenced by the appearance of such officer's name and signature on a list of
officers furnished to the Lenders by Borrower (or by written agreement with the
Lenders), as such list may be amended or supplemented from time to time by
notice to the Lenders.
"Business Day" means any day other than a Saturday, Sunday or day on
which the banks in New York are authorized or permitted to be closed.
"Capital Improvements" means construction and alteration work of a
"capital" nature to be undertaken from time to time in or at the Mortgaged
Properties, including tenant improvements, "base building" work, expansions,
capital replacements, and capital improvements, including so-called "soft costs"
related to any of the foregoing, provided, in each and every case, that the cost
of all such work constitutes Permitted Capital Improvement Expenses. Capital
Improvements shall exclude repairs, maintenance and other items of an operating
nature properly includible in Operating Expenses.
"Cash Flow" shall mean for any month, calendar quarter or other period
for which such calculation shall be made, the amount by which (i) Net Operating
Income exceeds (ii) the sum of the following during such period: (a) the actual
interest, principal, if any, and fees paid or payable by Borrower to the Lenders
with respect to the Loan, excluding nonmandatory prepayments of principal, plus
(b) Permitted Capital Improvement Expenses approved by the Lenders and funded
from Net Operating Income.
"Clean-up" means the removal, remediation and/or elimination of, or
other response to, Contamination that is necessary to comply with Environmental
Laws and satisfactory to all applicable governmental agencies.
"Collateral" means all of Borrower's right, title and interest in, to
and under, and any and all benefits accruing to Borrower from, the following:
(a) The Mortgaged Properties, including all Leases and rents and
other Income arising therefrom;
(b) All Accounts, chattel paper, Equipment, General Intangibles,
Goods, Instruments and Inventory;
(c) Any other property of any character described in any UCC-1
financing statement executed by Borrower as debtor in favor of any of the
Lenders as secured party; and
(d) All Proceeds of the foregoing Collateral.
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"Contamination" means the presence or Release of any Hazardous
Substance at, in, under or otherwise affecting the Mortgaged Properties, that
(a) is in violation of any Environmental Laws, or (b) is in concentrations that
would require Clean-Up under Environmental Laws.
"Contract Interest Rate" means the rate of (i) eight percent (8%) per
annum from and after January 1, 1996 and continuing to and including June 30,
1998, and thereafter at nine percent (9%) per annum until Borrower has performed
all Obligations.
"Contract of Sale" means that certain Purchase and Sale Agreement,
dated as of the date hereof, between Lenders and the Other AP Sellers, as
sellers, and Borrower, as purchaser.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting stock, by contract or otherwise.
"Default" means any condition or event that with the giving of notice
or the lapse of time or both would become an Event of Default.
"Default Rate" means a per annum rate of interest equal to the Interest
Rate plus 5% per annum, but the Default Rate shall never exceed the Usury Limit.
"Engineering Reports" means engineering reports and/or architect's
certificates acceptable to the Lenders issued by an engineer(s) or architect(s)
approved by the Lenders covering, among other matters, inspection of heating and
cooling systems, roof and structural details, a detailed reserve analysis and
showing no failure of compliance with any applicable local, state, or federal
laws.
"Environmental Assessment Reports" means environmental engineering
reports (Phase I and, where the Lenders deems it reasonably necessary or
appropriate in Lenders' judgment, Phase II) the content of which is reasonably
acceptable to the Lenders. Such Environmental Assessment Reports shall in the
Lenders' reasonable judgment constitute an appropriate inquiry concerning the
existence of Hazardous Substances on the applicable Mortgaged Property, and the
past or present use or Release of any Hazardous Substances at or from such
Mortgaged Property.
"Environmental Documents" means each of the following: (a) each and
every document received by Borrower from, and each and every document submitted
by Borrower to, any federal, state, county or municipal, health, safety or
environmental or health agency involving violations of Environmental Laws or
Contamination at the Mortgaged Property or Borrower's operations upon the
Mortgaged Property; and (b) any final Environmental Assessment Reports or other
analysis concerning Contamination at, in or under or with respect to the
Mortgaged Property that have been or may after the Closing Date be prepared by
or on behalf of or for the benefit of Borrower.
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"Environmental Indemnity Agreement" means that certain indemnity
agreement from Borrower, as indemnitor to Lenders, as indemnitee dated as of the
date hereof.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree or judgment, relative to the applicable
Mortgaged Property, relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.) ("CERCLA"); the Hazardous Material Transportation
Act, as amended (49 U.S.C. Section 1801 et seq.); the Federal Insecticide,
Fungicide, and Rodenticide Act, as amended (7 U.S.C. Section 136 et seq.); the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901 et
seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. Section
2601 et seq.); the Clean Air Act, as amended (42 U.S.C. Section 7401 et seq.);
the Federal Water Pollution Control Act, as amended (33 U.S.C. Section 1251 et
seq.); and any and all regulations promulgated thereunder, and all analogous
state and local counterparts or equivalents and any statutes requiring
governmental notification or approval of any transfer of ownership.
"Equipment" means all "equipment," as such term is defined in UCC
Section 9-109(2), wherever located, now or hereafter owned by, or pledged to,
Borrower, including all machinery, equipment, plant, furnishings, fixtures and
other fixed assets now owned or hereafter acquired.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means, with respect to any Person, any trade or
business (whether or not incorporated) which is a member of a group of which
such Person is a Member and which would be deemed a "controlled group" within
the meaning of Section 414 of the IRC.
"Excluded Uses" shall mean (a) any illegal, unlawful or hazardous
purpose; (b) a massage parlor; (c) the sale or display of objects or
publications that are obscene or pornographic ("pornographic" shall mean any
written or pictorial matter with prurient appeal or any objects or instruments
that are primarily concerned with lewd or prurient sexual activity) or any other
similar items commonly associated with peep show, massage parlor, or similar
stores, but this clause "c" shall not be construed to prohibit mass-market
magazines such as "Playboy" and "Penthouse"; and (d) the conduct of any obscene,
nude, or semi-nude live or recorded performances or use for nude or semi-nude
modeling, rap sessions, or as a so-called "rubber goods" shop, or as a sex club
of any kind. (For purposes of the foregoing, "semi-nude" means less fully
clothed, to any degree, than members of a typical audience in a typical
courtroom.)
"Financing Documents" means this Agreement, the Notes, the Security
Documents and all other documents, instruments and agreements delivered pursuant
to, or contemplated by,
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this Agreement, as such documents may be modified, amended, extended, restated
or refinanced from time to time, and all other documents, instruments,
certificates and affidavits that may hereafter be given as further security for,
as evidence of, or in connection with the Loan.
"GECC" means General Electric Capital Corporation, a New York
corporation.
"GECC Loan" means the loan from GECC secured by the GECC First
Mortgages and the GECC Second Mortgages.
"GECC Loan Payments" means the regularly scheduled payments of
principal and interest on the GECC Loan, as described in Exhibit G.
"GECC Pledge" means the pledge and collateral assignment by the Lenders
to GECC of the Notes, the Senior Mortgages, the Subordinate Mortgages and
related Financing Documents pursuant to a Pledge Agreement dated the date hereof
between the Lenders and GECC.
"General Intangibles" means all "general intangibles," as such term is
defined in UCC Section 9-106, now or hereafter owned by, or pledged to,
Borrower, including all franchises, patents, know-how, inventories, trademarks,
service marks, trademark or service ▇▇▇▇ licenses, customer lists, other
intellectual property and licenses, copyrights, judgments, choses in action,
computer programs and all general intangibles that represent the right to
receive money.
"General Partner" means, with respect to any Person that is a
partnership, any general partner of such Person under such Person's partnership
agreement.
"Goods" means all "goods," as defined in Section 9-105 of the UCC, now
or hereafter owned by, or pledged to, Borrower, including all things that are
movable at the time the security interest attaches or that are fixtures as
provided in Section 9-313 of the UCC, but does not include money, documents,
Instruments, Accounts, chattel paper, General Intangibles, or minerals or the
like before extraction.
"Hazardous Substances" means any hazardous or toxic waste, hazardous or
toxic substance or material, pollutant, contaminant, chemical substances or
materials and all other dangerous substances or materials defined, listed or
described as such in, or governed by, any Environmental Law (including
urea-formaldehyde, polychlorinated biphenyls in excess of legally permitted
amounts, friable asbestos or regulated asbestos-containing materials, nuclear or
radioactive material or waste, radon, explosives, corrosives, known carcinogens,
petroleum or crude oil or any fraction thereof, natural gas, liquefied natural
gas, synthetic gas, biologically hazardous agents, pesticides and herbicides),
and any other waste, substance, material, pollutant or contaminant, that is
currently or may in the future be defined, listed or described as such under any
Environmental Law or that could subject an owner or operator of property to any
Regulatory Actions or Third Party Claims.
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"▇▇▇▇▇ Farm Shopping Center Property" means the Mortgaged Property
located in the City of Milwaukee, County of Clackamas and State of Oregon as
more particularly described in Exhibit A-I.
"Income" means the gross rental receipts from Leases and all other
receipts and revenue generated by the use and operation of the Mortgaged
Properties and any business conducted by Borrower thereon and actually received
by or on behalf of Borrower. Income shall not include security deposits (until
applied to any rental obligations under any Leases), proceeds of the Loan or any
other indebtedness, any insurance (other than rent insurance) or condemnation
proceeds (to extent applied to repairs, rebuilding or principal), capital
contributions, and any proceeds from a sale, exchange or refinancing of any of
the Mortgaged Properties. Receipts will be recognized for the period to which
they apply, but only as and when received.
"Indebtedness" means, with respect to any Person, all obligations for
borrowed money and/or the deferred purchase price of property, contingent or
otherwise, of such Person, or to which such Person is subject, or that in
accordance with Accounting Principles should be reflected in the Person's
balance sheet as liabilities except accounts payable arising in the ordinary
course of business and not more than sixty (60) days overdue, but including: (i)
all liabilities secured by any mortgage, pledge or lien on the Person's
property; (ii) all obligations created or arising under any conditional sale or
other title retention agreement or arrangement; (iii) all guaranties,
endorsements (other than endorsements made in connection with items deposited
for collection in the ordinary course of business) and all other direct or
indirect contingent obligations for borrowed money or to maintain the solvency
of another Person; and (iv) all capitalized lease obligations.
"Indemnified Party" means the Lenders, together with all officers,
agents, directors, representatives, loan correspondents, and participants of the
Lenders and any other person engaged by or otherwise working on behalf of the
Lenders.
"Instruments" means all "instruments," as defined in UCC Section 9-105.
"Interest Payment Date" shall mean: (a) the first day of each calendar
month after January 1, 1996 until Borrower has paid and performed all
Obligations; and (b) the Maturity Date. If a date that would otherwise be an
Interest Payment Date is not a Business Day, then such Interest Payment Date
shall be the next following Business Day but the foregoing shall not limit,
prevent or defer the accrual of interest on any unpaid sums.
"Interest Rate" means the interest rate at the time then payable with
respect to the Loan.
"Inventory" means all "inventory," as defined in UCC Section 9-109(4),
of every type and description and all documents of title covering such inventory
now or hereafter owned by, or pledged to, Borrower, including all goods,
merchandise and other personal property held for sale, lease or exchange, or
that are furnished or are to be furnished under contracts of sale, whether or
not held on consignment, or that constitute raw materials, work-in-process,
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returned goods or materials used or consumed or to be used or consumed in
Borrower's business, or in the processing, shipping and transporting of the
same, and all finished goods.
"IRC" means the Internal Revenue Code of 1986, as amended, as in effect
on the date with respect to which any item of income or expense is being
characterized.
"Kanawha Mall Property" means the Mortgaged Property located in the
City of Charleston, County of Kanawha and State of West Virginia as more
particularly described in Exhibit A-IV.
"Late Charge" means a charge equal to 4% of any amount that is (a) due
and owing to Lender (excluding the Principal Amount) under any Financing
Document, and (b) not received within ten (10) days after the date when such
amount became due unless otherwise specifically provided.
"Leases" means all leases, subleases, underlettings, concession
agreements, licenses and other occupancy agreements, that now or hereafter may
affect the Mortgaged Properties or any portions thereof and any and all
guarantees, modification, renewals and extensions thereof and all rights to
damages and other rights and remedies against tenants under the Leases.
"Leasing Guidelines" means, in connection with a Lease, the following
restrictions and limitations: (a) the leased premises subject to such Lease are
not larger than 10,000 rentable square feet; (b) the term of such Lease does not
exceed 60 months (plus up to one 60 month option term provided the rental rate
during such option term is at least 95% of market rate as of the commencement of
such option term); (c) the rental rate under such Lease is at least market rate
for the entire term of such Lease (except as set forth in clause "b" of this
paragraph during an option term); (d) "fixed" or "base" rent is at a
substantially consistent or rising level throughout the term of the Lease (other
than market-rate "free rent" periods); (e) the Lease provides that the demised
premises thereunder may not be used for Excluded Uses, (f) all other terms and
conditions of such Lease are substantially consistent with the terms and
conditions of existing Leases for comparable space at such Mortgaged Property,
and (g) the tenant thereunder shall not be an Affiliate of Borrower.
Notwithstanding the foregoing, so long as any Borrower owns the Mortgaged
Properties, the Borrower may use a reasonable and industry-standard amount of
space in each Mortgaged Property as an on-site management office for such
Mortgaged Property, without payment of rent, which occupancy shall terminate at
Lender's option upon or at any time after the occurrence of an Event of Default.
"Lenders' Engineer" means such engineering or architectural firm from
time to time selected by the Lenders to perform the services of "Lenders'
Engineer" as set forth in this Agreement.
"Lenders' Advance" means any amount advanced by the Lenders to cure any
default by Borrower under any Financing Document.
"Lenders' Representative" means an officer, employee or agent of the
Lenders involved in or responsible for administering the functions of the
Lenders and protecting the
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interests of the Lenders under the Financing Documents, whose name appears in a
list of authorized officers, employees and agents of the Lenders, designated as
such, provided to Borrower from time to time in accordance with the notice
provisions of this Agreement or by written agreement with Borrower.
"Management Fee" means a management fee not exceeding the sum of (a) 4%
of Income during the affected period plus (b) reasonable and customary
out-of-pocket expenses that are reimbursable as provided in the Management
Agreement(s) as they presently exist.
"Marathon Shopping Center Property" means the Mortgaged Property
located in the City of Marathon, County of Monroe and State of Florida as more
particularly described in Exhibit A-II.
"Marysville Towne Center Property" means the Mortgaged Property located
in the City of Marysville, County of Snohomish and State of Washington as more
particularly described in Exhibit A-III.
"Material Adverse Effect" means, except where specifically qualified, a
material adverse effect on the use, management, operations, value or
marketability of any of the Mortgaged Properties or of the Mortgaged Property in
the aggregate or the business, operations, management, assets, or condition
(financial or otherwise) of the Borrower in the aggregate (such that Borrower's
ability to comply with its obligations in respect of the Mortgaged Properties
would be materially adversely affected), in all cases, as compared with all such
factors as of the Closing Date.
"Maturity Date" means the first to occur of December 31, 2000 or the
Accelerated Maturity Date.
"Mortgages" means: (a) the Senior Mortgages, (b) the Subordinate
Mortgages, and (c) any other instrument that is the functional equivalent of a
mortgage under local law, whether such instrument is identified as a mortgage,
deed of trust, deed to secure debt, security agreement, or otherwise. Each
Senior Mortgage shall secure the entire principal balance of the corresponding
Note together with any and all other sums payable pursuant to such Note. The
Subordinate Mortgages shall secure all obligations under this Agreement, but
exclude the Note corresponding to the Senior Mortgage covering the Mortgaged
Property covered by the Subordinate Mortgage.
"Mortgaged Property" or "Mortgaged Properties" means the land,
improvements, personal property and other collateral constituting security for
the Loan pursuant to the Mortgages at any given time, collectively. The
Mortgaged Properties are described in Exhibit "A" (i.e., the ▇▇▇▇▇ Farm Shopping
Center Property, the Marathon Shopping Center Property, the Marysville Towne
Center Property, the Kanawha Mall Property and the Village Royale Shopping
Center Property). To the extent that the Lenders release any Mortgaged Property
from the Mortgage(s), the term "Mortgaged Property" shall be deemed redefined to
exclude the previous Mortgaged Property so released.
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"Net Operating Income" for any period means the sum of Income less
Operating Expenses for such period.
"New Lease" means a Lease that has been unconditionally executed and
delivered by and between Borrower and a New Tenant and either (a) is reasonably
acceptable to and approved by the Lenders or (b) complies with the Leasing
Guidelines.
"New Tenant" means a new tenant under a New Lease affecting any
Mortgaged Property, which tenant did not (and whose Affiliate did not)
previously occupy such Mortgaged Property or any portion thereof.
"Obligations" means all covenants, agreements, obligations and
liabilities of Borrower to the Lenders, now existing or hereafter incurred
under, arising out of or in connection with any Financing Document, including
Borrower's obligation to repay the Loan.
"Operating Expenses" means the following expenses related to the
Mortgaged Properties, all as determined in accordance with Accounting
Principles: (i) actual operating expenses for the Mortgaged Properties,
including reasonable and customary (for the geographic area in which any
particular Mortgaged Property is located) bona fide expenses paid to third
parties (except as otherwise provided in this Agreement) to the extent related
and allocable to the operation of the Mortgaged Properties; (ii) the Management
Fee in compliance with this Agreement; (iii) ad valorem real estate taxes and
assessments (other than those excluded below) and agreed upon reserves therefor;
(iv) insurance premiums (other than those excluded below) and agreed upon
reserves therefor and maintenance costs; (v) operating and working capital
reserves as agreed upon by Lenders and Borrower; (vi) leasing commissions under
Leases (or extensions, renewals or expansions) entered into after the date
hereof; and (vii) other reasonable, normal and customary expenses of operating
the Mortgaged Properties. In addition, the following provisions shall apply to
the definition and determination of "Operating Expenses":
- Operating Expenses shall not include the following: (a) deduction for
depreciation or amortization of property taken or noted on Borrower's tax
returns or any other non-cash item; (b) any item to the extent paid for by a
tenant or any other third party at the Mortgaged Properties, which reimbursement
is not otherwise included in Income; (c) ad valorem real estate taxes and
assessments and insurance premiums paid from reserves; (d) cash reserves (other
than those set forth above), any closing costs, payment or expenses for which
Borrower is reimbursed from proceeds of the Loan, insurance or any other
third-party source; and (d) any sums paid or payable on account of the Loan.
- Any fees (including the Management Fee), commissions, charges or
other expenses or amounts paid to Borrower or any Borrower Affiliate shall not
constitute an Operating Expense, unless such fees, commissions or other amounts
paid to Borrower or any such Borrower Affiliate (A) are not more than would be
paid to an unrelated, independent third party in a bona fide unrelated third
party transaction, and (B) if Borrower or any such Borrower Affiliate performs
work or provides services for a number of properties, including the Mortgaged
Properties, the Lenders shall have determined, in response to Borrower's
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written application, that the allocation of payroll and other expenses to the
Mortgaged Properties is appropriate and equitable (and, in addition, if
Borrower's Affiliate manages the Mortgaged Properties, the Management Fee
payable to Borrower's Affiliate shall be included in the definition of Operating
Expenses only if Borrower's Affiliate demonstrates to Lenders' reasonable
satisfaction that it has experience and skill in managing similar properties in
similar locations).
- All calculations of Operating Expenses shall be subject to the
Lenders' reasonable approval.
"Other AP Sellers" means AP Century I, L.P., AP Century II,
L.P. and AP Century IX, L.P., each a limited partnership affiliated with
Lenders.
"Pending Leases" means the Leases which are not fully executed
and delivered as of the Closing Date as set forth on the attached Schedule "D".
"Permitted Capital Improvements" shall mean such additional capital
improvements as Borrower may, from time to time, propose to the Lenders to
undertake after the Closing Date, which additional capital improvements: (a)
have been approved by the Lenders , such approval not to be unreasonably
withheld (including pursuant to the Lenders' approval of a Permitted Capital
Improvements Budget prepared by Borrower and/or pursuant to Leases approved by
Lenders); and (b) constitute Permitted Capital Improvement Expenses and not
Operating Expenses. Permitted Capital Improvements shall not include such
Capital Improvements as are required to be performed by Lenders at Lenders'
expense pursuant to the Contract of Sale (no additional Lenders' consent is
required for all such Capital Improvements to be performed by Lenders at
Lenders' expense).
"Permitted Capital Improvements Budget" shall mean the budget prepared
by Borrower from time to time (and modified from time to time) with the Lenders'
approval, not to be unreasonably withheld, for Permitted Capital Improvements to
be completed at any of the Mortgaged Properties.
"Permitted Capital Improvement Expenses" means capital expenditures
made for the physical improvement of the Mortgaged Properties (without regard to
depreciation thereof or credit for interest thereon), provided that:
(a) the full amount of such capital expenditure would
qualify as a "capital" item under the IRC (i.e., constitutes an
expenditure the total amount of which may not, under the IRC, be
included as a deduction from gross income in the year it is expended)
or is treated as a capitalized item under Accounting Principles;
provided, however, if the full amount does not so qualify, then so much
of the amount of such capital expenditure as would so qualify will be
included;
(b) no portion of such capital expenditure has been paid
from the lock-box account or otherwise to Borrower or any Borrower
Affiliate unless the Lenders or
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Lenders' Representative have granted express written consent prior to
the performance of the services for which the capital expenditures are
incurred;
(c) such capital expenditures are reasonable and necessary,
or are required by new Leases or to comply with applicable laws, or are
required by existing Leases if not Lenders' obligation to pay for
pursuant to the Contract of Sale, or are likely to increase the value
of the Mortgaged Property by at least the amount of the capital
expenditure as certified by Borrower's Representative to the Lenders
(which certification shall incorporate by reference the Nonrecourse
Clause);
(d) the amount of such capital expenditures is reasonable
for the types of capital items and the type and use of property, as
certified by Borrower's Representative to the Lenders;
(e) the Persons providing services in connection with the
capital expenditures are generally in the business of providing the
types of goods or services provided and neither Borrower nor any
Affiliate is receiving any payment, inducement, consideration, or
kickback (whether in cash or in kind) therefor; and
(f) Borrower's Representative has certified to the Lenders
(which certification shall incorporate by reference the Nonrecourse
Clause), that the capital expenditure qualifies as such under this
definition, which certificate sets forth in detail the nature, extent
and purpose of the capital expenditure and the separate payments to
each named payee in connection therewith, together with copies of each
invoice submitted by each payee in connection therewith and photographs
of the improvements showing the capital expenditure as completed.
"Permitted Encumbrances" means (a) liens for taxes or
assessments or other governmental charges not yet due and payable or to
the extent that nonpayment thereof is expressly permitted by this
Agreement or the other Financing Documents; and (b) liens,
restrictions, and encumbrances listed in the title insurance policy
issued in connection with each Mortgaged Property insuring the Lenders
in this transaction and accepted by the Lenders or permitted hereby and
any matters approved by the Lenders or the Lenders counsel in writing;
and (c) any leases that satisfy the Leasing Guidelines or have been
approved by the Lenders in writing.
"Permitted Indebtedness" shall mean (a) the Obligations; (b)
obligations under the Leases; (c) obligations under any equipment
financing providing that same is incurred in the ordinary course of
business and does not exceed the reasonable and customary equipment
financing for similarly situated shopping centers; (d) indemnity
obligations to First American Title Insurance Company and its
affiliates with respect to issuance of policies of title insurance to
the Lenders, (e) the incurrence by Borrower of routine trade payables
in connection with the Mortgaged Property provided all of such routine
trade payables are (i) not secured and do not result in any lien being
placed on the Mortgaged Property, (ii) incurred in the ordinary course
of business of Borrower,
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and (iii) not more than 60 days past due; and (f) obligations for
leasing commissions and Permitted Capital Improvements.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof or any other person.
"Plan" means with respect to Borrower or any of its ERISA
Affiliates, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, that Borrower maintains, contributes to, or has
an obligation to contribute to on behalf of participants employed by
Borrower (excluding any so-called 401(k) plan).
"Principal Amount" means the aggregate principal amount of the
Loan outstanding from time to time. Such Principal Amount shall
automatically at all times equal the sum total of all amounts
outstanding under the Notes.
"Proceeds" means all "proceeds," as defined in UCC Section
9-306(l), including all proceeds of mortgage insurance, hazard
insurance and title insurance policies relating to the Mortgaged
Properties, cash, Accounts, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights of payment of any and every kind, and
other forms of obligations and receivables that may at any time
constitute all or part or are included as proceeds of the Collateral.
"Regulatory Actions" means any claim, demand, action or
proceeding brought or instituted by any governmental authority or
agency in connection with any Environmental Law, including civil,
criminal and administrative proceedings.
"Release" means the intentional or unintentional spilling,
leaking, dumping, pouring, pumping, emptying, seeping, disposing,
discharging (including the abandonment or discharging of barrels,
containers or other receptacles, whether open or closed, containing any
Hazardous Substances), emitting, depositing, injecting, leaching,
escaping, or any other release or threatened release, however defined,
of any Hazardous Substance.
"Security Documents" means each document or instrument
securing (or providing for repayment of or a source for repayment of)
the Loan or any portion thereof, including the Mortgages, the Senior
Assignments of Leases, the Subordinate Assignments of Leases, UCC-1
financing statements, the Lockbox Agreement, title insurance
policy(ies), fire and casualty and flood hazard insurance policy(ies),
together with this Agreement to the extent that this Agreement
constitutes a security agreement for purposes of the UCC.
"Third Party Claims" means any claims, actions, demands or
proceedings (other than Regulatory Actions) based on negligence,
trespass, strict liability, nuisance, toxic tort or detriment to health
or welfare or any other cause of action due to
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Contamination, and whether or not seeking costs, damages, penalties,
expenses or other remedies, brought by any person other than a
governmental authority or agency.
"UCC" means the Uniform Commercial Code in effect from time to
time in New York, or, as appropriate, the state in which the Collateral
is located.
"Usury Limit" means an annual rate of interest equal to the
maximum rate (if any) permitted under applicable law at the time taking
into account the nature and size of the Loan and the status of Borrower
and the Lenders. If no such maximum rate exists at a particular time,
then references to Usury Limit shall be disregarded.
"Village Royale Shopping Center Property" means the Mortgaged
Property located in the City of Royal Palm Beach, County of Palm Beach
and State of Florida as more particularly described in Exhibit A-V.
2. TERMS OF LOAN
2.1 Loan and Note.
2.1.1 Agreement to Lend. Subject to the terms and conditions
of the Financing Documents, the Lenders agree to provide purchase money
financing (i.e., the Loan) to Borrower. The aggregate principal amount of the
Loan shall be $40,447,684.
2.2 Interest Accrual. It is expressly agreed that interest shall
accrue on the principal amount of the Loan from and after January 1, 1996. The
aforesaid agreement is notwithstanding anything to the contrary contained in any
of the Notes.
2.3 Interest. On each Interest Payment Date, Borrower shall pay
interest, in arrears, on the outstanding principal balance of the Loan at a rate
per annum equal to the Contract Interest Rate in effect from time to time,
computed on the basis of a "360-day year for the actual number of days elapsed."
Such phrase, as used throughout this Agreement, shall mean that in computing
interest for the subject period, the interest rate shall be multiplied by a
fraction, the denominator of which is 360 and the numerator of which is the
actual number of days elapsed from the date of the first disbursement of the
Loan or the date of the preceding interest and/or principal due date, as the
case may be, to the date of the next interest and/or principal due date. On each
Interest Payment Date, Borrower shall pay all interest then payable and Borrower
shall have no right to defer or accrue payment of any interest. Notwithstanding
the foregoing, if on any Interest Payment Date there is insufficient net
operating income generated by the use and operation of the Mortgaged Properties
and deposited in the "Depository Account" (as defined in the Lockbox Agreement)
to pay in full, as and when due and payable, the Contract Interest Rate then, in
such event, Borrower's obligation to pay interest on the outstanding principal
balance of the Loan shall be limited to the greater of (i) the amount which
would be payable if the Contract Interest Rate were six percent (6%) per annum
or (ii) the amount of such net operating income generated by the Mortgaged
Properties, and the amount of such interest which is not then payable to Lenders
(hereinafter referred to as the "Accrual") shall accrue and be payable when
there is sufficient
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income in the Depository Account (but in no event later than the Maturity Date).
For so long as GECC is the holder of the Mortgages, in the event GECC
accelerates the Mortgages, the Accrual shall not be secured by the Mortgages or
other Security Documents.
2.4 Collection Accounts. Borrower shall cause all income generated
by the use and operation of the Mortgaged Properties and any business conducted
by Borrower thereon to be deposited into the "Collection Accounts" (as defined
in the Lockbox Agreement) and held pursuant to the Lockbox Agreement. From and
after the date hereof until the Collection Accounts are opened, Borrower shall
or shall cause all rents and other income generated by the use and operation of
the Mortgaged Properties and any business conducted by Borrower thereon to be
deposited into an account with a bank designated by Lenders and approved by
Borrower (and Chemical Bank is hereby approved), and Lender shall own the
account and both Lenders and Borrower shall have joint control over all
disbursements from or any other decisions in connection with the use of such
rents and other income, but it is understood that the parties intend that the
disbursements shall be in the order of priority set forth in Section 2.6;
provided, however, if on March 15, 1996, the Lockbox Agreement has not been
entered into (for reasons other than delay attributable to Lenders or the
Lockbox Bank), the restrictions on distributions on account of Borrower's Return
on Equity described in Section 3.2 shall be effective.
2.5 Repayment on Maturity Date. Borrower shall repay in full the
entire outstanding principal balance of the Loan, together with all accrued but
unpaid interest thereon, and all other Obligations and other sums that may be
payable under or with respect to the Loan or the Financing Documents, on the
Maturity Date. The Lenders shall not be required to notify Borrower of the
Maturity Date. The payment due upon the Maturity Date shall, so long as the GECC
Loan is outstanding, be made directly to GECC as described in Section 2.9.
2.6 Application of Payments.
2.6.1 Order of Application. So long as no Event of Default
shall have occurred and be continuing, all such income in the Collateral
Accounts from time to time shall be applied only in the following order of
priority (subject in each case to the Payment Priority Exceptions and the
Principal Repayment Allocations): first, to reimburse the "Lockbox Bank" (as
such term is defined in the Lockbox Agreement) for reasonable costs and expenses
incurred in administering the Lockbox Agreement, and the Lockbox Bank's fees for
such services, second, to fund monthly escrows, if any, for ad valorem real
estate taxes and assessments or to pay any real estate taxes and assessments
that may then be due (but not, however, to the extent escrow funds are available
for such payments), third, to pay in full, as and when due and payable, GECC
Loan Payments, and all arrearages thereof, fourth, to pay in full as and when
due and payable, all Operating Expenses (other than the items referenced above
in the first priority payment), subject to, and in accordance with, the terms
and conditions of this Agreement, and including any reserves agreed upon by
Borrower and Lenders, fifth, to pay in full, as and when due and payable, all
interest and other amounts (other than principal payments) payable under the
Notes, and any and all arrearages thereof including any unpaid Accrual
(excluding the amounts paid and applied pursuant to the third
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priority payment on account of GECC Loan Payments), sixth, to pay in full, as
and when due and payable, all Permitted Capital Improvements Expenses and any
and all arrearages, seventh, an amount to be paid to Borrower equal to
"Borrower's Return on Equity" (as defined in the Lockbox Agreement), eighth, to
pay down the principal amounts of the Notes in proportion to their then relative
principal balances.
2.6.2 Exceptions. Notwithstanding anything to the contrary in
the Financing Documents, Borrower and the Lenders agree as follows with respect
to the priority of application of any payments made at any time with respect to
the Loan (the "Payment Priority Exceptions"):
2.6.2.1 Event of Default. If any Event of Default has
occurred, then the Lenders may apply any payments in such order and to such
items as the Lenders shall deem appropriate in Lenders' sole and absolute
discretion, including to pay all outstanding late charges and other costs and
expenses incurred by the Lenders.
2.6.2.2 Failure to Specify. If the Lenders fail to
specify how any payment has been applied, then the Lenders may specify such
application thereafter at any time by written notice to Borrower.
2.6.2.3 No Specification by Borrower. Borrower shall
have no right, power or authority to specify how payments shall be applied.
2.6.2.4 Limitation of Liability. The Lenders'
liability for any failure to apply payments in the order required by this
Agreement shall be limited to an obligation to apply payments in the order
required.
2.7 Principal Repayment Allocations. To the extent that Borrower
repays the Principal Amount of the Loan, such repayment shall be allocated among
the Notes as follows so long as no Event of Default shall exist (the "Principal
Repayment Allocations"). If any Event of Default exists, then such repayments
shall be allocated as the Lenders determine in their sole and absolute
discretion.
2.7.1 Site-Specific Reductions. If such repayment arises from
a Property Release or other event affecting a specific Mortgaged Property
("Mortgaged Property Proceeds"), then such repayment shall be applied first
against the Note secured by the Senior Mortgage covering the Mortgaged Property
affected thereby and thereafter to reduce the amount of the various Notes in
proportion to their then relative principal balances.
2.7.2 General Reductions. If such repayment arises from
mandatory amortization or any source other than Mortgaged Property Proceeds,
then such repayment shall be applied to reduce the amount of the various Notes
in proportion to their then relative principal balances.
2.8 Reversal of Payments. To the extent that Borrower makes any
payment to the Lenders or the Lenders receive any payment or proceeds of any
Collateral for Borrower's
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benefit, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
payment or proceeds received, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect, as if the
Lenders had not received such payment or proceeds.
2.9 Prepayment or Payment upon Maturity or Acceleration. Borrower
shall have the right to prepay the Loan, in whole or in part, at any time
without premium or penalty; provided, however, that Borrower shall pay to the
Lenders at the time of any such payment all accrued but unpaid interest due
hereunder, and all other amounts which are then due and payable pursuant to the
Loan and/or any other document executed by Borrower in connection with the Loan;
and provided, further, that any prepayment hereunder shall be on not less than
10 Business Days notice and such prepayment shall be not less than One Hundred
Thousand and 00/100 Dollars ($100,000.00) except, that if the remaining
principal amount under a Note equals a sum that is less than One Hundred
Thousand and 00/100 Dollars ($100,000.00), then Borrower may prepay the Loan in
the remaining principal amount under such Note. Notwithstanding anything to the
contrary in any Financing Document, and so long as the GECC Loan is outstanding,
any prepayment of the Loan, and any payment of the Loan upon acceleration or
maturity, shall be paid by Borrower directly to (and shall not be effective
unless paid directly to) GECC, as a prepayment on the GECC Loan with any
remaining balance to be promptly remitted to Lenders. Such prepayment to GECC
shall be applied in accordance with the GECC Loan Agreement and shall be
credited against the Loan.
2.9.1 Property Releases. At the time of any such prepayment
Borrower shall be entitled to require the Lenders to release one or more
Mortgaged Properties from the lien of the Mortgage and the other Security
Documents and to cause the concurrent release thereof from the First Mortgages,
provided that the Release Conditions are satisfied both on the date of the
Prepayment Notice and on the effective date of the release (a "Property
Release"). From and after the occurrence of any Property Release, the property
that has been released shall no longer constitute Collateral or Mortgaged
Property. The Lenders shall have no obligation in connection with any partial
prepayment to release any Mortgaged Property from the liens of the Mortgages or
other Financing Documents, or to cause the concurrent release thereof from the
First Mortgages, except as specifically set forth in this Article. The "Release
Conditions" are as follows:
2.9.1.1 Minimum Property Release Price. In order to
obtain the release of any particular Mortgaged Property, Borrower shall prepay
so much of the Principal Amount of the Loan (which prepayment shall be allocated
first to the Note secured by the Senior Mortgage for the Mortgaged Property that
Borrower wants released and thereafter to reduce the amounts of the various
other Notes in proportion to the then relative principal balances thereof) as is
equal to at least an amount equal to 110% of the allocated mortgage amount then
outstanding (the "Release Price").
2.9.1.2 Intentionally Deleted
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2.9.2 Application of Prepayments. The Lender shall apply any
prepayments of the Loan received pursuant to the terms hereof in the order of
priority as provided hereinabove in Section 2.7.1.
2.9.3 Oak Grove Cinema. In the event of the exercise by tenant
of its option to purchase Oak Grove Cinema at the ▇▇▇▇▇ Farm Shopping Center
Property, Lender(s) shall release the Cinema parcel from the lien of the
applicable Senior Mortgage and Subordinate Mortgage and other applicable
Security Documents, and to cause the concurrent release thereof from the First
Mortgage, upon payment of 83% of the gross proceeds of sale, which shall be
applied to the Note secured by the Senior Mortgage and the balance of such
proceeds shall be distributed to Borrower.
2.10 Single Loan. All of the Obligations of Borrower arising under
this Agreement and the other Financing Documents shall, to the extent herein set
forth, constitute one obligation of Borrower secured by all of the Mortgaged
Properties and (collectively) all of the Mortgages. Each of the Senior Mortgages
shall secure Borrower's obligation to pay the principal amount of the applicable
Note (together with other related sums such as interest and other sums with
respect to such principal amount). Each of the Subordinate Mortgages shall, to
the extent herein set forth, secure all of the Borrower's other obligations
under this Agreement, including Borrower's obligation to pay the entire amount
of the Loan other than such portion of the Loan as is evidenced and represented
by the separate Note secured by the Senior Mortgage covering the Mortgaged
Property covered by the Subordinate Mortgage.
2.11 Effect of Disbursement of Monies. Borrower shall make or cause
to be made each payment under this Agreement (including repayment of the Loan in
full on the Maturity Date) not later than 2:00 p.m. (New York City time) on the
day when due in lawful money of the United States of America in immediately
available funds to the Lenders' depository bank in the United States as
designated by the Lenders from time to time for deposit in the Lenders'
depository account. If the Lenders disburses funds by wire transfer on a
Business Day, then such funds shall be considered advanced on such day. With
regard to the repayment of the Loan, interest at the Interest Rate shall
continue to accrue on any amount repaid until such time as the repayment has
been received and cleared by the Lenders. Any payment made by Borrower by wire
transfer or other immediately available funds and actually received before 2:00
p.m. (New York City time) on a Business Day, shall be deemed to have been
received and cleared by the Lenders on the date of receipt. If a payment is not
actually received prior to 2:00 p.m. (New York City time) on a Business Day,
then such payment shall be deemed to have been received and cleared by the
Lenders on the next Business Day.
2.12 Taxes.
2.12.1 No Deductions for General Taxes. Any and all payments by Borrower
hereunder or under the Notes or otherwise with respect to the Loan shall be
made, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding taxes imposed on or measured by the net income
of the Lenders and franchise taxes (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
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hereinafter referred to as "General Taxes"). If Borrower shall be required by
law to deduct any General Taxes from or in respect of any sum payable hereunder
or under the Notes, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable by Borrower to the Lenders on account of Taxes) the
Lenders receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such deductions, and (iii)
Borrower shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Notwithstanding anything in this
paragraph to the contrary, if, at any time, the Loan or a portion thereof or an
interest therein is transferred to a Person other than the Lenders, Borrower's
liabilities under this paragraph shall not exceed the amount of liabilities that
Borrower would have incurred under this paragraph had the Lenders continued to
hold the entire Note.
2.12.2 Transaction Taxes. In addition, Borrower agrees to pay
any present or future stamp or documentary taxes or any other sales, transfer,
excise, mortgage recording or property taxes, charges or similar levies that
arise from any payment made hereunder or under the Notes or from the execution,
delivery, registration or recordation (if any) of, or otherwise with respect to,
this Agreement, the Notes or any other Financing Documents (hereinafter referred
to as "Transaction Taxes").
2.12.3 Right to Contest. Borrower shall have the right to
contest any General Taxes and/or Transaction Taxes (collectively, "Taxes")
provided that Borrower satisfies the conditions thereto set forth in the
Mortgages and provided, further, that nonpayment of such Taxes shall not, in the
Lenders' reasonable judgment, adversely affect the Lenders' liens on the
Mortgaged Properties (including the enforceability or priority thereof).
2.12.4 Indemnification. Borrower shall indemnify the Lenders
for the full amount of Taxes (including any General Taxes imposed by any
jurisdiction on amounts payable by Borrower pursuant to Borrower's obligations
under this Agreement with respect to Taxes) paid by the Lenders and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be paid within thirty days from the
date the Lenders provide Borrower with reasonable proof of payment by the
Lenders and written demand for payment by Borrower.
2.12.5 Proof of Payment. Within 30 days after the date of any
payment of Taxes, Borrower shall furnish to the Lenders, the original or a
certified copy of a receipt evidencing payment thereof; provided, however, (i)
if the Lenders makes a payment of Taxes on Borrower's behalf, then the Lenders
shall notify Borrower that such payment was made and to promptly provide
Borrower with a copy of the paid ▇▇▇▇ (but the Lenders shall have no liability
for a failure to so notify Borrower or provide Borrower with a paid ▇▇▇▇), and
(ii) Lenders shall provide Borrower with any receipt(s) for such payments
actually received by the Lenders together with any paid bills (and canceled
checks if available to Lenders) not previously provided by the Lenders to
Borrower.
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2.12.6 Survival. Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and obligations of Borrower
contained in this Section 2.19 shall survive the payment in full of all
Obligations.
2.13 Indemnity.
2.13.1 Generally. Borrower shall indemnify and hold each Lender
harmless from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements, including those incurred upon any appeal) that may be
instituted or asserted against or incurred by each Lender by any third party
(i.e., a party unrelated to Borrower or such Lender and excluding, without
limitation, any partner of such Lender or any Affiliate of such Lender) in
connection with the enforcement (or attempted enforcement) of the Financing
Documents or any collection proceeding instituted by any of the Lenders (except
that Lender shall not be indemnified against liability to the extent such
liability is attributable to Lender's gross negligence or willful misconduct or
the breach by Lenders of any covenant or condition under which Lenders are bound
or which liability is explicitly excluded from the scope of Borrower's
Environmental Indemnity Agreement) ("Borrower's General Indemnity").
2.13.2 Intentionally Deleted.
2.14 Access. The Lenders and any of its officers, employees
and/or agents shall have the right to inspect the Mortgaged Properties as
frequently as the Lenders determine to be appropriate, (i) at any time if (x) an
Event of Default exists, (y) there may be an imminent violation of the Financing
Documents relating to the Mortgaged Property to be inspected, in the Lenders'
reasonable judgment, or (z) there is an emergency currently existing at the
Mortgaged Property to be inspected, in the Lenders' reasonable judgment, and
(ii) during normal business hours (or at such other times as may reasonably be
requested by the Lenders) upon reasonable notice, otherwise.
3. CLOSING AND POST-CLOSING CONDITIONS
3.1 Conditions to Making of Loan. As conditions to the Lenders'
closing the Loan, Borrower shall execute, deliver and/or provide to the Lenders
the following, all of which shall be in form and substance satisfactory to the
Lenders in the Lenders' sole and absolute discretion:
3.1.1 The Notes.
3.1.2 Formation, Organization, Etc. With respect to Borrower:
(a) documents evidencing organization, authority and the issuance of all
necessary internal consents and approvals for the Loan and the Financing
Documents; and (b) certificates of good standing and qualification to do
business issued by the jurisdiction of organization and, to the extent required
by law, each state where any Mortgaged Property is located.
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3.1.3 Opinion of Counsel. An opinion of counsel (which may be
issued by Borrower's in-house counsel) with respect to Borrower, issued by
counsel satisfactory to the Lenders, together with evidence that such opinion of
counsel was issued at the request of Borrower covered thereby and may be relied
upon by Lenders.
3.1.4 Mortgages. The Mortgages and all related Security
Documents as required by the Lenders with respect to the related Mortgaged
Property.
3.1.5 Title Insurance. A policy of title insurance with
respect to each Mortgage, insuring each Senior Mortgage as a senior mortgage or
senior deed of trust, as the case may be, subject only to title exceptions
satisfactory to the related Lender, and including such affirmative insurance,
endorsements and reinsurance arrangements as such Lender shall reasonably
require and each Subordinate Mortgage as a subordinate mortgage or subordinate
deed of trust, as the case may be, subject only to the applicable Senior
Mortgage and to the Permitted Encumbrances, and including such affirmative
insurance, endorsements and reinsurance arrangements as the related Lender shall
reasonably require.
3.1.6 Insurance. Policies of hazard insurance and liability
insurance as required by the Mortgage.
3.1.7 Lockbox. A lockbox agreement with respect to the
Mortgaged Properties (the "Lockbox Agreement") in the form set forth in Exhibit
"F" with such changes as are reasonably required by the "Lockbox Bank" and as
may be agreed upon by Lenders and Borrower.
3.1.8. Other Documents. Such other documents, deliveries,
certificates and other items as the Lenders shall reasonably require with
respect to the Mortgaged Properties and the Loan.
3.2 Post Closing Conditions. In connection with the closing of the
Loan, Lenders and Borrower shall cooperate and use best efforts in order to
obtain the Delayed Deliveries (as defined below) on or before March 15, 1996.
If, as of March 15, 1996, the Delayed Deliveries have not been obtained and
delivered to Lenders other than by reason of delays attributable to Lenders or
the Lockbox Bank, then from and after March 15, 1996, all funds in the
collection accounts under the Lockbox Agreement shall be disbursed in accordance
with the order of priorities set forth in Section 2.6 except that distributions
to Borrower on account of Borrower's Return on Equity shall be deferred until
the Delayed Deliveries are made. For the purposes of the foregoing, the "Delayed
Deliveries" shall consist of the following:
3.2.1 Establishment of Lockbox. The entering into of the
Lockbox Agreement and the establishment of the account(s) required by the
Lockbox Agreement and completion of all documentation required by the Lockbox
Agreement, to the extent such action and documentation is required to be taken
or completed by Borrower.
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3.2.2 Letters to Tenants. Letters to all tenants of the
Mortgaged Properties directing them to pay rent as required by the Lockbox
Agreement.
3.3 No Revolver. To the extent that Borrower has paid or repaid
any portion of the Loan, Borrower shall not be entitled to reborrow such sum.
4. SECURITY FOR LOAN, ETC.
4.1 Grant of Security Interest. As security for the prompt and
complete payment and performance when due of the Obligations, Borrower hereby
presently and unconditionally conveys, assigns, mortgages, pledges,
hypothecates, transfers and delivers to the Lenders, and grants to the Lenders a
continuing security interest in, all Collateral.
4.2 Further Documentation. Borrower shall execute and deliver all
documents and instruments as may be reasonably necessary or appropriate to
evidence and perfect the Lenders' security interest in the Collateral, including
additional Security Documents as reasonably required and any and all financing
statements and other documents and instruments as may be reasonably required by
the Lenders, provided such other documents and instruments (i) are subject to
the terms, covenants and conditions of the Non-Recourse provisions of Section 9
herein, and (ii) do not increase Borrower's obligations or liabilities
hereunder.
4.3 Security Agreement; UCC Remedies. This Agreement shall
constitute a security agreement under the UCC. The Lenders shall have, with
respect to the Collateral, all of the rights, remedies, powers and privileges of
a secured party under UCC Article 9, and all rights, remedies, powers and
privileges set forth in the Financing Documents.
4.4 Security for Loan. The Loan shall be secured by:
4.4.1 Senior Mortgages. The Senior Mortgages, each of which
shall secure only the portion of the Loan stated in such Senior Mortgage;
4.4.2 Subordinate Mortgages. The Subordinate Mortgages, which
shall secure all Obligations of Borrower as hereinbefore provided; and
4.4.3 Security Documents. All other Security Documents.
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4.5 GECC Wrap. As set forth in each of the Senior Mortgages, each
such Senior Mortgage is wrapped around an underlying first mortgage or first
deed of trust held by GECC (the "First Mortgages" or the "GECC First Mortgages")
which encumbers the Mortgaged Property encumbered by such corresponding Senior
Mortgage. In addition, it is hereby agreed by Lenders and Borrower that the
Subordinate Mortgages are to be considered as if they were wrapped around the
second mortgages and deeds of trusts held by GECC (the "GECC Second Mortgages")
which encumber the Mortgaged Properties encumbered by such corresponding
Subordinate Mortgage. With respect to the Subordinate Mortgages and the GECC
Second Mortgages, Borrower and Lenders agree as follows:
4.5.1 Payment of GECC Second Mortgages. Provided that there is
no Event of Default, Lenders agree to pay to the holder of the GECC Second
Mortgages all installments of interest, principal and other sums due on the
note(s) secured by the GECC Second Mortgages, as and when required by the terms
of the GECC Second Mortgages.
4.5.2 Timing of Payment. All payments to be made by Lenders
pursuant to the provisions of Section 4.5.1 above shall be made before the
expiration of the applicable grace periods provided for such payments as
contained in the GECC Second Mortgages.
4.5.3 Restrictions. Subject to the terms and conditions in the
Lockbox Agreement, Borrower covenants not to make any payments whatsoever
directly to the holder of the GECC Second Mortgages, including any prepayment,
or request any release, partial release, amendment or other modifications of the
GECC Second Mortgages and the notes and obligations secured thereby without the
prior written consent of Lenders, their successors and assigns.
4.5.4 Wrap Provisions. Lenders and Borrower agree that all
provisions of Article 4 of the First Mortgages applicable with respect to the
First Mortgages are equally applicable with respect to the GECC Second
Mortgages, and such Sections are hereby incorporated by reference and are
intended to be effective so that the Senior Mortgages and Subordinate Mortgages
are to be considered jointly wrapped around the GECC First Mortgages and the
GECC Second Mortgages.
5. BORROWER'S REPRESENTATIONS AND WARRANTIES
As an inducement to each of the Lenders to enter into this Agreement
and to make the Loan, Borrower represents and warrants to each of the Lenders as
follows, each of which representations and warranties shall be deemed to be made
as of the Closing Date:
5.1 Due Organization. Borrower is duly organized, validly existing
and in good standing under the laws of the State of New York and (i) is in good
standing under the laws of the State where Borrower is required by law to be
qualified in order to hold title to real property, (ii) has all requisite power
and authority to own its property and conduct its business as conducted and as
contemplated hereunder and to enter into and perform its obligations under this
Agreement and all other documents and instruments contemplated hereby, and (iii)
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requires no material licenses, certificates and permits from any governmental
authorities in order to purchase the Mortgaged Properties from Lenders.
5.2 Authorization and Enforceability. The execution and delivery of
the Financing Documents, and the performance of all obligations of Borrower
hereunder and thereunder, (i) have been duly authorized by all necessary action
of Borrower, and (ii) do not and shall not require any consent or approval of,
notice to or any action by, any Person or, if required, such consents or
approvals have been obtained in writing. The Financing Documents, when executed
and delivered, shall (and to the extent already executed and delivered, do)
constitute legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
5.3 No Litigation. Except as set forth in Schedule "C", to
Borrower's knowledge, there are no actions, suits or proceedings (collectively
"Proceedings") pending against Borrower, at law or in equity, or before or by
any Person, including any federal, state, municipal or other governmental
department, commission, board, agency or instrumentality, that, if determined
adversely to Borrower, would have a Material Adverse Effect on any Mortgaged
Property.
5.4 Compliance with Law. To Borrower's knowledge, Borrower is not
in violation of or in default under any applicable laws or regulations
(including all Requirements as defined in the Mortgages) that would have a
Material Adverse Effect on any Mortgaged Property. To Borrower's knowledge,
Borrower is not in violation or default under any order, writ, injunction,
demand or decree of any court or any other Person that would have a Material
Adverse Effect on any Mortgaged Property. Borrower is not in violation or
default in any material respect under any indenture, agreement or other
instrument to which it is a party or by which its properties are bound, that
would have a Material Adverse Effect on any Mortgaged Property. To Borrower's
knowledge, (a) all required certificates of occupancy for the Mortgage
Properties have been issued and (b) Borrower has received no written notice that
any of the certificates of occupancy have been suspended or revoked.
5.5 No Conflict. Subject to any required consents under the First
Mortgages, Borrower's execution and delivery of the Financing Documents, and
performance of its obligations hereunder and thereunder: (i) do not and shall
not violate or result in a breach by Borrower of, or constitute a default under,
or conflict with, or cause any acceleration of, any obligation in any material
amount with respect to any material provision or restriction of any indenture,
deed of trust, document, agreement or instrument to which Borrower is a party
or, to Borrower's knowledge, by which it or its property may be bound that would
have a Material Adverse Effect on any Mortgaged Property; or (ii) do not and
shall not violate (A) the charter document or by-laws of Borrower or (B) any
provision of applicable law, regulation or order, including the provisions of
any federal or state tax or securities laws and any applicable rule, regulation,
order, writ, injunction or decree of any court or governmental authority that
would have a Material Adverse Effect on any Mortgaged Property.
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5.6 Ownership. To Borrower's actual knowledge, Borrower owns the
fee simple title to the Mortgaged Properties. Borrower has full power and
authority to grant a security interest in all Mortgaged Property without the
consent of any third Person.
5.7 Place of Business. Borrower's principal place of business is
located at its address listed in the opening paragraph of this Agreement.
Borrower keeps its books and records at such address.
5.8 Financial Statements. The 1994 annual financial statements or
reports on Form 10-K and the Form 10-Q for the quarterly period ended September
30, 1995 for Borrower which were submitted to the Lenders are true and correct
in all material respects as of the respective dates thereof, subject to
quarterly and year-end adjustments and such financial statements, fairly present
in all material respects the respective financial conditions and results of
operations of the entities to which they, including notes thereto, relate, as of
the dates and for the periods indicated.
5.9 Intentionally Deleted.
5.10 Intentionally Deleted.
5.11 Intentionally Deleted.
5.12 Intentionally Deleted.
5.13 Security Interest. To Borrower's knowledge, this Agreement
constitutes and creates a valid and continuing lien on and security interest in
the Collateral in favor of each of the Lenders, prior to all other liens and
rights of others except Permitted Encumbrances, and is enforceable as such as
against creditors of and purchasers from Borrower and as against any owner of
the real property where any of the Equipment is located, any purchaser of such
real property and any present or future creditor obtaining a lien on such real
property, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in any proceeding in equity or at law).
5.14 Solvency. Borrower is not insolvent and the consummation of
the transactions contemplated by this Agreement and the other Financing
Documents will not render Borrower insolvent.
5.15 Intentionally Deleted.
5.16 Intentionally Deleted.
5.17 Intentionally Deleted.
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5.18 Leases. List of Leases. Exhibit "B" lists, to Borrower's
knowledge, all Leases and amendments thereto affecting the Mortgaged Property or
any portion thereof; Exhibit "B-1" lists, to Borrower's knowledge, all rental
arrearages for each of the Tenants as of the date set forth on such Exhibit and
security deposits being held by Borrower; and Exhibit "B-2" lists, to Borrower's
knowledge, all offsets, defenses or claims to the payment of rent by the
Tenants. To Borrower's knowledge: Exhibits "B", 'B-1' and "B-2" are correct and
complete; no rent or other income from such Leases have been pledged, assigned
or otherwise transferred or encumbered; except for employees performing
management services in connection with the Mortgaged Property where they work,
no Person has any right to occupy any portion of the Mortgaged Properties except
pursuant to a Lease described in said Exhibit.
5.19 Intentionally Deleted.
5.20 Environmental Protection. Except as expressly disclosed in the
Environmental Assessment Reports furnished to the Lenders before the Closing
Date, to Borrower's knowledge, all of the Mortgaged Properties are free of
Contamination. Borrower shall provide the Lenders with a copy of each and every
Environmental Document relating to the Mortgaged Properties, promptly upon
Borrower's receipt, preparation or filing (as the case may be) of such
Environmental Document.
5.21 Intentionally Deleted.
5.22 Employment, Labor and Management Agreements. Except for the
Initial Manager, Borrower has not entered into any management agreement covering
Borrower's management or the management of the Mortgaged Properties.
5.23 Intentionally Deleted.
5.24 Intentionally Deleted.
5.25 Opinion of Counsel. The opinion(s) of Borrower's counsel being
delivered to the Lenders on the Closing Date in connection with the Loan is
(are) being delivered by Borrower's counsel to the Lenders at Borrower's request
and the Lenders are entitled to rely thereon.
6. BORROWER'S COVENANTS
Borrower covenants and agrees with each of the Lenders (such covenants
and agreements to remain in full force and effect until all Obligations have
been paid and performed in full) as follows, each of which shall be deemed a
covenant and obligation of Borrower:
6.1 Protection of Collateral. Borrower shall appear in and defend
any action or proceeding that may adversely affect its title to or the Lenders
interest in the Collateral.
6.2 Intentionally Deleted.
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6.3 Compliance. Borrower shall perform all its obligations under
all Financing Documents, when and as such performance is required under the
Financing Documents.
6.4 Lockbox. Borrower shall cause to be deposited and apply all
Income pursuant to the Lockbox Agreement.
6.5 Books and Records. Borrower shall maintain at its principal
place of business or the place of business of the Manager (defined hereinafter)
set forth herein full, true and accurate books and records concerning its
business, including the Mortgaged Property and other Collateral.
6.6 Audit and Inspection. Borrower shall permit the Lenders or
their authorized representatives, or an independent certified public accountant
of their choosing during normal business hours, to audit, inspect and copy such
books and records and files of account of Borrower as pertain to the Collateral
and the Mortgaged Properties, and to discuss the Mortgaged Properties and their
financial and other conditions relating to the Collateral and Mortgaged
Properties with officers or employees of Borrower or Borrower's Representatives.
Upon five Business Days prior notice from the Lenders, (a) Borrower shall
deliver any document or instrument reasonably necessary for the Lenders, as the
Lenders may request, to obtain records from any service bureau maintaining
records for Borrower relating to any of the Mortgaged Properties; and (b)
Borrower shall obtain from its property manager and provide to the Lenders such
information and records as the Lenders may reasonably request, including bank
statements, bank reconciliations, and other similar banking information,
regarding the Mortgaged Properties and as are then reasonably available to
Borrower or the property manager. Borrower shall permit the Lenders and their
representatives to photocopy any such documentation and shall provide equipment
for such purpose. (For purposes of this Agreement, any or all of the foregoing
activities, as conducted by the Lenders, their authorized representative or an
independent certified public accountant of its choosing, shall constitute an
"Audit"). The Lenders, or any of their officers, employees and/or agents or an
independent certified public accountant of its choosing shall have the right to
conduct an Audit upon ten Business Days prior notice (which may be oral) at any
time when no Event of Default exists, and five business days prior notice (which
may be oral) at any time when an Event of Default exists. For purposes of an
Audit, Borrower shall not be required to provide for the Lenders any reports or
documentation not produced or generated by Borrower, its property manager, its
accountant or its banking and other financial institutions in the ordinary
course of business, except that Borrower shall also be required to provide upon
request by the Lenders any reports or documentation that are then required (of
all borrowers owning similar assets) by Borrower company-wide underwriting and
asset management requirements and policies as in effect from time to time, as
certified by Borrower's Representative (the "Standard Borrower Reports").
Borrower shall pay the Lenders' reasonable expenses in connection with
reasonable Audits of Borrower conducted at reasonable intervals. Borrower shall
not be required to pay for more than one Audit per year conducted by the
Lenders' certified public accountants.
6.7 Management. Simultaneously with the date hereof, Borrower shall
enter into a management agreement with Century Properties, Inc. (the "Initial
Manager") for a term not
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less than twelve months (12) (or less if terminated for cause prior thereto)
which complies with this Agreement and is otherwise reasonably acceptable to the
Lenders and Borrower (the Initial Manager shall be required to conform to all
requirements provided herein for the Manager (as defined below)). Thereafter, at
all times until all Obligations have been paid and performed, the Mortgaged
Properties shall be managed by the Initial Manager or by such other management
firm (having equal or greater levels of applicable experience, skill and
reputation) as shall be selected by Borrower and approved by the Lenders, which
approval shall not be unreasonably withheld provided that such other management
firm has experience and skill in managing similar properties in similar
locations (the approved management firm being sometimes referred to herein as
the "Manager") pursuant to a management agreement (the "Management Agreement")
in form and content reasonably satisfactory to the Lenders and Borrower and
providing for a Management Fee and no other payments except leasing commissions
and expenses reimbursable under the Management Agreement to the Manager.
Borrower shall not materially amend or modify the Management Agreement without
the prior consent of Lenders which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, Lenders approve the Initial Manager and
the management agreement entered into as of the date hereof between the Initial
Manager and Borrower (the "Initial Management Agreement").
6.8 No Relocation. Borrower shall not change the location of its
books and records relating to the Collateral without having first given 60 days'
prior written notice to the Lenders.
6.9 Financial Statements. Borrower shall furnish or cause to be
furnished to the Lenders:
6.9.1 Quarterly Financials. Within 30 days after the end of
each fiscal quarter of Borrower, (a) a copy of unaudited financial statements of
each Mortgaged Property prepared in accordance with Accounting Principles,
including balance sheets and profit and loss statements, as of the end of each
such quarter and for the corresponding quarter of the preceding year and
detailed statements of operations for the year to date and for the corresponding
period of the preceding year, together with a certificate of Borrower's
Representative subject to the Nonrecourse provision at Section 9 (i) attesting
to Borrower's knowledge, the material accuracy thereof; and (ii) stating that to
such Person's knowledge, no monetary Event of Default has occurred and is
continuing or material nonmonetary Event of Default has occurred and is
continuing (or, if such has occurred specifying the nature thereof and the
action that Borrower has taken or proposes to take with respect thereto); and
(b) copies of current rent rolls and leasing reports with respect to each of the
Mortgaged Properties. Each such quarterly unaudited financial statement
described above in (a) shall contain a reconciliation of profits and losses for
the immediately prior fiscal quarter.
6.9.2 Annual Financials. Within 90 days after the end of each
fiscal year of Borrower, a copy of the financial statements, consisting of
balance sheets, income statements and cash flow statements as of the end of such
fiscal year for each Mortgaged Property, all in reasonable detail and prepared
in accordance with Accounting Principles and compiled by an independent
certified public accountant;
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6.9.3 Accountants' Reports. Promptly upon receipt thereof by
Borrower, a copy of each report (including reports commenting on Borrower's
internal bookkeeping, accounting or financial procedures) pertaining to any
Mortgaged Property, if any, submitted to Borrower by the accountants that
prepared, or the accountants (if any) that audited, or compiled, Borrower's
financial statements;
6.9.4 Budgets. Annual budgets for the Mortgaged Properties,
at least thirty days before the commencement of the applicable fiscal year, for
the Lenders' information; and
6.9.5 Other Information. Promptly upon request, such other
information as the Lenders may reasonably request with respect to the Mortgaged
Properties and the Collateral (financial or otherwise); provided however that,
for purposes of this paragraph, Borrower and Borrower's accountants or property
manager shall not be required to generate any documents that Borrower or
Borrower's accountants or property manager would not otherwise be required to
generate in the ordinary course of business, except that Borrower shall also be
required to provide upon request by the Lenders any Standard Borrower Reports.
6.10 Notification of Lender. Borrower shall promptly notify the
Lenders in writing:
6.10.1 Default or Event of Default. Of any known material
Default or Event of Default hereunder;
6.10.2 Property-Related Litigation. Upon the commencement of
any litigation, including arbitration, and of any proceedings before any
governmental agency against Borrower that would, if successful, have a Material
Adverse Effect on Borrower's ability to perform its obligations with respect to
or on any of, the Collateral (unless such litigation is being defended by
Borrower's insurance carrier);
6.10.3 Material Adverse Change or Breach. Of any condition or
event suffered by Borrower that has resulted in (i) a material adverse change in
the financial condition or operations of Borrower, (ii) a material breach of or
noncompliance with any material term, condition or covenant contained herein or
in any document delivered pursuant hereto, or (iii) a material breach of or
noncompliance with any material term, condition or covenant of any material
contract to which Borrower is a party or by which its property may be bound, and
which material adverse change under (i) or breach or noncompliance under (ii) or
(iii) would have a Material Adverse Effect on the Mortgaged Properties.
6.10.4 Loan-Related Litigation. Of any legal proceeding
instituted against Borrower that arises from or relates to the Loan.
6.11 Cost Overruns. Borrower shall keep the Lenders fully advised as
to any and all cost overruns with respect to Capital Improvements required to be
paid for by the Borrower and any other material construction, alteration, or
demolition work affecting any of the Mortgaged Properties. Borrower shall be
responsible for and shall promptly fund the same (to the extent required to be
paid for by Borrower).
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6.12 Conduct of Business. Borrower shall: (i) do or cause to be done
all things necessary to preserve, maintain, renew and keep in force and effect
its material rights, licenses, permits and franchises related to the Mortgaged
Properties; (ii) conduct its business at the Mortgaged Properties in an orderly
and regular manner; and (iii) comply with all applicable laws and governmental
regulations with respect to the Mortgaged Properties and with the terms of any
indenture, contract or other instrument to which it may be a party with respect
to or under which such properties may be bound if noncompliance would have a
material adverse effect upon the Collateral, except where contested in good
faith and by appropriate proceedings diligently pursued; and (iv) subject to
Lenders' obligations under the separate agreement dated the date hereof relating
to certain deferred maintenance items, preserve and maintain the property and
keep the same in good repair, working order and condition (taking into
consideration ordinary wear and tear).
6.13 Restrictive Covenants. Without the prior written consent of
the Lenders, which may be withheld for any reason or no reason, Borrower shall
not do any of the following (such prohibitions, collectively, the "Restrictive
Covenants"):
6.13.1 Transfer. Do or permit to be done any of the following
(collectively, the "Transfer Prohibition"):
6.13.1.1 Sell, convey, assign (by operation of law or
otherwise), transfer, lease (other than for occupancy in accordance with the
Leasing Guidelines), abandon or otherwise dispose of, directly or indirectly, by
operation of law or otherwise, any item of Collateral or Mortgaged Property or
any right or interest therein (except as required by law in connection with a
Permitted Encumbrance), except that Lenders consent to transfers of the
Mortgaged Properties to New Valley Permitted Transferee(s) that occur after
December 30, 1996. After any transfer to New Valley Permitted Transferee(s), any
reference to Borrower shall be deemed (as to the affected Mortgaged
Property(ies)) to refer both to Borrower (as to any Nonrecourse Carve-Outs) and
to the New Valley Permitted Transferee(s) (as to all matters) and, further,
Borrower shall remain liable and responsible for all of the obligations and
liabilities under the Environmental Indemnity Agreement as if Borrower continued
to own the Mortgaged Property(ies). "New Valley Permitted Transferee" means on
or after December 31, 1996, an entity that is a "successor," "affiliate," or
"subsidiary" of Borrower (as such terms are for the purposes of this Section
6.13.1 defined below) provided such entity has joined in that certain New Valley
Acknowledgment dated the date hereof and executed and delivered by Borrower. A
"successor" to Borrower shall mean any Person that is a bona-fide purchaser of
all or substantially all of Borrower's business and/or assets or successor by
merger and/or consolidation. A "subsidiary" of Borrower shall mean any entity
not less than one-half of which, and voting control, at the time shall be owned
(and shall thereafter continue to be owned) by Borrower. An "affiliate" of
Borrower shall mean any party that controls, is controlled by, or is under
common control with, Borrower.
6.13.1.2 Other than the Leases, further encumber,
create, assume, suffer to exist, alienate, hypothecate or grant a security
interest in or ▇▇▇▇▇ ▇ ▇▇▇▇, charge or any other interest whatsoever in or with
respect to any Mortgaged Property (whether superior or inferior to the liens of
the Financing Documents) in favor of any Person.
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If the Lenders elects to accelerate the entire balance of the Obligations on
account of a violation of the Transfer Prohibition the Lenders shall have no
obligation to allege or show any impairment of its security and may pursue any
legal or equitable remedies for default in such payment without making any such
allegation or showing.
6.13.2 Intentionally Deleted.
6.13.3 Dissolution. Dissolve, liquidate or discontinue its
business;
6.13.4 Other Indebtedness. Incur any Indebtedness with
respect to the Mortgaged Properties other than Permitted Indebtedness;
6.13.5 Financial Reports. Knowingly furnish, or permit any
Affiliate to furnish, any material financial statement, budget, schedule,
report, information, application, data, opinion, certificate, confirmation,
application, affidavit, agreement or any other material at any time to the
Lenders in connection with or in furtherance of this Agreement or other
documents and pertaining to the Mortgaged Properties, that does not fully and
fairly (in all material respects) state the matters with which they purport to
deal or that misstates any material fact or, separately or in the aggregate,
omits or fails to state any material fact necessary to make the statements made
therein not misleading;
6.13.6 Intentionally Deleted.
6.13.7 New Leases. Enter into any Leases unless such Leases
either (a) comply with the Leasing Guidelines or (b) are approved by the
Lenders, such approval not to be unreasonably withheld or delayed
(notwithstanding the foregoing, Lenders have approved the Pending Leases,
provided the financial terms of such Leases are not materially adversely revised
from their current form on the date hereof);
6.13.8 Existing Leases. Amend, modify, waive, terminate or
cancel or accept surrender of any Lease (except upon the default of the tenant
thereunder), (a "Lease Modification"). Notwithstanding the foregoing, so long as
no Event of Default has occurred and no fact or circumstance exists that, with
the passage of time or the giving of notice, would constitute an Event of
Default, Borrower may agree to a Lease Modification provided that it is entered
into in good faith, on fair market terms and conditions, and not in
contemplation of a default by Borrower under the Loan;
6.13.9 Rents. Discount any rents or collect any rents for a
period of more than one month in advance;
6.13.10 Security Instruments. Execute, as debtor, any
conditional ▇▇▇▇ of sale, chattel mortgage or other security instrument covering
any furniture, furnishings, fixtures and equipment, intended to be incorporated
in the Mortgaged Property or the appurtenances thereto, or covering articles of
personal property placed in the Mortgaged Property or purchase any of such
furniture, furnishings, fixtures and equipment so that ownership of the same
will not vest unconditionally in the Borrower, free from encumbrances on
delivery to
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the Mortgaged Property. The preceding prohibition shall not be deemed to apply
to replacement equipment leases on comparable terms; or
6.14 Borrower Action. Borrower shall promptly take such action as
may be necessary to discharge any lien, charge or other security interest that
may encumber any item of the Collateral or the Mortgaged Property in
contravention of this Agreement.
6.15 Intentionally Deleted.
6.16 Defense of Lien. If the validity or priority of any lien of the
Lenders arising under the Security Documents, or of any rights, titles, security
interests or other interests created or evidenced hereby shall be challenged by
any legal proceedings. Borrower shall give prompt written notice thereof to the
Lenders and, at Borrower's own cost and expense, shall diligently endeavor to
cure any defect that may be developed or claimed, and shall take all necessary
and proper steps for the defense of such legal proceedings, and the Lenders
(whether or not named as a party) is hereby authorized and empowered, upon 5
days prior notice to Borrower, if possible (unless immediate action is necessary
to preserve Lender's lien), to take such additional steps as in its judgment and
discretion may be necessary or proper for the defense of any such legal
proceedings or the protection of the validity or priority of this Agreement and
the rights, titles, security interests and other interests created or evidenced
hereby, and all expenses so incurred of every kind and character shall be a
demand obligation owing by Borrower and shall bear interest from the date of
expenditure until paid at the Contract Interest Rate to the tenth day after the
date of expenditure and thereafter at the Default Rate.
6.17 Further Assurances. Borrower and, where indicated, Lenders
shall promptly:
6.17.1 Correction of Errors. Notify each other and correct
promptly, any defect, error or omission that may be discovered in the contents
of this Agreement or in any other instrument executed in connection herewith or
in the execution or acknowledgment thereof;
6.17.2 Notice of Inaccuracies. Notify each other of any
inaccuracy or breach of any representation or warranty made by the non-breaching
party; and
6.17.3 Further Documentation. Subject to Borrower's approval
(not to be unreasonably withheld or delayed), execute, acknowledge, deliver and
record or file such documents or instruments (including further security
agreements, financing statements, continuation statements and notices to
depositories), provided that neither Borrower's rights under the Financing
Documents shall be consequently reduced, nor Borrower's obligations under the
Financing Documents be consequently increased, and to take such actions and do
such further acts, as may be reasonably necessary, desirable or proper to carry
out more effectively the purposes of this Agreement and to subject to the
security interests hereof and of the other Security Documents any property
intended by the terms hereof or thereof to be covered hereby and thereby,
including any renewals, additions, substitutions, replacements or appurtenances
to the Collateral and/or the Mortgaged Property.
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6.18 Intentionally Deleted.
6.19 Intentionally Deleted.
6.20 Intentionally Deleted.
6.21 Intentionally Deleted.
6.22 Liens, Etc. Borrower shall not create or permit any lien on
any of the Mortgaged Properties except: (a) presently existing or hereafter
created liens in favor of the Lenders; and (b) Permitted Encumbrances; (c) the
Leases; and (d) utility and operating easements customary for owners and
operators of similar properties.
6.23 Intentionally Deleted.
6.24 Intentionally Deleted.
6.25 Intentionally Deleted.
6.26 Status Reports. Borrower shall keep the Lenders apprised, in a
timely fashion and in a format reasonably acceptable to the Lenders, of the
status of all Mortgaged Properties including material litigation (except for
tenant eviction proceedings conducted in the ordinary course of business of
Borrower), foreclosures, bankruptcies, court orders, material damage to any of
the Mortgaged Properties and material insurance claims with respect to any of
the Mortgaged Properties.
6.27 SEC Filings.
6.27.1 Lender Consent. Borrower shall obtain the Lenders'
consent, to any reference to GECC, the GECC Loan or any other transactions
between Borrower and GECC that may be contained in any registration statement
filed by Borrower or any Affiliate of Borrower under the Securities Act of 1933,
as amended, or any report (including any prospectus) filed by Borrower or any
Affiliate of Borrower under the Securities Exchange Act of 1934, as amended and
any other disclosure document in connection with any public or private offering
of securities by Borrower or any Affiliate of Borrower and any amendments
thereof, prior to its distribution and prior to the effectiveness of any
offering contemplated thereby. The Lenders' approval rights as aforesaid shall
be for the Lenders' (and GECC's) own purposes only and the Lenders (and GECC)
shall have no liability with respect to such materials and shall not be
obligated to advise Borrower of any matters regarding such materials that may
come to the Lenders' attention.
6.27.2 Copies of Filings. Borrower and any Affiliate shall
furnish to the Lenders: (i) promptly after the filing thereof with the
Securities and Exchange Commission, a copy of each report, notice or other
filing, if any, by Borrower that relates to the Mortgaged Properties, GECC
and/or Lenders; and (ii) a copy of each written communication that relates
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to the Mortgaged Properties, GECC and/or Lenders received by Borrower from or
delivered by Borrower to the Securities and Exchange Commission.
6.28 Intentionally Deleted.
6.29 Agreements. Borrower shall perform, within all required time
periods, all of its obligations and enforce all of its rights under each
agreement to which it is a party that relates to the Mortgaged Properties, where
the failure to so perform and enforce would have a Material Adverse Effect on
the Mortgaged Properties. Borrower shall not terminate or modify in any manner
adverse to it any provision of any agreement related to the Mortgaged Properties
to which it is a party, which termination or modification could have a Material
Adverse Effect on the Mortgaged Properties.
6.30 Intentionally Deleted.
6.31 Intentionally Deleted.
6.32 Change in Accountants. In the event that Borrower at any time
changes any of Borrower's Accountants with respect to the Mortgaged Properties,
Borrower shall execute and deliver to such new Borrower's Accountants an
Accountant Authorization substantially in the form being signed by Borrower
simultaneously herewith, directing such new Borrower's Accountant to provide the
Lenders with information and to respond to the Lenders' inquiries, as provided
for in this Agreement.
6.33 Effect of Payment and Performance. Upon Borrower's full
payment and performance of Borrower's Obligations, the Lenders shall (i)
terminate the Lenders' rights with respect to Borrower's real estate taxes, and
(ii) authorize the mailing of all future tax bills for real estate taxes,
assessments, penalties, and any other charges collectible by the applicable
state taxing authorities with respect to each of the Mortgaged Properties as
Borrower shall direct.
6.34 Shopping Center Use. Borrower shall use and operate each
Mortgaged Property only as a retail shopping center containing: (a) retail
stores; and (b) other uses of type(s) commonly found in other similarly situated
shopping centers in the state where the Mortgaged Property is located ("a" and
"b," together, the "Permitted Uses").
7. EVENTS OF DEFAULT AND REMEDIES
7.1 Definition. The occurrence of each or any of the following
events shall constitute an event of default ("Event of Default") hereunder
(whatever the reason for such event and whether it is voluntary or involuntary,
or within or beyond the control of Borrower, or is effected by operation of law
or pursuant to any judgment or order of any court or any order, rule or
regulation of any Person):
7.1.1 Nonpayment. (a) If Lenders and Borrower enter into a
Lockbox Agreement and the Lockbox Agreement is in full force and effect, then if
Borrower fails to
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pay any sum of money when required under the Lockbox Agreement or under any of
the other Financing Documents, including any failure to deposit any amounts
required to be deposited into any account, when and as the Lockbox Agreement or
the other Financing Documents require to make such payment or deposit, and such
failure to pay or deposit continues for five Business days after notice and (b)
If Lenders and Borrower did not enter into the Lockbox Agreement or the Lockbox
Agreement is not in full force and effect, then, if Borrower fails to pay any
sum of money when required under the Financing Documents, including any failure
to pay principal and interest and to deposit any amounts required to be
deposited into any account, when and as the Financing Documents require to make
such payment or deposit, and such failure to pay or deposit continues for 10
days after notice;
7.1.2 Representations and Warranties. If any material
representation or warranty made in this Agreement or any other Financing
Document shall have been false or misleading in any material respect when made
and same is not remedied within 30 days after notice provided, that, Lenders
shall not be required to provide notice if, in Lenders reasonable discretion,
same is not reasonably capable of being remedied within said 30 day period;
7.1.3 Nonmonetary Default. If Borrower or any obligor under
any of the Financing Documents defaults in the performance of, or otherwise
breaches, any agreement, obligation or covenant in the Financing Documents
(other than an obligation to pay or deposit money) and such breach or default
continues for 30 days after written notice to Borrower specifying such default
or breach, or such longer period (but in no event longer than 180 days, or 365
days in the case of obtaining necessary certificates of occupancy which are
material to the Mortgaged Properties and which certificate(s) should have been
obtained prior to the date hereof because of governmental requirements or laws,
subject in either case to extension for force majeure) as shall be reasonably
required to cure such breach or default, so long as Borrower shall have
diligently commenced curative action within 30 days of receipt of such notice
and shall thereafter diligently and continuously proceed to cure such breach or
default;
7.1.4 Financial Matters.
7.1.4.1 Voluntary Proceedings. If Borrower commences
insolvency or bankruptcy proceedings, or admits in writing its inability to pay
its debts as they mature, or makes an assignment for the benefit of its
creditors, or applies for or consents to the appointment of a trustee, custodian
or receiver for any portion of its properties;
7.1.4.2 Appointment of Trustee. If a trustee,
custodian or receiver is appointed (other than upon the application or with the
consent of Borrower) for Borrower or any portion of its properties, and such
appointment is not dismissed within one hundred and twenty days;
7.1.4.3 Involuntary Proceedings. If any bankruptcy,
reorganization, arrangement, insolvency, readjustment, liquidation, dissolution
or other proceeding for relief under any present or future bankruptcy law or
laws or other statute, law or regulation for the relief of debtors is instituted
against any Borrower and either (a) Borrower acquiesces in such
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proceedings or (b) such proceedings continue without being dismissed for one
hundred twenty days after the institution thereof.
7.1.5 Cross-Default. The occurrence and continuance of any
Event of Default or other default, beyond applicable notice and grace period (if
any), under any other Financing Document.
7.1.6 Transfer. Any attempted transfer, assignment, or
further mortgaging or encumbrance by Borrower, whether direct or indirect, of
its rights, privileges or duties with respect to the Mortgaged Properties
(including any of the rents, issues or profits therefrom) or under the Financing
Documents which is not otherwise permitted.
7.1.7 Other Documents. A default (beyond any applicable
notice and cure, if any) shall occur under any material agreement, document or
instrument (other than a Financing Document) to which Borrower is a party or by
which Borrower or any Mortgaged Property is bound, and such default would have a
Material Adverse Effect.
7.1.8 Intentionally Deleted.
7.1.9 Other Financings. If Borrower or Borrower's Affiliates
fail to pay any sum of money when required to be paid under any other financing
documents with respect to the Mortgaged Properties which they are a party to and
such failure continues beyond any applicable notice and cure periods.
7.2 Acceleration. Upon the occurrence and continuance of any Event
of Default, upon written notice to Borrower, the Lenders may declare (A) the
entire outstanding principal balance of the Loan, (B) all accrued and unpaid
interest on the Loan and (C) all other Obligations to be immediately due and
payable, whereupon such amounts shall become forthwith due and payable, without
presentment, demand, protest, or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding. Notwithstanding the foregoing, upon the occurrence of
any event specified in Section 9.1.4, the Loan shall become automatically and
immediately due and payable, both as to principal and all interest and other
amounts due thereunder, without presentment, demand, protest, or notice of any
kind, all of which are hereby expressly waived. The payment due upon such
acceleration shall, so long as the GECC Loan is outstanding, be made directly to
GECC as described in Section 2.9.
7.3 Additional Remedies. In addition the Lenders' rights to
require immediate repayment of the Loan, upon the occurrence and continuance of
an Event of Default, the Lenders also may, by written notice to Borrower,
exercise any and all rights, powers or remedies in any combination whatsoever,
available hereunder or under any Financing Document or otherwise at law or in
equity, including:
7.3.1 Set-Off. The right to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by or for the account of the Lenders with respect to the Mortgaged
Properties to any indebtedness at any time owing to
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the Lenders to the credit or for the account of Borrower against any and all of
the Obligations of Borrower, irrespective of whether the Lenders shall have made
any demand under this Agreement, the Note(s) or any other Financing Documents.
The Lenders agree to notify Borrower promptly after any such set-off and
application made by the Lenders, provided that the failure to give such notice
shall not affect the validity of such set-off and application or entitle
Borrower to any other rights or remedies;
7.3.2 UCC Remedies. The right to exercise all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, Borrower expressly agrees that in any such event the Lenders,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon Borrower or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, grant options to purchase, or
sell or otherwise dispose of and deliver the Collateral (or contract to do so),
or any part thereof, in one or more parcels at public or private sale or sales,
at any exchange broker's board or at any of the Lenders' offices or elsewhere at
such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Lender(s) shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in Borrower, which right or
equity is hereby expressly waived and released. Borrower recognizes that the
Lenders may be unable to effect a public sale of certain of the Collateral by
reason of the provisions contained in the Securities Act of 1933, as amended,
and applicable state securities laws, and therefore may be compelled to resort
to one or more private sales to a restricted group of purchasers. Borrower
acknowledges that such private sales may result in prices and other terms less
favorable to the seller than if such sales were public, and agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner. Borrower further agrees, at Lenders' request, to assemble the
Collateral, make it available to the Lenders at places that the Lenders shall
select that shall be reasonably convenient to the Lenders and Borrower, whether
at Borrower's premises or elsewhere. The net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care, safekeeping or otherwise of any or all of the Collateral or in any way
relating to the rights of the Lenders hereunder, including reasonable attorneys'
fees and legal expenses, shall be applied by the Lenders to the payment in whole
or in part of the Obligations, in such order as the Lenders may elect, and only
after the payment by the Lenders of any other amount required by any provision
of law, including UCC Section 9-504(l)(c), need the Lenders account for the
surplus, if any, to Borrower. To the extent permitted by applicable law,
Borrower waives all claims, damages, and demands against the Lenders arising out
of the repossession, retention or sale of the Collateral. Borrower agrees that
the Lenders need not give more than 10 business days' notice (which notification
shall be deemed given when delivered by hand or reputable overnight courier to
Borrower at its address in the opening paragraph of this Agreement) of the time
and place of any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters;
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7.3.3 Real Property Foreclosure. The right to foreclose or
exercise the Trustee's power of sale, and to sell, in accordance with the
applicable laws of the respective jurisdictions in which the Mortgaged
Properties are located, any portion of the Collateral consisting of real
property at public auction, upon such terms and conditions, in such parcels, at
such times and places, and after such previous public advertisement as the
Lenders shall deem advantageous and proper and as required by all applicable
laws, and to convey any item of the Collateral, upon compliance with the terms
of the sale thereof, to and at the cost of the purchaser or purchasers thereof
(who shall not be required to see to the application of the purchase money paid
by such purchaser or purchasers) and to hold and apply the proceeds of sale of
any item of such Collateral, which proceeds are to be applied in accordance with
the provisions of any applicable law, but in the absence thereof, as follows:
first, to pay all costs, charges and expenses incurred by the Lenders in
connection with the sale of such item of Collateral, including the cost, if any,
of obtaining possession of such item or of conducting any sale of such item of
Collateral (at which Borrower or any Affiliate of Borrower may bid and be the
purchaser for cash of such item), including reasonable counsel fees to the
attorneys representing the Lenders; second, to discharge all taxes, levies and
assessments, with costs and interest relating thereto if they have priority over
the lien of the security interest granted in the Security Documents or this
Agreement; third, to pay the Obligations secured by the Security Documents, with
interest and other charges accrued thereon; and fourth, to pay the remainder, if
any, of the proceeds to the party legally entitled thereto or its assigns;
provided, however, that Borrower's right to receive such remainder shall not be
limited by any inheritance, devise, conveyance, assignment or lien of or upon
Borrower's equity, without actual notice thereof prior to distribution;
7.3.4 Possession of Collateral. The right to take possession
of the Collateral or any part thereof, at any time, after applicable notice and
cure periods and without regard to the adequacy or inadequacy of the Collateral
as security for the debt secured hereby or the solvency of Borrower or any other
party or parties liable for the payment of such debt, and to perform any acts,
including the rental, management and operation of any part or all of the
Collateral that the Lenders deems necessary or advisable in order to conserve
the Collateral, and to collect and receive all rents, issues and profits
relating to the Collateral, including those past due as well as those accruing
thereafter. The Lenders shall be entitled as a matter of right, without regard
to the value of the Collateral as security for the amount due or the solvency of
Borrower or any other party or parties liable for the payment of such amount,
upon at least ten business days' prior written notice to Borrower, but without
any other notice to Borrower or to any other party or parties (the right to any
such other notice being hereby expressly waived) (unless otherwise required by
law), to the appointment of a receiver with full and complete power and
authority to enter upon the premises relating to any item of Collateral, to
employ security guards to protect any improvements thereon from depredation,
damage or injury and to preserve and protect the personal property therein, to
continue any and all outstanding contracts, or, at the Lenders' sole option, to
enter into a new contract or contracts for the construction and completion of
any improvements thereon, to use the architects' and engineers' plans, drawings
and specifications therefor, and to pay or discharge all debts, obligations and
liabilities incurred thereby and all mechanics' or other liens affecting the
Collateral. The Lenders or any receiver appointed in accordance herewith also
may take possession of, and for these purposes use, any and all personal
property included in the
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Collateral and owned and used by Borrower in the operation, construction,
marketing, sale, rental or leasing thereof or any part thereof. The reasonable
expenses (including the Lenders' and receiver's fees, reasonable counsel fees
and out of pocket costs and agent's compensation) incurred pursuant to the
powers herein contained shall be secured hereby. After payment of all such costs
and expenses, the Lenders or receiver shall apply all rents and other proceeds
collected by the Lenders or receiver to reduce the Obligations secured hereby in
such order as the Lenders determine. The right to enter and take possession of
the Collateral, to manage, operate and deal with the same, to collect the rents,
issues and profits thereof, whether by a receiver or otherwise, shall be in
addition to, and not in limitation of, any other right or remedy hereunder or
afforded by law, and may be exercised concurrently with any such other right or
remedy or independently hereof. The Lenders and any receiver (as the case may
be) shall be liable to account only for rents and profits, and other proceeds
actually received, respectively, by the Lenders and such receiver;
7.3.5 Delivery of Collateral. Upon the occurrence and
continuance of an Event of Default, Borrower shall at the Lenders' request
promptly deliver to the Lenders all Collateral, if any, in the possession or
control of Borrower;
7.3.6 Miscellaneous. Upon the occurrence and continuance of
an Event of Default, each of the Lenders may immediately, and without expiration
of any grace period beyond that required to create an Event of Default, enforce
payment of all Obligations of Borrower and exercise any and all remedies granted
to it hereunder and under any other Financing Document. If, at any time after
the principal of the Notes shall have become due and payable as a result of any
declaration of acceleration and before any judgment or decree for the payment of
the monies so due, or any part thereof, shall have been entered, all obligations
of Borrower incurred hereunder and under all other Financing Documents then owed
to each of the Lenders (except that portion of the principal of the Notes that
by such declaration shall have become payable) shall have been duly paid, and
every other default and Event of Default shall have been made good, waived or
cured, then and in every such case each of the Lenders may, by written notice to
Borrower (at the Lenders' sole and absolute option, with each of the Lenders
being under no obligation whatsoever), rescind and annul such declaration and
its consequences; provided, however, that no such rescission or annulment shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.
7.4 No Oral Waivers.
7.4.1 Generally. Borrower acknowledges that this Agreement
and any other Financing Document can be extended, modified or amended only in
writing executed by the Lenders and that none of the rights or benefits of the
Lenders can be waived permanently except in a written document executed by the
Lenders. Borrower further acknowledges that no officer or administrator of the
Lenders has the power or the authority from the Lenders to make an oral
extension or modification or amendment of any such instrument or agreement on
behalf of the Lenders.
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7.4.2 State of Washington. The provisions of this paragraph
shall only apply with respect to Mortgaged Property located in the State of
Washington. BORROWER AND THE LENDERS HEREBY ACKNOWLEDGE THAT ORAL AGREEMENTS OR
ORAL COMMITMENTS TO LEND MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER THE LAWS OF THE STATE OF
WASHINGTON.
8. INTENTIONALLY DELETED
9. NONRECOURSE
9.1 Generally. Anything contained herein, in the Mortgage, the
Assignment, the Notes or in any of the other Financing Documents to the contrary
notwithstanding, no recourse shall be had for the performance of any of
Borrower's obligations under any of the Financing Documents including, without
limitation, the payment of the principal, or interest or premium, if any, and/or
any other charges of any nature arising out of the Loan, or any of the Financing
Documents, or for any deficiency with respect to principal, or interest or
premium, owing on and any other charges arising out of the Loan against (i)
Borrower, Borrower's Affiliates, or any of Borrower's shareholders; (ii) any
incorporator or any past, present or future subscriber to the capital stock,
stockholder, officer or director of any partner of Borrower (together with any
predecessor or successor corporation); or (iii) any legal representative, heir,
estate or successor of any thereof (collectively, the "Exculpated Parties");
provided, however, that the foregoing limitations shall not be construed so as
to exonerate or exculpate the Borrower from any liability relating to the
Nonrecourse Carve-Outs as defined below.
9.2 Nonrecourse Carve-Outs. Notwithstanding the provisions of
Section 10.1, Borrower shall have full personal liability and shall not be
exonerated or exculpated from, the payment of all losses or damages, liabilities
and expenses suffered, sustained or incurred by each of the Lenders as a result
of or arising out of, in connection with, directly or indirectly, or resulting
from any of the following matters (such liability and such matters from which
such liability arises, collectively, the "Nonrecourse Carve-Outs"): (a)
misappropriation of insurance proceeds, condemnation awards or security deposits
in violation of applicable law or the provisions of the applicable Mortgage; (b)
following the occurrence and continuation of an Event of Default, Borrower's
attempts to interfere with each of the Lenders' rights under the Assignment of
Leases (but Borrower may bring an independent action to contest Lenders'
exercise of such rights); (c) the failure of Borrower to apply proceeds of rents
and other income of the collateral toward the costs of maintenance and operation
of the Mortgaged Properties and to the payment of taxes, lien claims, insurance
premiums and debt service and other indebtedness to the extent the applicable
Mortgage or other Financing Documents require such taxes, lien claims and other
items to be paid; (d) Borrower's collection of rentals for periods of more than
three months in advance under any Leases except to extent proceeds thereof are
applied as in (c); (e) statutory liability for willful damage or destruction to
the Mortgaged Properties, or to the electrical, plumbing, heating or air
conditioning systems or elevators of the Mortgaged Properties, except as a
result of casualty or condemnation or permitted alterations or improvements; (f)
any claims, actions, proceedings and suits initiated
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by Borrower (or any party empowered to act on behalf of Borrower) alleging that
the relationship of Borrower and the Lenders is that of joint venturers,
partners, tenants in common, joint tenants or any relationship other than that
of debtor and creditor (except the relationship of purchaser and seller to the
extent of the seller-purchaser relationship existing pursuant to the Purchase
and Sale Agreement, dated the date hereof, between the Lenders and Borrower) or
(g) any claim, demand, order, consent decree, settlement, judgment or verdict
arising from the manufacture, deposit, storage, disposal, burial, dumping,
injecting, spilling, leaking or other placement or release in, on or about any
Mortgaged Property of a hazardous or toxic waste, waste product or substance as
defined in 42 U.S.C. Section 9601 or as defined in any other statute, rule or
regulation governing such wastes, waste products or substances, to the extent
that Borrower is liable therefor under the separate Environmental Indemnity
Agreement from Borrower to Lenders of even date herewith.
9.3 Lenders' Security. The foregoing limitations on Borrower's and
any other person's personal liability shall not impair the validity of the Loan,
the Notes, the lien of the Mortgage or the security interest of each of the
Lenders in the Mortgaged Properties, or the right of each of the Lenders as
mortgagee or secured party to foreclose and/or enforce the lien of the Mortgage
against the Mortgaged Properties or any part thereof after an Event of Default
or against the tenants under the Leases and the profits of the Mortgaged
Properties, or the right of each of the Lenders to enforce the provisions of the
Assignment of Rents and Leases, against any of the tenants under the Leases and
the profits of the Mortgaged Properties at any time as therein provided.
9.4 Guaranties and Other Rights. If any person(s) shall have
guaranteed all or part of the Loan or any of Borrower's obligations with respect
thereto by separate written guaranty or in the event any person or entity shall
have indemnified the Lenders with respect to the Loan by separate written
indemnity, none of the foregoing limitations on Borrower's or any other person's
personal liability for payment of principal and interest shall modify, diminish
or discharge the personal liability of any such guarantor or indemnitor as set
forth in such written guarantee or indemnity.
9.5 Bankruptcy; Continued Security. Without affecting the
limitations hereunder on Borrower's liability, nothing in this Article 9 shall
be deemed to be a waiver of any right that the Lenders may have under Sections
506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Reform Act of
1978 or under any other bankruptcy law of the United States or the State of New
York to file a claim for the full amount of the debt owing to the Lenders by
Borrower or to require that all of the Mortgaged Properties shall continue to
secure all of the indebtedness owing to the Lenders in accordance with this Loan
Agreement, the Notes, the Mortgages, the Senior Assignment of Rents the
Subordinate Assignment of Rents and any of the other Financing Documents.
9.6 Intentionally Deleted.
9.7 Definition. This Article 9, considered in its entirety, is
sometimes referred to as the "Nonrecourse Clause."
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10. MULTIPLE NOTES
10.1 Multiple Mortgages and Notes. Borrower acknowledges,
represents and warrants the following:
10.1.1 Amounts of Notes. The amount of each Note represents a
reasonable allocation of the Loan, taking into account the value and the
allocated purchase price of each Property which was acquired by Borrower and
financed by the Lenders.
10.1.2 Intentionally Deleted.
10.1.3 Separate Foreclosures. Borrower desires and intends
that the Note and Senior Mortgage secured by such Note may be enforced (by
foreclosure or otherwise) separately from the other Notes and corresponding
Senior Mortgages.
10.1.4 Insolvency. Notwithstanding the foregoing, the Loan
constitutes the obligation of Borrower. However, because of the operation of the
Nonrecourse Clause, Borrower acknowledges that as a practical matter the amount
of Borrower's liability with respect to the Loan cannot exceed the value of
Borrower's assets and thus the Loan cannot render Borrower insolvent.
10.2 Separate Exercise of Remedies. The Lenders may exercise
remedies against each Mortgaged Property separately, whether or not the Lenders
exercise remedies against the other Mortgaged Properties. Any failure or
inability of the Lenders to enforce Borrower's obligations against any Mortgaged
Property shall not in any way limit the Lenders' right to enforce the
obligations against any other Mortgaged Property . If a Lender forecloses or
exercises similar remedies under any one or more Senior Mortgage(s), then such
foreclosure or similar remedy shall be deemed to reduce the balance of the Loan
only to the extent of the cash proceeds actually realized by such Lender from
such foreclosure or similar remedy, regardless of the effect of such foreclosure
or similar remedy on the Note(s) actually secured by such Senior Mortgage(s)
under the applicable state law. If the Lenders accept a deed in lieu of
foreclosure of any one or more Mortgaged Properties from Borrower, then such
acceptance shall not be deemed to diminish Borrower's liability for the full
amount of the Obligations, except to the extent that the Lenders agree otherwise
in writing.
10.3 Waivers. Without notice to, or consent by, Borrower, and in
the Lenders' sole and absolute discretion and without prejudice to the Lenders
or in any way limiting or reducing Borrower's liability for the Obligations, the
Lenders may: (a) grant extensions of time, renewals or other indulgences or
modifications to Borrower under any of the Financing Document(s), (b) agree with
Borrower to change the rate of interest under the Loan, (c) agree with Borrower
to change, amend or modify any Financing Document(s), (d) sell, exchange,
release or exercise remedies with respect to any or all Collateral, (e) accept
or reject additional Collateral, (f) discharge or release any party or parties
liable under the Financing Documents, (g) foreclose or otherwise realize on any
Collateral, or attempt to foreclose or otherwise realize on any Collateral,
whether such attempt is successful or unsuccessful, and whether such attempt
relates to some or all or only some portion of the Collateral, (h) accept
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or make compositions or other arrangements or file or refrain from filing a
claim in any bankruptcy, insolvency or similar proceeding, (i) make other or
additional loans to Borrower in such amount(s) and at such time(s) as the
Lenders may determine, and (j) credit payments in such manner and order of
priority to principal, interest or other obligations as the Lenders may
determine in its discretion except as otherwise provided in this Agreement.
Without limiting the generality of the foregoing, Borrower's liability for the
Obligations shall continue even if the Lenders and Borrower alter any
obligations under the Financing Documents in any respect or the Lenders' or
Borrower's remedies or rights against Borrower are in any way impaired or
suspended without Borrower's consent. If the Lenders perform any of the actions
described in this paragraph, then Borrower's liability shall continue in full
force and effect.
10.4 Waivers of Rights and Defenses. Borrower waives any right to
require the Lenders to (a) proceed against any particular Mortgaged Property or
in any particular order of realization, (b) proceed against or exhaust any
Mortgaged Property, or (c) pursue any other right or remedy. Borrower agrees
that the Lenders may proceed against Borrower with respect to the Obligations
without taking any actions against Borrower and without proceeding against or
exhausting any Mortgaged Property. Borrower agrees that the Lenders may
unqualifiedly exercise in its sole discretion any or all rights and remedies
available to Lenders against Borrower without impairing Lenders' rights and
remedies in enforcing the Obligations, under which Borrower's liabilities shall
remain independent and unconditional. To the extent that any of the Lenders
collect or receive any sums or payments from Borrower or any Collateral,
Borrower agrees that the Lenders shall have the right, but not the obligation,
to apply such amounts first to that portion of Borrower's indebtedness and
obligations that is not secured by the Senior Mortgage, regardless of the manner
in which any such payments and/or amounts are otherwise characterized.
10.5 Additional Waivers. Borrower waives diligence and all demands,
protests, presentments and notices of every kind or nature except notices of
default, notices to cure and notices that, in any of the foregoing cases, are
either required by law or by the Financing Documents, including notices of
protest, dishonor, nonpayment, acceptance of the Obligations and the creation,
renewal, extension, modification or accrual of any of the Obligations. No
failure or delay on the Lenders' part in exercising any power, right or
privilege under the Financing Documents shall impair or waive any such power,
right or privilege.
10.6 Full Knowledge. Borrower acknowledges, represents and warrants
that Borrower has had a full and adequate opportunity to review the Financing
Documents, the transaction contemplated by the Financing Documents and all
underlying facts relating to such transaction. Borrower represents and warrants
that Borrower fully understands: (a) the remedies the Lenders may pursue against
Borrower in the event of a default under the Financing Documents, (b) the value
(if any) of any Collateral, and (c) Borrower's financial condition and ability
to perform under the Financing Documents. Borrower agrees to keep itself fully
informed regarding all aspects of Borrower's financial condition and the
performance of the Obligations. Borrower agrees that the Lenders have no duty,
whether now or in the future, to disclose to Borrower any information pertaining
to Borrower or any Collateral except in their capacity as Sellers pursuant to
the Contract of Sale.
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10.7 Deferral of Subrogation and Contribution. Borrower agrees it
shall have no right of subrogation against the Lenders and no right of
subrogation against any Collateral, unless and until: (a) such right of
subrogation does not violate (or otherwise produce any result adverse to the
Lenders under) any applicable law, including any bankruptcy or insolvency law;
and (b) all amounts due under the Financing Documents have been paid in full and
all other performance required under the Financing Documents has been rendered
in full to the Lenders and all Obligations have been paid and performed and the
Lenders have released, transferred or disposed of all of its right, title and
interest in all Collateral (such deferral of Borrowers' subrogation and
contribution rights, the "Subrogation Deferral").
10.8 Effect of Invalidation. To the extent that a court of competent
jurisdiction determines that Borrower's Subrogation Deferral is void or voidable
for any reason, Borrower agrees that Borrower's rights of subrogation against
the Lenders and Borrower's right of subrogation against any Collateral shall at
all times be junior and subordinate to the Lenders' rights against Borrower and
the Lenders' right, title and interest in such Collateral.
10.9 Definitions. For purposes of the foregoing, the term
"Insolvency Laws" means all applicable state and federal laws governing
bankruptcy, reorganization, insolvency of debtors, or the rights of creditors
generally, including laws relating to fraudulent conveyances and fraudulent
transfers.
10.10 Intentionally Deleted.
10.11 Intentionally Deleted.
10.12 Lenders' Disgorgement of Payments. Upon payment of all or any
portion of the Obligations, Borrower's obligations under the Financing Documents
shall continue and remain in full force and effect if all or any part of such
payment is, pursuant to any bankruptcy, insolvency or similar proceeding or
otherwise, avoided or recovered directly or indirectly from the Lenders as a
preference, fraudulent transfer or otherwise, irrespective of (a) any notice of
revocation given by Borrower prior to such avoidance or recovery, or (b) payment
in full of the Loan. Borrower's liability under the Financing Documents shall
continue until all periods have expired within which the Lenders could (on
account of bankruptcy or insolvency proceedings, whether or not then pending,
affecting Borrower, or any other person) be required to return or repay any
amount paid at any time on account of the Obligations. If, in any such
proceeding, any party seeks to require the Lenders to disgorge or repay any
payments previously made by Borrower to the Lenders, then Borrower shall be
obligated to pay the Lenders, within ten business days after the Lenders'
written request, an amount equal to the amount adjudicated to be disgorged or
repaid.
10.13 Assignment. Upon satisfaction of all Obligations hereunder by
Borrower, Borrower may at its option receive in lieu of satisfaction of
Mortgages, an assignment of such Mortgages without representation, warranty or
recourse of any kind or nature.
11. MISCELLANEOUS
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11.1 Term of Agreement. This Agreement shall continue in full force
and effect, and the security interests granted hereby and the duties, covenants
and liabilities of Borrower hereunder and all the terms, conditions and
provisions hereof relating thereto shall continue to be fully operative until
the Notes have been paid in full and all Obligations have been paid or satisfied
in full. Wherever the Financing Documents refer to the "term" of the Loan or of
the Financing Documents, such reference shall be deemed to refer to the period
from the Closing Date until this Agreement has terminated pursuant to the
preceding sentence.
11.2 Subordination, Attornment and Non-Disturbance. With respect to
Leases entered into with tenants prior to the date hereof Lenders shall enter
into a subordination, attornment and nondisturbance agreement(s) as required
under such applicable Lease(s). In addition, the Lenders agrees to (i) enter
into a Subordination, Attornment and Non- Disturbance Agreement with any New
Tenant under a New Lease that satisfies the Leasing Guidelines and (ii) enter
into a Subordination, Attornment and Nondisturbance Agreement with any New
Tenant that is a credit tenant (as determined by Lenders in their reasonable
discretion taking into consideration the terms and conditions of such Lease),
and such credit tenant is leasing at least 5,000 rentable square feet and
otherwise satisfies the Leasing Guidelines and (iii) not unreasonably refuse to
enter into a Subordination, Attornment and Non-Disturbance Agreement with any
other tenant under a New Lease.
11.3 Effectiveness of Representations and Warranties. All
representations and warranties made by Borrower in the Financing Documents shall
survive the execution and delivery of this Agreement and the Notes.
11.4 Expenses and Attorneys' Fees.
11.4.1 Closing Costs. If the transactions contemplated by this
Agreement are consummated or completed, Borrower shall pay (i) Borrower's legal
fees in connection with the preparation of this Agreement and other Financing
Documents and the consummation of the transactions contemplated herein and
therein, (ii) Lenders' mortgagee title insurance premium, fees and expenses and
the reasonable cost of affirmative insurance and endorsements for the state in
which the Property is located, (iii) all costs to record documents and
instruments required by this Agreement, and all mortgage, documentary, recording
and other similar taxes and expenses relating to the Loan or the Financing
Documents.
11.4.2 Post Closing Costs. If, at any time or times,
regardless of the existence of an Event of Default (except with respect to
clauses (iii) and (iv) below, which shall be subject to an Event of Default
having occurred and be continuing), the Lenders shall employ counsel or other
advisors for advice or other representation or shall incur reasonable legal or
other costs and expenses in connection with:
(i) any amendment, modification or waiver, or consent with
respect to, any of the Financing Documents (unless or except to the
extent such amendment, modification, waiver or consent is being made at
Lender's request for Lender's benefit);
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(ii) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrower or any other Person) in
any way relating to the Mortgaged Properties, any of the Financing
Documents or any other agreements to be executed or delivered in
connection herewith, unless Borrower prevails against the Lenders
therein;
(iii) any attempt to enforce any rights of the Lenders against
Borrower, or any other Person, that may be obligated to the Lenders by
virtue of any of the Financing Documents, unless Borrower prevails
against the Lenders therein; or
(iv) any attempt to verify, protect, collect, sell, liquidate
or otherwise dispose of the Mortgaged Properties; or
(v) any exercise of remedies, collection of amounts due
under any of the Financing Documents, or protection of the security for
the obligations, or the enforcement of any covenant or agreement by
Borrower, under the Notes or other Financing Documents, unless Borrower
prevails against the Lenders therein;
then, and in each and any such event, the reasonable attorneys' and other
parties' fees actually and necessarily arising from such services, including
those of any trial court proceedings, appellate proceedings, bankruptcy
proceedings, arbitration proceedings and mediation proceedings and all
reasonable expenses, costs, charges and other fees incurred by such counsel and
others in any way or respect arising in connection with or relating to any of
the events or actions described in this Section shall be payable, on demand, by
Borrower to the Lenders and shall be additional Obligations (except to the
extent that Borrower prevails against the Lenders in any action commenced in
connection with the foregoing in which case all such costs incurred shall be
borne by the Lenders and shall not be deemed to be additional Obligations of
Borrower under this Agreement or any other Financing Document). Without limiting
the generality of the foregoing, such reasonable expenses, costs, charges and
fees may include: paralegal fees, costs and expenses; accountants' fees, costs
and expenses; expert witness fees and appraisers' fees; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; secretarial
overtime charges; and expenses for travel, lodging and food paid or incurred in
connection with the performance of such legal services, each of which expense,
cost, charge or fee shall be reasonable. All such costs, charges, expenses and
fees shall be payable on demand and subject to Late Charges.
11.5 Agents, Etc. Each of the Lenders may exercise any or all of
the Lenders' rights or remedies under the Financing Documents through any agent,
representative, designee, nominee, or subsidiary as designated by the Lenders'
from time to time.
11.6 No Lenders Obligations. Notwithstanding anything to the
contrary in any Financing Document, Borrower shall remain liable to observe and
perform all the conditions and obligations to be observed and performed by it
with respect to all Collateral, all in accordance with and pursuant to the terms
and provisions of the Collateral. The Lenders shall have no obligation or
liability under the Collateral by reason of or arising out of this
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Agreement (except the obligation to act in good faith with respect to the
Collateral) or the assignment by Borrower to the Lenders of, or the receipt by
the Lenders of any payment relating to, the Loan pursuant to the Financing
Documents. The Lenders shall not be required or obligated in any manner to
perform or fulfill any of the obligations of Borrower under or pursuant to the
Loan, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any Borrower, or to present or file any claim or to take any action to
collect or enforce any performance or the payment of any amounts that may have
been assigned to Borrower or to which Borrower may be entitled at any time or
times.
11.7 Parties. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include each of such parties
individually as well as in the aggregate and to include the successors and
assigns of each such party, and all representations, covenants, provisions and
agreements made by or on behalf of Borrower in this Agreement shall inure to the
benefit of the successors and assigns of the Lenders; provided, however, that
without the written consent of the Lenders, Borrower shall neither assign nor
delegate any of its rights, privileges or duties arising under this Agreement,
other than as set forth herein, and any such attempted or purported assignment
or delegation without such prior written consent shall be null and void ab
initio.
11.8 Notices. Unless otherwise provided for herein, all notices and
other communications required or permitted hereunder shall be in writing and
shall be deemed to have been duly given (a) when delivered, if sent by
registered or certified mail (return receipt requested), (b) when delivered, if
delivered personally, or (c) on the following Business Day, if sent by overnight
mail or overnight courier, in each case to the parties at the following
addresses (or at such other addresses as shall be specified by like notice, but
Borrower and all Borrowers shall at all times and in all cases have the same
address and the same designated notice recipient(s), all of which may be changed
simultaneously by appropriate notice):
11.8.1 Lenders. If to Lenders, at:
c/o Apollo Real Estate Advisors, L.P.
1301 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Esq.
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11.8.2 Borrower. If to Borrower, at:
New Valley Corporation
▇▇▇ ▇.▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
with copy to:
c/▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication within any corporation or firm to the persons designated to
receive copies thereof shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication.
11.9 Borrower and Lender Communications.
11.9.1 Borrower's Communication. If any Lender receives any
requisition, notice, approval, request or other communication from Borrower's
Representative or from Borrower, or any Affiliate of Borrower, or from any
Person purporting to act on behalf of any of the foregoing, or from any attorney
known to the Lenders, to represent Borrower (a "Borrower Communication"), then:
(a) Borrower's Communication shall bind Borrower for all purposes; (b) the
Lenders may rely on such Borrower Communication for all purposes; and (c) the
Lenders may treat any Borrower Communication as having been given by Borrower.
11.9.2 Lender's Communication. If Borrower receives any
requisition, notice, approval, request or other communication from a Person
purporting to act on behalf of the Lenders, or from any attorney purporting to
represent the Lenders (a "Lender Communication"), Borrower, upon verification
with Borrower's account manager for this Loan, that such Person is indeed
authorized to act on behalf of the Lenders or that such attorney is indeed
authorized to represent the Lenders, may rely on such Lender Communication for
all purposes and may treat such Lender Communication as having been given by all
the Lenders.
11.10 Amendments. This Agreement, including all Financing Documents,
and all Exhibits and Schedules to the foregoing, and other agreements referred
to herein and therein cannot be changed or terminated orally, and shall be
deemed effective as of the date they are accepted by the Lenders at its offices
above set forth. No amendment or waiver of any provision of this Agreement, the
Notes or any related document shall be effective unless the same shall be in
writing and signed by the party against whom such amendment or waiver is
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to be enforced, and then such waiver and consent shall be effective only in the
specific instance and for the specific purpose for which given.
11.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL
LAWS (AND NOT THE LAWS RELATING TO CONFLICT OF LAWS) OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE SAME MAY BE SUPERSEDED BY FEDERAL LAW; PROVIDED
HOWEVER, THAT WITH RESPECT TO THE PROVISIONS HEREIN THAT RELATE TO THE
PERFECTION, PRIORITY OR ENFORCEMENT OF LIENS ON THE MORTGAGED PROPERTY, THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH SUCH
MORTGAGED PROPERTY IS LOCATED. THE CREATION, PERFECTION AND MAINTENANCE OF THE
LIEN OF EACH SENIOR MORTGAGE AND EACH SUBORDINATE MORTGAGE AND THE ENFORCEMENT
OF EACH SENIOR MORTGAGE AND EACH SUBORDINATE MORTGAGE SHALL BE GOVERNED,
CONSTRUED AND INTERPRETED BY THE LAWS OF THE STATE IN WHICH THE MORTGAGED
PROPERTY COVERED BY THE SENIOR MORTGAGE OR THE SUBORDINATE MORTGAGE, AS THE CASE
MAY BE, IS LOCATED. EACH SENIOR ASSIGNMENT OF LEASE AND EACH SUBORDINATE
ASSIGNMENT OF LEASE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY COVERED BY THE SENIOR
ASSIGNMENT OF LEASE OR THE SUBORDINATE ASSIGNMENT OF LEASE, AS THE CASE MAY BE,
IS LOCATED.
11.12 Joint and Several. If Borrower consists of more than one
Person, then the liability of all such Persons shall be joint and several, and
each such Person shall be fully liable for all obligations of Borrower, subject
in each case to any applicable Nonrecourse Clause. For purposes of the
foregoing, every reference to "Borrower" or comparable terms in the Financing
Documents shall be interpreted as if it referred to "Borrower and, except where
the context requires otherwise, each and every Borrower jointly and severally."
11.13 Brokerage Indemnification. Borrower and Lenders hereby agree to
indemnify, defend and save harmless the other from and against any and all loss,
liability, expense or damage of any kind or nature and from any suits, claims,
or demands, including legal fees and expenses on account of brokerage
commissions or finder's fees claimed by any broker or other party in connection
with the transactions contemplated hereby if such claim or claims are based in
whole or in part on dealings or agreements with the indemnifying party.
11.14 Jury Trial Waiver; Jurisdiction.
11.14.1 Jury Trial. BORROWER HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE THAT MAY ARISE OUT OF
THIS AGREEMENT, THE COLLATERAL OR ANY MATTER RELATED THERETO OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE OF ANY KIND OR NATURE BETWEEN BORROWER AND THE LENDERS.
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11.14.2 New York Jurisdiction. Borrower and the Lenders hereby
agree that any state or federal court sitting in the County of New York, State
of New York or, at the option of the Lenders, any court in which the Lenders (or
any of them) shall initiate legal or equitable proceedings that has subject
matter jurisdiction over the matter in controversy, shall have jurisdiction to
hear and determine any claims or disputes between Borrower and the Lenders
pertaining directly or indirectly to this Agreement or to any matter arising
therefrom. Borrower expressly submits and consents in advance to such
jurisdiction in any action or proceeding commenced in such courts, hereby
waiving personal service of the summons and complaint, or other process or
papers issued therein, and agreeing that service of such summons and complaint,
or other process or papers, may be made by registered or certified mail
addressed to Borrower at the address of Borrower set forth in this Agreement,
with simultaneous copies by the same means to those persons entitled to receive
copies of notices under this Agreement. Should Borrower fail to appear or answer
any summons, complaint, process or papers so served within 30 days after the
mailing thereof, it shall be deemed in default and an order or judgment may be
entered against it as demanded or prayed for in such summons, complaint, process
or papers. The choice of forum set forth in this paragraph shall not be deemed
to preclude the enforcement of any judgment obtained in such forum or the taking
of any action under this Agreement to enforce the same in any appropriate
jurisdiction. To the extent that Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise), Borrower unconditionally and irrevocably
waives such immunity in respect of its obligations under this Financing
Agreement, the Notes and/or the Financing Documents. The foregoing consent, in
advance, to the jurisdiction of the above mentioned courts is a material
inducement for the Lenders to make the Loan.
11.15 Conflicts. In the event of any conflict between the provisions
of this Agreement and those of any of the other Financing Documents, other than
the Notes, or any other agreement relating to the Loan, the provisions of this
Agreement shall govern, except as otherwise indicated herein.
11.16 Date of Performance. If the date for the performance of any
term, provision or condition (monetary or otherwise) under the Loan or this
Agreement shall happen to fall on a day that is not a Business Day, then the
date for the performance of such term, provision or condition shall be extended
to the next succeeding Business Day immediately thereafter occurring, with
interest on the Principal Amount at the Interest Rate provided in this Agreement
to such next succeeding Business Day if such term, provision or condition shall
result in the extension of any monetary payment due to the Lenders.
11.17 Power of Attorney. Borrower hereby makes, constitutes and
appoints Lenders (and each of them) the true and lawful agent and
attorney-in-fact of Borrower, with full power of substitution if an Event of
Default has occurred and is continuing to endorse Borrower's name on any
financing statements. The power of attorney granted under this paragraph is
coupled with an interest and shall be irrevocable until all Obligations have
been paid in full. The Lenders shall give Borrower notice of the Lenders'
intention to exercise its
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rights described in this paragraph after any Event of Default but only to the
extent that such notice is required by applicable law.
11.18 No Waiver; Remedies. No failure on the part of the Lenders to
exercise, and no delay by the Lenders in exercising, any right under this
Agreement, the Notes or any other Financing Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any right under this
Agreement or any related document preclude any other or further exercise thereof
or the exercise of any other right. The remedies provided in this Agreement, the
Notes and the Financing Documents are cumulative and not exclusive of any
remedies provided by law.
11.19 Severability. Whenever possible, each provision of this
Agreement and the Financing Documents shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this
Agreement or the Financing Documents shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement and the Financing Documents.
11.20 Injunctive Relief. Borrower recognizes that, in the event
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Lenders; therefore, Borrower agrees that the Lenders, if the
Lenders so requests, shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
11.21 Relationship of Parties.
11.21.1 Lender's Role. This Agreement provides for the making
of a purchase money loans by the Lenders, in its capacity as a lender, to
Borrower, in its capacity as a borrower, and for the payment of interest and
repayment of principal by Borrower to the Lenders. The relationship between the
Lenders and Borrower is limited to that of creditor/secured party and
debtor/borrower and seller/purchaser. The provisions herein for compliance with
financial covenants and delivery of financial statements are intended solely for
the benefit of the Lenders to protect its interests as creditor in assuring
payments of interest and repayment of principal, and nothing contained in this
Agreement shall be construed as permitting or obligating the Lenders to act as a
financial or business advisor or consultant to Borrower, as permitting or
obligating the Lenders to control Borrower or to conduct Borrower's operations,
as creating any fiduciary obligation on the part of the Lenders to Borrower or
as creating any joint venture, partnership, agency, or other relationship
between the parties hereto other than as explicitly and specifically stated or
referred to in this Agreement. Borrower acknowledges that it has had the
opportunity to obtain the advice of experienced counsel of its own choosing in
connection with the negotiation and execution of this Agreement and to obtain
the advice of such counsel with respect to all matters contained herein,
including the provisions in this Agreement relating to waiver of trial by jury
and choice of forum. Borrower further acknowledges that it is experienced with
respect to financial and credit matters and has made its own independent
decision to apply to the Lenders for credit and to execute and deliver this
Agreement.
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11.21.2 No Partnership. In no event shall the Lenders be
considered a partner or joint venturer with Borrower or a beneficiary of
Borrower, by virtue of making the Loan, entering into this Agreement, accepting
the Notes, or any of the other Financing Documents or accepting payments
thereunder or exercising any rights thereunder. Nothing contained in this
Agreement or any other Financing Document is intended, nor shall it be
construed, to render either Borrower or the Lenders liable or responsible for
the debts or obligations of the other. The Lenders' rights of approval, prior
consent, comment or review set forth in this Agreement or any other Financing
Documents are provided solely for the purpose of protecting the Lenders'
security interest in its lien upon the Collateral and to assure the Lenders that
it shall receive accurate and fair payment of all principal and interest payable
to it. All conditions to the obligations of the Lenders set forth in this
Agreement and all Financing Documents and all rights of the Lenders set forth
herein are imposed solely and exclusively for the benefit of the Lenders and its
assigns and no other person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that the
Lenders shall enforce any of its rights hereunder. Any or all of such conditions
and rights may be freely waived in whole or in part by the Lenders at any time
if in its sole discretion the Lenders considers it advisable to do so. Without
limitation of the foregoing, the Lenders are not and shall not be considered
such a partner or joint venturer on account of the Lenders becoming a mortgagee
in possession or exercising any other remedial rights under this Agreement or
any Financing Document or available at law or in equity.
11.22 Interpretation. This Agreement shall not be interpreted "for"
or "against" either party, both parties recognizing that this Agreement has been
reviewed and negotiated by sophisticated business persons represented by
competent counsel. All section headings have been inserted for convenience of
reference only and shall not affect any construction or interpretation of this
Agreement. All exhibits attached to this Agreement are incorporated by reference
in, and made a part of, this Agreement. Wherever this Agreement refers to any
document, such reference shall refer to such document together with all
amendments, modifications, extensions, renewals, restatements, replacements, and
substitutions thereof, except (at Lender's option) any of the foregoing that are
not expressly permitted by the Financing Documents or otherwise do not comply
with the Financing Documents. Terms defined in the plural or the singular may be
used in the singular or the plural and shall have the same meaning in either
case, all in accordance with normal principles of English grammar. Words such as
"include," "including," and "such as" shall be interpreted in each case as if
followed by the words "without limitation," except where the context clearly
requires otherwise. The phrase "not to be unreasonably withheld" shall be
interpreted in each case as if followed by the words "and not unreasonably
delayed or conditioned," except where the context clearly requires otherwise.
The phrase "to Borrower's knowledge" or words of similar import shall in each
case mean to the actual knowledge of Borrower's counsel and ▇▇▇▇▇▇ ▇▇▇▇▇▇.
11.23 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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11.24 Usury Savings. Notwithstanding anything in this Agreement or in
any other Financing Document to the contrary, no provision of this Agreement or
of any Financing Document shall require the payment, or permit the collection,
of interest or fees to the extent that receipt of such interest or fees would be
contrary to the provisions of any applicable law limiting the maximum rate of
interest or fees that may be charged or collected by the Lenders or cause the
Lenders to collect interest in excess of the Usury Limit. To the extent that
Borrower shall have made interest payments, and the Lenders shall have
inadvertently accepted interest payments in excess of the amount permitted by
law, the amount of the excess shall be applied by the Lenders as an optional
prepayment of principal of the Loan.
11.25 Future Loans, Etc. (a) Subject to the provisions in Section
4.5, Borrower covenants and agrees that the Lenders may, in whole or in part,
and subject to the limitations set forth below, encumber any of the Mortgaged
Properties by replacing the First Mortgages and "wrap" the Senior Mortgages
around the newly created first mortgage(s) and/or deed(s) of trust. Borrower
covenants and agrees to cooperate in good faith in all reasonable respects with
the Lenders and any successor lender(s) to accomplish the foregoing, including
executing and delivering any and all documentation as the Lenders may reasonably
require, provided such documentation does not materially increase Borrower's
liability or obligations under the Financing Documents. Borrower also covenants
and agrees to cooperate in good faith and in all reasonable respects with the
Lenders and/or any assignee of some or all of the Lenders' rights hereunder in
connection with any reasonable request made by the Lenders and/or such assignee
in connection with any assignment (including assignments of interests in
tranches) or sale of a participation by the Lenders and/or such assignee
permitted by paragraph (b) below, provided such documentation does not
materially increase Borrower's liability or obligations under the Financing
Documents. In furtherance of the foregoing, Borrower shall execute and deliver
any and all such documentation, including estoppels, certificates and
instruments as the Lenders and/or such assignee may reasonably require to
effectuate any such assignment, or participation, including, in the case of a
partial assignment of rights and obligations with respect to the Loan and the
Financing Documents, such instruments and documents as may be reasonably
necessary in the Lenders' and/or such assignee's judgment to split the loans
into two or more loans evidenced and secured by and pursuant to separate sets of
notes, mortgages, loan agreements and other related loan documents to the full
extent reasonably required by the Lenders or such assignee, as the case may be,
and such other modifications to the Financing Documents as the Lenders shall
reasonably request; provided that such agreements, amendments, modifications and
documents do not materially increase Borrower's liability or obligations under
the Financing Documents; and provided, further, that the Borrower shall not be
required to bear the legal fees and other costs and expenses incurred by the
Lenders in connection with modifications requested by the Lenders pursuant to
this section.
(b) In addition to the provisions set forth in subsection
(a) of this Section 11.25, Borrower agrees at any time and from time to time,
upon request from Lenders, to effectuate cross defaults and cross
collateralization of the Notes and Mortgages with the "Notes" and "Mortgages"
issued under Loan Agreement II, and same may be requested either before and/or
in conjunction with any of the financings described in said subsection (a). In
connection with any such request, Borrower shall execute and deliver any
modification
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agreements, mortgages, deeds of trust and other documents as Lenders may
reasonably request. Notwithstanding the foregoing, without GECC's prior written
consent, which may be withheld for any reason or no reason: (a) the Mortgages
and other Security Documents (as defined in this Agreement) shall not secure any
indebtedness arising under Loan Agreement II (but the Mortgages and other
Security Documents defined in Loan Agreement II may secure the indebtedness
arising under this Agreement); (b) an Event of Default under Loan Agreement II
shall not constitute an Event of Default under this Agreement (but an Event of
Default under this Agreement may constitute an Event of Default under Loan
Agreement II); and (c) no other event or occurrence affecting the Mortgaged
Properties (as defined in Loan Agreement II), which event or occurrence does not
affect the Mortgaged Properties (as defined in this Agreement) shall entitle
Lenders to exercise any rights or remedies under any of the Financing Documents
(but an event or occurrence affecting the Mortgaged Properties (as defined in
this Agreement) may, to the extent permitted by Loan Agreement II, permit the
Lenders under Loan Agreement II to exercise rights or remedies under the
Financing Documents, as defined in Loan Agreement II).
(c) Sale or Assignment by Lenders. Each of the Lenders may
sell, assign or transfer all or a portion of its rights and obligations under
this Agreement provided that Borrower shall not be liable for any increase in
costs under the Loan incurred in connection with or resulting from such sale,
assignment, transfer or participation in excess of the obligations Borrower
would have incurred hereunder had the Lenders continued to hold all of its
rights and obligations under this Agreement. In addition, each of the Lenders'
rights under this Agreement shall be assignable in order to comply with the
mortgage banking or similar regulations of any states in which the Mortgaged
Properties may be located. In addition, Borrower shall reasonably cooperate with
the Lenders, at Lenders' expense, and sign any and all reasonably required
documents, in connection with any potential sale, assignment, transfer or
participation of all or a portion of Lenders' rights and obligations under this
Agreement, provided that no such documents shall materially increase Borrower's
obligations or reduce Borrower's rights or otherwise adversely affect or modify
the Nonrecourse Clause in any way.
11.26 Offset Rights. If Lenders fail to fulfill certain of their
obligations in Section 25.5B in the Contract of Sale or under that certain
Repair and Replacement Agreement dated the date hereof between Lenders, the
Other AP Sellers and Borrower, then Purchaser, shall have the right of offset
against amounts due and owing Lenders under this Agreement, the Notes and the
Mortgages subject to the amounts due and owing GECC as more particularly
described in Section 25.5B (the "Offset Rights").
11.27 Lenders' Estoppels. If Borrower desires the Lenders to provide
Borrower with an estoppel certificate stating (i) the then Principal Amount of
the Loan, (ii) whether any Event of Default exists (and, if so, describing it),
and (iii) to the Lenders' knowledge, whether Borrower has failed to make a
payment in any amount that is due and payable to the Lenders hereunder or if the
Lenders have given Borrower written notice of any nonmonetary act or omission,
in either case, that, with the giving of notice or the passage of time, or both,
would constitute an Event of Default, then the Lenders shall execute and deliver
such a certificate, provided that Borrower has advised the Lenders of the
purpose, need, and basis for such estoppel certificate. No such estoppel
certificate shall bind the Lenders as against Borrower,
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but may be relied upon only by unaffiliated third party(ies) identified by name
in such estoppel certificate(s). Borrower may not obtain more than two (2)
estoppel certificates from the Lenders in any calendar year.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Closing Date.
LENDER
AP CENTURY III, L.P., a Delaware limited
partnership
By: AP-GP CENTURY III, L.P., a Delaware
limited partnership
By: AP CENTURY III OPERATING
CORPORATION, a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
AP CENTURY IV, L.P., a Delaware limited
partnership
By: AP-GP CENTURY IV, L.P., a Delaware
limited partnership
By: AP CENTURY IV OPERATING
CORPORATION, a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
AP CENTURY V, L.P., a Delaware limited
partnership
By: AP-GP CENTURY V, L.P., a Delaware
limited partnership
By: AP CENTURY V OPERATING
CORPORATION, a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
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AP CENTURY VI, L.P., a Delaware limited
partnership
By: AP-GP CENTURY VI, L.P., a Delaware
limited partnership
By: AP CENTURY VI OPERATING
CORPORATION, a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
AP CENTURY VIII, L.P., a Delaware limited
partnership
By: AP-GP CENTURY VIII, L.P., a
Delaware limited partnership
By: AP CENTURY VIII OPERATING
CORPORATION, a Delaware corporation
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇
Its: Vice President
BORROWER
NEW VALLEY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Executive Vice President
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Index of Defined Terms
Defined Term Page
------------ ----
Accrual........................................................ 16
Audit.......................................................... 29
Borrower....................................................... 1
Borrower Communication......................................... 50
Borrower's General Indemnity................................... 22
Borrower's Return on Equity.................................... 17
CERCLA......................................................... 7
Closing Date................................................... 1
Collection Accounts............................................ 17
Delayed Deliveries............................................. 23
Depository Account............................................. 16
Event of Default............................................... 36
Exculpated Parties............................................. 42
First Mortgages................................................ 24
GECC First Mortgages........................................... 24
GECC Second Mortgages.......................................... 24
General Taxes.................................................. 20
Initial Management Agreement................................... 30
Initial Manager................................................ 29
Insolvency Laws................................................ 46
Lease Modification............................................. 33
Lender Communication........................................... 50
Lender or Lenders.............................................. 1
Loan........................................................... 1
Loan Agreement II.............................................. 1
Lockbox Agreement.............................................. 23
Lockbox Bank................................................... 17
Management Agreement........................................... 29
Manager........................................................ 29
Mortgaged Property Proceeds.................................... 18
New Valley Permitted Transferee................................ 32
Nonrecourse Carve-Outs......................................... 42
Nonrecourse Clause............................................. 43
Note or the Notes.............................................. 2
Note I......................................................... 2
Note II........................................................ 2
Note III....................................................... 2
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Defined Term Page
------------ ----
Note IV............................................................. 2
Note V.............................................................. 2
Offset Rights....................................................... 56
Other Loan.......................................................... 1
Other Properties.................................................... 1
Payment Priority Exceptions......................................... 18
Permitted Uses...................................................... 36
Principal Repayment Allocations..................................... 18
Proceedings......................................................... 26
Property Release.................................................... 19
RCRA................................................................ 7
Release Conditions.................................................. 19
Release Price....................................................... 19
Restrictive Covenants............................................... 32
Senior Assignment of Lease or Senior Assignments
of Lease........................................................... 4
Senior Mortgage or Senior Mortgages................................. 2
Standard Borrower Reports........................................... 29
Subordinate Assignment of Lease or Subordinate Assignments
of Lease........................................................... 4
Subordinate Mortgage or Subordinate Mortgages....................... 3
Subrogation Deferral................................................ 46
Taxes............................................................... 21
Transaction Taxes................................................... 21
Transfer Prohibition................................................ 32
ii