EXHIBIT 99.5
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LOAN AGREEMENT
Dated as of November 18, 1998
Between
CARS-DB3, L.P.,
as Borrower
and
GLOBAL ALLIANCE FINANCE COMPANY, L.L.C.,
as Lender
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TABLE OF CONTENTS
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION............................................................. 1
Section 1.1 Definitions........................................................................... 1
Section 1.2 Principles of Construction............................................................ 12
II. GENERAL TERMS....................................................................................... 12
Section 2.1 Loan Commitment; Disbursement to Borrower............................................. 12
2.1.1 The Loan.............................................................................. 12
2.1.2 Disbursement to Borrower.............................................................. 12
2.1.3 The Note, Mortgages and Loan Documents................................................ 12
2.1.4 Use of Proceeds....................................................................... 13
Section 2.2 Interest; Loan Payments; Late Payment Charge.......................................... 13
2.2.1 Interest Generally.................................................................... 13
2.2.2 Interest Calculation.................................................................. 13
2.2.3 Payment Before Maturity Date.......................................................... 13
2.2.4 Payment on Maturity Date.............................................................. 13
2.2.5 Payments after Default................................................................ 13
2.2.6 Late Payment Charge................................................................... 14
2.2.7 Usury Savings......................................................................... 14
Section 2.3 Prepayments........................................................................... 14
2.3.1 Voluntary Prepayments................................................................. 14
2.3.2 Mandatory Prepayments................................................................. 14
2.3.3 Prepayments After Default............................................................. 15
Section 2.4 Defeasance............................................................................ 15
2.4.1 Voluntary Defeasance.................................................................. 15
2.4.2 Successor Borrower.................................................................... 17
2.4.3 Mandatory Defeasance.................................................................. 17
Section 2.5 Release of Property................................................................... 17
2.5.1 Release of all Properties............................................................. 18
2.5.2 Release of Individual Property........................................................ 18
2.5.3 Release on Payment in Full............................................................ 19
Section 2.6 Manner of Making Payments; Cash Management............................................ 20
2.6.1 Deposits into Lockbox Account......................................................... 20
2.6.2 Making of Payments.................................................................... 20
2.6.3 Payments Received in the Lockbox Account.............................................. 20
2.6.4 No Deductions, etc.................................................................... 20
2.6.5 Disbursement of Excess Funds.......................................................... 20
Section 2.7 Property Substitutions................................................................ 21
2.7.1 Substitution of Property.............................................................. 21
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III. REPRESENTATIONS AND WARRANTIES...................................................................... 29
Section 3.1 Borrower Representations.............................................................. 29
3.1.1 No Litigation......................................................................... 29
3.1.2 Title................................................................................. 29
3.1.3 Permitted Encumbrances................................................................ 30
3.1.4 First Lien............................................................................ 30
3.1.5 ERISA................................................................................. 30
3.1.6 Contingent Liabilities................................................................ 30
3.1.7 No Other Obligations.................................................................. 30
3.1.8 No Other Debt......................................................................... 30
3.1.9 Fraudulent Conveyance................................................................. 30
3.1.10 Investment Company Act................................................................ 31
3.1.11 Access/Utilities...................................................................... 31
3.1.12 Special Assessments................................................................... 31
3.1.13 Flood Zone............................................................................ 31
3.1.14 Misstatements of Fact................................................................. 31
3.1.15 No Defenses........................................................................... 31
3.1.16 Permits; Casualty..................................................................... 32
3.1.17 Boundary Lines........................................................................ 32
3.1.18 Intentionally Deleted................................................................. 32
3.1.19 Survey................................................................................ 32
3.1.20 Legal Requirements.................................................................... 32
3.1.21 Forfeiture............................................................................ 32
3.1.22 Management Agreement.................................................................. 32
3.1.23 Organization.......................................................................... 33
3.1.24 Proceedings........................................................................... 33
3.1.25 No Conflicts.......................................................................... 33
3.1.26 Agreements............................................................................ 33
3.1.27 No Bankruptcy Filing.................................................................. 34
3.1.28 Financial Information................................................................. 34
3.1.29 Condemnation.......................................................................... 34
3.1.30 Federal Reserve Regulations........................................................... 34
3.1.31 Not a Foreign Person.................................................................. 34
3.1.32 Separate Lots......................................................................... 34
3.1.33 Enforceability........................................................................ 34
3.1.34 Insurance............................................................................. 35
3.1.35 Use of Property....................................................................... 35
3.1.36 Physical Condition.................................................................... 35
3.1.37 Leases................................................................................ 35
3.1.38 Filing and Recording Taxes............................................................ 36
3.1.39 Loan to Value......................................................................... 36
3.1.40 Single Purpose Entity/Separateness.................................................... 36
3.1.41 No Change in Facts or circumstances; Disclosure....................................... 39
Section 3.2 Survival of Representations........................................................... 40
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IV. BORROWER COVENANTS................................................................................. 40
Section 4.1 Affirmative Covenants................................................................ 40
4.1.1 Existence; Compliance with Legal Requirements; Insurance............................. 40
4.1.2 Taxes and Other Charges.............................................................. 41
4.1.3 Litigation........................................................................... 41
4.1.4 Access to Properties................................................................. 41
4.1.5 Notice of Default.................................................................... 41
4.1.6 Cooperate in Legal Proceedings....................................................... 42
4.1.7 Perform Loan Documents............................................................... 42
4.1.8 Insurance Benefits................................................................... 42
4.1.9 Intentionally Deleted................................................................ 42
4.1.10 Financial Reporting.................................................................. 42
4.1.11 Business and Operations.............................................................. 43
4.1.12 Title to the Properties.............................................................. 44
4.1.13 Costs of Enforcement................................................................. 44
4.1.14 Estoppel Statement................................................................... 44
4.1.15 Loan Proceeds........................................................................ 44
4.1.16 Performance by Borrower.............................................................. 44
4.1.17 Confirmation of Representations...................................................... 45
4.1.18 Leasing Matters...................................................................... 45
4.1.19 Alterations.......................................................................... 45
4.1.20 Intentionally Deleted................................................................ 45
4.1.21 Further Acts, Etc.................................................................... 45
4.1.22 Performance of Other Agreements...................................................... 46
4.1.23 Recording of Mortgages, Etc.......................................................... 46
4.1.24 Handicapped Access................................................................... 46
Section 4.2 Negative Covenants................................................................... 47
4.2.1 Operation of Property................................................................ 47
4.2.2 Liens................................................................................ 47
4.2.3 Dissolution of the SPC Entity........................................................ 47
4.2.4 Change In Business................................................................... 48
4.2.5 Debt Cancellation.................................................................... 48
4.2.6 Affiliate Transactions............................................................... 48
4.2.7 Zoning............................................................................... 48
4.2.8 Assets............................................................................... 48
4.2.9 Debt................................................................................. 48
4.2.10 No Joint Assessment.................................................................. 48
4.2.11 Principal Place of Business; Name.................................................... 48
4.2.12 ERISA................................................................................ 49
4.2.13 Easements............................................................................ 49
4.2.14 Maintenance and Use of Property...................................................... 49
V. INSURANCE; CASUALTY; CONDEMNATION.................................................................. 50
Section 5.1 Insurance............................................................................ 50
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Section 5.2 Casualty.............................................................................. 52
Section 5.3 Condemnation.......................................................................... 54
VI. RESERVE FUNDS..................................................................................... 56
Section 6.1 Tax and Insurance Escrow Fund......................................................... 56
Section 6.2 Security Interest..................................................................... 57
VII. TRANSFER AND ENCUMBRANCE OF PROPERTY.............................................................. 57
Section 7.1 Transfer and Encumbrance of Property.................................................. 57
VIII. DEFAULTS.......................................................................................... 60
Section 8.1 Event of Default...................................................................... 60
Section 8.2 Remedies.............................................................................. 62
Section 8.3 Remedies Cumulative; Waivers.......................................................... 67
IX. ENVIRONMENTAL PROVISIONS.......................................................................... 67
Section 9.1 Hazardous Substances.................................................................. 67
Section 9.2 Asbestos.............................................................................. 68
Section 9.3 Environmental Monitoring.............................................................. 69
Section 9.4 Environmental Indemnification......................................................... 70
Section 9.5 Environmental Compliance.............................................................. 70
X. SPECIAL PROVISIONS................................................................................ 70
Section 10.1 Sale of Notes and Securitization...................................................... 70
Section 10.2 Intentionally Deleted................................................................. 71
Section 10.3 Intentionally Deleted................................................................. 71
Section 10.4 Indemnification....................................................................... 71
Section 13.6 Termination of Manager................................................................ 72
XI. MISCELLANEOUS..................................................................................... 72
Section 11.1 Survival.............................................................................. 72
Section 11.2 Lender's Discretion................................................................... 73
Section 11.3 Governing Law......................................................................... 73
Section 11.4 No Oral Change........................................................................ 74
Section 11.5 Delay Not a Waiver, Non-Waiver........................................................ 74
Section 11.6 Notices............................................................................... 75
Section 11.7 Trial by Jury......................................................................... 75
Section 11.8 Headings.............................................................................. 76
Section 11.9 Severability.......................................................................... 76
Section 11.10 Preferences........................................................................... 76
Section 11.11 Waiver of Notice...................................................................... 76
Section 11.12 Remedies of Borrower.................................................................. 77
Section 11.13 Expenses; Indemnity................................................................... 77
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Section 11.14 Liability............................................................................. 78
Section 11.15 Inapplicable Provisions............................................................... 78
Section 11.16 Schedules Incorporated................................................................ 78
Section 11.17 Duplicate Originals................................................................... 78
Section 11.18 Offsets, Counterclaims and Defenses................................................... 78
Section 11.19 Lender's Consent; No Joint Venture or Partnership; No Third Party
Beneficiaries....................................................................... 79
Section 11.20 Publicity............................................................................. 79
Section 11.21 Multi-Party Borrowers................................................................. 79
Section 11.22 No Forfeiture......................................................................... 79
Section 11.23 Borrower's Own Judgment............................................................... 80
Section 11.24 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets............... 80
Section 11.25 Waiver of Setoff Counterclaim......................................................... 81
Section 11.26 Actions and Proceedings............................................................... 81
Section 11.27 Conflict; Construction of Documents; Reliance......................................... 81
Section 11.28 Servicer.............................................................................. 82
Section 11.29 Assignments........................................................................... 82
Section 11.30 Brokers and Financial Advisors........................................................ 82
Section 11.31 Prior Agreements...................................................................... 82
Section 11.32 Lender's Statement.................................................................... 82
Section 11.33 Limited Recourse...................................................................... 83
Section 11.34 Other Loans........................................................................... 83
SCHEDULES
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Schedule I - Properties - Allocated Release Amounts
Schedule II - Rent Roll
Schedule III - Form of Subordination, Nondisturbance and Attornment Agreement
Schedule IV - Environmental Review
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 18, 1998 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), among GLOBAL ALLIANCE FINANCE COMPANY, L.L.C., a Delaware limited
liability company, having its principal office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("LENDER") and CARS-DB3, L.P., a Delaware
limited partnership, having an address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BORROWER").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined)
from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents
(as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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SECTION 1.1 DEFINITIONS.
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For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"ACCESS LAWS" shall have the meaning set forth in Section 4.1.24(a)
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hereof.
"ADJUSTED RELEASE AMOUNT" shall mean, for each Individual Property,
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one hundred twenty-five percent (125%) of the Release Amount for such Individual
Property.
"AFFILIATE" shall mean, as to any Person, any other Person that,
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directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
affiliate of such Person.
"ALTA" shall mean American Land Title Association, or any successor
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thereto.
"APPLICABLE INTEREST RATE" shall mean Seven and Sixty-Seven Hundredths
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percent (7.67%) per annum.
"ASBESTOS" shall have the meaning set forth in Section 9.2 hereof.
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"ASSIGNMENT OF LEASES" shall mean, with respect to each Individual
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Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, in form and substance satisfactory to Lender in its sole
discretion, from Borrower, as assignor, to Lender, as assignee, assigning to
Lender all of Borrower's interest in and to the Leases and Rents of such
Individual Property as security for the Loan, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean that certain
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Assignment and Subordination of Management Agreement dated the date hereof among
Lender, Borrower and Manager, as the same may amended, restated, replaced,
supplemented or otherwise modified from time to time.
"AWARD" shall have the meaning set forth in Section 5.3(b) hereof.
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"BASIC CARRYING COSTS" shall mean, with respect to each Individual
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Property, the sum of the following costs associated with such Individual
Property for the relevant Fiscal Year or payment period: (i) Taxes and (ii)
Insurance Premiums.
"BORROWER" shall mean CARS-DB3, L.P., a Delaware limited partnership,
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together with its successors and assigns.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
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other day on which national banks in New York, New York are not open for
business.
"CASH MANAGEMENT AGREEMENT" shall mean that certain cash management
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agreement, in form and substance satisfactory to Lender in its sole discretion,
between Borrower, Lender and one or more certain financial institutions
(together with any modification, amendment, substitution or replacement), which
shall provide, among other things, that all Rents and other sums collected from,
or arising with respect to, the Properties be deposited in the accounts
established in connection with such Cash Management Agreement.
"CERCLA" shall have the meaning set forth in Section 9.1 hereof.
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"CLOSING DATE" shall mean the date of the funding of the Loan.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended, as it
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may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"CONDEMNATION" shall have the meaning set forth in Section 5.3(a)
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hereof.
"DEBT" shall mean the outstanding principal amount set forth in, and
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evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums (including the Yield Maintenance Premium) due
to Lender in respect of the Loan under the Note, this Agreement, the Mortgages
or any other Loan Document.
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"DEBT SERVICE" shall mean, with respect to any particular period of
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time, scheduled principal and/or interest payments under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio, as determined by
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Lender, for the applicable period in which: (A) the numerator is the Net
Operating Income (excluding interest on credit accounts) for such period as set
forth in the statements required hereunder; and (B) the denominator is the
aggregate amount of principal and interest due and payable on the Note.
"DEFAULT" shall mean the occurrence of any event hereunder or under
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any other Loan Document which, but for the giving of notice or passage of time,
or both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum
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equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
two percent (2%) above the Applicable Interest Rate.
"DEFEASANCE DATE" shall have the meaning set forth in Section
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2.4.1(a)(i) hereof.
"DEFEASANCE DEPOSIT" shall mean an amount equal to the remaining
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principal amount of the Note or the Defeased Note, as applicable, the Yield
Maintenance Premium, if any, required in connection therewith, any costs and
expenses incurred or to be incurred in the purchase of U.S. Obligations
necessary to meet the Scheduled Defeasance Payments and any revenue, documentary
stamp or intangible taxes or any other tax or charge due in connection with the
transfer of the Note or the Defeased Note, as applicable, the creation of the
Defeased Note and the Undefeased Note, if applicable, or otherwise required to
accomplish the agreements of Sections 2.3 and 2.4 hereof.
"DEFEASANCE EVENT" shall have the meaning set forth in Section
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2.4.1(a) hereof.
"DEFEASED NOTE" shall have the meaning set forth in Section
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2.4.1(a)(v) hereof.
"EBTDAR RATIO" shall mean, with respect to any Individual Property or
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Properties subject to a Lease for any period of time, the ratio as determined by
Lender based on evidence delivered by Borrower and reasonably satisfactory to
Lender, of (a) net income determined in accordance with GAAP for such period
plus the sum of provisions for such period for income taxes, depreciation,
amortization, rent, "owner's" compensation and bonus paid by the tenant under
the Lease in excess of reasonable salary for services actually rendered by such
owner and other non-cash items approved by Lender used in determining such net
income for the business operated on such Individual Property or Properties by
the tenant under such Lease to (b) Rents payable by such tenant under such
Lease.
"ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental and
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Hazardous Substance Indemnification Agreement, in form and substance
satisfactory to Lender hereunder in its sole discretion, executed by Borrower
and Guarantor in connection with the
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Loan for the benefit of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section 9.1
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hereof.
"ERISA" shall have the meaning set forth in Section 3.1.5 hereof.
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"EVENT OF DEFAULT" shall have the meaning set forth in Section 8.1
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hereof.
"FISCAL YEAR" shall mean each twelve (12) month period commencing on
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January 1 and ending on December 31 during each year of the term of the Loan.
"GAAP" shall mean generally accepted accounting principles in the
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United States of America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
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commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall have the meaning set forth in
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Section 4.1.10(b)(iii).
"GUARANTOR" shall mean Capital Automotive REIT, a Maryland real estate
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investment trust.
"GUARANTY OF PAYMENT" shall mean that certain Guaranty of Payment
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dated the date hereof by Borrower in favor of Lender, guaranteeing payment of
certain loans made by Lender to certain Affiliates of Borrower, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in Section 9.1
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hereof.
"IMPOUNDS TRIGGER EVENT" means the occurrence of an Event of Default.
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"IMPROVEMENTS" shall have the meaning set forth in the granting clause
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of the related Mortgage with respect to each Individual Property.
"INDEBTEDNESS" of a Person, at a particular date, means the sum
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(without duplication) at such date of (a) indebtedness or liability for borrowed
money; (b) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under letters of credit;
(e) obligations under acceptance facilities; (f) all guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds, to invest in
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any Person or entity, or otherwise to assure a creditor against loss; and (g)
obligations secured by any Liens, whether or not the obligations have been
assumed.
"INDEPENDENT DIRECTOR" shall have the meaning set forth in Section
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3.1.40(p) hereof.
"INDIVIDUAL PROPERTY" shall mean each parcel of real property
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referenced on Schedule I attached hereto and any Substitute Property, the
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Improvements thereon and all personal property owned by Borrower related to such
real property and encumbered by a Mortgage, together with all rights of Borrower
pertaining to such property and Improvements, as more particularly described in
the Granting Clauses of each Mortgage or Deed to Secure Debt and referred to
therein as the "Mortgaged Property", or described in the Granting Clauses of
each Deed of Trust and referred to therein as the "Trust Property".
"INSOLVENCY OPINION" shall have the meaning set forth in Section
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3.1.40(t) hereof.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section
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5.1(c) hereof.
"INSURED CASUALTY" shall have the meaning set forth in Section 5.2(a)
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hereof.
"JUNIOR MORTGAGE" shall mean, with respect to each Individual
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Property, collectively, that certain second priority Mortgage (or Deed of Trust
or Deed to Secure Debt), Assignment of Leases and Rents and Security Agreement,
dated the date hereof, and that certain Junior Assignment of Leases and Rents,
dated the date hereof, each in form and substance satisfactory to Lender in its
sole discretion, executed and delivered by Borrower as security for that certain
Guaranty of Payment and encumbering such Individual Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"JUNIOR SECURITY AGREEMENT" shall have the meaning set forth in
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Section 2.4.1(a)(vi)(B) hereof.
"LEASE" shall mean any (i) lease or (ii) any license, concession or
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other agreement (whether written or oral and whether now or hereafter in effect)
pursuant to which any Person is granted by Borrower (or its predecessor in
title) a possessory interest in, or right to use or occupy all or any portion of
any space in any Individual Property of Borrower, and every modification,
amendment or other agreement relating to such lease or other agreement entered
into in connection with such lease or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto, but excluding any sublease.
"LEGAL REQUIREMENTS" shall mean, with respect to each Individual
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Property, all federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities
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affecting such Individual Property or any part thereof, or the construction,
use, alteration or operation thereof, or any part thereof, whether now or
hereafter enacted and in force, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to
Borrower, at any time in force affecting such Individual Property or any part
thereof, including, without limitation, any which may (a) require repairs,
modifications or alterations in or to such Individual Property or any part
thereof, or (b) in any way limit the use and enjoyment thereof.
"LENDER" shall mean Global Alliance Finance Company, L.L.C., a
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Delaware limited liability company, together with its successors and assigns.
"LENDER'S CONSULTANT" shall have the meaning set forth in Section 9.1
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hereof.
"LICENSES" shall have the meaning set forth in Section 3.1.16 hereof.
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"LIEN" shall mean, with respect to each Individual Property, any
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mortgage, deed of trust, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting
Borrower, the related Individual Property, any portion thereof or any interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and
mechanic's, materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the loan in the original principal amount of Thirty-
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Six Million Eight Hundred Fifty Thousand and No/100 Dollars ($36,850,000) made
by Lender to Borrower pursuant to this Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note,
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the Mortgages, the Assignments of Leases, the Environmental Indemnity, the Cash
Management Agreement, the Assignment of Management Agreement, the Recourse
Guaranty and all other documents evidencing or securing the Loan.
"LOCKBOX ACCOUNT" shall mean the account specified in the Cash
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Management Agreement for deposit of Rents and other receipts from the
Properties.
"MANAGEMENT AGREEMENT" shall mean, with respect to any Individual
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Property, the management agreement entered into by and between Borrower and
Manager, pursuant to which Manager is to provide management and other services
with respect to such Individual Property.
"MANAGER" shall mean Capital Automotive L.P. and its successors as
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Manager of the Properties.
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"MATURITY DATE" shall mean December 1, 2008, or such other date on
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which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate,
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if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MONTHLY PAYMENT DATE" shall mean the first (1st) day of each calendar
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month during the term of the Loan.
"MORTGAGE" shall mean, with respect to each Individual Property, that
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certain first priority Mortgage (or Deed of Trust or Deed to Secure Debt),
Assignment of Leases and Rents and Security Agreement, dated the date hereof, in
form and substance satisfactory to Lender in its sole discretion, executed and
delivered by Borrower as security for the Loan and encumbering such Individual
Property, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"NET OPERATING INCOME" shall have the meaning set forth in Section
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4.1.10(b)(i).
"NET PROCEEDS" shall mean, as applicable, (i) the net amount of all
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insurance proceeds received by Lender as a result of an Insured Casualty, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same, or (ii) the net amount of
any Award received by Lender, after deduction of its reasonable costs and
expenses (including, but not limited to, reasonable counsel fees), if any, in
collecting same.
"NO DOWNGRADE LETTER" shall have the meaning set forth in Section
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7.1(b).
"NOTE" shall mean that certain note of even date herewith in the
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principal amount of the Loan, in form and substance satisfactory to Lender in
its sole discretion, made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time, including any Defeased Note and Undefeased Note that may exist from time
to time.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender
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by Borrower which is signed by an authorized senior officer of the managing
member or general partner of Borrower.
"OPERATING EXPENSES" shall have the meaning set forth in Section
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4.1.10(b)(ii).
"OPTION HOLDER" shall mean the holder of the Purchase Option.
-------------
7
"OPTION PROPERTY" shall mean that certain Individual Property located
---------------
at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, leased to ▇▇▇▇▇▇ Buick of Atlanta, Inc.
and identified as Individual Property No. 11 on Schedule I attached hereto.
----------
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
-------------
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Individual Property, now or hereafter levied or
assessed or imposed against such Individual Property or any part thereof.
"PERMITTED ENCUMBRANCES" shall mean, with respect to an Individual
----------------------
Property, collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policies relating to such Individual Property or any part thereof, (c)
Liens, if any, for Taxes imposed by any Governmental Authority not yet
delinquent, (d) Permitted Leases (e) the Junior Mortgage, and (f) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender's sole discretion, which Permitted Encumbrances in the aggregate do not
materially adversely affect the value or use of such Individual Property or
Borrower's ability to repay the Loan.
"PERMITTED LEASES" shall mean those Leases referenced on Schedule II
---------------- -----------
attached hereto, any other Leases entered into in accordance with the terms and
conditions of this Agreement and any subleases or assignments permitted pursuant
to said Leases.
"PERMITTED MATERIALS" shall have the meaning set forth in Section
-------------------
3.1.37 hereof.
"PERMITTED RELEASE DATE" shall mean the first to occur of (a) the date
----------------------
that is two (2) years from the "startup day" within the meaning of Section
860G(a)(9) of the Code of the REMIC Trust and (b) the date that is four (4)
years from the date hereof.
"PERSON" shall mean any individual, corporation, partnership, joint
------
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PHASE I REPORTS" shall mean those certain Phase I Environmental
---------------
Reports of the Properties and any other environmental reports delivered to
Lender in connection with the origination of the Loan.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to each
--------------------------
Substitute Property, a report prepared by a company satisfactory to the Rating
Agencies regarding the physical condition of such Substitute Property,
satisfactory in form and substance to the Rating Agencies in their sole
discretion, which report shall, among other things, (a) confirm that such
Substitute Property and its use complies, in all material respects, with all
applicable Legal Requirements (including, without limitation, zoning,
subdivision and building laws) and
8
(b) include a copy of a final certificate of occupancy with respect to all
Improvements on such Substitute Property.
"POLICIES" shall have the meaning set forth in Section 5.1(c) hereof.
--------
"PREPAYMENT CONSIDERATION" shall mean an amount equal to the present
------------------------
value of the Income Difference (as hereinafter defined), calculated as follows:
(a) Calculate the total amount of interest ("INTEREST INCOME") that
would accrue to Lender on account of the portion of the principal balance of the
Note equal to the Adjusted Release Amount at the Applicable Interest Rate
between the date of the tender of payment (the "TENDER DATE") and the Maturity
Date; then
(b) Calculate the total amount of investment income ("INVESTMENT
INCOME") that would be earned by Lender from the Tender Date through the
Maturity Date if the portion of the principal balance of the Note equal to the
Adjusted Release Amount as of the Tender Date were invested in United States
Government general issue Treasury Securities at the Comparable Treasury Rate (as
hereinafter defined) until the Maturity Date, and such investment called for a
series of monthly interest payments at that rate through the Maturity Date; then
(c) Calculate the difference, if any, between the Investment Income
and the Interest Income through the Maturity Date (the "INCOME DIFFERENCE") by
subtracting the Interest Income from the Investment Income; then
(d) If the Income Difference is a positive number, calculate the
present value of the Income Difference as of the Tender Date, based on (i) a
stream of monthly interest payments corresponding to the stream of payments
comprising the Income Difference and (ii) a discount rate equal to the
Comparable Treasury Rate.
(e) The term "COMPARABLE TREASURY RATE" shall mean the rate of
interest which is equal to the average yield (determined by Lender as of the
date which is seven (7) days prior to the Tender Date) on then generally
available United States Government general issue Treasury Securities maturing
nearest to the ending date of the Maturity Date.
"PROPERTIES" shall mean, collectively, each and every Individual
----------
Property which is subject to the terms of this Agreement.
"PROPERTY SPECIFIC DEBT SERVICE COVERAGE RATIO" shall mean, with
---------------------------------------------
respect to any Individual Property, a ratio, as determined by Lender, for the
applicable period in which: (A) the numerator is the Net Operating Income
(excluding interest on credit accounts) determined only with respect to such
Individual Property for such period as set forth in the statements required
hereunder; and (B) the denominator is the aggregate amount of principal and
interest due and payable on the Note with respect to the Release Amount for such
Individual Property.
9
"PROVIDED INFORMATION" shall have the meaning set forth in Section
--------------------
10.1(a)(i) hereof.
"PURCHASE OPTION" shall mean that certain option to purchase the
---------------
Property held by Option Holder pursuant to that certain Declaration of Use
Restriction, Right of First Refusal and Option to Purchase and Lease dated April
1, 1997 by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, recorded on April 3, 1997 as Document No. 200483
in County Clerk's Office of ▇▇▇▇▇▇ County, Georgia.
"RATING AGENCIES" shall mean each of Standard & Poor's Ratings Group,
---------------
a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., Duff & ▇▇▇▇▇▇
Credit Rating Co. and Fitch IBCA, Inc., or any other nationally-recognized
statistical rating agency which has been approved by Lender that shall have
issued, or shall be contemplating the issuance of, a rating with respect to any
Securities.
"RCRA" shall have the meaning set forth in Section 9.1 hereof.
----
"RECOURSE GUARANTY" shall mean that certain Guaranty of Recourse
-----------------
Obligations of even date herewith, in form and substance satisfactory to Lender
in its sole discretion, from Guarantor for the benefit of Lender.
"RELEASE AMOUNT" shall mean for an Individual Property the amount set
--------------
forth on Schedule I hereto.
----------
"REMEDIAL WORK" shall have the meaning set forth in Section 9.3
-------------
hereof.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
-----------
within the meaning of Section 860D of the Code that holds the Note.
"RENTS" shall mean, with respect to each Individual Property, all
-----
rents, rent equivalents, moneys payable as damages or in lieu of rent or rent
equivalents, royalties (including, without limitation, all oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower from any and all sources arising from or
attributable to the Individual Property, and proceeds, if any, from business
interruption or other loss of income insurance.
"RESERVE FUNDS" shall mean the Tax and Insurance Escrow Fund and any
-------------
other escrow fund established by the Loan Documents.
"SCHEDULED DEFEASANCE PAYMENTS" shall have the meaning set forth in
-----------------------------
Section 2.4.1(b) hereof.
"SECURITIES" shall have the meaning set forth in Section 10.1 hereof.
----------
10
"SECURITIZATION" shall have the meaning set forth in Section 10.1
--------------
hereof.
"SECURITY AGREEMENT" shall have the meaning set forth in Section
------------------
2.4.1(a)(vi)(A) hereof.
"SERVICER" shall have the meaning set forth in Section 11.28 hereof.
--------
"SERVICING AGREEMENT" shall have the meaning set forth in Section
-------------------
11.28 hereof.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in Section
----------------------
8.2(k) hereof.
"SPC ENTITY" shall have the meaning set forth in Section 3.1.40(o)
----------
hereof.
"STATE" shall mean, with respect to an Individual Property, the State
-----
or Commonwealth in which such Individual Property or any part thereof is
located.
"SUBSTITUTE PROPERTY" shall have the meaning set forth in Section
-------------------
2.7.1 hereof.
"SUBSTITUTE RELEASE AMOUNT" shall have the meaning set forth in
-------------------------
Section 2.7.1(k) hereof.
"SUBSTITUTED PROPERTY" shall have the meaning set forth in Section
--------------------
2.7.1 hereof.
"SUCCESSOR BORROWER" shall have the meaning set forth in Section 2.4.2
------------------
hereof.
"SURVEY" shall mean a survey of the Individual Property in question
------
prepared by a surveyor licensed in the State and satisfactory to Lender, in its
sole discretion, and the company or companies issuing the Title Insurance
Policies, and containing a certification of such surveyor satisfactory to
Lender, in its sole discretion.
"TAKING" shall have the meaning set forth in Section 5.3(b) hereof.
------
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in
-----------------------------
Section 6.1 hereof.
"TAXES" shall mean all real estate and personal property taxes,
-----
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against any Individual Property or part thereof.
"TERM" shall have the meaning set forth in Section 5.1(a) hereof.
----
"TITLE INSURANCE POLICIES" shall mean, with respect to each Individual
------------------------
Property, an ALTA mortgagee title insurance policy in the form (acceptable to
Lender) (or, if an Individual Property is in a State which does not permit the
issuance of such ALTA policy, such
11
form as shall be permitted in such State and acceptable to Lender) issued with
respect to such Individual Property and insuring the lien of the Mortgage
encumbering such Individual Property.
"TRANSFEREE" shall have the meaning set forth in Section 7.1(f)(ii)
----------
hereof.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
--- -----------------------
Code as in effect in the applicable State in which an Individual Property is
located.
"UNDEFEASED NOTE" shall have the meaning set forth in Section
---------------
2.4.1(a)(v) hereof.
"U.S. OBLIGATIONS" shall mean direct non-callable obligations of the
----------------
United States of America.
"YIELD MAINTENANCE PREMIUM" shall mean the amount (if any) which, when
-------------------------
added to the remaining principal amount of the Note or the principal amount of a
Defeased Note, as applicable, will be sufficient to purchase U.S. Obligations
providing the required Scheduled Defeasance Payments.
SECTION 1.2 PRINCIPLES OF CONSTRUCTION.
--------------------------
All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
II. GENERAL TERMS
-------------
SECTION 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
-----------------------------------------
2.1.1 THE LOAN. Subject to and upon the terms and conditions set
--------
forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept
the Loan on the Closing Date.
2.1.2 DISBURSEMENT TO BORROWER. Borrower may request and receive
------------------------
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 THE NOTE, MORTGAGES AND LOAN DOCUMENTS. The Loan shall be
--------------------------------------
evidenced by the Note and secured by the Mortgages, the Assignments of Leases
and the other Loan Documents.
12
2.1.4 USE OF PROCEEDS. Borrower shall use the proceeds of the
---------------
Loan to (a) repay and discharge, or cause to be repaid and discharged, any
existing loans relating to the Properties (including that certain bridge loan
made by Lender to Capital Automotive L.P. on October 16, 1998), (b) pay all
past-due Basic Carrying Costs, if any, in respect of the Properties, (c) make
deposits into the Reserve Funds, if any, on the Closing Date in the amounts
provided herein, (d) pay costs and expenses incurred in connection with the
closing of the Loan, as approved by Lender, (e) fund any working capital
requirements of the Properties, and (f) distribute the balance, if any, to
Borrower for all corporate purposes.
SECTION 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE.
--------------------------------------------
2.2.1 INTEREST GENERALLY. Interest on the outstanding principal
------------------
balance of the Loan shall accrue from the Closing Date to but excluding the
Maturity Date at the Applicable Interest Rate.
2.2.2 INTEREST CALCULATION. Interest on the outstanding
--------------------
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by
(b) a daily rate based on a three hundred sixty (360) day year by (c) the
outstanding principal balance.
2.2.3 PAYMENT BEFORE MATURITY DATE. On the Closing Date, Borrower
----------------------------
shall make a payment of interest only for the period from the Closing Date
through and including the date immediately prior to the Monthly Payment Date
occurring in December, 1998. If the Closing Date shall occur within the last ten
(10) Business Days of November, Borrower shall pay to Lender, in addition to the
amount set forth in the preceding sentence, in advance on the Closing Date, the
amount of Debt Service scheduled to be payable to Lender on the Monthly Payment
Date occurring in January, 1999. Borrower shall make a payment to Lender of
interest only, in arrears, on the Monthly Payment Date occurring in January,
1999, and on each Monthly Payment Date thereafter to and including the Monthly
Payment Date occurring in December, 2000. Borrower shall make a payment to
Lender of principal and interest, in arrears, in the amount of Two Hundred
Seventy-Six Thousand Four Hundred Six and No/100 Dollars ($276,406) on the
Monthly Payment Date occurring in January, 2001 and on each Monthly Payment Date
thereafter to and including the Maturity Date. Each payment shall be applied
first to accrued and unpaid interest and the balance to principal.
2.2.4 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender on
------------------------
the Maturity Date the outstanding principal balance, all accrued and unpaid
interest and all other amounts due hereunder and under the Note, the Mortgages
and the other Loan Documents.
2.2.5 PAYMENTS AFTER DEFAULT. Upon the occurrence and during the
----------------------
continuance of an Event of Default, interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan, shall accrue at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein.
13
2.2.6 LATE PAYMENT CHARGE. If any monthly installment of principal,
-------------------
interest or any other sums due under the Loan Documents is not paid by Borrower
on the date on which it is due, Borrower shall pay to Lender upon demand an
amount equal to the lesser of five percent (5%) of such unpaid sum or the
maximum amount permitted by applicable law in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Mortgages and the other Loan Documents to the
extent permitted by applicable law.
2.2.7 USURY SAVINGS. This Agreement, the Note and the other Loan
-------------
Documents are subject to the express condition that at no time shall Borrower be
obligated or required to pay interest on the principal balance of the Loan at a
rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate. If, by the terms of this
Agreement or the other Loan Documents, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of the Maximum Legal Rate, the Applicable Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to the
Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate
shall be deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to be paid to
Lender for the use, forbearance, or detention of the sums due under the Loan,
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Loan does not
exceed the Maximum Legal Rate of interest from time to time in effect and
applicable to the Loan for so long as the Loan is outstanding.
SECTION 2.3 PREPAYMENTS.
-----------
2.3.1 VOLUNTARY PREPAYMENTS. Except as otherwise provided herein,
---------------------
Borrower shall not have the right to prepay the Loan in whole or in part prior
to the Maturity Date; provided, however, that Borrower shall have the right to
prepay the entire Loan and any other amounts outstanding on any Monthly Payment
Date during the three (3) months preceding the Maturity Date without payment of
the Yield Maintenance Premium or any other premium or penalty.
2.3.2 MANDATORY PREPAYMENTS. (a) On each date on which Borrower
---------------------
or Lender actually receives any Net Proceeds, if Lender does not make such Net
Proceeds available to Borrower for the restoration of any Individual Property
and the Permitted Release Date has not yet occurred, Borrower shall prepay the
outstanding principal balance of the Note in an amount equal to one hundred
percent (100%) of such Net Proceeds. No Yield Maintenance Premium shall be due
in connection with any prepayment made pursuant to this Section 2.3.2. Any
partial prepayment under this Section 2.3.2 shall be applied to the last
payments of principal due under the Loan.
14
(b) If Option Holder shall exercise the Purchase Option prior to the
Permitted Release Date, Borrower shall, simultaneously with transfer of the
Option Property pursuant to the Purchase Option, prepay the outstanding
principal balance of the Note in an amount equal to the Adjusted Release Amount
for the Option Property plus the Prepayment Consideration.
2.3.3 PREPAYMENTS AFTER DEFAULT. If, prior to the Maturity Date
-------------------------
and following an Event of Default, payment of all or any part of the Debt is
tendered by Borrower or otherwise recovered by Lender, such tender or recovery
shall be deemed a voluntary prepayment by Borrower in violation of the
prohibition against prepayment set forth in Section 2.3.1 and Borrower shall
pay, in addition to the Debt, the applicable Yield Maintenance Premium. In
addition to the foregoing, if any such payment is made prior to the Permitted
Release Date, Borrower shall also pay an amount equal to two percent (2%) of the
outstanding principal amount of the Loan to be prepaid or satisfied.
SECTION 2.4 DEFEASANCE.
----------
2.4.1 VOLUNTARY DEFEASANCE. (a) Provided no Event of Default
--------------------
shall then exist, Borrower shall have the right at any time after the Permitted
Release Date and prior to the Maturity Date to voluntarily defease all or any
portion of the Loan by and upon satisfaction of the following conditions (such
event being a "DEFEASANCE EVENT"):
(i) Borrower shall provide not less than thirty (30) days prior
written notice to Lender specifying the Monthly Payment Date (the "DEFEASANCE
DATE") on which the Defeasance Event shall occur and the principal amount of the
Loan to be defeased;
(ii) Borrower shall pay to Lender all accrued and unpaid interest on
the principal balance of the Note to and including the Defeasance Date;
(iii) Borrower shall pay to Lender all other sums, not including
scheduled interest or principal payments due under the Note, this Agreement, the
Mortgage, and the other Loan Documents through and including the Defeasance
Date;
(iv) Borrower shall deliver to Lender the Defeasance Deposit
applicable to the Defeasance Event;
(v) In the event only a portion of the Loan is the subject of the
Defeasance Event, Borrower shall prepare all necessary documents to modify this
Agreement and to amend and restate the Note and issue two substitute notes, one
note having a principal balance equal to the defeased portion of the original
Note (the "DEFEASED NOTE") and the other note having a principal balance equal
to the undefeased portion of the Note (the "UNDEFEASED NOTE"). The Defeased
Note and Undefeased Note shall otherwise have terms identical to the Note,
except that a Defeased Note cannot be the subject of any further Defeasance
Event;
(vi) Borrower shall execute and deliver (A) a security agreement, in
form and substance satisfactory to Lender, in its sole discretion, creating a
first priority lien on the
15
Defeasance Deposit and the U.S. Obligations purchased with the Defeasance
Deposit in accordance with the provisions of this Section 2.4 (the "SECURITY
AGREEMENT") and (B) if the Junior Mortgage remains in effect at the time of such
Defeasance Event, a junior security agreement in form and substance satisfactory
to lender in its sole discretion, creating a second priority lien on the
Defeasance Deposit and the U.S. Obligations purchased with the Defeasance
Deposit, as security for the payment and performance of Borrower under the
Guaranty of Payment (the "Junior Security Agreement");
(vii) Borrower shall deliver an opinion of counsel for Borrower in
form and substance satisfactory to Lender in its sole discretion stating, among
other things, that Borrower has legally and validly transferred and assigned the
U.S. Obligations and all obligations, rights and duties under and to the Note or
Defeased Note (as applicable) to the Successor Borrower, that Lender has a
perfected first priority security interest in the Defeasance Deposit and the
U.S. Obligations delivered by Borrower and that any REMIC Trust formed pursuant
to a Securitization will not fail to maintain its status as a "real estate
mortgage investment conduit" within the meaning of Section 860D of the Code as a
result of such Defeasance Event;
(viii) Borrower shall deliver confirmation in writing from the
applicable Rating Agencies to the effect that such Defeasance Event will not
result in a downgrading, withdrawal or qualification of the respective ratings
in effect immediately prior to such Defeasance Event for the Securities issued
in connection with the Securitization which are then outstanding. If required by
the applicable Rating Agencies, Borrower shall also deliver or cause to be
delivered a non-consolidation opinion with respect to the Successor Borrower in
form and substance satisfactory to Lender and the applicable Rating Agencies, in
their respective sole discretion;
(ix) Borrower shall deliver an Officer's Certificate certifying that
the requirements set forth in this Section 2.4.1(a) have been satisfied;
(x) Borrower shall deliver a certificate of an independent
certified public accountant selected by Borrower and reasonably satisfactory to
Lender certifying that the U.S. Obligations purchased with the Defeasance
Deposit generate monthly amounts equal to or greater than the Scheduled
Defeasance Payments;
(xi) Borrower shall deliver such other certificates, documents or
instruments as Lender may reasonably request; and
(xii) Borrower shall pay all costs and expenses of Lender incurred in
connection with the Defeasance Event, including any costs and expenses
associated with a release of the Lien of the related Mortgage as provided in
Section 2.5 hereof as well as reasonable attorneys' fees and expenses.
(b) In connection with each Defeasance Event, Borrower hereby
appoints Lender as its agent and attorney-in-fact for the purpose of using the
Defeasance Deposit to purchase U.S. Obligations which provide payments on or
prior to, but as close as
16
possible to, all successive scheduled payment dates after the Defeasance Date
upon which interest and principal payments are required under the Note, in the
case of a Defeasance Event for the entire outstanding principal balance of the
Loan, or the Defeased Note, in the case of a Defeasance Event for only a portion
of the outstanding principal balance of the Loan, as applicable, and in amounts
equal to the scheduled payments due on such dates under the Note or the Defeased
Note, as applicable, (including without limitation scheduled payments of
principal, interest, servicing fees (if any) and any other amounts due under the
Loan Documents on such dates) and assuming such Note or Defeased Note is prepaid
in full on the Maturity Date (the "SCHEDULED DEFEASANCE PAYMENTS"). Borrower,
pursuant to the Security Agreement or other appropriate document, shall
authorize and direct that the payments received from the U.S. Obligations may be
made directly to the Lockbox Account (unless otherwise directed by Lender) and
applied to satisfy the obligations of Borrower under (i) the Note or the
Defeased Note, as applicable, (ii) if Borrower's obligations under the Note or
the Defeased Note, as applicable, have been satisfied, the Guaranty of Payment.
Any portion of the Defeasance Deposit in excess of the amount necessary to
purchase the U.S. Obligations required by this Section 2.4 and satisfy
Borrower's other obligations under this Section 2.4 and Section 2.5 shall be
remitted to Borrower.
2.4.2 SUCCESSOR BORROWER. In connection with any Defeasance Event,
------------------
Borrower may, or at the request of Lender shall, establish or designate a
successor entity (the "SUCCESSOR BORROWER") which shall be a single purpose
bankruptcy remote entity with an Independent Director approved by Lender, and
Borrower shall transfer and assign all obligations, rights and duties under and
to the Note or the Defeased Note, as applicable, together with the pledged U.S.
Obligations to such Successor Borrower. Such Successor Borrower shall assume the
obligations under the Note or the Defeased Note, as applicable, and the Security
Agreement and, if applicable, the Junior Security Agreement and Borrower shall
be relieved of its obligations under such documents. Borrower shall pay $1,000
to any such Successor Borrower as consideration for assuming the obligations
under the Note or the Defeased Note, as applicable, and the Security Agreement
and, if applicable, the Junior Security Agreement. Notwithstanding anything in
this Agreement to the contrary, no other assumption fee shall be payable upon a
transfer of the Note or the Defeased Note, as applicable, in accordance with
this Section 2.4.2, but Borrower shall pay all costs and expenses incurred by
Lender, including Lender's reasonable attorneys' fees and expenses, incurred in
connection therewith.
2.4.3 MANDATORY DEFEASANCE. If Option Holder shall exercise the
--------------------
Purchase Option after the Permitted Release Date, Borrower shall, simultaneously
with transferring the Option Property, defease a portion of the Loan equal to
the Adjusted Release Amount for the Option Property.
SECTION 2.5 RELEASE OF PROPERTY.
-------------------
Except as set forth in this Section 2.5, no repayment, prepayment or
defeasance of all or any portion of the Note shall cause, give rise to a right
to require, or otherwise result in, the release of any Lien of any Mortgage on
any Individual Property.
17
2.5.1 RELEASE OF ALL PROPERTIES.
-------------------------
(a) If Borrower has elected to defease the entire Loan and the
requirements of Section 2.4 and this 2.5.1(a) have been satisfied, all of the
Properties shall be released from the Liens of their respective Mortgages and,
if applicable, Junior Mortgages, and the U.S. Obligations, pledged pursuant to
the Security Agreement, shall be the sole source of collateral securing the Note
and, if applicable, the Guaranty of Payment.
(b) In connection with the release of the Mortgages and, if
applicable, the Junior Mortgages, Borrower shall submit to Lender, not less than
thirty (30) days prior to the Defeasance Date, a release of Lien (and related
Loan Documents) for each Individual Property for execution by Lender. Such
release shall be in a form appropriate in each jurisdiction in which an
Individual Property is located and reasonably satisfactory to Lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such releases in
accordance with the terms of this Agreement.
2.5.2 RELEASE OF INDIVIDUAL PROPERTY. (a) If Borrower has
------------------------------
elected to defease a portion of the Loan and the requirements of Section 2.4 and
this 2.5.2 have been satisfied, Borrower may obtain the release of one or more
Individual Properties from the Lien of the Mortgage thereon (and related Loan
Documents) and the release of Borrower's obligations under the Loan Documents
with respect to each such Individual Property (other than those expressly stated
to survive), upon the satisfaction of each of the following conditions:
(i) The principal balance of the Defeased Note shall equal or
exceed the Adjusted Release Amount for the applicable Individual Property;
provided, however, if the undefeased portion of the Loan at the time a release
is requested is less than the Adjusted Release Amount, the Defeased Note shall
equal the remaining undefeased portion of the Loan at the time of release;
(ii) Borrower shall submit to Lender, not less than thirty (30) days
prior to the date of such release, a release of Lien of the Mortgage and, if
applicable, the Junior Mortgage (and related Loan Documents) for such Individual
Property for execution by Lender. Such release shall be in a form appropriate
in each jurisdiction in which the Individual Property is located and
satisfactory to Lender in its sole discretion. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an Officer's Certificate
certifying that such documentation (i) is in compliance with all Legal
Requirements, (ii) will effect such release in accordance with the terms of this
Agreement, and (iii) will not impair or otherwise adversely affect the Liens,
security interests and other rights of Lender under the Loan Documents not being
released (or as to the parties to the Loan Documents and Properties subject to
the Loan Documents not being released); and
18
(iii) After giving effect to such release, the Debt Service Coverage
Ratio for the Properties then remaining subject to the Liens of the Mortgages
shall be equal to at least 2.00 to 1.00.
(iv) If the Individual Property sought to be released is subject to
the same Mortgage as any other Individual Property or adjacent to any other
Individual Property, after giving effect to such release, (i) each such
remaining Individual Property shall (A) have adequate rights of access to public
ways, (B) be a "legal lot" under all Legal Requirements and be separately
assessed for tax purposes, (C) comply with all Legal Requirements, including all
applicable zoning ordinances and subdivision ordinances, (D) receive all public
utilities directly from an adjoining public right-of-way, through another
remaining Individual Property or through valid easements insured under the Title
Insurance Policies and (E) not be subject to any material encroachment by
improvements on the property so released, (ii) no material Improvements on any
Individual Property shall encroach onto the property so released. Borrower
shall have executed and delivered such reciprocal easements, declarations of
covenants, conditions and restrictions and such other agreements as may be
required by the title insurance company that issued the Title Insurance Policies
or by any Governmental Authorities or as may be reasonably required by Lender.
Borrower shall also have delivered to Lender evidence satisfactory to Lender
establishing that the coverage of the Title Insurance Policy insuring the Lien
of the Mortgage covering the Individual Properties remaining subject to such
Mortgage after such release, including all endorsements and affirmative
coverages thereunder, shall not be affected or changed by such release.
(v) If the Individual Property sought to be released is subject to
a Lease that also covers any other Individual Property, such Lease shall be
severed and amended so that, after giving effect to such release, (i) no
Individual Property shall be subject to a Lease that also affects any property
that is not subject to a Mortgage, (ii) the Property Specific Debt Service
Coverage Ratio for the Individual Property or Properties remaining subject to
such Lease shall be equal to at least 2.00 to 1.00 and (iii) the EBTDAR Ratio
for the Individual Property or Properties remaining subject to such Lease shall
be equal to at least 2.00 to 1.00.
(b) After such release, the released property shall not be deemed
to be an Individual Property (except for the purposes of obligations under the
Loan Documents that are expressly provided to survive repayment in full of the
Debt and satisfaction of the Mortgage).
(c) In addition to the foregoing, if Option Holder shall have
exercised the Purchase Option and Borrower shall have complied with its
obligations under Section 2.3.2(b) or Section 2.4.2, as applicable, and
fulfilled the conditions in subparagraph (a)(ii) of this Section 2.5.2, Lender
will release the lien of the Mortgage and, if applicable, the Junior Mortgage
from the Option Property simultaneously with the transfer of the Option Property
by Borrower.
2.5.3 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
--------------------------
request and at the expense of Borrower (including reasonable attorneys' fees and
expenses), upon payment in full of all principal and interest on the Loan and
all other amounts due and payable under the
19
Loan Documents in accordance with the terms and provisions of the Note and this
Loan Agreement, release the Lien of the Mortgage on each Individual Property not
theretofore released.
SECTION 2.6 MANNER OF MAKING PAYMENTS; CASH MANAGEMENT.
------------------------------------------
2.6.1 DEPOSITS INTO LOCKBOX ACCOUNT. Borrower shall cause all
-----------------------------
Rents from the Properties to be deposited into the Lockbox Account in accordance
with the Cash Management Agreement. Without limitation of the foregoing,
Borrower shall (a) deliver irrevocable written instructions to all Tenants under
Leases to deliver all Rents payable thereunder directly to the Lockbox Account,
and (b) deposit all amounts received by Borrower constituting Rents or other
revenue of any kind from the Properties into the Lockbox Account within one (1)
Business Day of receipt thereof. Disbursements from the Lockbox Account will be
made in accordance with the terms and conditions of this Agreement and the Cash
Management Agreement. Lender shall have sole dominion and control over the
Lockbox Account and, except as set forth in the Cash Management Agreement,
Borrower shall have no rights to make withdrawals therefrom.
2.6.2 MAKING OF PAYMENTS. Each payment by Borrower hereunder or
------------------
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 2:00 p.m., New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day, including any Monthly Payment Date, which is not a Business Day, such
payment shall be made on the first Business Day succeeding such scheduled due
date.
2.6.3 PAYMENTS RECEIVED IN THE LOCKBOX ACCOUNT. Notwithstanding
----------------------------------------
anything to the contrary contained in this Agreement or the other Loan
Documents, and provided no Event of Default has occurred and is continuing,
Borrower's obligations with respect to the monthly payment of principal and
interest and amounts due for the Reserve Funds shall be deemed satisfied to the
extent sufficient amounts are on deposit in the Lockbox Account to satisfy such
obligations at the time each such payment is required, regardless of whether any
of such amounts are so applied by Lender.
2.6.4 NO DEDUCTIONS, ETC. All payments made by Borrower hereunder or
-------------
under the Note or the other Loan Documents shall be made irrespective of, and
without any deduction for, any setoff, defense or counterclaims.
2.6.5 DISBURSEMENT OF EXCESS FUNDS. Provided no Event of Default
----------------------------
has occurred that is then continuing, once funds sufficient to make all payments
to Lender required to be made under the Loan Documents on the next Payment Date
and any other amounts then payable to Lender have been deposited in the Lockbox
Account, Lender shall release, or cause to be released to Borrower, as provided
in the Cash Management Agreement, all amounts thereafter deposited in the
Lockbox Account allocable to the period prior to the next Payment
20
Date; provided that Lender shall not be required to release or cause to be
-------- ----
released any such amounts during the period from the twentieth (20th) day of any
calendar month until the next Payment Date.
SECTION 2.7 PROPERTY SUBSTITUTIONS.
----------------------
2.7.1 SUBSTITUTION OF PROPERTY. Subject to the terms and conditions
------------------------
set forth in this Section 2.7, Borrower may obtain a release of the Lien of a
Mortgage (and the related Loan Documents) encumbering an Individual Property (a
"SUBSTITUTED PROPERTY") by substituting therefor another automobile dealership
property acquired by Borrower (individually, a "SUBSTITUTE PROPERTY" and
collectively, the "SUBSTITUTE PROPERTY"), provided that any such substitution
shall be subject, in each case, to the satisfaction of the following conditions
precedent:
(a) All of the Individual Properties released during the term of the
Loan shall represent in the aggregate not more than twenty-five
percent (25%) of the aggregate Net Operating Income of all of the
Properties for the twelve (12) month period immediately preceding
the Closing Date and for the twelve (12) month period immediately
preceding the date of substitution.
(b) Such substitution shall not be allowed more than three (3) times
during the term of the Loan.
(c) Borrower shall have delivered reasonable evidence establishing that
an environmental condition exists at the Substituted Property such
that the potential liability to Guarantor under the Recourse
Guaranty and/or the Environmental Indemnity exceeds Two Hundred
Fifty Thousand and No/100 Dollars ($250,000).
(d) Lender shall have received a copy of a deed conveying all of
Borrower's right, title and interest in and to the Substituted
Property to an entity other than Borrower and a letter from Borrower
countersigned by a title insurance company acknowledging receipt of
such deed or assignment and assumption, as applicable, and agreeing
to record such deed or assignment and assumption, as applicable, in
the real estate records for the county in which the Substituted
Property is located.
(e) Lender shall have received an appraisal of the Substitute Property
dated no more than sixty (60) days prior to the substitution by an
appraiser acceptable to the Rating Agencies, indicating an appraised
value of the Substitute Property that is equal to or greater than
the value of the Substituted Property determined by Lender at the
time of the encumbrance of the Substituted Property by the related
Mortgage at or about the Closing Date.
21
(f) After giving effect to the substitution, the Debt Service Coverage
Ratio for the Loan for all of the Properties (including the
Substitute Property but excluding the Substituted Property) is not
less than the Debt Service Coverage Ratio for the Loan for all of
the Properties (including the Substituted Property but excluding the
Substitute Property) as of the Closing Date and as of the date
immediately preceding the substitution.
(g) The Net Operating Income for the Substitute Property either (i) does
not show a downward trend over the three (3) years immediately prior
to the date of substitution or (ii) with respect to a Substitute
Property for which information regarding the Net Operating Income of
such Substitute Property for the three (3) years immediately prior
to the date of substitution cannot be obtained by Borrower after
Borrower's exercise of diligent efforts, the Net Operating Income
shall not show a downward trend for such period of time immediately
prior to the date of substitution as may be determined from the
information regarding such Net Operating Income available or (iii)
if the Substitute Property has been the subject of a new triple net
Lease executed within such three (3) year period, the Net Operating
Income shall not show a downward trend for the period, not less than
twelve (12) months, since the execution of said Lease.
(h) The Net Operating Income and Property Specific Debt Service Coverage
Ratio (for the twelve (12) month period immediately preceding the
substitution) for the Substitute Property immediately after such
substitution is greater than one hundred ten percent (110%) of the
Net Operating Income and Property Specific Debt Service Coverage
Ratio (for the twelve (12) month period immediately preceding the
substitution) for the related Substituted Property immediately prior
to such substitution.
(i) Lender shall have received confirmation in writing from the Rating
Agencies to the effect that such substitution will not result in a
withdrawal, qualification or downgrade of the respective ratings in
effect immediately prior to such substitution for the Securities
issued in connection with the Securitization that are then
outstanding.
(j) No material Default or Event of Default shall have occurred and be
continuing and Borrower shall be in compliance in all material
respects with all terms and conditions set forth in this Agreement
and in each Loan Document on Borrower's part to be observed or
performed. Lender shall have received a certificate from Borrower
confirming the foregoing, stating that the representations and
warranties of Borrower contained in this Agreement and the other
Loan Documents are true and correct in all material respects on and
as of the date of the substitution
22
with respect to Borrower, the Properties and the Substitute Property
and containing any other representations and warranties with respect
to Borrower, the Properties, the Substitute Property or the Loan as
the Rating Agencies may require, such certificate to be in form and
substance satisfactory to the Rating Agencies.
(k) Borrower shall have executed, acknowledged and delivered to Lender
(i) a Mortgage, an Assignment of Leases and two UCC Financing
Statements with respect to the Substitute Property, together with a
letter from Borrower countersigned by a title insurance company
acknowledging receipt of such Mortgage, Assignment of Leases and
UCC-1 Financing Statements and agreeing to record or file, as
applicable, such Mortgage, Assignment of Leases and Rents and one of
the UCC-1 Financing Statements in the real estate records for the
county in which the Substitute Property is located and to file one
of the UCC-1 Financing Statement in the office of the Secretary of
State of the state in which the Substitute Property is located, so
as to effectively create upon such recording and filing valid and
enforceable Liens upon the Substitute Property, of the requisite
priority, in favor of Lender (or such other trustee as may be
desired under local law), subject only to the Permitted Encumbrances
and such other Liens as are permitted pursuant to the Loan Documents
and (ii) and an Environmental Indemnity with respect to the
Substitute Property. The Mortgage, Assignment of Leases, UCC-1
Financing Statements and Environmental Indemnity shall be the same
in form and substance as the counterparts of such documents executed
and delivered with respect to the related Substituted Property
subject to modifications reflecting the Substitute Property as the
Individual Property that is the subject of such documents and such
modifications reflecting the laws of the state in which the
Substitute Property is located as shall be recommended by the
counsel admitted to practice in such state and delivering the
opinion as to the enforceability of such documents required pursuant
to clause (q) below. The Mortgage encumbering the Substitute
Property shall secure all amounts evidenced by the Note, provided
that in the event that the jurisdiction in which the Substitute
Property is located imposes a mortgage recording, intangibles or
similar tax and does not permit the allocation of indebtedness for
the purpose of determining the amount of such tax payable, the
principal amount secured by such Mortgage shall be equal to one
hundred fifty percent (150%) of the amount of the Loan allocated to
the Substitute Property. The amount of the Loan allocated to, and
the Release Amount of, the Substitute Property (such amount being
hereinafter referred to as the "SUBSTITUTE RELEASE AMOUNT") shall
equal the Release Amount of the related Substituted Property.
23
(l) Lender shall have received (A) any "tie-in" or similar endorsement
to each Title Insurance Policy insuring the Lien of an existing
Mortgage as of the date of the substitution available with respect
to the Title Insurance Policy insuring the Lien of the Mortgage with
respect to the Substitute Property and (B) a Title Insurance Policy
(or a marked, signed and redated commitment to issue such Title
Insurance Policy) insuring the Lien of the Mortgage encumbering the
Substitute Property, issued by the title company that issued the
Title Insurance Policies insuring the Lien of the existing Mortgages
and dated as of the date of the substitution, with reinsurance and
direct access agreements that replace such agreements issued in
connection with the Title Insurance Policy insuring the Lien of the
Mortgage encumbering the Substituted Property. The Title Insurance
Policy issued with respect to the Substitute Property shall (1)
provide coverage in the amount of the Substitute Release Amount if
the "tie-in" or similar endorsement described above is available or,
if such endorsement is not available, in an amount equal to one
hundred fifty percent (150%) of the Substitute Release Amount, (2)
insure Lender that the relevant Mortgage creates a valid first lien
on the Substitute Property encumbered thereby, free and clear of all
exceptions from coverage other than Permitted Encumbrances and
standard exceptions and exclusions from coverage (as modified by the
terms of any endorsements), (3) contain such endorsements and
affirmative coverages as are contained in the Title Insurance
Policies insuring the Liens of the existing Mortgages, and (4) name
Lender as the insured. Lender also shall have received copies of
paid receipts showing that all premiums in respect of such
endorsements and Title Insurance Policies have been paid.
(m) Lender shall have received a current title survey for each
Substitute Property, certified to the title company and Lender and
their successors and assigns, in the same form and having the same
content as the certification of the Survey of the Substituted
Property prepared by a professional land surveyor licensed in the
state in which the Substitute Property is located and acceptable to
the Rating Agencies in accordance with the 1992 Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys. Such survey
shall reflect the same legal description contained in the Title
Insurance Policy relating to such Substitute Property and shall
include, among other things, a metes and bounds description of the
real property comprising part of such Substitute Property. The
surveyor's seal shall be affixed to each survey and each survey
shall certify that (A) no material Improvements on the surveyed
property are relocated in an area designated as Flood Zone A or
Flood Zone V by the Federal
24
Emergency Management Administration, in which case such property
shall be covered by the flood insurance as provided in Section
-------
5.1.
---
(n) Lender shall have received valid certificates of insurance
indicating that the requirements for the policies of insurance
required for an Individual Property hereunder have been satisfied
with respect to the Substitute Property and evidence of the
payment of all premiums payable for the existing policy period.
(o) Lender shall have received a Phase I environmental report and, if
recommended under the Phase I environmental report, a Phase II
environmental report, which conclude that the Substitute Property
does not contain any Hazardous Substance (as defined in the
Mortgage), other than as is permitted under the Loan Documents,
is not subject to any risk of contamination from any off-site
Hazardous Substance and does not require any remedial actions
with respect to Hazardous Substances.
(p) Borrower shall deliver or cause to be delivered to Lender (A)
updates certified by Borrower of all organizational documentation
related to Borrower and/or the formation, structure, existence,
good standing and/or qualification to do business delivered to
Lender in connection with the Closing Date; (B) good standing
certificates, certificates of qualification to do business in the
jurisdiction in which the Substitute Property is located (if
required in such jurisdiction) and (C) resolutions of Borrower
authorizing the substitution and any actions taken in connection
with such substitution.
(q) Lender shall have received the following opinions of Borrower's
counsel: (A) an opinion or opinions of counsel admitted to
practice under the laws of the state in which the Substitute
Property is located stating that the Loan Documents delivered
with respect to the Substitute Property pursuant to clause (k)
above are valid and enforceable in accordance with their terms,
subject to the laws applicable to creditors' rights and equitable
principles, and that Borrower is qualified to do business and in
good standing under the laws of the jurisdiction where the
Substitute Property is located or that Borrower is not required
by applicable law to qualify to do business in such jurisdiction;
(B) an opinion of Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ or such other
counsel acceptable to the Rating Agencies stating that the Loan
Documents delivered with respect to the Substitute Property
pursuant to clause (j) above were duly authorized, executed and
delivered by Borrower and that the execution and delivery of such
Loan Documents and the performance by Borrower of its obligations
thereunder will not cause a breach of, or a default under, any
agreement, document or instrument to which Borrower is a party or
to which it or its properties are bound;
25
(C) an opinion of counsel acceptable to the Rating Agencies
stating that subjecting the Substitute Property to the Lien of
the related Mortgage and the execution and delivery of the
related Loan Documents does not and will not affect or impair the
ability of Lender to enforce its remedies under all of the Loan
Documents or to realize the benefits of the cross-
collateralization provided for thereunder; (D) an update of the
Insolvency Opinion indicating that the substitution does not
affect the opinions set forth therein; (E) an opinion of counsel
acceptable to the Rating Agencies stating that the substitution
and the related transactions do not constitute a fraudulent
conveyance under applicable bankruptcy and insolvency laws and
(F) an opinion of counsel acceptable to the Rating Agencies that
the substitution does not constitute a "significant modification"
of the Loan under Section 1001 of the Code or otherwise cause a
tax to be imposed on a "prohibited transaction" by any REMIC
Trust.
(r) Borrower shall have paid, or caused to be paid, all Basic
Carrying Costs relating to the Properties and the Substitute
Property, including without limitation, (i) accrued but unpaid
insurance premiums relating to the Properties and the Substitute
Property, (ii) currently due Taxes (including any in arrears)
relating to the Properties and the Substitute Property and (iii)
currently due Other Charges relating to the Properties and
Substitute Property.
(s) Borrower shall have paid or reimbursed Lender for all costs and
expenses incurred by Lender (including, without limitation,
reasonable attorneys fees and disbursements) in connection with
the substitution and Borrower shall have paid all recording
charges, filing fees, taxes or other expenses (including, without
limitation, mortgage and intangibles taxes and documentary stamp
taxes) payable in connection with the substitution. Borrower
shall have paid or caused to be paid all costs and expenses of
the Rating Agencies incurred in connection with the substitution.
(t) Lender shall have received annual operating statements and
occupancy statements for the Substitute Property for the most
current completed fiscal year and a current operating statement
for the Substituted Property, each certified to Lender as being
true and correct and a certificate from Borrower certifying that
there has been no material adverse change in the financial
condition of the Substitute Property since the date of such
operating statements.
(u) Borrower shall have delivered to Lender estoppel certificates
from any existing tenants (A) constituting anchor tenants at the
Substitute Property, (B) leasing an entire building at the
Substitute Property,
26
(C) whose rent equals or exceeds five percent of the Gross Income
from Operations relating to the Substitute Property or (D) that,
disregarding the area leased by those described in clauses (A),
(B) and (C), lease no less than seventy-five percent (75%) of the
remaining gross leasable area at the Substitute Property. All
such estoppel certificates shall include the information provided
in the form of subordination, nondisturbance and attornment
agreement attached hereto as Schedule III and shall indicate that
------------
(1) the subject lease is a valid and binding obligation of the
tenant thereunder, (2) there are no defaults under such lease on
the part of the landlord or tenant thereunder, (3) the tenant
thereunder has no defense or offset to the payment of rent under
such leases, (4) no rent under such lease has been paid more than
one (1) month in advance, (5) the tenant thereunder has no option
or right of first refusal under such lease to purchase all or any
portion of the Substitute Property, except on terms consistent
with the Permitted Leases and (6) all tenant improvement work
required under such lease has been completed and the tenant under
such lease is in actual occupancy of its leased premises. If an
estoppel certificate indicates that all tenant improvement work
required under the subject lease has not yet been completed,
Borrower shall, if required by the Rating Agencies, deliver to
Lender financial statements indicating that Borrower has adequate
funds to pay all costs related to such tenant improvement work as
required under such lease.
(v) Lender shall have received copies of all tenant leases and any
ground leases affecting the Substitute Property certified by
Borrower as being true and correct. Lender shall have received a
current rent roll of the Substitute Property certified by
Borrower as being true and correct.
(w) Lender shall have received, and Lender shall enter into,
subordination, nondisturbance and attornment agreements in the
form of subordination, nondisturbance and attornment agreement
attached hereto as Schedule III with respect to all of the Leases
------------
affecting the Substitute Property other than such Leases that
are, by their terms, subordinate to the Mortgage with respect to
the Substitute Property and, if the law of the State where the
Substitute Property is located allows the tenant under the Lease
in question to treat such Lease as terminated in the event of
sale by foreclosure or power of sale, provide for attornment to a
subsequent owner in the case of sale by foreclosure or power of
sale.
(x) Lender shall have received (A) an endorsement to the Title
Insurance Policy insuring the Lien of the Mortgage encumbering
the Substitute Property insuring that the Substitute Property
constitutes a separate tax lot or, if such an endorsement is not
available in the state in which the Substitute Property is
located, a letter from the title insurance company issuing such
Title Insurance Policy stating that the Substitute Policy
27
constitutes a separate tax lot or (B) a letter from the
appropriate taxing authority stating that the Substitute Property
constitutes a separate tax lot.
(y) Lender shall have received a Physical Conditions Report with
respect to the Substitute Property stating that the Substitute
Property and its use comply in all material respects with all
applicable Legal Requirements (including, without limitation,
zoning, subdivision and building laws) and that the Substitute
Property is in good condition and repair and free of damage or
waste. If compliance with any Legal Requirements are not
addressed by the Physical Conditions Report, such compliance
shall be confirmed by delivery to Lender of a certificate of an
architect licensed in the state in which the Substitute Property
is located, a letter from the municipality in which such Property
is located, a certificate of a surveyor that is licensed in the
state in which the Substitute Property is located (with respect
to zoning and subdivision laws), an ALTA 3.1 zoning endorsement
to the Title Insurance Policy delivered pursuant to clause (ix)
above (with respect to zoning laws) or a subdivision endorsement
to the Title Insurance Policy delivered pursuant to clause (ix)
above (with respect to subdivision laws). If the Physical
Conditions Report recommends that any repairs be made with
respect to the Substitute Property, such Physical Conditions
Report shall include an estimate of the cost of such recommended
repairs and Borrower shall deposit with Lender an amount equal to
one hundred fifty percent (150%) of such estimated cost, which
deposit shall constitute additional security for the Loan and
shall be released to Borrower upon the delivery to Lender of (A)
an update to such Physical Conditions Report or a letter from the
engineer that prepared such Physical Conditions Report indicating
that the recommended repairs were completed in good and
workmanlike manner and (B) paid receipts indicating that the
costs of all such repairs have been paid.
(z) If the Substituted Property is covered by a Management Agreement
that also covers other Individual Properties, Lender shall have
received a certified copy of an amendment to the Management
Agreement reflecting the deletion of the Substituted Property and
the addition of the Substitute Property as a property managed
pursuant thereto and Manager shall have executed and delivered to
Lender an amendment to the Assignment of Management Agreement
reflecting such amendment to the Management Agreement.
(aa) Lender shall have received such other and further approvals,
opinions, documents and information in connection with the
substitution as the Rating Agencies may have requested.
28
(bb) Borrower shall submit to Lender, not less than ten (10) days
prior to the date of such substitution, a release of Lien (and
related Loan Documents) for the Substituted Property for
execution by Lender. Such release shall be in a form appropriate
for the jurisdiction in which the Substituted Property is
located. Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.7.1
have been satisfied.
Upon the satisfaction of the foregoing conditions precedent, Lender will release
its Lien from the Substituted Property to be released and the Substitute
Property shall be deemed to be an Individual Property for purposes of this
Agreement, the Substitute Release Amount with respect to such Substitute
Property shall be deemed to be the Release Amount with respect to such
Substitute Property for all purposes hereunder and the Substituted Property
shall not be deemed to be an Individual Property (except for the purposes of
obligations under the Loan Documents that are expressly provided to survive
repayment in full of the Debt and satisfaction of the Mortgages).
III. REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 3.1 BORROWER REPRESENTATIONS.
------------------------
Borrower represents and warrants as of the date hereof and as of the
Closing Date that:
3.1.1 NO LITIGATION. There are no pending actions, suits or
-------------
proceedings, arbitrations or governmental investigations against Borrower or
Properties, an adverse outcome of which would materially affect Borrower's
performance under the Note, this Agreement or the other Loan Documents, or the
use of the Properties for the use currently being made thereof, the operation of
the Properties as currently being operated or the value of the Properties.
3.1.2 TITLE. Borrower has good, marketable and insurable title to
-----
the real property comprising part of each Individual Property and good title to
the balance of such Individual Property, and has the full power, authority and
right to execute, deliver and perform its obligations under this Agreement and
under each Loan Document to which Borrower is a party, and to deed, encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate the same and that Borrower possesses an
unencumbered fee estate in each Individual Property and the Improvements and
that it owns each Individual Property free and clear of all liens, encumbrances
and charges whatsoever except for Permitted Encumbrances and that each Mortgage
is and will remain a valid and enforceable first lien on and security interest
in the applicable Individual Property, subject only to said exceptions.
Borrower shall forever warrant, defend and preserve such title and the validity
and priority of the lien of the Mortgage and the other Loan Documents and shall
forever warrant and defend the same to Lender against the claims of all Persons
whomsoever.
29
3.1.3 PERMITTED ENCUMBRANCES. The Permitted Encumbrances do not
----------------------
and will not materially and adversely affect (a) the ability of Borrower to pay
in full the principal and interest on the Note in a timely manner or (b) the use
of the Properties for the use currently being made thereof or the operation of
the Properties as currently being operated.
3.1.4 FIRST LIEN. Upon the execution by Borrower and the recording
----------
of each Mortgage, and upon the execution and filing of UCC-1 financing
statements, Lender will have a valid first lien on the Properties and a valid
security interest in Borrower's interest in the Equipment (as defined in the
Mortgages), if any, subject to no liens, charges or encumbrances other than the
Permitted Encumbrances.
3.1.5 ERISA. Borrower has made and shall continue to make all
-----
required contributions to all employee benefit plans of Borrower, if any, and
Borrower has no knowledge of any material liability which has been incurred by
Borrower which remains unsatisfied for any taxes or penalties with respect to
any employee benefit plan or any multi-employer plan, and each such plan has
been administered in compliance with its terms and the applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
any other federal or state law.
3.1.6 CONTINGENT LIABILITIES. Borrower has no known material
----------------------
contingent liabilities.
3.1.7 NO OTHER OBLIGATIONS. Borrower has no material financial
--------------------
obligation under any indenture, mortgage, loan agreement or other agreement or
instrument to which Borrower is a party or by which Borrower or the Properties
is otherwise bound, other than the Debt and obligations incurred in the ordinary
course of the operation of the Properties.
3.1.8 NO OTHER DEBT. Borrower has not borrowed or received other
-------------
debt financing that has not been heretofore repaid in full.
3.1.9 FRAUDULENT CONVEYANCE. Borrower (a) has not entered into the
---------------------
Loan or any Loan Document with the actual intent to hinder, delay, or defraud
any creditor and (b) received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan contemplated by
the Loan Documents, the fair saleable value of Borrower's assets exceed and
will, immediately following the execution and delivery of the Loan Documents,
exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed or contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
execution and delivery of the Loan Documents, be greater than Borrower's
probable liabilities, including the maximum amount of its contingent liabilities
or its debts as such debts become absolute and matured. Borrower's assets do not
and, immediately following the execution and delivery of the Loan Documents will
not, constitute unreasonably small capital to carry out its business as
conducted or as proposed to be conducted. Borrower does not intend to, and does
not believe that it will, incur debts and liabilities (including, without
limitation, contingent liabilities and other
30
commitments) beyond its ability to pay such debts as they mature (taking into
account the timing and amounts to be payable on or in respect of obligations of
Borrower).
3.1.10 INVESTMENT COMPANY ACT. Borrower is not (a) an "investment
----------------------
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (b) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any
other federal or state law or regulation which prevents Borrower from entering
into the Loan.
3.1.11 ACCESS/UTILITIES. The Properties have adequate rights of
----------------
access to public ways and are served by adequate water, sewer, sanitary sewer
and storm drain facilities. All public utilities necessary to the continued use
and enjoyment of the Properties as presently used and enjoyed are located in the
public right-of-way abutting the applicable Individual Property or an adjacent
Individual Property, and all such utilities are connected so as to serve the
Properties, directly from such public right-of-way, through such adjacent
Individual Property or through valid easements insured under the Title Insurance
Policies. All roads necessary for the current utilization of the Properties
have been completed and dedicated to public use and accepted by all Governmental
Authorities or are the subject of access easements for the benefit of the
applicable Individual Property or an adjacent Individual Property.
3.1.12 SPECIAL ASSESSMENTS. Except as disclosed in the Title
-------------------
Insurance Policies, there are no material pending or, to the knowledge of
Borrower, proposed special or other assessments for public improvements or
otherwise affecting the Properties, nor, to the knowledge of Borrower, are there
any contemplated improvements to the Properties that may result in such special
or other assessments.
3.1.13 FLOOD ZONE. No material Improvements on any Individual
----------
Property are located in an area designated as Flood Zone A or Flood Zone V by
the Federal Emergency Management Administration except with respect to the
Individual Property known as ▇▇▇▇▇▇ Chevrolet located in Ft. ▇▇▇▇▇, Indiana, for
which Individual Property Borrower has obtained flood insurance in accordance
with the provisions of Section 5.1(b)(i) of this Agreement.
3.1.14 MISSTATEMENTS OF FACT. The Loan Documents do not contain
---------------------
any untrue statement of a material fact or omit to state any material fact
necessary to make statements contained herein or therein not misleading.
3.1.15 NO DEFENSES. The Note, this Agreement and the other Loan
-----------
Documents are not subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor would the operation of any of the
terms of the Note, this Agreement or any of the other Loan Documents, or the
exercise of any right thereunder, render this Agreement unenforceable, in whole
or in part, or subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury.
31
3.1.16 PERMITS; CASUALTY. All certifications, permits, licenses
-----------------
and approvals, including, without limitation, certificates of completion and
occupancy permits required for the legal use, occupancy and operation of the
Properties as an automobile dealership and servicing center (the "LICENSES"),
have been obtained and are in full force and effect except to the extent the
failure of any such License to be in full force and effect would not have a
material adverse effect on Borrower or the use and operation of any Individual
Property. The Properties are free of material damage and are in good repair in
all material respects, and there is no proceeding pending for the total or
material partial condemnation of, or affecting, the Properties.
3.1.17 BOUNDARY LINES. All of the material Improvements which
--------------
were included in determining the appraised value of each Individual Property lie
wholly within the boundaries and building restriction lines of such Individual
Property except to the extent such Improvements may encroach upon an adjoining
Individual Property, and no improvements on adjoining properties, other than an
adjoining Individual Property, encroach materially upon any Individual Property,
and no easements or other encumbrances upon an Individual Property encroach
materially upon any of the Improvements, so as to affect the value or
marketability of any Individual Property, except those which are insured against
by the Title Insurance Policies. All of the Improvements comply with all
material requirements of any applicable zoning and subdivision laws and
ordinances.
3.1.18 INTENTIONALLY DELETED.
---------------------
3.1.19 SURVEY. The survey of each Individual Property delivered to
------
Lender in connection with this Agreement, has been performed by a duly licensed
surveyor or registered professional engineer in the jurisdiction in which each
Individual Property is situated, is certified to Lender, its successors and
assigns, and the title insurance company, with the signature and seal of a
licensed engineer or surveyor affixed thereto, and does not fail to reflect any
material matter known to Borrower affecting any Individual Property or the title
thereto.
3.1.20 LEGAL REQUIREMENTS. The Properties are and shall at all times
------------------
remain in compliance in all material respects with all Legal Requirements,
including, without limitation, building and zoning ordinances and codes.
3.1.21 FORFEITURE. There has not been and shall never be committed
----------
by Borrower or any other Person in occupancy of or involved with the operation
or use of the Properties any act or omission affording the federal government or
any state or local government the right of forfeiture as against the Properties
or any part thereof or any monies paid in performance of Borrower's obligations
under any of the Loan Documents.
3.1.22 MANAGEMENT AGREEMENT. The Management Agreement, dated the
--------------------
date hereof (the "MANAGEMENT AGREEMENT") between Borrower and Manager pursuant
to which Manager operates the Properties is in full force and effect and there
is no default or violation by any party thereunder. The fee due under the
Management Agreement, and the
32
terms and provisions of the Management Agreement, are subordinate to this
Agreement and Manager shall attorn to Lender.
3.1.23 ORGANIZATION. Borrower has been duly organized and is validly
------------
existing and in good standing with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with its properties,
businesses and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged, and the
sole business of Borrower is the ownership, management and operation of the
Properties.
3.1.24 PROCEEDINGS. Borrower has taken all necessary action to
-----------
authorize its execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
3.1.25 NO CONFLICTS. The execution, delivery and performance of
------------
this Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement or other agreement or instrument to
which Borrower is a party or by which any of Borrower's property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any Governmental Authority having
jurisdiction over Borrower or any of Borrower's properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower of this Agreement or any other Loan Documents has been
obtained and is in full force and effect.
3.1.26 AGREEMENTS. Borrower is not a party to any agreement or
----------
instrument or subject to any restriction which might materially and adversely
affect Borrower or any Individual Property, or Borrower's business, properties
or assets, operations or condition, financial or otherwise. Borrower is not in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or any of the Properties
are bound. Borrower has no material financial obligation under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Borrower is a party or by which Borrower or the Properties is otherwise
bound, other than (a) obligations incurred in the
33
ordinary course of the operation of the Properties and (b) obligations under the
Loan Documents.
3.1.27 NO BANKRUPTCY FILING. Neither Borrower nor any of its
--------------------
constituent Persons are contemplating either the filing of a petition by it
under any state or federal bankruptcy or insolvency laws or the liquidation of
all or a major portion of Borrower's assets or property, and Borrower has no
knowledge of any Person contemplating the filing of any such petition against it
or such constituent Persons.
3.1.28 FINANCIAL INFORMATION. All financial data that have been
---------------------
delivered to Lender in respect of the Properties (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of the Properties as of the date of such reports, and (iii) to the
extent prepared or audited by an independent certified public accounting firm,
have been prepared in accordance with GAAP throughout the periods covered,
except as disclosed therein. Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on any Individual
Property or the operation thereof as an automobile dealership and servicing
center, except as referred to or reflected in said financial statements. Since
the date of such financial statements, there has been no materially adverse
change in the financial condition, operations or business of Borrower from that
set forth in said financial statements.
3.1.29 CONDEMNATION. No Condemnation or other proceeding has
------------
been commenced or, to Borrower's best knowledge, is contemplated with respect to
all or any material portion of any Individual Property or for the relocation of
roadways providing access to any Individual Property.
3.1.30 FEDERAL RESERVE REGULATIONS. No part of the proceeds of
---------------------------
the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" in violation of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
3.1.31 NOT A FOREIGN PERSON. Borrower represents and warrants that
--------------------
Borrower is not a "foreign person" within the meaning of Section 1445(f)(3) of
the Internal Revenue Code of 1986, as amended and the related Treasury
Department regulations, including temporary regulations.
3.1.32 SEPARATE LOTS. Each Individual Property is comprised of
-------------
one (1) or more parcels which constitute a separate tax lot or lots and does not
constitute a portion of any other tax lot not a part of such Individual
Property.
3.1.33 ENFORCEABILITY. The Loan Documents are not subject to any
--------------
right of rescission, set-off, counterclaim or defense by Borrower, including the
defense of usury, nor
34
would the operation of any of the terms of the Loan Documents, or the exercise
of any right thereunder, render the Loan Documents unenforceable, and Borrower
has not asserted any right of rescission, set-off, counterclaim or defense with
respect thereto.
3.1.34 INSURANCE. Borrower has obtained and has delivered to
---------
Lender certificates of all insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. To the
best of Borrower's knowledge, no material pending claims have been made under
any such policy, and no Person, including Borrower, has done, by act or
omission, anything which would materially impair the coverage of any such
policy.
3.1.35 USE OF PROPERTY. Each Individual Property is used
---------------
exclusively for automobile dealership and servicing center purposes, other
appurtenant and related uses and other previously existing uses as permitted
under the Permitted Leases.
3.1.36 PHYSICAL CONDITION. Except as may be set forth in the
------------------
engineering reports delivered to Lender in connection with the origination of
the Loan, each Individual Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, is in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in any Individual Property, whether latent or
otherwise, and Borrower has not received notice from any insurance company or
bonding company of any defects or inadequacies in any Individual Property, or
any part thereof, which would adversely affect the insurability of the same or
cause the imposition of extraordinary premiums or charges thereon or of any
termination or threatened termination of any policy of insurance or bond.
3.1.37 LEASES. The Properties are not subject to any Leases
------
other than the Leases described in Schedule II attached hereto and made a part
-----------
hereof and subleases or assignments thereunder. No Person has any possessory
interest in any Individual Property or right to occupy the same except under and
pursuant to the provisions of the Leases and subleases or assignments permitted
thereunder. The current Leases are in full force and effect and there are no
material defaults thereunder by either party and, to Borrower's knowledge, there
are no conditions that, with the passage of time or the giving of notice, or
both, would constitute material defaults thereunder. No Rent (including
security deposits) has been paid more than one (1) month in advance of its due
date. All material work to be performed by Borrower under each Lease has been
performed as required and has been accepted by the applicable tenant, and any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any tenant has
already been received by such tenant. There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Lease or of the Rents received
therein. Except as permitted under the Permitted Leases, no tenant listed on
Schedule II has assigned its Lease or sublet all or any portion of the premises
-----------
demised thereby, no such tenant holds its leased premises under assignment or
sublease, nor does anyone except such tenant and its employees occupy such
35
leased premises. Except as set forth in the Leases, no tenant under any Lease
has a right or option pursuant to such Lease or otherwise to purchase all or any
part of the leased premises or the building of which the leased premises are a
part. No tenant under any Lease has any right or option for additional space in
the Improvements. No hazardous wastes or toxic substances, as defined by
applicable federal, state or local statutes, rules and regulations, have been
disposed, stored or treated by any tenant under any Lease on or about the leased
premises nor does Borrower have any knowledge of any tenant's intention to use
its leased premises for any activity which, directly or indirectly, involves the
use, generation, treatment, storage, disposal or transportation of any petroleum
product or any toxic or hazardous chemical, material, substance or waste except
for any such substances used or generated by any tenant in the ordinary course
of business and treated in accordance with applicable Environmental Laws
("PERMITTED MATERIALS"). Borrower shall not permit or suffer any tenant under
any Permitted Lease to relocate from any Individual Property to any property
owned by an Affiliate of Borrower, without, in either case, the prior written
consent of Lender, in its sole discretion.
3.1.38 FILING AND RECORDING TAXES. All transfer taxes, deed
--------------------------
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the transfer of the Properties to Borrower have
been paid. All mortgage, mortgage recording, stamp, intangible or other similar
tax required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the execution, delivery, recordation,
filing, registration, perfection or enforcement of any of the Loan Documents,
including, without limitation, the Mortgages, been paid, and, under current
Legal Requirements, each of the Mortgages is enforceable in accordance with
their respective terms by Lender (or any subsequent holder thereof).
3.1.39 LOAN TO VALUE. The maximum principal amount of the Loan
-------------
does not exceed one hundred twenty-five percent (125%) of the fair market value
of the Properties.
3.1.40 SINGLE PURPOSE ENTITY/SEPARATENESS. Borrower represents,
----------------------------------
warrants and covenants as follows:
(a) Borrower does not own and will not own any asset or property other
than (i) the Properties, and (ii) incidental personal property necessary for the
ownership or operation of the Properties.
(b) Borrower will not engage in any business other than the ownership,
management and operation of the Properties and Borrower will conduct and operate
its business as presently conducted and operated.
(c) Borrower will not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower, Guarantor or any
Affiliate of any constituent party or Guarantor, except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than any
such party.
36
(d) Borrower has not incurred and will not incur any Indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt and (ii) trade and
operational debt incurred in the ordinary course of business with trade
creditors and in amounts as are normal and reasonable under the circumstances,
except pursuant to the Guaranty of Payment and the Cash Management Agreement.
No Indebtedness other than the Debt may be secured (subordinate or pari passu)
---- -----
by the Properties, except pursuant to the Junior Mortgage.
(e) Borrower has not made and will not make any loans or advances to
any third party (including any Affiliate or constituent party, any Guarantor or
any Affiliate of any constituent party or Guarantor), except pursuant to the
Guaranty of Payment or as provided in the Cash Management Agreement, and shall
not acquire obligations or securities of its Affiliates.
(f) Borrower is and will remain solvent and Borrower will pay its
debts and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due.
(g) Borrower has done or caused to be done and will do all things
necessary to observe organizational formalities and preserve its existence, and
Borrower will not, nor will Borrower permit any SPC Entity to amend, modify or
otherwise change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, operating agreement, certificate of organization,
trust or other organizational documents of Borrower or such SPC Entity in any
manner that would affect the status of Borrower or such SPC Entity as a single-
purpose, bankruptcy-remote entity, without (i) the prior written consent of
Lender, in its sole discretion and, (ii) if a Securitization has occurred,
delivery to Lender of a No Downgrade Letter.
(h) Borrower will maintain all of its books, records, financial
statements and bank accounts separate from those of its Affiliates and any
constituent party and file its own tax returns (provided that Borrower's
financial statements and tax returns may be prepared on a consolidated basis
with other entities provided that such consolidated financial statements and tax
returns indicate the separate existence of Borrower and its assets and
liabilities). Borrower shall maintain its books, records, resolutions and
agreements as official records.
(i) Borrower will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate of Borrower, any constituent party of Borrower, any Guarantor or
any Affiliate of any constituent party or Guarantor), shall correct any known
misunderstanding regarding its status as a separate entity, shall conduct
business in its own name, shall not identify itself or any of its Affiliates as
a division or part of the other and shall maintain and utilize separate
stationery, invoices and checks.
(j) Borrower is adequately capitalized and will maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations.
37
(k) Borrower shall not seek the dissolution, winding up, liquidation,
consolidation or merger in whole or in part, of Borrower.
(l) Borrower will not commingle the funds and other assets of Borrower
with those of any Affiliate or constituent party, any Guarantor, or any
Affiliate of any constituent party or Guarantor, or any other Person.
(m) Borrower has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party, any
Guarantor, or any Affiliate of any constituent party or Guarantor, or any other
Person.
(n) Borrower does not and will not guarantee, become obligated for,
pledge its assets as security for, or hold itself out to be responsible for the
debts or obligations of any other Person or the decisions or actions respecting
the daily business or affairs of any other Person, except pursuant to the
Guaranty of Payment.
(o) If Borrower is a limited partnership or a limited liability
company, the general partner or managing member (the "SPC ENTITY") shall be a
corporation whose sole asset is its interest in Borrower and the SPC Entity will
at all times comply, and will cause Borrower to comply, with each of the
representations, warranties, and covenants contained in this Section 3.1.40 as
if such representation, warranty or covenant was made directly by such SPC
Entity.
(p) Borrower shall at all times cause there to be at least one duly
appointed member of the board of directors (an "INDEPENDENT DIRECTOR") of the
SPC Entity who shall not have been at the time of such individual's appointment,
and shall not be at any time while serving as a director of the SPC Entity and
has not been at any time during the preceding five (5) years (i) a shareholder
of, or an officer, director (with the exception of serving as the Independent
Director of the SPC Entity), attorney, counsel, partner or employee of,
Borrower, the SPC Entity or any Affiliate of either of them, (ii) a customer of,
or supplier to, Borrower, the SPC Entity or any Affiliate of either of them,
(iii) a Person controlling or under common control with any such shareholder,
partner, supplier or customer, or (iv) a member of the immediate family of any
such shareholder, officer, director, partner, employee, supplier or customer.
As used herein, the term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies or
activities of a Person, whether through ownership of voting securities, by
contract or otherwise. Notwithstanding the foregoing, (1) an individual that
otherwise satisfies the foregoing shall not be disqualified from serving as an
Independent Director of the SPC Entity if such individual, at or prior to the
time of initial appointment, or at any time while serving as an Independent
Director of the SPC Entity, (i) is an Independent Director of a "special purpose
entity" affiliated with the Borrower or the SPC Entity (for purposes of this
paragraph, a "special purpose entity" is an entity whose organizational
documents contain restrictions on its activities and impose requirements
intended to preserve the Borrower's and the SPC Entity's separateness that are
substantially similar to those of the Borrower or the SPC Entity, as applicable,
and provided, inter alia, that
38
it (a) is organized for the limited purpose of owning and operating one or more
properties or being an owner of one or more other entities that are so
organized; (b) has restrictions on its ability to incur indebtedness, dissolve,
liquidate, consolidate, merge and/or sell assets; (c) may not file voluntarily a
bankruptcy petition on its own behalf or on behalf of an entity in which it has
an ownership interest without the consent of its independent director; and (d)
shall conduct itself and cause any entity in which it has an ownership interest
to conduct itself in accordance with certain "separateness covenants,"
including, but not limited to, the maintenance of its and such entity's books,
records, bank accounts and assets separate from those of any other person or
entity), (ii) makes retail purchases of vehicles from dealerships that are
affiliates of the SPC Entity or Borrower, or (iii) is employed by a company that
provides independent director services to corporations, which company (either
directly or through an affiliated entity) provides corporate registration or
other services to the SPC Entity, the Borrower or any affiliate of either of
them, and (2) the SPC Entity shall be entitled to pay reasonable fees to the
Independent Director for his or her services as a director of the SPC Entity.
(q) Borrower shall not cause or permit the board of directors of the
SPC Entity to take any action which, under the terms of any certificate of
incorporation, by-laws or any voting trust agreement with respect to any common
stock, requires a vote of the board of directors of the SPC Entity unless at the
time of such action there shall be at least one member who is an Independent
Director.
(r) Borrower shall allocate fairly and reasonably overhead expenses,
if any, that are shared with an Affiliate, including paying for office space and
services performed by any employee of an Affiliate.
(s) Borrower shall pay its own liabilities and expenses, including,
without limitation, the salaries of its own employees, if any, out of its own
funds and assets and maintain a sufficient number of employees if any are
required in light of its contemplated business operations.
(t) All of the assumptions made in that certain substantive non-
consolidation opinion letter dated the date hereof, delivered by Shaw, Pittman,
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ in connection with the Loan and any subsequent non-
consolidation opinion delivered on behalf of Borrower as required by the terms
and conditions of this Agreement (the "INSOLVENCY OPINION"), including, but not
limited to, any exhibits attached thereto, are true and correct in all respects.
Borrower shall conduct its business so that the assumptions made with respect to
Borrower in the Insolvency Opinion shall be true and correct in all respects.
Each Person other than Borrower with respect to which an assumption is made in
the Insolvency Opinion has complied and will comply with all of the assumptions
made with respect to it in the Insolvency Opinion.
3.1.41 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
-----------------------------------------------
information submitted by Borrower to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection
with the Loan or in satisfaction of the terms thereof and all statements of fact
made by Borrower in this Agreement or in any other Loan
39
Document, are accurate, complete and correct in all material respects. There has
been no material adverse change in any condition, fact, circumstance or event
that would make any such information inaccurate, incomplete or otherwise
misleading in any material respect or that otherwise materially and adversely
affects or might materially and adversely affect the Properties or the business
operations or the financial condition of Borrower except for changes in share
price of Guarantor. Borrower has disclosed to Lender all material facts and has
not failed to disclose any material fact that could cause any representation or
warranty made herein to be materially misleading.
SECTION 3.2 SURVIVAL OF REPRESENTATIONS.
---------------------------
Borrower agrees that all of the representations and warranties of
Borrower set forth in Section 3.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.
IV. BORROWER COVENANTS
------------------
SECTION 4.1 AFFIRMATIVE COVENANTS.
---------------------
From the date hereof and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Mortgages encumbering the Properties (and all related obligations)
in accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
4.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE.
--------------------------------------------------------
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, licenses, permits and
franchises and comply in all material respects with all Legal Requirements
applicable to it and the Properties. There shall never be committed by Borrower
or any other Person in occupancy of or involved with the operation or use of the
Properties any act or omission affording any Governmental Authority the right of
forfeiture as against any Individual Property or any part thereof or any monies
paid in performance of Borrower's obligations under any of the Loan Documents.
Borrower hereby covenants and agrees not to commit, permit or suffer to exist
any act or omission affording such right of forfeiture. Borrower shall at all
times maintain, preserve and protect all franchises and trade names and preserve
all the remainder of its property used or useful in the conduct of its business
and shall keep (or cause to be kept) the Properties in good working order and
repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto.
Borrower shall keep the Properties insured at all times by financially sound and
reputable insurers, to such extent
40
and against such risks, and maintain liability and such other insurance, as is
more fully provided in this Agreement and the Leases.
4.1.2 TAXES AND OTHER CHARGES. Borrower shall pay or cause
-----------------------
tenants to pay all Taxes and Other Charges now or hereafter levied or assessed
or imposed against the Properties or any part thereof as the same become due and
payable. Borrower will deliver to Lender annually a statement showing when
Taxes and Other Charges are payable with respect to each Individual Property.
Borrower will deliver to Lender receipts for payment or other evidence
satisfactory to Lender that the Taxes and Other Charges have been so paid
promptly after payment thereof. Borrower shall not suffer and shall promptly
cause to be paid and discharged any Lien or charge whatsoever which may be or
become a Lien or charge against the Properties, and shall promptly pay or cause
tenants to pay for all utility services provided to the Properties. After prior
written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the amount or validity or application in whole or in part of
any Taxes or Other Charges, provided that (i) no Default or Event of Default has
occurred and remains uncured; (ii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable statutes, laws
and ordinances; (iii) no Individual Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, canceled or
lost; (iv) Borrower shall promptly upon final determination thereof pay, or
cause to be paid, the amount of any such Taxes or Other Charges, together with
all costs, interest and penalties which may be payable in connection therewith;
(v) such proceeding shall suspend the collection of such contested Taxes or
Other Charges from the applicable Individual Property; and (vi) Borrower shall
furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon. Lender may pay over any such
cash deposit or part thereof held by Lender to the claimant entitled thereto at
any time when, in the judgment of Lender, the entitlement of such claimant is
established.
4.1.3 LITIGATION. Borrower shall give prompt written notice to
----------
Lender of any litigation or governmental proceedings pending or threatened
against Borrower which might materially adversely affect Borrower's condition
(financial or otherwise) or business or any Individual Property.
4.1.4 ACCESS TO PROPERTIES. Borrower shall permit agents,
--------------------
representatives and employees of Lender to inspect the Properties or any part
thereof at reasonable hours upon reasonable advance notice, subject to the
Leases.
4.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender
-----------------
of any material adverse change in Borrower's condition, financial or otherwise,
or of the occurrence of any material Default or Event of Default of which
Borrower has knowledge.
41
4.1.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate
------------------------------
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
4.1.7 PERFORM LOAN DOCUMENTS. Borrower shall observe, perform
----------------------
and satisfy all the terms, provisions, covenants and conditions of, and shall
pay when due all costs, fees and expenses to the extent required under, the Loan
Documents executed and delivered by, or applicable to, Borrower.
4.1.8 INSURANCE BENEFITS. Borrower shall cooperate with Lender
------------------
in obtaining for Lender the benefits of any proceeds of the Policies lawfully or
equitably payable in connection with any Individual Property, subject to the
rights of tenants under Permitted Leases, and Lender shall be reimbursed for any
expenses incurred in connection therewith (including reasonable attorneys' fees
and disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of a fire or other casualty affecting any Individual
Property or any part thereof) out of such insurance proceeds.
4.1.9 INTENTIONALLY DELETED.
---------------------
4.1.10 FINANCIAL REPORTING.
-------------------
(a) Borrower will maintain full and accurate books of accounts and
other records reflecting the results of the operations of the Properties and
will furnish to Lender on or before forty-five (45) days after the end of each
calendar quarter the following items, each certified by Borrower as being true
and correct: a written statement (rent roll) for the Properties dated as of the
last day of each such calendar quarter identifying each of the Leases by the
term, space occupied, rental required to be paid, security deposit paid, any
rental concessions, and identifying any defaults or payment delinquencies
thereunder. Within one hundred twenty (120) days following the end of each
calendar year, Borrower shall furnish statements of its financial affairs and
condition including a balance sheet and a statement of profit and loss for
Borrower in such detail as Lender may request, and setting forth the financial
condition and the income and expenses for the Properties for the immediately
preceding calendar year, which statements shall be prepared by Borrower.
Borrower's annual financial statements shall be the consolidating financial
statements of Guarantor, showing a balance sheet and an income statement for
Borrower, all audited by a "Big Five" accounting firm or other independent
certified public account acceptable to Lender. Each such annual financial
statement shall be prepared in accordance with GAAP. At any time and from time
to time Borrower shall deliver to Lender or its agents such other financial data
as Lender or its agents shall reasonably request with respect to the ownership,
maintenance, use and operation of the Properties.
(b) For the purposes of this Agreement, the following terms shall have
the following meanings:
42
(i) The term "NET OPERATING INCOME" shall mean the amount,
as determined by Lender, obtained by subtracting Operating Expenses from Gross
Income from Operations.
(ii) The term "OPERATING EXPENSES" shall mean the total, as
determined by Lender, of all expenditures of Borrower, computed in accordance
with GAAP, of whatever kind relating to the operation, maintenance and
management of the Properties that are incurred on a regular monthly or other
periodic basis, including without limitation, utilities, ordinary repairs and
maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related taxes, computer
processing charges, operational equipment or other lease payments as approved by
Lender, and other similar costs, but excluding depreciation, debt service,
capital expenditures, and contributions to the Tax and Insurance Escrow Fund,
and any other reserves required under the Loan Documents.
(iii) The term "GROSS INCOME FROM OPERATIONS" shall mean the
total, as determined by Lender, of all income of Borrower, computed in
accordance with GAAP, derived from the ownership and operation of the Properties
from whatever source, including, but not limited to, Rents, utility charges,
escalations, forfeited security deposits, interest on credit accounts, service
fees or charges, license fees, parking fees, rent concessions or credits, and
other pass-through or reimbursements paid by tenants under the Leases of any
nature but excluding sales, use and occupancy or other taxes on receipts
required to be accounted for by Borrower to any Governmental Authority, refunds
and uncollectible accounts, sales of furniture, fixtures and equipment, proceeds
of casualty insurance and condemnation awards (other than business interruption
or other loss of income insurance), and any disbursements to Borrower from the
Tax and Insurance Escrow Fund or any other escrow fund established by the Loan
Documents.
(c) Lender shall have the right, at any time and from time to time
when (i) an Event of Default exists, (ii) a material adverse change in Net
Operating Income has occurred or (iii) another event has occurred that has a
material adverse effect on the value of an Individual Property as security for
payment of the Loan, upon reasonable notice to Borrower and during normal
business hours at Borrower's principal place of business, to conduct an
inspection or review, at Borrower's expense, of Borrower's books and records.
Borrower shall cooperate, and shall cause its agents and employees to cooperate
in the conduct of any such inspection or review.
4.1.11 BUSINESS AND OPERATIONS. Borrower will continue to engage
-----------------------
in the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Properties. Borrower will qualify to do business and will remain in good
standing under the laws of each jurisdiction as and to the extent the same are
required for its ownership, maintenance, management and operation of the
Properties.
43
4.1.12 TITLE TO THE PROPERTIES. Borrower will warrant and defend
-----------------------
(a) the title to each Individual Property and every part thereof, subject only
to Liens permitted hereunder (including Permitted Encumbrances) and (b) the
validity and priority of the Liens of the Mortgages and the Assignments of
Leases on the Properties, subject only to Liens permitted hereunder (including
Permitted Encumbrances), in each case against the claims of all Persons
whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in any Individual Property, other than as permitted
hereunder, is claimed by another Person.
4.1.13 COSTS OF ENFORCEMENT. In the event (a) that any Mortgage
--------------------
encumbering any Individual Property is foreclosed in whole or in part or that
any such Mortgage is put into the hands of an attorney for collection, suit,
action or foreclosure, (b) of the foreclosure of any mortgage prior to or
subsequent to any Mortgage encumbering any Individual Property in which
proceeding Lender is made a party, or (c) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of Borrower or any of its
constituent Persons or an assignment by Borrower or any of its constituent
Persons for the benefit of its creditors, Borrower, its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys' fees and costs, incurred by Lender or Borrower
in connection therewith and in connection with any appellate proceeding or post-
judgment action involved therein, together with all required service or use
taxes.
4.1.14 ESTOPPEL STATEMENT.
------------------
(a) After request by Lender, Borrower shall within twenty (20) days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the unpaid
principal amount of the Note, (iii) the Applicable Interest Rate of the Note,
(iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, and (vi) that the Note,
this Agreement, the Mortgages and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) Borrower shall use best efforts to deliver to Lender upon request,
tenant estoppel certificates from each commercial tenant leasing space at the
Properties in form and substance reasonably satisfactory to Lender provided that
Borrower shall not be required to deliver such certificates more frequently than
two (2) times in any calendar year.
4.1.15 LOAN PROCEEDS. Borrower shall use the proceeds of the
-------------
Loan received by it on the Closing Date only for the purposes set forth in
Section 2.1.4.
4.1.16 PERFORMANCE BY BORROWER. Borrower shall in a timely
-----------------------
manner observe, perform and fulfill each and every covenant, term and provision
of each Loan Document executed and delivered by, or applicable to, Borrower, and
shall not enter into or otherwise suffer or permit any amendment, waiver,
supplement, termination or other modification of any Loan Document executed and
delivered by, or applicable to, Borrower without the prior written consent of
Lender, in its sole discretion.
44
4.1.17 INTENTIONALLY DELETED.
---------------------
4.1.18 LEASING MATTERS. Any Leases with respect to an Individual
---------------
Property written after the date hereof shall be approved by Lender, which
approval shall not be unreasonably withheld, conditioned or delayed. Upon
request, Borrower shall furnish Lender with executed copies of all Leases. All
renewals of Leases and all proposed Leases shall provide for rental rates
comparable to existing local market rates, subject to the existing Leases. All
proposed Leases shall be on commercially reasonable terms and shall not contain
any terms which would materially affect Lender's rights under the Loan
Documents. All Leases executed after the date hereof shall provide that they
are subordinate to the Mortgage encumbering the applicable Individual Property
and that the lessee agrees to attorn to Lender or any purchaser at a sale by
foreclosure or power of sale. If Lender shall approve any Lease covering an
entire Individual Property, Lender shall, at the request of Borrower, enter into
an Estoppel Certificate, Subordination, Nondisturbance and Attornment Agreement
in the form attached as Schedule III hereunder with the tenant thereunder.
------------
Borrower (a) shall observe and perform the obligations imposed upon the lessor
under the Leases in a commercially reasonable manner; (b) shall not amend or
modify in any material respect, or terminate, any Lease without the written
consent of Lender; (c) shall not collect any of the rents more than one (1)
month in advance (other than security deposits); (d) shall not execute any other
assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); and (v) shall execute and deliver at the
request of Lender all such further assurances, confirmations and assignments in
connection with the Leases as Lender shall from time to time reasonably require.
Lender shall use good faith efforts to respond to any request for approval
hereunder within fifteen (15) days of receipt thereof. For the purpose of this
section, without limiting the generality of the foregoing, any extension of the
term of a Lease that does not reduce the rent payable thereunder shall be deemed
not to be material and any amendment or modification of a Lease that reduces the
term of a Lease or the rent payable thereunder shall be deemed to be material.
4.1.19 ALTERATIONS. Borrower shall obtain Lender's prior written
-----------
consent to any alterations to any Improvements. Notwithstanding the foregoing,
Lender's consent shall not be required in connection with any alterations (a)
permitted to be made by tenants under Permitted Leases, or (b) that will not
have a material adverse effect on Borrower's financial condition, the value of
the applicable Individual Property or the Net Operating Income.
4.1.20 INTENTIONALLY DELETED.
---------------------
4.1.21 FURTHER ACTS, ETC. Borrower will, at the cost of Borrower,
------------------
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender the property and rights hereby deeded, mortgaged,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated or intended now or hereafter so to be, or
which Borrower may be or may
45
hereafter become bound to convey or assign to Lender, or for carrying out the
intention or facilitating the performance of the terms of this Agreement or for
filing, registering or recording this Agreement. Borrower, on demand, will
execute and deliver and hereby authorizes Lender to execute in the name of
Borrower or without the signature of Borrower to the extent Lender may lawfully
do so, one or more financing statements or other instruments, to evidence more
effectively the security interest of Lender in the Properties. Upon foreclosure,
the appointment of a receiver or any other relevant action, Borrower will, at
the cost of Borrower and without expense to Lender, cooperate fully and
completely to effect the assignment or transfer of any license, permit,
agreement or any other right necessary or useful to the operation of or the
Properties. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender at law and in equity, including, without
limitation, such rights and remedies available to Lender pursuant to this
section.
4.1.22 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
-------------------------------
perform in all material respects each and every term to be observed or performed
by Borrower pursuant to the terms of any material agreement or recorded
instrument affecting or pertaining to the Properties.
4.1.23 RECORDING OF MORTGAGES, ETC. Borrower forthwith upon the
----------------------------
execution and delivery of this Agreement and thereafter, from time to time, will
cause the Mortgages, and any security instrument creating a lien or security
interest or evidencing the lien thereof upon the Properties and each instrument
of further assurance to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law in order to publish
notice of and fully to protect the lien or security interest upon, and the
interest of Lender in, the Properties. Borrower will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of the Mortgages, any Mortgages supplemental
thereto, any security instrument with respect to the Properties and any
instrument of further assurance, and all federal, state, county and municipal,
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of the Mortgages, any Mortgages supplemental
thereto, any security instrument with respect to the Properties or any
instrument of further assurance, except where prohibited by law so to do.
Borrower shall hold harmless and indemnify Lender, its successors and assigns,
against any liability incurred by reason of the imposition of any tax on the
making and recording of the Mortgages.
4.1.24 HANDICAPPED ACCESS.
------------------
(a) Borrower agrees that the Properties shall at all times
strictly comply in all material respects to the extent applicable with the
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988 (if applicable), all state and local laws and ordinances
related to handicapped access and all rules, regulations, and orders issued
pursuant thereto including, without limitation, the Americans with Disabilities
Act Accessibility Guidelines for Buildings and Facilities (collectively "ACCESS
LAWS").
46
(b) Notwithstanding any provisions set forth herein or in any
other document regarding Lender's approval of alterations of the Properties,
Borrower shall not alter the Properties in any manner which would materially
increase Borrower's responsibilities for compliance with the applicable Access
Laws without the prior written approval of Lender. The foregoing shall apply to
tenant improvements constructed by Borrower or by any of its tenants, except as
otherwise permitted in the Permitted Leases without Borrower's consent. Lender
may condition any such approval upon receipt of a certificate of Access Law
compliance from an architect, engineer, or other person acceptable to Lender.
Lender shall use good faith efforts to respond to any request for approval
hereunder within fifteen (15) days of receipt thereof.
(c) Borrower agrees to give prompt notice to Lender of the receipt
by Borrower of any complaints related to material violation of any Access Laws
and of the commencement of any proceedings or investigations which relate to
compliance with applicable Access Laws.
SECTION 4.2 NEGATIVE COVENANTS.
------------------
From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Liens of all Mortgages encumbering the Properties in accordance with the terms
of this Agreement and the other Loan Documents, Borrower covenants and agrees
with Lender that it will not do, directly or indirectly, any of the following:
4.2.1 OPERATION OF PROPERTY. Borrower shall not, without the prior
---------------------
consent of Lender, which consent shall not be unreasonably withheld, terminate,
cancel, modify, extend, replace or enter into any management agreement with
respect to the Properties; provided that if Borrower shall have entered into a
-------- ----
management agreement with an Affiliate of Borrower, Borrower may elect to
terminate such management agreement and self-manage the applicable Individual
Property without Lender's consent. If at any time Lender consents to the
appointment of a new Manager, such new Manager and Borrower shall, as a
condition of Lender's consent, execute an Assignment of Management Agreement in
the form then used by Lender.
4.2.2 LIENS. Borrower shall not, without the prior written consent
-----
of Lender, in its sole discretion, create, incur, assume or suffer to exist any
Lien on any portion of any Individual Property or permit any such action to be
taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan Documents;
and
(iii) Liens for Taxes or Other Charges not yet delinquent.
4.2.3 DISSOLUTION OF THE SPC ENTITY. Borrower shall not cause,
-----------------------------
permit or suffer the SPC Entity to dissolve, wind up or liquidate or take any
action, or omit to take an
47
action, as a result of which the SPC Entity would be dissolved, wound up or
liquidated in whole or in part.
4.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any line of
------------------
business other than the ownership and operation of the Properties, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
4.2.5 DEBT CANCELLATION. Borrower shall not cancel or otherwise
-----------------
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
4.2.6 AFFILIATE TRANSACTIONS. Borrower shall not enter into, or be
----------------------
a party to, any transaction with an Affiliate of Borrower or any of the partners
of Borrower except in the ordinary course of business and on terms which are
fully disclosed to Lender in advance and are no less favorable to Borrower or
such Affiliate than would be obtained in a comparable arm's-length transaction
with an unrelated third party.
4.2.7 ZONING. Borrower shall not initiate or consent to any zoning
------
reclassification of any portion of any Individual Property or use or permit the
use of any portion of any Individual Property in any manner that could result in
such use becoming a non-conforming use under any zoning ordinance or any other
applicable land use law, rule or regulation, without the prior consent of
Lender, in its sole discretion. Borrower shall not seek any variance under any
existing zoning ordinance, other than commercially reasonable variances sought
in connection with the expansion of the Improvements on any Individual Property
or the use thereof, without Lender's consent, in its sole discretion.
4.2.8 ASSETS. Borrower shall not purchase or own any properties
------
other than the Properties and incidental personal property necessary for the
ownership or operation of the Properties.
4.2.9 DEBT. Borrower shall not create, incur or assume any
----
Indebtedness other than the Debt except to the extent expressly permitted
hereby.
4.2.10 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
-------------------
initiate the joint assessment of any Individual Property with (a) any other real
property constituting a tax lot separate from such Individual Property (other
than another Individual Property), or (b) any portion of such Individual
Property which may be deemed to constitute personal property, or any other
procedure whereby the Lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such Individual
Property.
4.2.11 PRINCIPAL PLACE OF BUSINESS; NAME. Borrower shall not change
---------------------------------
its principal place of business or name set forth on the first page of this
Agreement without first giving Lender thirty (30) days prior written notice.
48
4.2.12 ERISA. (a) Borrower shall not engage in any transaction which
-----
would cause any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Agreement or the
other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the term of
the Loan, as requested by Lender in its sole discretion, that (i) Borrower is
not and does not maintain an "employee benefit plan" as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within
the meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (iii) one or more of the following circumstances is
true:
(A) Equity interests in Borrower are publicly offered securities,
within the meaning of 29 C.F.R. (S)2510.3-101(b)(2);
(B) Less than twenty-five percent (25%) of each outstanding class
of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. (S)2510.3-
101(f)(2); or
(C) Borrower qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. (S)2510.3-
101(c) or (e).
4.2.13 EASEMENTS. Without the prior written consent of Lender,
---------
Borrower shall not enter into any easement or other agreement granting rights in
or restricting the use or development of the Properties, other than public
utility easements.
4.2.14 MAINTENANCE AND USE OF PROPERTY. Borrower shall cause the
-------------------------------
Properties to be maintained in a materially good and safe condition and repair.
Except as provided herein, the Improvements and the Equipment shall not be
removed, demolished or materially altered (except for normal replacement of the
Equipment) without the consent of Lender (except as permitted under Permitted
Leases without Borrower's consent). Borrower shall, or shall cause the
applicable tenant to promptly comply with all laws, orders and ordinance
affecting the Properties, or the use thereof. Borrower shall, or shall cause the
applicable tenant to, promptly repair, replace or rebuild any part of any
Individual Property that is destroyed by any casualty (subject to the provisions
of Section 5.2(a)), or becomes materially damaged, worn or dilapidated or that
is affected by any proceeding of the character referred to in Section 5.3 hereof
and shall complete and pay for any structure at any time in the process of
construction or repair on such Individual Property. Borrower shall not initiate,
join in, acquiesce in, or consent to any change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Properties or any part thereof. If
under applicable zoning provisions the use of all or any portion of any
Individual Property is or shall become a nonconforming use, Borrower will not
cause or permit such nonconforming use to be discontinued or abandoned without
the express written consent
49
of Lender, in its sole discretion. Borrower shall not (i) change the use of the
Properties from that permitted under the Permitted Leases, (ii) permit or suffer
to occur any waste on or to the Properties or to any portion thereof or (iii)
take any steps whatsoever to convert the Properties, or any portion thereof, to
a condominium or cooperative form of management. Borrower will not install or
permit to be installed on the Properties any underground storage tank except in
strict compliance with all applicable Environmental Laws.
V. INSURANCE; CASUALTY; CONDEMNATION
---------------------------------
SECTION 5.1 INSURANCE.
---------
(a) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall obtain and maintain during the entire term of this
Loan Agreement (the "TERM") policies of insurance against loss or damage by
fire, lightning and such other perils as are included in a standard "all-risk"
endorsement, and against loss or damage by all other risks and hazards covered
by a standard extended coverage insurance policy including, without limitation,
riot and civil commotion, vandalism, malicious mischief, burglary and theft.
Such insurance shall be in an amount equal to the greatest of (i) the then full
replacement cost of the Improvements and Equipment, without deduction for
physical depreciation and (ii) such amount that the insurer would not deem
Borrower a co-insurer under said policies. The policies of insurance carried in
accordance with this paragraph shall be paid annually in advance and shall
contain a "Replacement Cost Endorsement" with a waiver of depreciation, and
shall have a deductible no greater than $25,000.00 unless so agreed by Lender.
(b) Borrower, at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall also obtain and maintain during the Term with
respect to each Individual Property the following policies of insurance:
(i) Flood insurance if any part of any material part of
Improvements on any Individual Property is located in an area identified by the
Federal Emergency Management Agency as an area having special flood hazards and
in which flood insurance has been made available under the National Flood
Insurance Program in an amount at least equal to the outstanding principal
amount of the Loan or the maximum limit of coverage available with respect to
the Improvements and Equipment under said Program, whichever is less.
(ii) Comprehensive public liability insurance, including
broad form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages and containing minimum limits per
occurrence of $2,000,000 and $5,000,000 in the aggregate for any policy year. In
addition, at least $5,000,000 excess and/or umbrella liability insurance shall
be obtained and maintained for any and all claims, including all legal liability
imposed upon Borrower and all court costs and attorneys' fee incurred in
connection with the ownership, operation and maintenance of the Individual
Property.
50
(iii) Rental loss and/or business interruption insurance in
an amount equal to the greater of (A) estimated gross revenues for twenty-four
(24) months from the operations of such Individual Property or (B) the projected
operating expenses (including debt service) for twenty-four (24) months for the
maintenance and operation of such Individual Property. The amount of such
insurance shall be increased from time to time during the Term as and when new
Leases and renewal Leases are entered into and the Rents increase or the
estimate of (or the actual) gross revenue, as may be applicable, increases.
(iv) Insurance against loss or damage from (A) leakage of
sprinkler systems and (B) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure vessels or
similar apparatus now or hereafter installed in the Improvements (without
exclusion for explosions), to the extent that such items now or hereafter exist
upon such Individual Property, in an amount at least equal to the outstanding
principal amount of the Note or $2,000,000, whichever is less.
(v) Worker's compensation insurance with respect to any
employees of Borrower, as required by any Governmental Authority or Legal
Requirement.
(vi) During any period of repair or restoration, builder's
"all risk" insurance in an amount equal to not less than the full insurable
value of the Individual Property insuring against such risks (including, without
limitation, fire and extended coverage and collapse of the Improvements to
agreed limits) as Lender may request, in form and substance acceptable to
Lender.
(vii) Ordinance or law coverage to compensate for the cost of
demolition and the increased cost of construction.
(viii) Such other insurance as may from time to time be
reasonably required by Lender in order to protect its interests.
(c) All policies of insurance (the "POLICIES") required pursuant
to this paragraph: (i) shall be issued by companies approved by Lender and
licensed to do business in the state where the Individual Property is located,
with a claims paying ability rating of "AA" or better by Standard & Poor's
Rating Services, a division of the McGraw Hill Companies, Inc.; (ii) shall name
Lender and its successors and/or assigns as their interest may appear as the
Lender/mortgagee; (iii) shall contain a non-contributory standard mortgagee
clause and a lender's loss payable endorsement or their equivalents, naming
Lender as the Person to which all payments made by such insurance company shall
be paid; (iv) shall contain a waiver of subrogation against Lender; (v) shall be
maintained throughout the Term without cost to Lender; (vi) shall be assigned
and, upon Lender's request, the originals delivered to Lender; (vii) shall
contain such provisions as Lender deems reasonably necessary or desirable to
protect its interest including, without limitation, endorsements providing that
neither Borrower, Lender nor any other party shall be a co-insurer under said
Policies and that Lender shall receive at least thirty (30) days prior written
notice of any modification, reduction or cancellation; and (viii) shall be
satisfactory in form and substance to Lender and shall be
51
approved by Lender as to amounts, form, risk coverage, deductibles, loss payees
and insureds. Borrower shall pay or cause tenants to pay the premiums for such
Policies (the "INSURANCE PREMIUMS") as the same become due and payable and shall
furnish to Lender evidence of the renewal of each of the Policies with receipts
for the payment of the Insurance Premiums or other evidence of such payment
reasonably satisfactory to Lender. If Borrower does not furnish such evidence
and receipts prior to the final expiration of any expiring Policy, then Lender
may procure, but shall not be obligated to procure, such insurance and pay the
Insurance Premiums therefor, and Borrower agrees to reimburse Lender for the
cost of such Insurance Premiums promptly on demand. Within thirty (30) days
after request by Lender, Borrower shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested by Lender, taking
into consideration changes in the value of money over time, changes in liability
laws, changes in prudent customs and practices.
(d) Lender acknowledges that it has approved the evidence of
insurance delivered to Lender in connection with the origination of the Loan as
satisfying the requirements of this Section 5.1.
SECTION 5.2 CASUALTY.
--------
(a) If an Individual Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty (an "INSURED CASUALTY"), Borrower
shall give prompt notice thereof to Lender. Following the occurrence of an
Insured Casualty, Borrower, shall promptly (or shall promptly cause the tenant
to) proceed to restore, repair, replace or rebuild the same to be of at least
equal value and of substantially the same character as prior to such damage or
destruction, all to be effected in accordance with applicable law; provided that
-------- ----
if Lender shall not make the proceeds of any insurance received by Lender
available to reimburse Borrower for the costs of such restoration, repair,
replacement or rebuilding, Borrower shall not be required to perform such
restoration, repair, replacement or rebuilding, provided further that Borrower
-------- -------
shall take at its own expense such steps as may be reasonably required to put
and maintain the Improvements in a safe and secure condition. The expenses
incurred by Lender in the adjustment and collection of insurance proceeds shall
become part of the Debt and be secured hereby and shall be reimbursed by
Borrower to Lender upon demand.
(b) In case of loss or damages covered by any of the Policies, the
following provisions shall apply:
(i) In the event of an Insured Casualty that does not
exceed the lesser of (a) $250,000.00 or (b) ten percent (10%) of the Release
Amount for the applicable Individual Property, Borrower may settle and adjust
any claim without the consent of Lender and agree with the insurance company or
companies on the amount to be paid upon the loss; provided that such adjustment
is carried out in a competent and timely manner. In such case, Borrower is
hereby authorized to collect and receipt for any such insurance proceeds.
(ii) In the event an Insured Casualty shall exceed the
lesser of (a) $250,000.00 or (b) ten percent (10%) of the Release Amount for the
applicable Individual
52
Property, then and in that event, Lender may settle and adjust any claim without
the consent of Borrower and agree with the insurance company or companies on the
amount to be paid on the loss and the proceeds of any such policy shall be due
and payable solely to Lender and held in escrow by Lender in accordance with the
terms of this Loan Agreement.
(iii) In the event of an Insured Casualty where the loss is
in an aggregate amount less than twenty-five percent (25%) of the Release Amount
for the applicable Individual Property, and if, in the reasonable judgment of
Lender, the Individual Property can be restored within twelve (12) months and
prior to the Maturity Date to an economic unit not materially less valuable
(including an assessment of the impact of the termination of any Leases due to
such Insured Casualty) and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the
outstanding balance of the Debt, then, if no Event of Default (as hereinafter
defined) shall have occurred and be then continuing, the proceeds of insurance
(after reimbursement of any expenses incurred by Lender) shall be applied to
reimburse Borrower for the cost of restoring, repairing, replacing or rebuilding
the Individual Property or part thereof subject to the Insured Casualty, in the
manner set forth below. Borrower hereby covenants and agrees to commence and
diligently prosecute, or cause the applicable tenant to commence and diligently
prosecute, such restoring, repairing, replacing or rebuilding; provided always,
that Borrower shall pay all costs (and if required by Lender, Borrower shall
deposit the total thereof with Lender in advance) of such restoring, repairing,
replacing or rebuilding in excess of the net proceeds of insurance made
available pursuant to the terms hereof.
(iv) Except as provided above, the proceeds of insurance
collected upon any Insured Casualty shall, at the option of Lender in its sole
discretion, be applied to the payment of the Debt or to reimburse Borrower for
the cost of restoring, repairing, replacing or rebuilding the Individual
Property or part thereof subject to the Insured Casualty, in the manner set
forth below. Any such application to the Debt shall be without any prepayment
consideration except that if an Event of Default has occurred, then Borrower
shall pay to Lender an additional amount equal to the Yield Maintenance Premium,
if any, that would be required under Section 2.4 hereof if a Defeasance Note in
the amount so prepaid was to be entered into by Borrower and any amount then
payable under the last sentence of Section 2.3.3. Any such application to the
Debt shall be applied to those payments of principal and interest last due under
the Note but shall not postpone or reduce any payments otherwise required
pursuant to the Note other than such last due payments.
(v) In the event Borrower is entitled to reimbursement out
of insurance proceeds held by Lender, such proceeds shall be disbursed from time
to time upon Lender being furnished with (1) evidence satisfactory to it of the
estimated cost of completion of the restoration, repair, replacement and
rebuilding, (2) funds or, at Lender's option, assurances satisfactory to Lender
that such funds are available, sufficient in addition to the proceeds of
insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (3) such architect's certificates, waivers of lien, contractor's
sworn statements, title insurance endorsements, bonds, plats of survey and such
other reasonable evidences of cost, payment and performance as Lender may
reasonably require and approve. Lender may,
53
in any event, require that all plans and specifications for such restoration,
repair, replacement and rebuilding be submitted to and approved by Lender prior
to commencement of work. No payment made prior to the final completion of the
restoration, repair, replacement and rebuilding shall exceed ninety percent
(90%) of the value of the work performed from time to time; funds other than
proceeds of insurance shall be disbursed prior to disbursement of such proceeds;
and at all times, the undisbursed balance of such proceeds remaining in the
hands of Lender, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Lender by or on behalf of Borrower for that
purpose, shall be at least sufficient in the reasonable judgment of Lender to
pay for the cost of completion of the restoration, repair, replacement or
rebuilding, free and clear of all liens or claims for lien. Any surplus which
may remain out of insurance proceeds held by Lender after payment of such costs
of restoration, repair, replacement or rebuilding shall be paid to any party
entitled thereto.
(vi) Notwithstanding anything to the contrary contained
herein, if any Permitted Lease shall obligate the tenant thereunder to repair,
restore or rebuild the affected Individual Property after the occurrence of an
Insured Casualty and requires that insurance proceeds be made available for such
repair, restoration or rebuilding, Lender shall make such proceeds available as
required under such Permitted Lease, subject only to the conditions set forth in
such Permitted Lease and the conditions set forth in the first sentence of
Section 5.2(b)(v) above.
SECTION 5.3 CONDEMNATION.
------------
(a) Borrower shall promptly give Lender written notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding (a "CONDEMNATION") and shall deliver to Lender copies of any and all
papers served in connection with such Condemnation. Following the occurrence of
a Condemnation, Borrower shall, or shall promptly cause the tenant to, proceed
to restore, repair, replace or rebuild the same to the extent practicable to be
of at least equal value and of substantially the same character as prior to such
Condemnation, all to be effected in accordance with applicable law; provided
--------
that if Lender shall not make the proceeds of any Award received by Lender
----
available to reimburse Borrower or tenant for the costs of such restoration,
repair, replacement or rebuilding, Borrower shall not be required to perform
such restoration, repair, replacement or rebuilding, provided further that
-------- -------
Borrower shall take at its own expense such steps as may be reasonably required
to put and maintain the Improvements in a safe and secure condition.
(b) Lender is hereby irrevocably appointed as Borrower's attorney-
in-fact, coupled with an interest, with exclusive power to collect, receive and
retain any award or payment ("AWARD") for any taking accomplished through a
Condemnation (a "TAKING") and to make any compromise or settlement in connection
with such Condemnation, subject to the provisions of this Loan Agreement.
Notwithstanding any Taking by any public or quasi-public authority (including,
without limitation, any transfer made in lieu of or in anticipation of such a
Taking), Borrower shall continue to pay the Debt at the time and in the manner
provided for in the Note, in this Loan Agreement and the other Loan Documents
and the Debt shall not be reduced unless and until any Award shall have been
actually received and applied by Lender to
54
expenses of collecting the Award and to discharge of the Debt. Lender shall not
be limited to the interest paid on the Award by the condemning authority but
shall be entitled to receive out of the Award interest at the rate or rates
provided in the Note. Borrower shall cause any Award that is payable to Borrower
to be paid directly to Lender.
(c) In the event of any Condemnation where the Award is in an
aggregate amount less than the lesser of (i) $250,000.00 or (ii) ten percent
(10%) of Release Amount for the applicable Individual Property outstanding
original principal balance of the Note, and if, in the reasonable judgment of
Lender, the Individual Property can be restored within twelve (12) months and
prior to the Maturity Date to an economic unit not less valuable (including an
assessment of the impact of the termination of any Leases due to such
Condemnation) and not less useful than the same was prior to the Condemnation,
and after such restoration will adequately secure the outstanding balance of the
Debt, then, if no Event of Default shall have occurred and be then continuing,
the proceeds of the Award (after reimbursement of any expenses incurred by
Lender) shall be applied to reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the Individual Property or part thereof
subject to Condemnation, in the manner set forth below. Borrower hereby
covenants and agrees to commence and diligently prosecute, or cause the
applicable tenant to commence and diligently prosecute, such restoring,
repairing, replacing or rebuilding; provided always, that Borrower shall pay all
costs (and if required by Lender, Borrower shall deposit the total thereof with
Lender in advance) of such restoring, repairing, replacing or rebuilding in
excess of the Award made available pursuant to the terms hereof.
(d) Except as otherwise provided herein, the Award collected upon
any Condemnation shall, at the sole discretion of Lender, be applied to the
payment of the Debt or to the reimbursement of Borrower for the cost of
restoring, repairing, replacing or rebuilding the Individual Property or part
thereof subject to the Condemnation, in the manner set forth below. Any such
application to the Debt shall be without any prepayment consideration except
that if an Event of Default has occurred then Borrower shall pay to Lender an
additional amount equal to the Yield Maintenance Premium, if any, that would be
required under Section 2.4 hereof if a Defeasance Note in the amount so prepaid
was to be entered into by Borrower and any amount then payable under the last
sentence of Section 2.3.3. Any such application to the Debt shall be applied to
those payments of principal and interest last due under the Note but shall not
postpone or reduce any payments otherwise required pursuant to the Note other
than such last due payments. If the Individual Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of such Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall be
recoverable or shall have been sought, recovered or denied, to receive all or a
portion of said Award sufficient to pay the Debt.
(e) In the event Borrower is entitled to reimbursement out of the
Award received by Lender, such proceeds shall be disbursed from time to time
upon Lender being furnished with (1) evidence satisfactory to it of the
estimated cost of completion of the restoration, repair, replacement and
rebuilding resulting from such condemnation, (2) funds or, at Lender's option,
assurances satisfactory to Lender that such funds are available, sufficient in
55
addition to the proceeds of the Award to complete the proposed restoration,
repair, replacement and rebuilding, and (3) such architect's certificates,
waivers of lien, contractor's sworn statements, title insurance endorsements,
bonds, plats of survey and such other evidences of costs, payment and
performance as Lender may reasonably require and approve; and Lender may, in any
event, require that all plans and specifications for such restoration, repair,
replacement and rebuilding be submitted to and approved by Lender prior to
commencement of work. No payment made prior to the final completion of the
restoration, repair, replacement and rebuilding shall exceed ninety percent
(90%) of the value of the work performed from time to time; funds other than
proceeds of the Award shall be disbursed prior to disbursement of such proceeds;
and at all times, the undisbursed balance of such proceeds remaining in hands of
Lender, together with funds deposited for that purpose or irrevocably committed
to the satisfaction of Lender by or on behalf of Borrower for that purpose,
shall be at least sufficient in the reasonable judgment of Lender to pay for the
costs of completion of the restoration, repair, replacement or rebuilding, free
and clear of all liens or claims for lien. Any surplus which may remain out of
the Award received by Lender after payment of such costs of restoration, repair,
replacement or rebuilding shall, in the sole and absolute discretion of Lender,
be retained by Lender and applied to payment of the Debt.
(f) Notwithstanding anything to the contrary contained herein, if any
Permitted Lease shall obligate the tenant thereunder to repair, restore or
rebuild the affected Individual Property after the occurrence of a Condemnation
and requires that the Award be made available for such repair, restoration or
rebuilding, Lender shall make such Award available as required under such
Permitted Lease, subject only to the conditions set forth in such Permitted
Lease and the conditions set forth in the first sentence of Section 5.3(e)
above.
VI. RESERVE FUNDS
-------------
SECTION 6.1 TAX AND INSURANCE ESCROW FUND.
-----------------------------
Upon the occurrence of an Impounds Trigger Event, Borrower shall
thereafter pay to Lender on each Monthly Payment Date (a) one-twelfth of the
Taxes that Lender estimates will be payable during the next ensuing twelve (12)
months in order to accumulate with Lender sufficient funds to pay all such Taxes
at least thirty (30) days prior to their respective due dates, and (b) one-
twelfth of the Insurance Premiums that Lender estimates will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in
order to accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies (said
amounts in (a) and (b) above hereinafter called the "TAX AND INSURANCE ESCROW
FUND"), provided that if the Impounds Trigger Event in question shall consist of
a failure of a tenant under a Permitted Lease to make any payment of Taxes or
Insurance Premiums in a timely manner as required hereunder, Borrower shall only
be required to make deposits to the Tax and Insurance Escrow Fund with respect
to Taxes and Insurance payable with respect to the Individual Property subject
to such Lease. The Tax and Insurance Escrow Fund and the payments of interest
or principal or both, payable pursuant to the Note, shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the
Tax and Insurance Escrow Fund to payments of
56
Taxes and Insurance Premiums required to be made by Borrower pursuant to this
Loan Agreement and the Mortgages as and when due, subject to the terms of the
Loan Documents. In making any payment relating to the Tax and Insurance Escrow
Fund, Lender may do so according to any ▇▇▇▇, statement or estimate procured
from the appropriate public office (with respect to Taxes) or insurer or agent
(with respect to Insurance Premiums), without inquiry into the accuracy of such
▇▇▇▇, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax and
Insurance Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums, Lender shall, in its sole discretion, return any excess to Borrower or
credit such excess against future payments to be made to the Tax and Insurance
Escrow Fund. Any amount remaining in the Tax and Insurance Escrow Fund after the
Debt has been paid in full shall be returned to Borrower. In allocating such
excess, Lender may deal with the Person shown on the records of Lender to be the
owner of the Properties. If at any time Lender reasonably determines that the
Tax and Insurance Escrow Fund is not or will not be sufficient to pay Taxes and
Insurance Premiums by the dates set forth in (a) and (b) above, Lender shall
notify Borrower of such determination and Borrower shall increase its monthly
payments to Lender by the amount that Lender estimates is sufficient to make up
the deficiency at least thirty (30) days prior to delinquency of the Taxes
and/or thirty (30) days prior to expiration of the Policies, as the case may be.
SECTION 6.2 SECURITY INTEREST.
-----------------
Borrower hereby grants to Lender a first-priority perfected security
interest in the Reserve Funds and any and all monies now or hereafter deposited
in each Reserve Fund as additional security for payment of the Debt. Until
expended or applied in accordance herewith, the Reserve Funds shall constitute
additional security for the Debt. Borrower shall not, without obtaining the
prior written consent of Lender, in its sole discretion, further pledge, assign
or grant any security interest in any Reserve Fund or the monies deposited
therein or permit any lien or encumbrance to attach thereto, or any levy to be
made thereon, or any UCC-1 Financing Statements, except those naming Lender as
the secured party, to be filed with respect thereto.
VII. TRANSFER AND ENCUMBRANCE OF PROPERTY
------------------------------------
SECTION 7.1 TRANSFER AND ENCUMBRANCE OF PROPERTY.
------------------------------------
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower in owning and operating properties
such as the Properties in agreeing to make the Loan, and that Lender will
continue to rely on Borrower's ownership of the Properties as a means of
maintaining the value of the Properties as security for repayment of the Debt.
Borrower acknowledges that Lender has a valid interest in maintaining the value
of the Properties so as to ensure that, should Borrower default in the repayment
of the Debt, Lender can recover the Debt by a sale of the Properties. Borrower
shall not, without the prior written consent of Lender, in its sole discretion,
sell, convey, alienate, mortgage, encumber, pledge or otherwise transfer the
Properties or any part thereof,
57
or permit the Properties or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, pledged or otherwise transferred subject to Permitted
Encumbrances.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Article VII shall be deemed to include (i)
-----------
an installment sales agreement wherein Borrower agrees to sell the Properties or
any part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Properties for other than
actual occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, Borrower's right, title and
interest in and to any Leases or any Rents; (iii) if Borrower or any general
partner or managing member of Borrower is a corporation, the voluntary or
involuntary sale, conveyance or transfer of such corporation's stock or the
creation or issuance of new stock in one or a series of transactions by which an
aggregate of more than 10% of such corporation's stock shall be vested in a
party or parties who are not now stockholders or any change in the control of
such corporation; (iv) if Borrower or any general partner or managing member of
Borrower is a limited or general partnership, joint venture or limited liability
company, the change, removal, resignation or addition of a general partner,
managing partner, or joint venturer or the transfer of any ownership interest of
any general partner, managing partner or joint venturer or the transfer,
assignment or pledge of any ownership interest of any general partner, managing
partner or joint venturer; (v) if Borrower or any general partner of managing
member of Borrower is a limited partnership, the voluntary or involuntary sale,
conveyance, transfer or pledge of any limited partnership interests or the
creation or issuance of new limited partnership interests; or (vi) if Borrower
or any general partner of managing member of Borrower is a limited liability
company, the voluntary or involuntary sale, conveyance or transfer of a member's
interest. Notwithstanding the foregoing, Lender's consent shall not be required
in connection with (A) transfers of up to forty-nine percent (49%) of the stock
of any Borrower or any general partner or managing member of Borrower that is a
corporation, (B) transfers of limited partnership interests or membership
interests (other than any managing member's interest) or (C) a merger or
consolidation of Guarantor into or with any other entity, provided that (x) with
respect to transfers described in clauses (A) or (B) above, Guarantor shall
retain control of Borrower and the general partner or managing member of
Borrower and (y) if any such transfer, merger or consolidation shall result in
any entity owning more than forty-nine percent (49%) of the ownership interests
in Borrower or any general partner or managing member of Borrower that did not
previously hold more than forty-nine percent (49%) of such interests, such
transfer shall be conditioned upon delivery to Lender of (I) an Insolvency
Opinion with respect to the new structure satisfactory to the Rating Agencies,
if such Insolvency Opinion is then required by the Rating Agencies, (II) written
confirmation (a "NO DOWNGRADE LETTER") from the Rating Agencies that the
transfer will not result in a withdrawal, qualification or downgrade of the
Securities issued in connection with the Securitization that are then
outstanding. For the purposes of this subparagraph (b), the term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
58
(c) Lender shall not be required to demonstrate any actual impairment
of its security or any increased risk of default hereunder in order to declare
the Debt immediately due and payable upon Borrower's sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Properties without
Lender's consent. This provision shall apply to every sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Properties
regardless of whether voluntary or not, or whether or not Lender has consented
to any previous sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Properties.
(d) Lender's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Properties shall not be deemed to be a
waiver of Lender's right to require such consent to any future occurrence of
same. Any sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Properties made in contravention of this paragraph shall be null
and void and of no force and effect.
(e) Borrower agrees to bear and shall pay or reimburse Lender on
demand for all reasonable expenses (including, without limitation, reasonable
attorneys' fees and disbursements, title search costs and title insurance
endorsement premiums) incurred by Lender in connection with the review, approval
and documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
(f) Without implying any obligation to grant such consent, where
Lender's consent is otherwise required hereunder, Lender's consent to the sale
or transfer of the Properties may be conditioned upon consideration of all
relevant factors as determined by Lender in its sole discretion including,
without limitation, that:
(i) no Event of Default or event which with the giving of
notice or the passage of time would constitute an Event of Default shall have
occurred and remain uncured;
(ii) the proposed transferee ("TRANSFEREE") shall be a reputable
Person of good character, creditworthy, with sufficient financial worth
considering the obligations assumed and undertaken, as evidenced by financial
statements and other information reasonably requested by Lender;
(iii) the Transferee and its property manager shall have
sufficient experience in the ownership and management of properties similar to
the Properties, and Lender shall be provided with reasonable evidence thereof
(and Lender reserves the right to approve the Transferee without approving the
substitution of the property manager);
(iv) Lender shall have recommendations in writing from the
Rating Agencies to the effect that such transfer will not result in a
requalification, reduction or withdrawal of any rating initially assigned or to
be assigned in a Securitization;
(v) the Transferee shall have executed and delivered to Lender
an assumption agreement in form and substance acceptable to Lender, evidencing
such
59
Transferee's agreement to abide and be bound by the terms of the Note, this
Agreement and the other Loan Documents, together with such legal opinions and
title insurance endorsements as may be reasonably requested by Lender; and
(vi) Lender shall have received the payment of an assumption fee
equal to one percent (1%) of the then outstanding principal balance of the Note
and payment of all costs and expenses incurred by Lender in connection with such
assumption (including reasonable attorneys' fees and costs).
VIII. DEFAULTS
--------
SECTION 8.1 EVENT OF DEFAULT.
----------------
The Debt shall become immediately due and payable at the option of
Lender upon the happening of any one or more of the following events of default
(each, an "EVENT OF DEFAULT"):
(a) if any portion of the Debt is not paid on or before the date on
which such payment is due, subject to any grace period set forth in the Note
with respect to payments of Debt Service under the Note;
(b) subject to Borrower's right to contest as provided herein, if any
of the Taxes or Other Charges are not paid prior to the tenth (10th) day after
the date on which such Taxes or Other Charges become delinquent;
(c) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Lender upon request;
(d) if Borrower transfers or encumbers any portion of the Properties
without Lender's prior written consent;
(e) if any representation or warranty of Borrower or of any Guarantor
made herein or in any other Loan Document or in any certificate, report,
financial statement or other instrument or document furnished to Lender shall
have been false or misleading in any material respect when made;
(f) if Borrower or any Guarantor shall make an assignment for the
benefit of creditors or if Borrower or Guarantor shall generally not be paying
its debts as they become due;
(g) if a receiver, liquidator or trustee of Borrower or of any
Guarantor shall be appointed or if Borrower or any Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower or any Guarantor or if any proceeding for the dissolution or
liquidation of Borrower or of any Guarantor shall be instituted; provided,
however, if such
60
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower or such Guarantor, upon the same not being discharged,
stayed or dismissed within ninety (90) days;
(h) if Borrower shall be in default under the Junior Mortgage, any
other loan agreement or security agreement covering any part of the Properties
whether it be superior or junior in lien to this Loan Agreement;
(i) subject to Borrower's right to contest as provided herein, if the
Properties becomes subject to any mechanic's, materialman's or other lien and
such lien is not removed of record within forty-five (45) days of the filing or
recording of such lien (except a lien for local real estate taxes and
assessments not then due and payable) or otherwise insured over to Lender's
satisfaction;
(j) if Borrower fails to cure properly any material violations of laws
or ordinances affecting or which may be interpreted to affect the Properties
within thirty (30) days after Borrower first receives notice of any such
violations, provided that, if such violations are susceptible to cure but cannot
reasonably be cured within such thirty (30) day period, so long as Borrower is
diligently seeking to cure such violations, such thirty (30) day period shall be
extended for such period, not to exceed one hundred twenty (120) days after such
notice, as shall be reasonably necessary to cure such violations;
(k) except as permitted in this Loan Agreement, the material
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Lender;
(l) if Borrower shall continue to be in default under any term,
covenant, or provision of the Note or any of the other Loan Documents, beyond
applicable cure periods contained in those documents;
(m) if Borrower fails to cure a default under any other term, covenant
or provision of this Loan Agreement within thirty (30) days after Borrower (i)
first receives notice of any such default or (ii) an officer of Borrower or
Guarantor becomes aware of such default, and ; provided, however, if such
default is reasonably susceptible of cure, but not within such thirty (30) day
period, then Borrower may be permitted up to an additional one hundred twenty
(120) days to cure such default provided that Borrower diligently and
continuously pursues such cure;
(n) if Borrower or any SPC Entity shall fail to comply with the
provisions of its organization agreement, articles or certificate of
incorporation, partnership agreement or any other governing document in any
manner that would affect its status as a single-purpose, bankruptcy-remote
entity without Lender's prior written consent;
(o) if any SPC Entity shall amend, modify or otherwise change its
organizational documents in any manner that would affect its status as a single-
purpose, bankruptcy-remote entity without Lender's prior written consent;
61
(p) if the board of directors of the SPC Entity shall take any action
which, under the terms of any certificate of incorporation, by-laws or any
voting trust agreement with respect to any common stock, requires a vote of the
board of directors of the SPC Entity at a time when there is not at least one
member of such board of directors who is an Independent Director;
(q) if the SPC Entity shall dissolve, wind up or liquidate or take any
action, or omit to take an action, as a result of which the SPC Entity would be
dissolved, wound up or liquidated in whole or in part;
(r) if any interest in Borrower, direct or indirect, shall be
transferred except as permitted under Section 7.1;
(s) if without Lender's prior written consent, except as permitted
hereunder, the Management Agreement is terminated, (ii) the ownership,
management or control of Manager is transferred, unless the applicable
Management Agreement is terminated or replaced as provided hereunder, (iii)
there is a material change in the Management Agreement, or (iv) if there shall
be a material default by Borrower under the Management Agreement; or
(t) if any of the assumptions contained in any substantive non-
consolidation opinion, delivered to Lender by Borrower's counsel in connection
with the Loan or otherwise hereunder including, but not limited to, any exhibits
attached thereto, were not true and correct as of the date of such opinion or
thereafter became untrue or incorrect in any respect.
SECTION 8.2 REMEDIES.
--------
(a) Upon the occurrence of any Event of Default or if Borrower fails
to make any payment or to do any act as herein provided, Lender may, but without
any obligation to do so and upon notice to Borrower (or without notice to or
demand on Borrower if an Event of Default shall have occurred or Lender deems an
emergency to have occurred with respect to Borrower or an Individual Property)
and without releasing Borrower from any obligation hereunder, make or do the
same in such manner and to such extent as Lender may deem necessary to protect
the security hereof. Lender is authorized to enter upon the Properties, subject
to the Permitted Leases, for such purposes or appear in, defend, or bring any
action or proceeding to protect its interest in the Properties or to foreclose
this Agreement or collect the Debt, and the cost and expense thereof (including
reasonable attorneys' fees and disbursements to the extent permitted by law),
with interest at the Default Rate for the period after notice from Lender that
such cost or expense was incurred to the date of payment to Lender, shall
constitute a portion of the Debt, shall be secured by this Agreement and the
other Loan Documents and shall be due and payable to Lender upon demand.
(b) Upon the occurrence of any Event of Default, Lender may take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Borrower and in and to the Properties by Lender itself or
through a trustee or otherwise, including, without limitation, the following
actions, each of which may be pursued
62
concurrently or otherwise, at such time and in such order as Lender may
determine, in its sole discretion, without impairing or otherwise affecting the
other rights and remedies of Lender:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or
nonjudicial, by advertisement or otherwise, for the complete foreclosure of the
Mortgages in which case the Properties or any interest therein may be sold for
cash or upon credit in one or more parcels or in several interests or portions
and in any order or manner;
(iii) with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute proceedings for
the partial foreclosure of the Mortgages for the portion of the Debt then due
and payable, subject to the continuing lien of the Mortgages for the balance of
the Debt not then due;
(iv) sell for cash or upon credit the Properties or any part
thereof and all estate, claim, demand, right, title and interest of Borrower
therein and rights of redemption thereof, pursuant to the power of sale
contained herein or otherwise, at one or more sales, as an entirety or in
parcels, at such time and place, upon such terms and after such notice thereof
as may be required or permitted by law;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained herein,
or in any of the other Loan Documents;
(vi) recover judgment on the Note either before, during or
after any proceedings for the enforcement of this Agreement;
(vii) apply for the appointment of a trustee, receiver,
liquidator or conservator of the Properties, without notice and without regard
for the adequacy of the security for the Debt and without regard for the
solvency of Borrower, any Guarantor or of any Person liable for the payment of
the Debt;
(viii) enforce Lender's interest in the Leases and Rents and
enter into or upon the Properties, subject to the Permitted Leases, either
personally or by its agents, nominees or attorneys and dispossess Borrower and
its agents and servants therefrom, and thereupon Lender may (A) use, operate,
manage, control, insure, maintain, repair, restore and otherwise deal with all
and every part of the Properties and conduct the business thereat; (B) complete
any construction on the Properties in such manner and form as Lender deems
advisable; (C) make alterations, additions, renewals, replacements and
improvements to or on the Properties; (D) exercise all rights and powers of
Borrower with respect to the Properties, whether in the name of Borrower or
otherwise, including, without limitation, the right to make, cancel, enforce or
modify Leases, obtain and evict tenants, and demand, ▇▇▇ for, collect and
receive all Rents; and (E) apply the receipts from the Properties to the payment
of Debt, after deducting therefrom all expenses (including reasonable attorneys'
fees and disbursements) incurred in connection with the aforesaid operations and
all amounts necessary to pay the
63
taxes, assessments insurance and other charges in connection with the
Properties, as well as just and reasonable compensation for the services of
Lender, its counsel, agents and employees;
(ix) require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of any portion of the Properties occupied by Borrower
and require Borrower to vacate and surrender possession to Lender of the
Properties or to such receiver and, in default thereof, evict Borrower by
summary proceedings or otherwise; or
(x) pursue such other rights and remedies as may be available at
law or in equity or under the Uniform Commercial Code including without
limitation the right to receive and/or establish a lock box for all Rents
proceeds from the Intangibles (as defined in the Mortgage) and any other
receivables or rights to payments of Borrower relating to the Properties.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Properties, this Agreement shall continue as a lien on the remaining portion of
the Properties.
(c) The proceeds of any sale made under or by virtue of this
paragraph, together with any other sums which then may be held by Lender under
this Agreement, whether under the provisions of this paragraph or otherwise,
shall be applied by Lender to the payment of the Debt in such priority and
proportion as Lender in its sole discretion shall deem proper, subject to the
applicable law.
(d) Lender or any trustee may adjourn from time to time any sale by
it to be made under or by virtue of this Agreement by announcement at the time
and place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by any applicable provision of law, Lender or any
trustee, without further notice or publication, may make such sale at the time
and place to which the same shall be so adjourned.
(e) Upon the completion of any sale or sales pursuant to the
Mortgages, Lender, or an officer of any court empowered to do so, shall execute
and deliver to the accepted purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, conveying, assigning and
transferring all estate, right, title and interest in and to the property and
rights sold. Lender and any trustee are hereby irrevocably appointed the true
and lawful attorney of Borrower, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Properties and rights
so sold and for that purpose Lender and any trustee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one or
more Persons with like power, Borrower hereby ratifying and confirming all that
its said attorney or such substitute or substitutes shall lawfully do by virtue
hereof. Any sale or sales made under or by virtue of this paragraph, whether
made under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Borrower in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against
64
Borrower and against any and all Persons claiming or who may claim the same, or
any part thereof from, through or under Borrower.
(f) Upon any sale made under or by virtue of this paragraph, whether
made under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, Lender may bid
for and acquire the Properties or any part thereof and in lieu of paying cash
therefor may make settlement for the purchase price by crediting upon the Debt
the net sales price after deducting therefrom the expenses of the sale and costs
of the action and any other sums which Lender is authorized to deduct under this
Agreement.
(g) No recovery of any judgment by Lender and no levy of an execution
under any judgment upon the Properties or upon any other property of Borrower
shall affect in any manner or to any extent the lien of this Agreement upon the
Properties or any part thereof, or any liens, rights, powers or remedies of
Lender hereunder, but such liens, rights, powers and remedies of Lender shall
continue unimpaired as before.
(h) Lender may terminate or rescind any proceeding or other action
brought in connection with its exercise of the remedies provided in this
paragraph at any time before the conclusion thereof, as determined in Lender's
sole discretion and without prejudice to Lender.
(i) Lender or trustee may resort to any remedies and the security
given by the Note, this Agreement or the Loan Documents in whole or in part, and
in such portions and in such order as determined by Lender's sole discretion. No
such action shall in any way be considered a waiver of any rights, benefits or
remedies evidenced or provided by the Note, this Agreement or any of the other
Loan Documents. The failure of Lender to exercise any right, remedy or option
provided in the Note, this Agreement or any of the other Loan Documents shall
not be deemed a waiver of such right, remedy or option or of any covenant or
obligation secured by the Note, this Agreement or the other Loan Documents. No
acceptance by Lender of any payment after the occurrence of any Event of Default
and no payment by Lender of any obligation for which Borrower is liable
hereunder shall be deemed to waive or cure any Event of Default with respect to
Borrower, or Borrower's liability to pay such obligation. No sale of all or any
portion of the Properties, no forbearance on the part of Lender, and no
extension of time for the payment of the whole or any portion of the Debt or any
other indulgence given by Lender or trustee to Borrower, shall operate to
release or in any manner affect the interest of Lender in the remaining
Properties or the liability of Borrower to pay the Debt. No waiver by Lender or
trustee shall be effective unless it is in writing and then only to the extent
specifically stated. All costs and expenses of Lender in exercising the rights
and remedies under this Section 8.2 (including reasonable attorneys' fees and
disbursements to the extent permitted by law), shall be paid by Borrower
immediately upon notice from Lender, with interest at the Default Rate for the
period after notice from Lender and such costs and expenses shall constitute a
portion of the Debt and shall be secured by this Agreement.
65
(j) The interests and rights of Lender under the Note, this Agreement
or in any of the other Loan Documents shall not be impaired by any indulgence,
including (i) any renewal, extension or modification which Lender may grant with
respect to any of the Debt; (ii) any surrender, compromise, release, renewal,
extension, exchange or substitution which Lender may grant with respect to the
Properties or any portion thereof; or (iii) any release or indulgence granted to
any maker, endorser, Guarantor or surety of any of the Debt.
(k) With respect to Borrower and the Properties, nothing contained
herein or in any other Loan Document shall be construed as requiring Lender to
resort to any Individual Property for the satisfaction of any of the Debt in
preference or priority to any other Individual Property, and Lender may seek
satisfaction out of all of the Properties or any part thereof, in its absolute
discretion in respect of the Debt. In addition, Lender shall have the right
from time to time to partially foreclose the Mortgages in any manner and for any
amounts secured by the Mortgages then due and payable as determined by Lender in
its sole discretion including, without limitation, the following circumstances:
(i) in the event Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and interest, Lender may
foreclose one or more of the Mortgages to recover such delinquent payments, or
(ii) in the event Lender elects to accelerate less than the entire outstanding
principal balance of the Loan, Lender may foreclose one or more of the Mortgages
to recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by one or more of the Mortgages as Lender may elect.
Notwithstanding one or more partial foreclosures, the unforeclosed Properties
shall remain subject to the Mortgages to secure payment of sums secured by the
Mortgages and not previously recovered.
(l) Lender shall have the right from time to time to sever the Note
and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the "SEVERED LOAN DOCUMENTS") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until fifteen (15) days
after notice has been given to Borrower by Lender of Lender's intent to exercise
its rights under such power. Borrower shall not be obligated to pay any costs or
expenses incurred in connection with the preparation, execution, recording or
filing of the Severed Loan Documents, and the Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in the Loan
Documents and any such representations and warranties contained in the Severed
Loan Documents will be given by Borrower only as of the Closing Date.
66
SECTION 8.3 REMEDIES CUMULATIVE; WAIVER.
----------------------------
The rights, powers and remedies of Lender under this Agreement shall
be cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights,
powers and remedies may be pursued singly, concurrently or otherwise, at such
time and in such order as Lender may determine in Lender's sole discretion. No
delay or omission to exercise any remedy, right or power accruing upon an Event
of Default shall impair any such remedy, right or power or shall be construed as
a waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.
IX. ENVIRONMENTAL PROVISIONS
------------------------
SECTION 9.1 HAZARDOUS SUBSTANCES.
--------------------
Borrower hereby represents and warrants to Lender that, to the best of
Borrower's knowledge after due inquiry and investigation, except as disclosed in
the Phase I Reports, in all material respects: (a) each Individual Property is
not in violation of any local, state, federal or other governmental authority,
statute, ordinance, code, order, decree, law, rule or regulation pertaining to
or imposing liability or standards of conduct concerning environmental
regulation, contamination or clean-up including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
("CERCLA"), the Resource Conservation and Recovery Act, as amended ("RCRA"), the
Emergency Planning and Community Right-to-Know Act of 1986, as amended, the
Hazardous Substances Transportation Act, as amended, the Solid Waste Disposal
Act, as amended, the Clean Water Act, as amended, the Clean Air Act, as amended,
the Toxic Substance Control Act, as amended, the Safe Drinking Water Act, as
amended, the Occupational Safety and Health Act, as amended, any state super-
lien and environmental clean-up statutes and all rules and regulations adopted
in respect to the foregoing laws whether presently in force or coming into being
and/or effectiveness hereafter (collectively, "ENVIRONMENTAL LAWS"); (b) no
Individual Property is subject to any private or governmental lien or judicial
or administrative notice or action or inquiry, investigation or claim relating
to hazardous and/or toxic, dangerous and/or regulated, substances, wastes,
materials, raw materials which include hazardous constituents, pollutants or
contaminants including without limitation, petroleum, tremolite, anthlophylie,
actinolite or polychlorinated biphenyls and any other substances or materials
which are included under or regulated by Environmental Laws or which are
considered by scientific opinion to be otherwise dangerous in terms of the
health, safety and welfare of humans (collectively, "HAZARDOUS SUBSTANCES"); (c)
no Hazardous Substances are or have been (including the period prior to
Borrower's acquisition of each Individual Property) discharged, generated,
treated, disposed of or stored on, incorporated in, or removed or transported
from each Individual Property other than in compliance with all Environmental
Laws; and (d) no Hazardous Substances other than Permitted Materials are present
in, on or
67
under any nearby real property which could migrate to or otherwise affect each
Individual Property. So long as Borrower owns or is in possession of each
Individual Property, Borrower (i) shall keep or cause each Individual Property
to be kept free from Hazardous Substances other than Permitted Materials and in
compliance with all Environmental Laws, (ii) shall promptly notify Lender if
Borrower shall become aware of any Hazardous Substances other than Permitted
Materials on or near each Individual Property and/or if Borrower shall become
aware that each Individual Property is in direct or indirect violation of any
Environmental Laws and/or if Borrower shall become aware of any condition on or
near each Individual Property which shall pose a threat to the health, safety or
welfare of humans, and (iii) Borrower shall remove or cause removal of such
Hazardous Substances and/or cure such violations and/or remove such threats, as
applicable, as required by law (or as shall be reasonably required by Lender in
accordance with reasonable commercial lending standards and practices in the
case of removal which is not required by law, but in response to the opinion of
a licensed hydrogeologist, licensed environmental engineer or other qualified
consultant engaged by Lender ("LENDER'S CONSULTANT")), promptly after Borrower
becomes aware of same, at Borrower's sole expense. Notwithstanding anything to
the contrary in this paragraph, Borrower and its tenants may use and store
Hazardous Substances at each Individual Property if such use or storage is in
connection with the ordinary operation, cleaning and maintenance of each
Individual Property so long as such use and storage (A) does not violate any
applicable Environmental Laws and (B) does not violate any specific
recommendations in the Phase I Reports. Nothing herein shall prevent Borrower
from recovering such expenses from any other party that may be liable for such
removal or cure. The obligations and liabilities of Borrower under this Section
9.1 shall survive any termination, satisfaction, or assignment of this Agreement
and the exercise by Lender of any of its rights or remedies hereunder,
including, without limitation, the acquisition of each Individual Property by
foreclosure or a conveyance in lieu of foreclosure.
SECTION 9.2 ASBESTOS.
--------
Borrower represents and warrants that, to the best of Borrower's
knowledge, after due inquiry and investigation, no asbestos or any substance or
material containing asbestos ("ASBESTOS") is located on each Individual Property
except as may have been disclosed in the Phase I Reports delivered to Lender in
connection with the Loan. Borrower shall not install Asbestos in any Individual
Property and, upon discovery of any Asbestos in any Individual Property, shall,
at Borrower's sole expense, cause an operations and maintenance program
satisfactory to Lender to be established with respect to such Asbestos. Borrower
shall in all instances comply with, and ensure compliance by all occupants of
each Individual Property with, all applicable federal, state and local laws,
ordinances, rules and regulations with respect to Asbestos, and shall keep each
Individual Property free and clear of any liens imposed pursuant to such laws,
ordinances, rules or regulations. In the event that Borrower receives any notice
or advice from any governmental agency or any source whatsoever with respect to
Asbestos on, affecting or installed on any Individual Property, Borrower shall
immediately notify Lender. The obligations and liabilities of Borrower under
this Section 9.1 shall survive any termination, satisfaction, or assignment of
this Agreement and the exercise by Lender of any of its rights or remedies
hereunder, including but not limited
68
to, the acquisition of any Individual Property by foreclosure or a conveyance in
lieu of foreclosure.
SECTION 9.3 ENVIRONMENTAL MONITORING.
------------------------
Borrower shall give prompt written notices to Lender of any of the
following: (a) any proceeding or official inquiry by any party with respect to
the presence of any Hazardous Substance or Asbestos on, under, from or about any
Individual Property, (b) all claims made or threatened by any third party
against Borrower or any Individual Property relating to any loss or injury
resulting from any Hazardous Substance or Asbestos, and (c) Borrower's discovery
of any occurrence or condition on any real property adjoining or in the vicinity
of any Individual Property that could cause such Individual Property to be
subject to any official investigation or cleanup pursuant to any Environmental
Law. Borrower shall permit Lender to join and participate in, as a party if it
so elects, any legal proceedings or actions initiated with respect to any
Individual Property in connection with any Environmental Law or Hazardous
Substance, and Borrower shall pay all attorneys' fees and disbursements incurred
by Lender in connection therewith. Upon Lender's request, at any time and from
time to time while this Agreement is in effect, when (x) Lender has determined
(in the exercise of its good faith judgment) that reasonable cause exists for
the performance of an environmental inspection or audit of any Individual
Property or Properties or (y) an Event of Default exists, Borrower shall provide
at Borrower's sole expense, (i) an inspection or audit of each such Individual
Property prepared by a licensed hydrogeologist or licensed environmental
engineer approved by Lender indicating the presence or absence of Hazardous
Substances on, in or near each such Individual Property, and (ii) an inspection
or audit of such Individual Property prepared by a duly qualified engineering or
consulting firm approved by Lender, indicating the presence or absence of
Asbestos on the Each Individual Property. If Borrower fails to provide such
inspection or audit within thirty (30) days after such request, Lender may order
same, and Borrower hereby grants to Lender and its employees and agents access
to each Individual Property and a license to undertake such inspection or audit.
The cost of such inspection or audit to be paid by Borrower may be added to the
Debt and shall bear interest thereafter until paid at the Default Rate. In the
event that any environmental site assessment report prepared in connection with
such inspection or audit recommends that an operations and maintenance plan be
implemented for Asbestos or any Hazardous Substance, Borrower shall cause such
operations and maintenance plan to be prepared and implemented at Borrower's
expense upon request of Lender. In the event that any investigation, site
monitoring, containment cleanup, removal, restoration, or other work of any kind
is reasonably necessary under an applicable Environmental Law (the "REMEDIAL
WORK"), Borrower shall promptly commence and thereafter diligently prosecute, or
cause tenant to commence and thereafter diligently prosecute, to completion all
such Remedial Work after written demand by Lender for performance thereof. All
Remedial Work shall be performed by contractors approved in advance by Lender,
and under the supervision of a consulting engineer approved by Lender. All costs
and expenses of such Remedial Work shall be paid by Borrower including, without
limitation, Lender's reasonable attorneys' fees and disbursements incurred in
connection with monitoring or review of such Remedial Work. In the event
Borrower shall fail to timely commence, or cause to be commenced, or fail to
diligently prosecute to completion, such
69
Remedial Work, Lender may, but shall not be required to, cause such Remedial
Work to be performed, and all costs and expenses thereof, or incurred in
connection therewith, may be added to the Debt and shall bear interest
thereafter until paid at the Default Rate.
SECTION 9.4 ENVIRONMENTAL INDEMNIFICATION.
-----------------------------
Borrowers shall protect, indemnify, and hold harmless Lender from and
against all liabilities, obligations, claims, demands, damages, penalties,
causes of action, losses, fines, costs and expenses (including without
limitation reasonable attorneys' fee and disbursements), imposed upon or
incurred by or asserted against Lender by reason of (a) the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission, release, or threatened
release of any Hazardous Substance or Asbestos on, from or affecting the
Properties; (b) any personal injury (including wrongful death) or property
damage (real or personal) arising out of or related to such Hazardous Substance
or Asbestos; (c) any lawsuit brought or threatened, settlement reached, or
government order relating to such Hazardous Substance or Asbestos; and (d) any
violation of the Environmental Laws, which are based upon or in any way related
to such Hazardous Substance or Asbestos including, without limitation, the costs
and expenses of any Remedial Work, attorney and consultant fees and
disbursements, investigation and laboratory fees, court costs, and litigation
expenses.
SECTION 9.5 ENVIRONMENTAL COMPLIANCE.
------------------------
Borrower shall, within six (6) months of the date hereof (or such
longer time as may reasonably be required to complete the same with diligent
effort by Borrower, in light of the Legal Requirements and Governmental
Authorities involved), deliver evidence reasonably satisfactory to Lender
establishing that Borrower has performed and paid for the work set forth on
Schedule IV attached hereto in accordance with all Environmental Laws.
-----------
X. SPECIAL PROVISIONS
------------------
SECTION 10.1 SALE OF NOTES AND SECURITIZATION.
--------------------------------
At the request of the holder of the Note and, to the extent not
already required to be provided by Borrower under this Agreement, Borrower shall
reasonably cooperate with Lender, at Lender's expense, in connection with
satisfying reasonable requirements of Lender or the Rating Agencies in
connection with the sale of the Note or participations therein or the
securitization (such sale and/or securitization, the "SECURITIZATION") of rated
single or multi-class securities (the "SECURITIES") secured by or evidencing
ownership interests in the Note and the Mortgages by:
(a) (i) providing such financial and other information with respect
to the Properties, Borrower and Manager (the "PROVIDED INFORMATION") and (ii) at
Lender's expense (except to the extent that Borrower is otherwise responsible
for the cost of same pursuant to the terms of this Agreement), performing or
permitting or causing to be performed or permitted such site inspection,
appraisals, market studies, environmental reviews and reports (Phase I's and, if
appropriate, Phase II's), engineering reports and other due diligence
investigations of
70
the Properties, as may be reasonably requested by the holder of the Note or the
Rating Agencies or as may be necessary or appropriate in connection with the
Securitization together, if customary, with appropriate verification and/or
consents of the Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to Lender and the Rating Agencies;
(b) causing counsel to render opinions, which may be relied upon by
the holder of the Note, the Rating Agencies and their respective counsel, agents
and representatives, as to non-consolidation, fraudulent conveyance, and true
sale and/or lease or any other opinion customary in securitization transactions,
which counsel and opinions shall be reasonably satisfactory to the holder of the
Note and the Rating Agencies; and
(c) executing such amendments to the Loan Documents and organizational
documents as may be requested by the holder of the Note or the Rating Agencies
or otherwise to effect the Securitization; provided, however, that Borrower
shall not be required to modify or amend any Loan Document or organizational
document if such modification or amendment would (i) change the interest rate,
the stated maturity or the amortization of principal set forth in the Note, (ii)
modify or amend any other material economic term of the Loan or (iii) increase
Borrower's obligations, or decrease Borrower's rights, under the Loan Documents.
SECTION 10.2 INTENTIONALLY DELETED.
---------------------
SECTION 10.3 INTENTIONALLY DELETED.
---------------------
SECTION 10.4 INDEMNIFICATION.
---------------
In addition to any other indemnifications provided herein or in the
other Loan Documents, Borrower shall protect, defend, indemnify and save
harmless Lender from and against all liabilities, obligations, claims, demands,
damages, penalties, causes of action, losses, fines, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements),
imposed upon or incurred by or asserted against Lender by reason of (a) the
execution, delivery or performance of this Agreement or any other Loan
Documents, or ownership of the Properties or any interest therein or Mortgages
thereon or receipt of any Rents; (b) any accident, injury to or death of persons
or loss of or damage to property occurring in, on or about the Properties or any
part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (c) any use, nonuse or condition in, on or about
the Properties or any part thereof or on adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (d) any failure on the part
of Borrower to perform or comply with any of the terms of this Agreement or any
other Loan Documents; (e) performance of any labor or services or the furnishing
of any materials or other property in respect of the Properties or any part
thereof; (f) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release of any Hazardous Substance
or Asbestos on, from, or affecting the Properties; (g) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Substance or Asbestos; (h) any lawsuit brought or
threatened, settlement
71
reached, or government order relating to such Hazardous Substance or Asbestos;
(i) any violation of the Environmental Laws, which are based upon or in any way
related to such Hazardous Substance or Asbestos including, without limitation,
the costs and expenses of any Remedial Work, attorney and consultant fees and
disbursements, investigation and laboratory fees, court costs, and litigation
expenses; (j) any failure of the Properties to comply with any Access Laws; (k)
any representation or warranty made by Borrower in the Note, this Agreement or
any of the other Loan Documents (including, for the purposes of this provision,
in the Provided Information) being false or misleading in any material respect
as of the date such representation or warranty was made; (l) any claim by
brokers, finders or similar persons claiming to be entitled to a commission in
connection with the Loan (other than any such entity having dealt with Lender in
connection therewith), any Lease or other transaction involving the Properties
or any part thereof under any legal requirement or any liability asserted
against Lender with respect thereto; and (m) the claims of any lessee of any or
any portion of the Properties or any Person acting through or under any lessee
or otherwise arising under or as a consequence of any Lease; provided, however,
-------- -------
that Borrower shall not have any obligation to Lender hereunder to the extent
that such liabilities, obligations, claims, demands, damages, penalties, causes
of action, losses, fines, costs or expenses arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender. Any amounts payable to
Lender by reason of the application of this paragraph shall be secured by this
Agreement and the other Loan Documents and shall become immediately due and
payable and shall bear interest at the Default Rate from the date loss or damage
is sustained by Lender until paid. The obligations and liabilities of Borrower
under this Section 10.4 shall survive and termination, satisfaction, or
assignment of this Agreement and the exercise by Lender of any of its rights or
remedies hereunder, including, but not limited to, the acquisition of the
Properties by foreclosure or a conveyance in lieu of foreclosure.
SECTION 10.5 TERMINATION OF MANAGER.
----------------------
If (a) the amounts evidenced by the Note have been accelerated
pursuant to Section 8.1(b) hereof, or (b) Manager shall become insolvent,
Borrower shall, at the request of Lender, terminate the Management Agreement and
replace the Manager with a manager approved by Lender on terms and conditions
satisfactory to Lender, it being understood and agreed that the management fee
for such replacement manager shall not exceed then prevailing market rates.
XI. MISCELLANEOUS
-------------
SECTION 11.1 SURVIVAL.
--------
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
72
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
SECTION 11.2 LENDER'S DISCRETION.
-------------------
Wherever pursuant to this Agreement, Lender exercises any right given
to it to consent or not consent or approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to consent or not
consent, to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the reasonable discretion of
Lender, except as may be otherwise expressly and specifically provided herein.
SECTION 11.3 GOVERNING LAW.
-------------
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN
WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF
THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
73
YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING.
SECTION 11.4 NO ORAL CHANGE.
--------------
This Agreement, and any provisions hereof, may not be modified,
amended, waived, extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
SECTION 11.5 DELAY NOT A WAIVER, NON-WAIVER.
------------------------------
The failure of Lender to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of this Agreement.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of
(a) the failure of Lender to comply with any request of Borrower or Guarantor to
take any action to foreclose this Agreement or otherwise enforce any of the
provisions hereof or of the Note, or the other Loan Documents, (b) the release,
regardless of consideration, of the whole or any part of the Properties, or of
any Person liable for the Debt or any portion thereof, or (c) any agreement or
stipulation by Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Agreement or any of the other Loan
Documents. Lender may resort for the payment of the Debt to any other security
held by Lender in such order and manner as Lender, in its sole discretion, may
elect. Lender may take action to recover the Debt, or any portion thereof, or to
enforce any covenant hereof without prejudice to the right of Lender thereafter
to foreclosure this Agreement. The rights and remedies of Lender under this
Agreement shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Lender shall be construed as an
election to proceed under any one provision herein to the exclusion of any other
provision. Lender shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.
74
SECTION 11.6 NOTICES.
-------
Any notice, demand, statement, request or consent made hereunder shall
be in writing, addressed to the address, as set forth below, of the party to
whom such notice is to be given, or to such other address as Borrower or Lender,
as the case may be, shall designate in writing, and shall be deemed to be
received by the addressee on (i) the day such notice is personally delivered to
such addressee, (ii) the third (3rd) day following the day such notice is
deposited with the United States postal service first class certified mail,
return receipt requested, or (iii) the day following the day on which such
notice is delivered to a nationally recognized overnight courier delivery
service.
If to Lender: Global Alliance Finance Company, L.L.C.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Loan Origination Group
with a copy to: Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
If to Borrower: c/o Capital Automotive REIT
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
With a copy to: c/o Capital Automotive REIT
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
With a copy to: Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
SECTION 11.7 TRIAL BY JURY.
-------------
EACH OF BORROWER AND LENDER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION
75
ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY EACH OF BORROWER AND LENDER, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF BORROWER AND LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY THE OTHER PARTY.
SECTION 11.8 HEADINGS.
--------
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 11.9 SEVERABILITY.
------------
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement 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.
SECTION 11.10 PREFERENCES.
-----------
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, 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 hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
SECTION 11.11 WAIVER OF NOTICE.
----------------
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. To the extent permitted by law, Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not expressly provide for the
giving of notice by Lender to Borrower.
76
SECTION 11.12 REMEDIES OF BORROWER.
--------------------
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
SECTION 11.13 EXPENSES; INDEMNITY.
-------------------
(a) Borrower covenants and agrees to pay or, if Borrower fails to
pay, to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Properties); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Borrower; (iv) securing Borrower's compliance
with any requests made pursuant to the provisions of this Agreement; (v) the
filing and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Liens in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vi) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Properties, or any other security given for the Loan; and (vii) enforcing
any obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Properties or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
-------- -------
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender. Any cost and expenses due and payable to Lender may be paid from any
amounts in the Lockbox Account if Borrower has failed to pay the same within ten
(10) days of notice thereof.
77
(b) Borrower shall indemnify, defend and hold harmless Lender from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against Lender in any manner relating to or arising
out of (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "INDEMNIFIED LIABILITIES"); provided, however, that Borrower
-------- -------
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
SECTION 11.14 LIABILITY.
---------
If Borrower consists of more than one Person, the obligations and
liabilities of each such Person hereunder shall be joint and several. Subject to
the provisions hereof requiring Lender's consent to any transfer of the
Properties, this Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns forever.
SECTION 11.15 INAPPLICABLE PROVISIONS.
-----------------------
If any term, covenant or condition of the Note or this Agreement is
held to be invalid, illegal or unenforceable in any respect, the Note and this
Agreement shall be construed without such provision.
SECTION 11.16 SCHEDULES INCORPORATED.
----------------------
The Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body hereof.
SECTION 11.17 DUPLICATE ORIGINALS.
-------------------
This Agreement may be executed in any number of duplicate originals
and each such duplicate original shall be deemed to be an original.
SECTION 11.18 OFFSETS, COUNTERCLAIMS AND DEFENSES.
-----------------------------------
Any assignee of Lender's interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against
78
any assignor of such documents, and no such unrelated counterclaim or defense
shall be interposed or asserted by Borrower in any action or proceeding brought
by any such assignee upon such documents and any such right to interpose or
assert any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrower.
SECTION 11.19 LENDER'S CONSENT; NO JOINT VENTURE OR PARTNERSHIP; NO
-----------------------------------------------------
THIRD PARTY BENEFICIARIES.
-------------------------
Any consent or approval by Lender in any single instance shall not be
deemed or construed to be Lender's consent or approval in any like matter
arising at a subsequent date, and the failure of Lender to promptly exercise any
right, power, remedy, consent or approval provided herein or at law or in equity
shall not constitute or be construed as a waiver of the same nor shall Lender be
estopped from exercising such right, power, remedy, consent or approval at a
later date. Any consent or approval requested of and granted by Lender pursuant
hereto shall be narrowly construed to be applicable only to Borrower and the
matter identified in such consent or approval and no third party shall claim any
benefit by reason thereof, and any such consent or approval shall not be deemed
to constitute Lender a venturer or partner with Borrower nor shall privity of
contract be presumed to have been established with any such third party. If
Lender deems it to be in its best interest to retain assistance of persons,
firms or corporations (including, without limitation, attorneys, title insurance
companies, appraisers, engineers and surveyors) with respect to a request for
consent or approval, Borrower shall reimburse Lender for all costs reasonably
incurred in connection with the employment of such persons, firms or
corporations.
SECTION 11.20 PUBLICITY.
---------
All news releases by Borrower or their Affiliates through any media
intended to reach the general public which refers to the Loan Documents or the
financing evidenced by the Loan Documents, to Lender, Duetsche Bank Securities,
Inc. or any of their Affiliates shall be subject to the prior reasonable
approval of Lender, provided that Borrower may make public any filings required
by law.
SECTION 11.21 MULTI-PARTY BORROWERS.
---------------------
If there is more than one party comprising Borrower then the
obligations and liabilities of each party under this Agreement shall be joint
and several.
SECTION 11.22 NO FORFEITURE.
-------------
Borrower hereby covenants and agrees not to commit, permit or suffer
to exist any act, omission or circumstance affording such right of forfeiture.
In furtherance thereof, Borrower hereby indemnifies Lender and agrees to defend
and hold Lender harmless from and against any loss, damage or injury by reason
of the breach of the covenants and agreements or the representations and
warranties set forth in this paragraph. Without limiting the generality of the
foregoing, the filing of formal charges or the commencement of proceedings
against
79
Borrower or all or any part of the Properties under any federal or state law for
which forfeiture of the Properties or any part thereof or of any monies paid in
performance of Borrower's obligations under the Loan Documents is a potential
result, shall, at the election of Lender, constitute an Event of Default
hereunder without notice or opportunity to cure.
Section 11.23 BORROWER'S OWN JUDGMENT.
-----------------------
Borrower acknowledges that, with respect to the Loan, Borrower is
relying solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Borrower acknowledges that it is represented by competent counsel and has
consulted counsel before executing the Loan Documents.
Section 11.24 CROSS-DEFAULT; CROSS-COLLATERALIZATION; WAIVER OF
-------------------------------------------------
MARSHALLING OF ASSETS.
---------------------
(a) Borrower acknowledges that Lender has made the Loan to Borrower
upon the security of its collective interest in the Properties and in reliance
upon the aggregate of the Properties taken together being of greater value as
collateral security than the sum of each Individual Property taken separately.
Borrower agrees that the Mortgages are and will be cross-collateralized and
cross-defaulted with each other so that (i) an Event of Default under any of the
Mortgages shall constitute an Event of Default under each of the other Mortgages
which secure the Note; (ii) an Event of Default under the Note or this Loan
Agreement shall constitute an Event of Default under each Mortgage; and (iii)
each Mortgage shall constitute security for the Note as if a single blanket lien
were placed on all of the Properties as security for the Note.
(b) To the fullest extent permitted by law, Borrower, for itself and
its successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Properties, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Mortgages, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Properties for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of the
Properties in preference to every other claimant whatsoever. In addition,
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Mortgages, any equitable right otherwise
available to Borrower which would require the separate sale of the Properties or
require Lender to exhaust its remedies against any Individual Property or any
combination of the Properties before proceeding against any other Individual
Property or combination of Properties; and further in the event of such
foreclosure Borrower does hereby expressly consents to and authorizes, at the
option of Lender, the foreclosure and sale either separately or together of any
combination of the Properties.
80
(c) Lender may, at Lender's election, elect to "uncross" one or more
of the Mortgages such that the provisions of this Section 11.24 shall no longer
apply to such Mortgages. Borrower shall cooperate with Lender, at Lender's
expense, and execute such documents as may be reasonably requested by Lender in
connection with the uncrossing of the Mortgages, including, without limitation,
such severances, amendments, restatements and replacements of the Note, this
Agreement and the other Loan Documents as Lender may reasonably request.
SECTION 11.25 WAIVER OF SETOFF AND COUNTERCLAIM.
---------------------------------
All amounts due under this Agreement, the Note and the other Loan
Documents shall be payable without setoff, counterclaim or any deduction
whatsoever. Borrower hereby waives the right to assert a setoff, counterclaim
(other than a mandatory or compulsory counterclaim) or deduction in any action
or proceeding in which Lender is a participant, or arising out of or in any way
connected with this Agreement, the Note, any of the other Loan Documents, or the
Debt.
SECTION 11.26 ACTIONS AND PROCEEDINGS.
-----------------------
Lender has the right to appear in and defend any action or proceeding
brought with respect to the Properties and to bring any action or proceeding, in
the name and on behalf of Borrower, which Lender, in its sole discretion,
decides should be brought to protect its interest in the Properties. Lender
shall, at its option, be subrogated to the lien of any deed of trust or other
security instrument discharged in whole or in part by the Debt, and any such
subrogation rights shall constitute additional security for the payment of the
Debt.
Section 11.27 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.
---------------------------------------------
In the event of any conflict between the provisions of this Loan
Agreement and any of the other Loan Documents, the provisions of this Loan
Agreement shall control. The parties hereto acknowledge that they were
represented by competent counsel in connection with the negotiation, drafting
and execution of the Loan Documents and that such Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Borrower acknowledges that, with respect to the Loan, Borrower
shall rely solely on its own judgment and advisors in entering into the Loan
without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by it
or any parent, subsidiary or Affiliate of Lender of any equity interest any of
them may acquire in Borrower, and Borrower hereby irrevocably waives the right
to raise any defense or take any action on the basis of the foregoing with
respect to Lender's exercise of any such rights or remedies. Borrower
acknowledges that Lender engages in the business of real estate financings and
other real estate transactions and investments which may be viewed as adverse to
or competitive with the business of Borrower or its Affiliates.
81
SECTION 11.28. SERVICER.
--------
At the option of Lender, the Loan may be serviced by a
servicer/trustee (the "SERVICER") selected by Lender and Lender may delegate all
or any portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement (the "SERVICING
AGREEMENT") between Lender and Servicer. Lender shall be responsible for any
reasonable set-up fees or any other initial costs relating to or arising under
the Servicing Agreement, provided, however, that Lender shall be responsible for
payment of the monthly servicing fee due to the Servicer under the Servicing
Agreement.
SECTION 11.29 ASSIGNMENTS.
-----------
Lender shall have the right to assign or transfer its rights under
this Agreement without limitation. Any assignee or transferee shall be entitled
to all the benefits afforded Lender under this Agreement.
SECTION 11.30 BROKERS AND FINANCIAL ADVISORS.
------------------------------
Borrower hereby represents that it has dealt with no financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower hereby
agrees to indemnify, defend and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind (including Lender's
attorneys' fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Borrower or Lender in connection
with the transactions contemplated herein, except for any such Person having
dealt with Lender. The provisions of this Section 11.30 shall survive the
-------------
expiration and termination of this Agreement and the payment of the Debt.
SECTION 11.31 PRIOR AGREEMENTS.
----------------
The Loan Documents contain the entire agreement between Borrower and
Lender relating to or connected with the Loan. Any other agreements relating to
or connected with the Loan not expressly set forth in the Loan Documents are
null and void and superseded in their entirety by the provisions of the Loan
Documents.
SECTION 11.32 LENDER'S STATEMENT.
------------------
Not more than twice in any calendar year, Lender, within twenty (20)
days after written request by Borrower in connection with a proposed sale of the
Properties pursuant to Section 7.1(f), shall issue to Borrower a written
statement setting forth the outstanding principal balance of the Loan and the
date through which interest has been paid. Such written statement by Lender
shall not constitute a waiver of any of Lender's rights under the Loan
Documents.
82
SECTION 11.33 LIMITED RECOURSE.
----------------
Notwithstanding anything to the contrary contained herein, the
provisions of Paragraph 9 of the Note are incorporated herein as if the same
were fully set forth herein.
SECTION 11.34 OTHER LOANS.
-----------
Borrower has given the Guaranty of Payment, secured by the Junior Deed
of Trust, as security for the payment by Affiliates of Borrower, CARS-DB1,
L.L.C., CARS-DB2, L.L.C., and CARS-DB4, L.P., (collectively, the "OTHER
BORROWERS"), of certain mortgage loans in the respective principal amounts of
$38,050,000, $39,670,000, and $35,430,000 (the "OTHER LOANS") making the Loan
cross-collateralized and cross-defaulted with the Other Loans. The Borrower
acknowledges that Lender may wish to "un-cross" the Loan from one or more of the
Other Loans by releasing or modifying the Guaranty of Payment and the Junior
Deed of Trust. Borrower shall cooperate with Lender, at Lender's expense, and
execute such documents as may be reasonably requested by Lender in connection
with the un-crossing of the Loan and the Other Loans, including, without
limitation, such severances, amendments, restatements and replacements of the
Guaranty of Payment and the Junior Deed of Trust as Lender may reasonably
request. Borrower shall, if requested by Lender, also cause Borrower's counsel,
at Lender's expense, to deliver an Insolvency Opinion reflecting the resulting
structure after any such un-crossing of the Loan and the Other Loans and an
enforceability opinion with respect to the documents executed by Borrower in
connection with such un-crossing.
[NO FURTHER TEXT ON THIS PAGE]
83
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
BORROWER:
CARS-DB3, L.P., a Delaware limited partnership
By: CARS-DBSPE3, INC., a Delaware corporation, its
general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President, General
Counsel, Secretary
LENDER:
GLOBAL ALLIANCE FINANCE COMPANY,
L.L.C., a Delaware limited liability company
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
SCHEDULE I
----------
PROPERTIES - ALLOCATED RELEASE AMOUNTS
(CARS-DB3, L.P.)
-------------------------------------------------------------------------------------------------------------------------
PROPERTY CITY STATE ALLOCATED RELEASE AMOUNT
-------- ---- ----- ------------------------
-------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇
-------
-------------------------------------------------------------------------------------------------------------------------
1 ▇▇▇▇▇▇▇ Lincoln-Mercury Annandale Virginia $3,650,774
-------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇
------
-------------------------------------------------------------------------------------------------------------------------
2 Saturn of Gwinnett Duluth Georgia $2,395,820
-------------------------------------------------------------------------------------------------------------------------
▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ $1,197,910
-------------------------------------------------------------------------------------------------------------------------
4 Courtesy Motors Decatur Indiana $1,540,170
-------------------------------------------------------------------------------------------------------------------------
5 Saturn of Chamblee Chamblee Georgia $1,540,170
-------------------------------------------------------------------------------------------------------------------------
▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $3,080,341
-------------------------------------------------------------------------------------------------------------------------
▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 912,693
-------------------------------------------------------------------------------------------------------------------------
8 Northside Chevrolet Evansville Indiana $1,311,997
-------------------------------------------------------------------------------------------------------------------------
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ $3,251,471
-------------------------------------------------------------------------------------------------------------------------
10 Saturn of Fort ▇▇▇▇▇ Fort ▇▇▇▇▇ Indiana $ 570,433
-------------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $3,251,471
-------------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ $2,795,124
-------------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ $2,452,864
-------------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇
------
-------------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $3,821,904
-------------------------------------------------------------------------------------------------------------------------
15 ▇▇▇▇▇▇▇ Ford Sales Philadelphia Pennsylvania $2,281,734
-------------------------------------------------------------------------------------------------------------------------
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $1,597,214
-------------------------------------------------------------------------------------------------------------------------
17 ▇▇▇▇▇▇ Ford of ▇▇▇▇▇▇ Heights ▇▇▇▇▇▇ Heights Maryland $1,197,910
-------------------------------------------------------------------------------------------------------------------------
SCHEDULE II
-----------
RENT ROLL
SCHEDULE III
------------
FORM OF SUBORDINATION,
NONDISTURBANCE AND ATTORNMENT AGREEMENT