EXHIBIT 10.1
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LOAN AGREEMENT
Dated as of October 30, 1998
Between
Borrowers (as defined herein)
And
THE CAPITAL COMPANY OF AMERICA LLC,
as Lender
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TABLE OF CONTENTS
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I DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1
1.1 Specific Definitions 1
1.2 Index of Other Definitions 18
1.3 Principles of Construction 19
II THE LOAN 20
2.1 The Loan 20
2.1.1 Commitment 20
2.1.2 Note 20
2.1.3 Use of Loan Proceeds 21
2.2 Conditions Applicable to All Advances 21
2.2.1 Facility Amount 21
2.2.2 No Default 21
2.2.3 Collateral Property Requirements 21
2.2.4 Expenses 21
2.2.5 New Collateral Property 21
2.2.6 Number of Closings 21
2.3 [Reserved] 21
2.4 [Reserved] 21
2.5 Conditions Precedent to Designation of a Collateral Property 22
2.5.1 First Mortgage 22
2.5.2 Second Mortgage 22
2.5.3 Title Insurance 22
2.5.4 Environmental Audit 22
2.5.5 Insurance 23
2.5.6 Operating Statements; Budgets 23
2.5.7 Searches 23
2.5.8 Survey 23
2.5.9 Management 23
2.5.10 Leases and Material Contracts 23
2.5.11 Tenant Estoppels and SNDA's 24
2.5.12 Property Condition Report 24
2.5.13 Appraisal 24
2.5.14 Zoning Compliance, Etc. 24
2.5.15 Recording Taxes 24
2.5.16 Perfection of Security Interests 24
2.5.17 Opinions 24
2.5.18 Ground Lease 25
2.5.19 REA 25
2.5.20 Reserves and Escrows 25
2.5.21 Rent Roll 25
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2.5.22 Further Documents 25
2.5.23 Approval 25
2.5.24 Expenses 25
2.5.25 Effective Date 25
2.5.26 Additional Properties 26
2.6 Substitution of Collateral Properties 26
III INTEREST; PAYMENTS 29
3.1 Interest; Monthly Payments 29
3.1.1 Generally 29
3.1.2 29
3.1.3 Property Cash Flow Allocation 29
3.1.4 Default Rate 30
3.2 Loan Repayment 30
3.2.1 Repayment 30
3.2.2 Mandatory Prepayments 31
3.3 Release of Property 31
3.3.1 Release of Individual Properties 31
3.3.2 Release on Payment in Full 33
3.3.3 Release Documents 33
3.4 Payments and Computations 33
3.4.1 Making of Payments 33
3.4.2 Computations 33
3.4.3 Late Payment Charge 33
3.5 Special Cash Management Termination 34
3.6 [Reserved] 34
3.7 Fees 34
3.7.1 Draw Fee 34
3.7.2 Authorization 34
3.8 Taxes 35
3.9 Breakage Indemnity 35
IV CASH MANAGEMENT; ESCROWS AND RESERVES 36
4.1 Cash Management Arrangements 36
4.2 Required Repairs; Required Repair Funds 36
4.2.1 Required Repairs 36
4.2.2 Release of Required Repair Funds 37
4.2.3 Repair Fund L/C 37
4.3 Tax and Insurance Escrow Fund 38
4.4 Replacement Reserves 39
4.4.1 Replacement Reserve Fund 39
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4.4.2 Payment of Replacement Expenses 39
4.5 Rollover Reserves 40
4.5.1 Rollover Reserve Fund 40
4.5.2 Payment of Leasing Expenses 40
4.6 Ground Rent Escrow 41
4.6.1 Ground Rent Escrow Fund 41
4.7 Operating Expense Reserves 41
4.7.1 Operating Expense Reserve Fund 41
4.7.2 Payment of Approved Operating Expenses 42
4.8 Casualty/Condemnation Fund 42
4.9 Security Deposits 42
4.10 Grant of Security Interest; Application of Funds 43
4.11 Investments of Funds 43
4.12 UNOI Letter of Credit 44
4.13 Oakridge Option Fund 44
4.14 Cash Collateral Fund 46
4.15 Regal Reserve Fund 46
4.16 Environmental Fund 47
4.17 Parkway Reserve #2 Fund 48
V REPRESENTATIONS AND WARRANTIES 49
5.1 Borrower Representations 49
5.1.1 Organization; Special Purpose 49
5.1.2 Proceedings; Enforceability 49
5.1.3 No Conflicts 49
5.1.4 Litigation 49
5.1.5 Agreements 50
5.1.6 Title 50
5.1.7 Survey 50
5.1.8 No Bankruptcy Filing 50
5.1.9 Full and Accurate Disclosure 50
5.1.10 No Plan Assets 51
5.1.11 Compliance 51
5.1.12 Contracts 51
5.1.13 Financial Information 51
5.1.14 Condemnation 51
5.1.15 Federal Reserve Regulations 51
5.1.16 Utilities and Public Access 52
5.1.17 Not a Foreign Person 52
5.1.18 Separate Lots 52
5.1.19 Assessments 52
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5.1.20 Enforceability 52
5.1.21 Insurance 52
5.1.22 Use of Property; Licenses 52
5.1.23 Flood Zone 52
5.1.24 Physical Condition 52
5.1.25 Encroachments 53
5.1.26 Leases 53
5.1.27 Filing and Recording Taxes 54
5.1.28 Investment Company Act 54
5.1.29 Fraudulent Transfer 54
5.1.30 Ownership of Borrower 54
5.1.31 Management Agreement 55
5.1.32 Hazardous Substances 55
5.1.33 Name; Principal Place of Business 55
5.1.34 Subordinated Debt 56
5.1.35 Ground Lease 56
5.1.36 REA 56
5.1.37 Development Agreement 56
5.2 Survival of Representations and Covenants 56
VI AFFIRMATIVE COVENANTS 57
6.1 Existence 57
6.2 Taxes and Other Charges 57
6.3 Repairs; Maintenance and Compliance 57
6.3.1 Repairs and Maintenance 57
6.3.2 Legal Compliance 58
6.3.3 Alterations 58
6.4 Litigation 59
6.5 Performance of Other Agreements 59
6.6 Notices 59
6.7 Cooperate in Legal Proceedings 60
6.8 Further Assurances 60
6.9 Financial Reporting 60
6.9.1 Bookkeeping 60
6.9.2 Annual Reports 60
6.9.3 Monthly and Quarterly Reports 61
6.9.4 Other Reports 61
6.9.5 Annual Budget 61
6.9.6 Delivery of Financial Information 62
6.10 Environmental Matters 62
6.10.1 Hazardous Substances 62
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6.10.2 Environmental Monitoring 62
6.11 Title to the Property 64
6.12 Leases 64
6.12.1 Form of Lease 64
6.12.2 New and Renewal Leases 65
6.12.3 Leasing Covenants 67
6.12.4 Nondisturbance Agreements 67
6.12.5 Reciprocal Easement Agreements 67
6.12.6 Notice to Tenants 67
6.13 Estoppel Statement 67
6.14 Property Management 68
6.14.1 Management Agreement 68
6.14.2 Termination of Manager 68
6.14.3 Manager's Subordination 68
6.15 Special Purpose Bankruptcy Remote Entity 69
6.16 Assumptions in Non-Consolidation Opinion 71
6.17 Expenses 71
6.18 Indemnity 71
6.19 Third Party Reports 73
6.20 Schedule 7 73
6.21 Undelivered Documents 73
6.22 Parkway Plaza 73
VII NEGATIVE COVENANTS 74
7.1 Management Agreement 74
7.2 Liens 74
7.3 Dissolution 75
7.4 Change In Business or Operation of Property 75
7.5 Debt Cancellation 75
7.6 Assets 75
7.7 Transfers 75
7.8 Debt 75
7.9 Assignment of Rights 75
7.10 Principal Place of Business 75
7.11 Corporate Organization 75
7.12 ERISA 76
VIII INSURANCE; CASUALTY; AND CONDEMNATION 76
8.1 Insurance 76
8.1.1 Coverage 76
8.1.2 Policies 77
8.2 Casualty 78
8.2.1 Notice; Restoration 78
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8.2.2 Settlement of Proceeds 78
8.3 Condemnation 78
8.3.1 Notice; Restoration 78
8.3.2 Collection of Award 79
8.4 Application of Proceeds or Award 79
8.4.1 Application to Restoration 79
8.4.2 Application to Debt 79
8.4.3 Procedure for Application to Restoration 80
8.4.4 Ground Lease; Anchor Lease 80
IX DEFAULTS 80
9.1 Events of Default 80
9.2 Remedies 83
9.2.1 Acceleration 83
9.2.2 Remedies Cumulative 84
9.2.3 Severance 84
9.2.4 Delay 85
9.2.5 Lender's Right to Perform 85
X SPECIAL PROVISIONS 85
10.1 Sale of Note and Secondary Market Transaction 85
10.1.1 Cooperation 85
10.1.2 Use of Information 86
10.1.3 Borrowers Obligations Regarding Disclosure Documents 87
10.1.4 Borrowers Indemnity Regarding Filings 88
10.1.5 Indemnification Procedure 88
10.1.6 Contribution 88
10.1.7 Rating Surveillance 89
10.1.8 Floor on Coupon Rate 89
XI MISCELLANEOUS 89
11.1 Exculpation 89
11.2 Notices 91
11.2.1 Borrowers' Agent 91
11.3 Brokers and Financial Advisors 91
11.4 Retention of Servicer 92
11.5 Survival 92
11.6 Lender's Discretion 92
11.7 Governing Law 92
11.8 Modification; Waiver in Writing 93
11.9 Delay Not a Waiver 93
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11.10 TRIAL BY JURY 94
11.11 Headings 94
11.12 Severability 94
11.13 Preferences 94
11.14 Waiver of Notice 94
11.15 Remedies of Borrower 94
11.16 Prior Agreements 95
11.17 Offsets, Counterclaims and Defenses 95
11.18 Publicity 96
11.19 No Usury 96
11.20 Conflict; Construction of Documents 96
11.21 No Third Party Beneficiaries 97
11.22 Yield Maintenance Premium 97
11.23 Assignment 97
11.24 Liabilities Not Joint and Several 97
11.25 Third Party Guaranties 98
SCHEDULES
Schedule 1 - Location of Property
Schedule 2 - Matters Regarding Representations
Schedule 3 - Initial Borrowers
Schedule 4 - Required Repairs
Schedule 5 - Organizational Chart
Schedule 6 - Monthly Replacement Deposit Amounts (Initial Borrowers)
Schedule 7 - Material Contracts
Schedule 8 - Description of Crestwood Alteration
Schedule 9 - Specified Agreements
Schedule 10 - Possible Additional Loan Properties
Schedule 11 - Undelivered Documents
Schedule 12 - Oakridge Option Agreement and Oakridge Subordinate Mortgage
EXHIBITS
Exhibit A - Form of Assumption of Loan Documents
Exhibit B-1 - Form of Manager Consent and Subordination (Westfield)
Exhibit B-2 - Form of Manager Consent and Subordination (other than Westfield)
Exhibit C - Form of Subordination Nondisturbance and Attornment Agreement
Exhibit D - Form of Notice to Tenants
LOAN AGREEMENT
LOAN AGREEMENT dated as of October 30, 1998 between the Borrowers (as
hereinafter defined) and THE CAPITAL COMPANY OF AMERICA LLC, a Delaware limited
liability company (together with its successors and assigns, "LENDER").
I DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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1.1 SPECIFIC DEFINITIONS. The following terms have the meanings set forth
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below:
"ACCEPTABLE APPRAISAL": an appraisal of a Collateral Property (or proposed
Collateral Property) (i) dated not more than 180 days prior to the applicable
Transaction Date, (ii) signed by a qualified MAI appraiser with no interest,
direct or indirect, in the Loan or any Collateral Property, and whose
compensation is not affected by the Appraised Value (and Lender agrees that as
of the date hereof ▇▇▇▇▇▇▇▇ Associates, Inc. satisfies the foregoing criteria),
(iii) addressed to Lender and its successors and assigns, (iv) made in
compliance with the requirements of the Federal National Mortgage Association
Company or Federal Home Loan Mortgage Corporation, or any successor thereto, and
Title XI of the Federal Institutions Reform, Recovery, and Enforcement Act of
1989 and the regulations promulgated thereunder, and (v) otherwise reasonably
satisfactory to Lender in all respects.
"ADVANCE": any portion of any Loan advanced by Lender.
"AFFILIATE": as to any Person, any other Person that, 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.
"ALLOCABLE SHARE": as to any Borrower: (i) with respect to Principal and
interest thereon, 100% of such Borrower's Allocated Note Amount and 100% of the
interest thereon, (ii) with respect to any Obligation relating solely to the
Collateral Property owned by such Borrower, 100% and (iii) with respect to any
other Obligation, subject to the provisions of Section 11.24, a fraction, the
numerator of which is such Borrower's then Allocated Note Amount and the
denominator of which is the then aggregate Allocated Note Amounts of all
Borrowers.
"ALLOCATED TITLE AMOUNT": with respect to any Collateral Property, 125% of
the Appraised Value of such Collateral Property.
"APPLICABLE DSCR": 1.35.
"APPLICABLE RATING AGENCIES": means the Rating Agencies that have rated any
Securities issued in connection with a Secondary Market Transaction.
"APPRAISED VALUE": the fair market value of a Collateral Property (or
proposed Collateral
Property) reflected in an Acceptable Appraisal.
"APPROVED BANK" shall mean a bank whose long term unsecured debt
obligations are rated at least "AA" by Standard & Poor's Rating Group.
"APPROVED LEASING EXPENSES": expenses incurred by a Borrower in leasing
space at such Borrower's Collateral Property pursuant to Leases entered into in
accordance with the Loan Documents, including brokerage commissions, tenant
improvements and other inducements, which expenses (i) are (A) specifically
approved by Lender in connection with approving the applicable Lease, (B)
incurred in the ordinary course of business and on market terms and conditions
in connection with Leases which do not require Lender's approval under the Loan
Documents, or (C) otherwise approved by Lender, which approval shall not be
unreasonably withheld or delayed, and (ii) are substantiated by executed Lease
documents and brokerage agreements.
"APPROVED MANAGER": Westfield Management Company, a Delaware general
partnership, or Westfield Management Acquisition, Inc., a Delaware corporation,
or any other wholly owned subsidiary of Westfield Holdings Limited, or any
successor or assignee of any of the foregoing, provided that each successor or
assignee shall be (i) approved by Lender in Lender's reasonable discretion
(unless such successor or assign is wholly owned, directly or indirectly, by
Westfield Holdings Limited and evidence thereof reasonably satisfactory to
Lender has been delivered to Lender prior to the change in Manager, in which
case Lender's approval shall not be required) and (ii) after any Secondary
Market Transaction, approved by each Rating Agency (provided that such Rating
Agency approval shall not be necessary as to any Manager wholly owned, directly
or indirectly, by Westfield Holdings Limited if each Rating Agency has received
a nonconsolidation opinion as to such Manager from Debevoise & ▇▇▇▇▇▇▇▇ or
another law firm acceptable to the Rating Agencies in form and substance
satisfactory to the Rating Agencies).
"APPROVED OPERATING EXPENSES": Operating Expenses incurred by a Borrower
which (i) are included in the approved Operating Budget for the Current Month
for the Collateral Property owned by such Borrower, (ii) are for electric, gas,
oil, water, sewer or other utility service to, or Management Fees for, such
Collateral Property or (iii) have been approved by Lender, which approval shall
not be unreasonably withheld or delayed.
"APPROVED REPLACEMENT EXPENSES": Replacement Expenses incurred by a
Borrower which (i) are included in the approved Replacement Budget for the
Current Month for the Collateral Property owned by such Borrower or (ii) have
been approved by Lender, which approval shall not be unreasonably withheld or
delayed.
"BLOCKED ACCOUNT AGREEMENTS": the respective Blocked Account Agreements
among each Borrower, Lender and a Clearing Bank.
"BORROWER": any one of the Borrowers.
"BORROWER REPRESENTATIVE": as to each Borrower, its general partner or
managing member.
"BORROWERS": collectively, the Initial Borrowers and each of the borrowers
that becomes a signatory to this Agreement pursuant to Sections 2.1.2 and 2.5
hereof, and their permitted successors and assigns.
"BORROWERS' AGENT": Westfield Management Company, a Delaware general
partnership.
"BUSINESS DAY": means any day other than (i) a Saturday or a Sunday, and
(ii) a day on which federally insured depository institutions in New York, New
York or San Francisco, California are authorized or obligated by law,
regulation, governmental decree or executive order to be closed.
"CASH MANAGEMENT EVENT": (i) either (A) an Event of Default occurs or (B)
the Debt Service Coverage Ratio at any time is less than 1.15 and (ii) the
giving by Lender to the Clearing Bank(s) of notice of such occurrence (a "CASH
MANAGEMENT NOTICE").
"CASH MANAGEMENT FEE": the fees charged from time to time by the Deposit
Bank during the continuance of a Cash Management Event in accordance with the
Cash Management Agreement.
"CASH MANAGEMENT TERMINATION": the giving by Lender to the Clearing
Bank(s) of notice that the sweeping of funds into the Deposit Account may cease
(a "CASH MANAGEMENT TERMINATION NOTICE"), which notice Lender shall only be
required to give if (i) the Loans, and all other obligations under the Loan
Documents have been repaid in full, or (ii) for twelve consecutive months after
the cure of the last Cash Management Event to have occurred, (x) there has
occurred no other Cash Management Event, (y) no Event of Default has occurred
and is continuing and (z) the Debt Service Coverage Ratio has been 1.20 or
higher, or (iii) Lender is obligated to give such notice pursuant to Section
3.5(b).
"CODE": the Internal Revenue Code of 1986, as amended, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"COLLATERAL POOL": at any time, all of the Collateral Properties.
"COLLATERAL PROPERTY": as of any date, any Retail Property that is subject
to the Lien of a Mortgage on such date and that satisfied the conditions set
forth in Section 2.6 at the time such Retail Property first became a Collateral
Property.
"CONTROL": with respect to any Person, either (i) ownership directly or
through other entities of more than 50% of all beneficial equity interest in
such Person, or (ii) the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, through the ownership of voting
securities, by contract or otherwise.
"CORE PROPERTY": a Collateral Property which Lender has determined
satisfies all of the conditions set forth in clause (A), clause (B) or clause
(C) of this definition.
A: (i) at least 90% of the gross leaseable area of all "in-line"
stores at such Collateral Property is leased and occupied by tenants; (ii)
the average tenant sales at "in-line" stores at such Collateral Property
for tenants who have been in occupancy and paying full rent for at least 12
consecutive months exceeded $275 per square foot of gross leaseable area
during the then most recent 12-month period; (iii) fixed and additional
rents payable by the tenants at "in-line" stores at such Collateral
Property were, in the aggregate, less than 15% of the aggregate annual
tenants' sales at such Collateral Property during such 12-month period; and
(iv) such Collateral Property has at least three "anchor" tenants (which
term includes anchor stores which own their own pads) who are in occupancy
and not in default under their leases or any REA affecting such Collateral
Property.
B: (i) at least 90% of the gross leaseable area of all "in-line"
stores at such Collateral Property is leased and occupied by tenants; (ii)
the average tenant sales at "in-line" stores at such Collateral Property
for tenants who have been in occupancy and paying full rent for at least 12
consecutive months exceeded $300 per square foot of gross leaseable area
during the then most recent 12-month period; (iii) fixed and additional
rents payable by the tenants at "in-line" stores at such Collateral
Property were, in the aggregate, less than 16.5% of the aggregate annual
tenants' sales at such Collateral Property during such 12-month period; and
(iv) such Collateral Property has at least three "anchor" tenants (which
term includes anchor stores which own their own pads) who are in occupancy
and not in default under their leases or any REA affecting such Collateral
Property.
C: (i) at least 85% of the gross leaseable area of all "in-line"
stores at such Collateral Property is leased and occupied by tenants; (ii)
the average tenant sales at "in-line" stores at such Collateral Property
for tenants who have been in occupancy and paying full rent for at least 12
consecutive months exceeded $300 per square foot of gross leaseable area
during the then most recent 12-month period; (iii) fixed and additional
rents payable by the tenants at "in-line" stores at such Collateral
Property were, in the aggregate, less than 15% of the aggregate annual
tenants' sales at such Collateral Property during such 12-month period; and
(iv) such Collateral Property has at least three "anchor" tenants (which
term includes anchor stores which own their own pads) who are in occupancy
and not in default under their leases or any REA affecting such Collateral
Property.
"COUPON DIFFERENTIAL AMOUNT": as to any partial prepayment of Principal, an
amount, determined immediately following such prepayment and after taking into
account the retirement of any Securities from the proceeds of such prepayment,
equal to the product of (x) the aggregate outstanding principal balance of the
Loans immediately following such prepayment, times (y) the amount, if any, by
which (i) the weighted average coupon rate on all Securities then issued and
outstanding immediately following such prepayment, exceeds (ii) LIBOR plus the
Margin.
"CURRENT MONTH": as of any date of determination, the then current
calendar month.
"DEBT": the unpaid Principal, all interest accrued and unpaid thereon, any
Yield Maintenance Premium and all other sums due to Lender in respect of the
Loan, or under any Loan Document.
"DEBT SERVICE": with respect to any particular period, the scheduled
interest payments due under the Note in such period.
"DEBT SERVICE CONSTANT": for any period, the greater of (i) 9.25% and (ii)
the Interest Rate as of the last day of such period.
"DEBT SERVICE COVERAGE RATIO": as of any date, the ratio calculated by
Lender of (i) the Underwritten Net Operating Income for the 12-month period
ending with the most recently completed calendar month to (ii) the product of
(A) the aggregate outstanding Principal balance of the Loans as of the end of
such period multiplied by (B) the Debt Service Constant.
"DEFAULT": the occurrence of any event under any Loan Document which, but
for the giving of notice or passage of time, or both, would be an Event of
Default.
"DEFAULT RATE": prior to the Stated Maturity Date: a rate per annum equal
to the lesser of (i) the Maximum Rate and (ii) 5% above the Interest Rate,
compounded monthly; from and after the Stated Maturity Date: a rate per annum
equal to the lesser of (i) the Maximum Rate and (ii) 10% above the Interest
Rate, compounded monthly.
"DEPOSIT BANK": LaSalle National Bank, or such other bank or depository
selected by Lender in its sole discretion, which holds and disburses Funds and
other deposits required hereunder.
"DETERMINATION DATE": with respect to any Interest Period, the date which
is two Eurodollar Business Days prior to the commencement of such Interest
Period.
"ELIGIBLE ACCOUNT": either (i) an account or accounts (A) maintained with
a depository institution or trust company, the short term unsecured debt
obligations or commercial paper of which are rated at least A-1+ (or equivalent)
by the applicable Rating Agency in the case of accounts in which funds are held
for 30 days or less (or, in the case of accounts in which funds are held for
more than 30 days, the long term unsecured debt obligations of which are rated
at least AA (or equivalent) by the applicable Rating Agency) or (B) as to which
Lender has
received a Rating Comfort Letter from each of the applicable Rating Agencies
with respect to holding funds in such account or (ii) a segregated trust account
or accounts maintained with a federal or state chartered depository institution
or trust company acting in its fiduciary capacity which, in the case of a state
chartered depository institution or trust company is subject to regulations
similar to 12 C.F.R. 9.10(b), having in either case a combined capital and
surplus of at least $50,000,000 and subject to federal and state authority, or
any other with respect to which Lender has received a Rating Comfort Letter.
"ENVIRONMENTAL EVENT" means, with respect to any Collateral Property, (a) a
violation of any Environmental Law with respect to such Collateral Property, or
(b) the presence of any Hazardous Substance on, about, or under such Collateral
Property that, under or pursuant to any Environmental Law, would require
remediation, if in the case of either (a) or (b), such event or circumstance
could result in a material adverse affect on the value or operations of such
Collateral Property.
"ERISA": the Employment Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE": all members of a controlled group of corporations and
all trades and business (whether or not incorporated) under common control and
all other entities which, together with Borrower, are treated as a single
employer under any or all of Section 414(b), (c), (m) or (o) of the Code.
"EURODOLLAR BUSINESS DAY": any day other than a Saturday, Sunday or other
day on which banks in the City of London, England are closed for interbank or
foreign exchange transactions.
"FACILITY AMOUNT": an amount determined by Lender equal to the least of
(i) the amount obtained by dividing (A) the Underwritten Net Operating Income
for the Collateral Pool as of the Funding Date in question by (B) the Debt
Service Constant as of the Funding Date, and by (C) 1.35, (ii) 60% of the
Appraised Value of the Collateral Pool as of the Funding Date in question, and
(iii) $850,000,000.
"FASIT": Financial Asset Securitization Investment Trust within the meaning
of Sec tion 860L(a)(1) of the Code.
"FISCAL YEAR": each twelve month period commencing on January 1 and ending
on December 31 during each year of the Term.
"FUNDING DATE": the date on which any Advance is made by Lender.
"FUNDING TERMINATION DATE": November 30, 1998.
"GAAP": generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.
"GOVERNMENTAL AUTHORITY": any court, board, agency, commission, office or
authority of any nature whatsoever for any governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) now or hereafter in existence.
"GROUND LEASE": any lease defined as a "Ground Lease" in any Mortgage.
"GROUND LESSOR": a lessor under a Qualified Ground Lease.
"GROUND RENT": with respect to any Ground Lease, all ground rents, square
footage rents, percentage rents or any other payments or rents owing by a
Borrower under such Ground Lease.
"INDEPENDENT DIRECTOR": as to any Borrower, an individual selected by such
Borrower and reasonably satisfactory to Lender who shall not have been at the
time of such individual's appointment as a director, does not thereafter become
and shall not have been at any time during the preceding five years (i) a
shareholder/partner/member of, or an officer or employee of, such Borrower or
any of its shareholders, subsidiaries or Affiliates, (ii) a director of any
shareholder, subsidiary or Affiliate of such Borrower other than such Borrower's
Borrower Representative, (iii) a customer of, or supplier to, such Borrower or
any of its shareholders, subsidiaries or Affiliates, (iv) a Person who Controls
any such shareholder, supplier or customer, or (v) a member of the immediate
family of any such shareholder/director/partner/member, officer, employee,
supplier or customer or of any other director of such Borrower's Borrower
Representative.
"INITIAL BORROWERS": the Borrowers identified on Schedule 3 hereto.
"INITIAL MORTGAGES": collectively, the first and second Mortgages executed
by each of the Initial Borrowers, each Initial Borrower having executed a first
and second Mortgage encumbering the Initial Property owned by such Initial
Borrower.
"INITIAL PROPERTIES": collectively, the Collateral Properties encumbered by
the Initial Mortgages, the locations of which are identified on Schedule 1.
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"INTEREST PERIOD": (i) the period from the date of the First Advance
through the first day thereafter that is an Interest Period Termination Date and
(ii) each period thereafter from an Interest Period Commencement Date through an
Interest Period Termination Date; except that the Interest Period, if any, that
would otherwise commence before and end after the Maturity Date shall end on the
Maturity Date.
"INTEREST PERIOD COMMENCEMENT DATE": the 11th day of each calendar month;
provided, however, that if the Payment Date is changed by Lender pursuant to the
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definition thereof, Lender may adjust this definition accordingly.
"INTEREST PERIOD TERMINATION DATE": the 10th day of each calendar month
(notwithstanding that the succeeding Payment Date may not be an Interest Period
Commencement Date because the day after such Interest Period Termination Date is
not a Business Day); provided, however, that if the Payment Date is changed by
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Lender pursuant to the definition thereof, lender may adjust this definition
accordingly.
"INTEREST RATE": for any Interest Period, the lesser of (A) LIBOR for such
Interest Period plus the Margin and (B) the Maximum Rate (or, when applicable
pursuant to this Agreement or any other Loan Document, the Default Rate).
"JURISDICTIONALLY CAPPED SECOND MORTGAGE": any second Mortgage executed
and delivered pursuant to Section 2.5.2 hereof which encumbers a Collateral
Property located in a state which requires the payment of mortgage recording tax
in excess of $25,000 in order to record such second Mortgage.
"LEASE ROLLOVER NUMBER": as to any calendar year, the aggregate number of
square feet of gross leaseable area in the Improvements in the Collateral Pool
that are covered by leases the expiration dates of which (after taking into
account all renewals and extensions that have been unconditionally exercised as
of the date in question) are scheduled to occur in such calendar year.
"LEASE ROLLOVER PERCENTAGE": as to any calendar year, a fraction, expressed
as a percentage, the numerator of which is the Lease Rollover Number for such
calendar year and the denominator of which is the aggregate number of square
feet of gross leaseable area of all Improvements in the Collateral Pool.
"LEASEHOLD ESTATE": the leasehold interest and estate of Borrower created
pursuant to a Ground Lease.
"LEASES": all leases and other agreements existing on the date hereof or
hereafter entered into affecting the use, or occupancy of, or the conduct of any
activity upon or in, any Collateral Property or any Improvements thereon,
including any extensions, renewals, modifications or amendments thereof, but
excluding (i) reciprocal easement and operating agreements and (ii) subleases
where the sublessee is not in privity with a Borrower.
"LEGAL REQUIREMENTS": statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of, or agreements (including the
Specified Agreements) with, Governmental Authorities affecting all or part of
any Collateral Property, any Ground Lease or the construction, use, alteration
or operation 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
instrument, either of record or known to any Borrower, at any time in force
affecting all or part of any Collateral Property, including any that may (i)
require repairs, modifications or alterations in or to all or part of any
Collateral Property, or (ii) in any way limit the use and enjoyment thereof.
"LETTER OF CREDIT" shall mean an irrevocable, unconditional, transferable,
clean sight draft letter of credit in favor of Lender and entitling Lender to
draw thereon in New York, New York, issued by a domestic Approved Bank or the
U.S. agency or branch of a foreign Approved Bank, or if there are no domestic
banks or financial institutions which qualify as an Approved Bank or U.S.
agencies or branches of a foreign bank or financial institution which qualifies
as an Approved Bank then issuing letters of credit, then such letter of credit
may be issued by any domestic bank with a long term unsecured debt rating that
is the highest such rating then given by each Rating Agency to a domestic
commercial bank.
"LIBOR": with respect to any Interest Period, the rate per annum which is
equal to the London Interbank Offered Rate reported from time to time by
Telerate News Service (page 3750), at which foreign branches of major United
States banks offer United States dollar deposits to other banks for a one-month
period in the London interbank market at approximately 11:00 a.m., London time,
on the related Determination Date. If such interest rate shall cease to be
available from Telerate News Service, LIBOR shall be determined from such
financial reporting service as Lender shall reasonably determine and use with
respect to its other loan facilities on which interest is determined based on
LIBOR. If two or more such rates appear on Telerate page 3750 or associated
pages, the rate in respect of such Interest Period will be the arithmetic mean
of such offered rates, absent manifest error.
"LIEN": any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest or any other encumbrance, charge or transfer of,
on or affecting all or part of any Collateral Property or any interest therein,
or in any Borrower or in any Borrower Representative, including 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 DOCUMENTS": this Agreement and all other documents, agreements and
instruments evidencing, securing or delivered to Lender in connection with the
Loan, whether now existing or hereafter executed , including the following: (i)
the Note, (ii) the first and second mortgages on each Collateral Property
(collectively, the "MORTGAGES"), (iii) the Assignments of Leases and Rents with
respect to each Collateral Property, (iv) the Assignments of Agreements with
respect to each Collateral Property, (v) the Deposit Account Agreements among
Borrowers, Lender, Manager and the Deposit Bank (the "DEPOSIT ACCOUNT
AGREEMENTS"), (vi) the Blocked Account Agreements and (vii) the Master Deposit
Account Agreement, as each of the foregoing may be (and each of the foregoing
defined terms shall refer to such documents as they may be) amended, restated,
replaced, supplemented or otherwise modified from time to time.
"MAINTENANCE AND REPAIRS": items of maintenance and repair to the
Improvements or Equipment similar to the items of work (but not limited to such
specific items) described in the
Dames & ▇▇▇▇▇ physical inspection reports delivered to Lender in connection with
the closing of the Loans.
"MANAGEMENT AGREEMENT": as to each Collateral Property, the management
agreement in effect on the date hereof between the Borrower that owns such
Collateral Property and an Approved Manager for such Collateral Property,
pursuant to which such Approved Manager is to manage such Property, as same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time with the prior approval of Lender (which consent shall not be reasonably
withheld or delayed), and after any Secondary Market Transaction, the approval
of each Rating Agency (provided, however, that any modification which does not
modify the term or economics of the Management Agreement or otherwise materially
modify the Management Agreement, shall require prior notice to, but not the
consent of, Lender, and shall not require the consent of any Rating Agency).
"MANAGEMENT FEE": as to any Management Agreement, all fees in the nature of
management fees payable to Manager under such Management Agreement.
"MANAGER": as to each Collateral Property, the Approved Manager under the
Management Agreement for such Collateral Property.
"MARGIN": 0.53%.
"MATERIAL ALTERATION": as to any Borrower, any alteration affecting
structural elements of such Borrower's Collateral Property the cost of which
exceeds 10% of such Borrower's original Allocated Note Amount; provided,
however, that in no event shall tenant improvement work, or alterations
performed as part of a Restoration, constitute a Material Alteration.
"MATERIAL LEASE": as to any Collateral Property, any Lease (i) which
demises more than 5% of such Collateral Property's gross leaseable area or (ii)
the fixed annual rent under which exceeds 5% of the aggregate fixed annual rent
payable under all Leases of such Collateral Property.
"MATURITY DATE": the date on which the final payment of principal of the
Note becomes due and payable as therein provided, whether at the Stated Maturity
Date, by declaration of acceleration, or otherwise.
"MAXIMUM RATE": the maximum interest rate allowed by applicable law in
effect with respect to the Loan on the date for which a determination of
interest accrued hereunder is made, after taking into account all fees, payments
and other charges that are, under applicable law, characterized as interest.
"MONTHLY REPLACEMENT DEPOSIT": for any Collateral Property, the greater of
(i) one-twelfth of the product obtained by multiplying $0.20 by the number of
square feet of gross leaseable area in such Collateral Property and (ii) the
amount determined by Lender, based on the engineering report for such Collateral
Property reviewed by Lender, at the time such Collateral
Property first becomes a Collateral Property. On each anniversary of the date of
this Agreement (or, if any such anniversary is not a Payment Date, on the first
Payment Date following such anniversary) the Monthly Replacement Deposit shall
automatically increase by 2.5% of the then Monthly Replacement Deposit amount.
The initial Monthly Replacement Deposit for each of the Collateral Properties
owned by the Initial Borrowers is set forth in Schedule 6 hereto.
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"MONTHLY ROLLOVER DEPOSIT": for any Collateral Property, an amount equal
to one-twelfth of the average annual cost (as determined by Lender) to the
applicable Borrower for tenant improvements and leasing commissions in respect
of such Collateral Property during the 60-month period preceding the date on
which such Collateral Property first becomes a Collateral Property.
"NET OPERATING INCOME": for any period, the excess, if any, of Operating
Income for such period over Operating Expenses for such period.
"OAKRIDGE BORROWER": Oakridge Mall LLC, a Delaware limited liability
company.
"OAKRIDGE PROPERTY": the Collateral Property owned by Oakridge Borrower.
"OBLIGATIONS": all obligations, liabilities and Debt of Borrowers (or any
of them) to Lender, whether now existing or hereafter arising, under this
Agreement or any of the other Loan Documents.
"OFFICER'S CERTIFICATE": as to any Borrower, a certificate delivered to
Lender by such Borrower which is signed by a senior executive officer of such
Borrower's Borrower Representative.
"OPERATING EXPENSES": as to any Collateral Property or proposed Collateral
Property, for any period, all expenditures by or on behalf of the applicable
Borrower in connection with the ownership, operation, maintenance, repair or
leasing of such Collateral Property, including (i) Management Fees, Insurance
Premiums, Ground Rent, bank charges, expenses for accounting, advertising,
marketing, architectural services, utilities (including costs for electricity,
oil, gas, water, steam, heat, ventilation, air conditioning and other energy),
extermination, cleaning, trash removal, window washing, landscaping, security
(including security systems), environmental compliance; and reasonable and
necessary legal and other professional expenses incurred in connection with the
operation of such Collateral Property; (ii) Taxes and Other Charges; (iii)
wages, benefits, payroll taxes, uniforms, insurance costs and all other related
expenses for employees of the applicable Borrower or its Affiliate to the extent
engaged in the repair, operation or maintenance of such Collateral Property;
(iv) the cost of tenant improvements (other than tenant improvements
constituting Replacement Expenses), routine interior and exterior maintenance,
repairs, minor alterations and other tenant services and (v) amounts deposited
into any Funds pursuant to this Agreement; provided that Operating Expenses will
not include Debt Service, Replacement Expenses, non-cash items such as
depreciation and amortization or any
extraordinary one-time expenditures not considered operating expenses under
GAAP. Operating Expenses shall be determined on a "cash basis".
"OPERATING INCOME": as to any Collateral Property or proposed Collateral
Property, for any period, all regular on-going revenues actually received by
Borrower from the operation of such Collateral Property during such period,
including (i) Rents, (ii) amounts withdrawn from any Funds pursuant to this
Agreement and (iii) all other amounts actually received which in accordance with
GAAP are required to be or are included in the applicable Borrower's annual
financial statements as operating income of such Collateral Property; provided,
that Operating Income will not include (1) income from non-recurring income
sources; (2) advance Rents or other payments; (3) deposits or escrows; (4) any
income otherwise includable in Operating Income but paid to a Person other than
the applicable Borrower; (5) proceeds of Casualty insurance or Condemnation
Awards; or (6) income from a sale, financing or other capital transaction.
Operating Income shall be determined on a "cash basis."
"OTHER CHARGES": with respect to any Collateral Property, all Ground Rents,
maintenance charges, impositions other than Taxes, and any other charges,
including vault charges and license fees for the use of vaults, chutes and
similar areas adjoining such Collateral Property, now or hereafter levied or
assessed or imposed against such Collateral Property or any part thereof,
including all interest and penalties on any of the foregoing.
"PAYMENT DATE": the 11th day of each calendar month (or such other day of
a calendar month selected by Lender to collect debt service payments under loans
which it makes and securitizes) or, if such day is not a Business Day, the first
Business Day thereafter.
"PERMITTED ENCUMBRANCES": as to any Collateral Property: (a) the Liens
created by the Loan Documents, (b) all Liens and other matters disclosed in the
Title Insurance Policies insuring the Mortgages on such Collateral Property, (c)
Liens, if any, for Taxes or Other Charges not yet payable or delinquent, (d)
easements for utilities and rights of way which do not have a materially adverse
affect on the use, operation or value of such Collateral Property and (e) such
other title and survey exceptions as Lender approves in writing in Lender's
reasonable discretion.
"PERMITTED INVESTMENTS": has the meaning given such term in the Deposit
Account Agreements.
"PERMITTED TRANSFERS": (i) a Lease (or an amendment, extension,
modification, waiver or renewal thereof) entered into in accordance with the
Loan Documents, (ii) a Permitted Encumbrance, (iii) a Transfer of a limited
partnership/membership interest in a Borrower by a limited partner/member other
than such Borrower's Borrower Representative, an interest in a limited
partner/member of a Borrower or stock in such Borrower's Borrower Representative
if either (A) such Transfer would not cause the transferee to acquire Control of
such Borrower or such Borrower's Borrower Representative or to increase its
direct or indirect interest in such Borrower or such Borrower's Borrower
Representative to an amount which equals or exceeds 49%, or (B) at such
Borrower's sole cost and expense, such Borrower shall have (1) delivered (or
caused to be delivered) to Lender, a Rating Comfort Letter from the applicable
Rating Agencies with respect to such Transfer, (2) delivered (or caused to be
delivered) to Lender and the applicable Rating Agencies, a substantive non-
consolidation opinion with respect to such Borrower in form and substance
satisfactory to Lender and the applicable Rating Agencies, and (3) reimbursed
Lender for all reasonable expenses incurred by it in connection with such
Transfer or (iv) any transfer of stock in a publicly held corporation.
"PERSON": any individual, corporation, partnership, joint venture, 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.
"PLAN": (i) an employee benefit or other plan established or maintained by
Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate
makes or is obligated to make contributions and (ii) which is covered by Title
IV of ERISA or Section 302 of ERISA or Section 412 of the Code.
"POOLING AND SERVICING AGREEMENT": the Servicing Agreement entered into
with the Servicer in connection with any Secondary Market Transaction, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"PRIMARY OAKRIDGE GROUND LEASE": the Primary Ground Lease (as such term is
defined in the first Mortgage encumbering the Oakridge Property).
"QUALIFIED GROUND LEASE": a ground lease of a Retail Property under which
a Borrower is the lessee, all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion (or, in the case of a
ground lease which covers only portions of a Collateral Property not material to
the use, operation or legal compliance of such Collateral Property, in Lender's
reasonable discretion) and as to which the Ground Lessor has executed and
delivered to Lender an estoppel certificate in form, scope and substance
satisfactory to Lender in its sole and absolute discretion.
"QUALIFIED REA": an REA all of the terms and conditions of which are
acceptable to Lender in its sole and absolute discretion and as to which each of
the parties to the REA (other than the applicable Borrower) has executed and
delivered to Lender an estoppel certificate in form, scope and substance
satisfactory to Lender in its sole and absolute discretion.
"RATING AGENCY": any of Standard & Poor's Ratings Group, a division of
▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., Duff & ▇▇▇▇▇▇ Credit Rating
Co., Fitch IBCA, Inc. or any other nationally-recognized statistical rating
agency which has issued a rating of any Securities.
"RATING COMFORT LETTER": a letter issued by each of the Applicable Rating
Agencies which confirms that the taking of the action referenced to therein will
not result in any qualification, withdrawal or downgrading of any existing
ratings of Securities created in a
Secondary Market Transaction.
"REA": any "construction, operation and reciprocal easement agreement" or
similar agreement (including any "separate agreement" or other agreement between
a Borrower and one or more other parties to an REA with respect to an REA)
affecting any Collateral Property or portion thereof.
"REAL PROPERTY": as to any Collateral Property, the portions thereof
constituting land, Improvements thereon and all rights pertaining to such land
and Improvements.
"REINVESTMENT RATE": means the actual reinvestment rate available to
Lender with respect to the amount of the Yield Maintenance Premium in question.
"REMIC": a "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
"RENTS": with respect to any Collateral Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, all oil and gas or other mineral royalties and bonuses),
income, fees, receivables, receipts, revenues, deposits (including security,
utility and other deposits), accounts, cash, issues, profits, charges for
services rendered, and other payment and consideration of whatever form or
nature received by or paid to or for the account of or benefit of a Borrower,
Manager (in its capacity as manager of such Collateral Property, and excluding
sums payable by Borrower to Manager pursuant to the Management Agreement) or any
of their agents or employees from any and all sources arising from or
attributable to such Collateral Property and the Improvements therein, including
all receivables, customer obligations, installment payment obligations and other
obligations now existing or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of the use and
occupancy of such Collateral Property or rendering of services by the applicable
Borrower or Manager (in its capacity as manager of such Collateral Property, and
excluding sums payable by Borrower to Manager pursuant to the Management
Agreement), and proceeds, if any, from business interruption or other loss of
income insurance.
"REPAIR EXPENSES": reasonable, market-rate costs and expenses actually
incurred to pay for Required Repairs.
"REPLACEMENT EXPENSES": expenses incurred to pay for replacements,
improvements and/or Maintenance and Repairs of the Improvements or Equipment or
portions of either.
"REQUIRED RECORD": any financial statement, certificate, report or
information required to be delivered under Section 6.9.
"RETAIL PROPERTY": a "regional" or "super regional" shopping mall.
"ROUTINE HAZARDOUS SUBSTANCES": Hazardous Substances typically used in the
ordinary
course of business at Retail Properties, which are generated, used, stored and
disposed of in compliance with all applicable Environmental Laws.
"SECURITY DEPOSIT SUB-ACCOUNT": that certain sub-account or accounts
established and maintained by Lender at the Deposit Bank for the purpose of
holding all security deposits of lessees under Leases after a Cash Management
Event.
"SERVICER": Capital America Client Services LLC or its successor in
interest, or if any successor servicer is appointed pursuant to the Pooling and
Servicing Agreement, such successor servicer.
"SPECIFIED AGREEMENTS": the agreements described on Schedule 9.
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"STATE": as to any Collateral Property, the state or commonwealth in which
such Collateral Property is located.
"STATED MATURITY DATE": December 11, 2001.
"SUBSTITUTION DATE": each semi-annual anniversary (or, if such semi-annual
anniversary is not a Payment Date, the closest Payment Date thereto) of the
first Payment Date to occur after the Funding Termination Date, excluding any
such semi-annual anniversary (or closest Payment Date thereto) that occurs on or
after the Maturity Date.
"SURVEY": a current as-built survey of a Collateral Property prepared by a
surveyor licensed by the State in which such Collateral Property is located and
certified to Lender and the Title Company and prepared in accordance with the
Minimum Standard Detail Requirements for ALTA/ ACSM Land Title Surveys meeting
the Accuracy Standards of an Urban Survey, with accuracy and precision
requirements modified to meet current angular and linear tolerance requirements
of such State, showing the legal description and street address of the
Collateral Property; all visible or recorded easements, building lines, curb
cuts, and party walls; all parking, sewage, water, electricity, gas and other
utility facilities, together with recording information concerning the documents
creating any such easements and building lines; stating the net, after deduction
of land dedicated or used or subject to easements for roads, highways, fire
lanes, utilities, storm drains or any other public purpose, and gross area of
the land; and including the following Table A items: 1, 2, 3, 4, 6, 7(a),
7(b)(1), 8, 10, 11 and 13.
"TAXES": as to any Collateral Property, all real estate and personal
property taxes, assessments, water rates or sewer rents, now or hereafter levied
or assessed or imposed against all or any part of such Collateral Property.
"TERM": the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrowers
pursuant to the Loan Documents.
"TITLE COMPANY": collectively, First American Title Insurance Company and
Chicago Title Insurance Company and their respective successors.
"TITLE INSURANCE POLICY": as to any Collateral Property, a policy of title
insurance, in form and amount acceptable to Lender, issued by the Title Company
for the benefit of Lender, its successors and assigns, insuring the Liens of the
first and second Mortgages on such Collateral Property subject to no Liens other
than Liens acceptable to Lender, and containing such endorsements and
affirmative coverages (including affirmative coverage as to "creditors' rights"
and "tie-in" or "aggregation" coverage) as Lender may require.
"TRANSACTION DATE": a date on which an Advance is made or a substitution
of Collateral Property occurs.
"TRANSFER": any sale, conveyance, transfer, lease (including any
amendment, extension, modification, waiver or renewal thereof), assignment,
mortgage, pledge, grant of a security interest or hypothecation, whether by law
or otherwise, of or in (i) all or part of any Collateral Property (including any
legal or beneficial direct or indirect interest therein), (ii) any direct or
indirect interest in any Borrower, or (iii) any direct or indirect interest in
the Borrower Representative of any Borrower.
"UCC": as to any Collateral Property, the Uniform Commercial Code as in
effect in the State in which such Collateral Property is located.
"UNDERWRITTEN NET OPERATING INCOME": for the 12-month period ending with
the most recently completed calendar month, all Operating Income minus all
Operating Expenses during such period, as determined by Lender; provided that,
in determining Underwritten Net Operating Income, the following adjustments
shall be made to the calculation of Operating Income and Operating Expenses:
(1) Fixed rent shall be adjusted so as to equal the lesser of (a)
fixed rent based on the trailing 12-month period plus annualized fixed
rent for credit tenants which have been in occupancy for less than one
year and (b) annualized fixed rent for signed leases with tenants in
occupancy and paying rent.
(2) Reimbursements will be based on the trailing 12-month period and
will be included as income to the extent such reimbursements are
determined by Lender, in its reasonable discretion, to be stabilized
and recurring. With the exception of contractual reimbursements, as
determined by Lender in its reasonable discretion, tenant
reimbursements in excess of the corresponding expense items will not
be included.
(3) Percentage rent will be included only to the extent it is
reasonably
determined by Lender to be stabilized and recurring up to a maximum of
100% of the amount collected in the trailing 12-month period. In
general, centers which are experiencing flat or declining tenant sales
will be underwritten in an amount which would result if percentage
rent were re-calculated based upon 90% of the tenant sales reported in
the trailing twelve month period. Centers with increasing sales trends
will be underwritten based upon 100% of the collected percentage rent
in the trailing 12-month period.
(4) Month to month tenants and temporary tenant income will be
included only to the extent it is reasonably determined by Lender to
be stabilized and recurring up to a maximum of 100% of rent collected
in the preceding 12 months.
(5) Other income may be included on a case-by-case basis and in any
event only to the extent it is determined by Lender to be stabilized
and recurring and of an operating nature for a period of at least
three years (e.g., interest income would be backed out).
(6) A vacancy and credit loss allowance equal to the greater of (a)
actual vacancy and historical credit loss and (b) 5-10% of the mall
shop revenues (assuming 100% occupancy).
(7) Expenses will be the greater of: (a) the actual expenses for the
trailing 12 months ended in the most recently completed fiscal month
(except real estate taxes and insurance, which will be included at
their stabilized, recurring levels), and (b) the average actual annual
expenses over the past three years and, in either case, will exclude
any non-recurring items and the costs of capital improvements.
(8) Management fees will be charged at the rate of the greater of:
(a) actual management fees and (b) 5% of total fixed and percentage
rents. The amounts of the management fees so determined will be
reduced by those costs which are incurred with respect to a Collateral
Property and are deducted under other numbered clauses of this
definition, but which are paid by the Manager from its management fee.
(9) Capital expenditures will be deemed to be the greater of (a)
$0.20 per square foot of owned gross leaseable area and (b) the amount
recommended by the structural engineering/property condition reports
approved by Lender.
(10) A deduction will be made for the pro-rated amount of tenant
improvement costs and leasing commissions, based on a 60% retention
rate assumption and other assumptions based on market information to
be confirmed by Lender during its due diligence, for the tenants that
are scheduled to roll during the term of the Loan, without duplication
for costs deducted under other sections, subject to a
minimum of $1.00 per occupied square foot of non-anchor space.
(11) Other adjustments as determined by Lender in its reasonable
discretion consistent with its due diligence findings and prevailing
market conditions.
In determining Underwritten Net Operating Income, all pro forma
adjustments to revenue and expenses shall be approved by Lender in its
reasonable discretion and shall be subject to Lender's full due
diligence. Notwithstanding anything to the contrary contained in this
definition, on the second anniversary of the date hereof, Lender shall
have the option of modifying the foregoing definition of Underwritten
Net Operating Income to reflect underwriting standards which match the
generally accepted, prevailing underwriting standards which at such
time are utilized in the market by Lender, the Rating Agencies and
other commercial financial institutions which are in the business of
making securitizable loans comparable to the Loan. Any such
modification by Lender of the definition of Underwritten Net Operating
Income shall be effective for all purposes of this Agreement
(including any calculation of the Facility Amount and Debt Service
Coverage Ratio). Upon Borrowers' written request from time to time,
Lender shall advise Borrowers of any modification of the definition of
Underwritten Net Operating Income made by Lender pursuant to the two
preceding sentences.
"WELFARE PLAN": means an employee welfare benefit plan, as defined in
Section 3(1) of ERISA.
"YIELD MAINTENANCE PREMIUM": as to any prepayment of Principal (other than
a prepayment in full of all of the Loans), an amount equal to the present value
(calculated using a discount rate equal to the Reinvestment Rate) as of the date
of such prepayment, of a hypothetical stream of payments, each in the Coupon
Differential Amount, made monthly on each Payment Date, from the Payment Date
immediately following the date of such prepayment through and including the
Stated Maturity Date. Under no circumstances shall the Yield Maintenance
Premium be less than zero.
1.2 INDEX OF OTHER DEFINITIONS. The following terms are defined in the
--------------------------
sections or Loan Documents indicated below:
"Accrued Interest" - 3.1.2
"Allocated Note Amount" - 2.1.2
"Annual Budget" - 6.9.5
"Approved Material Lease" - 6.12.2
"Award" - 8.3.2
"Cash Collateral Fund" - 4.14
"Cash Collateral Subaccount" - Master Account Agreement
"Cash Management Accounts" - 4.10
"Casualty" - 8.2.1
"Casualty/Condemnation Prepayment" - 3.2.2
"Casualty/Condemnation Fund" - 4.8
"CCA Group" - 10.1.3
"Clearing Accounts" - 4.1
"Clearing Banks" - 4.1
"Condemnation" - 8.3.1
"Deemed Approval Procedure" - 6.12.2
"Deposit Account" - 4.1
"Disclosure Document" - 10.1.2
"Early Termination Period" - 3.5
"Environmental Laws" - 5.1.32
"Equipment" - Mortgage
"Event of Default" - 9.1
"Exchange Act" - 10.1.2
"Funds" - 4.10
"Grid" - 2.1.2
"Ground Lease" - Mortgage
"Ground Rent Escrow Fund" - 4.6
"Guaranty" - 2.1.2
"Hazardous Substances" - 5.1.32
"Improvements" - Mortgage
"Indemnified Liabilities" - 6.18
"Indemnified Party" - 6.18
"Insurance Premiums" - 8.1.2
"Insured Casualty" - 8.2.2
"Issuer" - 10.1.3
"Late Payment Charge" - 3.4.3
"Lender's Consultant" - 6.10.2
"Liabilities" - 10.1.3
"Licenses" - 5.1.22
"Loan" - 2.1
"LTV Ratio" - 2.6
"Master Deposit Account" - 4.1
"Master Account Agreement" - 4.1
"Mortgage" - Definition of "Loan Documents"
"Note" - 2.1.2
"Oakridge Guarantor" - 4.13
"Oakridge Guaranty" - 4.13
"Oakridge Option Fund" - 4.13
"Operating Budget" - 6.9.5
"Operating Expense Reserve Fund" - 4.7.1
"Policies" - 8.1.2
"Principal" - 2.1
"Proceeds" - 8.2.2
"Provided Information" - 10.1.1
"Registration Statement" - 10.1.3
"Release Conditions" - 3.3.1
"Remainder Subaccount" - Deposit Account Agreements
"Remedial Work" - 6.10.2
"Rent Roll" - 5.1.26
"Repair Fund L/C" - 4.2.3
"Replacement Budget" - 6.9.5
"Replacement Reserve Fund" - 4.4.1
"Required Repair Fund" - 4.2.1
"Required Repairs" - 4.2.1
"Responsible Officer" - 11.2.1
"Restoration" - 8.4.1
"Rollover Reserve Fund" - 4.5.1
"Securities" - 10.1.1
"Securities Act" - 10.1.2
"Secondary Market Transaction" - 10.1.1
"Special Purpose Bankruptcy Remote Entity" - 6.15
"Subaccounts" - 4.1
"Tax and Insurance Escrow Fund": - 4.3
"Undelivered Documents" - 5.1.36
"Underwriter Group" - 10.1.3
"Underwriters" - 9.1.3
"Unpaid Balance" - 8.4.2
1.3 PRINCIPLES OF CONSTRUCTION. Unless otherwise specified, (i) all
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references to sections and schedules are to those in this Agreement, (ii) the
words "hereof," "herein" and "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the word "including" means "including but not limited to," and (v)
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
II THE LOAN
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2.1 THE LOAN.
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2.1.1 COMMITMENT. Subject to and upon the terms and conditions of this
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Agreement, Lender agrees to make loans to the respective Borrowers (each, a
"LOAN" and collectively, the "LOANS") on or before the Funding Termination Date
in an aggregate maximum principal sum of up to $850,000,000 (the "PRINCIPAL").
The Loans shall consist of (i) Loans made to the Initial Borrowers,
respectively, on the date hereof and (ii) Loans made after the date hereof but
on or before the Funding Termination Date to Persons who become Borrowers after
the date hereof. The Loans shall mature on the Stated Maturity Date. No amount
repaid in respect of any of the Loans may be reborrowed.
2.1.2 NOTE. (a) The Loans shall be evidenced by a promissory note in
----
the maximum principal sum of up to $850,000,000 (the "NOTE") executed by each of
the Borrowers; provided, however, that, as more particularly described in
Section 11.24, each Borrower shall be liable under the Note only for such
Borrower's Allocated Note Amount. Whenever Lender shall make an Advance, Lender
shall allocate such Advance to one Borrower or among two or more Borrowers, and
the Advances as so allocated among the Borrowers shall constitute the Borrowers'
respective "ALLOCATED NOTE AMOUNTS." Such allocation by Lender shall be based on
the respective Underwritten Net Operating Incomes of the Collateral Properties
as determined by Lender. Lender shall note the amount of each Advance and the
allocation thereof among the Borrowers on the grid attached to the Note (the
"GRID"). Whenever a Borrower makes a payment of Principal, such Borrower's
Allocated Note Amount shall be reduced accordingly and Lender shall make an
appropriate notation on the Grid. Except where this Agreement specifically
provides as to how a prepayment of Principal is to be allocated among Borrowers'
respective Allocated Note Amounts, any prepayment of Principal shall be
allocated to one or more Borrowers' respective Allocated Note Amounts in such
manner as Lender may elect in its sole and absolute discretion. Any person who
becomes a Borrower after the date hereof shall execute and deliver a counterpart
signature page to the Note and an assumption of this Agreement and the other
Loan Documents pursuant to which such person shall become a Borrower for all
purposes of the Loan Documents with an Allocated Note Amount as noted by Lender
on the Grid.
(b) Within 10 days after demand by Lender, each Borrower shall
execute and deliver a "severance note", in form and substance satisfactory to
Lender, which severance note shall evidence such Borrower's obligation to pay
its Allocated Note Amount and such Borrower's Allocable Share of all other
Obligations in accordance with the terms of this Agreement. Each severance note
shall be secured by the first Mortgage granted by the applicable Borrower on the
Collateral Property owned by such Borrower and shall be guaranteed by the other
Borrowers pursuant to the Guaranties.
(c) Each Borrower has executed and delivered to Lender a guaranty of
payment (a "GUARANTY") pursuant to which each Borrower has guaranteed payment by
the other Borrowers of their respective Allocable Shares of the Obligations.
(d) Each Borrower's Guaranty is secured by a second mortgage on the
Collateral Property owned by such Borrower.
2.1.3 USE OF LOAN PROCEEDS. The proceeds of any Loan shall be used by
--------------------
the
applicable Borrower solely to (i) acquire such Borrower's Collateral
Property; (ii) repay and discharge existing loans relating to such Borrower's
Collateral Property; (iii) fund certain of the Funds required to be funded by
such Borrower; (iv) pay approved costs and expenses in connection with the
foregoing and such Loan; and (v) make distributions to the members or partners
of such Borrower.
2.2 CONDITIONS APPLICABLE TO ALL ADVANCES. Lender shall have no
-------------------------------------
obligation to make any Advance unless Borrowers have complied with all of the
following conditions:
2.2.1 FACILITY AMOUNT. After giving effect to the requested Advance,
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the aggregate outstanding principal balance of the Loans shall not exceed the
Facility Amount (determined as of the end of the then most recent full calendar
month).
2.2.2 NO DEFAULT. On the Funding Date for such Advance, no Default or
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Event of Default shall be continuing.
2.2.3 COLLATERAL PROPERTY REQUIREMENTS. If, since the date of the then
--------------------------------
most recent Advance, Borrowers have designated one or more new Collateral
Properties, Borrowers shall have satisfied all of the conditions set forth in
Section 2.5 with respect to each such new Collateral Property.
2.2.4 EXPENSES. Borrowers shall have paid all amounts required to be
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paid by Borrowers under Section 6.17.
2.2.5 NEW COLLATERAL PROPERTY. Prior to the making of the requested
-----------------------
Advance, one or more Retail Properties is added to the Collateral Pool and all
of the conditions precedent thereto set forth in Section 2.5 hereof shall have
been satisfied.
2.2.6 NUMBER OF CLOSINGS. After giving effect to the requested
------------------
Advance, the number of Advances made by Lender does not exceed three (provided
that Lender will not unreasonably withhold its consent to one additional closing
which occurs on or before the Funding Termination Date).
2.3 [RESERVED]
2.4 [RESERVED]
2.5 CONDITIONS PRECEDENT TO DESIGNATION OF A COLLATERAL PROPERTY. Each
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Retail Property designated in a written notice delivered by Borrowers to Lender
shall become a Collateral Property upon satisfaction of the following
conditions:
2.5.1 FIRST MORTGAGE. A Mortgage (substantially in the form of other
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then existing Mortgages) shall constitute a valid first mortgage lien on the fee
simple title to (or on a Borrower's Leasehold Estate interest in a valid and
subsisting Qualified Ground Lease of) the
proposed Collateral Property, which shall secure the applicable Borrower's
Allocated Note Amount, subject only to such Liens as are acceptable to Lender;
and such Borrower shall have delivered UCC-1 financing statements covering
fixtures owned or to be owned by such Borrower and affixed to, or used in
connection with, such proposed Collateral Property, in each case appropriately
completed and duly executed and delivered to Lender for filing in the
appropriate county and state offices.
2.5.2 SECOND MORTGAGE. A Mortgage (substantially in the form of other
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then existing Mortgages) shall constitute a valid second mortgage lien on the
fee simple title to (or on a Borrower's Leasehold Estate in a valid and
subsisting Qualified Ground Lease of) the proposed Collateral Property, which
shall secure all of the obligations of such Borrower under its Guaranty, subject
only to such Liens as are acceptable to Lender; and such Borrower shall have
delivered UCC-1 financing statements covering fixtures owned or to be owned by
such mortgagor and affixed to, or used in connection with, such proposed
Collateral Property, in each case appropriately completed and duly executed and
delivered to Lender for filing in the appropriate county and state offices.
Notwithstanding the foregoing, with respect to any Jurisdictionally Capped
Second Mortgage, such Mortgage shall secure a maximum principal amount equal to
the amount by which the Allocated Title Amount of the Collateral Property in
question exceeds the principal amount secured by the first Mortgage on such
Collateral Property.
2.5.3 TITLE INSURANCE. Lender shall have received a Title Insurance
---------------
Policy for such Collateral Property and the applicable Borrower shall have paid
to the Title Company (and shall have delivered to Lender evidence of such
payment) all premiums and expenses of the Title Company in connection with the
issuance of such Title Insurance Policy and an amount equal to the recording and
the applicable stamp taxes (including mortgage recording taxes), if any, payable
in connection with recording the insured Mortgages in the appropriate county
land offices.
2.5.4 ENVIRONMENTAL AUDIT. Lender shall be satisfied that (A) there
-------------------
are no pending or threatened claims, suits, actions or proceedings arising out
of or relating to the existence of any Hazardous Substances at, in, on or under
the proposed Collateral Property, (B) the proposed Collateral Property is in
compliance in all material respects with all applicable Environmental Laws, and
(C) no Hazardous Substances exist at, in, on or under the proposed Collateral
Property except in compliance in all material respects with applicable
Environmental Laws. Lender shall have received, without limitation, (1) a
comprehensive environmental audit of the proposed Collateral Property (which
shall include a visual survey, a record review, an area reconnaissance and a
Phase I environmental study and, if the Phase I study shall so require, a Phase
II environmental study), reasonably satisfactory in form and substance to
Lender, conducted and certified by a qualified, independent environmental
consultant within 6 months prior to the time such proposed Collateral Property
first becomes a Collateral Property, (2) evidence that all required approvals
from all governmental and quasi-governmental authorities having jurisdiction
with respect to the proposed Collateral Property, and (3) such other
environmental reports, inspections and investigations as Lender shall require,
prepared, in
each instance, by engineers or other consultants reasonably satisfactory to
Lender.
2.5.5 INSURANCE. Lender shall have received evidence of the existence
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of all insurance required to be maintained by the applicable Borrower pursuant
to the Loan Documents and the designation of Lender as the mortgagee and loss
payee or additional insured, as applicable, thereunder to the extent required by
the Loan Documents, in form and substance specified in the Loan Documents.
2.5.6 OPERATING STATEMENTS; BUDGETS. Lender shall have received
-----------------------------
operating statements for such proposed Collateral Property for three calendar
years prior to the time of designation thereof as a Collateral Property (to the
extent that such Collateral Property has been in service for such time), and an
itemized financial forecast and budget for the operation of such proposed
Collateral Property for the 12 month period thereafter, all prepared in
accordance with GAAP (or such other accounting basis reasonably acceptable to
Lender), consistently applied, together with a written statement of the
assumptions used in the preparation thereof and a certificate of the applicable
Borrower, to the effect that such budget, financial forecast and assumptions are
reasonable and are the same as those used by such Borrower for its business
planning purposes for such proposed Collateral Property.
2.5.7 SEARCHES. Lender shall have received copies of UCC filing
--------
searches, tax lien searches, judgment searches and real estate tax searches and
municipal department searches setting forth any and all building violations (if
available) in each county where such proposed Collateral Property is located
(and in the case of UCC filing searches, in the office of the Secretary of State
or other applicable state office of the State where such proposed Collateral
Property is located), demonstrating as of a recent date the existence of no
other financing statements, tax liens, judgments, building violations or
delinquent real estate taxes, together with evidence that all fees payable in
connection with any such searches have been paid.
2.5.8 SURVEY. Lender shall have received a Survey of such proposed
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Collateral Property that is satisfactory to Lender and certified to Lender, the
Title Company and any other parties requested by Lender as of a certification
date satisfactory to the Title Company and reasonably satisfactory to Lender.
2.5.9 MANAGEMENT. The manager of the proposed Collateral Property
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shall have executed and delivered a manager consent and subordination in
accordance with Section 6.14.3.
2.5.10 LEASES AND MATERIAL CONTRACTS. Lender shall have received
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certified copies of all Leases, reciprocal easement agreements and material
contracts relating to the proposed Collateral Property, including all amendments
and modifications thereto, and such leases, reciprocal easement agreements and
contracts shall be in form and substance reasonably satisfactory to Lender.
2.5.11 TENANT ESTOPPELS AND SNDA'S. Lender shall have received
---------------------------
estoppels and subordination, non-disturbance and attornment agreements from such
tenants as Lender may
reasonably require, all of which shall be reasonably satisfactory to Lender in
form and substance.
2.5.12 PROPERTY CONDITION REPORT. Lender shall have received reports
-------------------------
covering the physical and structural condition of the proposed Collateral
Property in form and substance, and prepared by a qualified independent
engineer, reasonably satisfactory to Lender and dated no more than 6 months
prior to the time such proposed Collateral Property first becomes a Collateral
Property, which shall (i) identify deferred maintenance and the cost thereof and
include a 10-year schedule of annual cost to perform deferred maintenance and of
capital expenditures, and (ii) for Collateral Property in states in which Lender
reasonably determines that there has been a history of earthquakes, assess the
probable maximum loss in the event of earthquake.
2.5.13 APPRAISAL. Lender shall have received an Acceptable Appraisal
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of the proposed Collateral Property.
2.5.14 ZONING COMPLIANCE, ETC. Lender shall have received evidence
----------------------
reasonably satisfactory to Lender that all improvements constituting part of the
Collateral Property have been constructed and are being used and operated in
compliance in all material respects with (A) all applicable zoning, subdivision,
environmental and other laws, orders, rules, regulations and requirements of all
governmental or quasi-governmental authorities having jurisdiction with respect
to the proposed Collateral Property, (B) all building permits issued in respect
of the proposed Collateral Property and (C) the certificates of occupancy for
the proposed Collateral Property (copies of which certificates of occupancy
shall have been delivered to Lender).
2.5.15 RECORDING TAXES. The applicable Borrower shall have paid all
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mortgage recording taxes payable (if any) in each jurisdiction in which the
proposed Collateral Property is located in connection with the recordation of
any Mortgage required under this Agreement.
2.5.16 PERFECTION OF SECURITY INTERESTS. Lender shall have received
--------------------------------
evidence that all actions necessary or, in the opinion of Lender, desirable to
perfect and protect the Liens and security interests created by the Loan
Documents have been or will be taken, including evidence that each Mortgage on a
proposed Collateral Property has been or will be duly filed and recorded in the
appropriate governmental offices and that the related UCC financing statements
have been or will be duly filed in the appropriate governmental offices.
2.5.17 OPINIONS. Lender shall have received an opinion of counsel as to
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the applicable Borrower and an opinion of local counsel to Lender in the State
in which the proposed Collateral Property is located, in each case with respect
to such matters as Lender may request (including as to enforceability of the
Loan Documents against such Borrower and a "nonconsolidation" opinion with
respect to such Borrower, its partners, the manager of the Collateral Property
and such other persons as Lender shall designate, which nonconsolidation opinion
may be given by Debevoise & ▇▇▇▇▇▇▇▇), in form and substance and from counsel
reasonably satisfactory to Lender.
2.5.18 GROUND LEASE. If the proposed Collateral Property is subject to
------------
a ground lease, such Ground Lease is a Qualified Ground Lease.
2.5.19 REA. If the proposed Collateral Property is subject to an REA,
---
such REA is a Qualified REA.
2.5.20 RESERVES AND ESCROWS. Each Borrower shall have (i) paid into
--------------------
the Required Repair Fund any and all reserves for deferred maintenance and/or
environmental remediation as may be required by Lender based on the reports
referred to above, and (ii) made such initial deposits into the other Funds as
Lender may require in accordance with the Loan Documents.
2.5.21 RENT ROLL. A Rent Roll (in spread sheet format, containing such
---------
information as Lender may reasonably require) for the proposed Collateral
Property certified by the proposed additional Borrower shall have been delivered
to Lender.
2.5.22 FURTHER DOCUMENTS. Each Borrower shall have executed and
-----------------
delivered to Lender such documents and agreements and taken such action
including executing such amendments or supplements to, and assumptions of, the
Loan Documents, which Lender may reasonably require. Such documents may include
an Assignment of Leases, Assignment of Agreements, Deposit Account Agreement,
Cash Management Agreement, promissory note or counterpart signature page to the
Note, a contribution agreement among the Borrowers, an Assumption Agreement in
the form of Exhibit A hereto, and such other consents, instruments, documents
---------
and agreements as Lender may reasonably require.
2.5.23 APPROVAL. The proposed Collateral Property has been expressly
--------
approved by Lender in writing as a Collateral Property. Lender's approval of
the proposed Collateral Property shall be given or denied in Lender's reasonable
discretion and, in exercising such reasonable discretion, Lender shall take into
account Lender's analysis of the information required pursuant to this Section
2.5, the composition of all of the Collateral Properties, the effect of the
addition of the Retail Property in question on such composition and Lender's
then underwriting and due diligence standards and requirements.
2.5.24 EXPENSES. Borrowers shall have paid all amounts required to be
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paid by Borrowers under Section 6.17.
2.5.25 EFFECTIVE DATE. The proposed Collateral Property shall become a
--------------
Collateral Property on the applicable Funding Date provided all of the other
conditions of this Section 2.5 have been satisfied.
2.5.26 ADDITIONAL PROPERTIES. A Retail Property not on Schedule 10
--------------------- -----------
hereto cannot become a Collateral Property other than pursuant to a substitution
under Section 2.6.
2.5.27 NOTICES TO TENANTS. Upon the proposed Collateral Property
------------------
becoming a Collateral Property, the owner thereof shall promptly deliver a
notice to each tenant of such Collateral Property in the form of Exhibit D
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hereto.
2.6 SUBSTITUTION OF COLLATERAL PROPERTIES. (a) Subject to the terms and
--------------------------------------
conditions set forth in this Section 2.6, on any Substitution Date Borrowers may
obtain a release of Lender's Lien against one or more Collateral Properties by
substituting one or more other Retail Properties (a "SUBSTITUTE PROPERTY") for
the Collateral Property or Collateral Properties so released. Any such
substitution shall be subject, in each case, to the satisfaction of the
following conditions precedent:
(i) Such substitution shall occur on a Substitution Date;
(ii) Borrowers shall request such substitution by written notice
to Lender given at least 60 days prior to the Substitution Date on which the
substitution is to occur;
(iii) Lender shall have received any due diligence materials
requested by Lender with respect to each Substitute Property at least 60 days
before the Substitution Date (other than items such as title reports and
estoppels which are typically not delivered 60 days before a closing, provided
such items are delivered a reasonable period of time before the Substitution
Date) and the same are reasonably satisfactory to Lender in all respects;
(iv) Each Substitute Property is of the same general quality as
the Collateral Property it is replacing, as determined by Lender in its
reasonable discretion;
(v) The tenant quality of each Substitute Property is at least as
high as the tenant quality of the Collateral Property it is replacing, as
determined by Lender in its reasonable discretion;
(vi) Immediately after giving effect to such substitution the
Collateral Pool is in Lender's reasonable judgement no less geographically
diverse than it was immediately before such substitution (for example, after
giving effect to such substitution, the aggregate Underwritten Net Operating
Income for Collateral Properties located in any one State may not exceed by more
than 5% the highest aggregate Underwritten Net Operating Income for all
Collateral Properties located in any one state immediately before such
substitution);
(vii) After giving effect to the substitution the number of
Collateral Properties is ten or more;
(viii) The Underwritten Net Operating Income of each Substitute
Property is equal to or greater than the Underwritten Net Operating Income of
the Collateral Property it is replacing;
(ix) After giving effect to such substitution, Underwritten Net
Operating Income for all of the Collateral Properties shall be equal to or
greater than each of
(x) the Underwritten Net Operating Income of the Collateral Pool as of the day
after the Funding Termination Date and (y) the Underwritten Net Operating Income
of the Collateral Properties immediately before such substitution;
(x) After giving effect to such substitution, the Debt Service
Coverage Ratio must be equal to or greater than each of (x) the Debt Service
Coverage Ratio immediately prior to such substitution and (y) 1.35;
(xi) After giving effect to such substitution, the ratio of unpaid
Principal to the Appraisal Value of the Collateral Pool (the "LTV RATIO") shall
not exceed either of (x) the LTV Ratio as of the day after the Funding
Termination Date or (y) the LTV Ratio immediately prior to such substitution;
(xii) After giving effect to such substitution, the Lease Rollover
Percentage as reasonably determined by Lender will not exceed 20% for any
calendar year all or any portion of which occurs prior to the Stated Maturity
Date;
(xiii) Either (x) Lender shall have reasonably determined that the
Lease Rollover Percentage as of immediately after the substitution will not, for
any calendar year all or any portion of which occurs prior to the Stated
Maturity Date, be more than 2% in excess of the Lease Rollover Percentage for
such calendar year (or portion thereof) as of immediately prior to the
substitution or (y) the applicable Borrower shall deposit into the Rollover
Reserve Fund for such Substitute Property an amount equal to (1) $1.00
multiplied by (2) the increase in the Lease Rollover Number which resulted in
the condition set forth in the foregoing clause (x) not being satisfied;
(xiv) Lender shall have, in its reasonable discretion, approved
the substitution, which approval shall be based on, among other things, Lender's
determination that:
(A) after giving effect to much substitution there are at least 4
Core Properties;
(B) after giving effect to such substitution, there is no
environmental condition affecting any Collateral Property(ies)
that has a material adverse effect on the value of the Collateral
Pool as a whole; and
(C) after giving effect to such substitution, the Underwritten
Net Operating Income of each Collateral Property is less than 15%
of the aggregate Underwritten Net Operating Income of the entire
Collateral Pool;
(xv) On any Substitution Date, no more than 25% of the Collateral
Properties (calculated by share of Underwritten Net Operating Income) may be
released from the Liens of the Loan Documents pursuant to this Section 2.6;
(xvi) With respect to each Substitute Property, Borrowers shall
have complied with the conditions set forth in Section 2.5;
(xvii) No Event of Default shall be continuing;
(xviii) The Substitute Property is satisfactory to Lender in all
respects in Lender's reasonable discretion (after Lender's due diligence
investigation);
(xix) Borrowers shall execute and deliver such other consents,
certificates, documents, agreements or instruments as Lender may reasonably
request (including any modifications to this Agreement or the other Loan
Documents amending, e.g., the schedules hereto);
(xx) Borrowers shall pay all amounts required to be paid by
Borrowers under Section 6.17;
(xxi) The applicable Borrowers shall deliver an Officer's
Certificate certifying that all information delivered to Lender by or on behalf
of such Borrowers in connection with the Substitution is true, accurate and
complete in all material respects; and
(xxii) The applicable Borrowers shall have paid to Lender all
amounts required under Article IV in connection with the Substitute Property.
(b) For purposes of calculating Underwritten Net Operating Income and
Debt Service Coverage Ratio under Section 2.6(a), if any Collateral Property
being substituted for has suffered a Casualty or Condemnation or an
Environmental Event, then, at Lender's option, the Underwritten Net Operating
Income of such Collateral Property shall be calculated as of the end of the last
full calendar month preceding such Casualty, Condemnation or Environmental
Event, as the case may be.
(c) For purposes of determining whether any of the conditions set
forth in this Section 2.6 have been satisfied, Borrowers will not be required to
pay for the cost of any reports or updates of reports by third parties (e.g.,
engineers or environmental consultants) with respect to any then existing
Collateral Property (as distinguished from a proposed Substitute Property)
unless the Underwritten Net Operating Income of such existing Collateral
Property has declined by 10% or more since the date on which it first became a
Collateral Property.
III INTEREST; PAYMENTS
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3.1 INTEREST; MONTHLY PAYMENTS.
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3.1.1 GENERALLY. (a) From and after the date of each Advance,
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interest shall
accrue thereon at the Interest Rate.
(b) On the date hereof each Borrower shall pay interest at the
Interest Rate on its unpaid Allocated Note Amount for the period from the date
hereof through November 10, 1998. On December 11, 1998 and each Payment Date
thereafter to and including the Maturity Date, each Borrower shall pay interest
at the Interest Rate on its unpaid Allocated Note Amount which has accrued
through the last day of the Interest Period immediately preceding such Payment
Date. All accrued and unpaid interest shall be due and payable on the Maturity
Date.
3.1.2 (a) On or before the 25th day of each calendar month, Lender
shall deliver to Borrower's Agent a statement as to the aggregate amount of
interest and payments into Funds due on the following Payment Date (provided,
however, that the failure to deliver such statement shall not, except as
expressly provided in this Section 3.1.2(b), relieve any Borrower of its
obligation to make any payment hereunder on the due date therefor).
(b) If Lender does not render such statement by the 25th day of a
calendar month, Borrower's Agent shall use reasonable, good faith efforts to
contact the Servicer to obtain the relevant payment information (and Lender
shall promptly after the date hereof provide Borrower's Agent with a contact
name and telephone number at the Servicer). If despite such efforts Borrower's
Agent does not obtain such information by the applicable Payment Date, each
Borrower may, on such Payment Date, pay an amount not less than the aggregate
amount paid by such Borrower on the immediately preceding Payment Date (the
"Minimum Payment"). If the amount actually due and payable by such Borrower on
the applicable Payment Date exceeds the amount paid by such Borrower, then
provided the payment by such Borrower equalled or exceeded the Minimum Payment,
the failure to pay such excess when due shall not be a Default or Event of
Default, and no late charge or Default Rate interest shall be payable by reason
thereof, provided such Borrower pays such excess within five (5) days after
Lender delivers to such Borrower a statement therefor.
3.1.3 PROPERTY CASH FLOW ALLOCATION. (a) Commencing on December 11,
-----------------------------
1998 and continuing on each Payment Date occurring prior to the Maturity Date,
except following the acceleration of all or any part of the Debt, any Rents
received by any Borrower and/or its Manager and, after a Cash Management Event,
Rents with respect to such Borrower's Collateral Property deposited into the
Deposit Account during the immediately preceding Interest Period shall be
applied as follows in the following order of priority: (i) First, to make the
monthly required payments of Ground Rent, if any, pertaining to such Borrower's
Collateral Property (including, the payment to Lender of any sums required to be
deposited into the Ground Rent Escrow Fund); (ii) Second, to make payments to
the Tax and Insurance Escrow Fund required to be made by such Borrower; (iii)
Third, during the continuance of a Cash Management Event, to pay the monthly
portion of the Cash Management Fee due and payable by such Borrower; (iv)
Fourth, to Lender to pay the interest payment on such Borrower's Allocated Note
Amount required under Section 3.1.1(b) (plus, if applicable, such Borrower's
Allocable Share of interest at the Default Rate and any other charges then due
to Lender under the Loan Documents); (v) Fifth, to make payments to the Capital
Reserve Fund required to be made by
such Borrower; (vi) Sixth, to make payments to the Rollover Reserve Fund
required to be made by such Borrower; (vii) Seventh, in the case of the Oakridge
Borrower, to make payments to the Oakridge Option Fund required to be made by
the Oakridge Borrower; (viii) Eighth, during the continuance of a Cash
Management Event, to make payments for Approved Operating Expenses pertaining to
such Borrower's Collateral Property; (ix) Ninth, after the consummation of a
Secondary Market Transaction, to pay such Borrower's Allocable Share of the
expenses described in Section 10.1.7; (x) Tenth, to make payments (pursuant to
such Borrower's Guaranty) to pay any amounts due from other Borrowers under this
Section 3.1.3 (a) which are unpaid; and (xi) Lastly, payments to such Borrower
of any excess amounts unless a Cash Management Event has existed for 30 days or
more, in which case all Rents remaining after application thereof pursuant to
the preceding clause "Tenth" shall be paid into the Cash Collateral Fund.
(b) Subject to the provisions of Section 3.1.2(b), the failure of any
Borrower to make all of the payments required under clauses (i) through (ix) of
Section 3.1.3(a) in full on each Payment Date shall constitute a Default under
this Agreement.
(c) At any time after the Maturity Date or after the acceleration of
all or any portion of the Debt, Lender may, in its sole discretion, permit the
application of Rents in any order, and to any portion or portions of the Debt,
as Lender shall determine.
3.1.4 DEFAULT RATE. After the occurrence and during the continuance
------------
of an Event of Default, the entire unpaid Debt shall bear interest at the
Default Rate, and shall be payable upon demand from time to time, to the extent
permitted by applicable law. Payment or acceptance of interest at the Default
Rate is not a permitted alternative to timely payment and shall not constitute a
waiver of any Default or Event of Default or an amendment to this Agreement or
any other Loan Document and shall not otherwise prejudice or limit any rights or
remedies of Lender.
3.2 LOAN REPAYMENT.
--------------
3.2.1 REPAYMENT. Each Borrower shall repay its Allocated Note
---------
Amount in full on the Maturity Date, together with interest thereon to (but
excluding) the date of repayment and such Borrower's Allocable Share of any
other amounts due and owing under the Loan Documents. No Borrower shall have the
right to prepay all or any portion of the Principal before the Stated Maturity
Date; provided, however, that (x) a Borrower may repay its Allocated Note Amount
-------- -------
in full (but not in part) without penalty or premium on any Payment Date
occurring on or after December 11, 1999 provided that all of the other Borrowers
simultaneously prepay their respective Allocated Note Amounts in full on such
Payment Date and (y) any Borrower may prepay its Allocated Note Amount or a
portion thereof on any Payment Date occurring on or after December 11, 1999
provided that such prepayment is accompanied by the Yield Maintenance Premium
applicable thereto. In the event any such prepayment is not made on a Payment
Date, each Borrower making a prepayment of Principal shall also pay interest
that would have accrued on such prepaid Principal to but not including the next
Payment Date.
Except during the continuance of an Event of Default, all proceeds of any
repayment, including permitted prepayments, of any Loan shall be applied by
Lender as follows in the following order of priority: (i) First, to accrued and
unpaid interest on such Loan at the Interest Rate; (ii) Second, to Principal of
such Loan; (iii) Third, to the applicable Borrower's Allocable Share of any
other amounts then due and owing under the Loan Documents and (iv) Fourth, to
obligations under such Borrower's Guaranty. If prior to the Stated Maturity Date
the Debt is accelerated by reason of an Event of Default and Lender receives a
Principal payment of less than the aggregate outstanding Principal balance of
the Loans, then Lender shall be entitled to receive, in addition to all other
sums due under the Loan Documents, an amount equal to the Yield Maintenance
Premium applicable to such prepayment. During the continuance of an Event of
Default, all proceeds of repayment, including any payment or recovery on any
Collateral Property (whether through foreclosure, deed-in-lieu of foreclosure or
otherwise) shall, unless otherwise provided in the Loan Documents, be applied in
such order and in such manner as Lender shall elect in Lender's discretion.
3.2.2 MANDATORY PREPAYMENTS. Each Loan is subject to mandatory
---------------------
prepayment, without premium or penalty, in certain instances of Insured Casualty
or Condemnation (each a "CASUALTY/CONDEMNATION PREPAYMENT"), in the manner and
to the extent set forth in Section 8.4.2. Each Casualty/Condemnation Prepayment
shall be made on a Payment Date and shall be applied as follows in the following
order of priority: (i) First, to costs and expenses of Lender (if any),
including reasonable attorney's fees and disbursements, in connection with such
prepayment or reasonably expended by Lender to protect the collateral value of
the Property; (ii) Second, accrued and unpaid interest at the Interest Rate;
(iii) Third, to Principal (with each Casualty/Condemnation Prepayment being
applied first to reduce the Allocated Note Amount of the Borrower whose
Collateral Property was the subject of the Casualty/Condemnation); and (iv)
Fourth, to any other amounts then due and owing under the Loan Documents. If
such Casualty/Condemnation Prepayment is not paid on a Payment Date, the payment
amount will include interest that would have accrued on the Principal prepaid to
but not including the next Payment Date.
3.3 RELEASE OF PROPERTY. Except as set forth in this Section 3.3, no
-------------------
repayment or prepayment shall cause, give rise to a right to require, or
otherwise result in, the release of the Lien of any Mortgage.
3.3.1 RELEASE OF INDIVIDUAL PROPERTIES. A Borrower on one or more
--------------------------------
occasions may obtain (i) the release of the Collateral Property owned by it from
the Liens of the Mortgages thereon (and related Loan Documents) and (ii) the
release of such Borrower's obligations under the Loan Documents with respect to
such Collateral Property (other than those expressly stated to survive), upon
satisfaction of each of the following conditions:
(a) Either (i) the Release Conditions are satisfied; or (ii) Lender is
required to release such Collateral Property pursuant to Section 2.6 in
connection with a substitution of Collateral Properties (it being understood
that a release pursuant to Section 2.6 need not satisfy any Release Conditions
not expressly set forth in Section 2.6).
(b) Such Borrower shall submit to Lender, not less than twenty (20)
days prior to the date of such release, releases of Lien (and related Loan
Documents) for such Collateral Property (for execution by Lender) in a form
appropriate in the jurisdiction in which such Collateral Property is located and
satisfactory to Lender in its reasonable discretion, and all other documentation
Lender requires to be delivered by such Borrower in connection with such
release, together with an Officer's Certificate of such Borrower 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 Collateral Properties subject to the Loan
Documents not being released).
(c) As used herein "RELEASE CONDITIONS" means:
(i) Borrowers shall request the release by written notice to
Lender given at least 60 days prior to the date the release is to be effected;
(ii) The date of release shall be a Payment Date occurring on or
after December 11, 1999;
(iii) Immediately after giving effect to the release (and any
prepayment of Principal permitted under Section 3.2.1 that is made immediately
before such release), the Debt Service Coverage Ratio is equal to or greater
than each of (x) 1.35 and (g) the Debt Service Coverage Ratio immediately before
such release;
(iv) Simultaneously with such release, each Borrower whose
Collateral Property is being released shall pay to Lender (x) such Borrower's
outstanding Allocated Note Amount together with all interest accrued thereon and
all other sums, if any, then outstanding which constitute such Borrower's
Allocable Share of the Debt and (y) the Yield Maintenance Premium applicable to
the Principal being prepaid by such Borrower;
(v) Simultaneously with such release, the Borrowers whose
Collateral Properties are not being released (the "REMAINING BORROWERS") shall
prepay their respective Allocated Note Amounts by an aggregate principal amount
equal to 25% of the aggregate Prin cipal amount being paid to Lender pursuant to
clause (x) of the preceding subparagraph (iv) (such 25% amount being allocated
---------- -----------------
among the Remaining Borrowers in a manner acceptable to Lender);
(vi) No Event of Default shall be continuing;
(vii) Borrowers shall have paid all amounts required to be paid
by Borrowers under Section 6.17; and
(viii) The applicable Borrower shall deliver an Officer's
Certificate certifying that all information delivered to Lender by or on behalf
of such Borrower in connection with such release is true, complete and accurate
in all material respects.
(d) Upon the release of a Collateral Property, any amounts previously
deposited by a Borrower into any Fund with respect to such Collateral Property
shall be returned to such Borrower (or, if so directed in writing by such
Borrower, applied to amounts due and payable under this Agreement).
3.3.2 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
--------------------------
request and at the expense of Borrowers, upon payment in full of the Debt in
accordance herewith, release the Liens of the Mortgages if not theretofore
released.
3.3.3 RELEASE DOCUMENTS. When the Release Conditions are satisfied
------------------
with respect to a Collateral Property or when Lender is required to release a
Collateral Property pursuant to Section 2.6, Lender shall execute and deliver to
the applicable Borrower such documents as may be necessary or appropriate to
release such Borrower from its obligations under the Loan Documents and to
release all liens held by Lender on such Collateral Property. All such
documents shall be prepared by Borrower's counsel, shall be reasonably
acceptable to Lender in form and substance and shall be delivered to Lender at
least 20 days before the proposed release date.
3.4 PAYMENTS AND COMPUTATIONS.
-------------------------
3.4.1 MAKING OF PAYMENTS. Each payment by a 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 1:00 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 Borrowers.
Whenever any payment hereunder or under the Note shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the first Business
Day thereafter. All payments made by any Borrower hereunder or under the other
Loan Documents, shall be without any deduction, set-off or counterclaim,
whatsoever and are payable without relief from valuation and appraisement laws
and with all costs and charges incurred in the collection or enforcement
thereof, including attorneys' fees and court costs. Payments to Lender made
from the Deposit Account shall be deemed to have been made before 1 p.m., New
York City time, on the date such payment is made.
3.4.2 COMPUTATIONS. Interest payable hereunder or under the Note
------------
shall be computed on the basis of the actual number of days elapsed over a
360-day year, compounded monthly.
3.4.3 LATE PAYMENT CHARGE. If any Principal, interest or other sum
-------------------
due under any Loan Document is not paid on the date on which it is due,
Borrowers shall pay to Lender
upon demand an amount equal to the lesser of 5% of such unpaid sum or the
maximum amount permitted by applicable law (the "LATE PAYMENT CHARGE"), 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; provided that if no such late payment has occurred within
the prior 12-month period, Borrower shall only be required to pay the late
payment charge provided for in this Section 3.4.3 if such failure to pay
continues for two Business Days after notice from Lender. Such amount shall be
secured by the Loan Documents. Any action by Lender regarding the collection of
a Late Payment Charge will be without prejudice to any other rights, nor act as
a waiver of any other rights, that Lender may have as provided herein, at law or
in equity. No Late Payment Charge shall be due in connection with any payment to
be made from a Subaccount, provided that on the date such payment is due there
are sufficient funds in such Subaccount to make the payment in question.
3.5 SPECIAL CASH MANAGEMENT TERMINATION.
-----------------------------------
(a) Upon the occurrence of a Cash Management Event by reason of the
Debt Service Coverage Ratio being less than 1.15, one or more Borrowers shall
have the right, for 30 days after receipt by Borrower's Agent of the applicable
Cash Management Notice (the "Early Termination Period"), to either (x) make a
partial prepayment of Principal (including any applicable Yield Maintenance
Premium) in accordance with the provisions of Section 3.2.1 which causes the
Debt Service Coverage Ratio to increase to 1.20 or greater, (y) effect a release
pursuant to Section 3.2.2 which causes the Debt Service Coverage Ratio to
increase to 1.20 or greater or (z) if the Early Termination Period occurs before
December 11, 1999, deposit an amount into the Cash Collateral Fund equal to the
Principal (and Yield Maintenance Premium) that would need to be paid to Lender
to make a prepayment pursuant to Section 3.2.1 (assuming a prepayment was
permitted on such date) that would result in the Debt Service Coverage Ratio
increasing to 1.20 or greater.
(b) If prior to the expiration of the Early Termination Period
Borrower takes the action described in any of clauses (x), (y) and (z) of
Section 3.5(a), Lender shall give a Cash Management Termination Notice.
(c) If one or more Borrowers makes a deposit into the Cash Collateral
Fund pursuant to clause (z) of Section 3.5(a), then (i) such deposit shall, on
---------- --------------
December 11, 1999, be applied as a prepayment pursuant to Section 3.2.1 and (ii)
prior to such application such deposit (excluding the portion thereof
representing the applicable Yield Maintenance Premium) shall be deducted from
the outstanding Principal for purposes of calculating the Debt Service Coverage
Ratio.
3.6 [RESERVED]
3.7 FEES.
----
3.7.1 DRAW FEE. Simultaneously with each Advance made on or after
--------
the date hereof, Borrowers shall pay to Lender a draw fee equal to 0.375% of the
amount of such
Advance.
3.7.2 AUTHORIZATION. Borrowers hereby authorize and direct Lender to
-------------
pay itself the Draw Fee out of the proceeds of the applicable Advance.
3.8 TAXES. Any and all payments by a Borrower hereunder and under the
-----
other Loan Documents shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on Lender's income, and franchise taxes imposed on Lender by the law or
regulation of any Governmental Authority (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to in this Section 3.8 as "APPLICABLE TAXES"). If a Borrower shall be
required by law to deduct any Applicable Taxes from or in respect of any sum
payable hereunder to Lender, the following shall apply provided the Applicable
Taxes do not result because the Lender (due to permitted succession or
assignment) is not a United States person as defined at section 7701(a)(30) of
the Code or the Lender has failed to provide information necessary to avoid
back-up withholding pursuant to section 3406 of the Code: (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.8), Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Borrower shall make such
deductions and (iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law. Borrowers also agree to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
recordation of, or otherwise with respect to, this Agreement or any other Loan
Document ("OTHER TAXES"). Borrowers shall indemnify Lender for the full amount
of Applicable Taxes or Other Taxes (including any Applicable Taxes or Other
Taxes imposed by any jurisdiction on amounts paid or payable under this Section
3.8) paid by Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such
Applicable Taxes or Other Taxes were correctly or legally asserted. Payments
pursuant to this Section 3.8 shall be made within 15 days after the date Lender
makes written demand therefor.
3.9 BREAKAGE INDEMNITY. Borrowers shall indemnify Lender against any loss
------------------
or expense which Lender may actually sustain or incur as a consequence of (i)
any payment or prepayment of the Loan or any portion thereof made on a date
other than a Payment Date, (ii) any default in payment or prepayment of the
Principal or any part thereof or interest accrued thereon, as and when due and
payable (at the date thereof or otherwise, and whether by acceleration or
otherwise), (iii) any delay in making a requested Advance by reason of any
Borrower's act or failure to act or failure to satisfy a condition precedent to
the making of such Advance and (iv) the occurrence of any Event of Default, in
each case including any loss or expense actually sustained or incurred or
determined by Lender to be actually sustained or incurred in liquidating or
redeploying deposits from third parties acquired to effect or maintain the Loan
or any part thereof. Such loss or expense shall include any Yield Maintenance
Premium payable hereunder, as well as, but without double counting, an amount
equal to the
excess, if any, as determined by Lender of (A) its cost of obtaining the funds
for the Loan or portion thereof being paid or prepaid for the period from the
date of such payment or prepayment to the last day of the then current Interest
Period over (B) the amount of interest (as determined by Lender) that would be
realized by Lender in redeploying the funds so paid or prepaid for the balance
of such Interest Period. Lender shall deliver to Borrowers a statement for any
such sums which it is entitled to receive pursuant to this Section 3.9, which
statement shall include a reasonable explanation for the amount(s) thereof. Such
statement shall be binding and conclusive absent manifest error.
IV CASH MANAGEMENT; ESCROWS AND RESERVES
-------------------------------------
4.1 CASH MANAGEMENT ARRANGEMENTS. All Rents shall be transmitted directly
----------------------------
by tenants of each Collateral Property into one or more accounts (the "CLEARING
ACCOUNTS") maintained by the applicable Borrower but controlled by Lender at one
or more banks selected by the applicable Borrower (the "CLEARING BANKS") as more
fully described in the Blocked Account Agreements. All Rents received by a
Borrower or Manager shall be deposited into the applicable Clearing Account
within one Business Day of receipt. Funds deposited into the Clearing Accounts
shall be swept by the Clearing Banks on a daily basis into respective Borrowers'
respective operating accounts (or joint operating account) at the Clearing Banks
(which accounts are under the sole control of the respective Borrowers), unless
a Cash Management Event shall have occurred; in which event, until a Cash
Management Termination, such funds shall be swept by the Clearing Banks on a
daily basis into the applicable Eligible Account at the Deposit Bank controlled
by Lender (a "DEPOSIT ACCOUNT") and applied and disbursed in accordance with
this Agreement and the applicable Deposit Account Agreement. Lender may (and
during the continuation of a Cash Management Event Lender will) also establish
subaccounts of each Deposit Account for the purpose of retaining all Funds
described in this Article IV and for retaining the monthly interest payments,
which subaccounts shall at all times be Eligible Accounts (such subaccounts, and
any other accounts or subaccounts at the Deposit Bank, other than the Deposit
Accounts, are referred to herein as "SUBACCOUNTS"). Borrowers, Lender and the
Deposit Bank shall also enter into a Master Deposit Account Agreement (the
"MASTER DEPOSIT ACCOUNT AGREEMENT") pursuant to which an Eligible Account
controlled by Lender shall be established at the Deposit Bank (the "MASTER
DEPOSIT ACCOUNT") into which funds shall be swept in accordance with the terms
of the Deposit Account Agreements and this Agreement. The Clearing Accounts, the
Deposit Accounts, any Subaccount and the Master Deposit Account will be under
the sole control and dominion of Lender, and Borrower shall have no right of
withdrawal therefrom. Amounts in the Deposit Accounts and the Master Account
Deposit shall be invested in Permitted Investments in accordance with the
Deposit Account Agreements and the Master Account Agreement.
4.2 REQUIRED REPAIRS; REQUIRED REPAIR FUNDS.
---------------------------------------
4.2.1 REQUIRED REPAIRS. Each Borrower identified on Schedule 4 shall
---------------- ----------
promptly commence and thereafter diligently complete each item of the repairs
and Remedial Work at such Borrower's Collateral Property described on Schedule 4
----------
(the "REQUIRED REPAIRS"). On the date hereof, each such Borrower shall deposit
with Lender the amount set forth for such Borrower on Schedule 4 (the "REQUIRED
----------
REPAIR FUND"). Lender shall have the right to require that additional sums be
deposited into the Required Repair Fund in connection with any property added
(and as a condition to such property being added) to the Collateral Pool after
the date hereof. Lender shall invest the Required Repair Fund in Permitted
Investments.
4.2.2 RELEASE OF REQUIRED REPAIR FUNDS. From time to time (but not
--------------------------------
more often than monthly), Lender shall disburse funds held in the Required
Repair Fund to the applicable Borrower, within 30 days after the delivery by the
applicable Borrower to Lender of a request therefor, in increments of at least
$5,000 provided that (i) on the day of the request and on the day of payment no
Event of Default shall have occurred and be continuing; (ii) such disbursement
is for a Repair Expense that has been incurred by such Borrower; (iii) Lender
shall have (if it desires) verified (by an inspection conducted at the
applicable Borrower's expense) performance of the work associated with such
Repair Expense; (iv) the request for disbursement is accompanied by (A) an
Officer's Certificate certifying (r) the amount of funds to be disbursed, (s)
that such funds will be used to pay or reimburse the applicable Borrower for
Repair Expenses and a description thereof, (t) that the funds remaining in the
Required Repair Fund after such disbursement are equal to or more than 125% of
the cost to fully complete and pay for the remaining Required Repairs, (u) that
the work that is the subject of such disbursement has been performed in a good
and workmanlike manner and in accordance with all Legal Requirements, (v) the
identity of each Person that supplied materials or labor in connection with the
Required Repairs, (w) that each such Person has been or, upon receipt of the
requested disbursement, will be paid in full, (x) that all outstanding trade
payables (other than those to be paid from the requested disbursement, those
otherwise permitted to be outstanding under Section 7.8) have been paid in full,
(y) that the same has not been the subject of a previous disbursement, and (z)
that all previous disbursements have been used to pay the previously identified
Repair Expenses; and (v) if requested by Lender, such Borrower shall deliver to
Lender (A) copies of appropriate Lien waivers or other evidence of payment
satisfactory to Lender, (B) a title search for the applicable Collateral
Property indicating that it is free from all Liens not previously approved by
Lender, (C) a copy of each License required in connection with the Required
Repairs, and (D) such other evidence as Lender shall reasonably request that the
Required Repairs (or portion thereof in question) have been completed and paid
for.
4.2.3 REPAIR FUND L/C. (a) Each Borrower shall have the option, at
---------------
any time when no Event of Default exists, to deliver to Lender a Letter of
Credit in a face amount equal to the sum then required to be on deposit in the
Required Repair Fund with respect to such Borrower (a "REPAIR FUND L/C"). Upon
the delivery by a Borrower of a Repair Fund L/C, Lender shall return to such
Borrower the undisbursed portion of any deposit previously made by such
Borrower into the Required Repair Fund.
(b) Provided no Event of Default then exists, Lender shall return a
Repair Fund L/C to the applicable Borrower when the Required Repairs pertaining
to such Borrower's
Collateral Property have been fully performed and paid for and such Borrower has
delivered to Lender the items described in clauses (i) through (v) of Section
4.2.2. If Borrowers deliver one Repair Fund L/C in the aggregate amount of all
Required Repair Funds, then, when the Required Repairs pertaining to a
Borrower's Collateral Property have been fully performed and paid for and such
Borrower has delivered to Lender the items described in clauses (i) through (iv)
and, if requested by Lender, clause (v) of Section 4.2.2., Lender shall,
provided no Event of Default then exists, agree to accept a new Repair Fund L/C
or an amendment to the Repair Fund L/C which will have the effect of reducing
the Repair Fund L/C to an amount equal to the then required aggregate amount of
all Required Repair Funds.
(c) To the extent Lender draws on any Repair Fund L/C, the proceeds of
such draw shall be held in the Required Repair Fund in accordance with Sections
4.2.1 and 4.2.2.
(d) (i) Upon the occurrence of an Event of Default, Lender shall
have the right, but not the obligation, to draw on any Repair Fund L/C and apply
the proceeds thereof to pay any of the following in any order that Lender may
elect in its sole and absolute discretion: Taxes, Insurance Premiums, Ground
Rent, payments on account of Required Repairs and any amounts then due and
payable under any Loan Document.
(ii) Lender shall have the additional right to draw on any Repair
Fund L/C:
(A) if at least 30 days prior to the date on which such
Repair Fund L/C is scheduled to expire Lender has not
received a notice from the issuer of such Repair Fund
L/C that such Repair Fund L/C has been extended for a
period of at least one year;
(B) upon receipt of notice from the issuer of such Repair
Fund L/C that such Repair Fund L/C will be terminated;
or
(C) ten Business Days after Lender has notified the
applicable Borrower that the issuer of such Repair Fund
L/C is no longer an Approved Bank.
(iii) Notwithstanding anything to the contrary contained in this
Section 4.2.3 or elsewhere in this Agreement, Lender shall have no obligation to
draw on any Repair Fund L/C upon the happening of an event described in
subsections (d)(ii)(A), (B) or (C) or otherwise, and Lender shall not be liable
for any losses sustained by any Borrower due to the insolvency of the issuer of
any Repair Fund L/C, notwithstanding that Lender elected not to draw on such
Repair Fund L/C.
4.3 TAX AND INSURANCE ESCROW FUND. Each Borrower shall pay to Lender on
-----------------------------
each Payment Date (i) one-twelfth of the Taxes for such Borrower's Collateral
Property that Lender estimates will be payable during the next 12 months in
order to accumulate with Lender
sufficient funds to pay all such Taxes at least 30 days prior to their
respective due dates, and (ii) one-twelfth of the Insurance Premiums that Lender
estimates will be payable for the renewal of the coverage afforded by the
Policies relating to such Borrower's Collateral Property upon the expiration
thereof in order to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least 30 days prior to the expiration of such Policies
(the amounts paid under the foregoing clauses (i) and (ii) with respect to the
entire Collateral Pool, less disbursements thereof pursuant hereto, being called
the "TAX AND INSURANCE ESCROW FUND"). Lender will (a) apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be
made by the respective Borrowers pursuant to Sections 6.2 and 8.1 prior to the
date upon which interest or penalties would be imposed, provided that the
applicable Borrower has promptly supplied Lender with notices of all Taxes and
Insurance Premiums due for such Borrower's Collateral Property, or (b) reimburse
the applicable Borrower for such amounts upon presentation of evidence of
payment and an Officer's Certificate in form and substance satisfactory to
Lender; subject, however, to a Borrower's right to contest Taxes in accordance
with Section 6.2. Following the payment by Lender of any Taxes pursuant to this
Section 4.3, Lender shall send a "paid" receipt to the applicable Borrower.
Provided each Borrower has deposited funds into the Tax and Insurance Escrow
Fund as required under this Section and given Lender timely notice of the amount
and due date of such taxes, Borrowers shall not be liable for interest or
penalties resulting from late payment of such Taxes by Lender, and, so long as
no portion of the Debt has been accelerated, Lender or Servicer shall be
responsible for such interest and penalties. 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 next coming due for Taxes and Insurance Premiums pursuant to Sections
6.2 and 8.1, Lender shall, in its sole discretion, return any excess to the
applicable Borrower(s) or credit such excess against future payments to be made
to the Tax and Insurance Escrow Fund. If at any time Lender determines that the
Tax and Insurance Escrow Fund is not or will not be sufficient to pay the Taxes
or Insurance Premiums next coming due, Lender shall notify the applicable
Borrower(s) of such determination and the applicable Borrower(s) shall increase
their respective monthly payments to Lender by the amount that Lender estimates
is sufficient to make up the deficiency at least 30 days prior to delinquency of
the Taxes and/or expiration of the Policies, as the case may be. Lender
acknowledges that each Borrower currently causes its Premiums to be paid by Afco
Acceptance Corp. ("Afco") through an agreement with Westfield America, Inc., and
Lender agrees that amounts for each Borrower's Premiums held in such Borrower's
Tax and Insurance Escrow Fund shall be released to reimburse such Borrower for
payments made by it to reimburse Westfield America, Inc. for the amounts paid to
Afco with respect to such Borrower's Premiums (subject to compliance by such
Borrower with clause (b) of this Section 4.3) or any other similar arrangements
---------- -----------
reasonably acceptable to Lender.
4.4 REPLACEMENT RESERVES.
--------------------
4.4.1 REPLACEMENT RESERVE FUND. Each Borrower shall pay to Lender on
------------------------
each Payment Date (in addition to other payments required hereunder) an amount
equal to the Monthly Replacement Deposit for such Borrower's Collateral Property
(such payments with respect to the entire Collateral Pool, less disbursements
thereof pursuant hereto, being called the "REPLACEMENT RESERVE FUND"). If the
amount of the Replacement Reserve Fund shall exceed the amounts due for Approved
Replacement Expenses pursuant to the terms hereof, Lender shall, in its
discretion, return any excess to the applicable Borrower(s) or, if future
Replacement Reserve Fund payments are then required, credit such excess against
such future payments.
4.4.2 PAYMENT OF REPLACEMENT EXPENSES. From time to time (but not
-------------------------------
more often than monthly), Lender shall disburse funds held in the Replacement
Reserve Fund to the applicable Borrower, within 30 days after the delivery by
the applicable Borrower to Lender of a request therefor, in increments of at
least $5,000 provided that (i) on the day of the request and on the day of
payment no Event of Default shall have occurred and be continuing; (ii) such
disbursement is for a Replacement Expense that has been incurred by such
Borrower (provided that, during the continuance of a Cash Management Event, such
Replacement Expense must be an Approved Replacement Expense); (iii) Lender shall
have (if it desires) verified (by an inspection conducted at the applicable
Borrower's expense) performance of the work associated with such Approved
Expense (or Replacement Expense, as the case may be); and (iv) the request for
disbursement is accompanied by (A) an Officer's Certificate certifying (v) the
amount of funds to be disbursed, (w) that such funds will be used to pay or
reimburse the applicable Borrower for Approved Replacement Expenses (or
Replacement Expenses, as the case may be) and a description thereof, (x) that
all outstanding trade payables (other than those to be paid from the requested
disbursement, those otherwise permitted to be outstanding under Section 7.8)
have been paid in full, (y) that the same has not been the subject of a previous
disbursement, and (z) that all previous disbursements have been used to pay the
previously identified Approved Replacement Expenses (or Replacement Expenses, as
the case may be), and (B) reasonably detailed documentation as to the amount,
necessity and purpose therefor.
4.5 ROLLOVER RESERVES.
-----------------
4.5.1 ROLLOVER RESERVE FUND. Each Borrower shall pay to Lender on
---------------------
each Payment Date the Monthly Rollover Deposit for such Borrower's Collateral
Property (in addition to other payments required hereunder) (such payments with
respect to the entire Collateral Pool, less disbursements thereof pursuant
hereto, being called the "ROLLOVER RESERVE FUND"). Lender will apply such
payments to payment of Approved Leasing Expenses pursuant to the terms hereof.
Each Borrower shall also deposit into the Rollover Reserve Fund all payments
("Lease Termination Payments") received from tenants in connection with the
termination or cancellation of any Lease more than one year prior to its
expiration date, including fees, penalties and commissions (provided that, upon
the releasing of all or any portion of the space demised under such cancelled or
terminated space, Lender shall, upon the applicable Borrower's request and
provided no Event of Default then exists, release to such Borrower the portion,
if any, of the
Lease Termination Payment which exceeds the actual Leasing Expenses incurred or
to be incurred in connection with such releasing). If the amount of the Rollover
Reserve Fund shall exceed the amounts due for Approved Leasing Expenses pursuant
to the terms hereof, Lender shall, in its discretion, return any excess to the
applicable Borrower(s), credit such excess against future payments to the
Rollover Reserve Fund or allocate such excess to other Subaccounts. If Lender
determines in its reasonable judgment that the amount of the Rollover Reserve
Fund will be insufficient to pay the amounts due or to become due for Approved
Leasing Expenses (after taking into accounts any Lease Termination Payments
theretofore deposited into the Rollover Reserve), Lender may adjust the monthly
amounts required to be deposited into the Rollover Reserve Fund upon 30 days'
notice to the applicable Borrower(s). Alternatively, Lender may in its
discretion determine that the amount of the Rollover Reserve Fund will exceed
the amounts due or to become due for Approved Leasing Expenses, in which case
Lender may reduce the monthly amounts to be deposited therein.
4.5.2 PAYMENT OF LEASING EXPENSES. From time to time (but not more
---------------------------
than once per month) Lender shall disburse funds held in the Rollover Reserve
Fund to the applicable Borrower(s), within 15 days after the delivery by the
applicable Borrower(s) to Lender of a request therefor, in increments of at
least $5,000, provided (i) on the day of the request and on the day of payment
no Event of Default shall have occurred and be continuing; (ii) such
disbursement is for an Approved Leasing Expense; (iii) Lender shall have (if it
desires) verified (by an inspection conducted at such Borrower's expense)
performance of any construction work associated with such Approved Leasing
Expense; and (iv) the request for disbursement is accompanied by (A) an
Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such funds will be used only to pay (or reimburse the applicable
Borrower(s) for) Approved Leasing Expenses and a description thereof, (x) that
all outstanding trade payables (other than those to be paid from the requested
disbursement or those otherwise permitted to be outstanding under Section 7.8)
have been paid in full, (y) that the same has not been the subject of a previous
disbursement, and (z) that all previous disbursements have been used only to pay
(or reimburse the applicable Borrower(s) for) the previously identified Approved
Leasing Expenses, and (B) reasonably detailed supporting documentation as to the
amount, necessity and purpose therefor. During the continuance of a Cash
Management Event, any such disbursement to pay (rather than reimburse) Approved
Leasing Expenses may, at Lender's option, be made by joint check payable to the
applicable Borrower(s) and the payee of such Approved Leasing Expenses.
4.6 GROUND RENT ESCROW.
------------------
4.6.1 GROUND RENT ESCROW FUND. Each Borrower whose Collateral
-----------------------
Property is subject to a Ground Lease that requires payment of net annual rent
on other than a monthly basis, shall pay to Lender on each Payment Date one-
twelfth of the annual net rent that Lender estimates will be payable under such
Ground Lease during the next 12 months in order to accumulate with Lender
sufficient funds to pay the then next installment of annual net rent due under
such Ground Lease at least 30 days prior to the due date thereof (such payments
with
respect to all Ground Leases, less disbursements thereof pursuant hereto, the
"GROUND RENT ESCROW FUND"). Lender will apply the Ground Rent Escrow Fund to
payments of annual net rent required to be made by the applicable Borrower under
its Ground Lease, or to reimburse such Borrower for such amounts upon
presentation of evidence of payment and an Officer's Certificate of such
Borrower in form and substance satisfactory to Lender. In making any payment
relating to the Ground Rent Escrow Fund, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the landlord under the applicable Ground
Lease, without inquiry into the accuracy of such ▇▇▇▇, statement or estimate or
into the validity of any claim by such landlord. If at any time Lender
determines that the portion of the Ground Rent Escrow Fund allocable to any
Ground Lease is not or will not be sufficient to pay the annual net Rent
pursuant to such Ground Leases next coming due, Lender shall notify the
applicable Borrower(s) of such determination and the applicable Borrower(s)
shall increase its (their) monthly payments to Lender by the amount that Lender
reasonably estimates is sufficient to make up the deficiency at least 30 days
prior to delinquency of the annual net rent under the applicable Ground
Lease(s).
4.7 OPERATING EXPENSE RESERVES.
--------------------------
4.7.1 OPERATING EXPENSE RESERVE FUND. After the occurrence of a Cash
------------------------------
Management Event each Borrower shall pay to Lender an amount equal to the
Approved Operating Expenses for its Collateral Property for the next Current
Month (such payments with respect to the entire Collateral Pool, less
disbursements thereof pursuant hereto, being called the "OPERATING EXPENSE
RESERVE FUND"). If the amount of the Operating Expense Reserve Fund shall
exceed the amounts due for Approved Operating Expenses pursuant to the terms
hereof, Lender shall, in its discretion, return any excess to the applicable
Borrower(s) or, if future Operating Reserve Fund payments are then required,
credit such excess against such future payments.
4.7.2 PAYMENT OF APPROVED OPERATING EXPENSES. From time to time (but
--------------------------------------
not more than once per month) Lender shall disburse funds held in the Operating
Expense Reserve Fund to the applicable Borrower(s), provided (i) on the day of
the request and on the date of payment no portion of the Debt shall have been
accelerated ; (ii) such disbursement is for an Approved Operating Expense; and
(iii) such disbursement is requested by the applicable Borrower(s) in writing,
accompanied by (A) an Officer's Certificate certifying (v) the amount of funds
to be disbursed, (w) that such funds will be used to pay Approved Operating
Expenses and a description thereof, (x) that all outstanding trade payables
(other than those to be paid from the requested disbursement or those otherwise
permitted to be outstanding under Section 7.8) have been paid in full, (y) that
the same has not been the subject of a previous disbursement, and (z) that all
previous disbursements have been or will be used to pay the previously
identified Approved Operating Expenses, and (B) reasonably detailed
documentation as to the amount, necessity and purpose therefor. Subject to
satisfaction of the preceding conditions, if Lender receives from a Borrower a
valid request for a disbursement for payment of Approved Operating Expenses for
the then Current Month at least five Business Days prior to the Payment Date
occurring in such Current Month, then the disbursement in respect of such
Approved Operating Expenses shall be made to such Borrower on such Payment Date.
Notwithstanding anything to
the contrary in the foregoing, during the continuance of an Event of Default
Lender shall have the right, in lieu of disbursing to Borrowers funds from the
Operating Expense Reserve Fund, to pay such funds directly to the obligees or to
pay such funds to the applicable Borrower and the obligee in question jointly.
4.8 CASUALTY/CONDEMNATION FUND. The applicable Borrower shall pay, or
--------------------------
cause to be paid, to Lender all Proceeds or Awards due to any Casualty or
Condemnation (such amounts, less disbursements thereof pursuant hereto, the
"CASUALTY/CONDEMNATION FUND"), in accordance with the provisions of Article
VIII. All amounts in the Casualty/Condemnation Fund shall disbursed in
accordance with the provisions of Article VIII.
4.9 SECURITY DEPOSITS. (a) Security deposits under Leases shall not be
-----------------
commingled with any other funds of any Borrower (unless permitted by applicable
Legal Requirements) and all security deposits paid in cash under Leases, shall,
unless permitted to be commingled with Borrowers' funds under applicable Legal
Requirements, be deposited by the applicable Borrower at an account at the
Clearing Bank. After the occurrence of a Cash Management Event, each Borrower
shall, upon Lender's request, if permitted by applicable Legal Requirements,
turn over to Lender the security deposits (and any interest theretofore earned
thereon) under Leases, to be held by Lender in the Security Deposit Subaccount
subject to the terms of the Leases. If applicable Legal Requirements prohibit
any Borrower from turning over to Lender security deposits under Leases, such
Borrower shall keep such security deposits at a separately designated account at
the Clearing Bank so that the security deposits shall not be commingled with any
other funds of such Borrower. Security deposits held in the Security Deposit
Subaccount will be released by Lender upon notice from the applicable Borrower
together with such evidence as Lender may reasonably request that such security
deposit is required to be returned to a tenant pursuant to the terms of a Lease
or may be applied as Rent pursuant to the rights of such Borrower under the
applicable Lease.
(b) Any letter of credit or other instrument that a Borrower receives
in lieu of a cash security deposit shall (i) be maintained in full force and
effect in the full amount unless replaced by a cash deposit as hereinabove
described, (ii) if pertaining to a Material Lease, be issued by an institution
reasonably satisfactory to Lender, (iii) if permitted pursuant to any Legal
Requirements, name Lender as payee or mortgagee thereunder (or be fully
assignable to Lender) and (iv) in all respects, comply with any applicable Legal
Requirements and, if pertaining to a Material Lease, otherwise be reasonably
satisfactory to Lender. Each Borrower shall, upon request, provide Lender with
evidence reasonably satisfactory to Lender of such Borrower's compliance with
the foregoing.
4.10 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS. As security for
------------------------------------------------
payment of each Borrower's Allocable Share of the Debt and the performance by
each Borrower of all other terms, conditions and provisions of the Loan
Documents, each Borrower hereby pledges and assigns to Lender, and grants to
Lender a security interest in, all right, title and interest of such Borrower in
and to all Rents and in and to all payments to or monies held in the Clearing
Accounts, the Deposit Account, the Subaccounts and the Master Deposit Account
(collectively, the "CASH MANAGEMENT ACCOUNTS"), and in the Required Repair Fund,
Tax and Insurance
Escrow Fund, Replacement Reserve Fund, Rollover Reserve Fund, Operating Expense
Reserve Fund, UNOI Fund, Regal Reserve Fund, Environmental Fund, Parkway Reserve
Fund, Parkway Reserve #2 Fund, Cash Collateral Fund and Casualty/Condemnation
Fund (collectively, together with all other funds designated as or deemed to be
"FUNDS" under this Agreement, the "FUNDS"). Each Borrower for itself and on
behalf of each of its Affiliates hereby grants to Lender a continuing security
interest in, and agrees to hold in trust for the benefit of Lender, all Rents in
its possession prior to the (i) payment of such Rents to Lender or (ii) deposit
of such Rents into the Deposit Account. No Borrower shall, without obtaining the
prior written consent of Lender, further pledge, assign or grant any security
interest in any Cash Management Account or Fund, or permit any Lien to attach
thereto, or any levy to be made thereon, or any UCC-l Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto. This Agreement is, among other things, intended by the parties to be a
security agreement for purposes of the UCC. Upon the occurrence and during the
continuance of an Event of Default, Lender may apply any sums in any Cash
Management Account or Fund as provided under Section 3.1.3(c). The parties
hereto acknowledge that sums at any time in the Remainder Subaccounts and/or in
the Master Deposit Account have also been pledged to Lender pursuant to, and as
additional collateral for, the Guaranties.
4.11 INVESTMENTS OF FUNDS. Provided that no Event of Default is
--------------------
continuing, upon the written request of Borrowers, which request may be made
once per Interest Period, Lender shall direct the Deposit Bank to invest and
reinvest any balance in the Deposit Accounts or any Subaccount from time to time
in Permitted Investments as instructed by Borrowers, all as set forth in the
Deposit Account Agreements. At all other times such investment and reinvestment
decisions shall be made by Lender, it being the intent of the parties that, to
the extent practicable, prior to acceleration of the Debt or any portion
thereof, funds in the Deposit Accounts and the Master Deposit Account shall be
invested at all times.
4.12 UNOI LETTER OF CREDIT.
---------------------
(a) On the date hereof Borrowers shall deposit with Lender the sum of
$1,615,000 (the "UNOI FUND"); provided, however, that in lieu of all or any part
of the UNOI Fund, Borrowers may deliver to Lender a Letter of Credit (the "UNOI
L/C") in the face amount of the required UNOI Fund (or the applicable portion
thereof).
(b) After the date hereof Borrowers shall have the option at any time,
provided no Event of Default then exists, to deliver to Lender a Letter of
Credit in a face amount equal to the amount then in the UNOI Fund (also, a "UNOI
L/C"). Upon delivery to Lender of such UNOI L/C, Lender shall return to
Borrowers the funds then on deposit in the UNOI Fund.
(c) If the Debt Service Coverage Ratio as of June 11, 1999 or December
11, 1999 is 1.35 or greater, Lender shall return to Borrowers all UNOI L/Cs and
any UNOI Fund then held by Lender. If the Debt Service Coverage Ratio as of
June 11, 1999 and as of December 11, 1999 is less than 1.35, Lender shall hold
the UNOI L/Cs and UNOI Fund as additional security for the Loans until the Loans
are paid in full.
(d) If at any time the issuer of a UNOI L/C ceases to be an Approved
Bank, Borrowers shall, within 30 days after request by Lender, deliver to Lender
a new UNOI L/C issued by an Approved Bank (or immediately available funds in
such amount for deposit into the UNOI Fund), whereupon Lender shall return the
original UNOI L/C to Borrowers.
(e) If Borrowers fails to comply with the provisions of Section
-------
4.12(d), or if at any time a UNOI L/C is not replaced or renewed at least 30
-------
days prior to its date of expiration, Lender may draw on such UNOI L/C and the
proceeds thereof shall be deposited into the UNOI Fund.
(f) If for any reason a UNOI L/C shall expire without a replacement
UNOI L/C having been delivered to Lender, Borrowers shall, within 5 days after
demand, deliver to Lender a new UNOI L/C (or immediately available funds in such
amount for deposit into the UNOI Fund).
4.13 OAKRIDGE OPTION FUND.
--------------------
(a) On the date hereof, the Oakridge Borrower shall deposit with
Lender the sum of $4,500,000, representing 25% as of the current estimated
purchase price for the fee estate in the Oakridge Property pursuant to the
Primary Option as set forth and defined in the Oakridge Option Agreement (such
deposit, together with all amounts paid to Lender pursuant to paragraphs (b) and
(c) of this Section 4.13, being called the "OAKRIDGE OPTION FUND").
------------
(b) On each Payment Date occurring between the date hereof and
September 15, 2000 (the latter date being the first day of the Primary Option
Period (as defined in the Oakridge Option Agreement), Oakridge Borrower shall
pay to lender an amount equal to $204,545.45 (or such other monthly amount as
Lender may reasonably determine to be necessary in order that the aggregate
amount in the Oakridge Option Fund on the Payment Date immediately preceding the
Primary Option Period shall be equal to 50% of the purchase price for the fee
estate pursuant to the Primary Option.
(c) On each Payment Date occurring between September 16, 2000 and June
15, 2002 (the latter date being the first day of the Secondary Option Period as
defined in the Oakridge Option Agreement), Oakridge Borrower shall pay to Lender
an amount equal to $1,000,000 (or such other amount as Lender may reasonably
determine to be necessary in order that the aggregate amount in the Oakridge
Option Fund on the Payment Date immediately preceding the Secondary Option
Period shall be equal to 100% of the purchase price for the fee estate pursuant
to the Secondary Option).
(d) Oakridge Borrower shall have the option at any time, provided no
Event of Default then exists, to deliver to Lender a Letter of Credit in a face
amount equal to the sum then required to be in the Oakridge Option Fund (the
"OAKRIDGE L/C"). Upon delivery to Lender of
the Oakridge L/C, Lender shall return to Oakridge Borrower the funds then on
deposit in the Oakridge Option Fund.
(e) If at any time the issuer of the Oakridge L/C ceases to be an
Approved Bank, Oakridge Borrower shall, within thirty (30) days after request by
Lender, deliver to lender a new Oakridge L/C issued by an Approved Bank (or
immediately available funds in amount of such Letter of Credit), whereupon
Lender shall return the original Oakridge L/C to Oakridge Borrower.
(f) If Oakridge Borrower fails to comply with the provisions of
Section 4.13(e), or if at any time the Oakridge L/C is not replaced or renewed
---------------
at least thirty (30) days prior to its expiration, Lender may draw on the
Oakridge L/C and the proceeds thereof shall constitute the Oakridge Option Fund.
(g) If for any reason the Oakridge L/C should expire without a
replacement Oakridge L/C having been delivered to Lender, Oakridge Borrower
shall, within 5 days after demand, deliver to Lender a new Oakridge L/C, or
deposit funds with Lender, in the amount then required to be in the Oakridge
Option Fund.
(h) Upon the exercise of the Secondary Option, the Oakridge Borrower
shall deposit into the Oakridge Option Fund the amount, if any, by which the
purchase price for the fee estate pursuant to the Secondary Option exceeds the
sum of (i) the amount of any Oakridge L/C then held by Lender plus (ii) amounts
theretofore deposited into the Oakridge Option Fund (less any such amounts
returned to Oakridge Borrower pursuant to Section 4.13(d)).
(i) Upon the exercise of the Primary Option or the Secondary Option,
Lender shall release the Oakridge Reserve Fund, or return to Oakridge Borrower
the Oakridge L/C, provided that, simultaneously with such release or return,
Oakridge Borrower executes and delivers to Lender such documents as Lender may
reasonably request to spread the liens of the first and second Mortgages
concerning the Primary Oakridge Ground Lease, and any other applicable loan
documents, so as to encumber the fee estate in the Oakridge Property and to
cause the Title Policies insuring such Mortgages to be endorsed so as to cover
such first and second Mortgages as so spread.
(j) Upon demand of Lender at any time after both (1) the Primary
Option Period has commenced, and (2) the landlord under the Primary Oakridge
Ground Lease has given a notice of default to the tenant thereunder which
remains uncured, the Oakridge Borrower shall exercise the Primary Option and
close thereunder, and spread the liens of its Mortgages as described in Section
-------
4.13(h), above.
-------
(k) Westfield America, Inc. (the "OAKRIDGE GUARANTOR") has delivered
to Lender a guaranty (the "OAKRIDGE GUARANTY") of the obligations of Oakridge
Borrower under paragraph (h) of this Section 4.13.
------------- ------------
4.14 CASH COLLATERAL FUND.
--------------------
(a) After the occurrence of a Cash Management Event, all Rents
remaining in a Deposit Account after application thereof pursuant to clause
"Ninth" of Section 3.1.3(a), shall be transferred to the Master Deposit Account
----------------
(all funds at any time in the Master Deposit Account being called the "Cash
Collateral Fund").
(b) Funds in the Cash Collateral Subaccount shall be utilized to pay
(i) fees and other sums due and payable to the Management Consultants, to the
extent such fees and sums have not been paid pursuant to clauses "Seventh" and
"Ninth" of Section 3.1.3(a), and (ii) other payments described in clause (i)
through (ix) of Section 3.1.3(a) to the extent the Rents from any Borrower's
----------------
Collateral Property are insufficient to pay same.
(c) Upon a Cash Management Termination, Lender shall deliver to
Borrower all sums then in the Cash Collateral Fund.
4.15 REGAL RESERVE FUND.
------------------
(a) On the date hereof Parkway Borrower shall deposit with Lender the
sum of $2,550,000 (such sum, less disbursements thereof pursuant hereto, the
"REGAL RESERVE").
(b) From time to time (but not more often than monthly), Lender shall
disburse funds held in Regal Reserve to Parkway Borrower, within 30 days after
the delivery by the Parkway Borrower to Lender of a request therefor, in
increments of at least $5,000, provided that (i) on the day of the request and
on the day of payment no Event of Default shall exist and (ii) such request for
disbursement is accompanied by an Officer's Certificate certifying (A) that the
amount of such requested disbursement is due and payable to Regal Cinema
pursuant to its lease and (B) all prior disbursements to Parkway Borrower
pursuant to this Section 4.15(b) have been paid to Regal Cinema.
(c) Parkway Borrower shall have the option at any time, provided no
Event of Default then exists, to deliver to Lender a Letter of Credit in a face
amount equal to the sum then required to be in the Regal Reserve Fund (the
"REGAL L/C"). Upon delivery to Lender of the Regal L/C, Lender shall return to
Parkway Borrower the funds then on deposit in the Regal Reserve Fund.
(d) If at any time the issuer of the Regal L/C ceases to be an
Approved Bank, Parkway Borrower shall, within thirty (30) days after request by
Lender, deliver to Lender a new Regal L/C issued by an Approved Bank (or
immediately available funds in amount of such Letter of Credit), whereupon
Lender shall return the original Regal L/C to Parkway Borrower.
(e) If Parkway Borrower fails to comply with the provisions of Section
-------
4.15(d), or if at any time the Regal L/C is not replaced or renewed at least
-------
thirty (30) days prior to its expiration, Lender may draw on the Regal L/C and
the proceeds thereof shall constitute the Regal Reserve Fund.
(f) If for any reason the Regal L/C should expire without a
replacement Regal L/C having been delivered to Lender, Parkway Borrower shall,
within 5 days after demand, deliver to Lender a new Regal L/C, or deposit funds
with Lender, in the amount then required to be in the Regal Reserve Fund.
4.16 ENVIRONMENTAL FUND.
------------------
(a) On the date hereof Fox Hills Malls LLC ("FOX HILLS BORROWER")
shall deposit with Lender the sum of $100,000 (the "ENVIRONMENTAL FUND");
provided, however, that in lieu of the Environmental Fund, Fox Hills Borrower
may deliver to Lender a Letter of Credit (an "ENVIRONMENTAL L/C") in a face
amount equal to the required Environmental Fund.
(b) After the date hereof Fox Hills Borrower shall have the option at
any time, provided no Event of Default then exists, to deliver to Lender a
Letter of Credit in a face amount equal to the amount then in the Environmental
Fund (also, an "ENVIRONMENTAL L/C"). Upon delivery to Lender of such
Environmental L/C, Lender shall return to Fox Hills Borrower the funds then on
deposit in the Environmental Fund.
(c) Certain 1991 environmental reports disclosed low levels of
chlorinated solvents at the Collateral Property owned by Fox Hills Borrower.
Upon the delivery to Lender of evidence reasonably satisfactory to Lender that
such solvents have been removed or that the conditions pertaining thereto are
such that no remediation is necessary to satisfy Lender's standards and
requirements, Lender shall, provided no Event of Default then exists, return to
Fox Hills Borrower the Environmental Fund or Environmental L/▇. ▇▇▇ Hills
Borrower acknowledges that soil testing may be required in connection with the
foregoing.
(d) If at any time the issuer of an Environmental L/C ceases to be an
Approved Bank, Fox Hills Borrower shall, within 30 days after request by Lender,
deliver to Lender a new Environmental L/C issued by an Approved Bank (or
immediately available funds in such amount for deposit into the Environmental
Fund), whereupon Lender shall return the original Environmental L/C to Fox Hills
Borrower.
(e) If Fox Hills Borrower fails to comply with the provisions of
Section 4.16(d), or if at any time an Environmental L/C is not replaced or
---------------
renewed at least 30 days prior to its date of expiration, Lender may draw on
such Environmental L/C and the proceeds thereof shall be deposited into the
Environmental Fund.
(f) If for any reason an Environmental L/C shall expire without a
replacement Environmental L/C having been delivered to Lender, Fox Hills
Borrower shall, within 5 days after demand, deliver to Lender a new
Environmental L/C (or immediately available funds in such amount for deposit
into the Environmental Fund).
4.17 PARKWAY RESERVE #2 FUND.
-----------------------
(a) On the date hereof Parkway Borrower shall deposit with Lender the
sum of $178,000 (the "PARKWAY RESERVE #2 FUND").
(b) On or prior to the date of the second Advance, Parkway Borrower
shall increase the amount on deposit in the Parkway Reserve #2 Fund to a total
of $363,000 (unless the initial deposit into such Fund has then been released
pursuant to Section 4.17(d).
(c) After the date hereof Parkway Borrower shall have the option at
any time, provided no Event of Default then exists, to deliver to Lender a
Letter of Credit in a face amount equal to the amount then in the Parkway
Reserve #2 Fund (the "PARKWAY RESERVE #2 L/C"). Upon delivery to Lender of such
Parking Reserve #2 L/C, Lender shall return to Parkway Borrower the funds then
on deposit in the Parkway Reserve #2 Fund.
(d) Upon the delivery to Lender of evidence reasonably satisfactory to
Lender that Parkway Borrower has no further payment or contribution obligations
for street and/or highway improvements under that certain Development Agreement
by and between the City of El Cajon and H and H El Cajon for the Parkway Plaza
Expansion dated as of March 17, 1989, Lender shall, provided no Event of Default
then exists, return to Parkway Borrower the Parkway #2 Reserve Fund or Parkway
#2 Reserve L/C.
(e) If at any time the issuer of the Parkway Reserve #2 L/C ceases to
be an Approved Bank, Parkway Borrower shall, within 30 days after request by
Lender, deliver to Lender a new Parkway Reserve #2 L/C issued by an Approved
Bank (or immediately available funds in such amount for deposit into the Parkway
Reserve #2 Fund), whereupon Lender shall return the original Parkway Reserve #2
L/C to Parkway Borrower.
(f) If Parkway Borrower fails to comply with the provisions of Section
-------
4.17(e), or if at any time a Parkway Reserve #2 L/C is not replaced or renewed
-------
at least 30 days prior to its date of expiration, Lender may draw on such
Parkway Reserve #2 L/C and the proceeds thereof shall be deposited into the
Parkway Reserve #2 Fund.
(g) If for any reason a Parkway Reserve #2 L/C shall expire without a
replacement Parkway Reserve #2 L/C having been delivered to Lender, Borrowers
shall, within 5 days after demand, deliver to Lender a new Parkway Reserve #2
L/C (or immediately available funds in such amount for deposit into the Parkway
Reserve #2 Fund).
V REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 BORROWER REPRESENTATIONS. Each Borrower represents and warrants as of
------------------------
the date hereof that, except to the extent (if any) disclosed on Schedule 2 with
reference to a specific subsection of this Section 5.1:
5.1.1 ORGANIZATION; SPECIAL PURPOSE. Each Borrower has been duly
-----------------------------
organized
and is validly existing and in good standing under the laws of the
State of formation, with requisite power and authority, and all rights,
licenses, permits and authorizations, governmental or otherwise, necessary to
own its properties and to transact the business in which it is now engaged.
Each 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, business and operations. Each Borrower is a Special Purpose
Bankruptcy Remote Entity, and the sole business of each Borrower is the
ownership, management and operation of the Collateral Property owned by it.
5.1.2 PROCEEDINGS; ENFORCEABILITY. Each Borrower has taken all
---------------------------
necessary action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party. The Loan Documents to which any Borrower
is a party have been duly executed and delivered by such Borrower and constitute
legal, valid and binding obligations of such Borrower enforceable against such
Borrower in accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and general principles of equity.
5.1.3 NO CONFLICTS. The execution, delivery and performance by each
------------
Borrower of the Loan Documents to which it is a party 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 (other than pursuant
to the Loan Documents) upon any of the property of such Borrower pursuant to the
terms of, any agreement or instrument to which such Borrower is a party or by
which its property is subject (including any Ground Lease), 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 such Borrower
or any of its properties. Each Borrower's rights under the Licenses and the
Management Agreement pertaining to the Collateral Property owned by such
Borrower will not be adversely affected by the execution and delivery of the
Loan Documents, such Borrower's performance thereunder, the recordation of any
Mortgage executed by such Borrower, or the exercise of any remedies by Lender.
Any consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution and delivery by any
Borrower of the Loan Documents has been obtained and is in full force and
effect.
5.1.4 LITIGATION. There are no actions, suits or other proceedings
----------
at law or in equity by or before any Governmental Authority now pending or
threatened against or affecting any Borrower, any Borrower Representative, the
Manager or any Collateral Property, which, if adversely determined, might
materially adversely affect the condition (financial or otherwise) or business
of any Borrower, any Borrower Representative, Manager or the condition or
ownership of any Collateral Property.
5.1.5 AGREEMENTS. No Borrower is a party to any agreement or
----------
instrument or subject to any restriction which might adversely affect such
Borrower or its Collateral Property, or such Borrower's business, properties,
operations or condition, financial or otherwise. No Borrower is in default in
any material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
any
other agreement or instrument to which it is a party or by which it or any
Collateral Property is bound.
5.1.6 TITLE. Each Borrower has good fee title (or, if the Mortgages
-----
granted by such Borrower are leasehold mortgages, leasehold title) to the
portion of its Collateral Property constituting Real Property, and good title to
the balance of the Property, free and clear of all Liens except the Permitted
Encumbrances. The Mortgages executed by each Borrower, when properly recorded
in the appropriate records, together with any UCC financing statements required
to be filed in connection therewith, will create (i) valid, perfected first and
second priority lien on the fee interest in the Property (or, if the Mortgages
granted by such Borrower are leasehold mortgages, the leasehold estate), and
(ii) perfected security interests in and to, and perfected collateral
assignments of, all personalty proported to be covered by such Mortgages
(including the Leases affecting such Collateral Property), all in accordance
with the terms thereof, in each case subject only to any applicable Permitted
Encumbrances. The Permitted Encumbrances do not materially adversely affect the
value or use of any Collateral Property, or any Borrower's ability to repay such
Borrower's Allocable Share of the Loan. There are no claims for payment for
work, labor or materials affecting any Collateral Property which are or may
become a Lien prior to, or of equal priority with, any Liens created by the Loan
Documents.
5.1.7 SURVEY. To the best of each Borrower's knowledge, the survey
------
for each Collateral Property delivered to Lender does not fail to reflect any
material matter affecting such Collateral Property or the title thereto which is
required to be reflected thereon in accordance with the standards for a Survey
described in the definition thereof.
5.1.8 NO BANKRUPTCY FILING. None of the Borrowers is contemplating
--------------------
either the filing of a petition by it under any state or federal bankruptcy or
insolvency law or the liquidation of all or a major portion of its property (a
"BANKRUPTCY PROCEEDING"), and none of the Borrowers has any knowledge of any
Person contemplating the filing of any such petition against any Borrower. In
addition, no Borrower or Borrower Representative or any principal or Affiliate
of any Borrower or Borrower Representative has been a party to, or the subject
of a Bankruptcy Proceeding for the past ten years.
5.1.9 FULL AND ACCURATE DISCLOSURE. No statement of fact made by
----------------------------
Borrower in any Loan Documents contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
therein not misleading. There is no material fact presently known to any
Borrower that has not been disclosed to Lender which adversely affects, or, as
far as any Borrower can foresee, might adversely affect, the Property or the
business, operations or condition (financial or otherwise) of any Borrower.
5.1.10 NO PLAN ASSETS. No Borrower is an "employee benefit plan," as
--------------
defined in Section 3(3) of ERISA, subject to Title I of ERISA, and no assets of
any Borrower constitutes or will constitute "plan assets" of one or more such
plans within the meaning of 29 C.F.R. Sec tion 2510.3-101.
5.1.11 COMPLIANCE. Each Borrower and its Collateral Property and the
----------
use thereof comply in all material respects with all applicable Legal
Requirements. No Borrower is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of such Borrower. There has not been and shall never be committed
by any Borrower or any other Person in occupancy of or involved with the
operation or use of any Collateral Property any act or omission affording any
Governmental Authority the right of forfeiture as against any Collateral
Property or any part thereof or any monies paid in performance of any Borrower's
obligations under any Loan Document.
5.1.12 CONTRACTS. As of September 10, 1998 there are no material
---------
service, maintenance or repair contracts affecting any Collateral Property other
than those identified on Schedule 7. All information set forth in Schedule 7 is
---------- ----------
true, accurate and complete in all material respects as of September 10, 1998.
Except as disclosed on Schedule 7, there are no material service, maintenance or
----------
repair contracts that are not terminable on one month's notice or less without
cause and without penalty or premium. All service, maintenance or repair
contracts affecting any Collateral Property have been entered into at arms-
length in the ordinary course of a Borrower's business and provide for the
payment of fees in amounts and upon terms comparable to existing market rates.
5.1.13 FINANCIAL INFORMATION. All financial data, including the
---------------------
statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of any Collateral Property (i) are true, complete
and correct in all material respects, (ii) accurately represent the financial
condition of such Collateral Property as of the date of such reports, and (iii)
to the extent prepared by an independent certified public accounting firm, have
been prepared in accordance with GAAP consistently applied throughout the
periods covered, except as disclosed therein. No Borrower has any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments that would
have a material adverse affect on the financial condition of such Borrower.
Since the date of such financial statements, there has been no materially
adverse change in the financial condition, operations or business of any
Borrower from that set forth in said financial statements.
5.1.14 CONDEMNATION. No Condemnation or other proceeding has been
------------
commenced or, to any Borrower's best knowledge, is contemplated with respect to
all or part of any Collateral Property or for the relocation of roadways
providing access to any Collateral Property.
5.1.15 FEDERAL RESERVE REGULATIONS. No part of the proceeds of the
---------------------------
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose that would be inconsistent with such
Regulation U or any other regulation of such Board of Governors, or for any
purpose prohibited by Legal Requirements or any Loan Document.
5.1.16 UTILITIES AND PUBLIC ACCESS. Each Property has rights of
---------------------------
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service it for its intended uses. All public
utilities necessary to the full use of each Collateral Property are located in
the public right-of-way abutting such Collateral Property, and all such
utilities are connected so as to serve such Collateral Property without passing
over other property absent a valid easement. All roads necessary for the use of
each Collateral Property for its current purpose have been completed and
dedicated to public use and accepted by all Governmental Authorities.
5.1.17 NOT A FOREIGN PERSON. No Borrower is a "foreign person" with
--------------------
in the meaning of (S) 1445(f)(3) of the Code.
5.1.18 SEPARATE LOTS. There is no portion of any Collateral Property
-------------
which is part of a tax lot all or any portion of which is not encumbered by a
Mortgage.
5.1.19 ASSESSMENTS. There are no pending or proposed material
-----------
special or other assessments for public improvements or otherwise affecting any
Collateral Property, or any contemplated improvements to any Collateral Property
that may result in such special or other assessments.
5.1.20 ENFORCEABILITY. The Loan Documents are not subject to, and no
--------------
Borrower has asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury. No exercise of any of the terms of the
Loan Documents, or any right thereunder, will render any Loan Document
unenforceable.
5.1.21 INSURANCE. Each Borrower has obtained and has delivered to
---------
Lender insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement.
5.1.22 USE OF PROPERTY; LICENSES. Each Collateral Property is used
-------------------------
exclusively for retail and other appurtenant and related uses. Except as
heretofore discussed in writing to Lender, all material certifications, permits,
licenses and approvals, including certificates of completion and occupancy
permits required for the legal use, occupancy and operation of the Property
(collectively, the "LICENSES"), have been obtained and are in full force and
effect. The uses being made of each Collateral Property are in conformity in
all materials respects with, and are permitted under, the certificate of
occupancy issued for such Collateral Property.
5.1.23 FLOOD ZONE. Except as disclosed on a survey delivered to
----------
Lender, none of the Improvements on any Collateral Property is located in an
area as identified by the Federal Emergency Management Agency as an area having
special flood hazards.
5.1.24 PHYSICAL CONDITION. Except as otherwise disclosed in the
------------------
written physical inspection reports heretofore delivered to Lender, each
Collateral Property, including all Improvements, parking facilities, systems,
Equipment and landscaping, are in good condition,
order and repair in all material respects; there exists no structural or other
material defect or damages to any Collateral Property, whether latent or
otherwise. No Borrower has received notice from any insurance company or bonding
company of any defect or inadequacy in any Collateral Property, or any part
thereof, which would adversely affect its insurability or cause the imposition
of extraordinary premiums or charges thereon or any termination of any policy of
insurance or bond.
5.1.25 ENCROACHMENTS. All of the Improvements on any Collateral
-------------
Property included in determining the appraised value of such Collateral Property
lie wholly within the boundaries and building restriction lines of such
Collateral Property, and no improvement on an adjoining property encroaches upon
such Collateral Property, and no easement or other encumbrance upon such
Collateral Property encroaches upon any of the Improvements, so as to affect the
value or marketability of such Collateral Property, except those insured against
by the Title Insurance Policy.
5.1.26 LEASES. Borrowers have delivered to Lender a true, correct
------
and complete rent roll for each Collateral Property (each a, "RENT ROLL"), which
includes all Leases affecting such Collateral Property (including schedules for
all executed Leases for tenants not yet in occupancy or under which the rent
commencement date has not occurred). Except as set forth in the Rent Rolls and
estoppel certificates delivered to Lender on or prior to the Funding Date for
the applicable Collateral Property: (i) to the best of each Borrower's
knowledge, each Lease is in full force and effect; (ii) the tenants under the
Leases have accepted possession of and are in occupancy of all of their
respective demised premises, have commenced the payment of rent under the
Leases, and, to the best of each Borrower's knowledge, there are no offsets,
claims or defenses to the enforcement thereof; (iii) to the best of each
Borrower's knowledge, all rents due and payable under the Leases have been paid
and no portion thereof has been paid for any period more than 30 days in
advance; (iv) the rent payable under each Lease is the amount of fixed rent set
forth in the Rent Roll, and, to the best of each Borrower's knowledge, there is
no claim or basis for a claim by the tenant thereunder for an adjustment to the
rent; (v) to the best of each Borrower's knowledge, no tenant has made any
written claim against the landlord under any Lease which remains outstanding,
there are no defaults on the part of the landlord under any Lease, and no event
has occurred which, with the giving of notice or passage of time, or both, would
constitute such a default; (vi) to each Borrower's best knowledge, there is no
present material default by the tenant under any Lease; (vii) no Borrower holds
any security deposits under the Leases; (viii) a Borrower is the sole owner of
the entire lessor's interest in each Lease; (ix) to the best of each Borrower's
knowledge, each Lease is the valid, binding and enforceable obligation of a
Borrower and the applicable tenant thereunder; and (x) to the best of each
Borrower's knowledge, no Person has any possessory interest in, or right to
occupy, any Collateral Property except under the terms of a Lease.
Notwithstanding the foregoing, the breach of any of the representations
contained in the preceding sentence shall not constitute an Event of Default
provided that (i) the relevant Lease is not a Material Lease and (ii) the facts
resulting in such breach do not, after taking into account all other facts
resulting in other breaches of the
representations contained in the preceding sentence, do not have a material
adverse affect on the value, Underwritten Net Operating Income, use or operation
of any Collateral Property. None of the Leases contains any option to purchase
or right of first refusal to purchase any Collateral Property or any part
thereof. Neither the Leases nor the Rents have been assigned or pledged except
to Lender, and no other Person has any interest therein except the tenants
thereunder.
5.1.27 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 in connection with the
transfer of any Collateral Property to any Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar taxes required
to be paid by any Person under applicable Legal Requirements in connection with
the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents have been paid.
5.1.28 INVESTMENT COMPANY ACT. No Borrower is (i) an "investment
----------------------
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (ii) 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 (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
5.1.29 FRAUDULENT TRANSFER. No Borrower has entered into the Loan or
-------------------
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and each Borrower has received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of each Borrower's
assets exceeds and will, immediately following the execution and delivery of the
Loan Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of
each Borrower's assets is and will, immediately following the execution and
delivery of the Loan Documents, be greater than such Borrower's probable
liabilities, including the maximum amount of its contingent liabilities or its
debts as such debts become absolute and matured. Each 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. No Borrower intends to, or believes
that it will, incur debts and liabilities (including contingent liabilities and
other 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 such Borrower).
5.1.30 OWNERSHIP OF BORROWER. As to each Borrower that is a limited
---------------------
partnership, the sole general partner of such Borrower is its Borrower
Representative. As to each Borrower that is a limited liability company, the
sole managing member of such Borrower is its Borrower Representative. Westfield
America, Inc. is the owner of all of the issued and outstanding capital stock of
each Borrower Representative, all of which capital stock has been
validly issued and fully paid and is nonassessable. The only limited partners or
other members of each Borrower are identified on Schedule 5 hereto. The stock of
each Borrower Representative and all limited partnership or membership interests
in each Borrower are owned free and clear of all Liens, warrants, options and
rights to purchase. No Borrower has an obligation to any Person to purchase,
repurchase or issue any ownership interest in it. Attached hereto as Schedule 5
is an organizational chart for each Borrower indicating the ownership interests
in each Borrower and its Borrower Representative.
5.1.31 MANAGEMENT AGREEMENT. The Management Agreement for each
--------------------
Collateral Property is in full force and effect. There is no default, breach or
violation existing thereunder, and no event has occurred (other than payments
due but not yet delinquent) that, with the passage of time or the giving of
notice, or both, would constitute a default, breach or violation thereunder, by
either party thereto. The Management Fee and the terms and provisions of the
Management Agreement are subordinate to the Loan Documents in accordance with
the term set forth in the applicable Manager Consent and Subordination. Lender
approves the terms of the Management Agreements heretofore delivered to Lender.
5.1.32 HAZARDOUS SUBSTANCES. To the best of each Borrower's
--------------------
knowledge after due inquiry, except as disclosed in the written environmental
reports delivered to Lender prior to the date hereof: (i) no Collateral Property
is in violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or
clean-up, including the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Hazardous Substances
Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean
Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act, any state super-lien and environmental
clean-up statutes, any local law requiring related permits and licenses and all
amendments to and regulations in respect of the foregoing laws (collectively,
"ENVIRONMENTAL LAWS"); (ii) no Collateral Property is subject to any private or
governmental Lien or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous, toxic, dangerous and/or regulated
substances, wastes, materials, raw materials which include hazardous
constituents, pollutants or contaminants, including asbestos, asbestos
containing materials, petroleum, tremolite, anthlophylite, actinolite,
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"); (iii) no Hazardous
Substances are or have been (including the period prior to the acquisition of
any Collateral Property by the Borrower that owns it), discharged, generated,
treated, stored on, incorporated in, or removed from any Collateral Property
other than in compliance with all Environmental Laws; (iv) except for Routine
Hazardous Substances, no Hazardous Substances are or have been (including the
period prior to the acquisition of any Collateral Property by the Borrower that
owns it), disposed of or transported from any Collateral Property other than in
compliance with all Environmental Laws; (v) no Hazardous Substances are present
in, on or under any nearby real property which could migrate to or otherwise
affect any Collateral Property; and (vi) no underground storage
tanks exist on any Collateral Property. There have been no environmental
investigations, studies, audits, reviews or other analyses conducted by or on
behalf of any Borrower which have not been provided to Lender.
5.1.33 NAME; PRINCIPAL PLACE OF BUSINESS. No Borrower uses or will
---------------------------------
use any trade name and has done or will do business under any name other than
its actual name set forth herein or the name of its Collateral Property. The
principal place of business of each Borrower is its primary address for notices
as set forth in Section 11.2, and no Borrower has any other place of business
------------
(other than its Collateral Property).
5.1.34 SUBORDINATED DEBT. No Borrower has any indebtedness with
-----------------
respect to its Collateral Property or any excess cash flow or any residual
interest therein, whether secured or unsecured, other than Permitted
Encumbrances and the permitted indebtedness described in Section 7.8.
5.1.35 GROUND LEASE. With respect to each Ground Lease: (i) The
------------
applicable Borrower has delivered to Lender a true and correct copy of such
Ground Lease, together with all amendments and modifications thereto; (ii) such
Ground Lease is in full force and effect and has not otherwise been modified or
amended; (iii) to the best of each Borrower's knowledge, there are no defaults
under such Ground Lease and no event has occurred, which with the passage of
time, the giving of notice, or both, would constitute a default under such
Ground Lease (iv) all rents, additional rents and other sums due and payable
under such Ground Lease have been paid in full; (v) neither the lessee
thereunder nor the Ground Lessor has commenced any action or given or received
any notice for the purpose of terminating such Ground Lease; (vi) the applicable
Borrower's interest in such Ground Lease may be encumbered by the Mortgages
granted in connection with the Loan.
5.1.36 REA. With respect to each REA: (i) the applicable Borrower
---
has delivered to Lender a true and correct copy of such REA, together with all
amendments and modifications thereto (other than the amendments identified on
Schedule ll (the "UNDELIVERED DOCUMENTS"). Such REA is in full force and effect
-----------
and has not otherwise been modified or amended; (ii) except as disclosed in
estoppels delivered to Lender prior to the Funding Date for the applicable
Collateral Property, there are no defaults under such REA and no event has
occurred, which with the passage of time, the giving of notice, or both, would
constitute a default (other than a technical, non-material default which would
not entitle a party to terminate or exercise any remedies with respect to an
REA) under such REA; (iii) all sums due and payable under such REA have been
paid in full; (iv) no party thereto has commenced any action or given or
received any notice for the purpose of terminating such REA; and (v) the
applicable Borrower's interest in such REA may be encumbered by the Mortgages
granted in connection with the Loan and is assignable without the consent of any
other party to the REA.
5.1.37 DEVELOPMENT AGREEMENT. The Master Development Framework
---------------------
Agreement dated as of July 1, 1996, as amended on May 21, ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇.▇.
Development, L.P. and Westfield America, Inc. is in full force and effect. The
Master Development Framework Agreement will not be binding on any person that
acquires the Trust Property by reason of a foreclosure of a Mortgage or deed-in-
lieu thereof. Lender approves the terms of the Master Development Framework
Agreement.
5.2 SURVIVAL OF REPRESENTATIONS AND COVENANTS. All of the representations
-----------------------------------------
and warranties in Section 5.1 and elsewhere in the Loan Documents (i) shall
survive for so long as any portion of the Debt remains owing to Lender and (ii)
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf. The
representations, warranties and covenants set forth in Section 5.1.32 and 6.10
shall not be subject to the exculpation provisions of Section 11.1.
VI AFFIRMATIVE COVENANTS
---------------------
Until the end of the Term, Borrower hereby covenants and agrees with Lender
that:
6.1 EXISTENCE. Each Borrower shall (i) do or cause to be done all things
---------
necessary to preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently
conducted by it, (iii) obtain and maintain all Licenses applicable to it or its
Collateral Property, and (iv) qualify to do business and remain in good standing
under the laws of each jurisdiction, in each case as and to the extent required
for the ownership, maintenance, management and operation of the Collateral
Property owned by it.
6.2 TAXES AND OTHER CHARGES. Each Borrower shall pay all Taxes and Other
-----------------------
Charges applicable to such Borrower and the Collateral Property owned by it as
the same become due and payable, and deliver to Lender receipts for payment or
other evidence satisfactory to Lender that such Taxes and Other Charges have
been so paid no later than 30 days before they would be delinquent if not paid
(provided, however, that a Borrower need not furnish such receipts for payment
of Taxes paid by Lender pursuant to Section 4.3). No Borrower shall suffer and
shall promptly cause to be paid and discharged any Lien against its Collateral
Property other than Permitted Encumbrances, and shall promptly pay for all
utility services provided to such Collateral Property. After prior notice to
Lender, a 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 of any Taxes or Other Charges,
provided that (i) no Event of Default has occurred and remains uncured, (ii)
such proceeding shall suspend the collection of such Taxes or Other Charges,
(iii) such proceeding shall be permitted under and be conducted in accordance
with the provisions of any other instrument to which such Borrower is subject
and shall not constitute a default thereunder, (iv) no part of or interest in
any Collateral Property will be in danger of being sold, forfeited, terminated,
canceled or lost, (v) such Borrower shall have furnished 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, which shall not be less than 125% of the unpaid Taxes and
Other Charges being contested (and in the case of any Taxes being contested, any
sums in the Tax and Insurance Escrow fund dedicated to payment of such contested
Taxes shall count toward such 125%), and (vi) such Borrower shall promptly upon
final determination thereof pay the amount
of such Taxes or Other Charges, together with all costs, interest and penalties.
Lender may pay over any such security 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.
6.3 REPAIRS; MAINTENANCE AND COMPLIANCE; ALTERATIONS
------------------------------------------------
6.3.1 REPAIRS AND MAINTENANCE. Each Borrower shall at all times
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maintain, preserve and protect all franchises and trade names, and each Borrower
shall cause its Collateral Property to be maintained in a good and safe
condition and repair and shall not, without Lender's prior written consent,
remove or demolish the Improvements or Equipment (except for removal of
Equipment being replaced with Equipment of the same or greater value and
utility, and demolition necessary to perform alterations permitted under Section
6.3.3).
6.3.2 LEGAL COMPLIANCE. Each Borrower shall promptly comply in all
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material respects with all Legal Requirements applicable to itself or its
Collateral Property and cure properly any violation of a Legal Requirement
within 30 days after such Borrower receives notice of such violation. Each
Borrower shall promptly repair, replace or rebuild any part of its Collateral
Property that becomes damaged, worn or dilapidated and shall complete and pay
for any Improvements constituting part of its Collateral Property at any time in
the process of construction or repair. Notwithstanding the foregoing, a Borrower
may defer compliance with a Legal Requirement pending such Borrower's contest
thereof provided that (1) such Borrower is permitted by the applicable Legal
Requirement to delay compliance therewith pending such proceedings, (2) neither
the affected Collateral Property nor any part thereof or interest therein will
be sold, forfeited or lost if such Borrower fails to promptly comply with the
Legal Requirement being contested, and if Borrower fails to prevail in contest,
such Borrower would thereafter have the opportunity to comply with such Legal
Requirement, (3) Lender would not, by virtue of such permitted contest, be
exposed to any risk of any civil liability for which such Borrower has not
furnished additional security as provided in clause (4) below, or to any risk of
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criminal liability, and neither the Collateral Property nor any interest therein
would be subject to the imposition of any Lien for which such Borrower has not
furnished additional security as provided in clause (4) below, as a result of
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the failure to comply with such Legal Requirement and (4) if requested by Lender
at any time, such Borrower shall have furnished to Lender additional security in
respect of the Legal Requirement being contested and the loss or damage that may
result from such Borrower's failure to prevail in such contest in such amount as
may be reasonably requested by Lender but in no event less than one hundred
twenty-five percent (125%) of the cost of complying such Legal Requirement and
any loss or damage that may result from such Borrower's failure to prevail in
such contest.
6.3.3 ALTERATIONS. Borrower may, without Lender's consent, perform
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alterations to the Improvements and Equipment which do not constitute a Material
Alteration and which do not adversely affect such Borrower's financial condition
or the value or net operating income of such Borrower's Collateral Property. No
Borrower shall perform any Material Alteration without Lender's prior written
consent, which consent shall not be unreasonably withheld or delayed; provided,
however, that Lender may, in its sole and absolute discretion, withhold consent
to any
alteration the cost of which is reasonably estimated to exceed $15,000,000 or
which is likely to result in a decrease of Underwritten Net Operating Income by
2.5% or more for a period of 30 days or longer. In considering a Borrower's
request for Lender's consent to a Material Alteration, Lender shall have the
right to retain an architect and/or engineer, at the applicable Borrower's
expense, to review and approve the plans and specifications for such Material
Alteration. Lender may, as a condition to giving its consent to a Material
Alteration, require that the applicable Borrower deliver to Lender as security
for payment of the cost of such Material Alteration and as additional security
for Borrower's Allocable Share of the Debt any of the following: (1) cash, (2)
U.S. Treasury securities, (3) other securities having a rating acceptable to
Lender and that the Rating Agencies have confirmed in writing will not, in and
of itself, result in a downgrade, withdrawal or qualification of the initial,
or, if higher, then current ratings assigned in connection with any Secondary
Market Transaction, or (4) an irrevocable Letter of Credit (payable on sight
draft only) issued by a Qualified Counterparty. Such security shall be in an
amount equal to the cost of the Material Alteration as reasonably estimated by
Lender. Upon the occurrence of an Event of Default, Lender may apply such
security to payment of the Debt. If the security posted is other than cash, upon
substantial completion of the Material Alteration and submission to Lender of
evidence satisfactory to Lender that (i) the Material Alteration was constructed
in accordance with applicable Legal Requirements and substantially in accordance
with plans and specifications approved by Lender (which approval shall not be
unreasonably withheld or delayed), (ii) all contractors, subcontractors,
materialmen and professionals who provided work, materials or services in
connection with the Material Alteration have been paid in full and have
delivered unconditional releases of lien and (iii) all material Licenses
necessary for the use, operation and occupancy of the Material Alteration (other
than those which depend on the performance of tenant improvement work) have been
issued, Lender shall, provided no Event of Default then exists, return the
security (or the unapplied portion thereof) to the applicable Borrower. At the
applicable Borrower's request, Lender shall, provided no Event of Default then
exists, return one-half of the security to such Borrower when Lender has
determined, in its sole discretion, that 75% of the Material Alteration has been
completed and paid for and that the remaining security is sufficient to ensure
payment in full for all work, services and materials necessary to complete the
Material Alteration as contemplated in clauses (i), (ii) and (iii) of the
preceding sentence. If the security posted is cash, Lender shall disburse such
cash in accordance with the same procedures as are applicable to disbursement of
Proceeds or an Award under Section 8.4.3. The applicable Borrower shall
reimburse Lender upon demand for all out-of-pocket costs and expenses (including
the reasonable fees of all professionals) incurred by Lender in reviewing plans
and specifications or in making any determinations necessary to implement the
provisions of this Section 6.3.3. Lender hereby (x) approves the Material
Alteration described on Schedule 8 hereto and (y) for so long as no Cash
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Management Event is continuing, waives the applicable Borrower's obligation to
post security in connection with the Material Alteration described in Schedule
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8.
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6.4 LITIGATION. Each Borrower shall give prompt written notice to Lender
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of any litigation, governmental proceedings or claims or investigations
regarding an alleged actual violation of a Legal Requirement pending or
threatened against such Borrower which would, if adversely determined,
materially adversely affect such Borrower's condition (financial or
otherwise) or business or its Collateral Property.
6.5 PERFORMANCE OF OTHER AGREEMENTS. Each Borrower shall observe and
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perform in all material respects each and every term to be observed or performed
by it pursuant to the terms of any agreement or instrument affecting or
pertaining to its Collateral Property, including any Ground Lease affecting such
Collateral Property.
6.6 NOTICES. Each Borrower shall promptly advise Lender of any material
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adverse change in such Borrower's condition, financial or otherwise, or of the
occurrence of any Default or Event of Default of which such Borrower has
knowledge, including any notice sent by the Ground Lessor concerning any Ground
Lease under which such Borrower is the lessee. Each Borrower shall cause to be
delivered to Lender any Securities and Exchange Commission or other public
filings, if any, of such Borrower, its Borrower Representative, Manager, or any
Affiliate of any of the foregoing within ten (10) business days of such filing.
6.7 COOPERATE IN LEGAL PROCEEDINGS. Each Borrower shall cooperate fully
------------------------------
with Lender with respect to, and permit Lender, at its option, to participate
in, any proceedings before any Governmental Authority which may in any way
affect the rights of Lender under any Loan Document.
6.8 FURTHER ASSURANCES. Each Borrower shall, at such Borrower's sole cost
------------------
and expense, (i) furnish to Lender all then existing instruments, documents,
boundary surveys, footing or foundation surveys, certificates, plans and
specifications, appraisals, title and other insurance reports and agreements,
reasonably requested by Lender; (ii) execute and deliver to Lender such
documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to evidence, preserve and/or protect the
collateral at any time securing or intended to secure the Debt, as Lender may
reasonably require from time to time; (iii) do and execute all and such further
lawful and reasonable acts, conveyances and assurances for the better and more
effective carrying out of the intents and purposes of the Loan Documents, as
Lender shall reasonably require from time to time and (iv) upon Lender's request
therefor given from time to time after the occurrence of any Default or Event of
Default pay for (a) reports of UCC, federal tax lien, state tax lien, judgment
and pending litigation searches with respect to such Borrower and (b) searches
of title to any Collateral Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations reasonably
designated by Lender.
6.9 FINANCIAL REPORTING.
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6.9.1 BOOKKEEPING. Each Borrower shall keep on a Fiscal Year basis,
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in accordance with GAAP, proper and accurate books, records and accounts
reflecting all of the financial affairs of such Borrower and all items of income
and expense and any services, Equipment or furnishings provided in connection
with the operation of such Borrower's Property, whether such income or expense
is realized by such Borrower, Manager or any Affiliate of such Borrower or
Manager. Lender shall have the right from time to time during normal business
hours upon reasonable notice to examine such books, records and accounts at the
office of such Borrower or other Person maintaining them, and to make such
copies or extracts thereof as Lender shall desire. After an Event of Default,
Borrowers shall pay any costs incurred by Lender to examine such books, records
and accounts, as Lender shall determine to be necessary or appropriate in the
protection of Lender's interest.
6.9.2 ANNUAL REPORTS. Each Borrower shall furnish to Lender annually,
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(i) within 40 days after each Fiscal Year, unaudited financial statements of
such Borrower, and (ii) within 120 days after each Fiscal Year, a complete copy
of such Borrower's annual financial statements audited by Ernst & Young or
another independent certified public accountant (accompanied by an unqualified
opinion from such accounting firm or other independent certified public
accountant) reasonably acceptable to Lender, each in accordance with GAAP and
containing balance sheets and statements of profit and loss for such Borrower
and its Collateral Property in such detail as Lender may request. Each such
statement (x) shall set forth the financial condition and the income and
expenses for its Collateral Property for the immediately preceding calendar
year, including statements of annual Net Operating Income, and (y) shall be
accompanied by an Officer's Certificate certifying (1) that such statement
presents fairly the financial condition of such Collateral Property and has been
prepared in accordance with GAAP, (2) whether there exists a Default or Event of
Default, and if so, the nature thereof, the period of time it has existed and
the action then being taken to remedy it, (3) a list of tenants, if any,
occupying more than twenty percent of the rentable space of such Collateral
Property, and (4) a breakdown showing (a) the year in which each Lease then in
effect expires, (b) the percentage of rentable space covered by such Lease, (c)
the percentage of base rent with respect to which Leases shall expire in each
such year, expressed both on a per year and a cumulative basis. At Borrowers'
option, Borrowers' may submit a combined annual statement with individual
Collateral Property schedules setting forth all information required under this
Section 6.9.2.
6.9.3 MONTHLY AND QUARTERLY REPORTS. Each Borrower shall furnish to
-----------------------------
Lender (x) within 30 days after the end of each calendar month the following
items: (i) monthly and year-to-date operating statements, noting Net Operating
Income and other information necessary and sufficient under GAAP to fairly
represent the financial position and results of operation of its Collateral
Property during such calendar month, all in form reasonably satisfactory to
Lender; (ii) a statement that such Borrower has not incurred any indebtedness
other than indebtedness permitted hereunder; and (iii) occupancy rates, rent
rolls (identifying the leased premises, names of all tenants, units leased,
monthly rental and all other charges payable under each Lease, date to which
paid, term of Lease, date of occupancy, date of expiration, material special
provisions, concessions or inducements granted to tenants, and a year-by-year
schedule showing by percentage the rentable area of the Improvements and the
total base rent attributable to Leases expiring each year) and a delinquency
report for such Collateral Property; and (y) within 40 days after the end of
each calendar quarter the following items: (i) a balance sheet for such calendar
month; (ii) a comparison of the budgeted income and expenses and the actual
income and expenses for each month and year-to-date for such Collateral
Property, together with a detailed explanation of any variances of 10% or more
between budgeted and actual amounts for such
period and year-to-date; (iii) a statement of the actual Replacement Expenses
made by such Borrower during each calendar quarter as of the last day of such
calendar quarter; and (iv) an aged receivables report. Each such statement shall
be accompanied by an Officer's Certificate certifying (1) that such items are
true, correct, accurate, and complete and fairly present the financial condition
and results of the operations of such Borrower and its Collateral Property in
accordance with GAAP (subject to normal year-end adjustments) and (2) whether
there exists a Default or Event of Default, and if so, the nature thereof, the
period of time it has existed and the action then being taken to remedy it.
6.9.4 OTHER REPORTS. Each Borrower shall furnish to Lender, within ten
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Business Days after request, such further detailed information with respect to
the operation of its Collateral Property and the financial affairs of such
Borrower or Manager as may be reasonably requested by Lender or any applicable
Rating Agency.
6.9.5 ANNUAL BUDGET. Each Borrower shall prepare and submit (or shall
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cause Manager to prepare and submit) to Lender within 30 days after a Cash
Management Event and by November 15 of each year thereafter during the Term
until a Cash Management Termination, for approval by Lender, which approval
shall not be unreasonably withheld or delayed, a proposed pro forma budget for
its Collateral Property for the succeeding Fiscal Year (an "ANNUAL BUDGET"),
and, promptly after preparation thereof, any revisions to such Annual Budget.
Lender's failure to approve or disapprove any Annual Budget or revision within
30 days after Lender's receipt thereof shall be deemed to constitute Lender's
approval thereof. The Annual Budget shall consist of (i) an operating expense
budget (the "OPERATING BUDGET") showing, on a month-by-month basis, in
reasonable detail, each line item of such Borrower's anticipated Operating
Income and Operating Expenses (on a cash and accrual basis), including amounts
required to establish, maintain and/or increase the Funds, and (ii) a
Replacement Expense budget (the "REPLACEMENT BUDGET") showing, on a month-by-
month basis, in reasonable detail, each line item of anticipated Replacement
Expenses.
6.9.6 DELIVERY OF FINANCIAL INFORMATION. After notice to any Borrower
---------------------------------
of a Secondary Market Transaction, such Borrower shall, concurrently with any
delivery to Lender, deliver copies of all financial information provided in this
Article VI to the Rating Agencies, the Servicer, any trustee or any other party
reasonably requested by Lender.
6.10 ENVIRONMENTAL MATTERS.
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6.10.1 HAZARDOUS SUBSTANCES. So long as any Borrower owns or is in
--------------------
possession of any Collateral Property, such Borrower (i) shall keep such
Collateral Property free from Hazardous Substances (other than Routine Hazardous
Substances) and in compliance with all Environmental Laws, (ii) shall promptly
notify Lender if such Borrower shall become aware that (A) any Hazardous
Substance (other than Routine Hazardous Substances) is on or immediately
adjacent to such Collateral Property, (B) such Collateral Property is in direct
or indirect violation of any Environmental Laws or (C) any condition on or near
such Collateral Property shall pose a threat to the health, safety or welfare of
humans, (iii) shall remove such
Hazardous Substances and/or cure such violations and/or remove such threats, as
applicable, as required by law, promptly after such Borrower becomes aware of
same, at such Borrower's sole expense and (iv) shall take all actions described
in the environmental report delivered to Lender in connection with the Loan as
being necessary to comply with all applicable laws. Nothing herein shall prevent
any Borrower from recovering such expenses from any other party that may be
liable for such removal or cure.
6.10.2 ENVIRONMENTAL MONITORING. (a) Each Borrower shall give prompt
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written notice to Lender of (i) any proceeding or inquiry by any party
(including any Governmental Authority) with respect to the presence of any
Hazardous Substance on, under, from or about its Collateral Property, (ii) all
claims made or threatened in writing by any third party (including any
Governmental Authority) against such Borrower or its Collateral Property or any
party occupying such Collateral Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) such Borrower's discovery of
any occurrence or condition on any real property adjoining or in the vicinity of
its Collateral Property that could cause such Collateral Property to be subject
to any investigation or cleanup pursuant to any Environmental Law. Each
Borrower shall permit Lender to join and participate in, as a party if it so
elects, any legal proceedings or other actions initiated with respect to its
Collateral Property in connection with any Environmental Law or Hazardous
Substance, and such Borrower shall pay all reasonable attorneys' fees and
disbursements incurred by Lender in connection therewith.
(b) Upon Lender's request, at any time and from time to time, each
Borrower shall provide an inspection or audit of its Collateral Property
prepared by a licensed hydrogeologist, licensed environmental engineer or
qualified environmental consulting firm approved by Lender assessing the
presence or absence of Hazardous Substances on, in or near such Collateral
Property. The cost and expense of such audit or inspection shall be paid by a
Borrower with respect to its Collateral Property if Lender, in its good faith
judgment, determines that reasonable cause exists for the performance of an
environmental inspection or audit of such Collateral Property, in which case
such inspections or audits shall be at the applicable Borrower's sole expense.
If a Borrower fails to order any such inspection or audit within 30 days after
such request, Lender may order same, and such Borrower hereby grants to Lender
and its employees and agents access to its Collateral Property and a license to
undertake such inspection or audit. The cost of such inspection or audit shall,
to the extent required to be paid by a Borrower pursuant to this paragraph, be
paid by such Borrower upon demand and if not paid, shall be added to the Debt
and shall bear interest thereafter at the Default Rate until paid.
(c) If any environmental site assessment report prepared in
connection with such inspection or audit recommends that an operations and
maintenance plan be implemented for any Hazardous Substance, whether such
Hazardous Substance existed prior to the ownership by a Borrower of its
Collateral Property, or presently exists or is reasonably suspected of existing,
the applicable Borrower shall cause such operations and maintenance plan to be
prepared and implemented at its expense upon request of Lender. If a licensed
hydrogeologist, licensed environmental engineer or other qualified environmental
consulting firm engaged by Lender ( "LENDER'S CONSULTANT") determines that any
investigation, site monitoring, containment,
cleanup, removal, restoration or other work of any kind is required to cure a
violation of an applicable Environmental Law or to comply with an order or
directive of any court or governmental agency ("REMEDIAL WORK"), the applicable
Borrower shall commence and thereafter diligently prosecute to completion all
such Remedial Work within 30 days after written demand by Lender for performance
thereof (or such shorter period of time as may be required under applicable
law). All Remedial Work shall be performed by contractors reasonably approved in
advance by Lender, and under the supervision of a consulting engineer reasonably
approved by Lender. All costs of such Remedial Work shall be paid by the
applicable Borrower, including Lender's reasonable attorneys' fees and
disbursements incurred in connection with the monitoring or review of such
Remedial Work. If the applicable Borrower does not timely commence and
diligently prosecute to completion the Remedial Work, Lender may (but shall not
be obligated to) cause such Remedial Work to be performed. All costs and
expenses (including reasonable attorneys' fees and disbursements) relating to or
incurred by Lender in connection with monitoring, reviewing or performing any
Remedial Work in accordance herewith shall be paid by the applicable Borrower
upon demand from Lender and if not, shall be added to the Debt and shall bear
interest thereafter at the Default Rate until paid. Notwithstanding the
foregoing, no Borrower shall be required to commence such Remedial Work within
the above specified time period: (x) if prevented from doing so by any
Governmental Authority, (y) if commencing such Remedial Work within such time
period would result in such Borrower or such Remedial Work violating any
Environmental Law, or (z) if such Borrower, at its expense and after prior
written notice to Lender, is contesting by appropriate legal, administrative or
other proceedings, conducted in good faith and with due diligence, the need to
perform Remedial Work. Each Borrower shall have the right to contest the need to
perform such Remedial Work provided that (1) such Borrower is permitted by the
applicable Environmental Laws to delay performance of the Remedial Work pending
such proceedings, (2) neither the affected Collateral Property nor any part
thereof or interest therein will be sold, forfeited or lost if such Borrower
fails to promptly perform the Remedial Work being contested, and if Borrower
fails to prevail in contest, such Borrower would thereafter have the opportunity
to perform such Remedial Work, (3) Lender would not, by virtue of such permitted
contest, be exposed to any risk of any civil liability for which such Borrower
has not furnished additional security as provided in clause (4) below, or to any
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risk of criminal liability, and neither the Collateral Property nor any interest
therein would be subject to the imposition of any Lien for which such Borrower
has not furnished additional security as provided in clause (4) below, as a
----------
result of the failure to perform such Remedial Work and (4) if requested by
Lender at any time, such Borrower shall have furnished to Lender additional
security in respect of the Remedial Work being contested and the loss or damage
that may result from such Borrower's failure to prevail in such contest in such
amount as may be reasonably requested by Lender but in no event less than one
hundred twenty-five percent (125%) of the cost of such Remedial Work and any
loss or damage that may result from such Borrower's failure to prevail in such
contest.
(d) No Borrower shall install or permit to be installed on its
Collateral Property any underground storage tank without Lender's prior written
consent; provided, however, that (i) a Borrower may permit the tenant under any
"anchor", "big box" or TBA (tires,
batteries and accessories) Lease to install an underground storage tank provided
that (x) such tenant has the right to do so under its Lease and (y) such
installation and the maintenance and repair of such tank is performed in
accordance with all applicable Legal Requirements and (ii) Borrower may install
an underground storage tank if it reasonably determines that an above ground
storage tank is not reasonably feasible, provided that such Borrower complies
with all of the provisions of the preceding clause (y) in connection with such
underground storage tank.
(e) Borrower's obligations to Lender to remediate an environmental
condition existing at any Collateral Property shall terminate if Lender's Lien
on such Collateral Property is released in connection with a substitution of
Collateral Property pursuant to Section 2.5; provided, however, that Borrower's
indemnification obligations under Section 6.18 with respect to such
environmental condition shall not terminate upon such substitution.
6.11 TITLE TO THE PROPERTY. Each Borrower will warrant and defend the
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title to its Collateral Property, and the validity and priority of the Liens of
the Mortgages, subject only to Permitted Encumbrances, against the claims of all
Persons.
6.12 LEASES.
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6.12.1 FORM OF LEASE. All Leases other than Material Leases shall be
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written on the standard forms of lease which have been approved by Lender. In
negotiating Leases, changes may be made to the standard form of lease provided
that (i) such changes are commercially reasonable, and (ii) no changes may be
made to the following provisions in Borrowers' standard form of lease without
the prior written consent of Lender: provisions relating to subordination,
attornment, estoppels, mortgagee's right to notice and opportunity to cure
landlord's defaults, and mortgagee's rights with respect to lease amendments and
prepayment of rents. In addition, all renewals of Leases and all proposed
leases shall provide for rental rates comparable to existing local market rates
and shall be arms length transactions. All Leases entered into after the date
hereof shall provide for (x) subordination to the Mortgages and, at Lender's
election, attornment to Lender and (y) the Lender's unilateral right to
subordinate the Mortgages to the Leases. No Lease entered into after the date
hereof will contain any option to purchase, any right of first refusal to
purchase, any right to terminate (except in the event of the destruction of
substantially all of the applicable Collateral Property), any non-disturbance or
similar agreement or any requirement that a Borrower rebuild any Collateral
Property (except as provided in the forms of Lease that have been approved by
Lender); provided, however, that "small shop" leases entered into after the date
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hereof and covering not more than 15% of the gross leaseable area of any
Collateral Property may contain so called "kick out" clauses permitting either
landlord or the tenant to terminate the lease if the specified sales revenue is
not attained. Upon request, each Borrower shall furnish Lender with executed
copies of all Leases affecting its Collateral Property then in effect.
6.12.2 NEW AND RENEWAL LEASES.
----------------------
(a) A Borrower may not enter into proposed new Leases or proposed
renewals or
extensions of existing Leases without the prior written consent of Lender, which
shall not be unreasonably withheld or delayed; provided, however, that Lender's
prior written consent shall not be required if such proposed Lease or extension
is an Approved Material Lease or if such proposed Lease or extension: (i) is not
a Material Lease; (ii) conforms with the requirements of 6.12.1; (iii) with
respect to such new or renewal Lease, the representations set forth in Section
5.1.26 are true and accurate as of the day of the effectiveness of such new or
renewal Lease; (iv) shall have an initial term of not less than three years or
greater than ten years; (v) shall provide for rental rates comparable to
existing local markets (taking into account the type and quality of the tenant,
then prevailing practices with respect to tenant concessions and incentives in
similar Retail Properties in the same metropolitan area, the duration of the
tenancy and the location and configuration of the spaces rented); (vi) shall be
on commercially reasonable terms and shall not contain any terms which would
materially adversely affect Lender's rights under the Loan Documents; and (vii)
shall be to a tenant unaffiliated with any Borrower and which is experienced,
creditworthy and reputable. Any and all new or renewal Leases shall be included
in the definition of Leases hereunder and under the other Loan Documents.
(b) As used herein "APPROVED MATERIAL LEASE" means a Material Lease
or extension thereof which satisfies the following conditions:
(i) Prior to entering into such Lease (or extension), the applicable
Borrower delivered to Lender a lease abstract in a form
previously approved by Lender, which lease abstract sets forth
all material economic terms of the Lease (or extension) and all
other information called for in the form of abstract;
(ii) Lender has approved in writing the terms set forth in the lease
abstract, which approval shall not be unreasonably withheld or
delayed, and shall be deemed given if the Deemed Approval
Procedure was complied with;
(iii) The Lease is on a form which was previously approved in writing
by Lender for the tenant in question (or a new form which is
approved by Lender, which approval shall not be unreasonably
withheld or delayed) and there are no deviations from such form
other than (x) deviations implementing the terms set forth in
the lease abstract approved by Lender and (y) deviations which
do not affect any of the provisions described in clause (ii) of
Section 6.12.1 and which are otherwise immaterial;
(iv) The Lease is executed and delivered within 180 days after Lender
approves the lease abstract; and
(v) The Lease complies with the requirements for all Leases set
forth in Section 6.12.1 (other than requirements expressly
superceded by terms set forth in the lease abstract).
(c) As used herein "DEEMED APPROVAL PROCEDURE" means:
(i) Borrower shall deliver to Lender a lease abstract as described
in the definition of Approved Material Lease accompanied by a notice
requesting Lender's consent to such abstract and stating "this request
for consent is subject to the Deemed Approval Procedure set forth in
Section 6.12.2 of the Loan Agreement" (such abstract and notice,
collectively, the "FIRST SUBMISSION");
(ii) if Lender shall fail to approve, disapprove or request
additional information with respect to such lease abstract within 15
Business Days after Lender receives the First Submission, the
provisions of clause (iv) below shall apply;
(iii) if Lender shall request additional information pertaining to
such lease abstract within such 15 Business Day Period, the applicable
Borrower shall deliver to Lender all such information to the extent
reasonably available to or obtainable by such Borrower or, to the
extent not so available or obtainable, such Borrower shall so notify
Lender in writing, and in either such case, Lender shall be deemed to
have received the First Submission on the date such additional
information and/or notice, as applicable, is received by Lender;
(iv) if Lender does not disapprove the lease abstract within 15
Business Days after Lender receives the First Submission, Borrower may
send Lender a notice (the "SECOND SUBMISSION") again requesting
Lender's consent to the lease abstract which notice (i) shall contain
a copy of the First Submission (unless Lender has previously
acknowledged receipt thereof) and (ii) shall state that "pursuant to
the Loan Agreement, Lender shall be deemed to have approved the lease
abstract if Lender does not object thereto within 10 Business Days
after receipt hereof;"
(v) if Lender fails to disapprove the lease abstract within 10
Business Days after Lender's receipt of the Second Submission, Lender
shall be deemed to have approved the lease abstract in question.
6.12.3 LEASING COVENANTS. Each Borrower (i) shall observe and perform
-----------------
the material obligations imposed upon the lessor under the Leases; (ii) shall
enforce in a commercially reasonable manner the terms, covenants and conditions
contained in the Leases upon the part of the lessee thereunder to be observed or
performed; (iii) shall not collect any of the rents more than one (1) month in
advance (other than security deposits) except as approved by Lender or as
provided in Leases in existence as of the date hereof; (iv) shall not execute
any other assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change the
terms of the Leases in a manner inconsistent within the provisions of the Loan
Documents; (vi) shall promptly send copies to Lender of all notices of default
such Borrowers shall give or receive with respect to any Lease demising 20,000
or more square feet of gross leaseable area; and (vii) 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. Notwithstanding anything herein to the contrary, no Borrower shall
terminate any Lease without Lender's prior written consent; provided, however,
-------- -------
that a Borrower may, without the prior consent of Lender: (x) terminate any
Lease with a tenant in material default; (y) to the extent consistent with good
commercial practice, terminate any month to month Lease; and (z) terminate any
other Leases (other than a Material Lease) provided that (A) Borrower reasonably
determines that the termination of such Lease(s) is in the best interest of its
Collateral Property, and (B) such terminations do not, in the aggregate (after
taking into account any subsequent releasing of space covered by such terminated
Leases), result in a reduction of gross rental income at such Borrower's
Collateral Property, by an amount exceeding 2.5% of the gross rental income at
such Collateral Property as of the date hereof.
6.12.4 NONDISTURBANCE AGREEMENTS. At a Borrower's request, Lender shall
-------------------------
enter into a subordination, nondisburbance and attornment agreement as to any
Lease permitted under the Loan Documents. Such agreement shall be in the form
attached hereto as Exhibit C, with such changes thereto as may be reasonably
---------
acceptable to Lender.
6.12.5 RECIPROCAL EASEMENT AGREEMENTS. No Borrower shall enter into,
------------------------------
terminate or modify any REA without Lender's consent, which consent shall not be
unreasonably withheld or delayed. Lender shall subordinate the lien of the
applicable Mortgages to any REA Amendment consented to by Lender.
6.12.6 NOTICE TO TENANTS. Promptly after the date hereof (but in no
-----------------
event later than the date on which such Borrower sends out bills for Rents due
in December 1998), each Borrower shall deliver a notice in the form of Exhibit D
---------
to each existing tenant at such Borrower's Collateral Property directing them to
remit their rent checks directly to the applicable Clearing Bank and shall also
deliver such a notice to each future tenant at such Collateral Property.
6.13 ESTOPPEL STATEMENT. After request by Lender, each Borrower shall within
------------------
ten days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii) the date
installments of interest and/or Principal were last paid, (iv) any offsets or
defenses to the payment of the Debt, (v) that the Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification and (vi) such other information concerning the
Loan as Lender may request. After request by Lender (but no more frequently than
once in any 12 month period), each Borrower shall, within 30 days, request
tenant estoppel certificates from each tenant at such Borrower's Collateral
Property in form and substance reasonably satisfactory to Lender, and thereafter
use commercially reasonable efforts to obtain such estoppel certificates and
deliver them to Lender. From time to time upon the reasonable request of Lender,
each Borrower whose Collateral Property is subject to a Ground Lease will
endeavor to obtain from Ground Lessor an estoppel certificate in form and
substance reasonably satisfactory to Lender.
6.14 PROPERTY MANAGEMENT.
-------------------
6.14.1 MANAGEMENT AGREEMENT. Each Borrower shall (i) cause its
--------------------
Collateral Property to be managed pursuant to the Management Agreement; (ii)
promptly perform and observe all of the covenants required to be performed and
observed by it under the Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder; (iii) promptly
notify Lender of any default under the Management Agreement of which it is
aware; (iv) promptly deliver to Lender a copy of any notice of default or other
material notice received by such Borrower under the Management Agreement; and
(v) promptly enforce the performance and observance of all of the covenants
required to be performed and observed by Manager under the Management Agreement.
6.14.2 TERMINATION OF MANAGER. If a Cash Management Event shall exist
----------------------
each Borrower shall, at the request of Lender, hire a property management firm
designated by Lender to serve as a property management consultant (the
"Management Consultant") for such Borrower and its Collateral Property.
Borrowers' failure to retain such property management firm within thirty (30)
days after Lender designates such firm shall constitute an immediate Event of
Default. Each Borrower shall continue to retain its Management Consultant until
a Cash Management Termination occurs. The Management Consultant at each
Collateral Property shall oversee and approve and fully participate in all
actions and decisions of the Manager at such Collateral Property, including the
incurring of any expenses, the retention of any broker, the negotiation and
execution of any leases or lease "term sheets", decisions as to tenants and
"tenant mix" and repairs, alterations and improvements. Each Borrower shall
cause its Manager to cooperate with the applicable Management Consultant to
enable the Management Consultant to perform its responsibilities as described
above and in the applicable agreement between such Borrower and its Management
Consultant. All fees payable to the Management Consultant shall be an Approved
Operating Expense.
6.14.3 MANAGER'S SUBORDINATION. Each Borrower shall cause its Manager
-----------------------
to enter into a Manager Consent and Subordination Agreement in the form of
Exhibit B-2 hereto; provided, however, that if such Manager is wholly owned,
-----------
directly or indirectly by Westfield Holdings Limited, such Manager may enter
into a Manager Consent and Subordination in the form of Exhibit B-1 hereto.
-----------
6.15 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY. Each Borrower is and shall
----------------------------------------
continue to be a Special Purpose Bankruptcy Remote Entity. A "Special Purpose
Bankruptcy Remote Entity" means a corporation, limited partnership or limited
liability company which on the date hereof and at all times hereafter (i) is
organized solely for the purpose of (A) owning its Collateral Property or (B)
acting as a general partner of the limited partnership that owns a Collateral
Property or member of the limited liability company that owns a Collateral
Property; (ii) is not engaged and will not engage in any business unrelated to
(A) the ownership of its Collateral Property, (B) acting as general partner of
the limited partnership that owns a Collateral Property or (C) acting as a
member of the limited liability company that owns a Collateral
Property, as applicable; (iii) does not and will not have any assets other than
those related to its Collateral Property or its partnership or member interest
in the limited partnership or limited liability company that owns a Collateral
Property, as applicable; (iv) is not engaged in seeking, or consenting to and
will not engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, asset sale, transfer of partnership or membership
interests (if such entity is a general partner in a limited partnership or a
member in a limited liability company), or amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate of
formation or operating agreement (as applicable), if such amendment would
shorten the term of such entity or result in such entity not being a Special
Purpose Bankruptcy Remote Entity; (v) if such entity is a limited partnership,
has, as its only general partners, Special Purpose Bankruptcy Remote Entities
that are corporations; (vi) if such entity is a corporation, has at least one
Independent Director, and will not cause or allow the board of directors of such
entity to take any action requiring the unanimous affirmative vote of 100% of
the members of its board of directors unless an Independent Director shall have
participated in such vote; (vii) if such entity is a limited liability company,
has at least one member that is a Special Purpose Bankruptcy Remote Entity that
is a corporation and such corporation is the managing member of such limited
liability company; (viii) if such entity is a limited liability company, has
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, providing that (A) such entity will dissolve only upon
the bankruptcy of the managing member, (B) the vote of a majority-in-interest of
the remaining members is sufficient to continue the life of the limited
liability company in the event of such bankruptcy of the managing member and
(C) if the vote of a majority-in-interest of the remaining members to continue
the life of the limited liability company following the bankruptcy of the
managing member is not obtained, the limited liability company may not liquidate
a Collateral Property without the consent of the applicable Rating Agencies for
as long as the loan is outstanding; (ix) has not, and without the unanimous
consent of all of its partners, directors or members (including all Independent
Directors), as applicable, will not, with respect to itself or to any other
entity in which it has a direct or indirect legal or beneficial ownership
interest (A) file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings or otherwise seek any relief under any laws relating to
the relief from debts or the protection of debtors generally, (B) dissolve,
liquidate, consolidate, merge, or sell all or substantially all of its assets or
the assets of such other entity or otherwise seek or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any
similar official for such entity or for all or any portion of such entity's
properties; (C) make any assignment for the benefit of such entity's creditors;
(D) take any action that is likely to cause such entity to become insolvent or
(E) engage in any other business activity (other than those stated in clauses
(i) and (ii) above), or amend its organizational documents; (x) is and will
remain solvent and is maintaining 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; (xi) will not
fail to correct any known misunderstanding regarding the separate identity of
such entity; (xii) does and will maintain its accounts, books and records
separate from any other Person and will file its own tax returns; (xiii) does
and will maintain its books, records, resolutions and agreements as official
records; (xiv) does not and will not commingle its funds or assets with those of
any other Person (other than another Borrower); (xv) does and will hold its
assets in its own name; (xvi) does and will conduct its business in its name;
(xvii) does and will maintain its financial statements,
accounting records and other entity documents separate from any other Person;
(xviii) does and will pay its own liabilities, including the salaries of its own
employees, out of its own funds and assets; (xix) does and will observe all
partnership, corporate or limited liability company formalities, as applicable;
(xx) does and will maintain an arm's-length relationship with its Affiliates;
(xxi) (a) has no indebtedness other than the Loan, Taxes, Insurance Premiums,
Approved Leasing Expenses, Approved Replacement Expenses and other liabilities
in the ordinary course of business relating to the ownership and operation of a
Collateral Property which other liabilities (1) do not exceed, at any time, a
maximum amount of one percent (1%) of the original amount of its Principal and
(2) are paid within sixty (60) days of the date incurred (except for amounts
being disputed in good faith and for which it has made ample reserves), or (b)
if such entity acts as the general partner of a limited partnership which owns
the Property, has and will have no indebtedness other than unsecured trade
payables in the ordinary course of business relating to acting as general
partner of the limited partnership which owns the Property which (1) do not
exceed, at any time, $10,000 and (2) are paid within sixty (60) days of the date
incurred, or (c) if such entity acts as a managing member of a limited liability
company which owns a Collateral Property, has and will have no indebtedness
other than unsecured trade payables in the ordinary course of business relating
to acting as a member of the limited liability company which owns a Collateral
Property which (1) do not exceed, at any time, $10,000 and (2) are paid within
thirty (30) days of the date incurred; (xxii) has not and will not assume or
guarantee or become obligated for the debts of any other Person or hold out its
credit as being available to satisfy the obligations of any other Person except
for the Loan and the liabilities permitted pursuant to this Agreement; (xxiii)
has not and will not acquire obligations or securities of its partners, members
or shareholders; (xxiv) does and will allocate fairly and reasonably any
overhead for shared office space and uses separate stationery, invoices and
checks; (xxv) except in connection with the Loan and except for Permitted
Encumbrances, has not pledged and will not pledge its assets for the benefit of
any other Person; (xxvi) does hold itself out and identify itself and will hold
itself out and identify itself as a separate and distinct entity under its own
name and not as a division or part of any other Person; (xxvii) does maintain
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 other Person; (xxviii) holds no loans and will not make loans to any
Person; (xxix) does not and will not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part of it;
(xxx) is not a party to, and will not enter into or be a party to, any
transaction with its partners, members, shareholders or Affiliates except in the
ordinary course of its business and on terms which are intrinsically fair and
are no less favorable to it than would be obtained in a comparable arm's-length
transaction with an unrelated third party; (xxxi) has no obligation to indemnify
its partners, officers, directors or members, as the case may be, or has such an
obligation that is fully subordinated to the Debt and will not constitute a
claim against it in the event that cash flow in excess of the amount required to
pay the Debt is insufficient to pay such obligation; and (xxxii) if such entity
is a corporation, it is required to consider the interests of its creditors in
connection with the corporate actions referred to in clause (ix) above.
6.16 ASSUMPTIONS IN NON-CONSOLIDATION OPINION. Each Borrower and its
----------------------------------------
Borrower
Representative shall conduct their business so that the assumptions made in that
certain substantive non-consolidation opinion letter dated the date hereof,
delivered by Borrowers' counsel in connection with the Loan, shall be true and
correct in all respects.
6.17 EXPENSES. Each Borrower shall reimburse Lender upon receipt of notice
--------
for all reasonable out-of-pocket costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with the
Loan, including (i) the preparation, negotiation, execution and delivery of the
Loan Documents and the consummation of the transactions contemplated thereby and
all the costs of furnishing all opinions by counsel for Borrowers; (ii) all
costs, fees and expenses (including the fees of any Rating Agencies, trustee or
Servicer) incurred in connection with any Advance, any substitution of a
Collateral Property, any release of a Collateral Property (but excluding the
fees payable to the Rating Agencies in connection with the initial issuance of
Securities); (iii) each Borrower's and Lender's ongoing performance under and
compliance with the Loan Documents, including confirming compliance with
environmental and insurance requirements; (iv) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications of or under any Loan Document and any other documents or
matters requested by Lender; (v) filing and recording of any Loan Documents;
(vi) title insurance, surveys, inspections and appraisals; (vii) the creation,
perfection or protection of Lender's Liens in the Collateral Properties, the
Cash Management Accounts and the Funds (including fees and expenses for title
and lien searches, intangibles taxes, personal property taxes, mortgage
recording taxes, due diligence expenses, travel expenses, accounting firm fees,
costs of appraisals, environmental reports and Lender's Consultant, surveys and
engineering reports); (viii) 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 any Borrower, the
Loan Documents, any Collateral Property, or any other security given for the
Loan; and (ix) enforcing any obligations of or collecting any payments due from
any Borrower under any Loan Document or with respect to any Collateral Property
or in connection with any refinancing or restructuring of the Loan in the nature
of a "work-out", or any insolvency or bankruptcy proceedings. Any costs and
expenses due and payable to Lender hereunder which are not paid by any Borrower
within ten days after demand may be paid from any amounts in the Deposit
Account, with notice thereof to Borrowers. The obligations and liabilities of
each Borrower under this Section 6.17 shall survive the Term and the exercise by
Lender of any of its rights or remedies under the Loan Documents, including the
acquisition of any Collateral Property by foreclosure or a conveyance in lieu of
foreclosure.
6.18 INDEMNITY. Each Borrower shall indemnify and hold harmless Lender and
---------
each of its Affiliates and their respective successors and assigns (including
their respective directors, officers, participants, employees, professionals and
agents and each other Person, if any, who Controls Lender, its Affiliates or any
of the foregoing) (each, an "INDEMNIFIED PARTY") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for an Indemnified
Party 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 any Indemnified Party (collectively, the "INDEMNIFIED
LIABILITIES") in any manner, relating to or arising out of or by reason of the
Loan, including: (i) any breach by a Borrower of its obligations under, or any
misrepresentation by a Borrower contained in, any Loan Document; (ii) the use or
intended use of the proceeds of the Loan; (iii) any information provided by or
on behalf of a Borrower, or contained in any documentation approved by a
Borrower; (iv) ownership of any Mortgage, any Collateral Property or any
interest therein, or receipt of any Rents; (v) any accident, injury to or death
of persons or loss of or damage to property occurring in, on or about any
Collateral Property or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vi) any use, non-use or condition in,
on or about any Collateral Property or on adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (vii) performance of any
labor or services or the furnishing of any materials or other property in
respect of any Collateral Property; (viii) the presence, disposal, escape,
seepage, leakage, spillage, discharge, emission, release, or threatened release
of any Hazardous Substance on, from or affecting any Collateral Property; (ix)
any personal injury (including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous Substance; (x) any lawsuit
brought or threatened, settlement reached, or government order relating to such
Hazardous Substance; (xi) any violation of the Environmental Laws which is based
upon or in any way related to such Hazardous Substance, 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; (xii) any failure of any Collateral Property to comply with
any Legal Requirement; (xiii) any claim by brokers, finders or similar persons
claiming to be entitled to a commission in connection with any Lease or other
transaction involving any Collateral Property or any part thereof, or any
liability asserted against Lender with respect thereto; and (xiv) the claims of
any lessee of any portion of any Collateral Property or any person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; no Borrower shall have any obligation to any Indemnified Party
hereunder to the extent that it is finally judicially determined that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of such Indemnified Party. If any Indemnified Party becomes
involved in any action, proceeding or investigation in connection with any
transaction or matter referred to or contemplated in this Agreement, Borrowers
shall periodically reimburse any Indemnified Party upon demand therefor in an
amount equal to its reasonable legal and other expenses (including the costs of
any investigation and preparation) incurred in connection therewith. To the
extent that the undertaking to indemnify and hold harmless set forth in the
preceding sentence may be unenforceable because it violates any law or public
policy, Borrowers shall contribute 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 any Indemnified Party. Any amounts payable
to any Indemnified Party by reason of the application of this paragraph shall
become immediately due and payable and shall bear interest at the Default Rate
from the date loss or damage is sustained by any Indemnified Party until paid.
The obligations and liabilities of Borrower under this Section 6.18 shall
survive the Term and the exercise by Lender of any of its rights or remedies
under the Loan Documents, including the acquisition of any Collateral Property
by foreclosure or
a conveyance in lieu of foreclosure. As used in this Section 6.18, the term
"Collateral Property" includes any property that was at any time subject to the
Lien of a Mortgage.
6.19 THIRD PARTY REPORTS. Within 30 days after any request by Lender, each
-------------------
Borrower shall deliver to Lender and pay for (or reimburse Lender for cost of)
any reports of third parties (e.g., engineers or environmental consultants)
requested by Lender as to any Collateral Property the Underwritten Net Operating
Income for which has declined by 10% or more since the date on which it first
became a Collateral Property.
6.20 SCHEDULE 7. Within 10 days after the date hereof Borrowers shall
----------
deliver to Lender an updated Schedule 7 showing all changes since September 10,
----------
1998, whereupon such updated schedule shall become Schedule 7 hereto.
----------
6.21 UNDELIVERED DOCUMENTS. Borrower shall use commercially reasonable
---------------------
efforts to promptly obtain and deliver to Lender copies of all Undelivered
Documents.
6.22 PARKWAY PLAZA.
-------------
(a) Parkway Plaza LLC (the "PARKWAY BORROWER") shall use diligent
efforts to cause all parties to the REA encumbering its Collateral Property to
promptly execute an amendment thereto approving the construction and operation
of the movie theater currently under construction at such Collateral Property
(the "AMENDMENT"). In addition, the Parkway Borrower shall use diligent efforts
to cause such Amendment to contain a provision (the "NOTICE PROVISION") whereby
The May Department Store Company ("May Co.") agrees to give Parkway Borrower and
Lender at least ninety days' written notice (the "MAY NOTICE") prior to the date
on which Parkway Borrower shall first be obligated to pay or incur any expense
with respect to the contemplated expansion of the May Co.'s store at Parkway
Plaza (the "MAY EXPANSION"). Parkway Plaza LLC shall deliver to Lender a copy
of the Amendment within two (2) business days after Parkway Borrower executes
the Amendment.
(b) Within 20 days after May Co. gives the May Notice (or, if the
Amendment does not contain a Notice Provision, on the date the Amendment is
executed and delivered), Parkway Borrower shall deposit with Lender an amount
(the "PARKWAY RESERVE FUND") equal to 125% of the total amount which Parkway
Borrower reasonably estimates it will be required to pay or incur in connection
with the May Expansion, which estimate shall be subject to Lender's reasonable
approval.
(c) In lieu of depositing cash with Lender pursuant to Section
6.22(b), Parkway Borrower may deliver to Lender a Letter of Credit (the "MAY
EXPANSION L/C") having a face amount equal to the amount required to be in the
Parkway Reserve Fund.
(d) If at any time the issuer of the May Expansion L/C ceases to be
an Approved Bank, Parkway Borrower shall, within thirty (30) days after request
by Lender, deliver
to Lender a new May Expansion L/C issued by an Approved Bank (or immediately
available funds in amount of such Letter of Credit), whereupon Lender shall
return the original May Expansion L/C to Parkway Borrower.
(e) If Parkway Borrower fails to comply with the provisions of
Section 6.22(d), or if at any time the May Expansion L/C is not replaced or
---------------
renewed at least thirty (30) days prior to its expiration, Lender may draw on
the May Expansion L/C and the proceeds thereof shall constitute the Parkway
Reserve Fund.
(f) If for any reason the May Expansion L/C should expire without a
replacement May Expansion L/C having been delivered to Lender, Parkway Borrower
shall, within five days after demand, deliver to Lender a new May Expansion L/C
(or immediately available funds in such amount for deposit into (a) Parkway
Reserve Fund).
(g) At such time as the Parkway Borrower shall have paid and
performed all of its obligations to [May Co.] in connection with the May
Expansion, as evidenced by an estoppel from May Co. reasonably acceptable to
Lender, Lender shall, provided no Event of Default then exists, return to the
Parkway Borrower any cash or letter of credit previously delivered to Lender
pursuant to this Section 6.22 and not theretofore applied by Lender to any
Obligations in accordance with the Loan Documents.
(h) Lender shall not unreasonably withhold consent to any "lot line
adjustment" necessary in connection with the May Expansion.
VII NEGATIVE COVENANTS
------------------
Until the end of the Term, each Borrower covenants and agrees with Lender
that it will not, directly or indirectly:
7.1 MANAGEMENT AGREEMENT. Without Lender's prior consent: (i) surrender,
--------------------
terminate, cancel, extend or renew the Management Agreement (other than an
extension or renewal on the same terms as the expiring Management Agreement,
with only such modifications as do not require consent of Lender or any Rating
Agency hereunder) or otherwise replace the Manager or enter into any other
management agreement (except pursuant to Section 6.14.2); (ii) reduce or consent
to the reduction of the term of the Management Agreement; (iii) increase or
consent to the increase of the amount of any charges under the Management
Agreement; (iv) otherwise modify, change, supplement, alter or amend in any
material respect, or waive or release in any material respect any of its rights
and remedies under, the Management Agreement; or (v) suffer or permit the
occurrence and continuance of a default beyond any applicable cure period under
the Management Agreement (or any successor management agreement) if such default
permits the Manager to terminate the Management Agreement (or such successor
management agreement).
7.2 LIENS. Without Lender's prior consent, create, incur, assume, permit
-----
or suffer to
exist any mechanic's, materialmen's or other Lien (other than an inchoate
mechanic's lien the amount of which is not yet due and payable) on any portion
of its Collateral Property or legal or beneficial ownership interest in such
Borrower, except Permitted Encumbrances, unless such Lien is bonded or
discharged within 30 days after such Borrower first receives notice of such
Lien; provided, however, that the existence of liens resulting from mechanics or
-------- -------
materialmen hired by a tenant shall not constitute a Default or Event of Default
hereunder so long as the applicable Borrower is diligently taking all
commercially reasonable action to enforce the obligation of such tenant to cause
such lien to be removed.
7.3 DISSOLUTION. Dissolve, terminate, liquidate, merge with or
-----------
consolidate into another Person;
7.4 CHANGE IN BUSINESS OR OPERATION OF PROPERTY. Enter into any line of
-------------------------------------------
business other than the ownership and operation of its Collateral Property, 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 or otherwise cease to operate its Collateral
Property as a retail property or terminate such business for any reason
whatsoever (other than temporary cessation in connection with renovations to its
Collateral Property);
7.5 DEBT CANCELLATION. Cancel or otherwise forgive or release any claim
-----------------
or debt owed to such Borrower by any Person, except in the ordinary course of
such Borrower's business in its reasonable judgment and in a manner consistent
with the operation of first class Retail Properties;
7.6 ASSETS. Purchase or own any property other than its Collateral
------
Property and other property intended to be subject to the lien of a Mortgage;
7.7 TRANSFERS. Make, suffer or permit the occurrence of any Transfer
---------
other than a Permitted Transfer, nor, except in the ordinary course of
Borrower's business, Transfer any License required for the operation of its
Collateral Property;
7.8 DEBT. Create, incur or assume any indebtedness other than (i) the
----
Debt, (ii) Taxes, Insurance Premiums, Approved Replacement Expenses and Approved
Leasing Expenses and (iii) other trade debt incurred in the ordinary course of
business relating to the ownership and operation of its Collateral Property
which other trade debt does not exceed, at any time, a maximum aggregate amount
of one percent (1%) of such Borrower's maximum Allocated Note Amount and is paid
within sixty (60) days of the date incurred (other than amounts being disputed
in good faith);
7.9 ASSIGNMENT OF RIGHTS. Without Lender's prior consent, attempt to (i)
--------------------
assign such Borrower's rights or interest under any Loan Document in
contravention of any Loan Document or (ii) if such Borrower's Collateral
Property is affected by a Ground Lease, surrender, terminate, cancel, modify or
amend such Ground Lease;
7.10 PRINCIPAL PLACE OF BUSINESS. Change its principal place of business
---------------------------
without first giving Lender 30 days' prior notice;
7.11 CORPORATE ORGANIZATION. Make any change, amendment or modification to
----------------------
the organizational documents of such Borrower, or take any other action, if such
change, amendment, modification or action could result in (x) such Borrower not
being a Special Purpose Bankruptcy Remote Entity or (y) the term of any Borrower
or Borrower Representative being shortened; or
7.12 ERISA. Maintain, sponsor, contribute to or become obligated to
-----
contribute to, or suffer or permit any ERISA Affiliate of such Borrower to,
maintain, sponsor, contribute to or become obligated to contribute to, any Plan
or any Welfare Plan or permit the assets of such Borrower to become "plan
assets," whether by operation of law or under regulations promulgated under
ERISA.
VII INSURANCE; CASUALTY; AND CONDEMNATION
-------------------------------------
8.1 INSURANCE.
---------
8.1.1 COVERAGE. Each Borrower, at its sole cost, for the mutual
--------
benefit of such Borrower and Lender, shall obtain and maintain during the Term
the following policies of insurance with respect to the Collateral Property
owned by such Borrower:
(a) Property insurance insuring against loss or damage by standard,
"all-risk" perils, which shall (i) be in an amount equal to the greatest of (A)
the then full replacement cost of the Collateral Property without deduction for
physical depreciation, (B) the unpaid Principal, and (C) such amount as is
necessary so that the insurer would not deem such Borrower a co-insurer under
such policies, (ii) have deductibles or self insured retentions no greater than
$100,000 (or, in the case of earthquake insurance, 5% of the total insured
values at risk), (iii) be paid annually in advance and (iv) contain a
"Replacement Cost Endorsement" with a waiver of depreciation.
(b) Flood insurance if any part of the Collateral 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 maximum limit of coverage available with respect to the Collateral
Property under such program.
(c) Commercial general 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
$1,000,000 and $2,000,000 in the aggregate per location for any policy year;
together with at least $75,000,000 excess and/or umbrella liability insurance
for any and all claims, including all legal liability imposed upon Borrower and
all court costs and attorneys' fees incurred in connection with the ownership,
operation and maintenance of the Property.
(d) Rental loss and/or business interruption insurance in an amount
equal to the greater of (i) the estimated Rents for the next succeeding 18-month
period or (ii) the projected Operating Expenses and Debt Service on such
Borrower's Allocated Note Amount for such period. The amount of such insurance
shall be increased from time to time during the Term as and when the estimated
or actual Rents increase.
(e) Insurance against loss or damage from (i) leakage of sprinkler
systems and (ii) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and Equipment, pressure vessels or similar apparatus
now or hereafter installed in any of the Improvements (without exclusion for
explosions), in an amount at least equal to $2,000,000.
(f) Worker's compensation insurance with respect to any employees of
such Borrower, as required by any Legal Requirement.
(g) 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
Collateral Property, against such risks (including fire and extended coverage
and collapse of the Improvements to agreed limits) as Lender may request, in
form and substance acceptable to Lender.
(h) Coverage to compensate for the cost of demolition and the
increased cost of construction in an amount satisfactory to Lender.
(i) Such other insurance (including earthquake insurance and
windstorm insurance) as may from time to time be reasonably required by Lender
in order to protect its interests.
8.1.2 POLICIES.
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(a) All policies of insurance (the "POLICIES") required pursuant to
Section 8.1.1 shall (i) be issued by companies approved by Lender and licensed
to do business in the State, with a claims paying ability rating of "AA" or
better by Standard & Poor's Ratings Group (or the equivalent by any other Rating
Agency) and a rating of A:VII or better in the current Best's Insurance Reports;
(ii) name Lender and its successors and/or assigns as their interest may appear
as the mortgagee (in the case of property insurance) or an additional insured
(in the case of liability insurance); (iii) contain (in the case of property
insurance) a Non-Contributory Standard Lender 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) contain a waiver of
subrogation against Lender; (v) be delivered to Lender (provided that copies
certified by the insurance companies may be delivered in lieu of originals);
(vi) contain such provisions as Lender deems reasonably necessary or desirable
to protect its interest, including endorsements providing that neither the
applicable Borrower, Lender nor any other party shall be a co-insurer
under the Policies and that Lender shall receive at least 30 days' prior written
notice of any modification, reduction or cancellation of any of the Policies;
and (vii) be satisfactory in form and substance to Lender and approved by Lender
as to amounts, form, risk coverage, deductibles, loss payees and insureds. Each
Borrower shall pay the premiums for the Policies required to be maintained by it
hereunder (the "INSURANCE PREMIUMS") as the same become due and payable and
furnish to Lender evidence of the renewal of each of the Policies together with
(unless such Insurance Premiums have been paid by Lender pursuant to Section
4.3) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If a Borrower does not furnish such evidence
and receipts at least 30 days prior to the expiration of any expiring Policy,
then Lender may, but shall not be obligated to, procure such insurance and pay
the Insurance Premiums therefor, and such Borrower shall reimburse Lender for
the cost of such Insurance Premiums promptly on demand, with interest accruing
at the Default Rate. Each Borrower shall deliver to Lender a certified copy of
each Policy required to be maintained by it hereunder within 90 days after its
effective date. Within 90 days after request by Lender, each 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, and the like.
(b) Lender hereby approves the insurance coverage that Borrowers have
in effect on the date hereof as evidenced by submissions delivered to Lender
prior to the date hereof and agrees that Borrower may maintain such coverage by
the existing carriers throughout the Term, notwithstanding that certain of such
carriers providing such coverage are not rated "AA" or better by Standard &
Poor's.
8.2 CASUALTY.
--------
8.2.1 NOTICE; RESTORATION. If any Collateral Property is damaged or
-------------------
destroyed, in whole or in part, by fire or other casualty (a "CASUALTY"),
Borrowers shall give prompt notice thereof to Lender. Following the occurrence
of a Casualty, the Borrower that owns such Collateral Property, regardless of
whether insurance proceeds are available, shall promptly proceed to restore,
repair, replace or rebuild such Collateral Property in accordance with Legal
Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction.
8.2.2 SETTLEMENT OF PROCEEDS. In the event of a Casualty covered by
----------------------
any of the Policies (an "INSURED CASUALTY") where the loss does not exceed
$1,000,000, the applicable Borrower may settle and adjust any claim without the
consent of Lender; provided such adjustment is carried out in a competent and
timely manner; and such Borrower is hereby authorized to collect and receipt for
the insurance proceeds (the "PROCEEDS"). In the event of an Insured Casualty
where the loss equals or exceeds $1,000,000, Lender may settle and adjust any
claim without the consent of any Borrower and agree with the insurer(s) on the
amount to be paid on the loss, and the Proceeds shall be due and payable solely
to Lender and held by Lender in the Casualty/Condemnation Fund and disbursed in
accordance herewith. The expenses incurred by Lender in the adjustment and
collection of the Proceeds shall become part of the Debt and shall
be reimbursed by the applicable Borrower to Lender upon demand.
8.3 CONDEMNATION.
------------
8.3.1 NOTICE; RESTORATION. Borrowers shall promptly give Lender notice
-------------------
of the actual or threatened commencement of any condemnation or eminent domain
proceeding affecting any Collateral Property (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, the applicable
Borrower, regardless of whether an Award is available, shall promptly proceed to
restore, repair, replace or rebuild such Collateral Property in accordance with
Legal Requirements to the extent practicable to be of at least equal value and
of substantially the same character as prior to such Condemnation.
8.3.2 COLLECTION OF AWARD. Lender is hereby irrevocably appointed as
-------------------
each Borrower's attorney-in-fact, coupled with an interest, with exclusive power
to collect, receive and retain any award or payment in respect of a Condemnation
(an "AWARD") and to make any compromise or settlement in connection with such
Condemnation. Notwithstanding any Condemnation (or any transfer made in lieu of
or in anticipation of such Condemnation), each Borrower shall continue to pay
such Borrower's Allocable Share of the Debt at the time and in the manner
provided for in the Loan Documents, and the Debt shall not be reduced unless and
until any Award shall have been actually received and applied by Lender to
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. If a Collateral Property that is the subject of a
Condemnation 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 the Award sufficient to pay the Debt.
Borrower shall cause any Award that is payable to Borrower to be paid directly
to Lender. Lender shall hold such Award in the Casualty/Condemnation Fund and
disburse such Award in accordance with the terms hereof.
8.4 APPLICATION OF PROCEEDS OR AWARD.
--------------------------------
8.4.1 APPLICATION TO RESTORATION. In the event of an Insured Casualty
--------------------------
or Condemnation with respect to any Collateral Property where (i) the loss is in
an aggregate amount less than 25% of the unpaid Allocated Note Amount of the
Borrower that owns such Collateral Property, (ii) in the reasonable judgment of
Lender, such Collateral Property can be restored within six months, and prior to
the Stated Maturity Date and the expiration of the business interruption
insurance with respect thereto, to an economic unit not less valuable and not
less useful than the same was prior to the Insured Casualty or Condemnation, and
after such restoration will adequately secure the unpaid Principal, and (iii) no
Event of Default shall have occurred and be then continuing, then the Proceeds
or the Award, as the case may be (after reimbursement of any expenses incurred
by Lender), shall be applied to reimburse the applicable Borrower for the cost
of restoring, repairing, replacing or rebuilding such Collateral Property (the
"RESTORATION"), in the manner set forth herein. The applicable Borrower shall
commence and diligently prosecute such Restoration; provided that (x) such
Borrower shall pay (and if required by Lender, such Borrower shall deposit with
Lender in advance) all costs of such Restoration in excess of the net amount of
the Proceeds or the Award made available pursuant to the terms hereof; and (y)
Lender shall have received evidence reasonably satisfactory to it that during
the period of the Restoration, the Rents from such Collateral Property will be
at least equal to the sum of the Operating Expenses for such Collateral Property
and Debt Service on such Borrower's Allocated Note Amount, as reasonably
determined by Lender.
8.4.2 APPLICATION TO DEBT. Except as provided in Section 8.4.1, the
-------------------
Proceeds and any Award may, at the option of Lender in its sole discretion, be
applied to the sum of (i) accrued but unpaid interest on the Note, (ii) the
outstanding principal balance of the Note (with such Proceeds being applied
first to reduce the Allocated Note Amount of the Borrower whose Collateral
Property was the subject the Condemnation in respect of which the Award was
paid) and (iii) other charges due under the Note (such amount, the "UNPAID
BALANCE"), or applied to reimburse the applicable Borrower for the cost of any
Restoration, in the manner set forth in Section 8.4.3. Any such application to
the Unpaid Balance shall be without any prepayment consideration, unless the
Debt or any portion thereof is accelerated prior to, or within one year after,
the date the Proceeds are received from the insurance company or the Award is
received from the condemning authority, as the case may be, in which event the
applicable Borrower shall pay to Lender an additional amount equal to the Yield
Maintenance Premium, if any, that may be required with respect to the amount of
the Proceeds or Award applied to the Unpaid Balance. After any such application
to the Unpaid Balance, the unpaid Principal shall be reamortized over the
remaining term thereof.
8.4.3 PROCEDURE FOR APPLICATION TO RESTORATION. If a Borrower is
----------------------------------------
entitled to reimbursement out of the Proceeds or an Award held by Lender, such
Proceeds or Award shall be disbursed from time to time from the
Casualty/Condemnation Fund upon Lender being furnished with (i) evidence
satisfactory to it of the estimated cost of completion of the Restoration, (ii)
funds or, at Lender's option, assurances satisfactory to Lender that such funds
are available sufficient in addition to the Proceeds or Award to complete the
proposed Restoration, (iii) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as Lender may
reasonably require and approve, and (iv) all plans and specifications for such
Restoration, such plans and specifications to be approved by Lender prior to
commencement of any work. No payment made prior to the final completion of the
Restoration shall exceed 90% of the value of the work performed from time to
time; funds other than the Proceeds or Award shall be disbursed prior to
disbursement of such Proceeds or Award; and at all times, the undisbursed
balance of such Proceeds or Award 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 the applicable 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, free and clear of all Liens
or claims for Lien. Any surplus that remains out of the Proceeds held by Lender
after
payment of such costs of Restoration shall be paid to the applicable Borrower.
Any surplus that remains out of the Award received by Lender after payment of
such costs of Restoration shall, in the sole and absolute discretion of Lender,
be retained by Lender and applied to payment of the Debt or returned to the
applicable Borrower.
8.4.4 GROUND LEASE; ANCHOR LEASE; REA. If Lender shall have the right
-------------------------------
or option hereunder to apply Proceeds or an Award to payment of the Debt, but
under any controlling provision in any Ground Lease, "anchor" Lease or REA such
Proceeds or Awards are required to be applied to Restoration of a Collateral
Property, then, notwithstanding anything to the contrary in this Article 8, such
Proceeds or Award shall be applied to Restoration in accordance with such Ground
Lease, "anchor" Lease or REA, subject to such conditions and procedures as
Lender may impose which are not inconsistent with the terms of such Ground
Lease, "anchor" Lease or REA.
IX DEFAULTS
9.1 EVENTS OF DEFAULT. An "Event of Default" shall exist with respect to a
-----------------
Loan to a Borrower upon the occurrence of any of the following events:
(a) any portion of such Borrower's Allocable Share of the Debt is not
paid when due;
(b) such Borrower shall fail to pay when due any deposit into any Fund;
(c) any of the Taxes applicable to such Borrower's Collateral Property
are not paid when due (other than Taxes for which funds have been deposited with
Lender pursuant to Section 4.3), subject to such Borrower's right to contest
Taxes applicable to its Collateral Property in accordance with Section 6.2;
(d) the Policies with respect to the Collateral Property owned by such
Borrower are not delivered to Lender within 90 days after their respective
applicable effective dates or within ten days after written demand from Lender,
whichever is later, or such Policies are not kept in full force and effect;
(e) a Transfer other than a Permitted Transfer occurs with respect to
such Borrower's Collateral Property, an interest in such Borrower or an interest
in the Borrower Representative of such Borrower;
(f) any representation or warranty made by such Borrower or in any
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by such Borrower in connection with
any Loan Document, shall be false or misleading in any material respect as of
the date the representation or warranty was made;
(g) such Borrower or such Borrower's Borrower Representative shall
make an assignment for the benefit of creditors, or shall generally not be
paying its debts as they become due;
(h) a receiver, liquidator or trustee shall be appointed for such
Borrower or such Borrower's Borrower Representative or the Oakridge Guarantor;
or such Borrower or such Borrower's Borrower Representative or the Oakridge
Guarantor shall be adjudicated a bankrupt or insolvent; or 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, such Borrower or such Borrower's Borrower Representative or
the Oakridge Guarantor, as the case may be; or any proceeding for the
dissolution or liquidation of such Borrower or such Borrower's Borrower
Representative or the Oakridge Guarantor shall be instituted; provided, however,
if such appointment, adjudication, petition or proceeding was involuntary and
not consented to by such Borrower or such Borrower's Borrower Representative or
the Oakridge Guarantor, as the case may be, only upon the same not being
discharged, stayed or dismissed within 60 days;
(i) such Borrower breaches any negative covenant contained in Section
7 or any covenant contained in Section 6.14;
(j) such Borrower shall be in default under any other mortgage or
security agreement covering any part of the Collateral Property owned by such
Borrower whether it be superior or junior in Lien to a Mortgage, and such
default shall continue after the expiration of any applicable notice and grace
period provided therein;
(k) except as permitted hereunder, commence any alteration,
improvement, demolition or removal of any of the Improvements constituting part
of such Borrower's Collateral Property without the prior consent of Lender;
(l) an Event of Default as defined or described in any other Loan
Document other than such Borrower's Guaranty occurs; or any other event shall
occur or condition shall exist, if the effect of such event or condition is to
accelerate or to permit Lender to accelerate the maturity of any portion of such
Borrower's Allocable Share of the Debt;
(m) such Borrower shall be in default under any term, covenant or
provision set forth herein or in any other Loan Document (other than such
Borrower's Guaranty) which specifically contains a notice requirement or grace
period and such notice has been given and such grace period has expired;
(n) any of the assumptions contained in any substantive non-
consolidation opinion, delivered to Lender by such Borrower's counsel in
connection with the Loan or otherwise hereunder (the "Original Opinion"), were
not true and correct as of the date of such opinion or thereafter became untrue
or incorrect and Borrower fails to deliver to Lender, within 20 days after
Borrower first become aware that any such assumption is not true or is
incorrect, a
new substantive non-consolidation opinion from the same counsel (or other
counsel acceptable to Lender and the Rating Agencies) which omits all such
untrue or incorrect assumptions and is otherwise in the same form as the
Original Opinion (other than for changes approved by Lender and the Rating
Agencies);
(o) such Borrower fails to give any notice due to any Person under any
Loan Document (i) within two (2) days after such notice was due or (ii) in
accordance with the applicable procedural requirements set forth in the Loan
Documents;
(p) such Borrower shall fail to pay when due any rent, additional rent
or other charge payable under any Ground Lease (which term, for purposes of this
paragraph (p) shall mean any Ground Lease affecting such Borrower's Collateral
Property or any portion thereof); or such Borrower shall default in the
observance or performance of any other term, covenant or condition of any Ground
Lease and such default is not cured within 20 days prior to the expiration of
any applicable grace period provided therein; or any event shall occur that
would cause any Ground Lease to terminate without notice or action by the
landlord thereunder or would entitle such landlord to terminate any Ground Lease
and the term thereof by giving notice to such Borrower; or any Ground Lease
shall be surrendered, terminated or canceled for any reason or under any
circumstance whatsoever; or any term of any Ground Lease shall be modified or
supplemented without Lender's consent; or any Borrower shall fail, within 10
Business Days after demand by Lender, to exercise its option to renew or extend
the term of any Ground Lease or shall fail or neglect to pursue diligently all
actions necessary to exercise such renewal rights pursuant to such Ground Lease;
(q) such Borrower shall default (other than a default which, in the
sole judgment of Lender, is not material) under any REA and, in the case of any
such default that is non-monetary, such default is not cured within 20 days
prior to the expiration of any applicable grace period provided therein; or any
event shall occur that would cause any REA to terminate without notice or action
by any party thereto or would entitle any party to terminate any REA and the
term thereof by giving notice to such Borrower; or any REA shall be surrendered,
terminated or canceled for any reason or under any circumstance whatsoever; or
any term of any REA shall be modified or supplemented without Lender's consent;
or any Borrower shall fail, within 10 Business Days after demand by Lender, to
exercise its option to renew or extend the term of any REA or shall fail or
neglect to pursue diligently all actions necessary to exercise such renewal
rights pursuant to such REA;
(r) such Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement or any other Loan
Document (other than such Borrower's Guaranty) not specified in this Section
9.1, for ten days after notice to such Borrower from Lender, in the case of any
Default which can be cured by the payment of a sum of money, or for 30 days
after notice from Lender in the case of any other Default; provided, however,
that if such non-monetary Default is susceptible of cure but cannot reasonably
be cured within such 30-day period, and such Borrower shall have commenced to
cure such Default within such 30-
day period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for an additional period of time as
is reasonably necessary for such Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed 90 days;
(s) an Event of Default shall occur with respect to a Loan to any
other Borrower; or
(t) Oakridge Borrower shall default under (i) the Oakridge Subordinate
Mortgage and such default shall continue after the expiration of any applicable
notice or grace period or (ii) the Oakridge Option Agreement;
(u) any Undelivered Document shall have a material adverse effect on
the value, Underwritten Net Operating Income, use or operation of a Collateral
Property.
(v) a default shall occur with respect to the Oakridge Guaranty;
(w) a default shall occur with respect to any Guaranty of the Loan; or
(x) if such Borrower shall fail to deliver any replacement or renewal
Letter of Credit (or immediately available funds in the amount of the applicable
Letter of Credit) as and when required under Sections 4.12, 4.13, 4.15, 4.16,
4.17 or 6.22.
9.2 REMEDIES.
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9.2.1 ACCELERATION. Upon the occurrence of an Event of Default with
------------
respect to a Loan to any Borrower (other than an Event of Default described in
paragraph (g) or (h) of Section 9.1) and at any time and from time to time
thereafter, in addition to any other rights or remedies available to it pursuant
to the Loan Documents or at law or in equity, Lender may take such action,
without notice or demand, that Lender deems advisable to protect and enforce its
rights against such Borrower and in and to any and all Collateral Properties of
such Borrower and any and all Ground Leases to which such Borrower is a party,
and against any and all guarantors of such Borrower's Allocable Share of the
Debt and any and all collateral for the guaranty obligations of such guarantors,
including declaring that Borrower's Allocable Share of the Debt (including
unpaid interest, Default Rate interest, Late Payment Charges, Yield Maintenance
Premium and any other amounts owing by such Borrower) to be immediately due and
payable), without notice or demand; and upon any Event of Default described in
paragraph(g) or (h) of Section 9.1, that Borrower's Allocable Share of the Debt
(including unpaid interest, Default Rate interest, Late Payment Charges, Yield
Maintenance Premium and any other amounts owing by such Borrower) shall
immediately and automatically become due and payable, without notice or demand,
and each Borrower hereby expressly waives any such notice or demand, anything
contained in any Loan Document to the contrary notwithstanding.
9.2.2 REMEDIES CUMULATIVE. Upon the occurrence of an Event of
-------------------
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender
against any or all Borrowers under the Loan Documents or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared due and payable, and whether or not Lender
shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Loan Documents. Any such
actions taken by Lender shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at such time and in
such order as Lender may determine in its sole discretion, to the fullest extent
permitted by law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by law, equity or contract or as set forth in the
Loan Documents. Without limiting the generality of the foregoing, each Borrower
agrees that if an Event of Default is continuing, (i) to the extent permitted by
applicable law, Lender is not subject to any "one action" or "election of
remedies" law or rule, and (ii) all Liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Collateral Properties, each
Mortgage has been foreclosed, the Collateral Properties have been sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full. To the extent permitted by applicable law, nothing contained in any Loan
Document shall be construed as requiring Lender to resort to any portion of the
Collateral Pool for the satisfaction of any of the Debt in preference or
priority to any other portion, and Lender may seek satisfaction out of the
entire Collateral Pool or any part thereof, in its absolute discretion.
9.2.3 SEVERANCE. Without limiting the provisions of Section 2.1.2(b),
---------
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 to reflect each Borrower's Allocable Share of the Debt and in such
priorities of payment and liens as Lender shall determine in its sole discretion
for purposes of evidencing and enforcing its rights and remedies. Each 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 such severance, each Borrower
ratifying all that such attorney shall do by virtue thereof.
9.2.4 DELAY. No delay or omission to exercise any remedy, right, power
-----
accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender shall impair any such remedy, right or power hereunder or
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 shall not be construed to be a waiver of any
subsequent Default or Event of Default or to impair any remedy, right or power
consequent thereon. Notwithstanding any other provision of this Agreement, to
the extent permitted by applicable law, Lender reserves the right to seek a
deficiency judgment or preserve a deficiency claim, in connection with the
foreclosure of any Mortgage, to the extent necessary to foreclose on any other
Collateral Property or part thereof, the Rents, the Funds or any other
collateral that constitutes security for the same obligation.
9.2.5 LENDER'S RIGHT TO PERFORM. If any Borrower fails to perform any
-------------------------
covenant or obligation contained herein and such failure shall continue for a
period of (5) five Business Days after such Borrower's receipt of written notice
thereof from Lender, without in any way limiting Lender's right to exercise any
of its rights as provided hereunder or under any of the other Loan Documents,
Lender may, but shall have no obligation to, perform, or cause performance of,
such covenant or obligation, and the expenses of Lender incurred in connection
therewith shall be payable by such Borrower to Lender upon demand and if not
paid shall be added to the Debt and shall bear interest thereafter at the
Default Rate. Notwithstanding the foregoing, Lender shall have no obligation to
send notice to such Borrower of any other Borrower of any such failure.
X SPECIAL PROVISIONS
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10.1 SALE OF NOTE AND SECONDARY MARKET TRANSACTION.
---------------------------------------------
10.1.1 COOPERATION. At Lender's request (to the extent not already
-----------
required to be provided by Borrowers under this Agreement), each Borrower shall
cooperate with Lender to enable Lender to satisfy the market standards to which
Lender customarily adheres or which may be reasonably required in the
marketplace or by the Rating Agencies in connection with one or more sales or
assignments of the Note or participations therein or securitizations (including
any FASIT) of rated single or multi-class securities (the "SECURITIES") secured
by or evidencing ownership interests in the Note and the Mortgage (each such
sale, assignment, participation and/or securitization, a "SECONDARY MARKET
TRANSACTION"). No Borrower shall be required to incur any out-of-pocket expense
to comply with the provisions of this Section 10.1.1 (unless Lender agrees to
reimburse such Borrower therefor). In furtherance of the foregoing, each
Borrower shall, at the request of Lender in connection with any Secondary Market
Transaction, and so long as the Loan is still outstanding:
(a) (i) provide updates of financial and other information with respect
to its Collateral Property, such Borrower and its Affiliates, Manager and any
tenants of its Collateral Property, (ii) provide updated business plans and
budgets relating to its Collateral Property and (iii) perform or permit or cause
to be performed or permitted such site inspection, appraisals, surveys, market
studies, environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), engineering reports and other due diligence investigations of its
Collateral Property, as may be reasonably requested from time to time by Lender
or the Rating Agencies or as may be necessary or appropriate in connection with
a Secondary Market Transaction or Exchange Act requirements (the items provided
to Lender pursuant to this paragraph (a) being called the "PROVIDED
INFORMATION"), together, if customary, with appropriate verification of and/or
consents to the Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to Lender and the Rating Agencies;
(b) use reasonable efforts to cause counsel to render opinions as to
non-consolidation, fraudulent conveyance, true sale and true contribution and
any other opinion customary in securitization transactions with respect to its
Collateral Property, such Borrower
and its Affiliates, which counsel and opinions shall be reasonably satisfactory
to Lender and the Rating Agencies;
(c) provide current certificates of good standing and qualification
with respect to such Borrower from appropriate Governmental Authorities; and
(d) execute such amendments to the Loan Documents and such Borrower's
organizational documents as may be requested by Lender or the Rating Agencies or
otherwise to effect a Secondary Market Transaction, provided that nothing
contained in this subsection (e) shall result in an economic change in the
transaction or impose any material legal obligations on any Borrower or restrict
Borrower in any material way.
10.1.2 USE OF INFORMATION. Each Borrower understands that certain of
------------------
the Provided Information and the Required Records may be included in disclosure
documents in connection with a Secondary Market Transaction, including a
prospectus or private placement memorandum (each, a "DISCLOSURE DOCUMENT") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers or other parties relating
to the Secondary Market Transaction. In the event that the Disclosure Document
is required to be revised, each Borrower shall cooperate with Lender in updating
the Provided Information or Required Records for inclusion or summary in the
Disclosure Document or for other use reasonably required in connection with a
Secondary Market Transaction by providing all current information pertaining to
such Borrower, and its Collateral Property necessary to keep the Disclosure
Document accurate and complete in all material respects with respect to such
matters. Such disclosure may include the opinion or judgment of Lender or
Servicer concerning the Provided Information or other matters disclosed.
10.1.3 BORROWERS OBLIGATIONS REGARDING DISCLOSURE DOCUMENTS. In
----------------------------------------------------
connection with a Disclosure Document, each Borrower shall:
(a) if requested by Lender, certify in writing that such Borrower has
carefully examined those portions of such Disclosure Document, pertaining to
such Borrower, its Collateral Property, the Manager and the Loan, including
applicable portions of the sections entitled "Special Considerations",
"Description of the Mortgages", "Description of the Mortgage Loans and Mortgaged
Property", "The Manager", "The Borrower" and "Certain Legal Aspects of the
Mortgage Loan", and such portions (and portions of any other sections reasonably
requested and pertaining to such Borrower, its Collateral Property, the Manager
or the Loan) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading;
(b) indemnify (i) any underwriter, syndicate member or placement agent
(collectively, the "UNDERWRITERS") retained by Lender or its issuing company
affiliate (the "ISSUER") in connection with a Secondary Market Transaction, (ii)
Lender and (iii) the Issuer that is named in the Disclosure Document or
registration statement relating to a Secondary Market Transaction (the
"REGISTRATION STATEMENT"), and each of the Issuer's directors, each of its
officers who have signed the Registration Statement and each person or entity
who controls the Issuer or the Lender within the meaning of Section 15 of the
Securities Act or Section 30 of the Exchange Act (collectively within (iii), the
"CCA GROUP"), and each of its directors and each person who controls each of the
Underwriters, within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act (collectively, the "UNDERWRITER GROUP") for any losses,
claims, damages or liabilities (the "LIABILITIES") to which Lender, the CCA
Group or the Underwriter Group may become subject (including reimbursing all of
them for any legal or other expenses actually incurred in connection with
investigating or defending the Liabilities) insofar as the Liabilities arise out
of or are based upon any untrue statement of any material fact contained in any
of the Required Records or in any of the applicable portions of such sections of
the Disclosure Document applicable to any Borrower, Manager, any Collateral
Property or the Loan, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated in the
applicable portions of such sections or necessary in order to make the
statements in the applicable portions of such sections in light of the
circumstances under which they were made, not misleading, provided, however,
-------- -------
that no Borrower shall be required to indemnify Lender for any Liabilities
relating to untrue statements or omissions or inadequacies of disclosure which
(i) any Borrower identified to Lender in writing at the time of such Borrower's
examination of such Disclosure Document or (ii) are set forth in a report
prepared by a third party not Affiliated with any Borrower; and
(c) reimburse any member of the CCA Group for any legal or other
expenses reasonably incurred by such member in connection with investigating or
defending the Liabilities.
Borrowers' Liability under clause (a) or (b) above shall be limited to
Liabilities arising out of or based upon any such untrue statement or omission
made therein in reliance upon and in conformity with information furnished to
Lender by or on behalf of a Borrower in connection with the preparation of those
portions of the Disclosure Document pertaining to Borrowers, Manager, the
Collateral Properties or the Loan or in connection with the underwriting of the
debt, including financial statements of Borrowers, operating statements, rent
rolls and other Required Records, environmental site assessment reports and
property condition reports with respect to the Collateral Properties. The
foregoing indemnity will be in addition to any liability which Borrowers may
otherwise have. Lender shall give Borrower a copy of any Disclosure Document
that is to be subject to the foregoing indemnification obligations a reasonable
amount of time prior to its delivery to potential investors pursuant to an
offering.
10.1.4 BORROWERS INDEMNITY REGARDING FILINGS. In connection with
-------------------------------------
filings under the Exchange Act, each Borrower shall (i) indemnify Lender, the
CCA Group and the Underwriter Group for any Liabilities to which Lender, the CCA
Group or the Underwriter Group may become subject insofar as the Liabilities
arise out of or are based upon the omission or alleged omission to state in the
Provided Information or Required Records a material fact
required to be stated in the Provided Information or Required Records in order
to make the statements in the Provided Information or Required Records, in light
of the circumstances under which they were made not misleading and (ii)
reimburse Lender, the CCA Group or the Underwriter Group for any legal or other
expenses reasonably incurred by Lender, CCA Group or the Underwriter Group in
connection with defending or investigating the Liabilities.
10.1.5 INDEMNIFICATION PROCEDURE. Promptly after receipt by an
-------------------------
indemnified party under Section 10.1.3 or 10.1.4 of notice of the commencement
of any action for which a claim for indemnification is to be made against any
Borrowers, such indemnified party shall notify Borrowers in writing of such
commencement, but the omission to so notify the Borrowers will not relieve any
Borrower from any liability that it may have to any indemnified party hereunder
except to the extent that failure to notify causes prejudice to such Borrower.
In the event that any action is brought against any indemnified party, and it
notifies Borrowers of the commencement thereof, Borrowers will be entitled,
jointly with any other indemnifying party, to participate therein and, to the
extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice of commencement,
to assume the defense thereof with counsel satisfactory to such indemnified
party in its sole discretion. After notice from Borrowers to such indemnified
party under this Section 10.1.5, Borrowers shall not be responsible for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both any Borrowers and an indemnified party, and any indemnified party shall
have reasonably concluded that there are any legal defenses available to it
and/or other indemnified parties that are different from or additional to those
available to any such Borrower(s), then the indemnified party or parties shall
have the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Borrowers shall not be liable for the expenses of
more than one separate counsel unless there are legal defenses available to it
that are different from or additional to those available to another indemnified
party.
10.1.6 CONTRIBUTION. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
Section 10.1.3 or 10.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 10.1.3
or 10.1.4, each Borrower shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
the CCA Group's and each Borrower's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and
each Borrower hereby agree that it may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
10.1.7 RATING SURVEILLANCE. Lender will retain the Rating Agencies
-------------------
to provide rating surveillance services on Securities. The pro rata expenses of
such surveillance will be paid for by Borrowers based on the applicable
percentage of such expenses determined by dividing the then outstanding
Principal by the then aggregate outstanding amount of the pool created in the
Secondary Market Transaction which includes the Loan.
10.1.8 FLOOR ON COUPON RATE. Lender agrees that the coupon rate on
--------------------
any Securities shall not be lower than 75 basis points below the sum of Libor
plus the Margin.
XI MISCELLANEOUS
-------------
11.1 EXCULPATION.
-----------
(a) Subject to the qualifications below, Lender shall not enforce the
liability and obligation of any Borrower to perform and observe the obligations
contained in the Loan Documents by any action or proceeding wherein a money
judgment shall be sought against such Borrower, except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate
action or proceeding to enable Lender to enforce and realize upon its interest
and rights under the Loan Documents, or in the Collateral Properties, the Rents
or any other collateral given to Lender pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against a Borrower only to
the extent of Borrower's interest in its Collateral Property, in the Rents and
in any other collateral given to Lender, and Lender shall not ▇▇▇ for, seek or
demand any deficiency judgment against any Borrower in any such action or
proceeding under or by reason of or under or in connection with any Loan
Document. The provisions of this section shall not, however, (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by any Loan
Document; (ii) impair the right of Lender to name any Borrowers as a party
defendant in any action or suit for foreclosure and sale under any Mortgage;
(iii) affect the validity or enforceability of any of the Loan Documents or any
guaranty made in connection with the Loan or any of the rights and remedies of
Lender thereunder; (iv) impair the right of Lender to obtain the appointment of
a receiver; (v) impair the enforcement of any Assignment of Leases; (vi)
constitute a prohibition against Lender to commence any other appropriate action
or proceeding in order for Lender to fully realize the security granted by the
Mortgages or to exercise its remedies against the Collateral Properties; or
(vii) constitute a waiver of the right of Lender to enforce the liability and
obligation of any Borrower, by money judgment or otherwise, to the extent of any
loss, damage, cost, expense, liability, claim or other obligation incurred by
Lender (including attorneys' fees and costs reasonably incurred) arising out of
or in connection with the following: (a) fraud or intentional misrepresentation
by such Borrower or any guarantor in connection with the Loan; (b) the gross
negligence or willful misconduct of such Borrower; (c) the breach of any
representation, warranty, covenant or indemnification in any Loan Document
concerning Environmental Laws or Hazardous Substances, including Sections 5.1.32
and 6.10, and clauses (viii) through (xi) of Section 6.18; (d) physical waste or
after an Event of Default, the removal or disposal of any portion of any
Collateral Property; (e) the misapplication or conversion by such Borrower of
(x) any Proceeds paid by reason of any Insured Casualty, (y) any Award received
in connection with a
Condemnation, or (z) any Rents, refunds of Taxes or Other Charges or Funds
(i.e., use of Rents or refunds of Taxes or Other Charges or Funds to make
distributions or payments to members/partners/shareholders of such Borrower
during the continuance of an Event of Default; (f) failure to pay charges for
labor or materials or other charges that can create Liens on any portion of any
Collateral Property unless such charges are the subject of a bona fide dispute
in which the applicable Borrower is contesting the amount or validity thereof;
(g) any security deposits collected with respect to any Collateral Property
which are not delivered to Lender upon a foreclosure of any Mortgage encumbering
such Collateral Property or action in lieu thereof, except to the extent any
such security deposits were applied in accordance with the terms and conditions
of any of the Leases prior to the occurrence of the Event of Default that gave
rise to such foreclosure or action in lieu thereof; and (h) such Borrower's
indemnifications of Lender set forth in Sections 10.1.3 and 10.1.4.
(b) Notwithstanding anything to the contrary in this Agreement or any
of the Loan Documents, (A) Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt or to require that all collateral shall continue to secure all of the
Debt in accordance with the Loan Documents, and (B) the Debt shall be fully
recourse to Borrowers in the event that (1) any Borrower or any Person owning an
interest (directly or indirectly) in any Borrower commences any action, suit,
claim, arbitration, governmental investigation or other proceeding (x) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to any Borrower, or seeking to adjudicate
any Borrower a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to any Borrower or any Borrower's debts, or (y) seeking appointment
of a receiver (other than a Borrowers seeking the appointment of a receiver
during the pendency of a foreclosure action against such Borrower commenced by
Lender), trustee, custodian or other similar official for any Borrower or for
all or substantially all of any Borrower's assets or (2) any Borrower ever
ceases to be a Special Purpose Bankruptcy Remote Entity.
(c) Notwithstanding anything to the contrary set forth in Section
11.1(a), the provisions of Section 11.1(a) shall be void and of no effect, and
the Loan shall become fully recourse to Borrowers, if any Borrower or any Person
acting on behalf of any Borrower shall breach or violate any of the provisions
of Section 11.17(b) hereof.
11.2 NOTICES. All notices, consents, approvals and requests required or
-------
permitted hereunder or under any other Loan Document (a "NOTICE") shall be given
in writing and shall be effective for all purposes if hand delivered or sent (i)
by certified or registered United States mail, postage prepaid, or (ii) by (A)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and (B) telecopier (with answer back
acknowledged), in any case addressed as follows (or to such other address or
Person as a party shall designate from time to time by notice to the other
party): If to Lender: The Capital
Company of America LLC, Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, Telecopier (▇▇▇) ▇▇▇-▇▇▇▇, with copies to:
Capital America Client Services, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Attention: Legal Department, Telecopier (▇▇▇) ▇▇▇-▇▇▇▇ and ▇▇▇▇,
Scholer, Fierman, ▇▇▇▇ & Handler, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇; if to Borrower:
c/o Westfield Corporation, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy
to: Westfield Corporation, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Office of Legal Counsel, Telecopier: (310) 478-
8776, with a copy to Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇. A notice shall be deemed to have been given: in
the case of hand delivery, at the time of delivery; in the case of registered or
certified mail, when delivered or the first attempted delivery on a Business
Day; or in the case of expedited prepaid delivery, upon the first attempted
delivery on a Business Day.
11.2.1 BORROWERS' AGENT. (a) Each of the Borrowers hereby makes,
----------------
constitutes and appoints Borrowers' Agent the true and lawful attorney-in-fact
of such Borrower, with the power from time to time, in the name, place and stead
of such Borrower, to give Lender directions of any kind with respect to the
funding of Advances and to give and receive notices of any kind on behalf of
such Borrower under this Agreement or any of the other Loan Documents. The
power-of-attorney shall bind each of the Initial Borrowers and all Borrowers who
hereafter become signatories to this Agreement.
(b) Borrowers' Agent shall notify Lender of the names of its
officers and employees authorized to request and take other actions on behalf of
Borrowers (each a "RESPONSIBLE OFFICER") and shall provide Lender with a
specimen signature of each such officer or employee. Lender shall be entitled to
rely conclusively on a Responsible Officer's authority to give and receive
notices and take other all other actions of any kind on behalf of Borrowers or
any of them until Lender receives written notice to the contrary. Lender shall
have no duty to verify the authenticity of the signature appearing on any
notice.
11.3 BROKERS AND FINANCIAL ADVISORS. Each Borrower hereby represents that
------------------------------
it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the Loan. Borrowers and Lender
shall indemnify and hold the other harmless from and against any and all claims,
liabilities, costs and expenses of any kind in any way relating to or arising
from a claim by any Person that such Person acted on behalf of the indemnifying
party in connection with the transactions contemplated herein. The provisions
of this Section 11.3 shall survive the expiration and termination of this
Agreement and the repayment of the Debt.
11.4 RETENTION OF SERVICER. Lender reserves the right to retain the
---------------------
Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, any Pooling and Servicing Agreement or similar agreement entered into
as a result of a Secondary Market Transaction, the Cash
Management Agreement or otherwise, together with such other powers as are
reasonably incidental thereto. Borrowers shall pay any reasonable fees and
expenses of the Servicer in connection with a release or substitution of any
Collateral Properties, assumption or modification of the Loan, enforcement of
the Loan Documents or any other action taken by Servicer hereunder on behalf of
Lender.
11.5 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 any of the Debt is unpaid. Each Borrower's covenants and agreements
in this Agreement shall inure to the benefit of the respective legal
representatives, successors and assigns of Lender.
11.6 LENDER'S DISCRETION. Whenever pursuant to this Agreement or any
-------------------
other Loan Document, Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide whether arrangements or
terms are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall be
final and conclusive.
11.7 GOVERNING LAW. (a) THIS AGREEMENT WAS MADE BY LENDER AND ACCEPTED BY
-------------
BORROWERS 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 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 AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND PROCEDURES RELATING TO
ENFORCEMENT OF THE LIENS CREATED PURSUANT TO THE LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE
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
VALIDITY AND THE ENFORCEABILITY OF ALL LOAN DOCUMENTS AND THE DEBT. TO THE
FULLEST EXTENT PERMITTED BY LAW, EACH 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 YORK
PURSUANT TO (S) 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR ANY
BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO (S) 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAW, AND EACH BORROWER WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH BORROWER DOES HEREBY
DESIGNATE AND APPOINT CT CORPORATION SYSTEM AT ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE
OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE OF SUCH BORROWER MAILED OR DELIVERED TO SUCH BORROWER IN THE MANNER
PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS
UPON SUCH BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW
YORK. EACH BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED
ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO
TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW
YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS),
AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT
CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR
11.8 MODIFICATION; WAIVER IN WRITING. No modification, amendment,
-------------------------------
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor consent to any departure by any Borrower
therefrom, shall in any event be effective unless the same shall be in a writing
signed by the party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for the purpose,
for which given. Except as otherwise expressly provided herein, no notice to or
demand on any Borrower shall entitle such Borrower or any other Borrower to any
other or future notice or demand in the same, similar or other circumstances.
11.9 DELAY NOT A WAIVER. Neither any failure nor any delay on the part of
------------------
Lender in insisting upon strict performance of any term, condition, covenant or
agreement, or exercising any right, power, remedy or privilege hereunder, or
under any other Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under any Loan Document, Lender shall not be deemed
to have waived any right either to require prompt payment when due of all other
amounts due under the Loan Documents, or to declare an Event of Default for
failure to effect prompt payment of any such other amount.
11.10 TRIAL BY JURY. BORROWERS AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL
-------------
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE 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 ARISING
IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN
KNOWINGLY AND VOLUNTARILY BY BORROWERS 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. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY
OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER.
11.11 HEADINGS. The Section headings in this Agreement are included herein
--------
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
11.12 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.
11.13 PREFERENCES. To the extent any Borrower makes a payment to Lender, or
-----------
Lender receives proceeds of any collateral, which is in whole or part
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 Debt 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. This provision
shall survive the expiration or termination of this Agreement and the repayment
of the Debt.
11.14 WAIVER OF NOTICE. No Borrower shall be entitled to any notices of any
----------------
nature whatsoever from Lender except with respect to matters for which this
Agreement or any other Loan Document specifically and expressly provides for the
giving of notice by Lender to such Borrower and except with respect to matters
for which such Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Each Borrower hereby expressly waives
the right to receive any notice from Lender with respect to any matter for which
no Loan Document specifically and expressly provides for the giving of notice by
Lender to such Borrower.
11.15 REMEDIES OF BORROWER. In the event that a claim or adjudication is
--------------------
made that Lender or its agent, including Servicer, has acted unreasonably or
unreasonably delayed acting in
any case where by law or under any Loan Document, Lender or such agent, as the
case may be, has an obligation to act reasonably or promptly, each Borrower
agrees that neither Lender nor its agents, including Servicer, shall be liable
for any monetary damages, and such Borrower's sole remedy shall be to commence
an action seeking injunctive relief or declaratory judgment. Any action or
proceeding to determine whether Lender has acted reasonably shall be determined
by an action seeking declaratory judgment. Each Borrower specifically waives any
claim against Lender and its agents, including Servicer, with respect to actions
taken by Lender or its agents on any Borrower's behalf pursuant to Section
9.2.5.
11.16 PRIOR AGREEMENTS. This Agreement and the other Loan Documents contain
----------------
the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents; provided, however, that the
-------- -------
following provisions of the Commitment Letter dated October 16, 1998 between
Lender and Westfield America, Inc. continue to survive: provisions pertaining to
the "Capital America Good Faith Deposit"; provisions of paragraph 6 of such
Commitment Letter pertaining to the application of certain deposits to fees and
expenses payable by Borrowers hereunder; provisions pertaining to the
termination of the "SUV Commitment Letter and Term Sheet"; and provisions
pertaining to the "New Swap" with Westfield America, Inc.
11.17 OFFSETS, COUNTERCLAIMS AND DEFENSES.
-----------------------------------
(a) Each Borrower hereby waives the right to assert a counterclaim,
other than a compulsory counterclaim, in any action or proceeding brought
against it by Lender or its agents, including Servicer. Any assignee of
Lender's interest in and to the Loan Documents shall take the same free and
clear of all offsets, counterclaims or defenses that are unrelated to the Loan
Documents which any Borrower may otherwise have against any assignor of such
documents, and no such unrelated offset, counterclaim or defense shall be
interposed or asserted by any 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 each Borrower.
(b) Each Borrower agrees that each Advance made by Lender hereunder
may be transferred, assigned or sold separately by Lender, including a transfer
into a Secondary Market Transaction (any transferred, assigned or sold advance,
a "TRANSFERRED ADVANCE"). Each Borrower agrees that if Lender shall fail to
-------------------
make any future Advance required hereunder, neither such Borrower, nor any other
Borrower, nor any Person acting on behalf of any Borrower shall have any right
of set-off, offset, or recoupment, or any similar right, against any Transferred
Advance, and neither such Borrower, nor any other Borrower, nor any Person
acting on behalf of any Borrower shall withhold or fail to make any payment due,
or perform any other obligation, under any Transferred Advance, and neither such
Borrower, nor any other Borrower, nor any Person acting on behalf of any
Borrower shall assert the failure by Lender to make any such future Advance as a
defense to its obligations to pay and perform with respect to any Transferred
Advance, and neither such Borrower, nor any other Borrower, nor any Person
acting on behalf of
any Borrower shall make any claim, or bring any action, suit or proceeding,
against the owner of any Transferred Advance as a result of such failure by
Lender to make a future Advance. Each Borrower agrees to indemnify Lender and
each owner of a Transferred Advance, and to hold Lender and each owner of a
Transferred Advance harmless against, any action, claim, proceeding, liability,
cost or expense (including attorneys' fees and expenses) arising out of or
related to a breach or violation by such Borrower or any other Borrower or any
Person acting on behalf of any Borrower of Borrowers' agreements in this Section
11.17(b). In the event that any Borrower or any Person acting on behalf of any
Borrower shall breach or violate any of its agreements in this Section 11.17(b),
each Borrower agrees that the Loan shall immediately become full recourse to
Borrowers. For purposes of this Section 11.17(b), all references to Lender shall
not include any successor or assignee of the initial Lender unless such
successor or assignee expressly assumes the obligation of the initial Lender to
make one or more future Advances under this Agreement.
11.18 PUBLICITY. All news releases, publicity or advertising by any
---------
Borrower or its Affiliates through any media intended to reach the general
public, which refers to the Loan Documents, the Loan, Lender, any member of the
CCA Group, a Loan purchaser, the Servicer or the trustee in a Secondary Market
Transaction, shall be subject to the prior written approval of Lender.
11.19 NO USURY. Borrowers and Lender intend at all times to comply with
--------
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 11.19 shall
control every other agreement in the Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under the Note or any other Loan Document, or contracted for,
charged, taken, reserved or received with respect to the Debt, or if Lender's
exercise of the option to accelerate the maturity of the Loan or any prepayment
by a Borrower results in such Borrower having paid any interest in excess of
that permitted by applicable law, then it is Borrowers' and Lender's express
intent that all excess amounts theretofore collected by Lender shall be credited
against the unpaid Principal and all other Debt (or, if the Debt has been or
would thereby be paid in full, refunded to the applicable Borrower(s)), and the
provisions of the Loan Documents immediately be deemed reformed and the amounts
thereafter collectible thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for thereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance or
detention of 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 Debt does not exceed the maximum lawful rate from time to time in effect
and applicable to the Debt for so long as the Debt is outstanding.
Notwithstanding anything to the contrary contained in any Loan Document, it is
not the intention of Lender to accelerate the maturity of any interest that has
not accrued at the time of such acceleration or to collect unearned interest at
the time of such acceleration.
11.20 CONFLICT; CONSTRUCTION OF DOCUMENTS. In the event of any conflict
-----------------------------------
between the provisions of this Agreement and any of the other Loan Documents,
the provisions of this Agreement shall control. The parties hereto acknowledge
that each is represented by separate counsel in connection with the negotiation
and drafting of the Loan Documents and that the Loan Documents shall not be
subject to the principle of construing their meaning against the party that
drafted them.
11.21 NO THIRD PARTY BENEFICIARIES. Except as provided in the following
----------------------------
sentence, the Loan Documents are solely for the benefit of Lender and Borrowers
and nothing contained in any Loan Document shall be deemed to confer upon anyone
other than the Lender and Borrowers any right to insist upon or to enforce the
performance or observance of any of the obligations contained therein. Each of
the current owners of the properties identified on Schedule 10 hereto is an
-----------
intended third party beneficiary of Lender's obligation to make Loans as
described in Article II above.
----------
11.22 YIELD MAINTENANCE PREMIUM. Each Borrower acknowledges that Lender
-------------------------
intends to enter into a Secondary Market Transaction which may result in various
classes of Securities with different coupon rates. Each Borrower also
acknowledges that (i) the proceeds of any partial prepayment of Principal may be
utilized to retire Securities bearing a coupon rate lower than the Interest
Rate, (ii) that following such prepayment the remaining outstanding Securities
may bear a weighted average coupon rate in excess of the Interest Rate and (iii)
that, absent the Yield Maintenance Premium payable hereunder in connection with
such prepayment, Lender will not receive the benefits intended to be conferred
by the Loan Documents. For these reasons, and to induce Lender to make the
Loans, Borrowers expressly waive any right or privilege to prepay the Loans
except as may be specifically permitted herein and agree that, except as
expressly provided for herein, all partial prepayments, if any, whether
voluntary or involuntary, will be accompanied by the Yield Maintenance Premium.
Such Yield Maintenance Premium shall be required whether payment is made by a
Borrower, by a Person on behalf of Borrower, or by the purchaser at any
foreclosure sale, and may be included in any bid by Lender at such sale. Each
Borrower further acknowledges that (A) it is a knowledgeable real estate
developer and/or investor; (B) it fully understands the effect of the provisions
of this Section 11.22, as well the other provisions of the Loan Documents; (C)
the making of the Loans by Lender at the Interest Rate and other terms set forth
in the Loan Documents are sufficient consideration for such Borrower's
obligation to pay a Yield Maintenance Premium (if required); and (D) Lender
would not make the Loans on the terms set forth herein without the inclusion of
such provisions. Borrowers also acknowledge that the provisions of this
Agreement limiting the right of prepayment and providing for the payment of the
Yield Maintenance Premium and other charges specified herein were independently
negotiated and bargained for, and constitute a specific material part of the
consideration given by Borrowers to Lender for the making of the Loans.
11.23 ASSIGNMENT. The Loan, the Note, the Loan Documents and all Lender's
----------
rights, title, obligations and interests therein may be assigned by Lender at
any time in its sole discretion whether by operation of law (pursuant to a
merger or other successor in interest) or otherwise. Subject to the provisions
of Section 11.17, upon such assignment, all references to Lender in this
Loan Agreement and in any Loan Document shall be deemed to refer to such
assignee or successor in interest and such assignee or successor in interest
shall thereafter stand in the place of Lender; provided, however that the
original named Lender herein shall not be released of its obligations in respect
of Advances which Lender is thereafter required to make hereunder. No Borrower
may assign its rights, interests or obligations under this Loan Agreement or
under any of the Loan Documents except as expressly permitted hereunder.
11.24 LIABILITIES NOT JOINT AND SEVERAL. Each Borrower shall be liable
---------------------------------
as a primary obligor (as distinguished from liability as a guarantor) only for
such Borrower's Allocable Share of the Obligations. If any Borrower shall for
any reason be released of any of its Obligations (other than an Obligation as to
which the released Borrower's Allocable Share was 100%) pursuant to the Loan
Documents, then each Borrower's Allocable Share of such Obligation shall be
equal to a fraction, the numerator of which is such Borrower's then Allocated
Note Amount and the denominator of which is the then aggregate Allocated Note
Amounts of all Borrowers who have not been released of their liability for such
Obligation.
11.25 THIRD PARTY GUARANTIES. Lender agrees that upon request by a
----------------------
Borrower, Lender will accept guaranties of a portion of such Borrower's
obligations hereunder from third parties designated by such Borrower, provided
that (i) the form of such guaranties shall be reasonably acceptable to Lender
and (ii) all Borrowers and the Oakridge Guarantor shall execute such instruments
as Lender may reasonably request to confirm that neither the delivery of such
new guaranties, nor any waiver, extension, modification, forbearance or release
of or with respect to such new guaranties, will affect in any way any of the
obligations of any Borrower or the Oakridge Guarantor under any Loan Document.
[Signatures on the following page]
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.
PARKWAY PLAZA LLC
By: Parkway Plaza, Inc.
Managing Member
By: /s/ ▇▇▇ ▇▇▇▇▇▇
--------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Secretary
▇▇▇▇▇▇ PLAZA LLC
By: ▇▇▇▇▇▇ Plaza, Inc.
Managing Member
By: /s/ ▇▇▇ ▇▇▇▇▇▇
--------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Secretary
FOX HILLS MALL LLC
By: Fox Hills Mall, Inc.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
--------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Secretary
OAKRIDGE MALL LLC
By: Oakridge Mall, Inc.
Managing Member
By: /s/ ▇▇▇ ▇▇▇▇▇▇
--------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Secretary
THE CAPITAL COMPANY OF AMERICA LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
The undersigned hereby agrees to the provisions of Section 11.1(c) and Section
11.17(b)
WESTFIELD AMERICA, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
---------------
▇▇▇ ▇▇▇▇▇▇
Secretary
Schedule 1
----------
Location of Properties
----------------------
1. Fox Hills Mall: ▇▇▇▇▇▇, Los Angeles County, California
2. ▇▇▇▇▇▇ Plaza: San Diego, San Diego County, California
3. Parkway Plaza: El Cajon, San Diego County, California
4. Oakridge Mall: San ▇▇▇▇, Santa ▇▇▇▇▇ County, California
S1-1
Schedule 2
----------
Matters Regarding Representations
---------------------------------
None
S2-1
Schedule 3
----------
Initial Borrowers
-----------------
1. Fox Hills Mall LLC, a Delaware limited liability company
2. ▇▇▇▇▇▇ Plaza LLC, a Delaware limited liability company
3. Oakridge Mall LLC, a Delaware limited liability company
4. Parkway Plaza LLC, a Delaware limited liability company
S3-1
Schedule 4
----------
Required Repairs
----------------
Fox Hills Mall $143,125
▇▇▇▇▇▇ Plaza $ 1,500
Oakridge Mall $ 12,500
Parkway Plaza $120,490
S4-1
Schedule 6
----------
Replacement Reserve Fund (Initial Borrowers)
--------------------------------------------
Fox Hills Mall $98,719.08
▇▇▇▇▇▇ Plaza $11,302.75/month
Oakridge Mall $13,254/month
Parkway Plaza $9,844/month
S6-1
Schedule 7
----------
Material Contracts
------------------
-------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
-------------------------------------------------------------------------------------------------------------
Capital Mall ▇▇▇▇▇▇▇▇▇▇▇ Building 30 days' written notice with 12/99
Service-Maintenance 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Landscape Services 30 days' written notice with 4/99
Landscaping (exterior) 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Interiorscapes 30 days' written notice with 4/99
Landscaping (interior) 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Fox Hills Mall Merchants Building 30 days' written notice with 2/18/99
Maintenance 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Centre Scapes 30 days' written notice with 5/31/98 Holdover
Landscaping (exterior) 48 hours written notice of month to month
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Rohan & Associates Air 30 days' written notice with 3/99
Conditioning Maint. 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Contract to be terminated 1/31/99
Elevator Maintenance in writing by owner and by
an officer and the contractor
--------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ Plaza Merchants Building 30 days' written notice with 11/25/98
Maintenance 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Brookwood Landscape 30 days' written notice with 1/1/99
Landscaping 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
S7-1
-------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
-------------------------------------------------------------------------------------------------------------
EDCO Trash one year Renews every
March 1/st/
-------------------------------------------------------------------------------------------------------------
Marcel's Power Parking 30 days' written notice with 1/1/99
Lot Sweeping 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Oakridge Mall Shrine Maintenance Inc. 30 days' written notice with 9/30/98
48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Landscaping Management 30 days' written notice with 12/3/98
Landscaping (exterior) 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Crystal Springs 30 days' written notice with 3/31/2000
Landscape Company 48 hours written notice of
Landscaping (interior) intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Universal Sweep 30 days' written notice with 3/31/2000
Parking Lot Sweeping 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Parkway Plaza Merchants Building 30 days' written notice with 2/23/99
Maintenance 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Brookwood Landscape 30 days' written notice with 12/31/98
Landscaping (exterior) 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Ram Air Conditioning 30 days' written notice with 12/31/98
Maintenance 48 hours written notice of
intention to exercise right
of termination.
-------------------------------------------------------------------------------------------------------------
Universal Refuse Removal City Contract no term
-------------------------------------------------------------------------------------------------------------
Crestwood Plaza Interstate Cleaning written notice of termination 1/14/2000
Corporation
Maintenance
-------------------------------------------------------------------------------------------------------------
S7-2
-------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
-------------------------------------------------------------------------------------------------------------
Professional Security may be canceled by either 1/14/2000
Consultants party without cause by giving
30 day notice of cancellation
in writing.
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ Controls 30 days' written notice. 12/31/98
Air Conditioning
Maintenance
-------------------------------------------------------------------------------------------------------------
BioLogix Cleaning 8/31/98
-------------------------------------------------------------------------------------------------------------
Enfield Square The Slanetz Corp - 1/31/99
Snow Removal
-------------------------------------------------------------------------------------------------------------
Interstate Cleaning may be canceled by either 1/31/2000
Corporation - party without cause by giving
Maintenance 30 day notice in writing.
-------------------------------------------------------------------------------------------------------------
Mid Rivers Mall The ▇▇▇▇▇▇▇▇ Group 30 days' written notice 12/31/98
Landscape Maintenance
-------------------------------------------------------------------------------------------------------------
Interstate Cleaning 30 days' written notice 1/31/99
Corporation
Maintenance
-------------------------------------------------------------------------------------------------------------
Security 30 days' written notice 3/14/2000
-------------------------------------------------------------------------------------------------------------
Parking Lot may be canceled by either 12/31/98
Maintenance party without reason with
or without cause by the giving
5 day notice of cancellation
in writing.
-------------------------------------------------------------------------------------------------------------
Northwest Plaza ICC-Maintenance 30 day written notice of 1/31/2000
termination
-------------------------------------------------------------------------------------------------------------
IPC International - month to month month to month
Security
-------------------------------------------------------------------------------------------------------------
▇▇▇▇ Elevator/Escalator 30 days' written notice 8/23/99
Service
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ Group 30 days' written notice 11/30/98
Exterior Landscaping
-------------------------------------------------------------------------------------------------------------
Plaza ▇▇▇▇▇▇ Professional Security 30 days' written notice by 1/31/2000
Consultants-Security either party
-------------------------------------------------------------------------------------------------------------
Interstate Cleaning may be canceled by either 9/30/99
Corporation - party without cause by giving
Maintenance 30 day notice in writing
-------------------------------------------------------------------------------------------------------------
S7-3
-------------------------------------------------------------------------------------------------------------
MALL TYPE OF CONTRACT TERMS OF CONTRACT EXPIRATION
-------------------------------------------------------------------------------------------------------------
Brookwood Landscape, may be canceled by either 9/30/98
Inc.-Landscaping party without cause by giving
30 day notice in writing
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ 10/31/98
Elevator/Escalator
Service
-------------------------------------------------------------------------------------------------------------
Plaza West Covina Professional Security Contractor shall promptly 3/7/2000
Consultant-Security take all action necessary to
fully comply with the terms
within 24 hours after written
notice
-------------------------------------------------------------------------------------------------------------
Interstate Cleaning 30 days' written notice 6/30/99 and 6/30/2000
Corporation
Maintenance
-------------------------------------------------------------------------------------------------------------
Centre Scapes, Inc. - Contractor shall promptly 5/31/99
Landscaping take all action necessary to
fully comply with the terms
within 24 hours after written
notice
-------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇- 10/31/98
Elevator/Escalator
Service
-------------------------------------------------------------------------------------------------------------
University Towne Center ISS-Maintenance 30 day written notice of Expired
termination with 8 hours
written notice of intent to
terminate
-------------------------------------------------------------------------------------------------------------
IPC International- 30 day written notice of 12/31/98
Security termination with 48 hours
written notice of intent to
terminate
-------------------------------------------------------------------------------------------------------------
USA Waste-Trash 30 day written notice of 12/31/98
termination with 8 hours
written notice of intent to
terminate
-------------------------------------------------------------------------------------------------------------
Marcel's Power 30 day written notice of 2/1/99
Sweeping-Parking lot termination with 48 hours
Maintenance written notice
-------------------------------------------------------------------------------------------------------------
S7-4
Schedule 8
----------
Description of Crestwood Alteration
-----------------------------------
CRESTWOOD PLAZA
---------------
Crestwood, Missouri
Summary
-------
Crestwood Plaza is a single-level regional mall located in the St. Louis suburb
of Crestwood, Missouri. The center, totaling 1,019,000 s.f., is anchored by
Dillard's, Famous-▇▇▇▇, and Sears. The proposed redevelopment consists of an
additional 27,000 s.f. of specialty stores and anticipates construction to begin
in January 1999 with a scheduled completion date of October 1999.
Project Cost:
Construction Cost $4,353,304
Indirect Cost 2,984,893
----------
Total Project Cost $7,228,197
==========
Income $ 729,540
==========
Yield 10.1%
IRR 14.5%
Management recommends that the Board of Directors approve the expenditure of
funds to proceed with the project.
Finance
Total project cost will be funded through the existing unsecured corporate
credit facility.
▇▇-▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Property Description
--------------------
Crestwood Plaza is a one-level enclosed super regional mall located in the St.
Louis suburb of Crestwood, Missouri, approximately 10 miles southwest of
downtown St. Louis. The shopping center, which was acquired in 1998 has a total
gross leaseable area of 1,019,000 s.f., and is anchored by Dillard's (170,000
s.f.), Sears (221,000 s.f.), and Famous-▇▇▇▇ (160,000 s.f.). The center has 150
specialty stores with a strong representation of upscale tenants. The site
consists of 47 acres.
Redevelopment Opportunity
-------------------------
The Crestwood Plaza expansion consists of the conversion of the existing
pedestrian bridge on the east side of Sears into a traditional mall and the
addition of 27,000 s.f. of gross retail area. The existing bridge is narrow and
tunnel like and is not architecturally harmonious with the existing mall
elements.
The modifications to and the expansion of the common area will create a natural
connection between the east and west sections of the mall resulting in better
customer circulation through the mall, increasing its leaseability.
A development application has been submitted to the City of Crestwood for its
review and approval. Planning and Zoning approval was received in June and the
final Board of ▇▇▇▇▇▇▇▇ approval is anticipated by mid-July.
The anticipated start of construction is in January 1999 with the completion in
October 1999.
S8-2
CRESTWOOD PLAZA
EXPANSION OF RETAIL BRIDGE
ESTIMATED COST ANALYSIS
------------------------------------------
Construction Cost $4,353,304
------------------------------------------
Indirect Cost:
------------------------------------------
Architect & Engineering 435,330
------------------------------------------
Predevelopment 228,635
------------------------------------------
Municipal Contributions 74,215
------------------------------------------
Tenant Allowances 1,242,740
------------------------------------------
Owner's Representative 32,500
------------------------------------------
Leasing Cost 178,282
------------------------------------------
Development Cost 327,250
------------------------------------------
Loan Origination Cost 103,084
------------------------------------------
Capitalized Interest 252,856
----------
------------------------------------------
Subtotal Indirect Cost 2,874,893
------------------------------------------
----------
Total Project Cost $7,228,197
==========
------------------------------------------
S8-3
CRESTWOOD PLAZA
EXPANSION OF RETAIL BRIDGE
INCREMENTAL PROJECT INCOME
-----------------------------------------------------------------------
Annual Tenant
Sq. Ft. $/SF Min. Rent Allowance
------- ---- --------- ---------
-----------------------------------------------------------------------
Retail Shops:
New GLA 27,428 $30.00 $822,840 $822,840
------ -------- --------
-----------------------------------------------------------------------
Subtotal-Retail Shops 27,428 822,840 822,840
-----------------------------------------------------------------------
Total New Space 27,428 822,840 822,840
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Rent Loss:
-----------------------------------------------------------------------
The Remington Store (584) (27,302) 58,400
-----------------------------------------------------------------------
Claire's Accessories (615) (27,601) 61,600
------ -------- --------
-----------------------------------------------------------------------
Subtotal-Rent Loss (1,199) (54,903) 119,900
-----------------------------------------------------------------------
Total Project 26,229 767,937 $924,740
====== ========
-----------------------------------------------------------------------
Less Management Fee 5.0% (38,937)
--------
-----------------------------------------------------------------------
Net Incremental Project Income $729,540
========
-----------------------------------------------------------------------
[MAP OF PROPOSED SITE PLAN HAS BEEN OMITTED.
AVAILABLE UPON WRITTEN REQUEST OF THE COMPANY]
S8-4
Schedule 9
----------
Specified Agreements
--------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇. Second Amended Disposition and Development Agreement dated 11/2/81
between the Redevelopment Agency of the City of San Diego and ▇▇▇▇▇▇ ▇.
▇▇▇▇, Inc. (predecessor in interest to Borrower), all subsequent
amendments and supplements thereto and various Implementation Agreements
related thereto.
2. Payment Agreement dated October 18, 1982 between the Redevelopment
Agency of the City of San Diego and EWH 1979 Development Company, L.P.
(predecessor in interest to Borrower), as amended 12/18/87, 6/10/93 and
11/21/95.
FOX HILLS MALL
1. Participation Agreement dated 8/19/96 between H, B-H Associates
(predecessor in interest to Borrower), ▇▇▇▇▇▇ City Redevelopment Agency
and Broadway Stores, Inc. (now Macy's).
2. Participation Agreement dated 12/19/96 between H, B-H Associates
(predecessor in interest to Borrower) and ▇▇▇▇▇▇ City Redevelopment
Agency.
3. Disposition and Development Agreement (▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Redevelopment
Project) dated 6/26/72 between ▇▇▇▇▇▇ City Redevelopment Agency and
H, B-H Associates (predecessor in interest to Borrower) and all
subsequent amendments and supplements thereto.
S9-1
Schedule 10
-----------
Other Properties
----------------
1. North West Plaza: St. Maryland Heights, St. Louis County, Missouri
1. Crestwood Plaza: Crestwood, St. Louis County, Missouri
1. Enfield Square: Enfield, Hartford County, Connecticut
1. Plaza ▇▇▇▇▇▇: National City, San Diego County, California
1. Plaza West Covina: West Covina, Los Angeles County, California
1. Mid Rivers Mall: St. ▇▇▇▇▇▇, St. ▇▇▇▇▇▇▇ County, Missouri
1. West Park Mall: Cape Girardeau, Cape Girardeau County, Missouri
1. Los Cerritos Mall: Los Cerritos, Los Angeles County, California
1. Capital Mall: Olympia, ▇▇▇▇▇▇▇▇ County, Washington
S10-1
Schedule 11
-----------
Undelivered Documents
---------------------
▇. ▇▇▇ Hills Mall
Assignment of Lease dated December 31, 1975 from The May Department Stores
Company to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Trustee under the Trust
Agreement dated April 22, 1971.
B. Parkway Plaza
Supplemental Agreement dated July 24, 1994 (re: ▇.▇. Penney).
C. Oakridge Mall
1. Sears
-----
a. Documentation adding ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to ▇▇▇.
b. Assignment of Lease dated October 15, 1977 from ▇▇▇▇▇▇ ▇. ▇▇▇▇,
Inc. to Oakridge Associates.
c. Letter Agreement dated May 15, 1982 from Oakridge Associates to
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
2. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
---------------
a. Assignment of Lease dated February 1, 1973 from ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Development Corporation to Sanward Associates.
b. Consent and Assumption Agreement dated December 31, 1973 between
Pearlblossom Development Corporation and ▇▇▇▇▇▇ ▇. ▇▇▇▇, Inc.
c. Assignment dated November 23, 1977 from ▇▇▇▇▇▇ ▇. ▇▇▇▇, Inc. to
Oakridge Associates.
d. Letter Agreement dated June 24, 1986 from ▇▇▇▇▇▇ ▇. ▇▇▇▇, Inc. to
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
S11-1
Schedule 12
-----------
Oakridge Option Agreement and Subordinate Deed of Trust
-------------------------------------------------------
1. Option Agreement dated 3/19/91 between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇,
as Co-Trustees of the ▇▇▇▇▇ Revocable Trust, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as Trustee
of the Trust of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, deceased, as Lessor, and Oakridge
Associates (predecessor in interest to Borrower), as Lessee.
2. Deed of Trust dated 3/19/91 made by Oakridge Associates (predecessor in
interest to Borrower), as trustor, to Commonwealth Land Title Insurance
Company, as trustee for the benefit ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and individual, ▇▇▇▇
▇. ▇▇▇▇▇, an individual, as trustees of the ▇▇▇▇▇ Revocable Trust under
Agreement dated 11/13/87, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as trustee of the Trust created
by the Will of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, deceased, as beneficiary, recorded in Book
L647, page 0212, Official Records, Santa ▇▇▇▇▇ County, California.
S12-1
EXHIBIT A
---------
ASSUMPTION AGREEMENT
This Assumption Agreement (this "Agreement") is made as of this ____
day of __________, ____, by _______________, a __________ limited __________,
having an address at ____________________("Assumption Borrower").
RECITALS
WHEREAS, The Capital Company of America LLC, a Delaware limited
liability company ("Lender"), Fox Hills Mall LLC, a Delaware limited liability
company, ▇▇▇▇▇▇ Plaza LLC, a Delaware limited liability company, Parkway Plaza
LLC, a Delaware limited liability company and Oakridge Mall LLC, a Delaware
limited liability company (each, an "Individual Initial Borrower" and
collectively, the "Initial Borrowers") entered into that certain Loan Agreement
dated as of October __, 1998 (the "Loan Agreement") with respect to a series of
loans to be made by Lender, subject to the terms and conditions contained
therein, in the aggregate maximum amount of up to $850,000,000 to each of the
Individual Initial Borrowers and each of the persons that becomes a "Borrower"
under the Loan Agreement pursuant to Section 2.1.2 of the Loan Agreement; and
WHEREAS, Assumption Borrower desires to become a Borrower pursuant to
Section 2.1.2 of the Loan Agreement.
NOW THEREFORE, in consideration of the foregoing and the loan be made
by Lender to Assumption Borrower, the receipt and sufficiency of which is hereby
acknowledged, and in furtherance of the terms of the Loan Agreement, Assumption
Borrower hereby acknowledges and agrees as follows:
1. Capitalized terms appearing herein and not otherwise defined shall
have the meanings ascribed to such terms in the Loan Agreement.
2. Assumption Borrower hereby (a) makes all of the representations,
warranties and covenants applicable to a Borrower under the Loan Agreement and
(b) assumes and agrees to be bound by all of the obligations, terms and
conditions of the Loan Agreement applicable to a Borrower thereunder. Without
limiting the foregoing, Assumption Borrower agrees that it shall be primarily
liable for its Allocable Share of the Obligations.
3. All the terms and conditions of the Loan Agreement are incorporated
herein by reference as if all such terms and conditions were set forth herein.
A-1
4. Assumption Borrower hereby agrees to execute and deliver such other
instruments as Lender may reasonably request from time to time to confirm its
joinder in and assumption of all of its obligations under the Loan Agreement.
5. This Agreement may be relied upon by, shall run to the benefit of and
may be enforced by Lender and its successors and assigns
6. This Agreement shall be governed by the laws of the State of New York
applicable to agreements executed and to be performed in New York.
7. This Agreement cannot be modified, changed, or discharged except by an
agreement in writing signed by Assumption Borrower and Lender.
[Signatures on the following page]
A-2
IN WITNESS WHEREOF the undersigned has caused this Assumption
Agreement to be duly executed by its duly authorized representatives as of the
day and year first above written.
ASSUMPTION BORROWER:
, a
---------------------------- ---------------
By: , Inc., a
----------------------------------
corporation, its
--------------------------
--------------------------
By:
---------------------------------------
Name:
Title:
ACKNOWLEDGED AND ACCEPTED:
THE CAPITAL COMPANY OF AMERICA LLC
By:
------------------------------
Name:
Title:
▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
Form of Manager Consent and Subordination
(Westfield Manager)
MANAGER'S CONSENT AND SUBORDINATION
OF MANAGEMENT AGREEMENT
-----------------------------------
THIS MANAGER'S CONSENT AND SUBORDINATION OF MANAGEMENT AGREEMENT (this
"Agreement"), dated as of _________________, 1998, is executed by the
----------
undersigned, ______________________, a _____________________ ("Manager"), as an
inducement to The Capital Company of America LLC, a Delaware limited liability
company (together with its successors and assigns, the "Lender"), to make loans
to ________________, a ___________ limited __________ ("Borrower") and certain
affiliates of Borrower (each a Borrower, and collectively, the "Borrowers") in
an aggregate principal amount not to exceed $850,000,000 (the "Loans") pursuant
to that certain Loan Agreement dated as of October __, 1998 (the "Loan
Agreement"), in connection with various properties, including the property owned
by Borrower known as ___________ (the "Property").
1. Definitions. All capitalized terms not defined herein shall have
-----------
the meanings ascribed thereto in the Loan Agreement.
2. Manager's Representations. Manager warrants and represents to
-------------------------
Lender, as of the date hereof, that the following are true and correct:
a. That Manager has agreed to act as manager of the Property
pursuant to that certain management agreement, between Borrower
and Manager, which agreement is described on Exhibit A attached
---------
hereto and made a part hereof, and has not been amended, modified
or supplemented except as set forth on said Exhibit A (the
---------
"Management Agreement").
--------------------
b. That the entire agreement between Manager and Borrower for the
management of the Property is evidenced by the Management
Agreement.
c. That the Management Agreement constitutes the valid and binding
agreement of Manager, enforceable in accordance with its terms,
and Manager has full authority under all state or local laws and
regulations, to perform all of its obligations under said
Management Agreement.
d. That neither Borrower not Manager is in default in the
performance of any of its obligations under the Management
Agreement.
B1-1
e. That Manager has received and reviewed a copy of the Loan
Agreement.
3. Manager's Agreements. Manager hereby consents to and agrees to
--------------------
each and every one of the following covenants and agreements for the benefit of
Lender and as a condition to Lender's making the Loans:
a. No termination of Management Agreement. Manager shall not
--------------------------------------
terminate the Management Agreement without first obtaining Lender's written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Notwithstanding the foregoing, Manager shall have the right to
terminate the Management Agreement of default by Borrower with respect to non-
payment of the management fee due thereunder by giving Lender thirty (30) days
prior written notice of such termination. In the event Lender shall cure such
non-payment default in the aforesaid thirty (30) day period, then any such
termination notice shall be of no further force or effect.
b. Subordination of Management Agreement to Lien of Mortgages. Any
-----------------------------------------------------------
and all liens, rights and interests (whether ▇▇▇▇▇▇ or inchoate and including,
without limitation, all mechanic's and materialman's liens under applicable law)
owned, claimed or held, or to be owned, claimed or held, by Manager in and to
the Property, other than rights of Manager to receive payment of the basic
management fee and all other amounts payable under the Management Agreement for
periods prior to the termination thereof, are and shall be, and are hereby made,
in all respects subordinate and inferior to the liens and security interests
created or to be created for the benefit of Lender, its successors and assigns,
and securing the repayment of the Debt and including, without limitation, those
created under and by virtue of the Mortgages.
c. Lender's Right to Terminate. Upon the occurrence of an Event of
----------------------------
Default under the Note, the Loan Agreement or any of the other Loan Documents
(each, an "Operative Event"), Manager shall, at the request of Lender, continue
performance, subject to Paragraph 3(d) hereof, on behalf of Lender, of all of
Manager's obligations under the terms of the Management Agreement with respect
to the Property, provided that Lender gives Manager the notice provided for in
Paragraph 3(i) hereof and Lender (or Borrower) performs or causes to be
performed the obligations of Borrower to Manager under the Management Agreement
accruing or arising from and after, and with respect to the period commencing
upon, the effective date of such notice. Notwithstanding anything contained in
the Management Agreement to the contrary, Lender, or Borrower at Lender's
direction pursuant to the Loan Documents, shall have the right to terminate the
Management Agreement upon, or at any time after, Lender or any third party
acquires the Property, whether by foreclosure, deed-in-lieu of foreclosure or
otherwise, by giving Manager thirty (30) day prior written notice of such
termination, in which event Manager shall resign as manager of the Property
effective upon the end of such thirty (30) day period. Manager agrees not to
look to Lender for payment of any accrued by unpaid fees relating to the
Property accruing from and after the effective date of such termination.
B1-2
d. Cooperation with Management Consultant. If, pursuant to the Loan
--------------------------------------
Agreement, Borrower retains a Management Consultant, Manager shall cooperate
with the Management Consultant to enable the Management Consultant to perform
its responsibilities as described in the Loan Agreement.
e. No Amendments to Management Agreement. Manager will not amend or
-------------------------------------
modify the Management Agreement in any manner which would (i) materially and
adversely affect the management, operation or value of the Property, or (ii)
increase the base management fee payable thereunder, without the prior written
consent of Lender which consent shall not be unreasonably withheld, delayed or
conditioned. In the event Manager fails to secure such approval, the Management
Agreement shall, for the purposes of Manager's obligations to Lender pursuant to
this Agreement, including Manager's obligation aforesaid to continue performance
thereunder for Lender's benefit pursuant to the terms of this Agreement, be
deemed not to have been modified by such amendment.
f. Delivery of Rent Roll and Service Contracts. Within twenty (20)
--------------------------------------------
Business Days after Lender's request therefor, but not more than once in any
calendar quarter, and only to the extent not furnished by Borrower, Manager
shall furnish to Lender a current rent roll of all tenants of the Property,
including a list of which tenants are in default under their respective leases,
and a schedule of all other entities with whom Manager has entered into leases,
contracts or other agreements relating to the Property, together with copies of
all such leases, contracts or agreements.
g. Further Assurances. Manager further agrees, without cost to
------------------
Manager, to (i) execute such affidavits and certificates as Lender shall
reasonably require to further evidence the agreements herein contained, (ii) on
request from Lender, and only to the extent not furnished by Borrower, furnish
Lender with copies of such information as Borrower is entitled to receive under
the Management Agreement, and (iii) at reasonable times, and upon reasonable
advance notice, cooperate with Lender's representative or agent in any
inspection of the Property.
h. Assignment of Rents and Leases. Manager acknowledges that, in
--------------------------------
connection with the Loan, Borrower has executed and delivered to Lender an
Assignment of Rents and Leases, dated as of the date hereof, assigning to
Lender, among other things, all of Borrower's right, title and interest in and
to all of the leases now or hereafter affecting the Property, including any of
Borrower's rights in the security deposits thereunder (to the extent permitted
by applicable law). Manager hereby agrees that upon receipt of written notice
from Lender that a Cash Management Event has occurred under the Loan Agreement
and that Lender has accelerated the indebtedness secured thereby, Manager shall,
upon receipt of Lender's notification therefor, thenceforth deliver to Lender,
for application in accordance with the terms and conditions of the Loan
Agreement and the other Loan documents, all proceeds relating to the Property
then being held by Manager and all rents, security deposits (upon compliance
with any requirements of applicable law with respect thereto and provided that
the same shall not be applied against the principal balance of the Loans except
to the extent required by applicable law
B1-3
but shall be held and applied in accordance with the applicable leases) and
other proceeds received from the after the date thereof from any and all tenants
or other parties occupying or using any portion of the Property.
i. No Joint Venture. Lender has not obligation to Manager with
----------------
respect to the Debt and Manager shall not be a third party beneficiary with
respect to any of Lender's obligations to Borrower set forth in the Loan
Documents. The relationship of Lender to Borrower is one of a creditor to a
debtor, and Lender is not a joint venturer or partner of Borrower.
j. Lender Not Obligated Under Management Agreement. Manager further
-----------------------------------------------
agrees that, except as hereinafter set forth, nothing herein shall impose upon
Lender any obligation for payment or performance in favor of Manager. In the
event that Lender notifies Manager in writing after an Operative Event that
Lender has elected to assert the rights of Borrower under the Management
Agreement, Lender shall pay Manager the sums due Manager under the terms of the
Management Agreement (subject to and in accordance with the terms of the
Management Agreement and this Agreement) for the period commencing on the
effective date of Lender's notice to Manager and ending on the expiration date
or earlier termination of the Management Agreement.
k. Lender's Reliance on Representations. Manager has executed this
------------------------------------
Agreement for the purpose of inducing the Lender to make the Loans in accordance
with the Loan Agreement and with full knowledge that Lender shall rely upon the
representations, warranties and agreements herein contained when making the
Loans, and that but for this instrument and the representations, warranties and
agreements herein contained, the Lender would not take such actions.
l. Governed by Loan Documents. Manager agrees that until such time
----------------------------
as the Debt has been repaid in full, the terms and provisions of this Agreement
and the Note, the Loan Agreement and the other Loan Documents shall be superior
to the terms and provisions of the Management Agreement with respect to the
payment of any management fees thereunder (other than with respect to payment of
management fees and other amounts payable under the Management Agreement for
any periods prior to the termination thereof) and termination of the Management
Agreement, and to the extent there are any inconsistencies between the
Management Agreement and this Agreement and the Loan Documents with respect to
such terms and provisions, the terms, provisions and conditions in this
Agreement and the Loan Documents shall govern in all respects.
4. Borrower Consent. Borrower has joined herein to evidence its
----------------
consent to all the agreements of Manager contained in this Agreement.
5. 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
B1-4
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.
6. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be an original and all of which shall
collectively constitute but one and the same instrument.
7. Assignment. Lender shall have the right to transfer, sell and
----------
assign its interest in this Agreement to any Person. All references to "Lender"
hereunder shall be deemed to include the successors and assigns of Lender.
8. Notices. Any notice, election, request, communication or demand
-------
which is required or permitted to be given or served hereunder shall be in
writing and shall be given or served by hand delivery against receipt, by any
nationally recognized overnight courier service providing evidence of the date
of delivery or by certified mail return receipt requested, postage prepaid,
addressed to Manager at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Financial Officer, with copy
to Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇▇▇▇▇, Esq., and to Lender at Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇, with copies to Capital America
Client Services, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: Legal Department and ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler,
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.,
or at such other address as shall be designated from time to time by Manager or
Lender by notice given in accordance with the provisions of this Section 8. Any
such notice or demand given hereunder shall be effective upon delivery or three
(3) days after mailing aforesaid. All notices, elections, requests,
communications and demands required or permitted hereunder shall be in the
English language.
9. Non-Recourse. Anything contained in this Agreement to the
------------
contrary notwithstanding (except as provided below), Lender's recourse with
respect to any claims arising under or in connection with this Agreement shall
be limited solely to the interest of Manager in the Management Agreement, and
none of (i) Manager or any of its Affiliates, (ii) any Persons who presently or
in the future own any direct ownership interest in Manager or any successor of
Manager (each a "Direct Beneficial Owner") or any affiliate thereof, (iii) any
Person owning, directly or indirectly, any legal or beneficial interest in
Manager or any Direct Beneficial Owner of any Affiliate thereof, or (iv) any
partner, principal, officer, controlling person, beneficiary, trustee, advisor,
shareholder, employee, agent, nominee, Affiliate or director of any Person
described in clauses (i) through (iii) above shall be personally liable for the
performance of any obligation hereunder or the payment of any amount due
hereunder, provided, however, that the foregoing limitation on the personal
-------- -------
liability of the Persons described in clauses (i) through (iv) above shall not
impair the validity of this Agreement or the right of Lender to enforce any of
its rights or remedies hereunder or under any of the other Loan Documents upon
the occurrence of a Cash
B1-5
Management Event as provided in this Agreement. Nothing contained herein shall
release, impair or otherwise affect any right, remedy or recourse Lender may
have against Manager or Borrower with respect to (a) any fraud or bad faith or
any material and intentional misrepresentation by Manager or its Affiliates made
in connection with the transactions contemplated hereby, (b) bad faith waste by
Manager, (c) any misapplication of Rents following and during the continuance of
an Operative Event, or (d) any misapplication of proceeds of any insurance
policies required to be maintained by Borrower or Manager.
[Remainder of Page Intentionally Left Blank]
B1-6
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as
of the day and year first above written.
MANAGER:
___________________________________, a
_________________
By: ______________________________, a
_____________, its ______________
By: ____________________________
Name:
Title:
BORROWER:
___________________________________, a Delaware
limited partnership
By: ______________________________, a Delaware
corporation, its general partner
By: ____________________________
Name:
Title:
B1-7
Exhibit A
Management Agreement
--------------------
B1-8
EXHIBIT B-2
-----------
Form of Manager Consent and Subordination
(Manager other than Westfield)
CONSENT AND SUBORDINATION OF MANAGER
____________________, 199___
The Capital Company of America LLC
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to (i) that certain Management Agreement (the "Management
Agree ment"), dated as of ______________, between _____________________ (the
"Borrower") and the undersigned (the "Manager") with respect to the property
known as ________________ and located in the City of _______________,
_____________ County, ___________ (the "Property"), and (ii) that certain Loan
Agreement (the "Loan Agreement") dated as of _________, 199__, between the
Borrower and The Capital Company of America LLC (together with its successors
and assigns, the "Lender"). Any capitalized terms used herein but not defined
herein shall have the same meanings as are ascribed to them in the Loan
Agreement.
The Manager acknowledges and understands that delivery of this letter to you
is a condition to the Lender making a certain loan to the Borrower pursuant to
the Loan Agreement in the original principal amount of up to $______________
(the "Loan").
The Borrower and the Manager hereby agree as follows:
1. The Management Agreement is and shall be subject and subordinate in all
respects to (i) the Mortgage (and to the lien of the Mortgage), (ii) the Loan
Documents, and (iii) any and all modifications, amendments, renewals and/or
substitutions of the Mortgage and/or any of the other Loan Documents. This
paragraph 1 shall be self-operative and no further instrument of subordination
shall be required. If requested, however, the Borrower and/or the Manager shall
execute
B2-1
and deliver such further instruments as the Lender may deem reasonably necessary
to effectuate this subordination.
2. If there shall have occurred and be continuing an Event of Default and the
Lender shall have obtained (i) title to the Property (or any portion thereof)
whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy sale or
otherwise and/or (ii) possession of the Property (or any portion thereof)
whether personally or through an agent, a receiver or a trustee, the Manager
shall, if and to the extent requested in writing by the Lender, continue
performance under the Management Agreement in accordance with the terms thereof
so long as the Manager is paid compensation thereafter accruing under the
Management Agreement. The Borrower and the Manager understand, however, that
nothing contained herein, in the Mortgage or in any of the other Loan Documents
shall be construed to obligate the Lender to perform or discharge any of the
Borrower's obligations, duties or liabilities under the Management Agreement.
3. Upon the occurrence of any default by the Borrower under the terms of the
Management Agreement, the Manager shall, promptly upon becoming aware thereof,
provide the Lender with notice in writing thereof, and after receipt of said
notice, the Lender shall have the same time period within which to cure said
defaults as the Borrower has under the Management Agreement although the
Borrower and the Manager understand that the Lender shall not have any
obligation to do so. Notwithstanding the foregoing, the failure by the Manager
to notify the Lender of a default under the Management Agreement shall not be
deemed to constitute a waiver by the Manager of such default. Furthermore, the
Borrower and the Manager agree that the Lender may terminate the Management
Agreement (i) in accordance with Section 5.14 of the Loan Agreement or in the
event of the Manager's gross negligence, malfeasance or willful misconduct/1/,
or (ii) by giving five days' notice to the Manager upon the Lender (or a
successor owner, as the case may be) obtaining (A) title to the Property (or any
portion thereof) whether by foreclosure, deed-in-lieu of foreclosure, bankruptcy
sale or otherwise, and/or (B) possession of the Property (or any portion
thereof) whether personally or through an agent, a receiver or a trustee. If
the Lender elects to terminate the Management Agreement in accordance with this
Paragraph 3, the Borrower and the Manager understand and agree that the Manager
shall look solely to the Borrower for any and all fees, charges or other sums
payable to the Manager under the Management Agreement. If the Management
Agreement shall be so terminated by the Lender, the Manager agrees to cooperate
with the Lender to ensure a smooth transition to the new property manager.
4. The Manager hereby confirms that (i) the term of the Management Agreement
shall expire on or before the Optional Prepayment Date, and (ii) if the Debt has
not been repaid in full on or before the Optional Prepayment Date, the term of
the Management Agreement may only be
---------------------------
/1/ The Management Agreement must permit the Borrower to terminate the
Management Agreement in the event of the Manager's gross negligence,
malfeasance or willful misconduct.
B2-2
renewed or extended beyond the Optional Prepayment Date with the prior written
approval of the Servicer./2/
5. This letter shall inure to the benefit of the Lender and its successors
and assigns, including the trustee in a Secondary Market Transaction. In the
event of any inconsistency or conflict with the provisions of this letter and
the provisions of the Management Agreement, the provisions of this letter shall
control.
6. The Manager agrees that it shall not change, amend, modify or terminate
the Management Agreement without the Lender's prior written approval in each
instance, which approval may be given or denied by the Lender in its sole
discretion. If the Manager does so amend, modify or terminate the Management
Agreement without the Lender's prior written approval, such amendment,
modification or termination shall be void ab initio.
7. This letter shall be governed by, and construed in accordance with, the
law of the State of New York.
8. Without limiting the generality of any other provisions contained herein
or in the other Loan Documents, no failure on the part of the Lender to
exercise, and no delay in exercising, any right hereunder or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or
the exercise of any other right. The rights and remedies of the Lender provided
herein and in the other Loan Documents are cumulative and are in addition to,
and are not exclusive of, any rights or remedies provided by law or in equity.
9. The Manager represents and warrants to the Lender that as of the date
hereof (i) the Management Agreement is in full force and effect and has not been
amended, modified, assigned, terminated or supplemented, (ii) the Manager is not
in default under the provisions of the Management Agreement and there is no
condition which, with the giving of notice and/or the lapse of time, would
constitute such a default, and (iii) to the best of Manager's knowledge, the
Borrower is not in default under the provisions of the Management Agreement and
there is no condition which, with the giving of notice and/or the lapse of time,
would constitute such a default.
---------------------------
/2/ The Management Agreement must expire on or before the Optional
Prepayment Date and may not be renewed or extended without the prior
written approval of the Servicer.
B2-3
10. This letter may not be amended, modified, terminated or supplemented
without the written approval of each of the Manager, the Borrower and the
Lender.
Very truly yours,
[MANAGER]
By: _____________________________
Name:
Title:
AGREED AND CONSENTED
TO AS OF ___________________, 199__
[BORROWER]
By: ______________________, its ________
By: ______________________
Name:
Title:
B2-4
EXHIBIT C
---------
Form of Subordination, Nondisturbance and Attornment Agreement
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Non-Disturbance and Attornment Agreement (this Agreement), made as of
_________, 199__, by and between THE CAPITAL COMPANY OF AMERICA LLC, a limited
liability company organized under the laws of Delaware and having an address at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the Lender) and
_______________________, a __________________, having an address at
_______________________ (the Tenant);
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, by a lease (as the same may be amended from time to time, the Lease)
dated _______________, 19__, between __________________________ (the Landlord),
as landlord, and Tenant, as tenant, the Landlord leased to Tenant a certain
portion of the building known as and located at _____________________, being
more fully described in said Lease (the Premises);
WHEREAS, the Landlord has executed and delivered to the Lender a mortgage
note in the original principal amount of ______________ ($________) Dollars,
which note is secured by, among other things, a mortgage or deed of trust (which
mortgage or deed of trust, and all amendments, renewals, increases,
modifications, replacements, substitutions, extensions, spreaders, restatements
and consolidations thereof and all re-advances thereunder and additions thereto
is referred to as the Mortgage) encumbering certain land being more particularly
described in Schedule A attached hereto (the Land), together with the buildings
and other improvements located or to be located thereon (such buildings and
other improvements and the Land, collectively, the Mortgaged Property)
including, without limitation, the Premises.
NOW, THEREFORE, the parties hereto, in consideration of the covenants
contained herein, have agreed and hereby agree as follows:
1. The Lease, as the same may hereafter be modified, amended or extended,
is and shall be subject and subordinate in each and every respect to the
Mortgage, to all renewals, modifications, replacement and extensions thereof, to
all terms, conditions and provisions thereof and to each and every advance
heretofore made or hereafter made under the Mortgage.
C-1
2. The Lender agrees that if any action or proceeding is commenced by the
Lender for the foreclosure of the Mortgage or the sale of the Mortgaged
Property, the Tenant shall not be named as a party therein (unless required by
law), and the sale of the Mortgaged Property in any such action or proceeding
and the exercise by the Lender of any of its other rights under the Mortgage, or
under the note secured by the Mortgage, shall be made subject to all rights of
the Tenant under the Lease, provided that at the time of the commencement of any
such action or proceeding and at the time of any such sale or exercise of any
such other rights, the Tenant shall not be in default under any of the terms,
covenants or conditions of the Lease or of this Agreement on the Tenant's part
to be observed or performed.
3. The Tenant shall concurrently give the Lender copies of all notices
and other communications given by the Tenant to the Landlord relating to (i)
defaults or alleged defaults on the part of the Landlord or the Tenant under the
Lease, (ii) any violations of any ordinances, statutes, laws, rules, codes,
regulations or requirements of any governmental agency, and (iii) any assignment
or subletting of all or any portion of the Premises.
4. In the event of any act or omission by the Landlord which would give
the Tenant the right, either immediately or after the lapse of a period of time,
to terminate the Lease, or to claim a partial or total eviction, the Tenant will
not exercise any such right (i) until it has sent written notice of such act or
omission to the Lender as provided herein, and (ii) unless the Lender shall have
failed within sixty (60) days after receipt of such notice to cure such default
or, if such default is not reasonably susceptible of cure within such sixty (60)
days, the Lender shall not have commenced the cure of such default within sixty
(60) days of receipt of such notice and thereafter diligently pursued such
action.
5. In the event that the interest of the Landlord is transferred by
reason of, or assigned in lieu of foreclosure or other proceedings for
enforcement of the Mortgage, then, subject to the provisions of this Agreement,
the Lease shall nevertheless continue in full force and effect and, upon the
written request of the Lender, the Tenant shall attorn to the Lender and shall
recognize the Lender as its landlord. Although the foregoing provision shall be
self-operative, in order to confirm such attornment, upon the request of the
Lender, the Tenant shall execute and deliver to the Lender (i) an agreement of
attornment in form and content reasonably satisfactory to the Lender, at the
Tenant's sole cost and expense, confirming the foregoing attornment and agreeing
to perform all the terms, covenants and conditions of the Lease on the Tenant's
part to be performed for the benefit of such Lender with the same force and
effect as if such Lender were the Landlord originally named in this Lease or
(ii) a new lease with the Lender, as landlord, for the remaining term of the
Lease and otherwise on the same terms and conditions and with the same options,
if any, then remaining. Nothing herein contained shall be construed however, to
obligate the Lender to cure any default by the Landlord under the Lease
occurring prior to any date on which the Lender shall succeed to the rights of
the Landlord, it being expressly agreed that under no circumstances shall the
Lender be obligated to remedy any such default.
C-2
6. If the Lender shall succeed to the interest of the Landlord, the
Lender shall have no personal liability as successor to the Landlord, and the
Tenant shall look only to the estate and property of the Lender in the Mortgaged
Property or the proceeds therefor for the satisfaction of the Tenant's remedies
for the collection of a judgment (or other judicial process) requiring the
payment of money in the event of any default by the Lender as landlord under the
Lease. In addition, the Lender as holder of the Mortgage or as landlord under
the Lease if it succeeds to that position, shall in no event (i) be liable to
the Tenant for any act or omission of any prior landlord, (ii) be subject to any
offset or defense which the Tenant might have against any prior landlord, (iii)
be liable to the Tenant for any liability or obligation of any prior landlord
occurring prior to the date that the Lender or any subsequent owner acquires
title to the Premises, or (iv) be liable to the Tenant for any security or other
deposits given to secure the performance of the Tenant's obligations under the
Lease, except to the extent that the Lender shall have acknowledged actual
receipt of such security or other deposits in writing. No other property or
assets of the Lender shall be subject to levy, execution or other enforcement
procedure for the satisfaction of the Tenant's remedies under or with respect to
the Lease, the relationship of the landlord and the tenant thereunder or the
Tenant's use or occupancy of the Premises.
7. All notices and other communications hereunder shall be sent by
certified or registered mail (postage prepaid, return receipt requested) to the
Lender at the address set forth above, Attention: ________________________, or
to the Tenant at the address set forth in the Lease, or to such other address or
person as may be specified in a notice sent in accordance with the provisions of
this Section 7, and shall be deemed given when received at the addresses
specified above.
8. No prepayment of rent or additional rent due under the Lease of more
than one month in advance shall be binding upon the Lender, as holder of the
Mortgage or as landlord under the Lease if the Lender succeeds to that position,
unless consented to by the Lender, and from and after the date hereof, no
amendment, modification, surrender or cancellation of the Lease shall be binding
upon the Lender, as holder of the Mortgage or as landlord under the Lease if the
Lender succeeds to that position, unless such amendment, modification, surrender
or cancellation is done in compliance with the terms of the Mortgage.
9. This Agreement shall apply to, bind and inure to the benefit of the
parties hereto and their respective successors and assigns. As used herein, the
term Tenant shall mean and include the present tenant under the Lease, any
permitted subtenant under the Lease, any permitted assignee of the Lease and any
successor of any of them. The term Lender as used herein shall include the
holder of the Mortgage, the successors and assigns of the Lender, and any
person, party or entity which shall become the owner of the Mortgaged Property
by reason of a foreclosure of the Mortgage or the acceptance of a deed or
assignment in lieu of foreclosure or other proceedings for enforcement of the
Mortgage or otherwise. The term Landlord as used herein shall mean and include
the present landlord under the Lease and such landlord's predecessors and
successors in interest under the Lease.
C-3
10. This Agreement may not be modified in any manner or terminated except
by an instrument in writing executed by the parties hereto.
[11. This Agreement satisfies the condition to the subordination of
the Lease to the Mortgage set forth in Section ___ of the Lease with respect to
the execution and delivery of ______.]
12. This Agreement shall be governed by and construed in accordance with
the laws of the State of _________.
13. Both the Tenant and the Lender hereby irrevocably waive all right to
trial by jury in any action, proceeding or counterclaim arising out of or
relating to the Lease or this Agreement.
C-4
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
THE CAPITAL COMPANY OF AMERICA LLC
By: __________________________________
Name:
Title:
[TENANT]
By: __________________________________
Name:
Title:
▇-▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of _____________ 199_, before me personally came
____________________, to me known, who, being by me duly sworn, did depose and
say that he resides at _________________________ that he is a _____________ of
Capital Company of America LLC, the limited liability company described in and
which executed the foregoing instrument, and that he signed his name thereto by
order of the board of directors of said company.
________________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the _____ day of ___________ 199_, before me personally came
________________________, to me known, who, being by me duly sworn, did depose
and say that he resides at _______________ that he is a _________________ of
_______________________, the _____________________ describe in and which
executed the foregoing instrument, and that he signed his name thereto by order
of the board of directors of said corporation.
________________________________
Notary Public
C-6
EXHIBIT D
---------
Form of Notice to Tenants
[BORROWER'S NAME AND ADDRESS]
, 1998
-------------
[Name and Address of Tenant]
Re: Lease of Stores at
(the "Center")
--------------
Ladies and Gentlemen:
The undersigned is the Owner of the Center and the landlord under your
lease of a store at the Center (your "Lease").
By this letter, you are hereby directed (1) to make all checks, in
payment of rent and other sums due to the landlord under your Lease, payable to
the order of [applicable Clearing Bank], and (2) to deliver such checks or
otherwise make such payments to the following address:
[Name and Address of Clearing Bank]
The foregoing direction is irrevocable, except with the written
consent of our mortgagee, The Capital Company of America LLC (or its successors
or assigns), notwithstanding any future contrary request or direction from the
undersigned or any other person (other than The Capital Company of America LLC
(or its successors or assigns)). Thank you for your cooperation.
Very truly yours,
[BORROWER}
By:
-----------------------------
Name:
Title: