Exhibit 10.85
Loan No.: 57968
Servicing No.: 3179553
================================================================================
LOAN AGREEMENT
Dated as of April 8, 2004
Between
INLAND WESTERN ST. ▇▇▇▇▇▇, L.L.C.,
as Borrower
and
BANK OF AMERICA, N.A.,
as Lender
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION .............................................................. 1
Section 1.1. Definitions ............................................................................. 1
Section 1.2. Principles of Construction ..............................................................11
ARTICLE 2 GENERAL TERMS ........................................................................................11
Section 2.1. The Loan ................................................................................11
Section 2.2. Disbursement to Borrower ................................................................11
Section 2.3. The Note, Deed of Trust and Loan Documents ..............................................11
Section 2.4. Loan Payments ...........................................................................11
Section 2.5. Loan Prepayments ........................................................................11
ARTICLE 3 CONDITIONS PRECEDENT .................................................................................11
Section 3.1. Conditions Precedent ....................................................................11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES .......................................................................12
Section 4.1. Organization ............................................................................12
Section 4.2. Status of Borrower ......................................................................12
Section 4.3. Validity of Documents ...................................................................12
Section 4.4. No Conflicts ............................................................................13
Section 4.5. Litigation ..............................................................................13
Section 4.6. Agreements ..............................................................................13
Section 4.7. Solvency ................................................................................13
Section 4.8. Full and Accurate Disclosure ............................................................14
Section 4.9. No Plan Assets ..........................................................................14
Section 4.10. Not a Foreign Person ....................................................................14
Section 4.11. Enforceability ..........................................................................14
Section 4.12. Business Purposes .......................................................................15
Section 4.13. Compliance ..............................................................................15
Section 4.14. Financial Information ...................................................................15
Section 4 15. Condemnation ............................................................................15
Section 4.16. Utilities and Public Access; Parking ....................................................15
Section 4.17. Separate Lots ...........................................................................16
Section 4.18. Assessments .............................................................................16
Section 4.19. Insurance ...............................................................................16
Section 4.20. Use of Property .........................................................................16
Section 4.21. Certificate of Occupancy; Licenses ......................................................16
Section 4.22. Flood Zone ..............................................................................16
Section 4.23. Physical Condition ......................................................................17
Section 4.24. Boundaries ..............................................................................17
Section 4.25. Leases and Rent Roll ....................................................................17
Section 4.26. Filing and Recording Taxes ..............................................................18
Section 4.27. Management Agreement ....................................................................18
Section 4.28. Illegal Activity ........................................................................18
Section 4.29. Construction Expenses ...................................................................18
Section 4.30. Personal Property .......................................................................18
PAGE
Section 4.31. Taxes ...................................................................................19
Section 4.32. Permitted Encumbrances ..................................................................19
Section 4.33. Federal Reserve Regulations .............................................................19
Section 4.34. Investment Company Act ..................................................................19
Section 4.35. Reciprocal Easement Agreements ..........................................................19
Section 4.36. No Change in Facts or Circumstances; Disclosure .........................................20
Section 4.37. Intellectual Property ...................................................................20
Section 4.38. Survival ................................................................................20
ARTICLE 5 BORROWER COVENANTS ...................................................................................21
Section 5.1. Existence; Compliance with Legal Requirements ...........................................21
Section 5.2. Maintenance and Use of Property .........................................................21
Section 5.3. Waste ...................................................................................21
Section 5.4. Taxes and Other Charges .................................................................22
Section 5.5. Litigation ..............................................................................22
Section 5.6. Access to Property ......................................................................23
Section 5.7. Notice of Default .......................................................................23
Section 5.8. Cooperate in Legal Proceedings ..........................................................23
Section 5.9. Performance by Borrower .................................................................23
Section 5.10. Awards; Insurance Proceeds ..............................................................23
Section 5.11. Financial Reporting .....................................................................23
Section 5.12. Estoppel Statement ......................................................................25
Section 5.13. Leasing Matters .........................................................................25
Section 5.14. Property Management .....................................................................27
Section 5.15. Liens ...................................................................................28
Section 5.16. Debt Cancellation .......................................................................28
Section 5.17. Zoning ..................................................................................28
Section 5.18. ERISA ...................................................................................28
Section 5.19. No Joint Assessment .....................................................................29
Section 5.20. Reciprocal Easement Agreements ..........................................................29
ARTICLE 6 ENTITY COVENANTS .....................................................................................29
Section 6.1. Single Purpose Entity/Separateness ......................................................29
Section 6.2. Change of Name, Identity or Structure ...................................................32
Section 6.3. Business and Operations .................................................................33
ARTICLE 7 NO SALE OR ENCUMBRANCE ...............................................................................33
Section 7.1. Transfer Definitions ....................................................................33
Section 7.2. No Sale/Encumbrance .....................................................................33
Section 7.3. Permitted Transfers .....................................................................34
Section 7.4. Lender's Rights .........................................................................34
Section 7.5. Assumption ..............................................................................35
Section 7.6. Assumption by Inland Permitted Transferee ...............................................37
PAGE
ARTICLE 8 INSURANCE; CASUALTY; CONDEMNATION; RESTORATION .......................................................39
Section 8.1. Insurance ...............................................................................39
Section 8.2. Casualty ................................................................................42
Section 8.3. Condemnation ............................................................................42
Section 8.4. Restoration .............................................................................43
ARTICLE 9 RESERVE FUNDS ........................................................................................47
Section 9.1. Required Repairs ........................................................................47
Section 9.2. Replacements ............................................................................47
Section 9.3. Tenant Improvements and Leasing Commisions ..............................................48
Section 9.4. Required Work ...........................................................................48
Section 9.5. Release of Reserve Funds ................................................................50
Section 9.6. Tax and Insurance Reserve Funds .........................................................53
Section 9.7. Reserve Funds Generally .................................................................54
ARTICLE 10 [Reserved] ..........................................................................................56
ARTICLE 11 EVENTS OF DEFAULT; REMEDIES .........................................................................56
Section 11.1. Event of Default ........................................................................56
Section 11.2. Remedies ................................................................................58
ARTICLE 12 ENVIRONMENTAL PROVISIONS ............................................................................59
Section 12.1. Environmental Representations and Warranties ............................................59
Section 12.2. Environmental Covenants .................................................................60
Section 12.3. Lender's Rights .........................................................................60
Section 12.4. Operations and Maintenance Programs .....................................................61
Section 12.5. Environmental Definitions ...............................................................61
Section 12.6. Indemnification .........................................................................61
ARTICLE 13 SECONDARY MARKET ....................................................................................63
Section 13.1. Transfer of Loan ........................................................................63
Section 13.2. Delegation of Servicing .................................................................63
Section 13.3. Dissemination of Information ............................................................63
Section 13.4. Cooperation .............................................................................63
ARTICLE 14 INDEMNIFICATIONS ....................................................................................64
Section 14.1. General Indemnification .................................................................64
Section 14.2. Deed of Trust and Intangible Tax Indemnification ........................................65
Section 14.3. ERISA Indemnification ...................................................................65
Section 14.4. Survival ................................................................................65
ARTICLE 15 EXCULPATION .........................................................................................65
Section 15.1. Exculpation .............................................................................65
PAGE
ARTICLE 16 NOTICES .............................................................................................67
Section 16.1. Notices .................................................................................67
ARTICLE 17 FURTHER ASSURANCES ..................................................................................69
Section 17.1. Replacement Documents ...................................................................69
Section 17.2. Recording of Deed of Trust, etc .........................................................69
Section 17.3. Further Acts, etc .......................................................................69
Section 17.4. Changes in Tax, Debt, Credit and Documentary Stamp Laws .................................70
Section 17.5. Expenses ................................................................................70
ARTICLE 18 WAIVERS .............................................................................................71
Section 18.1. Remedies Cumulative; Waivers ............................................................71
Section 18.2. Modification, Waiver in Writing .........................................................71
Section 18.3. Delay Not a Waiver ......................................................................71
Section 18.4. Trial by Jury ...........................................................................72
Section 18.5. Waiver of Notice ........................................................................72
Section 18.6. Remedies of Borrower ....................................................................72
Section 18.7. Waiver of Marshalling of Assets .........................................................73
Section 18.8. Waiver of Statute of Limitations ........................................................73
Section 18.9. Waiver of Counterclaim ..................................................................73
Section 18.10. [Reserved] ..............................................................................73
ARTICLE 19 GOVERNING LAW .......................................................................................73
Section 19.1. Choice of Law ...........................................................................73
Section 19.2. Severability ............................................................................73
Section 19.3. Preferences .............................................................................74
ARTICLE 20 MISCELLANEOUS .......................................................................................74
Section 20.1. Survival ................................................................................74
Section 20.2. Headings ................................................................................74
Section 20.3. Cost of Enforcement .....................................................................74
Section 20.4. Schedules Incorporated ..................................................................74
Section 20.5. Offsets, Counterclaims and Defenses .....................................................75
Section 20.6. No Joint Venture or Partnership; No Third Party Beneficiaries ...........................75
Section 20.7. Publicity ...............................................................................76
Section 20.8. Conflict; Construction of Documents; Reliance ...........................................76
Section 20.9. Entire Agreement ........................................................................77
LOAN AGREEMENT
THIS
LOAN AGREEMENT, dated as of April 8, 2004 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), between BANK OF AMERICA, N.A., a national banking association,
having an address at Bank of America Corporate Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ NC1-027-20-01 (together with its successors and/or
assigns, "LENDER") and INLAND WESTERN ST. ▇▇▇▇▇▇, L.L.C. a Delaware limited
liability company, having an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ (together with its successors and/or assigns, "BORROWER").
RECITALS:
Borrower desires to obtain the Loan (defined below) from Lender.
Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents
(defined below).
In consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the
parties hereto hereby covenant, agree, represent and warrant as follows:
ARTICLE 1
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1. DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:
"ADDITIONAL REPLACEMENT" shall have the meaning set forth in Section 9.5(g)
hereof.
"ADDITIONAL REQUIRED REPAIR" shall have the meaning set forth in Section
9.5(f) hereof.
"AFFILIATE" shall mean, 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.
"AFFILIATED MANAGER" shall have the meaning set forth in Section 7.1
hereof.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean that certain Assignment and
Subordination of Management Agreement dated the date hereof among Lender,
Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"AWARD" shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of the Property.
1
"BORROWER PRINCIPAL" shall mean INLAND WESTERN RETAIL REAL ESTATE TRUST,
INC., a Maryland corporation
"BUSINESS DAY" shall mean a day on which Lender is open for the conduct of
substantially all of its banking business at its office in the city in which the
Note is payable (excluding Saturdays and Sundays).
"CASUALTY" shall have the meaning set forth in Section 8.2.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CONTROL" shall have the meaning set forth in Section 7.1 hereof.
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to its debts or debtors.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result, in lieu or in anticipation, of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Property, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Property or any
part thereof.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Deed of Trust or any other Loan Document.
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any date of determination,
for the applicable period of calculation, the ratio, as determined by Lender, of
(i) Net Operating Income to (ii) the aggregate amount of Debt Service which
would be due for the same period assuming the maximum principal amount of the
Loan is outstanding and calculated at the Note Rate.
"DEED OF TRUST" shall mean that certain first priority mortgage/deed of
trust/deed to secure debt and security agreement dated the date hereof, executed
and delivered by Borrower as security for the Loan and encumbering the Property,
as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"DEFAULT" shall mean the occurrence of any event hereunder or under any
other Loan Document which, but for the giving of notice or passage of time, or
both, would be an Event of Default.
"DEFAULT RATE" shall have the meaning set forth in the Note.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state chartered depository institution or
trust company which complies with the definition of
2
Eligible Institution or (b) 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 substantially similar to
12 C.F.R. Section 9.10(b), having in either case a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal and
state authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution or trust company
insured by the Federal Deposit Insurance Corporation, the short term unsecured
debt obligations or commercial paper of which are rated at least "A-1+" by S&P,
"P-l" by Moody's and "F-1+" by Fitch in the case of accounts in which funds are
held for thirty (30) days or less (or, in the case of accounts in which funds
are held for more than thirty (30) days, the long term unsecured debt
obligations of which are rated at least "AA" by Fitch and S&P and "Aa2" by
Moody's). Notwithstanding the foregoing, prior to a Securitization, Bank of
America, N.A. shall be an Eligible Institution.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL LIENS" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL REPORT" shall have the meaning set forth in Section 12.5
hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statutes thereto and applicable
regulations issued pursuant thereto in temporary or final form.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 11.1 hereof.
"FITCH" shall mean Fitch, Inc.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, department,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, state, county, municipal, city, town, special
district or otherwise) whether now or hereafter in existence.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 12.5
hereof.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause of
the Deed of Trust.
"INDEMNIFIED PARTIES" shall mean (a) Lender, (b) any prior owner or holder
of the Loan or Participations in the Loan, (c) any servicer or prior servicer of
the Loan, (d) any Investor or any prior Investor in any Securities, (e) any
trustees, custodians or other fiduciaries who hold or who have held a full or
partial interest in the Loan for the benefit of any Investor or other third
party, (f) any receiver or other fiduciary appointed in a foreclosure or other
Creditors Rights Laws proceeding, (g) any officers, directors, shareholders,
partners, members, employees, agents, servants, representatives, contractors,
subcontractors, affiliates or subsidiaries of any and all of the foregoing, and
(h) the heirs, legal representatives, successors and assigns of any and all
3
of the foregoing (including, without limitation, any successors by merger,
consolidation or acquisition of all or a substantial portion of the Indemnified
Parties' assets and business), in all cases whether during the term of the Loan
or as part of or following a foreclosure of the Deed of Trust.
"INLAND PERMITTED TRANSFEREE" shall mean a newly-formed special purpose
entity that is wholly-owned (directly or indirectly) by Inland Retail Real
Estate Trust, Inc., a Maryland corporation, Inland Western Retail Real Estate
Trust, Inc., a Maryland corporation, Inland Real Estate Corporation, a Maryland
corporation, or Inland Real Estate Investment Corporation, a Delaware
corporation.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section 8.1
hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"INVESTOR" shall have the meaning set forth in Section 13.3 hereof.
"LEASE" shall have the meaning set forth in the Deed of Trust.
"LEGAL REQUIREMENTS" shall mean all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting the Property or any part thereof, or the construction,
use, alteration or operation thereof, whether now or hereafter enacted and in
force, and all permits, licenses, authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Borrower, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use and enjoyment
thereof.
"LIEN" shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting Borrower, the Property, any portion thereof or any interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and
mechanic's, materialmen's and other similar liens and encumbrances.
"LLC AGREEMENT" shall have the meaning set forth in Section 6.1(c).
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Deed of Trust, the Assignment of Management Agreement, and any and all other
documents, agreements
4
and certificates executed and/or delivered in connection with the Loan, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"LOSSES" shall mean any and all claims, suits, liabilities (including,
without limitation, strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, fines, penalties, charges, fees,
judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to legal fees and other costs of defense).
"MAJOR LEASE" shall mean as to the Property (i) any Lease which,
individually or when aggregated with all other leases at the Property with the
same Tenant or its Affiliate, either (A) accounts for seven and one-half percent
(7.5%) or more of the Property's rental income, or (B) demises 7,500 square feet
or more of the Property's gross leasable area, (ii) any Lease which contains any
option, offer, right of first refusal or other similar entitlement to acquire
all or any portion of the Property, or (iii) any instrument guaranteeing or
providing credit support for any Lease meeting the requirements of (i) or (ii)
above.
"MANAGEMENT AGREEMENT" shall mean the management agreement entered into by
and between Borrower and the Manager, pursuant to which the Manager is to
provide management and other services with respect to the Property, as the same
may be amended, restated, replaced, supplemented or otherwise modified in
accordance with the terms of this Agreement.
"MANAGER" shall mean Inland Western Management Corp., or such other entity
selected as the manager of the Property in accordance with the terms of this
Agreement.
"MATURITY DATE" shall have the meaning set forth in the Note.
"MEMBER" shall have the meaning set forth in Section 6.1(c).
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investor Services, Inc.
"NET PROCEEDS" shall have the meaning set forth in Section 8.4(b) hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
8.4(b)(vi) hereof.
"NOTE" shall mean that certain promissory note of even date herewith in the
principal amount of $10,590,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining the Property, now or hereafter levied or assessed or
imposed against the Property or any part thereof.
"PARTICIPATIONS" shall have the meaning set forth in Section 13.1 hereof.
"PERMITTED ENCUMBRANCES" shall mean collectively, (a) the Lien and security
interests created by the Loan Documents, (b) all Liens, encumbrances and other
matters disclosed in the Title Insurance Policy, (c) Liens, if any, for Taxes
imposed by any Governmental Authority not
5
yet due or delinquent, and (d) such other title and survey exceptions as Lender
has approved or may approve in writing in Lender's sole discretion.
"PERMITTED INVESTMENTS" shall mean to the extent available from Lender or
Lender's servicer for deposits in the Reserve Accounts, any one or more of the
following obligations or securities acquired at a purchase price of not greater
than par, including those issued by a servicer of the Loan, the trustee under
any securitization or any of their respective Affiliates, payable on demand or
having a maturity date not later than the Business Day immediately prior to the
date on which the funds used to acquire such investment are required to be used
under this Agreement and meeting one of the appropriate standards set forth
below:
(a) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) be rated "AAA" or the equivalent by each of the Rating Agencies,
(iii) if rated by S&P, must not have an "r" highlighter affixed to their rating,
(iv) if such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (v) such investments must not be
subject to liquidation prior to their maturity;
(b) Federal Housing Administration debentures;
(c) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (i) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (ii) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(d) federal funds, unsecured certificates of deposit, time deposits,
bankers' acceptances and repurchase agreements with maturities of not more than
365 days of any bank, the short term obligations of which at all times are rated
in the highest short term rating category by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency in the highest
short term rating category and otherwise acceptable to each other Rating
6
Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities); provided, however,
that the investments described in this clause must (i) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (ii) if
rated by S&P, must not have an "r" highlighter affixed to their rating, (iii) if
such investments have a variable rate of interest, such interest rate must be
tied to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (iv) such investments must not be subject
to liquidation prior to their maturity;
(e) fully Federal Deposit Insurance Corporation-insured demand and time
deposits in, or certificates of deposit of, or bankers' acceptances with
maturities of not more than 365 days and issued by, any bank or trust company,
savings and loan association or savings bank, the short term obligations of
which at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise acceptable
to each other Rating Agency, as confirmed in writing that such investment would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities);
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(f) debt obligations with maturities of not more than 365 days and at all
times rated by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities) in its highest
long-term unsecured rating category; provided, however, that the investments
described in this clause must (i) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (ii) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (iii) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(g) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof) with
maturities of not more than 365 days and that at all times is rated by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as confirmed
in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest short-term unsecured
debt rating; provided, however, that the investments described in this clause
must (i) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (ii) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (iii) if such investments have a variable rate of
interest, such interest rate must be tied to a single
7
interest rate index plus a fixed spread (if any) and must move proportionately
with that index, and (iv) such investments must not be subject to liquidation
prior to their maturity;
(h) units of taxable money market funds or mutual funds, with maturities
of not more than 365 days and which funds are regulated investment companies,
seek to maintain a constant net asset value per share and invest solely in
obligations backed by the full faith and credit of the United States, which
funds have the highest rating available from each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to the
Securities) for money market funds or mutual funds; and
(i) any other security, obligation or investment which has been approved
as a Permitted Investment in writing by (i) Lender and (ii) each Rating Agency,
as evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;
PROVIDED, HOWEVER, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments, (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of one hundred twenty percent (120%) of
the yield to maturity at par of such underlying investment or (C) such
obligation or security has a remaining term to maturity in excess of one (1)
year.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting clause
of the Deed of Trust.
"PHYSICAL CONDITIONS REPORT" shall mean a report prepared by a company
satisfactory to Lender regarding the physical condition of the Property,
satisfactory in form and substance to Lender in its sole discretion.
"POLICIES" shall have the meaning specified in Section 8.1 hereof.
"PROHIBITED TRANSFER" shall have the meaning set forth in Section 7.2
hereof.
"PROPERTY" shall mean the parcel of real property, the Improvements thereon
and all Personal Property owned by Borrower and encumbered by the Deed of Trust,
together with all rights pertaining to such property and Improvements, as more
particularly described in the granting clause of the Deed of Trust and referred
to therein as the "Property".
"QUALIFIED MANAGER" shall mean (a) Manager or (b) a reputable and
experienced professional management organization (i) which manages, together
with its affiliates, at least ten
8
(10) shopping centers totaling at least 1,000,000 square feet of gross leasable
area, exclusive of the Property and (ii) approved by Lender, which approval
shall not have been unreasonably withheld and for which Lender shall have
received written confirmation from the Rating Agencies that the employment of
such manager will not result in a downgrade, withdrawal or qualification of the
initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization.
"RATING AGENCIES" shall mean each of S&P, ▇▇▇▇▇'▇ and Fitch, or any other
nationally-recognized statistical rating agency which has been approved by
Lender.
"REA" shall mean any construction, operation and reciprocal easement
agreement or similar agreement (including any separate agreement or other
agreement between Borrower and one or more other parties to an REA with respect
to such REA) affecting the Property or portion thereof.
"RELEASE" shall have the meaning set forth in Section 12.5 hereof.
"RENT ROLL" shall have the meaning set forth in Section 4.25 hereof.
"RENTS" shall have the meaning set forth in the Deed of Trust.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in Section
9.2(a) hereof.
"REPLACEMENT RESERVE FUNDS" shall have the meaning set forth in Section
9.2(b) hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth in
Section 9.2(b) hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 9.2(a) hereof.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in Section
9.l(b) hereof.
"REQUIRED REPAIR FUNDS" shall have the meaning set forth in Section 9.l(b)
hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section 9.1 (a)
hereof.
"REQUIRED WORK" shall have the meaning set forth in Section 9.4 hereof.
"RESERVE ACCOUNTS" shall mean the Required Repair Account, the Tax and
Insurance Reserve Account, the Replacement Reserve Account, or any other escrow
account established by the Loan Documents.
"RESERVE FUNDS" shall mean the Required Repair Funds, the Tax and Insurance
Reserve Funds, the Replacement Reserve Funds, or any other escrow funds
established by the Loan Documents.
9
"RESTORATION" shall mean, following the occurrence of a Casualty or a
Condemnation which is of a type necessitating the repair of the Property, the
completion of the repair and restoration of the Property as nearly as possible
to the condition the Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved by Lender.
"RESTORATION CONSULTANT" shall have the meaning set forth in Section
8.4(b)(iii) hereof.
"RESTORATION RETAINAGE" shall have the meaning set forth in Section
8.4(b)(iv) hereof.
"RESTRICTED PARTY" shall have the meaning set forth in Section 7.1 hereof.
"SALE OR PLEDGE" shall have the meaning set forth in Section 7.1 hereof.
"SCHEDULED PAYMENT DATE" shall have the meaning set forth in the Note.
"SECURITIES" shall have the meaning set forth in Section 13.1 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIZATION" shall have the meaning set forth in Section 13.1 hereof.
"SPECIAL MEMBER" shall have the meaning set forth in Section 6.l(c).
"SPE COMPONENT ENTITY" shall mean, if required by Lender under Article 6,
each general partner if Borrower is a partnership, or the managing member if
Borrower is a limited liability company, which entity shall be a corporation
whose sole asset is its interest in Borrower.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"STATE" shall mean the state in which the Property or any part thereof is
located.
"TAX AND INSURANCE RESERVE FUNDS" shall have the meaning set forth in
Section 9.6 hereof.
"TAX AND INSURANCE RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.6 hereof.
"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Property or part thereof.
"TENANT" shall mean any Person leasing, subleasing or otherwise occupying
any portion of the Property under a Lease or other occupancy agreement with
Borrower.
"TITLE INSURANCE POLICY" shall mean that certain ALTA mortgagee title
insurance policy issued with respect to the Property and insuring the lien of
the Deed of Trust.
10
"TRANSFEREE" shall have the meaning set forth in Section 7.5 hereof.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code
as in effect in the State where the applicable Property is located.
Section 1.2. PRINCIPLES OF CONSTRUCTION
All references to sections and schedules are to sections and schedules in
or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
ARTICLE 2
GENERAL TERMS
Section 2.1. THE LOAN
Subject to and upon the terms and conditions set forth herein, Lender
hereby agrees to make and Borrower hereby agrees to accept the Loan on the
Closing Date.
Section 2.2. DISBURSEMENT TO BORROWER
Borrower may request and receive only one borrowing in respect of the Loan
and any amount borrowed and repaid in respect of the Loan may not be reborrowed.
Section 2.3. THE NOTE, DEED OF TRUST AND LOAN DOCUMENTS
The Loan shall be evidenced by the Note and secured by the Deed of Trust
and the other Loan Documents.
Section 2.4. LOAN PAYMENTS
The Loan and interest thereon shall be payable pursuant to the terms of the
Note.
Section 2.5. LOAN PREPAYMENTS
The Loan may not be prepaid, in whole or in part, except in strict
accordance with the express terms and conditions of the Note.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1. CONDITIONS PRECEDENT
The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by Borrower or waiver by Lender of all of the conditions precedent
to closing set forth in the
11
application or term sheet for the Loan delivered by Borrower to Lender and any
commitment or commitment rider to the application for the Loan issued by Lender.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Borrower and, where specifically indicated, each Borrower Principal
represents and warrants to Lender as of the Closing Date that:
Section 4.1. ORGANIZATION
Borrower and Borrower Principal (when not an individual) (a) has been duly
organized and is validly existing and in good standing with requisite power and
authority to own its properties and to transact the businesses in which it is
now engaged, (b) is duly qualified to do business and is in good standing in
each jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations, (c) possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management and operation of
the Property, and (d) in the case of Borrower, has full power, authority and
legal right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer
and convey the Property pursuant to the terms of the Loan Documents, and in the
case of Borrower and Borrower Principal, has full power, authority and legal
right to keep and observe all of the terms of the Loan Documents to which it is
a party. Borrower and Borrower Principal represent and warrant that the chart
attached hereto as Exhibit A sets forth an accurate listing of the direct and
indirect owners of the equity interests in Borrower and Borrower Principal (when
not an individual).
Section 4.2. STATUS OF BORROWER
Borrower's exact legal name is correctly set forth on the first page of
this Agreement, on the Deed of Trust and on any UCC-1 Financing Statements filed
in connection with the Loan. Borrower is an organization of the type specified
on the first page of this Agreement. Borrower is organized under the laws of the
state of Delaware. Borrower's principal place of business and chief executive
office, and the place where Borrower keeps its books and records, including
recorded data of any kind or nature, regardless of the medium of recording,
including software, writings, plans, specifications and schematics, has been for
the preceding four months (or, if less, the entire period of the existence of
Borrower) the address of Borrower set forth on the first page of this Agreement.
Borrower's organizational identification number, if any, assigned by the state
of incorporation or organization is correctly set forth on the UCC financing
statements with respect to the Loan. Borrower's federal taxpayer identification
number, if available as of the date hereof, is correctly set forth on the first
page of the Note.
Section 4.3. VALIDITY OF DOCUMENTS
Borrower and Borrower Principal have taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents to which they are parties. This Agreement and such other
Loan Documents have been duly executed and delivered by or on behalf of Borrower
and Borrower Principal and constitute the legal, valid and
12
binding obligations of Borrower and Borrower Principal enforceable against
Borrower and Borrower Principal in accordance with their respective terms,
subject only to applicable bankruptcy, insolvency and similar laws affecting
rights of creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
Section 4.4. NO CONFLICTS
The execution, delivery and performance of this Agreement and the other
Loan Documents by Borrower and each Borrower Principal will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower or any Borrower Principal pursuant to the terms of any
agreement or instrument to which Borrower or any Borrower Principal is a party
or by which any of Borrower's or Borrower Principal's property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any Governmental Authority having
jurisdiction over Borrower or any Borrower Principal or any of Borrower's or
Borrower Principal's properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any Governmental
Authority required for the execution, delivery and performance by Borrower or
Borrower Principal of this Agreement or any of the other Loan Documents has been
obtained and is in full force and effect.
Section 4.5. LITIGATION
There are no actions, suits or proceedings at law or in equity by or before
any Governmental Authority or other agency now pending or, to Borrower's or
Borrower Principal's knowledge, threatened against or affecting Borrower, any
Borrower Principal, the Manager or the Property, which actions, suits or
proceedings, if determined against Borrower, any Borrower Principal, the Manager
or the Property, would materially adversely affect the condition (financial or
otherwise) or business of Borrower or any Borrower Principal or the condition or
ownership of the Property.
Section 4.6. AGREEMENTS
Borrower is not a party to any agreement or instrument or subject to any
restriction which would materially and adversely affect Borrower or the
Property, or Borrower's business, properties or assets, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or the Property is bound. Borrower has no material financial
obligation under any agreement or instrument to which Borrower is a party or by
which Borrower or the Property is otherwise bound, other than (a) obligations
incurred in the ordinary course of the operation of the Property and (b)
obligations under the Loan Documents.
Section 4.7. SOLVENCY
Borrower and each Borrower Principal have (a) not entered into the
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder,
13
delay or defraud any creditor and (b) received reasonably equivalent value in
exchange for their obligations under such Loan Documents. Giving effect to the
Loan, the fair saleable value of the assets of Borrower and each Borrower
Principal exceeds and will, immediately following the making of the Loan, exceed
the total liabilities of Borrower and each Borrower Principal, including,
without limitation, subordinated, unliquidated, disputed and contingent
liabilities. No petition in bankruptcy has been filed against Borrower, any
Borrower Principal, or Affiliated Manager in the last ten (10) years, and
neither Borrower, nor any Borrower Principal, or Affiliated Manager in the last
ten (10) years has made an assignment for the benefit of creditors or taken
advantage of any Creditors Rights Laws. Neither Borrower nor any Borrower
Principal, or Affiliated Manager is contemplating either the filing of a
petition by it under any Creditors Rights Laws or the liquidation of all or a
major portion of Borrower's assets or property, and Borrower has no knowledge of
any Person contemplating the filing of any such petition against Borrower or any
Borrower Principal, or Affiliated Manager.
Section 4.8. FULL AND ACCURATE DISCLOSURE
No statement of fact made by or on behalf of Borrower or any Borrower
Principal in this Agreement or in any of the other Loan Documents or in any
other document or certificate delivered by or on behalf of Borrower or any
Borrower Principal contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading. There is no material fact presently known to Borrower or any
Borrower Principal which has not been disclosed to Lender which adversely
affects, nor as far as Borrower or any Borrower Principal can reasonably
foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower or any Borrower Principal.
Section 4.9. NO PLAN ASSETS
Borrower is not an "employee benefit plan," as defined in Section 3(3) of
ERISA, subject to Title I of ERISA, and none of the assets of Borrower
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is not a
"governmental plan" within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower are not subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans
similar to the provisions of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code currently in effect, which prohibit or otherwise restrict
the transactions contemplated by this Agreement.
Section 4.10. NOT A FOREIGN PERSON
Neither Borrower nor Borrower Principal is a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code.
Section 4.11. ENFORCEABILITY
The Loan Documents are not subject to any right of rescission, set-off,
counterclaim or defense by Borrower, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither Borrower
nor Borrower Principal has asserted any right of rescission,
14
set-off, counterclaim or defense with respect thereto. No Default or Event of
Default exists under or with respect to any Loan Document.
Section 4.12. BUSINESS PURPOSES
The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.
Section 4.13. COMPLIANCE
To the best of Borrower's knowledge, Borrower and the Property, and the use
and operation thereof, comply in all material respects with all Legal
Requirements, including, without limitation, building and zoning ordinances and
codes and the Americans with Disabilities Act. To Borrower's knowledge, Borrower
is not in default or violation of any order, writ, injunction, decree or demand
of any Governmental Authority and Borrower has received no written notice of any
such default or violation. There has not been committed by Borrower or, to
Borrower's knowledge, any other Person in occupancy of or involved with the
operation or use of the Property any act or omission affording any Governmental
Authority the right of forfeiture as against the Property or any part thereof or
any monies paid in performance of Borrower's obligations under any of the Loan
Documents.
Section 4.14. FINANCIAL INFORMATION
All financial data, including, without limitation, the balance sheets,
statements of cash flow, statements of income and operating expense and rent
rolls, that have been delivered to Lender in respect of Borrower, any Borrower
Principal and/or the Property (a) are true, complete and correct in all material
respects, (b) accurately represent the financial condition of Borrower, Borrower
Principal or the Property, as applicable, as of the date of such reports, and
(c) to the extent prepared or audited by an independent certified public
accounting firm, have been prepared in accordance with tax basis accounting
throughout the periods covered, except as disclosed therein. Borrower does not
have any contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a material
adverse effect on the Property or the current and/or intended operation thereof,
except as referred to or reflected in said financial statements. Since the date
of such financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower or Borrower Principal
from that set forth in said financial statements.
Section 4.15. CONDEMNATION
No Condemnation or other proceeding has been commenced or, to Borrower's
knowledge, is threatened or contemplated with respect to all or any portion of
the Property or for the relocation of roadways providing access to the Property.
Section 4.16. UTILITIES AND PUBLIC ACCESS; PARKING
To the best of Borrower's knowledge, the Property has adequate rights of
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service
15
the Property for full utilization of the Property for its intended uses. All
public utilities necessary to the full use and enjoyment of the Property as
currently used and enjoyed are located either in the public right-of-way
abutting the Property (which are connected so as to serve the Property without
passing over other property) or in recorded easements serving the Property and
such easements are set forth in and insured by the Title Insurance Policy, All
roads necessary for the use of the Property for its current purposes have been
completed and dedicated to public use and accepted by all Governmental
Authorities. The Property has, or is served by, parking to the extent required
to comply with all Legal Requirements.
Section 4.17. SEPARATE LOTS
The Property is assessed for real estate tax purposes as one or more wholly
independent tax lot or lots, separate from any adjoining land or improvements
not constituting a part of such lot or lots, and no other land or improvements
is assessed and taxed together with the Property or any portion thereof.
Section 4.18. ASSESSMENTS
To Borrower's knowledge after due inquiry, there are no pending or proposed
special or other assessments for public improvements or otherwise affecting the
Property, nor are there any contemplated improvements to the Property that may
result in such special or other assessments.
Section 4.19. INSURANCE
Borrower has obtained and has delivered to Lender certified copies of all
Policies or, to the extent such Policies are not available as of the Closing
Date, certificates of insurance with respect to all such Policies reflecting the
insurance coverages, amounts and other requirements set forth in this Agreement.
No claims have been made under any of the Policies, and to Borrower's knowledge,
no Person, including Borrower, has done, by act or omission, anything which
would impair the coverage of any of the Policies.
Section 4.20. USE OF PROPERTY
The Property is used exclusively for general commercial purposes and other
appurtenant and related uses.
Section 4.21. CERTIFICATE OF OCCUPANCY; LICENSES
All certificates of occupancy and, to the best of Borrower's knowledge, all
other material certifications, permits, licenses and approvals, including,
without limitation, certificates of completion or occupancy and any applicable
liquor license required for the legal use, occupancy and operation of the
Property for the purpose intended herein, have been obtained and are valid and
in full force and effect. Borrower shall keep and maintain all licenses
necessary for the operation of the Property for the purpose intended herein. The
use being made of the Property is in conformity with the certificate of
occupancy and any permits or licenses issued for the Property.
Section 4.22. FLOOD ▇▇▇▇
▇▇
▇▇▇▇ of the Improvements on the Property are located in an area identified
by the Federal Emergency Management Agency as an area having special flood
hazards, or, if any portion of the Improvements is located within such area,
Borrower has obtained the insurance prescribed in Section 8.l(a)(i).
Section 4.23. PHYSICAL CONDITION
Based on the Physical Conditions Report and to Borrower's knowledge, the
Property, including, without limitation, all buildings, improvements, parking
facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC
systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects.
Based on the Physical Conditions Report and to Borrower's knowledge, there
exists no structural or other material defects or damages in the Property, as a
result of a Casualty or otherwise, and whether latent or otherwise. Borrower has
not received notice from any insurance company or bonding company of any defects
or inadequacies in the Property, or any part thereof, which would adversely
affect the insurability of the same or cause the imposition of extraordinary
premiums or charges thereon or of any termination or threatened termination of
any policy of insurance or bond.
Section 4.24. BOUNDARIES
(a) None of the Improvements which were included in determining the
appraised value of the Property lie outside the boundaries and building
restriction lines of the Property to any material extent, and (b) no
improvements on adjoining properties encroach upon the Property and no easements
or other encumbrances upon the Property encroach upon any of the Improvements so
as to materially affect the value or marketability of the Property.
Section 4.25. LEASES AND RENT ROLL
Borrower has delivered to Lender, to the best of Borrower's knowledge, a
true, correct and complete rent roll for the Property (a "RENT ROLL") which
includes all Leases affecting the 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 Roll (as same has been
updated by written notice thereof to Lender) and estoppel certificates delivered
to Lender on or prior to the Closing Date: (a) each Lease is in full force and
effect; (b) the premises demised under the Leases have been completed and the
Tenants under the Leases have accepted possession of and are in occupancy of all
of their respective demised premises; (c) the Tenants under the Leases have
commenced the payment of rent under the Leases, there are no offsets, claims or
defenses to the enforcement thereof, and Borrower has no monetary obligations to
any Tenant under any Lease; (d) all Rents due and payable under the Leases have
been paid and no portion thereof has been paid for any period more than thirty
(30) days in advance; (e) the rent payable under each Lease is the amount of
fixed rent set forth in the Rent Roll, and there is no claim or basis for a
claim by the Tenant thereunder for an offset or adjustment to the rent; (f) no
Tenant has made any written claim of a material default against the landlord
under any Lease which remains outstanding nor has Borrower or Manager received,
by telephonic, in-person, e-mail or other communication, any notice of a
material default under any Lease; (g) to Borrower's
17
knowledge there is no present material default by the Tenant under any Lease;
(h) all security deposits under the Leases have been collected by Borrower; (i)
Borrower is the sole owner of the entire landlord's interest in each Lease; (j)
each Lease is the valid, binding and enforceable obligation of Borrower and the
applicable Tenant thereunder and there are no agreements with the Tenants under
the Leases other than as expressly set forth in the Leases; (k) no Person has
any possessory interest in, or right to occupy, the Property or any portion
thereof except under the terms of a Lease; (1) none of the Leases contains any
option or offer to purchase or right of first refusal to purchase the Property
or any part thereof; and (m) neither the Leases nor the Rents have been
assigned, pledged or hypothecated except to Lender, and no other Person has any
interest therein except the Tenants thereunder.
Section 4.26. FILING AND RECORDING TAXES
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Deed of Trust, have been paid or will be paid, and,
under current Legal Requirements, the Deed of Trust is enforceable in accordance
with its terms by Lender (or any subsequent holder thereof).
Section 4.27. MANAGEMENT AGREEMENT
The Management Agreement is in full force and effect and there is no
default thereunder by any party thereto and, to Borrower's knowledge; no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder. No management fees under the Management
Agreement are accrued and unpaid.
Section 4.28. ILLEGAL ACTIVITY
No portion of the Property has been or will be purchased with proceeds of
any illegal activity, and no part of the proceeds of the Loan will be used in
connection with any illegal activity.
Section 4.29. CONSTRUCTION EXPENSES
All costs and expenses of any and all labor, materials, supplies and
equipment used in the construction maintenance or repair of the Improvements
have been paid in full. To Borrower's knowledge after due inquiry, there are no
claims for payment for work, labor or materials affecting the Property which are
or may become a lien prior to, or of equal priority with, the Liens created by
the Loan Documents.
Section 4.30. PERSONAL PROPERTY
Borrower has paid in full for, and is the owner of, all Personal Property
(other than tenants' property) used in connection with the operation of the
Property, free and clear of any and all security interests, liens or
encumbrances, except for Permitted Encumbrances and the Lien and security
interest created by the Loan Documents.
18
Section 4.31. TAXES
Borrower and Borrower Principal have filed all federal, state, county,
municipal, and city income, personal property and other tax returns required to
have been filed by them and have paid all taxes and related liabilities which
have become due pursuant to such returns or pursuant to any assessments received
by them. Neither Borrower nor Borrower Principal knows of any basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.
Section 4.32. PERMITTED ENCUMBRANCES
None of the Permitted Encumbrances, individually or in the aggregate,
materially interferes with the benefits of the security intended to be provided
by the Loan Documents, materially and adversely affects the value of the
Property, impairs the use or the operation of the Property or impairs Borrower's
ability to pay its obligations in a timely manner.
Section 4.33. 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
which would be inconsistent with such Regulation U or any other Regulations of
such Board of Governors, or for any purposes prohibited by Legal Requirements or
prohibited by the terms and conditions of this Agreement or the other Loan
Documents.
Section 4.34. INVESTMENT COMPANY ACT
Borrower is not (a) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended; (b) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended; or (c) subject to any other federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.
Section 4.35. RECIPROCAL EASEMENT AGREEMENTS
(a) To the best of Borrower's knowledge, neither Borrower, nor any other
party is currently in default (nor has any notice been given or received with
respect to an alleged or current default) under any of the terms and conditions
of the REA, and the REA remains unmodified and in full force and effect;
(b) All easements granted pursuant to the REA which were to have survived
the site preparation and completion of construction (to the extent that the
same has been completed), remain in fall force and effect and have not been
released, terminated, extinguished or discharged by agreement or otherwise;
(c) To the best of Borrower's knowledge, all sums due and owing by
Borrower to the other parties to the REA (or by the other parties to the REA to
the Borrower) pursuant to the
19
terms of the REA, including without limitation, all sums, charges, fees,
assessments, costs, and expenses in connection with any taxes, site preparation
and construction, non-shareholder contributions, and common area and other
property management activities have been paid, are current, and no lien has
attached on the Property (or threat thereof been made) for failure to pay any of
the foregoing;
(d) The terms, conditions, covenants, uses and restrictions contained in
the REA do not conflict in any manner with any terms, conditions, covenants,
uses and restrictions contained in any Lease or in any agreement between
Borrower and occupant of any peripheral parcel, including without limitation,
conditions and restrictions with respect to kiosk placement, tenant restrictions
(type, location or exclusivity), sale of certain goods or services, and/or other
use restrictions; and
(e) The terms, conditions, covenants, uses and restrictions contained in
each Lease do not conflict in any manner with any terms, conditions, covenants,
uses and restrictions contained in the REA, any other Lease or in any agreement
between Borrower and occupant of any peripheral parcel, including without
limitation, conditions and restrictions with respect to kiosk placement, tenant
restrictions (type, location or exclusivity), sale of certain goods or services,
and/or other use restrictions.
Section 4.36. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE
All information submitted by Borrower or its agents to Lender and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower in this Agreement or in any other
Loan Document, are accurate, complete and correct in all material respects.
There has been no material adverse change in any condition, fact, circumstance
or event that would make any such information inaccurate, incomplete or
otherwise misleading in any material respect or that otherwise materially and
adversely affects or might materially and adversely affect the Property or the
business operations or the financial condition of Borrower. Borrower has
disclosed to Lender all material facts and has not failed to disclose any
material fact that could cause any representation or warranty made herein to be
materially misleading.
Section 4.37. INTELLECTUAL PROPERTY
All trademarks, trade names and service marks necessary to the business of
Borrower as presently conducted or as Borrower contemplates conducting its
business are in good standing and, to the extent of Borrower's actual knowledge,
uncontested. To the best of Borrower's knowledge, Borrower has not infringed, is
not infringing, and has not received notice of infringement with respect to
asserted trademarks, trade names and service marks of others. To Borrower's
knowledge, there is no infringement by others of trademarks, trade names and
service marks of Borrower.
Section 4.38. SURVIVAL
Borrower agrees that, unless expressly provided otherwise, all of the
representations and warranties of Borrower set forth in this Article 4 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any portion of the Debt remains owing to
20
Lender. All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents by Borrower shall be deemed to have
been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.
ARTICLE 5
BORROWER COVENANTS
From the date hereof and until repayment of the Debt in full and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Deed of Trust (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:
Section 5.1. EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS
(a) Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to it and the Property. Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording any Governmental
Authority the right of forfeiture as against the Property or any part thereof or
any monies paid in performance of Borrower's obligations under any of the Loan
Documents. Borrower shall at all times maintain, preserve and protect all
franchises and trade names used in connection with the operation of the
Property.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the Legal Requirements affecting the
Property, provided that (i) no Default or Event of Default has occurred and is
continuing; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower or the
Property is subject and shall not constitute a default thereunder; (iii) neither
the Property, any part thereof or interest therein, any of the tenants or
occupants thereof, nor Borrower shall be affected in any material adverse way as
a result of such proceeding; (iv) non-compliance with the Legal Requirements
shall not impose civil or criminal liability on Borrower or Lender; (v) Borrower
shall have furnished the security as may be required in the proceeding or by
Lender to ensure compliance by Borrower with the Legal Requirements; and (vi)
Borrower shall have furnished to Lender all other items reasonably requested by
Lender.
Section 5.2. MAINTENANCE AND USE OF PROPERTY
Borrower shall cause the Property to be maintained in a good and safe
condition and repair. The Improvements and the Personal Property shall not be
removed, demolished or except as may be expressly permitted under the existing
leases without the consent of landlord thereunder, materially altered (except
for normal replacement of the Personal Property and alterations to the Parcel)
without the consent of Lender. If under applicable zoning provisions the use of
all or any portion of the Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or
the nonconforming Improvement to be abandoned without the express written
consent of Lender.
Section 5.3. WASTE
21
Borrower shall not commit or suffer any waste of the Property or make any
change in the use of the Property which will in any way materially increase the
risk of fire or other hazard arising out of the operation of the Property, or
take any action that might invalidate or give cause for cancellation of any
Policy, or do or permit to be done thereon anything that may in any way impair
the value of the Property or the security for the Loan. Borrower will not,
without the prior written consent of Lender, permit (to the extent that Borrower
has the right to do so) any drilling or exploration for or extraction, removal,
or production of any minerals from the surface or the subsurface of the
Property, regardless of the depth thereof or the method of mining or extraction
thereof.
Section 5.4. TAXES AND OTHER CHARGES
(a) Borrower shall pay all Taxes and Other Charges now or hereafter levied
or assessed or imposed against the Property or any part thereof as the same
become due and payable. Borrower shall furnish or cause to be furnished to
Lender all receipts for the payment of the Taxes and the Other Charges and upon
request by Lender, a certificate from Borrower and Borrower Principal that
indicates that, as of the date of such certificate, there are no liens filed
against the Property arising from the non-payment of Taxes or Other Charges.
Borrower shall not suffer nor permit any Tenant to suffer and shall promptly
cause to be paid and discharged any Lien or charge whatsoever which may be or
become a Lien or charge against the Property, and shall promptly pay for all
utility services provided to the Property.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i) no Default or
Event of Default has occurred and remains uncured; (ii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable Legal Requirements; (iii) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of such contested Taxes or Other Charges
from the Property; and (vi) Borrower shall furnish such security as may be
required in the proceeding, or deliver to Lender such reserve deposits as may be
requested by Lender, to insure the payment of any such Taxes or Other Charges,
together with all interest and penalties thereon (unless Borrower has paid all
of the Taxes or Other Charges under protest). Lender may pay over any such cash
deposit or part thereof held by Lender to the claimant entitled thereto at any
time when, in the judgment of Lender, the entitlement of such claimant is
established or the Property (or part thereof or interest therein) shall be in
danger of being sold, forfeited, terminated, canceled or lost or there shall be
any danger of the Lien of the Deed of Trust being primed by any related Lien.
Section 5.5. LITIGATION
22
Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened in writing against Borrower which
might materially adversely affect Borrower's condition (financial or otherwise)
or business or the Property.
Section 5.6. ACCESS TO PROPERTY
Borrower shall permit agents, representatives and employees of Lender to
inspect the Property or any part thereof at reasonable hours upon reasonable
advance notice, subject to the rights of tenants under Leases.
Section 5.7. NOTICE OF DEFAULT
Borrower shall promptly advise Lender of any material adverse change in the
condition (financial or otherwise) of Borrower, any Borrower Principal or the
Property or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.
Section 5.8. COOPERATE IN LEGAL PROCEEDINGS
Borrower shall at Borrower's expense cooperate fully with Lender with
respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Lender hereunder or any
rights obtained by Lender under any of the other Loan Documents and, in
connection therewith, permit Lender, at its election, to participate in any such
proceedings.
Section 5.9. PERFORMANCE BY BORROWER
Borrower shall in a timely manner observe, perform and fulfill each and
every covenant, term and provision to be observed and performed by Borrower
under this Agreement and the other Loan Documents and any other agreement or
instrument affecting or pertaining to the Property and any amendments,
modifications or changes thereto.
Section 5.10. AWARDS; INSURANCE PROCEEDS
Borrower shall cooperate with Lender in obtaining for Lender the benefits
of any Awards or Insurance Proceeds lawfully or equitably payable in connection
with the Property, and Lender shall be reimbursed for any expenses incurred in
connection therewith (including reasonable, actual attorneys' fees and
disbursements, and the payment by Borrower of the expense of an appraisal on
behalf of Lender in case of a Casualty or Condemnation affecting the Property or
any part thereof) out of such Awards or Insurance Proceeds. The actual payment
of any Awards shall be governed by Section 8.4 hereof.
Section 5.11. FINANCIAL REPORTING
(a) Borrower and Borrower Principal shall keep adequate books and records
of account in accordance with federal tax basis accounting or in accordance with
other methods acceptable to Lender in its sole discretion, consistently applied
and shall furnish to Lender:
23
(i) quarterly and annual (and prior to a Securitization, if
requested by Lender, monthly) certified rent rolls signed and dated by
Borrower, detailing the names of all Tenants of the Improvements, the
portion of Improvements (in terms of square footage) occupied by each
Tenant, the base rent, additional rent and any other charges payable under
each Lease (including, by separate report, annual store sales required to
be reported by Tenant under any Lease), and the term of each Lease,
including the commencement and expiration dates and any tenant extension,
expansion or renewal options, the extent to which any Tenant is in material
default under any Lease, by separate report, and any other information as
is reasonably required by Lender, within twenty (20) days after the end of
each calendar month, forty-five (45) days after the end of each fiscal
quarter or one hundred twenty (120) days after the close of each fiscal
year of Borrower, as applicable;
(ii) quarterly and annual (and prior to a Securitization, if
requested by Lender, monthly) operating statements of the Property,
prepared and certified by Borrower in the form required by Lender,
detailing the revenues received, the expenses incurred and the net
operating income before and after debt service (principal and interest) and
major capital improvements (including, without limitation, any capital
improvements planned) for the period of calculation and containing
appropriate year-to-date information, within twenty (20) days after the end
of each calendar month, forty-five (45) days after the end of each fiscal
quarter or one hundred twenty (120) days after the close of each fiscal
year of Borrower, as applicable;
(iii) annual balance sheets, profit and loss statements,
statements of cash flows, and statements of change in financial position of
Borrower, as applicable, and Borrower Principal in the form required by
Lender, prepared and certified by Borrower and Borrower Principal, within
one hundred twenty (120) days after the close of each fiscal year of
Borrower and Borrower Principal, as the case may be.
(b) Upon request from Lender, Borrower shall promptly furnish to Lender:
(i) a property management report for the Property, showing the number
of inquiries made and/or rental applications received from tenants or
prospective tenants and deposits received from tenants and any other
information requested by Lender, in reasonable detail and certified by
Borrower, but no more frequently than quarterly;
(ii) an accounting of all security deposits held in connection with
any Lease of any part of the Property, including the name and
identification number of the accounts in which such security deposits are
held, the name and address of the financial institutions in which such
security deposits are held and the name of the Person to contact at such
financial institution, along with any authority or release necessary for
Lender to obtain information regarding such accounts directly from such
financial institutions; and
(c) a report of all 1etters of credit provided by any Tenant in connection
with any Lease of any part of the Property, including the account numbers of
such letters of credit, the names and addresses of the financial institutions
that issued such letters of credit and the names
24
of the Persons to contact at such financial institutions, along with any
authority or release necessary for Lender to obtain information regarding such
letters of credit directly from such financial institutions
(d) To the extent not inconsistent with the provisions of Section 5.11(a)
hereof (e.g., GAAP accounting and audits shall not be required), Borrower and
Borrower Principal shall furnish Lender with such other additional financial or
management information (including state and federal tax returns) as may, from
time to time, be reasonably required by Lender in form and substance
satisfactory to Lender (including, without limitation, any financial reports
required to be delivered by any Tenant or any guarantor of any Lease pursuant to
the terms of such Lease), and shall furnish to Lender and its agents convenient
facilities for the examination and audit of any such books and records.
(e) All items requiring the certification of Borrower shall, except where
Borrower is an individual, require a certificate executed by the general
partner, managing member or chief executive officer of Borrower, as applicable
(and the same rules shall apply to any sole shareholder, general partner or
managing member which is not an individual).
(f) Without limiting any other rights available to Lender under this
Loan
Agreement or any of the other Loan Documents, in the event Borrower shall fail
to timely furnish Lender any financial document or statement in accordance with
this Section 5.11, Borrower shall promptly pay to Lender a non-refundable
charge in the amount of $500 for each such failure after written notice and a
five (5) day cure period. The payment of such amount shall not be construed to
relieve Borrower of any Event of Default hereunder arising from such failure.
Section 5.12. ESTOPPEL STATEMENT
(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the rate of
interest on the Note, (iii) the unpaid principal amount of the Note, (iv) the
date installments of interest and/or principal were last paid, (v) any offsets
or defenses to the payment of the Debt, if any, and (vi) that the Note, this
Agreement, the Deed of Trust and the other Loan Documents are valid, legal and
binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) Borrower shall use its best efforts to deliver to Lender, promptly
upon request, duly executed estoppel certificates from any one or more Tenants
as required by Lender attesting to such facts regarding the related Lease as
Lender may require, including, but not limited to attestations that each Lease
covered thereby is in full force and effect with no defaults thereunder on the
part of any party, that none of the Rents have been paid more than one month in
advance, except as security, and that the Tenant claims no defense or offset
against the full and timely performance of its obligations under the Lease.
Section 5.13. LEASING MATTERS.
(a) Borrower may enter into a proposed Lease (including the renewal or
extension of an existing Lease (a "RENEWAL LEASE")) without the prior written
consent of Lender, provided such proposed Lease or Renewal Lease (i) provides
for rental rates and terms comparable to
25
existing local market rates and terms (taking into account the type and quality
of the tenant) as of the date such Lease is executed by Borrower (unless, in the
case of a Renewal Lease, the rent payable during such renewal, or a formula or
other method to compute such rent, is provided for in the original Lease), (ii)
is an arm's-length transaction with a bona fide, independent third party tenant,
(iii) does not have a materially adverse effect on the value of the Property
taken as a whole, (iv) is subject and subordinate to the Deed of Trust and the
Tenant thereunder agrees to attorn to Lender, (v) does not contain any option,
offer, right of first refusal, or other similar right to acquire all or any
portion of the Property, (vi) has a base term of less than fifteen (15) years
including options to renew, (vii) has no rent, credits, free rents or
concessions granted thereunder, other than commercially reasonable tenant
improvement allowances and commercially reasonable rent abatements consistent
with other comparable leases within the local market and (viii) is written on
the standard form of lease approved by Lender. All proposed Leases which do not
satisfy the requirements set forth in this subsection shall be subject to the
prior approval of Lender and its counsel, at Borrower's expense. Borrower shall
promptly deliver to Lender copies of all Leases which are entered into pursuant
to this subsection together with Borrower's certification that it has satisfied
all of the conditions of this Section.
(b) Borrower (i) shall observe and perform all the obligations imposed
upon the landlord under the Leases and shall not do or permit to be done
anything to impair the value of any of the Leases as security for the Debt; (ii)
shall promptly send copies to Lender of all notices of default which Borrower
shall send or receive thereunder; (iii) shall enforce all of the material terms,
covenants and conditions contained in the Leases upon the part of the tenant
thereunder to be observed or performed; (iv) shall not collect any of the Rents
more than one (1) month in advance (except security deposits shall not be deemed
Rents collected in advance); (v) shall not execute any other assignment of the
landlord's interest in any of the Leases or the Rents; and (vi) shall not
consent to any assignment of or subletting under any Leases not in accordance
with their terms, without the prior written consent of Lender.
(c) Borrower may, without the consent of Lender, amend, modify or waive
the provisions of any Lease or terminate, reduce Rents under, accept a surrender
of space under, or shorten the term of, any Lease (including any guaranty,
letter of credit or other credit support with respect thereto) provided that
such action (taking into account, in the case of a termination, reduction in
rent, surrender of space or shortening of term, the planned alternative use of
the affected space) does not have a materially adverse effect on the value of
the Property taken as a whole, and provided that such Lease, as amended,
modified or waived, is otherwise in compliance with the requirements of this
Agreement and any subordination agreement binding upon Lender with respect to
such Lease. A termination of a Lease with a tenant who is in default beyond
applicable notice and grace periods shall not be considered an action which has
a materially adverse effect on the value of the Property taken as a whole. Any
amendment, modification, waiver, termination, rent reduction, space surrender or
term shortening which does not satisfy the requirements set forth in this
subsection shall be subject to the prior approval of Lender and its counsel, at
Borrower's expense. Borrower shall promptly deliver to Lender copies of
amendments, modifications and waivers which are entered into pursuant to this
subsection together with Borrower's certification that it has satisfied all of
the conditions of this subsection.
26
(d) Notwithstanding anything contained herein to the contrary, Borrower
shall not, without the prior written consent of Lender, enter into, renew,
extend, amend, modify, waive any provisions of, terminate, reduce Rents under,
accept a surrender of space under, or shorten the term of any Major Lease.
Section 5.14. PROPERTY MANAGEMENT
(a) Borrower shall (i) 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; (ii) promptly notify Lender of any default under the Management
Agreement of which it is aware; (iii) promptly deliver to Lender a copy of any
notice of default or other material notice received by Borrower under the
Management Agreement; (iv) promptly give notice to Lender of any notice or
information that Borrower receives which indicates that the Manager is
terminating the Management Agreement or that the Manager is otherwise
discontinuing its management of the Property; 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.
(b) If at any time, (i) the Manager shall become insolvent or a debtor in
a bankruptcy proceeding; (ii) an Event of Default has occurred and is
continuing; or (iii) a default has occurred and is continuing after the
expiration of any applicable cure periods under the Management Agreement,
Borrower shall, at the request of Lender, terminate the Management Agreement
upon thirty (30) days prior notice to Manager and replace Manager with a
Qualified Manager, it being understood and agreed that the management fee for
such replacement manager shall not exceed then prevailing market rates.
(c) In addition to the foregoing, in the event that Lender, in Lender's
reasonable discretion, at any time prior to the termination of the Assignment of
Management Agreement, determines that the Property is not being managed in
accordance with generally accepted management practices for projects similarly
situated, Lender may deliver written notice thereof to Borrower and the Manager,
which notice shall specify with particularity the grounds for Lender's
determination. If Lender reasonably determines that the conditions specified in
Lender's notice are not remedied to Lender's reasonable satisfaction by Borrower
or the Manager within thirty (30) days from the date of such notice or that
Borrower or the Manager have failed to diligently undertake correcting such
conditions within such thirty (30) day period, Lender may direct Borrower to
terminate the Management Agreement and to replace the Manager with a Qualified
Manager on terms and conditions satisfactory to Lender, it being understood and
agreed that the management fee for such replacement manager shall not exceed
then prevailing market rates.
(d) Borrower shall not, without the prior written consent of Lender (which
consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement or otherwise replace
Manager or enter into any other management agreement with respect to the
Property; (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; or (iv) otherwise modify, change,
supplement, alter or
27
amend, or waive or release any of its rights and remedies under, the Management
Agreement in any material respect.
Section 5.15. LIENS
Borrower shall not, without the prior written consent of Lender, create,
incur, assume or suffer to exist any Lien on any portion of the Property or
permit any such action to be taken, except Permitted Encumbrances.
Section 5.16. DEBT CANCELLATION
Borrower shall not cancel or otherwise forgive or release any claim or debt
(other than termination of Leases in accordance herewith) owed to Borrower by
any Person, except for adequate consideration and in the ordinary course of
Borrower's business.
Section 5.17. Zoning
Borrower shall not initiate or consent to any zoning reclassification of
any portion of the Property or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of the Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior consent of Lender.
Section 5.18. ERISA
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (i) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(B) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2);
or
(C) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R. Section
2510.3-101(c) or (e).
28
Section 5.19. NO JOINT ASSESSMENT
Borrower shall not suffer, permit or initiate the joint assessment of the
Property with (a) any other real property constituting a tax lot separate from
the Property, or (b) any portion of the Property which may be deemed to
constitute personal property, or any other procedure whereby the Lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Property.
Section 5.20. RECIPROCAL EASEMENT AGREEMENTS
Borrower shall not enter into, terminate or modify any REA without Lender's
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed. Borrower shall enforce, comply with, and cause each of
the parties to the REA to comply with all of the material economic terms and
conditions contained in the REA, provided that Borrower may agree, without
Lender's consent, to modifications to any REA or to grant easements with respect
to the Property which could not reasonably be expected to have a material
adverse affect on the use, value or operation of the Property or on Borrower's
ability to perform its obligations under the Loan Documents.
ARTICLE 6
ENTITY COVENANTS
Section 6.1. SINGLE PURPOSE ENTITY/SEPARATENESS
Until the Debt has been paid in full, Borrower represents, warrants and
covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership,
operation and maintenance of the Property, and activities incidental
thereto;
(ii) acquire or own any assets other than (A) the Property, and
(B) such incidental Personal Property as may be necessary for the operation
of the Property;
(iii) merge into or consolidate with any Person, or dissolve,
terminate, liquidate in whole or in part, transfer or otherwise dispose of
all or substantially all of its assets or change its legal structure;
(iv) fail to observe all organizational formalities, or fail to
preserve its existence as an entity duly organized, validly existing and in
good standing (if applicable) under the applicable Legal Requirements of
the jurisdiction of its organization or formation, or amend, modify,
terminate or fail to comply with the provisions of its organizational
documents;
(v) own any subsidiary, or make any investment in, any Person;
29
(vi) commingle its assets with the assets of any other Person;
(vii) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (A) the Debt, (B) trade
and operational indebtedness incurred in the ordinary course of business
with trade creditors, provided such indebtedness is (1) unsecured, (2) not
evidenced by a note, (3) on commercially reasonable terms and conditions,
and (4) due not more than sixty (60) days past the date incurred and paid
on or prior to such date, and/or (C) financing leases and purchase money
indebtedness incurred in the ordinary course of business relating to
Personal Property on commercially reasonable terms and conditions; provided
however, the aggregate amount of the indebtedness described in (B) and (C)
shall not exceed at any time three percent (3%) of the outstanding
principal amount of the Note;
(viii) fail to maintain its records, books of account, bank
accounts, financial statements, accounting records and other entity
documents separate and apart from those of any other Person; except that
Borrower's financial position, assets, liabilities, net worth and operating
results may be included in the consolidated financial statements of an
Affiliate, provided that such consolidated financial statements contain a
footnote indicating that Borrower is a separate legal entity and that it
maintains separate books and records;
(ix) enter into any contract or agreement with any general
partner, member, shareholder, principal, guarantor of the obligations of
Borrower, or any Affiliate of the foregoing, except upon terms and
conditions that are intrinsically fair, commercially reasonable and
substantially similar to those that would be available on an arm's-length
basis with unaffiliated third parties; (the Management Agreement shall be
deemed to comply with this subsection);
(x) maintain its assets in such a manner that it will be costly
or difficult to segregate, ascertain or identity its individual assets from
those of any other Person;
(xi) assume or guaranty the debts of any other Person, hold itself
out to be responsible for the debts of any other Person, or otherwise
pledge its assets for the benefit of any other Person or hold out its
credit as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person;
(xiii) fail to file its own tax returns or be included on the tax
returns of any other person or entity except as required by Applicable Law
and to the extent not treated as a "disregarded entity" under Applicable
Law;
(xiv) fail either to hold itself out to the public as a legal
entity separate and distinct from any other Person or to conduct its
business solely in its own name or fail to correct any known
misunderstanding regarding its separate identity;
(xv) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light
of its contemplated business
30
operations (provided that Borrower's failure to do so solely because of a
shortfall in cash flow derived from the operation of the Property shall
not, by itself, constitute a breach of this covenant);
(xvi) without the unanimous written consent of all of its partners
or members, as applicable, and the written consent of 100% of the
directors/managers of each SPE Component Entity (if any), (a) file or
consent to the filing of any petition, either voluntary or involuntary, to
take advantage of any Creditors Rights Laws, (b) seek or consent to the
appointment of a receiver, liquidator or any similar official, (c) take any
action that might cause such entity to become insolvent, or (d) make an
assignment for the benefit of creditors;
(xvii) fail to allocate shared expenses (including, without
limitation, shared office space and services performed by an employee of an
Affiliate) among the Persons sharing such expenses and to use separate
stationery, invoices and checks;
(xviii) fail to remain solvent or pay its own liabilities (including,
without limitation, salaries of its own employees) only from its own
funds (provided that Borrower's failure to do so solely because of a
shortfall in cash flow derived from the operation of the Property shall
not, by itself, constitute a breach of this covenant);
(xix) acquire obligations or securities of its partners, members,
shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with
respect to Borrower and its principals in any opinion letter pertaining to
substantive consolidation delivered to Lender in connection with the Loan;
or
(xxi) fail to maintain a sufficient number of employees in light of
its contemplated business operations.
(b) If Borrower is a partnership or limited liability company, each
general partner in the case of a partnership, or the managing member in the case
of a limited liability company (each an "SPE COMPONENT ENTITY") of Borrower, as
applicable, shall be a corporation whose sole asset is its interest in Borrower.
Each SPE Component Entity (i) will at all times comply with each of the
covenants, terms and provisions contained in Section 6.1(a)(iii) - (vi) and
(viii) - (xxi), as if such representation, warranty or covenant was made
directly by such SPE Component Entity; (ii) will not engage in any business or
activity other than owning an interest in Borrower; (iii) will not acquire or
own any assets other than its partnership, membership, or other equity interest
in Borrower; (iv) will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation); and (v) will cause Borrower
to comply with the provisions of this Section 6.1. Prior to the withdrawal or
the disassociation of any SPE Component Entity from Borrower, Borrower shall
immediately appoint a new general partner or managing member whose articles of
incorporation are substantially similar to those of such SPE Component Entity
and, if an opinion letter pertaining to substantive consolidation was required
at closing, deliver a new opinion letter acceptable to Lender and the Rating
Agencies with respect to the new SPE Component Entity and its equity owners.
Notwithstanding the foregoing,
31
to the extent Borrower is a single member Delaware limited liability company, so
long as Borrower maintains such formation status, no SPE Component Entity shall
be required.
(c) In the event Borrower is a single member Delaware limited liability
company, the limited liability company agreement of Borrower (the "LLC
AGREEMENT") shall provide that (i) upon the occurrence of any event that causes
the sole member of Borrower ("MEMBER") to cease to be the member of Borrower
(other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee, or (B) the
resignation of Member and the admission of an additional member, in either case
in accordance with the terms of the Loan Documents and the LLC Agreement), the
person executing the LLC Agreement as a "Special Member" (as such term is
defined in the LLC Agreement) ("SPECIAL MEMBER") shall, without any action of
any other Person and simultaneously with the Member ceasing to be the member of
Borrower, automatically be admitted to Borrower and shall continue Borrower
without dissolution and (ii) Special Member may not resign from Borrower or
transfer its rights as Special Member unless a successor Special Member has been
admitted to Borrower as Special Member in accordance with requirements of
Delaware law. The LLC Agreement shall further provide that (i) Special Member
shall automatically cease to be a member of Borrower upon the admission to
Borrower of a substitute Member, (ii) Special Member shall be a member of
Borrower that has no interest in the profits, losses and capital of Borrower and
has no right to receive any distributions of Borrower assets, (iii) pursuant to
Section 18-301 of the Delaware Limited Liability Company Act (the "ACT"),
Special Member shall not be required to make any capital contributions to
Borrower and shall not receive a limited liability company interest in Borrower,
(iv) Special Member, in its capacity as Special Member, may not bind Borrower
and (v) except as required by any mandatory provision of the Act, Special
Member, in its capacity as Special Member, shall have no right to vote on,
approve or otherwise consent to any action by, or matter relating to, Borrower,
including, without limitation, the merger, consolidation or conversion of
Borrower. In order to implement the admission to Borrower of Special Member,
Special Member shall execute a counterpart to the LLC Agreement. Prior to its
admission to Borrower as Special Member, Special Member shall not be a member of
Borrower.
Upon the occurrence of any event that causes the Member to cease to be a member
of Borrower, to the fullest extent permitted by law, the personal representative
of Member shall, within ninety (90) days after the occurrence of the event that
terminated the continued membership of Member in Borrower, agree in writing (i)
to continue Borrower and (ii) to the admission of the personal representative or
its nominee or designee, as the case may be, as a substitute member of Borrower,
effective as of the occurrence of the event that terminated the continued
membership of Member of Borrower in Borrower, Any action initiated by or brought
against Member or Special Member under any Creditors Rights Laws shall not cause
Member or Special Member to cease to be a member of Borrower and upon the
occurrence of such an event, the business of Borrower shall continue without
dissolution. The LLC Agreement shall provide that each of Member and Special
Member waives any right it might have to agree in writing to dissolve Borrower
upon the occurrence of any action initiated by or brought against Member or
Special Member under any Creditors Rights Laws, or the occurrence of an event
that causes Member or Special Member to cease to be a member of Borrower.
Section 6.2. CHANGE OF NAME, IDENTITY OR STRUCTURE
32
Borrower shall not change or permit to be changed (a) Borrower's name, (b)
Borrower's identity (including its trade name or names), (c) Borrower's
principal place of business set forth on the first page of this Agreement, (d)
the corporate, partnership or other organizational structure of Borrower, each
SPE Component Entity (if any) or Borrower Principal, (e) Borrower's state of
organization, or (f) Borrower's organizational identification number, without in
each case notifying Lender of such change in writing at 1east thirty (30) days
prior to the effective date of such change and, in the case of a change in
Borrower's structure, without first obtaining the prior written consent of
Lender. In addition, Borrower shall not change or permit to be changed any
organizational documents of Borrower if such change would adversely impact the
covenants set forth in Section 6.1 hereof. Borrower authorizes Lender to file
any financing statement or financing statement amendment required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Borrower intends to operate the Property, and representing and warranting that
Borrower does business under no other trade name with respect to the Property.
If Borrower does not now have an organizational identification number and later
obtains one, or if the organizational identification number assigned to Borrower
subsequently changes, Borrower shall promptly notify Lender of such
organizational identification number or change.
Section 6.3. BUSINESS AND OPERATIONS
Borrower will qualify to do business and will remain in good standing under
the laws of the State as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property.
ARTICLE 7
NO SALE OR ENCUMBRANCE
Section 7.1. TRANSFER DEFINITIONS
For purposes of this Article 7 an "AFFILIATED MANAGER" shall mean any
managing agent in which Borrower, Borrower Principal, any SPE Component Entity
(if any) or any affiliate of such entities has, directly or indirectly, any
legal, beneficial or economic interest; "CONTROL" shall mean the power to direct
the management and policies of a Restricted Party, directly or indirectly,
whether through the ownership of voting securities or other beneficial
interests, by contract or otherwise; "RESTRICTED PARTY" shall mean Borrower,
Borrower Principal, any SPE Component Entity (if any), any Affiliated Manager,
or any shareholder, partner, member or non-member manager, or any direct or
indirect legal or beneficial owner of Borrower, Borrower Principal, any SPE
Component Entity (if any), any Affiliated Manager or any non-member manager; and
a "SALE OR PLEDGE" shall mean a voluntary or involuntary sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options
with respect to, or any other transfer or disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) of a legal or beneficial
interest.
Section 7.2. NO SALE/ENCUMBRANCE
33
(a) Borrower shall not cause or permit a Sale or Pledge of the Property or
any part thereof or any legal or beneficial interest therein nor permit a Sale
or Pledge of an interest in any Restricted Party (in each case, a "PROHIBITED
TRANSFER"), other than pursuant to Leases of space in the Improvements to
Tenants in accordance with the provisions of Section 5.13. without the prior
written consent of Lender.
(b) A Prohibited Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower's right, title and interest
in and to any Leases or any Rents; (iii) if a Restricted Party is a corporation,
any merger, consolidation or Sale or Pledge of such corporation's stock or the
creation or issuance of new stock in one or a series of transactions; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any
merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
or limited partner or any profits or proceeds relating to such partnership
interests or the creation or issuance of new partnership interests; (v) if a
Restricted Party is a limited liability company, any merger or consolidation or
the change, removal, resignation or addition of a managing member or non-member
manager (or if no managing member, any member) or the Sale or Pledge of the
membership interest of any member or any profits or proceeds relating to such
membership interest; (vi) if a Restricted Party is a trust or nominee trust, any
merger, consolidation or the Sale or Pledge of the legal or beneficial interest
in a Restricted Party or the creation or issuance of new 1egal or beneficial
interests; (vii) the removal or the resignation of the Manager (including,
without limitation, an Affiliated Manager) other than in accordance with Section
5.14.
Section 7.3. PERMITTED TRANSFERS
(a) Notwithstanding the provisions of Section 7.2, the following transfers
shall not be deemed to be a Prohibited Transfer: (i) a transfer by devise or
descent or by operation of law upon the death of a member, partner or
shareholder of a Restricted Party; (ii) the Sale or Pledge, in one or a series
of transactions, of not more than forty-nine percent (49%) of the stock, limited
partnership interests or non-managing membership interests (as the case may be)
in a Restricted Party; provided, however, no such transfers shall result in a
change in Control in the Restricted Party or change in control of the Property,
and as a condition to each such transfer, Lender shall receive not less than
thirty (30) days prior written notice of such proposed transfer. Notwithstanding
the foregoing, any transfer that results in any Person owning in excess of
forty-nine percent (49%) of the ownership interest in a Restricted Party shall
comply with the requirements of Section 7.4 hereof.
Section 7.4. LENDER'S RIGHTS
Lender reserves the right to condition the consent to a Prohibited Transfer
requested hereunder upon (a) a modification of the terms hereof and an
assumption of the Note and the other Loan Documents as so modified by the
proposed Prohibited Transfer, (b) receipt of payment of a transfer fee equal to
one percent (1%) of the outstanding principal balance of the Loan and all of
Lender's expenses incurred in connection with such Prohibited Transfer,
34
(c) receipt of written confirmation from the Rating Agencies that the Prohibited
Transfer will not result in a downgrade, withdrawal or qualification of the
initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization, (d) the proposed transferee's
continued compliance with the covenants set forth in this Agreement (including,
without limitation, the covenants in Article 6) and the other Loan Documents,
(e) a new manager for the Property and a new management agreement satisfactory
to Lender, and (f) the satisfaction of such other conditions and/or legal
opinions as Lender shall determine in its sole discretion to be in the interest
of Lender. All expenses incurred by Lender shall be payable by Borrower whether
or not Lender consents to the Prohibited Transfer. Lender shall not be required
to demonstrate any actual impairment of its security or any increased risk of
default hereunder in order to declare the Debt immediately due and payable upon
a Prohibited Transfer made without Lender's consent. This provision shall apply
to each and every Prohibited Transfer, whether or not Lender has consented to
any previous Prohibited Transfer. Notwithstanding anything to the contrary
contained in this Section 7.4, in the event a substantive non-consolidation
opinion was delivered to Lender and the Rating Agencies in connection with the
closing of the Loan, and if any Sale or Pledge permitted under this Article 7
results in any Person and its Affiliates owning in excess of forty-nine percent
(49%) of the ownership interests in a Restricted Party, Borrower shall, prior to
such transfer, and in addition to any other requirement for Lender consent
contained herein, deliver a revised substantive non-consolidation opinion to
Lender reflecting such Prohibited Transfer, which opinion shall be in form,
scope and substance acceptable in all respects to Lender and the Rating
Agencies.
Section 7.5. ASSUMPTION
Notwithstanding the foregoing provisions of this Article 7, following the
date which is six (6) months from the Closing Date, Lender shall not
unreasonably withhold consent to a transfer of the Property in its entirety to,
and the related assumption of the Loan by, any Person (a "TRANSFEREE") and
release of Borrower of its obligations under the Loan provided that each of the
following terms and conditions are satisfied:
(a) no Default or Event of Default has occurred;
(b) Borrower shall have (i) delivered written notice to Lender of the
terms of such prospective transfer not less than forty-five (45) days before the
date on which such transfer is scheduled to close and, concurrently therewith,
all such information concerning the proposed Transferee as Lender shall
reasonably require and (ii) paid to Lender a non-refundable processing fee in
the amount of $10,000. Lender shall have the right to approve or disapprove the
proposed transfer based on its then current underwriting and credit requirements
for similar loans secured by similar properties which loans are sold in the
secondary market, such approval not to be unreasonably withheld. In determining
whether to give or withhold its approval of the proposed transfer, Lender shall
consider the experience and track record of Transferee and its principals in
owning and operating facilities similar to the Property, the financial strength
of Transferee and its principals, the general business standing of Transferee
and its principals and Transferee's and its principals' relationships and
experience with contractors, vendors, tenants, lenders and other business
entities; provided, however, that, notwithstanding Lender's agreement to
consider the foregoing factors in determining whether to give or withhold such
approval, such
35
approval shall be given or withheld based on what Lender determines to be
commercially reasonable and, if given, may be given subject to such conditions
as Lender may deem reasonably appropriate;
(c) Borrower shall have paid to Lender, concurrently with the closing of
such transfer, (i) a non-refundable assumption fee in an amount equal to one
percent (1.0%) of the then outstanding principal balance of the Note, and (ii)
all out-of-pocket costs and expenses, including reasonable attorneys' fees,
incurred by Lender in connection with the transfer;
(d) Transferee assumes and agrees to pay the Debt as and when due subject
to the provisions of Article 15 hereof and, prior to or concurrently with the
closing of such transfer, Transferee and its constituent partners, members or
shareholders as Lender may require, shall execute, without any cost or expense
to Lender, such documents and agreements as Lender shall reasonably require to
evidence and effectuate said assumption;
(e) Borrower and Transferee, without any cost to Lender, shall furnish any
information requested by Lender for the preparation of, and shall authorize
Lender to file, new financing statements and financing statement amendments and
other documents to the fullest extent permitted by applicable law, and shall
execute any additional documents reasonably requested by Lender;
(f) Borrower shall have delivered to Lender, without any cost or expense
to Lender, such endorsements to Lender's Title Insurance Policy insuring that
fee simple or leasehold title to the Property, as applicable, is vested in
Transferee (subject to Permitted Encumbrances), hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;
(g) Transferee shall have furnished to Lender, if Transferee is a
corporation, partnership, limited liability company or other entity, all
appropriate papers evidencing Transferee's organization and good standing, and
the qualification of the signers to execute the assumption of the Debt, which
papers shall include certified copies of all documents relating to the
organization and formation of Transferee and of the entities, if any, which are
partners or members of Transferee. Transferee and such constituent partners,
members or shareholders of Transferee (as the case may be), as Lender shall
require, shall comply with the covenants set forth in Article 6 hereof;
(h) Transferee shall assume the obligations of Borrower under any
Management Agreement or provide a new management agreement with a new manager
which meets with the requirements of Section 5.14 hereof and assign to Lender as
additional security such new management agreement;
(i) Transferee shall furnish an opinion of counsel satisfactory to Lender
and its counsel (A) that Transferee's formation documents provide for the
matters described in subparagraph (g) above, (B) that the assumption of the Debt
has been duly authorized, executed and delivered, and that the Note, the Deed of
Trust, this Agreement, the assumption agreement and the other Loan Documents are
valid, binding and enforceable against Transferee in accordance with their
terms, (C) that Transferee and any entity which is a controlling
36
stockholder, member or general partner of Transferee, have been duly organized,
and are in existence and good standing, and (E) with respect to such other
matters as Lender may reasonably request, including, without limitation,
customary single member limited liability company opinions; and,
(j) if required by Lender, Lender shall have received confirmation in
writing from the Rating Agencies that rate the Securities to the effect that the
transfer will not result in a qualification, downgrade or withdrawal of any
rating initially assigned or to be assigned to the Securities;
(k) Borrower's obligations under the contract of sale pursuant to which
the transfer is proposed to occur shall expressly be subject to the satisfaction
of the terms and conditions of this Section 7.5; and
(l) in the event a substantive non-consolidation opinion was required in
connection with the closing of the Loan, Transferee shall, prior to such
transfer, deliver a substantive non-consolidation opinion to Lender, which
opinion shall be in form, scope and substance acceptable in all respects to
Lender and the Rating Agencies.
A consent by Lender with respect to a transfer of the Property in its entirety
to, and the related assumption of the Loan by, a Transferee pursuant to this
Section 7.5 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent Sale or Pledge of the Property.
Section 7.6. ASSUMPTION BY INLAND PERMITTED TRANSFEREE
Notwithstanding the foregoing provisions of this Article 7, Borrower shall
be permitted to transfer the Property in its entirety to an Inland Permitted
Transferee, provided the Loan is simultaneously assumed by an Inland Permitted
Transferee, such transfer shall release Borrower of its obligations under the
Loan, provided further that each of the following terms and conditions are
satisfied:
(a) no Default or Event of Default has occurred;
(b) Borrower shall have delivered written notice to Lender of the terms of
such prospective transfer not less than forty-five (45) days before the date on
which such transfer is scheduled to close and, concurrently therewith, all such
information concerning the proposed Transferee as Lender shall reasonably
require;
(c) Borrower shall have paid to Lender all out-of-pocket costs and
expenses, including reasonable attorneys' fees, incurred by Lender in
connection with the transfer;
(d) such Inland Permitted Transferee assumes and agrees to pay the Debt as
and when due subject to the provisions of Article 15 hereof and, prior to or
concurrently with the closing of such transfer, such Inland Permitted Transferee
and its constituent partners, members or shareholders as Lender may require,
shall execute, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate said
assumption;
37
(e) Borrower and such Inland Permitted Transferee, without any cost to
Lender, shall furnish any information requested by Lender for the preparation
of, and shall authorize Lender to file, new financing statements and financing
statement amendments and other documents to the fullest extent permitted by
applicable law, and shall execute any additional documents reasonably requested
by Lender;
(f) Borrower shall have delivered to Lender, without any cost or expense
to Lender, such endorsements to Lender's Title Insurance Policy insuring that
fee simple title to the Property is vested in such Inland Permitted Transferee
(subject to Permitted Encumbrances), hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;
(g) such Inland Permitted Transferee shall have furnished to Lender, if
such Inland Permitted Transferee is a corporation, partnership, limited
liability company or other entity, all appropriate papers evidencing
Transferee's organization and good standing, and the qualification of the
signers to execute the assumption of the Debt, which papers shall include
certified copies of all documents relating to the organization and formation of
Transferee and of the entities, if any, which are partners or members of
Transferee. Transferee and such constituent partners, members or shareholders of
Transferee (as the case may be), as Lender shall require, shall comply with the
covenants set forth in Article 6 hereof, provided, however, that, (i) if such
Inland Permitted Transferee is a limited partnership or a limited liability
company (with more than one member), Lender may require that the general partner
or managing member of such Inland Permitted Transferee also comply with the
covenants set forth in Article 6, as modified to state that such general partner
or managing member holds an interest in the Inland Permitted Transferee rather
than an interest in the Property or (ii) if such Inland Permitted Transferee is
a single member limited liability company, the state of organization of such
entity must be Delaware and the organizational documents must provided for a
springing member upon the bankruptcy or dissolution of the sole member;
(h) such Inland Permitted Transferee shall assume the obligations of
Borrower under any Management Agreement or provide a new management agreement
with a new manager which meets with the requirements of Section 5.14 hereof and
assign to Lender as additional security such new management agreement;
(i) Transferee shall furnish an opinion of counsel satisfactory to Lender
and its counsel (A) that Transferee's formation documents provide for the
matters described in subparagraph (g) above, (B) that the assumption of the Debt
has been duly authorized, executed and delivered, and that the Note, the
Mortgage, this Agreement, the assumption agreement and the other Loan Documents
are valid, binding and enforceable against Transferee in accordance with their
terms, (C) that Transferee and any entity which is a controlling stockholder,
member or general partner of Transferee, have been duly organized, and are in
existence and good standing, and (E) with respect to such other matters as
Lender may reasonably request, including, without limitation, customary single
member limited liability company opinions in the event that such Inland
Permitted Transferee is a Delaware limited liability company; and
(j) in the event a substantive non-consolidation opinion was required in
connection with the closing of the Loan, Transferee shall, prior to such
transfer, deliver a substantive non-
38
consolidation opinion to Lender, which opinion shall be in form, scope and
substance acceptable in all respects to Lender and the Rating Agencies.
A consent by Lender with respect to a transfer of the Property in its entirety
to, and the related assumption of the Loan by, a Transferee pursuant to this
Section 7.6 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent Sale or Pledge of the Property.
ARTICLE 8
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
Section 8.1. INSURANCE
(a) Borrower shall obtain and maintain, or cause to be maintained, at all
times insurance for Borrower and the Property providing at least the following
coverages:
(i) comprehensive "all risk" insurance on the Improvements and
the Personal Property, in each case (A) in an amount equal to one hundred
percent (100%) of the "Full Replacement Cost," which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver
of depreciation; (B) containing an agreed amount endorsement with respect
to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $10,000 for all
such insurance coverage; and (D) if any of the Improvements or the use of
the Property shall at any time constitute legal non-conforming structures
or uses, providing coverage for contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements and containing an "Ordinance or Law Coverage" or "Enforcement"
endorsement. In addition, Borrower shall obtain: (y) if any portion of the
Improvements is currently or at any time in the future located in a
"special flood hazard area" designated by the Federal Emergency Management
Agency, flood hazard insurance in an amount equal to the maximum amount of
such insurance available under the National Flood Insurance Act of 1968,
the Flood Disaster Protection Act of 1973 or the National Flood Insurance
Reform Act of 1994, as each maybe amended; and (z) earthquake insurance in
amounts and in form and substance reasonably satisfactory to Lender in the
event the Property is located in an area with a high degree of seismic
risk, provided that the insurance pursuant to clauses (y) and (z) hereof
shall be on terms consistent with the comprehensive all risk insurance
policy required under this subsection (i);
(ii) Commercial General Liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in
or about the Property, with such insurance (A) to be on the so-called
"occurrence" form with a general aggregate limit of not less than
$2,000,000 and a per occurrence limit of not less than $1,000,000; (B) to
continue at not less than the aforesaid limit until required to be changed
by Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations; (3)
independent contractors; (4) blanket contractual liability, and (5)
contractual liability covering the indemnities contained in Article 12 and
Article 14 hereof to the extent the same is available;
39
(iii) loss of rents insurance or business income insurance, as
applicable, (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i)
above; and (C) which provides that after the physical loss to the
Improvements and Personal Property occurs, the loss of rents or income, as
applicable, will be insured until such rents or income, as applicable,
either return to the same level that existed prior to the loss, or the
expiration of twelve (12) months, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period;
and (D) which contains an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and Personal
Property has been repaired, the continued loss of income will be insured
until such income either returns to the same level it was at prior to the
loss, or the expiration of twelve (12) months from the date that the
Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to the
end of such period. For hotels, motels, health care, and other property
types without a standard rent roll, the amount of business income insurance
required shall be not less than eighteen (18) months of debt service,
taxes, insurance, and other fixed expenses. The amount of such loss of
rents or business income insurance, as applicable, shall be determined
prior to the date hereof and at least once each year thereafter based on
Borrower's reasonable estimate of the gross income from the Property for
the succeeding period of coverage as required above. All proceeds payable
to Lender pursuant to this subsection shall be held by Lender and shall be
applied to the obligations secured by the Loan Documents from time to time
due and payable hereunder and under the Note; provided, however, that
nothing herein contained shall be deemed to relieve Borrower of its
obligations to pay the obligations secured by the Loan Documents on the
respective dates of payment provided for in the Note, this Agreement and
the other Loan Documents except to the extent such amounts are actually
paid out of the proceeds of such loss of rents or business income
insurance, as applicable;
(iv) at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if
the Property coverage form does not otherwise apply, (A) owner's contingent
or protective liability insurance covering claims not covered by or under
the terms or provisions of the above mentioned commercial general liability
insurance policy, and (B) the insurance provided for in subsection (i)
above written in a so-called Builder's Risk Completed Value form (1) on a
non-reporting basis, (2) against "all risks" insured against pursuant to
subsection (i) above, (3) including permission to occupy the Property, and
(4) with an agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of the
State, and employer's liability insurance in respect of any work or
operations on or about the Property, or in connection with the Property or
its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable,
in amounts as shall be reasonably required by Lender on terms consistent
with the commercial property insurance policy required under subsection (i)
above;
40
(vii) excess liability insurance in an amount not less than
$5,000,000 per occurrence on terms consistent with the commercial general
liability insurance required under subsection (ii) above; and
(viii) upon sixty (60) days' written notice, such other reasonable
insurance and in such reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the Property located
in or around the region in which the Property is located.
With respect to the Policies required to be maintained pursuant to clauses
(i) through (viii) above, Borrower shall use commercially reasonable efforts,
consistent with those of prudent owners of institutional quality commercial real
estate, to maintain insurance coverage against Losses resulting from acts of
terrorism.
(b) All insurance provided for in Section 8.l(a) shall be obtained under
valid and enforceable policies (collectively, the "POLICIES" or in the singular,
the "POLICY"), and shall be subject to the approval of Lender as to insurance
companies, amounts, deductibles, loss payees and insureds. The Policies shall be
issued by financially sound and responsible insurance companies authorized to do
business in the State and having a claims paying ability rating of "A" or better
by S&P (or such other ratings approved by Lender) and/or a general policy rating
of "A" or better and a financial class of VIII or better by A.M. Best Company,
Inc. The Policies described in Section 8.1 (a) hereof shall designate Lender and
its successors and assigns as additional insureds, mortgagees and/or loss payee
as deemed appropriate by Lender. To the extent such Policies are not available
as of the Closing Date, Borrower shall deliver certified copies of all Policies
to Lender not later than thirty (30) days after the Closing Date, Not less than
ten (10) days prior to the expiration dates of the Policies theretofore
furnished to Lender, renewal Policies accompanied by evidence satisfactory to
Lender of payment of the premiums due thereunder (the "INSURANCE PREMIUMS")
shall be delivered by Borrower to Lender,
(c) Any blanket insurance Policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 8.1(a).
(d) All Policies provided for or contemplated by Section 8.1(a), except
for the Policy referenced in Section 8.1(a)(v), shall name Borrower as the
insured and Lender as the additional insured, as its interests may appear, and
in the case of property damage, boiler and machinery, flood and earthquake
insurance, shall contain a so-called New York standard non-contributing
mortgagee clause in favor of Lender providing that the loss thereunder shall be
payable to Lender.
(e) All Policies provided for in Section 8.1(a) shall contain clauses or
endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any Tenant or other occupant, or failure to comply with
the provisions of any Policy, which might otherwise result in a forfeiture
of the insurance or any part thereof, shall in
41
any way affect the validity or enforceability of the insurance insofar as
Lender is concerned;
(ii) the Policies shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at 1east
thirty (30) days' prior written notice to Lender and any other party named
therein as an additional insured;
(iii) the issuers thereof shall give written notice to Lender if
the Policies have not been renewed thirty (30) days prior to its
expiration; and
(iv) Lender shall not be liable for any Insurance Premiums thereon
or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Property, including, without limitation,
obtaining such insurance coverage as Lender in its sole discretion deems
appropriate. All premiums incurred by Lender in connection with such action or
in obtaining such insurance and keeping it in effect shall be paid by Borrower
to Lender upon demand and, until paid, shall be secured by the Deed of Trust and
shall bear interest at the Default Rate.
Section 8.2. CASUALTY
If the Property shall be damaged or destroyed, in whole or in part, by fire
or other casualty (a "CASUALTY"), Borrower shall give prompt notice of such
damage to Lender and shall promptly commence and diligently prosecute the
Restoration of the Property in accordance with Section 8.4, whether or not
Lender makes any Net Proceeds available pursuant to Section 8.4. Borrower shall
pay all costs of such Restoration whether or not such costs are covered by
insurance, Lender may, but shall not be obligated to make proof of loss if not
made promptly by Borrower. Borrower shall adjust all claims for Insurance
Proceeds in consultation with, and approval of, Lender; provided, however, if an
Event of Default has occurred and is continuing, Lender shall have the exclusive
right to participate in the adjustment of all claims for Insurance Proceeds.
Section 8.3. CONDEMNATION
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of the Property of which
Borrower has knowledge and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced
42
until any Award shall have been actually received and applied by Lender, after
the deduction of expenses of collection, to the reduction or 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 herein or in the Note. If the Property or any
portion thereof is taken by a condemning authority, Borrower shall promptly
commence and diligently prosecute the Restoration of the Property and otherwise
comply with the provisions of Section 8.4. whether or not Lender makes any Net
Proceeds available pursuant to Section 8.4. If the Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the Award, Lender
shall have the right, whether or not a deficiency judgment on the Note shall
have been sought, recovered or denied, to receive the Award, or a portion
thereof sufficient to pay the Debt. So long as the tenants are not in default
under the terms of their leases, the payment and allocation of any Awards shall
be governed by the provisions of the tenant leases, only in so far as such
governance of Awards is required by the SNDAs of the tenants.
Section 8.4. RESTORATION
The following provisions shall apply in connection with the Restoration of
the Property:
(a) If the Net Proceeds shall be 1ess than $ 75,000 and the costs of
completing the Restoration shall be less than $75,000, the Net Proceeds will be
disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 8.4(b)(i) are met and Borrower delivers to
Lender a written undertaking to expeditiously commence and to satisfactorily
complete with due diligence the Restoration in accordance with the terms of this
Agreement.
(b) If the Net Proceeds are equal to or greater than $75,000 or the costs
of completing the Restoration are equal to or greater than $75,000, Lender shall
make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 8.4. The term "NET PROCEEDS" for purposes of this
Section 8.4 shall mean: (i) the net amount of all insurance proceeds received by
Lender pursuant to Section 8.1 (a)(i), (iv), (vi) and (viii) as a result of a
Casualty, after deduction of its reasonable costs and expenses (including, but
not limited to, reasonable counsel fees), if any, in collecting the same
("INSURANCE PROCEEDS"), or (ii) the net amount of the Award as a result of a
Condemnation, after deduction of its reasonable costs and expenses (including,
but not limited to, reasonable counsel fees), if any, in collecting the same
("CONDEMNATION PROCEEDS"), whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be continuing;
(B) (1) in the event the Net Proceeds are Insurance Proceeds,
less than thirty percent (30%) of the total floor area of the
Improvements on the Property has been damaged, destroyed or rendered
unusable as a result of a Casualty or (2) in the event the Net
Proceeds are Condemnation Proceeds, less than ten percent
43
(10%) of the land constituting the Property is taken, such land is
located along the perimeter or periphery of the Property, and no
portion of the Improvements is located on such land;
(C) Leases covering in the aggregate at least seventy-five
percent (75%) of the total rentable space in the Property which has
been demised under executed and delivered Leases in effect as of the
date of the occurrence of such Casualty or Condemnation, whichever the
case may be, and each Major Lease in effect as of such date shall
remain in full force and effect during and after the completion of the
Restoration without abatement of rent beyond the time required for
Restoration;
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than sixty (60) days
after such Casualty or Condemnation, whichever the case may be,
occurs) and shall diligently pursue the same to satisfactory
completion;
(E) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the
Note, which will be incurred with respect to the Property as a result
of the occurrence of any such Casualty or Condemnation, whichever the
case may be, will be covered out of the insurance coverage referred to
in Section 8.1(a)(iii) above;
(F) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) six (6) months
prior to the Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases or material agreements
affecting the Property, (3) such time as may be required under
applicable zoning law, ordinance, rule or regulation, or (4) the
expiration of the insurance coverage referred to in Section
8.l(a)(iii);
(G) the Property and the use thereof after the Restoration will
be in compliance with and permitted under all Legal Requirements;
(H) the Restoration shall be done and completed by Borrower in
an expeditious and diligent fashion and in compliance with all
applicable Legal Requirements;
(I) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the Property or the Improvements;
(J) Borrower shall deliver, or cause to be delivered, to Lender
a signed detailed budget approved in writing by Borrower's architect
or engineer stating the entire cost of completing the Restoration,
which budget shall be acceptable to Lender; and
(K) the Net Proceeds together with any cash or cash equivalent
deposited by Borrower with Lender are sufficient in Lender's
reasonable judgment to cover the cost of the Restoration.
44
(ii) The Net Proceeds shall be held by Lender until disbursements
commence, and, until disbursed in accordance with the provisions of this
Section 8.4(b), shall constitute additional security for the Debt and other
obligations under the Loan Documents. The Net Proceeds shall be disbursed
by Lender to, or as directed by, Borrower from time to time during the
course of the Restoration, upon receipt of evidence satisfactory to Lender
that (A) all the conditions precedent to such advance, including those set
forth in Section 8.4(b)(i), have been satisfied, (B) all materials
installed and work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in connection with the
related Restoration item have been paid for in full, and (C) there exist no
notices of pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or encumbrances of
any nature whatsoever on the Property which have not either been fully
bonded to the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title
company issuing the Title Insurance Policy. Notwithstanding the foregoing,
Insurance Proceeds from the Policies required to be maintained by Borrower
pursuant to Section 8.1(a)(iii) shall be controlled by Lender at all times,
shall not be subject to the provisions of this Section 8.4 and shall be
used solely for the payment of the obligations under the Loan Documents and
Operating Expenses.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance in all respects
by Lender and by an independent consulting engineer selected by Lender (the
"RESTORATION CONSULTANT"). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained
in connection with the Restoration. The identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as the
contracts in excess of $50,000 under which they have been engaged, shall be
subject to prior review and acceptance by Lender and the Restoration
Consultant. All costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration, including, without
limitation, reasonable counsel fees and disbursements and the Restoration
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration, as
certified by the Restoration Consultant, minus the Restoration Retainage.
The term "RESTORATION RETAINAGE" shall mean an amount equal to ten percent
(10%) of the costs actually incurred for work in place as part of the
Restoration, as certified by the Restoration Consultant, until the
Restoration has been completed. The Restoration Retainage shall be reduced
to five percent (5%) of the costs incurred upon receipt by Lender of
satisfactory evidence that fifty percent (50%) of the Restoration has been
completed. The Restoration Retainage shall in no event, and notwithstanding
anything to the contrary set forth above in this Section 8.4(b), be less
than the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The Restoration
Retainage shall not be released until the Restoration Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 8.4(b) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence
satisfactory to
45
Lender that the costs of the Restoration have been paid in full or will be
paid in full out of the Restoration Retainage; provided, however, that
Lender will release the portion of the Restoration Retainage being held
with respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Restoration Consultant certifies
to Lender that the contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor's, subcontractor's or
materialman's contract, the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due
to the contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the Title Insurance
Policy, and Lender receives an endorsement to the Title Insurance Policy
insuring the continued priority of the lien of the Deed of Trust and
evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Restoration
Retainage shall be approved by the surety company, if any, which has issued
a payment or performance bond with respect to the contractor, subcontractor
or materialman.
(v) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in consultation with
the Restoration Consultant, be sufficient to pay in full the balance of the
costs which are estimated by the Restoration Consultant to be incurred in
connection with the completion of the Restoration, Borrower shall deposit
the deficiency (the "NET PROCEEDS DEFICIENCY") with Lender before any
further disbursement of the Net Proceeds shall be made. The Net Proceeds
Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the Restoration on
the same conditions applicable to the disbursement of the Net Proceeds, and
until so disbursed pursuant to this Section 8.4(b) shall constitute
additional security for the Debt and other obligations under the Loan
Documents.
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after
the Restoration Consultant certifies to Lender that the Restoration has
been completed in accordance with the provisions of this Section 8.4(b),
and the receipt by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full, shall
be remitted by Lender to Borrower, provided no Event of Default shall have
occurred and shall be continuing under the Note, this Agreement or any of
the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 8.4(b)(vii) may (x) be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its sole discretion shall deem proper, or, (y) at
the sole discretion of Lender, the same may be paid, either in whole or in part,
to Borrower for such purposes and upon such conditions as Lender shall
designate.
46
(d) In the event of foreclosure of the Deed of Trust, or other transfer of
title to the Property in extinguishment in whole or in part of the Debt, all
right, title and interest of Borrower in and to the Policies then in force
concerning the Property and all proceeds payable thereunder shall thereupon vest
in the purchaser at such foreclosure, Lender or other transferee in the event of
such other transfer of title.
(e) As long as the Tenants are not in default under the terms of their
Leases, the Net Proceeds shall be used for restoration of the Property in
accordance with terms of the Leases, provided that the Lender or its designee
shall hold the Net Proceeds and that the actual disbursements of the proceeds
for work done in connection with the restoration shall be made in accordance
with the terms of this Agreement.
ARTICLE 9
RESERVE FUNDS
Section 9.1. REQUIRED REPAIRS.
(a) Borrower shall make the repairs and improvements to the Property set
forth on Schedule I and as more particularly described in the Physical
Conditions Report prepared in connection with the closing of the Loan (such
repairs hereinafter referred to as "REQUIRED REPAIRS"). Borrower shall complete
the Required Repairs in a good and workmanlike manner on or before the date that
is six (6) months from the date hereof or within such other time frame for
completion specifically set forth on Schedule I.
(b) If Borrower fails to complete the Required Repairs within six months,
Borrower shall establish an Eligible Account with Lender or Lender's agent to
fund the Required Repairs (the "REQUIRED REPAIR ACCOUNT") into which Borrower
shall deposit an amount equal to 125% of the estimated cost for the completion
of the Required Repairs. Amounts so deposited shall hereinafter be referred to
as the "REQUIRED REPAIR FUNDS."
Section 9.2. REPLACEMENTS
(a) On an ongoing basis throughout the term of the Loan, Borrower shall
make capital repairs, replacements and improvements necessary to keep the
Property in good order and repair and in a good marketable condition or prevent
deterioration of the Property, including, but not limited to, those repairs,
replacements and improvements more particularly described in the Physical
Conditions Report prepared in connection with the closing of the Loan
(collectively, the "REPLACEMENTS"). Borrower shall complete all Replacements in
a good and workmanlike manner as soon as commercially reasonable after
commencing to make each such Replacement.
(b) Borrower shall establish on the date hereof an Eligible Account with
Lender or Lender's agent to fund the Replacements (the "REPLACEMENT RESERVE
ACCOUNT") into which Borrower shall deposit on the date hereof $0. In addition,
Borrower shall deposit $0 (the "REPLACEMENT RESERVE MONTHLY DEPOSIT") into the
Replacement Reserve Account on each Scheduled Payment Date. Amounts so Deposited
shall hereinafter be referred to as "REPLACEMENT RESERVE FUNDS." Upon the
occurrence of an Event of Default or in the event that the Debt Service Coverage
Ratio for the Loan falls below 1.5 to 1, Lender may, in its
47
reasonable discretion, adjust the Replacement Reserve Monthly Deposit to an
amount sufficient to maintain the proper maintenance and operation of the
Property until the first Scheduled Payment Date after two (2) consecutive fiscal
quarters that the Debt Service Coverage Ratio for the Loan (as determined by
Lender in its sole discretion reasonably exercised) rises above 1.5 to 1. In the
event Lender shall at any time increase the Replacement Reserve Monthly Deposit,
Borrower may, at its election, request that Lender obtain, at the sole cost and
expense of Borrower, a Physical Conditions Report prepared by an engineer
selected by Lender in its reasonable discretion, in which case the Replacement
Reserve Monthly Deposit shall be adjusted by Lender based on the results of such
report, provided that in no event shall such amounts be reduced below the
initial amount of the Replacement Reserve Monthly Deposit set forth in herein.
Replacement Reserve Monthly Deposits shall be required for the duration of the
Loan should the Debt Service Coverage Ratio for the Loan fall below 1.5 to 1 on
more than two separate occasions.
Section 9.3. TENANT IMPROVEMENTS.
Borrower hereby agrees to (a) perform, or cause to be performed, tenant
improvements required under any Lease entered into in accordance with the
provisions of Section 5.13 of this Agreement (collectively, the "TENANT
IMPROVEMENTS"), and (b) pay the costs of leasing commissions incurred by
Borrower in connection with the leasing of the Property or a portion thereof
(collectively, "LEASING COMMISSIONS").
Section 9.4. REQUIRED WORK.
Borrower shall diligently pursue all Required Repairs and Replacements and
Tenant Improvements (collectively, the "REQUIRED WORK") to completion in
accordance with the following requirements:
(a) Lender reserves the right, at its option, to approve all contracts or
work orders with materialmen, mechanics, suppliers, subcontractors, contractors
or other parties providing labor or materials in connection with the Required
Work to the extent such contracts or work orders exceed $50,000, Upon Lender's
request, Borrower shall assign any contract or subcontract to Lender.
(b) In the event Lender determines in its reasonable discretion that any
Required Work is not being or has not been performed in a workmanlike or timely
manner, Lender shall have the option to withhold disbursement for such
unsatisfactory Required Work and to proceed under existing contracts or to
contract with third parties to complete such Required Work and to apply the
Required Repair Funds or the Replacement Reserve Funds, as applicable, toward
the labor and materials necessary to complete such Required Work, without
providing any prior notice to Borrower and to exercise any and all other
remedies available to Lender upon an Event of Default hereunder.
(c) In order to facilitate Lender's completion of the Required Work,
Borrower grants Lender the right to enter onto the Property and perform any and
all work and labor necessary to complete the Required Work and/or employ
watchmen to protect the Property from damage. All sums so expended by Lender, to
the extent not from the Reserve Funds, shall be deemed to have
48
been advanced under the Loan to Borrower and secured by the Deed of Trust. For
this purpose Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Required Work in the name of Borrower upon Borrower's failure to do so in a
workmanlike and timely manner. Such power of attorney shall be deemed to be a
power coupled with an interest and cannot be revoked. Borrower empowers said
attorney-in-fact as follows: (i) to use any of the Reserve Funds for the purpose
of making or completing the Required Work; (ii) to make such additions, changes
and corrections to the Required Work as shall be necessary or desirable to
complete the Required Work; (iii) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for such purposes; (iv)
to pay, settle or compromise all existing bills and claims which are or may
become Liens against the Property, or as may be necessary or desirable for the
completion of the Required Work, or for clearance of title; (v) to execute all
applications and certificates in the name of Borrower which may be required by
any of the contract documents; (vi) to prosecute and defend all actions or
proceedings in connection with the Property or the rehabilitation and repair of
the Property; and (vii) to do any and every act which Borrower might do on its
own behalf to fulfill the terms of this Agreement.
(d) Nothing in this Section 9.4 shall: (i) make Lender responsible for
making or completing the Required Work; (ii) require Lender to expend funds in
addition to the Reserve Funds to make or complete any Required Work; (iii)
obligate Lender to proceed with the Required Work; or (iv) obligate Lender to
demand from Borrower additional sums to make or complete any Required Work.
(e) Borrower shall permit Lender and Lender's agents and representatives
(including, without limitation, Lender's engineer, architect, or inspector) or
third parties performing Required Work pursuant to this Section 9.4 to enter
onto the Property during normal business hours (subject to the rights of tenants
under their Leases) to inspect the progress of any Required Work and all
materials being used in connection therewith, to examine all plans and shop
drawings relating to such Required Work which are or may be kept at the
Property, and to complete any Required Work made pursuant to this Section 9.4.
Borrower shall cause all contractors and subcontractors to cooperate with Lender
and Lender's representatives or such other persons described above in connection
with inspections described in this Section 9.4 or the completion of Required
Work pursuant to this Section 9.4.
(f) Lender may, to the extent any Required Work would reasonably require
an inspection of the Property, inspect the Property at Borrower's expense prior
to making a disbursement of the Reserve Funds in order to verify completion of
the Required Work for which reimbursement is sought. Borrower shall pay Lender a
reasonable inspection fee not exceeding $1,000 for each such inspection. Lender
may require that such inspection be conducted by an appropriate independent
qualified professional selected by Lender and/or may require a copy of a
certificate of completion by an independent qualified professional acceptable to
Lender prior to the disbursement of the Reserve Funds. Borrower shall pay the
expense of the inspection as required hereunder, whether such inspection is
conducted by Lender or by an independent qualified professional.
(g) The Required Work and all materials, equipment, fixtures, or any other
item comprising a part of any Required Work shall be constructed, installed or
completed, as
49
applicable, free and clear of all mechanic's, materialman's or other Liens
(except for Permitted Encumbrances).
(h) Before each disbursement of the Reserve Funds, Lender may require
Borrower to provide Lender with a search of title to the Property effective to
the date of the disbursement, which search shows that no mechanic's or
materialmen's or other Liens of any nature have been placed against the Property
since the date of recordation of the Deed of Trust and that title to the
Property is free and clear of all Liens (except for Permitted Encumbrances).
(i) All Required Work shall comply with all Legal Requirements and
applicable insurance requirements including, without limitation, applicable
building codes, special use permits, environmental regulations, and requirements
of insurance underwriters.
(j) Borrower hereby assigns to Lender all rights and claims Borrower may
have against all Persons supplying labor or materials in connection with the
Required Work; provided, however, that Lender may not pursue any such rights or
claims unless an Event of Default has occurred and remains uncured.
Section 9.5. RELEASE OF RESERVE FUNDS.
(a) Upon written request from Borrower and satisfaction of the
requirements set forth in this Agreement, Lender shall disburse to Borrower
amounts from (i) the Required Repair Account to the extent necessary to
reimburse Borrower for the actual costs of each Required Repair (but not
exceeding 125% of the original estimated cost of such Required Repair as set
forth on Schedule I, unless Lender has agreed to reimburse Borrower for such
excess cost pursuant to Section 9.5(f)) or (ii) the Replacement Reserve Account
to the extent necessary to reimburse Borrower for the actual costs of any
approved Replacements. Notwithstanding the preceding sentence, in no event shall
Lender be required to (x) disburse any amounts which would cause the amount of
funds remaining in the Required Repair Account after any disbursement (other
than with respect to the final disbursement) to be less than 125% of the then
current estimated cost of completing all remaining Required Repairs for the
Property, (y) disburse funds from any of the Reserve Accounts if an Event of
Default exists, or (z) disburse funds from the Replacement Reserve Account to
reimburse Borrower for the costs of routine repairs or maintenance to the
Property or for costs which are to be reimbursed from funds held in the Required
Repair Account.
(b) Each request for disbursement from any of the Reserve Accounts shall
be on a form provided or approved by Lender and shall (i) include copies of
invoices for all items or materials purchased and all labor or services provided
and (ii) specify (A) the Required Work for which the disbursement is requested,
(B) the quantity and price of each item purchased, if the Required Work includes
the purchase or replacement of specific items, (C) the price of all materials
(grouped by type or category) used in any Required Work other than the purchase
or replacement of specific items, and (D) the cost of all contracted labor or
other services applicable to each Required Work for which such request for
disbursement is made. With each request Borrower shall certify that all Required
Work has been performed in accordance with all Legal Requirements. Except as
provided in Section 9.5(d), each request for disbursement shall be made only
after completion of the Required Repair, Replacement (or the portion thereof
completed in
50
accordance with Section 9.5(d)), or the full performance by the leasing agent of
its obligations (in the case of Leasing Commissions), as applicable, for which
disbursement is requested. Borrower shall provide Lender evidence satisfactory
to Lender in its reasonable judgment of such completion or performance.
(c) Borrower shall pay all invoices in connection with the Required Work
with respect to which a disbursement is requested prior to submitting such
request for disbursement from the Reserve Accounts or, at the request of
Borrower, Lender will issue joint checks, payable to Borrower and the
contractor, supplier, materialman, mechanic, subcontractor or other party to
whom payment is due in connection with the Required Work. In the case of
payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender's disbursement of the Reserve Funds. In
addition, as a condition to any disbursement, Lender may require Borrower to
obtain lien waivers from each contractor, supplier, materialman, mechanic or
subcontractor who receives payment in an amount equal to or greater than $10,000
for completion of its work or delivery of its materials. Any lien waiver
delivered hereunder shall conform to all Legal Requirements and shall cover all
work performed and materials supplied (including equipment and fixtures) for the
Property by that contractor, supplier, subcontractor, mechanic or materialman
through the date covered by the current disbursement request (or, in the event
that payment to such contractor, supplier, subcontractor, mechanic or
materialmen is to be made by a joint check, the release of lien shall be
effective through the date covered by the previous release of funds request).
(d) If (i) the cost of any item of Required Work exceeds $50,000, (ii) the
contractor performing such Required Work requires periodic payments pursuant to
terms of a written contract, and (iii) Lender has approved in writing in advance
such periodic payments, a request for disbursement from the Reserve Accounts may
be made after completion of a portion of the work under such contract, provided
(A) such contract requires payment upon completion of such portion of work, (B)
the materials for which the request is made are on site at the Property and are
properly secured or have been installed in the Property, (C) all other
conditions in this Agreement for disbursement have been satisfied, and (D) in
the case of a Replacement, funds remaining in the Replacement Reserve Account
are, in Lender's judgment, sufficient to complete such Replacement and other
Replacements when required.
(e) Borrower shall not make a request for, nor shall Lender have any
obligation to make, any disbursement from any Reserve Account more frequently
than once in any calendar month and (except in connection with the final
disbursement) in any amount less than the lesser of (i) $10,000 or (ii) the
total cost of the Required Work for which the disbursement is requested,
(f) In the event any Borrower requests a disbursement from the Required
Repair Account to reimburse Borrower for the actual cost of labor or materials
used in connection with repairs or improvements other than the Required Repairs
specified on Schedule I, or for a Required Repair to the extent the cost of such
Required Repair exceeds 125% of the estimated cost of such Required Repair as
set forth on Schedule I (in either case, an "ADDITIONAL REQUIRED REPAIR"),
Borrower shall disclose in writing to Lender the reason why funds in the
Required Repair Account should be used to pay for such Additional Required
Repair. If Lender determines that (i) such Additional Required Repair is of the
type intended to be covered by the Required Repair Account, (ii) such Additional
Required Repair is not covered or is not of the
51
type intended to be covered by the Replacement Reserve Account, (iii) costs for
such Additional Required Repair are reasonable, (iv) the funds in the Required
Repair Account are sufficient to pay for such Additional Required Repair and all
other Required Repairs for the Property specified on Schedule I, and (v) all
other conditions for disbursement under this Agreement have been met, Lender may
disburse funds from the Required Repair Account.
(g) In the event any Borrower requests a disbursement from the Replacement
Reserve Account to reimburse Borrower for the actual cost of labor or materials
used in connection with repairs or improvements other than the Replacements
specified in the Physical Conditions Report prepared in connection with the
closing of the Loan (an "ADDITIONAL REPLACEMENT"), Borrower shall disclose in
writing to Lender the reason why funds in the Replacement Reserve Account should
be used to pay for such Additional Replacement. If Lender determines that (i)
such Additional Replacement is of the type intended to be covered by the
Replacement Reserve Account, (ii) such Additional Replacement is not covered or
is not of the type intended to be covered by the Required Repair Account, (iii)
costs for such Additional Replacement are reasonable, (iv) the funds in the
Replacement Reserve Account a re sufficient to pay for such Additional
Replacement and all other Replacements for the Property specified in the
Physical Conditions Report, and (v) all other conditions for disbursement under
this Agreement have been met, Lender may disburse funds from the Replacement
Reserve Account.
(h) Lender's disbursement of any Reserve Funds or other acknowledgment of
completion of any Required Work in a manner satisfactory to Lender shall not be
deemed a certification or warranty by Lender to any Person that the Required
Work has been completed in accordance with Legal Requirements.
(i) If the funds in any Reserve Account should exceed the amount of
payments actually applied by Lender for the purposes of the account, Lender in
its sole discretion shall either return any excess to Borrower or credit such
excess against future payments to be made to that Reserve Account. In allocating
any such excess, Lender may deal with the Person shown on Lender's records as
being the owner of the Property. If at any time Lender reasonably determines
that the Reserve Funds are not or will not be sufficient to make the required
payments, Lender shall notify Borrower of such determination and Borrower shall
pay to Lender any amount necessary to make up the deficiency within ten (10)
days after notice from Lender to Borrower requesting payment thereof.
(j) The insufficiency of any balance in any of the Reserve Accounts shall
not relieve Borrower from its obligation to fulfill all preservation and
maintenance covenants in the Loan Documents.
(k) Upon the earlier to occur of (i) the timely completion of all Required
Repairs and any Additional Required Repairs, if any, in accordance with the
requirements of this Agreement, as verified by Lender in its reasonable
discretion, or (ii) the payment in full of the Debt, all amounts remaining on
deposit, if any, in the Required Repair Account shall be returned to Borrower or
the Person shown on Lender's records as being the owner of the Property and no
other party shall have any right or claim thereto.
52
(l) Upon payment in full of the Debt, all amounts remaining on deposit, if
any, in the Replacement Reserve Account shall be returned to Borrower or the
Person shown on Lender's records as being the owner of the Property and no other
party shall have any right or claim thereto.
(m) Upon the earlier to occur of (i) the completion of all Tenant
Improvements and the full performance by the leasing agent of its obligations
with respect to any Leasing Commissions, as verified by Lender in its reasonable
discretion, or (ii) the payment in full of the Debt, all amounts remaining on
deposit, if any, in the Leasing Reserve Account shall be returned to Borrower or
the Person shown on Lender's records as being the owner of the Property and no
other party shall have any right or claim thereto.
Section 9.6. TAX AND INSURANCE RESERVE FUNDS
Borrower shall establish on the date hereof an Eligible Account with Lender
or Lender's agent sufficient to discharge Borrower's obligations for the payment
of Taxes and Insurance Premiums pursuant to Section 5.4 and Section 8.1 hereof
(the "TAX AND INSURANCE RESERVE ACCOUNT") into which Borrower shall deposit on
the date hereof $0. Upon the occurrence of an Event of Default or in the event
that the Debt Service Coverage Ratio for the Loan falls below 1.5 to 1, Borrower
shall immediately deposit into the Tax and Insurance Reserve Account an amount
determined by Lender which, when added to the required monthly deposits set
forth in the next sentence, is sufficient to make the payments of Taxes and
Insurance Premiums as required herein. On each Scheduled Payment Date thereafter
that the Event of Default remains uncured or until the first Scheduled Payment
Date after two (2) consecutive fiscal quarters that the Debt Service Coverage
Ratio for the Loan (as determined by Lender in its sole discretion reasonably
exercised) rises above 1.5 to 1, Borrower shall deposit into the Tax and
Insurance Reserve Account (a) one-twelfth of the Taxes that Lender estimates
will be payable during the next ensuing twelve (12) months or such higher amount
necessary to accumulate with Lender sufficient funds to pay all such Taxes at
least thirty (30) days prior to the earlier of (i) the date that the same will
become delinquent and (ii) the date that additional charges or interest will
accrue due to the non-payment thereof, and (b) unless the Property is covered by
a blanket insurance policy acceptable to Lender, one-twelfth of the Insurance
Premiums that Lender estimates will be payable during the next ensuing twelve
(12) months for the renewal of the coverage afforded by the Policies upon the
expiration thereof or such higher amount necessary to accumulate with Lender
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies (said amounts in (a) and (b) above
hereinafter called the "TAX AND INSURANCE RESERVE FUNDS"). Lender will apply the
Tax and Insurance Reserve Funds to payments of Taxes and Insurance Premiums
required to be made by Borrower pursuant to Section 5.4 and Section 8.1 hereof.
In making any disbursement from the Tax and Insurance Reserve Account, Lender
may do so according to any ▇▇▇▇, statement or estimate procured from the
appropriate public office or tax lien service (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 Reserve Funds shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Section 5.4 and Section 8.1 hereof, Lender shall, in its
sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Tax and Insurance Reserve Account. In
allocating any such excess, Lender may
53
deal with the person shown on Lender's records as being the owner of the
Property. Any amount remaining in the Tax and Insurance Reserve Account after
the Debt has been paid in full shall be returned to Borrower or the person shown
on Lender's records as being the owner of the Property and no other party shall
have any right or claim thereto. If at any time Lender reasonably determines
that the Tax and Insurance Reserve Funds are not or will not be sufficient to
pay Taxes and Insurance Premiums by the dates set forth in (a) and (b) above,
Lender shall notify Borrower of such determination and Borrower shall pay to
Lender any amount necessary to make up the deficiency within ten (10) days after
notice from Lender to Borrower requesting payment thereof. The Tax and Insurance
Reserve Account will remain in place for the duration of the Loan should the
Debt Service Coverage Ratio for the Loan (as determined by Lender in its sole
discretion reasonably exercised) fall below 1.5 to 1 on more than two separate
occasions.
Section 9.7. RESERVE FUNDS GENERALLY
(a) (i) Except for the Replacement Reserve Account, no earnings or
interest on the Reserve Accounts shall be payable to Borrower. Neither Lender
nor any loan servicer that at any time holds or maintains such
non-interest-bearing Reserve Accounts shall have any obligation to keep or
maintain such Reserve Accounts or any funds deposited therein in
interest-bearing accounts. If Lender or any such loan servicer elects in its
sole and absolute discretion to keep or maintain any non-interest-bearing
Reserve Account or any funds deposited therein in an interest-bearing account,
the account shall be an Eligible Account and (A) such funds shall not be
invested except in Permitted Investments, and (B) all interest earned or accrued
thereon shall be for the account of and be retained by Lender or such loan
servicer.
(ii) Funds deposited in the Replacement Reserve Account shall each be held
in an interest-bearing business savings account and interest shall be credited
to Borrower. In no event shall Lender or any loan servicer that at any time
holds or maintains the Replacement Reserve Account be required to select any
particular interest-bearing account or the account that yields the highest rate
of interest, provided that selection of the account shall be consistent with the
general standards at the time being utilized by Lender or the loan servicer, as
applicable, in establishing similar accounts for loans of comparable type. All
such interest shall be and become part of the Replacement Reserve Account shall
be disbursed in accordance with Section 9.5 above; provided, however, that
Lender may, at its election, retain any such interest for its own account during
the occurrence and continuance of an Event of Default. Borrower agrees that it
shall include all interest on Replacement Reserve Funds, as the income of
Borrower (and, if Borrower is a partnership or other pass-through entity, the
partners, members or beneficiaries of Borrower, as the case may be), and shall
be the owner of the Replacement Reserve Funds for federal and applicable state
and local tax purposes, except to the extent that Lender retains any interest
for its own account during the occurrence and continuance of an Event of Default
as provided herein.
(b) Borrower grants to Lender a first-priority perfected security interest
in, and assigns and pledges to Lender, each of the Reserve Accounts and any and
all Reserve Funds now or hereafter deposited in the Reserve Accounts as
additional security for payment of the Debt. Until expended or applied in
accordance herewith, the Reserve Accounts and the Reserve Funds shall constitute
additional security for the Debt. The provisions of this Section 9.7 are
intended
54
to give Lender or any subsequent holder of the Loan "control" of the Reserve
Accounts within the meaning of the UCC.
(c) The Reserve Accounts and any and all Reserve Funds now or hereafter
deposited in the Reserve Accounts shall be subject to the exclusive dominion and
control of Lender, which shall hold the Reserve Accounts and any or all Reserve
Funds now or hereafter deposited in the Reserve Accounts subject to the terms
and conditions of this Agreement. Borrower shall have no right of withdrawal
from the Reserve Accounts or any other right or power with respect to the
Reserve Accounts or any or all of the Reserve Funds now or hereafter deposited
in the Reserve Accounts, except as expressly provided in this Agreement.
(d) Lender shall furnish or cause to be furnished to Borrower, without
charge, an annual accounting of each Reserve Account in the normal format of
Lender or its loan servicer, showing credits and debits to such Reserve Account
and the purpose for which each debit to each Reserve Account was made.
(e) As long as no Event of Default has occurred, Lender shall make
disbursements from the Reserve Accounts in accordance with this Agreement. All
such disbursements shall be deemed to have been expressly pre-authorized by
Borrower, and shall not be deemed to constitute the exercise by Lender of any
remedies against Borrower unless an Event of Default has occurred and is
continuing and Lender has expressly stated in writing its intent to proceed to
exercise its remedies as a secured party, pledgee or lienholder with respect to
the Reserve Accounts.
(f) If any Event of Default occurs, Borrower shall immediately lose all of
its rights to receive disbursements from the Reserve Accounts until the earlier
to occur of (i) the date on which such Event of Default is cured to Lender's
satisfaction, or (ii) the payment in full of the Debt. In addition, at Lender's
election, Borrower shall lose all of its rights to receive interest on the
Replacement Reserve Account during the occurrence and continuance of an Event of
Default. Upon the occurrence of any Event of Default, Lender may exercise any or
all of its rights and remedies as a secured party, pledgee and lienholder with
respect to the Reserve Accounts. Without limitation of the foregoing, upon any
Event of Default, Lender may use and disburse the Reserve Funds (or any portion
thereof) for any of the following purposes: (A) repayment of the Debt,
including, but not limited to, principal prepayments and the prepayment premium
applicable to such full or partial prepayment (as applicable); (B) reimbursement
of Lender for all losses, fees, costs and expenses (including, without
limitation, reasonable legal fees) suffered or incurred by Lender as a result of
such Event of Default; (C) payment of any amount expended in exercising any or
all rights and remedies available to Lender at law or in equity or under this
Agreement or under any of the other Loan Documents; (D) payment of any item from
any of the Reserve Accounts as required or permitted under this Agreement; or
(E) any other purpose permitted by applicable law; provided, however, that any
such application of funds shall not cure or be deemed to cure any Event of
Default. Without limiting any other provisions hereof, each of the remedial
actions described in the immediately preceding sentence shall be deemed to be a
commercially reasonable exercise of Lender's rights and remedies as a secured
party with respect to the Reserve Funds and shall not in any event be deemed to
constitute a setoff or a foreclosure of a statutory banker's lien. Nothing in
this Agreement shall obligate Lender to apply all or any portion of the Reserve
Funds to effect a cure of any Event of Default, or to pay the Debt, or in
55
any specific order of priority. The exercise of any or all of Lender's rights
and remedies under this Agreement or under any of the other Loan Documents shall
not in any way prejudice or affect Lender's right to initiate and complete a
foreclosure under the Deed of Trust.
(g) The Reserve Funds shall not constitute escrow or trust funds and may
be commingled with other monies held by Lender. Notwithstanding anything else
herein to the contrary, Lender may commingle in one or more Eligible Accounts
any and all funds controlled by Lender, including, without limitation, funds
pledged in favor of Lender by other borrowers, whether for the same purposes as
the Reserve Accounts or otherwise. Without limiting any other provisions of this
Agreement or any other Loan Document, the Reserve Accounts may be established
and held in such name or names as Lender or its loan servicer, as agent for
Lender, shall deem appropriate, including, without limitation, in the name of
Lender or such loan servicer as agent for Lender. In the case of any Reserve
Account which is held in a commingled account, Lender or its loan servicer, as
applicable, shall maintain records sufficient to enable it to determine at all
times which portion of such account is related to the Loan. The Reserve Accounts
are solely for the protection of Lender. With respect to the Reserve Accounts,
Lender shall have no responsibility beyond the allowance of due credit for the
sums actually received by Lender or beyond the reimbursement or payment of the
costs and expenses for which such accounts were established in accordance with
their terms. Upon assignment of the Loan by Lender, any Reserve Funds shall be
turned over to the assignee and any responsibility of Lender as assignor shall
terminate. The requirements of this Agreement concerning Reserve Accounts in no
way supersede, limit or waive any other rights or obligations of the parties
under any of the Loan Documents or under applicable law.
(h) Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in the Reserve
Accounts or the Reserve Funds deposited therein or permit any Lien to attach
thereto, except for the security interest granted in this Section 9.7, or any
levy to be made thereon, or any UCC Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.
(i) Borrower will maintain the security interest created by this Section
9.7 as a first priority perfected security interest and will defend the right,
title and interest of Lender in and to the Reserve Accounts and the Reserve
Funds against the claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of Lender, and at the sole expense
of Borrower, Borrower will promptly and duly execute and deliver such further
instruments and documents and will take such further actions as Lender
reasonably may request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.
ARTICLE 10
[Reserved]
ARTICLE 11
EVENTS OF DEFAULT; REMEDIES
Section 11.1. EVENT OF DEFAULT
56
The occurrence of any one or more of the following events shall constitute
an "EVENT OF DEFAULT":
(a) if any portion of the Debt is not paid prior to the tenth day
following the date the same is due or if the entire Debt is not paid on or
before the Maturity Date;
(b) except as otherwise expressly provided in the Loan Documents, if any
of the Taxes or Other Charges are not paid when the same are due and payable,
unless there is sufficient money in the Tax and Insurance Reserve Account for
payment of amounts then due and payable and Lender's access to such money has
not been constrained or restricted in any manner;
(c) if the Policies are not kept in full force and effect, or if certified
copies of the Policies are not delivered to Lender as provided in Section 8.1;
(d) if Borrower breaches any covenant with respect to itself or any SPE
Component Entity (if any) contained in Article 6 or any covenant contained in
Article 7 hereof;
(e) if any representation or warranty of, or with respect to, Borrower,
Borrower Principal, any SPE Component Entity, or any member, general partner,
principal or beneficial owner of any of the foregoing, made herein, in any other
Loan Document, or in any certificate, report, financial statement or other
instrument or document furnished to Lender at the time of the closing of the
Loan or during the term of the Loan shall have been false or misleading in any
material respect when made;
(f) if (i) Borrower, or any managing member or general partner of
Borrower, or Borrower Principal shall commence any case, proceeding or other
action (A) under any Creditors Rights Laws, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or Borrower, any managing member or general
partner of Borrower, Borrower Principal, or any SPE Component Entity (if any)
shall make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against Borrower, any managing member or general partner of
Borrower, Borrower Principal, or any SPE Component Entity (if any) any case,
proceeding or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
sixty (60) days; or (iii) there shall be commenced against Borrower, any
managing member or general partner of Borrower, Borrower Principal, or any SPE
Component Entity (if any) any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of any order
for any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or (iv)
Borrower, any managing member or general partner of Borrower, Borrower
Principal, or any SPE Component Entity (if any) shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) Borrower,
any managing member or general partner of Borrower,
57
Borrower Principal, or any SPE Component Entity (if any) shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due;
(g) if Borrower shall be in default beyond applicable notice and grace
periods under any other mortgage, deed of trust, deed to secure debt or other
security agreement covering any part of the Property, whether it be superior or
junior in lien to the Deed of Trust;
(h) if the Property becomes subject to any mechanic's, materialman's or
other Lien other than a Lien for any Taxes or Other Charges not then due and
payable and the Lien shall remain undischarged of record (by payment, bonding or
otherwise) for a period of thirty (30) days;
(i) if any federal tax lien is filed against Borrower, any member or
general partner of Borrower, Borrower Principal, or any SPE Component Entity (if
any) or the Property and same is not discharged of record (or bonded off or
insured to Lender's satisfaction) within thirty (30) days after same is filed;
(j) if an uninsured judgment is filed against the Borrower in excess of
$20,000 which is not vacated or discharged (or bonded off or insured to Lender's
satisfaction) within 30 days;
(k) if any default occurs under any guaranty or indemnity executed in
connection herewith and such default continues after the expiration of
applicable grace periods, if any;
(l) if Borrower shall permit any event within its control to 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 Borrower; or any REA shall be surrendered, terminated or canceled for
any reason or under any circumstance whatsoever except as provided for in such
REA; or any term of any REA shall be modified or supplemented without Lender's
consent; or Borrower shall fail, within ten (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 except as provided for in such REA;
(m) if Borrower shall continue to be in default under any other term,
covenant or condition of this Agreement or any of the Loan Documents for more
than ten (10) days after notice from Lender in the case of any default which can
be cured by the payment of a sum of money or for thirty (30) days after notice
from Lender in the case of any other default, provided that if such default
cannot reasonably be cured within such thirty (30) day period and Borrower shall
have commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for so long as it shall require Borrower in
the exercise of due diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of one hundred twenty (120) days.
Section 11.2. REMEDIES
(a) Upon the occurrence of an Event of Default (other than an Event of
Default described in Section ll.l(f) above) and at any time thereafter Lender
may, in addition to any
58
other rights or remedies available to it pursuant to this Agreement and the
other Loan Documents or at law or in equity, take such action, without notice or
demand, that Lender deems advisable to protect and enforce its rights against
Borrower and in the Property, including, without limitation, declaring the Debt
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against Borrower and
the Property, including, without limitation, all rights or remedies available at
law or in equity; and upon any Event of Default described in Section 11.1(f)
above, the Debt and all other obligations of Borrower hereunder and under the
other Loan Documents shall immediately and automatically become due and payable,
without notice or demand, and Borrower hereby expressly waives any such notice
or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.
(b) 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
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower 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 with respect to the
Property. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singularly, 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 form herein or in the other Loan Documents.
ARTICLE 12
ENVIRONMENTAL PROVISIONS
Section 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants, based solely upon an Environmental Report
of the Property and information that Borrower knows, that: (a) there are no
Hazardous Materials or underground storage tanks in, on, or under the Property,
except those that are both (i) in compliance with Environmental Laws and with
permits issued pursuant thereto (if such permits are required), if any, and (ii)
either (A) in the case of Hazardous Materials, in amounts not in excess of that
necessary to operate the Property for the purposes set forth herein or (B) fully
disclosed to and approved by Lender in writing pursuant to an Environmental
Report; (b) there are no past, present or threatened Releases of Hazardous
Materials in violation of any Environmental Law or which would require
remediation by a Governmental Authority in, on, under or from the Property
except as described in the Environmental Report; (c) there is no threat of any
Release of Hazardous Materials migrating to the Property except as described in
the Environmental Report; (d) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property except as described in the Environmental Report; (e) Borrower does
not know of, and has not received, any written or oral notice or other
communication from any Person relating to Hazardous Materials in, on, under or
from the Property; and (f) Borrower has truthfully and fully provided to Lender,
in writing, any and all information relating to environmental conditions in, on,
under or from the
59
Property known to Borrower or contained in Borrower's files and records,
including but not limited to any reports relating to Hazardous Materials in, on,
under or migrating to or from the Property and/or to the environmental condition
of the Property.
Section 12.2. ENVIRONMENTAL COVENANTS
Borrower covenants and agrees that so long as Borrower owns, manages, is in
possession of, or otherwise controls the operation of the Property: (a) all uses
and operations on or of the Property, whether by Borrower or any other Person,
shall be in compliance with all Environmental Laws and permits issued pursuant
thereto; (b) there shall be no Releases of Hazardous Materials in, on, under or
from the Property; (c) there shall be no Hazardous Materials in, on, or under
the Property, except those that are both (i) in compliance with all
Environmental Laws and with permits issued pursuant thereto, if and to the
extent required, and (ii) (A) in amounts not in excess of that necessary to
operate the Property for the purposes set forth herein or (B) fully disclosed to
and approved by Lender in writing; (d) Borrower shall keep the Property free and
clear of all Environmental Liens; (e) Borrower shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to Section
12.4 below, including but not limited to providing all relevant information and
making knowledgeable persons available for interviews; (f) Borrower shall, at
its sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any reasonable written request of Lender, upon Lender's reasonable
belief that the Property is not in full compliance with all Environmental Laws,
and share with Lender the reports and other results thereof, and Lender and
other Indemnified Parties shall be entitled to rely on such reports and other
results thereof; (g) Borrower shall, at its sole cost and expense, comply with
all reasonable written requests of Lender to (i) reasonably effectuate
remediation of any Hazardous Materials in, on, under or from the Property; and
(ii) comply with any Environmental Law; (h) Borrower shall not allow any tenant
or other user of the Property to violate any Environmental Law; and (i) Borrower
shall immediately notify Lender in writing after it has become aware of (A) any
presence or Release or threatened Release of Hazardous Materials in, on, under,
from or migrating towards the Property; (B) any non-compliance with any
Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien against the Property; (D) any required or proposed
remediation of environmental conditions relating to the Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a Governmental
Authority) relating in any way to Hazardous Materials. Any failure of Borrower
to perform its obligations pursuant to this Section 12.2 shall constitute bad
faith waste with respect to the Property.
Section 12.3. LENDER'S RIGHTS
Lender and any other Person designated by Lender, including but not limited
to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon the Property at all
reasonable times to assess any and all aspects of the environmental condition of
the Property and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in
Lender's sole discretion) and taking samples of soil, groundwater or other
water, air, or building materials, and conducting
60
other invasive testing. Borrower shall cooperate with and provide access to
Lender and any such person or entity designated by Lender.
Section 12.4. OPERATIONS AND MAINTENANCE PROGRAMS
If recommended by the Environmental Report or any other environmental
assessment or audit of the Property, Borrower shall establish and comply with an
operations and maintenance program with respect to the Property, in form and
substance reasonably acceptable to Lender, prepared by an environmental
consultant reasonably acceptable to Lender, which program shall address any
asbestos-containing material or lead based paint that may now or in the future
be detected at or on the Property. Without limiting the generality of the
preceding sentence, Lender may require (a) periodic notices or reports to Lender
in form, substance and at such intervals as Lender may specify, (b) an amendment
to such operations and maintenance program to address changing circumstances,
laws or other matters, (c) at Borrower's sole expense, supplemental examination
of the Property by consultants specified by Lender, (d) access to the Property
by Lender, its agents or servicer, to review and assess the environmental
condition of the Property and Borrower's compliance with any operations and
maintenance program, and (e) variation of the operations and maintenance program
in response to the reports provided by any such consultants.
Section 12.5. ENVIRONMENTAL DEFINITIONS
"ENVIRONMENTAL LAW" means any present and future federal, state and local
laws, statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, as well as common law, including but not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act and the Resource Conservation and Recovery Act, that apply to Borrower or
the Property and relate to Hazardous Materials or protection of human health or
the environment. "ENVIRONMENTAL LIENS" means all Liens and other encumbrances
imposed pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other Person. "ENVIRONMENTAL REPORT" means the written reports
resulting from the environmental site assessments of the Property delivered to
Lender in connection with the Loan. "HAZARDOUS MATERIALS" shall mean petroleum
and petroleum products and compounds containing them, including gasoline, diesel
fuel and oil; explosives, flammable materials; radioactive materials;
polychlorinated biphenyls and compounds containing them; lead and lead-based
paint; asbestos or asbestos-containing materials in any form that is or could
become friable; underground or above-ground storage tanks, whether empty or
containing any substance; any substance the presence of which on the Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material", "hazardous waste",
"toxic substance", "toxic pollutant", "contaminant", or "pollutant" within the
meaning of any Environmental Law. "RELEASE" of any Hazardous Materials includes
but is not limited to any release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping,
dumping, disposing or other movement of Hazardous Materials.
Section 12.6. INDEMNIFICATION.
61
(a) Borrower and Borrower Principal covenant and agree at their sole cost
and expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (i) any presence
of any Hazardous Materials in, on, above, or under the Property; (ii) any past,
present or threatened Release of Hazardous Materials in, on, above, under or
from the Property; (iii) any activity by Borrower, any Person affiliated with
Borrower, and any Tenant or other user of the Property in connection with any
actual, proposed or threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production, manufacturing, processing,
refining, control, management, abatement, removal, handling, transfer or
transportation to or from the Property of any Hazardous Materials at any time
located in, under, on or above the Property or any actual or proposed
remediation of any Hazardous Materials at any time located in, under, on or
above the Property, whether or not such remediation is voluntary or pursuant to
court or administrative order, including but not limited to any removal,
remedial or corrective action; (iv) any past, present or threatened
non-compliance or violations of any Environmental Laws (or permits issued
pursuant to any Environmental Law) in connection with the Property or operations
thereon, including but not limited to any failure by Borrower, any person or
entity affiliated with Borrower, and any tenant or other user of the Property to
comply with any order of any Governmental Authority in connection with any
Environmental Laws; (v) the imposition, recording or filing or the threatened
imposition, recording or filing of any Environmental Lien encumbering the
Property; (vi) any acts of Borrower, any person or entity affiliated with
Borrower, and any tenant or other user of the Property in (A) arranging for
disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Materials at any facility or incineration
vessel containing such or similar Hazardous Materials or (B) accepting any
Hazardous Materials for transport to disposal or treatment facilities,
incineration vessels or sites from which there is a Release, or a threatened
Release of any Hazardous Substance which causes the incurrence of costs for
remediation; and (vii) any misrepresentation or inaccuracy in any representation
or warranty or material breach or failure to perform any covenants or other
obligations pursuant to this Agreement relating to environmental matters.
(b) Upon written request by any Indemnified Party, Borrower and Borrower
Principal shall defend same (if requested by any Indemnified Party, in the name
of the Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their sole discretion, engage their own attorneys and other professionals to
defend or assist them, and, at the option of Indemnified Parties, their
attorneys shall control the resolution of any claim or proceeding. Upon demand,
Borrower and Borrower Principal shall pay or, in the sole discretion of the
Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.
(c) Notwithstanding the foregoing, Borrower shall have no liability for
any Losses imposed upon or incurred by or asserted against any Indemnified
Parties and described in subsection (a) above to the extent that Borrower can
conclusively prove both that such Losses were caused solely by actions,
conditions or events that occurred after the date that Lender (or any purchaser
at a foreclosure sale) actually acquired title to the Property and that such
Losses
62
were not caused by the direct or indirect actions of Borrower, Borrower
Principal, or any partner, member, principal, officer, director, trustee or
manager of Borrower or Borrower Principal or any employee, agent, contractor or
Affiliate of Borrower or Borrower Principal. The obligations and liabilities of
Borrower and Borrower Principal under this Section 12.6 shall fully survive
indefinitely notwithstanding any termination, satisfaction, assignment, entry of
a judgment of foreclosure, exercise of any power of sale, or delivery of a deed
in lieu of foreclosure of the Deed of Trust.
ARTICLE 13
SECONDARY MARKET
Section 13.1. TRANSFER OF LOAN
Lender may, at any time, sell, transfer or assign the Loan Documents, or
grant participations therein ("PARTICIPATIONS") or syndicate the Loan
("SYNDICATION") or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement ("SECURITIES") (a Syndication or the issuance of
Participations and/or Securities, a "SECURITIZATION").
Section 13.2. DELEGATION OF SERVICING
At the option of Lender, the Loan may be serviced by a servicer/trustee
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to such
servicer/trustee pursuant to a servicing agreement between Lender and such
servicer/trustee.
Section 13.3. DISSEMINATION OF INFORMATION
Lender may forward to each purchaser, transferee, assignee, or servicer of,
and each participant, or investor in, the Loan, or any Participations and/or
Securities or any of their respective successors (collectively, the "INVESTOR")
or any Rating Agency rating the Loan, or any Participations and/or Securities,
each prospective Investor, and any organization maintaining databases on the
underwriting and performance of commercial mortgage loans, all documents and
information which Lender now has or may hereafter acquire relating to the Debt
and to Borrower, any managing member or general partner thereof, Borrower
Principal, any SPE Component Entity (if any) and the Property, including
financial statements, whether furnished by Borrower or otherwise, as Lender
determines necessary or desirable. Borrower irrevocably waives any and all
rights it may have under applicable Legal Requirements to prohibit such
disclosure, including but not limited to any right of privacy.
Section 13.4. COOPERATION
(a) Borrower and Borrower Principal agree to cooperate with Lender in
connection with any sale or transfer of the Loan or any Participation and/or
Securities created pursuant to this Article 13, including, without limitation,
(a) the delivery of an estoppel certificate required in accordance with Section
5.12(a) and such other documents as may be reasonably requested by Lender, (b)
the execution of such amendments to the Loan Documents as may be requested by
the holder of the Note or the Rating Agencies or otherwise to effect the
Securitization including,
63
without limitation, bifurcation of the Loan into two or more separate notes;
provided, however, that Borrower shall not be required to modify or amend any
Loan Document if such modification or amendment would (i) change the interest
rate, the stated maturity or the amortization of principal set forth in the
Note, except in connection with a bifurcation of the Loan which may result in
varying fixed interest rates and amortization schedules, but which shall have
the same initial weighted average coupon of the original Note, or (ii) in the
reasonable judgment of Borrower, modify or amend any other material economic
term of the Loan, or (iii) in the reasonable judgment of Borrower, materially
increase Borrower's obligations and liabilities under the Loan Documents, (c)
make changes to the organizational documents of Borrower and its principals
and/or use its best efforts to cause changes to the legal opinions delivered by
Borrower in connection with the Loan, provided, that such changes shall not
result in a material adverse economic effect to Borrower, and (d) to use best
efforts to deliver any opinion, including without limitation, customary single
member limited liability company opinions, as may be reasonably requested by the
Lender or the holder of the Note or as may be requested by the Rating Agencies
to effect the Securitization, the cost of which Borrower shall be responsible
for, as well as make any changes to the LLC Agreement or the Loan Documents
which may be reasonably necessary to obtain said opinions. Borrower's failure to
deliver the opinions described in subsection (d) shall not constitute an Event
of Default should Borrower use best efforts. Borrower shall also furnish and
Borrower and Borrower Principal consent to Lender furnishing to such Investors
or such prospective Investors or such Rating Agency any and all information
concerning the Property, the Leases, the financial condition of Borrower or
Borrower Principal as may be requested by Lender, any Investor, any prospective
Investor or any Rating Agency in connection with any sale or transfer of the
Loan or any Participations or Securities. Neither Borrower nor Borrower
Principal shall be responsible for any costs incurred by Lender in connection
with a Securitization.
ARTICLE 14
INDEMNIFICATIONS
Section 14.1. GENERAL INDEMNIFICATION
Borrower shall indemnify, defend and hold harmless the Indemnified Parties
from and against any and all Losses imposed upon or incurred by or asserted
against any Indemnified Parties and directly or indirectly arising out of or in
any way relating to any one or more of the following: (a) any accident, injury
to or death of persons or loss of or damage to property occurring in, on or
about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (b) any use,
nonuse or condition in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) performance of any labor or services or the furnishing of any
materials or other property in respect of the Property or any part thereof; (d)
any failure of the Property to be in compliance with any Applicable Legal
Requirements; (e) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or undertakings on
its part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; (f) the holding or investing of the Reserve Accounts or
the performance of the Required Work, Additional Required Repairs or Additional
Replacements, or (g) the payment of any commission, charge or brokerage fee to
anyone which may be payable in connection with the funding of the Loan
(collectively, the "INDEMNIFIED
64
LIABILITIES"); provided, however, that Borrower shall not have any obligation to
Lender hereunder to the extent that such Indemnified Liabilities arise from the
gross negligence, illegal acts, fraud or willful misconduct of Lender. To the
extent that the undertaking to indemnify, defend and hold harmless set forth in
the preceding sentence may be unenforceable because it violates any law or
public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Lender.
Section 14.2. MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all
Losses imposed upon or incurred by or asserted against any Indemnified Parties
and directly or indirectly arising out of or in any way relating to any tax on
the making and/or recording of the Deed of Trust, the Note or any of the other
Loan Documents, but excluding any income, franchise or other similar taxes.
Section 14.3. ERISA INDEMNIFICATION
Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all
Losses (including, without limitation, reasonable attorneys' fees and costs
incurred in the investigation, defense, and settlement of Losses incurred in
correcting any prohibited transaction or in the sale of a prohibited loan, and
in obtaining any individual prohibited transaction exemption under ERISA that
may be required, in Lender's sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under Section 4.9 or Section 5.18 of this
Agreement.
Section 14.4. SURVIVAL
The obligations and liabilities of Borrower and Borrower Principal under
this Article 14 shall fully survive indefinitely notwithstanding any
termination, satisfaction, assignment, entry of a judgment of foreclosure,
exercise of any power of sale, or delivery of a deed in lieu of foreclosure of
the Deed of Trust.
ARTICLE 15
EXCULPATION
Section 15.1. EXCULPATION
(a) Except as otherwise provided herein or in the other Loan Documents,
Lender shall not enforce the liability and obligation of Borrower or Borrower
Principal, as applicable, to perform and observe the obligations contained
herein or in the other Loan Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower or Borrower Principal, except
that Lender may bring a foreclosure action, action for specific performance or
other appropriate action or proceeding to enable Lender to enforce and realize
upon this Agreement, the Note, the Deed of Trust and the other Loan Documents,
and the interest in the Property, the Rents and any other collateral given to
Lender created by this Agreement, the Note, the Deed of Trust and the other Loan
Documents; provided, however, that any judgment in any such action or proceeding
shall be enforceable against Borrower or Borrower Principal, as
65
applicable, only to the extent of Borrower's or Borrower Principal's interest in
the Property, in the Rents (following an Event of Default) and in any other
collateral given to Lender. Lender, by accepting this Agreement, the Note, the
Deed of Trust and the other Loan Documents, agrees that it shall not, except as
otherwise provided in this Section 15.1, ▇▇▇ for, seek or demand any deficiency
judgment against Borrower or Borrower Principal in any such action or
proceeding, under or by reason of or under or in connection with this Agreement,
the Note, the Deed of Trust or the other Loan Documents. The provisions of this
Section 15.1 shall not, however, (i) constitute a waiver, release or impairment
of any obligation evidenced or secured by this Agreement, the Note, the Deed of
Trust or the other Loan Documents; (ii) impair the right of Lender to name
Borrower or Borrower Principal as a party defendant in any action or suit for
judicial foreclosure and sale under this Agreement and the Deed of Trust; (iii)
affect the validity or enforceability of any indemnity (including, without
limitation, those contained in Section 12.6 and Article 14 of this Agreement),
guaranty, master lease or similar instrument made in connection with this
Agreement, the Note, the Deed of Trust and the other Loan Documents; (iv) impair
the right of Lender to obtain the appointment of a receiver; (v) impair the
enforcement of the assignment of leases provisions contained in the Deed of
Trust; or (vi) impair the right of Lender to obtain a deficiency judgment or
other judgment on the Note against Borrower or Borrower Principal if necessary
to obtain any Insurance Proceeds or Awards to which Lender would otherwise be
entitled under this Agreement; provided however, Lender shall only enforce such
judgment to the extent of the Insurance Proceeds and/or Awards.
(b) Notwithstanding the provisions of this Section 15.1 to the contrary,
Borrower and Borrower Principal shall be personally liable to Lender on a joint
and several basis for Losses due to:
(i) fraud or intentional misrepresentation by Borrower, Borrower
Principal or any other Affiliate of Borrower or Borrower Principal in
connection with the execution and the delivery of this Agreement, the Note,
the Deed of Trust, any of the other Loan Documents, or any certificate,
report, financial statement or other instrument or document furnished to
Lender at the time of the closing of the Loan or during the term of the
Loan;
(ii) Borrower's misapplication or misappropriation of Rents received
by Borrower after the occurrence of an Event of Default;
(iii) Borrower's misapplication or misappropriation of tenant
security deposits or Rents collected in advance;
(iv) the misapplication or the misappropriation of Insurance
Proceeds or Awards;
(v) Borrower's failure to pay Taxes, Other Charges (except to the
extent that sums sufficient to pay such amounts have been deposited in
escrow with Lender pursuant to the terms hereof and there exists no
impediment to Lender's utilization thereof), charges for labor or materials
or other charges that can create liens on the Property beyond any
applicable notice and cure periods specified herein;
66
(vi) Borrower's failure to return or to reimburse Lender for all
Personal Property taken from the Property by or on behalf of Borrower and
not replaced with Personal Property of the same utility and of the same or
greater value;
(vii) any act of actual waste or arson by Borrower, any principal,
Affiliate, member or general partner thereof or by Borrower Principal, any
principal, Affiliate, member or general partner thereof;
(viii) Borrower's failure following any Event of Default to deliver to
Lender upon demand all Rents and books and records relating to the
Property;
(ix) Borrower's failure to complete the Required Repairs within six
(6) months and subsequent failure to establish the Required Repair Account;
or
(x) Borrower's gross negligence or willful misconduct.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect and the Debt shall be fully
recourse to Borrower and Borrower Principal in the event of (i) a default by
Borrower, Borrower Principal or any SPE Component Entity (if any) of any of the
covenants set forth in Article 6 or Article 7 hereof, or (ii) if the Property or
any part thereof shall become an asset in (A) a voluntary bankruptcy or
insolvency proceeding of Borrower, or (B) an involuntary bankruptcy or
insolvency proceeding of Borrower which Borrower fails to use its best efforts
to dismiss within one hundred and twenty (120) days of filing.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Deed of Trust or to require that all collateral shall continue to
secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Deed of Trust or the other Loan Documents.
ARTICLE 16
NOTICES
Section 16.1. NOTICES
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, (b)
expedited prepaid overnight delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or by (c) telecopier (with
answer back acknowledged provided an additional notice is given pursuant to
subsection (b) above), addressed as follows (or at such other address and Person
as shall be designated from time to
67
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section):
If to Lender:
Bank of America, N.A.
Capital Markets Servicing Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
6th floor
CA9-706-06-42
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Servicing Manager
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.:(▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: INLAND WESTERN ST. ▇▇▇▇▇▇, L.L.C.
c/o Inland Western Retail Real Estate Trust, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: The Inland Real Estate Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower
Principal: Inland Western Retail Real Estate Trust, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: The Inland Real Estate Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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 and telecopy, upon the first attempted delivery on a
Business Day.
68
ARTICLE 17
FURTHER ASSURANCES
Section 17.1. REPLACEMENT DOCUMENTS
Upon receipt of an affidavit of an officer of Lender as to the loss, theft,
destruction or mutilation of the Note or any other Loan Document which is not of
public record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other Loan Document, Borrower will issue, in lieu
thereof, a replacement Note or other Loan Document, dated the date of such lost,
stolen, destroyed or mutilated Note or other Loan Document in the same principal
amount thereof and otherwise of like tenor.
Section 17.2. RECORDING OF DEED OF TRUST, ETC
Borrower forthwith upon the execution and delivery of the Deed of Trust and
thereafter, from time to time, will cause the Deed of Trust and any of the other
Loan Documents creating a lien or security interest or evidencing the lien
hereof upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, the Deed of Trust, the other Loan Documents, any
note, deed of trust or mortgage supplemental hereto, any security instrument
with respect to the Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state,
county and municipal taxes, duties, imposts, assessments and charges arising out
of or in connection with the execution and delivery of the Deed of Trust, any
deed of trust or mortgage supplemental hereto, any security instrument with
respect to the Property or any instrument of further assurance, and any
modification or amendment of the foregoing documents, except where prohibited by
law so to do.
Section 17.3. FURTHER ACTS, ETC.
Borrower will, at the cost of Borrower (except with respect to costs
incurred by Lender, for which Lender shall be responsible), do, execute,
acknowledge and deliver all and every further acts, deeds, conveyances, deeds of
trust, mortgages, assignments, security agreements, control agreements, notices
of assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning, transferring,
and confirming unto Lender the property and rights hereby mortgaged, deeded,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Agreement or
for filing, registering or recording the Deed of Trust, or for complying with
all Legal Requirements. Borrower, on demand, will execute and deliver, and in
the event it shall fail to so execute and deliver, hereby authorizes Lender to
execute in the name of Borrower or without the signature of Borrower to the
extent Lender may lawfully do so, one or more financing statements and financing
statement amendments to evidence more effectively, perfect
69
and maintain the priority of the security interest of Lender in the Property.
Borrower grants to Lender an irrevocable power of attorney coupled with an
interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender at law and in equity, including without limitation,
such rights and remedies available to Lender pursuant to this Section 17.3.
Section 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS
(a) If any law is enacted or adopted or amended after the date of this
Agreement which deducts the Debt from the value of the Property for the purpose
of taxation or which imposes a tax, either directly or indirectly, on the Debt
or Lender's interest in the Property, Borrower will pay the tax, with interest
and penalties thereon, if any. If Lender is advised by counsel chosen by it that
the payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall have
the option by written notice of not less than one hundred twenty (180) days to
declare the Debt immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of the Deed of Trust or the
Debt. If such claim, credit or deduction shall be required by law, Lender shall
have the option, by written notice of not less than one hundred twenty (180)
days, to declare the Debt immediately due and payable.
If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Deed of Trust, or any of the other Loan Documents or
impose any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
Section 17.5. EXPENSES
Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender upon receipt of written notice from Lender for all reasonable
costs and expenses (including reasonable, actual attorneys' fees and
disbursements and the allocated costs of internal legal services and all actual
disbursements of internal counsel) reasonably incurred by Lender in accordance
with this Agreement in connection with (a) the preparation, negotiation,
execution and delivery of this Agreement and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby and all the
costs of furnishing all opinions by counsel for Borrower (including without
limitation any opinions requested by Lender as to any legal matters arising
under this Agreement or the other Loan Documents with respect to the Property);
(b) Borrower's ongoing performance of and compliance with Borrower's respective
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and
insurance requirements; (c) following a request by Borrower, Lender's ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (d) the negotiation, preparation, execution,
delivery and
70
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Lender; (e) securing Borrower's compliance with any requests made
pursuant to the provisions of this Agreement; (f) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Lien in favor of Lender pursuant to this
Agreement and the other Loan Documents; (g) enforcing or preserving any rights,
in response to third party claims or the prosecuting or defending of any action
or proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Property, or any other
security given for the Loan; and (h) enforcing any obligations of or collecting
any payments due from Borrower under this Agreement, the other Loan Documents or
with respect to the Property or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy proceedings; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender.
ARTICLE 18
WAIVERS
Section 18.1. REMEDIES CUMULATIVE; WAIVERS
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or Borrower Principal pursuant to this Agreement or
the other Loan Documents, or existing at law or in equity or otherwise. Lender's
rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's
sole discretion. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy, right or power
may be exercised from time to time and as often as may be deemed expedient. A
waiver of one Default or Event of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or to impair any remedy, right or power consequent thereon.
Section 18.2. MODIFICATION, WAIVER IN WRITING
No modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement, or of the Note, or of any other Loan Document,
nor consent to any departure by 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 Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
Section 18.3. DELAY NOT A WAIVER
71
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 the Note or under any
other Loan Document, or any other instrument given as security therefor, 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
this Agreement, the Note or any other 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 this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other amount.
Section 18.4. TRIAL BY JURY
BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER
PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN
ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER, BORROWER
PRINCIPAL AND LENDER.
Section 18.5. WAIVER OF NOTICE
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
Section 18.6. REMEDIES OF BORROWER
In the event that a claim or adjudication is made that Lender or its agents
have acted unreasonably or unreasonably delayed acting in any case where by law
or under this Agreement or the other Loan Documents, Lender or such agent, as
the case may be, has an obligation to act reasonably or promptly, Borrower
agrees that neither Lender nor its agents shall be liable for any monetary
damages, and Borrower's sole remedies shall be limited to commencing an action
72
seeking injunctive relief or declaratory judgment. The parties hereto agree that
any action or proceeding to determine whether Lender has acted reasonably shall
be determined by an action seeking declaratory judgment. Lender agrees that, in
such event, it shall cooperate in expediting any action seeking injunctive
relief or declaratory judgment.
Section 18.7. WAIVER OF MARSHALLING OF ASSETS
To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Property, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Property for the collection of the Debt without any
prior or different resort for collection or of the right of Lender to the
payment of the Debt out of the net proceeds of the Property in preference to
every other claimant whatsoever.
Section 18.8. WAIVER OF STATUTE OF LIMITATIONS
Borrower hereby expressly waives and releases, to the fullest extent
permitted by law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its Other Obligations.
Section 18.9. WAIVER OF COUNTERCLAIM
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.
Section 18.10. [RESERVED]
ARTICLE 19
GOVERNING LAW
Section 19.1. CHOICE OF LAW
This Agreement shall be governed, construed, applied and enforced in
accordance with the laws of the State and applicable laws of the United States
of America, except that, with respect to the security interest in the Reserve
Accounts, the laws of the state where the Reserve Accounts are located shall
apply.
Section 19.2. 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.
73
Section 19.3. PREFERENCES
Lender shall have the continuing and exclusive right to apply or reverse
and reapply any and all payments by Borrower to any portion of the obligations
of Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any Creditors Rights
Laws, state or federal law, common law or equitable cause, then, to the extent
of such payment or proceeds received, the obligations hereunder or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender.
ARTICLE 20
MISCELLANEOUS
Section 20.1. SURVIVAL
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
Section 20.2. HEADINGS
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 20.3. COST OF ENFORCEMENT
In the event (a) that the Deed of Trust is foreclosed in whole or in part,
(b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors, or
(c) Lender exercises any of its other remedies under this Agreement or any of
the other Loan Documents, Borrower shall be chargeable with and agrees to pay
all costs of collection and defense, including attorneys' fees and costs,
incurred by Lender or Borrower in connection therewith and in connection with
any appellate proceeding or post-judgment action involved therein, together with
all required service or use taxes.
Section 20.4. SCHEDULES INCORPORATED
The Schedules annexed hereto are hereby incorporated herein as a part of
this Agreement with the same effect as if set forth in the body hereof.
74
Section 20.5. OFFSETS, COUNTERCLAIMS AND DEFENSES
Any assignee of Lender's interest in and to this Agreement, the Note and
the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by
Borrower.
Section 20.6. NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES
(a) Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
(c) The general partners, members, principals and (if Borrower is a trust)
beneficial owners of Borrower are experienced in the ownership and operation of
properties similar to the Property, and Borrower and Lender are relying solely
upon such expertise and business plan in connection with the ownership and
operation of the Property. Borrower is not relying on Lender's expertise,
business acumen or advice in connection with the Property.
(d) Notwithstanding anything to the contrary contained herein, Lender is
not undertaking the performance of (i) any obligations under the Leases; or (ii)
any obligations with respect to such agreements, contracts, certificates,
instruments, franchises, permits, trademarks, licenses and other documents.
(e) By accepting or approving anything required to be observed, performed
or fulfilled or to be given to Lender pursuant to this Agreement, the Deed of
Trust, the Note or the other Loan Documents, including, without limitation, any
officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
75
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
(f) Borrower recognizes and acknowledges that in accepting this Agreement,
the Note, the Deed of Trust and the other Loan Documents, Lender is expressly
and primarily relying on the truth and accuracy of the representations and
warranties set forth in Article 4 of this Agreement without any obligation to
investigate the Property and notwithstanding any investigation of the Property
by Lender; that such reliance existed on the part of Lender prior to the date
hereof, that the warranties and representations are a material inducement to
Lender in making the Loan; and that Lender would not be willing to make the Loan
and accept this Agreement, the Note, the Deed of Trust and the other Loan
Documents in the absence of the warranties and representations as set forth in
Article 4 of this Agreement.
Section 20.7. PUBLICITY
All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan,
Lender, Banc of America Securities LLC, or any of their Affiliates shall be
subject to the prior written approval of Lender, not to be unreasonably
withheld. Lender shall be permitted to make any news, releases, publicity or
advertising by Lender or its Affiliates through any media intended to reach the
general public which refers to the Loan, the Property, Borrower, Borrower
Principal and their respective Affiliates without the approval of Borrower or
any such Persons. Borrower also agrees that Lender may share any information
pertaining to the Loan with Bank of America Corporation, including its bank
subsidiaries, Banc of America Securities LLC and any other Affiliates of the
foregoing, in connection with the sale or transfer of the Loan or any
Participations and/or Securities created.
Section 20.8. CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE
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 they were represented by competent counsel
in connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
76
Section 20.9. ENTIRE AGREEMENT
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 between Borrower and Lender are superseded by the terms
of this Agreement and the other Loan Documents.
77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
INLAND WESTERN ST. ▇▇▇▇▇▇, L.L.C.,
a Delaware limited liability company
By: INLAND WESTERN RETAIL REAL
ESTATE TRUST, INC., a Maryland
corporation, its Sole Member
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
------------------------
Title: Asst Secretary
------------------------
BORROWER PRINCIPAL:
Acknowledged and agreed to with respect to
its obligations set forth in Article 4,
Section 12.6, Article 15 and Article 18
hereof:
INLAND WESTERN RETAIL REAL
ESTATE TRUST, INC., a Maryland corporation
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇
-------------------------------
Title: Asst Secretary
------------------------------
LENDER:
BANK OF AMERICA, N.A.,
a national banking association
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT A
BORROWER EQUITY OWNERSHIP STRUCTURE
Inland Western Retail Real Estate Trust, Inc. 100.0%
SCHEDULE I
REQUIRED REPAIRS ESTIMATED COST
Repair damaged concrete drainage swale on west side of Main Building $ 1,500.00
Seal Coat and re-stripe asphalt pavement $ 23,000.00
Seal longitudinal and transverse cracking throughout site $ 1,500.00
Remove and replace areas of alligator cracking throughout site $ 41,625.00
Seal cracked sidewalk and garbage dumpster enclosure pad areas
throughout site; grind asphalt adjacent to sidewalk at southwest side
of Main Building to mitigate trip hazard $ 1,500.00
Replace damaged CMU wall in southeast corner of site and concrete
wall north of the Main Building $ 2,000.00
Replace damaged mortar between CU, damaged mortar at vertical
control joints, seal hairline cracks, and repair damaged stucco and
EIFS at the Main Building $ 10,000.00
Replace damaged awning at southwest corner of Main Building $ 2,500.00
Perform repairs at both buildings including the lowering of primary
drain elevation above management office, replace missing coping, and
seal holes in CMU parapet wall at northwest corner of Main Building $ 3,500.00
Replace damaged windows at south side of Hollywood Video Building $ 2,250.00
Contact utility company to repair or replace leaking electrical transformer
west of the Main Building $ 0.00
Replace missing emergency light fixture at common area men's restroom $ 100.00
Install one additional ADA parking stall and replace existing ADA parking
stall signage $ 750.00
Replace asphalt curb ramp adjacent to Suite 19 of the Main Building and
replace with curb cut and ramp to meet ADA guidelines $ 1,500,00
Install fire alarms in common area restrooms and replace missing insulation
at lavatory drainpipes $ 2,500,00