Exhibit 2.2
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LOAN AGREEMENT
Dated as of April 4, 2002
Between
▇▇ ▇▇▇▇▇▇ VALLEY LIMITED PARTNERSHIP,
as Borrower
and
COLUMN FINANCIAL, INC.,
as Lender
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TABLE OF CONTENTS
Page
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION..................................................................1
Section 1.1. Definitions..........................................................................1
Section 1.2. Principles of Construction..........................................................15
II. GENERAL TERMS...........................................................................................16
Section 2.1. Loan Commitment; Disbursement to Borrower...........................................16
Section 2.2. Interest Rate.......................................................................16
Section 2.3. Loan Payment........................................................................17
Section 2.4. Prepayments.........................................................................18
Section 2.5. Defeasance..........................................................................19
Section 2.6. Release of Property.................................................................21
Section 2.7. Cash Management.....................................................................21
III. CONDITIONS PRECEDENT....................................................................................23
Section 3.1. Conditions Precedent to Closing.....................................................23
IV. REPRESENTATIONS AND WARRANTIES..........................................................................26
Section 4.1. Borrower Representations............................................................26
Section 4.2. Survival of Representations.........................................................32
V. BORROWER COVENANTS......................................................................................32
Section 5.1. Affirmative Covenants...............................................................32
Section 5.2. Negative Covenants..................................................................40
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS.....................................................44
Section 6.1. Insurance...........................................................................44
Section 6.2. Casualty............................................................................47
Section 6.3. Condemnation........................................................................48
Section 6.4. Restoration.........................................................................48
VII. RESERVE FUNDS...........................................................................................52
Section 7.1. Required Repair Funds...............................................................52
Section 7.2. Tax and Insurance Escrow Fund.......................................................53
Section 7.3. Replacements and Replacement Reserve................................................53
Section 7.4. Rollover Reserve....................................................................54
Section 7.5. Sears Reserve.......................................................................55
Section 7.6. Reserve Funds Generally.............................................................56
VIII. DEFAULTS................................................................................................57
Section 8.1. Event of Default....................................................................57
Section 8.2. Remedies............................................................................59
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IX. SPECIAL PROVISIONS......................................................................................60
Section 9.1. Sale of Notes and Securitization....................................................60
Section 9.2. Securitization Indemnification......................................................61
Section 9.3. Achievements........................................................................64
Section 9.4. Exculpation.........................................................................64
Section 9.5. Matters Concerning Manager..........................................................66
Section 9.6. Servicer............................................................................67
X. MISCELLANEOUS...........................................................................................67
Section 10.1. Survival............................................................................67
Section 10.2. Lender's Discretion.................................................................67
Section 10.3. Governing Law.......................................................................67
Section 10.4. Modification, Waiver in Writing.....................................................68
Section 10.5. Delay Not a Waiver..................................................................68
Section 10.6. Notices.............................................................................69
Section 10.7. Trial by Jury.......................................................................70
Section 10.8. Headings............................................................................70
Section 10.9. Severability........................................................................70
Section 10.10. Preferences.........................................................................70
Section 10.11. Waiver of Notice....................................................................71
Section 10.12. Remedies of Borrower................................................................71
Section 10.13. Expenses; Indemnity.................................................................71
Section 10.14. Schedules Incorporated..............................................................72
Section 10.15. Offsets, Counterclaims and Defenses.................................................72
Section 10.16. No Joint Venture or Partnership; No Third Party Beneficiaries.......................72
Section 10.17. Publicity...........................................................................73
Section 10.18. Waiver of Marshalling of Assets.....................................................73
Section 10.19. Waiver of Counterclaim..............................................................73
Section 10.20. Conflict; Construction of Documents; Reliance.......................................73
Section 10.21. Brokers and Financial Advisors......................................................73
Section 10.22. Prior Agreements....................................................................73
SCHEDULES
Schedule 1 - Legal Description of Property
Schedule 2 - Rent Roll
Schedule 3 - Required Repairs
Schedule 3.1 Parking Diagram
Schedule 4.1.26 Unpaid Borrower Obligations
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 4, 2002 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"Agreement"), is between COLUMN FINANCIAL, INC., having an address at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ (together with
its successors and assigns, "Lender"), and ▇▇ ▇▇▇▇▇▇ VALLEY LIMITED PARTNERSHIP,
a Pennsylvania limited partnership, having its principal place of business at
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter
defined) from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower,
subject to and in accordance with the terms of this Agreement and the other Loan
Documents (as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by
Lender and the covenants, agreements, representations and warranties set forth
in this Agreement, the parties hereto hereby covenant, agree, represent and
warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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 Insolvency Opinion" shall have the meaning set
forth in Section 4.1.30(c) 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 mean any managing agent in which
Borrower, Principal, or any Guarantor has, directly or indirectly, any legal,
beneficial or economic interest.
"ALTA" shall mean American Land Title Association, or any
successor thereto.
"Annual Budget" shall mean the operating budget, including all
planned Capital Expenditures, for the Property prepared by Borrower for the
applicable Fiscal Year or other period.
"Anticipated Repayment Date" shall mean April 11, 2012.
"Applicable Interest Rate" shall mean (a) prior to the
Anticipated Repayment Date, the Initial Term Interest Rate and (b) on and after
the Anticipated Repayment Date, the Extended Term Interest Rate.
"Approved Annual Budget" shall have the meaning set forth in
Section 5.1.11(d).
"Assignment of Leases" shall mean that certain first priority
Assignment of Leases and Rents, dated as of the date hereof, from Borrower, as
assignor, to Lender, as assignee, assigning to Lender all of Borrower's interest
in and to the Leases and Rents of the Property as security for the Loan, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"Assignment of Management Agreement" shall mean that certain
Assignment of Management Agreement and Subordination of Management Fees dated as
of 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.
"Basic Carrying Costs" shall mean the sum of the following
costs associated with the Property for the relevant Fiscal Year or payment
period: (a) Taxes and (b) Insurance Premiums.
"Borrower" shall have the meaning set forth in the
introductory paragraph hereto, together with its successors and assigns.
"Business Day" shall mean any day other than a Saturday,
Sunday or any other day on which national banks in New York, New York are not
open for business.
"Capital Expenditures" shall mean, for any period, the amount
expended for items capitalized under GAAP (including expenditures for building
improvements or major repairs, leasing commissions and tenant improvements).
"Cash Expenses" shall mean, for any period, the operating
expenses for the operation of the Property as set forth in an Approved Annual
Budget to the extent that such expenses are actually incurred by Borrower minus
any payments into the Tax and Insurance Escrow Fund.
"Cash Management Account" shall have the meaning specified in
Section 2.7.2(a) hereof.
"Cash Management Agreement" shall mean that certain Cash
Management Agreement, dated as of the date hereof, by and among Borrower,
Manager and Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time, relating to funds deposited in the
Lockbox Account.
"Casualty" shall have the meaning specified in Section 6.2
hereof.
"Casualty Consultant" shall have the meaning set forth in
Section 6.4(b)(iii) hereof.
"Casualty Retainage" shall have the meaning set forth in
Section 6.4(b)(iv) hereof.
"Closing Date" shall mean the date of the funding of the Loan.
"Code" shall mean the Internal Revenue Code of 1986, as
heretofore amended and 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.
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"Collection Period" shall mean, with respect to any Payment
Date, the period of days from the eleventh (11th) day of the month immediately
preceding the Payment Date to the tenth (10th) day of the month in which such
Payment Date occurs. With respect to the first Payment Date, the Collection
Period shall commence on and include the date hereof and end on and include the
tenth (10th) day of the calendar month of such first Payment Date.
"Condemnation" shall mean a temporary or permanent taking by
any Governmental Authority as the result or 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.
"Condemnation Proceeds" shall have the meaning set forth in
Section 6.4(b) hereof.
"Credit Suisse First Boston" shall have the meaning set forth
in Section 9.2(b) hereof.
"Credit Suisse First Boston Group" shall have the meaning set
forth in Section 9.2(b) hereof.
"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 (including the Yield Maintenance
Premium) due to Lender in respect of the Loan under the Note, this Agreement,
the Mortgage or any other Loan Document.
"Debt Service" shall mean, with respect to any particular
period of time, scheduled principal and/or interest payments under the Note.
"Debt Service Coverage Ratio" shall mean a ratio for the
applicable period in which:
(a) the numerator is the Net Operating Income (excluding
interest on credit accounts) for such period as set
forth in the statements required hereunder; and
(b) the denominator is the Debt Service for such period.
"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 Determination Ratio" shall have the meaning set forth
in Section 9.3 hereof.
"Default Rate" shall mean, with respect to the Loan, a rate
per annum equal to the lesser of (a) the maximum rate permitted by applicable
law, or (b) five percent (5%) above the Applicable Interest Rate.
"Defeasance Date" shall have the meaning set forth in Section
2.5.1(a)(i) hereof.
"Defeasance Deposit" shall mean an amount equal to the sum of
(i) the remaining principal amount of the Note, plus (ii) the amount (if any)
which, when added to the remaining principal amount of the Note, will be
sufficient to purchase U.S. Obligations providing the required Scheduled
Defeasance Payments, plus (iii) any costs and expenses incurred or to be
incurred in the purchase of U.S. Obligations necessary to meet the Scheduled
Defeasance Payments, plus (iv) any revenue, documentary stamp or intangible
taxes or any other tax or charge due in connection with the transfer of the Note
or otherwise required to accomplish the agreements of Sections 2.3 through 2.5
hereof.
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"Defeasance Event" shall have the meaning set forth in Section
2.5.1(a) hereof.
"Defeasance Expiration Date" shall mean, so long as a
Securitization has not occurred on or prior to such date, April 11, 2006.
"Disclosure Document" shall mean a preliminary or final
prospectus, prospectus supplement, private placement memorandum, offering
circular or other offering document (including any amendment or supplement
thereto) to be used by Lender or any Affiliate of Lender in connection with a
Securitization.
"Discount Rate" shall mean the rate which, when compounded
monthly, is equivalent to the Prepayment Treasury Rate when compounded
semi-annually.
"DSCR Determination Date" shall have the meaning set forth in
Section 9.3 hereof.
"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 Eligible
Institution (as hereinafter defined) 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. ss.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, the short term unsecured debt obligations or commercial paper of
which are rated at least A-1+ by Standard & Poor's Ratings Group, P-1 by ▇▇▇▇▇'▇
Investors Service, Inc. and F-1+ by Fitch Inc. 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 Standard & Poor's Ratings
Group and Fitch Inc. and "Aa2" by ▇▇▇▇▇'▇ Investors Service, Inc.).
Notwithstanding the foregoing, Wilmington Trust of Pennsylvania shall be deemed
to be an "Eligible Institution" solely for the purpose of serving as the initial
"Clearing Bank" under the Cash Management Agreement; provided, however, such
consent may be withdrawn by Lender upon a downgrade of Wilmington Trust of
Pennsylvania current rating of "A-" by Standard & Poor's Rating Group or "Baa1"
by ▇▇▇▇▇'▇ Investors Service, Inc.
"Environmental Indemnity" shall mean that certain
Environmental Indemnity Agreement dated as of the date hereof, executed by
Borrower in connection with the Loan for the benefit of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Event of Default" shall have the meaning set forth in Section
8.1(a) hereof.
"Excess Cash Flow" shall have the meaning set forth in Section
2.7.2(b) hereof.
"Exchange Act" shall have the meaning set forth in Section
9.2(a) hereof.
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"Extended Term Interest Rate" shall mean a rate per annum
equal to (a) the greater of (i) the Initial Term Interest Rate plus five (5)
percentage points or (ii) the Treasury Rate plus five (5) percentage points, or
(b) for so long as the Note is an asset of the trust, partnership, corporation
or other entity formed in connection with a Securitization pursuant to which
securities rated by any Rating Agency have been issued, the Initial Term
Interest Rate plus two (2) percentage points.
"Extraordinary Expense" shall have the meaning set forth in
Section 5.1.11(e) hereof.
"Fee Termination Ratio" shall have the meaning set forth in
Section 9.5(b) hereof.
"Fiscal Year" shall mean each twelve (12) month period
commencing on January 1 and ending on December 31 during each year of the term
of the Loan.
"Funding Limit" shall have the meaning set forth in Section
7.4.1 hereof.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as of the date of the applicable financial report.
"Governmental Authority" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Gross Income from Operations" shall mean all income, computed
in accordance with GAAP, derived from the ownership and operation of the
Property from whatever source, including, but not limited to, Rents, utility
charges, escalations, forfeited security deposits, interest on credit accounts,
service fees or charges, license fees, parking fees, rent concessions or
credits, and other pass-through or reimbursements paid by tenants under the
Leases of any nature but excluding sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any Governmental Authority,
refunds and uncollectible accounts, sales of furniture, fixtures and equipment,
proceeds of casualty insurance and condemnation awards (other than business
interruption or other loss of income insurance), and any disbursements to
Borrower from the Tax and Insurance Escrow Fund, the Replacement Reserve Fund,
the Sears Reserve Fund, the Rollover Reserve Fund or any other escrow fund
established by the Loan Documents.
"Guarantor" shall mean PREIT Associates, L.P., a Delaware
limited partnership.
"Guaranty" shall mean that certain Guaranty Agreement dated as
of the date hereof, from Guarantor to and for the benefit of Lender.
"Improvements" shall have the meaning set forth in the
granting clause of the Mortgage.
"Indebtedness" of a Person, at a particular date, shall mean
the sum (without duplication) at such date of (a) indebtedness or liability for
borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other
similar instruments; (c) obligations for the deferred purchase price of property
or services (including trade obligations); (d) obligations under letters of
credit; (e) obligations under acceptance facilities; (f) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds, to invest in any Person, or otherwise to assure a
creditor against loss; and (g) obligations secured by any Liens, whether or not
the obligations have been assumed.
"Indemnified Person" shall have the meaning set forth in
Section 9.2(h) hereof.
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"Independent Director" shall mean a director of the Principal
who is not at the time of initial appointment, or at any time while serving as a
director of the Principal, and has not been at any time during the preceding
five (5) years: (a) a shareholder of, or an officer, director (with the
exception of serving as the Independent Director of the Principal), attorney,
counsel, employee, partner, member or manager of the Principal, Borrower or any
Affiliate of either of them; (b) a customer, supplier or other Person who
derives any of its purchases or revenues from its activities with the Principal,
Borrower or any Affiliate of either of them; (c) a Person controlling or under
common control with any such stockholder, officer, director, employee, partner,
member, manager, customer, supplier or other Person; (d) a member of the
immediate family of any such stockholder, officer, director, employee, partner,
member, manager, customer, supplier or other person; or (e) a present or former
advisor or consultant to Borrower or the Borrower's partner, as applicable, or
any Affiliate of same. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
"Initial Term Interest Rate" shall mean a rate of seven and
thirty-six one-hundredths of one percent (7.36%) per annum.
"Insolvency Opinion" shall mean that certain non-consolidation
opinion letter dated the date hereof delivered by Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP.
"Insurance Premiums" shall have the meaning set forth in
Section 6.1(b) hereof.
"Insurance Proceeds" shall have the meaning set forth in
Section 6.4(b) hereof.
"Lease" shall mean any lease, sublease or sub-sublease,
letting, license, concession or other agreement (whether written or oral and
whether now or hereafter in effect) pursuant to which any Person is granted a
possessory interest in, or right to use or occupy all or any portion of any
space in the Property, and every modification, amendment or other agreement
relating to such lease, sublease, sub-sublease, or other agreement entered into
in connection with such lease, sublease, sub-sublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.
"Legal Requirements" shall mean all federal, state, county,
municipal and other governmental 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, or any part thereof, whether now or hereafter enacted and
in force, and all permits, licenses and authorizations and regulations relating
thereto, and all covenants, agreements, restrictions and encumbrances contained
in any instruments, either of record or known to Borrower, at any time in force
affecting 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.
"Lender" shall have the meaning set forth in the introductory
paragraph hereto, together with its successors and assigns.
"Liabilities" shall have the meaning set forth in Section
9.2(b) hereof.
"Licenses" shall have the meaning set forth in Section 4.1.22
hereof.
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"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.
"Loan" shall mean the loan made by Lender to Borrower pursuant
to this Agreement.
"Loan Documents" shall mean, collectively, this Agreement, the
Note, the Mortgage, the Assignment of Leases, the Environmental Indemnity, the
Assignment of Management Agreement, the Guaranty, the Cash Management Agreement
and all other documents executed and/or delivered in connection with the Loan.
"Lockbox Account" shall mean, collectively, the account or
accounts, if any, specified in the Cash Management Agreement for deposit of
Rents and other receipts from the Property.
"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, or, if the context requires, the Replacement Management Agreement
executed in accordance with the terms and provisions of this Agreement.
"Manager" shall mean PREIT Services, LLC, a Delaware limited
liability company, or, if the context requires, a Qualified Manager who is
managing the Property in accordance with the terms and provisions of this
Agreement.
"Maturity Date" shall mean April 11, 2032, or such other date
on which the final payment of principal of the Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.
"Maximum Legal Rate" shall mean the maximum non-usurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the indebtedness evidenced by the
Note and as provided for herein or the other Loan Documents, under the laws of
such state or states whose laws are held by any court of competent jurisdiction
to govern the interest rate provisions of the Loan.
"Monthly Debt Service Payment Amount" shall mean a constant
monthly payment of $331,033.50.
"Monthly Insurance Deposits" shall have the meaning set forth
in Section 7.2 hereof.
"Monthly Tax Deposits" shall have the meaning set forth in
Section 7.2 hereof.
"Mortgage" shall mean that certain first priority Open-End
Mortgage and Security Agreement, dated as of the date hereof, executed and
delivered by Borrower for the benefit of Lender 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.
"Net Cash Flow" for any period shall mean the amount obtained
by subtracting Operating Expenses and Capital Expenditures for such period from
Gross Income from Operations for such period.
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"Net Operating Income" shall mean, for any given period, the
amount obtained by subtracting Operating Expenses for such period from Gross
Income from Operations for such period.
"Net Proceeds" shall have the meaning set forth in Section
6.4(b) hereof.
"Net Proceeds Deficiency" shall have the meaning set forth in
Section 6.4(b)(vi) hereof.
"Note" shall mean that certain Promissory Note dated of even
date herewith in the principal amount of Forty Eight Million and No/100 Dollars
($48,000,000.00), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"Offering Materials" shall have the meaning set forth in
Section 9.2(b) hereof.
"Officer's Certificate" shall mean a certificate delivered to
Lender by Borrower which is signed by an authorized senior officer of the
general partner or managing member of Borrower.
"Operating Expenses" shall mean the total of all expenditures,
computed in accordance with GAAP, of whatever kind relating to the operation,
maintenance and management of the Property that are incurred on a regular
monthly or other periodic basis, including, without limitation, utilities,
common area maintenance (which for the purposes of this definition shall be no
less than an assumed expense of $161,800.00 per month), insurance, license fees,
property taxes and assessments, advertising expenses, management fees, payroll
and related taxes, computer processing charges, tenant improvements and leasing
commissions (which for the purposes of this definition shall be no less than an
assumed expense of $43,307.00 per month), operational equipment or other lease
payments as approved by Lender, and other similar costs, but excluding
depreciation, Debt Service, Capital Expenditures, and contributions to the Tax
and Insurance Escrow Fund, the Replacement Reserve Fund, the Rollover Reserve
Fund and any other reserves required under the Loan Documents.
"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.
"Payment Date" shall mean the eleventh (11th) day of each
calendar month during the term of the Loan or, if such day is not a Business
Day, the immediately preceding Business Day.
"Permitted Encumbrances" shall mean collectively, (a) the
Liens 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 yet due and
delinquent, and (d) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender's sole discretion; which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of the Property or Borrower's ability to repay the Loan.
"Permitted Investments" shall have the meaning set forth in
the Cash Management Agreement.
"Permitted Release Date" shall mean the date that is two (2)
years from the "startup day" within the meaning of Section 860G(a)(9) of the
Code of the REMIC Trust.
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"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 Mortgage.
"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 6.1(b)
hereof.
"Prepayment Date" shall have the meaning set forth in Section
2.4.4 hereof.
"Prepayment Treasury Rate" shall mean the yield calculated by
the linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H.15 Selected Interest Rates (the "Release") under the
heading "U.S. government securities" and the subheading "Treasury constant
maturities" for the week ending prior to the date of prepayment, of U.S.
Treasury constant maturities with maturity dates (one longer and one shorter)
most nearly approximating the Anticipated Repayment Date. In the event the
Release is no longer published, Lender shall select a comparable publication to
determine the Prepayment Treasury Rate in its reasonable discretion.
"Principal" shall mean ▇▇ ▇▇▇▇▇▇ Valley LLC, a Delaware
limited liability company, the general partner of Borrower.
"Property" shall mean each parcel of real property described
on Schedule 1 attached hereto, the Improvements thereon and all personal
property owned by Borrower and encumbered by the Mortgage, together with all
rights pertaining to such property and Improvements, as more particularly
described in the granting clauses of the Mortgage and referred to therein as the
"Property".
"Provided Information" shall have the meaning set forth in
Section 9.1(a) hereof.
"Qualified Manager" shall mean either (a) the Manager; (b)
PREIT-▇▇▇▇▇, Inc.; or (c) in the reasonable judgment of Lender, a reputable and
experienced management organization (which may be an Affiliate of Borrower)
possessing experience in managing properties similar in size, scope, use and
value as the Property, provided that Borrower shall have obtained prior written
confirmation from the applicable Rating Agencies that management of the Property
by such Person will not cause a downgrading, withdrawal or qualification of the
then current ratings of the Securities or any class thereof.
"Rating Agencies" shall mean each of Standard & Poor's Ratings
Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., and
Fitch Inc., or any other nationally-recognized statistical rating agency which
has been approved by Lender.
"Registration Statement" shall have the meaning set forth in
Section 9.2(b) hereof.
"REMIC Trust" shall mean a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code that holds the Note.
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"Rents" shall mean all rents, rent equivalents, money payable
as damages or in lieu of rent or rent equivalents, royalties (including, without
limitation, all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without limitation,
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other consideration of whatever form or nature
received by or paid to or for the account of or benefit of Borrower or its
agents or employees from any and all sources arising from or attributable to the
Property, and proceeds, if any, from business interruption or other loss of
income insurance.
"Replacement Management Agreement" shall mean, collectively,
(a) either (i) a management agreement with a Qualified Manager substantially in
the same form and substance as the Management Agreement, or (ii) a management
agreement with a Qualified Manager, which management agreement shall be
reasonably acceptable to Lender in form and substance, provided that, with
respect to this subclause (ii), Lender, at its option, may require that Borrower
obtain confirmation from the applicable Rating Agencies that such management
agreement will not cause a downgrading, withdrawal or qualification of the then
current rating of the Securities or any class thereof; and (b) an assignment of
management agreement and subordination of management fees substantially in the
form then used by Lender (or of such other form and substance reasonably
acceptable to Lender), executed and delivered to Lender by Borrower and such
Qualified Manager at Borrower's expense.
"Replacement Reserve Account" shall have the meaning set forth
in Section 7.3.1 hereof.
"Replacement Reserve Fund" shall have the meaning set forth in
Section 7.3.1 hereof.
"Replacement Reserve Monthly Deposit" shall have the meaning
set forth in Section 7.3.1 hereof.
"Replacements" shall have the meaning set forth in Section
7.3.1 hereof.
"Required Repair Account" shall have the meaning set forth in
Section 7.1.1 hereof.
"Required Repair Fund" shall have the meaning set forth in
Section 7.1.1 hereof.
"Required Repairs" shall have the meaning set forth in Section
7.1.1 hereof.
"Reserve Funds" shall mean the Tax and Insurance Escrow Fund,
the Replacement Reserve Fund, the Required Repair Fund, the Rollover Reserve
Fund, the Sears Reserve Fund and any other escrow fund established by the Loan
Documents.
"Restoration" shall mean the repair and restoration of the
Property after a Casualty or Condemnation 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.
"Restricted Party" shall mean Borrower, Principal, any
Guarantor, or any Affiliated Manager or any shareholder, partner, member or
non-member manager, or any direct or indirect legal or beneficial owner of,
Borrower, Principal, or any Guarantor, any Affiliated Manager or any non-member
manager.
"Rollover Reserve Fund" shall have the meaning set forth in
Section 7.4.3 hereof.
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"Sale or Pledge" shall mean a voluntary or involuntary sale,
conveyance, transfer or pledge of a legal or beneficial interest.
"Scheduled Defeasance Payments" shall have the meaning set
forth in Section 2.5.1(b) hereof.
"Sears Reserve Fund" shall have the meaning set forth in
Section 7.5 hereof.
"Sears Space" shall have the meaning set forth in Section 7.5
hereof.
"Securities" shall have the meaning set forth in Section 9.1
hereof.
"Securities Act" shall have the meaning set forth in Section
9.2(a) hereof.
"Securitization" shall have the meaning set forth in Section
9.1 hereof.
"Security Agreement" shall have the meaning set forth in
Section 2.5.1(a)(v) hereof.
"Servicer" shall have the meaning set forth in Section 9.6
hereof.
"Servicing Agreement" shall have the meaning set forth in
Section 9.6 hereof.
"Special Purpose Entity" shall mean a corporation, limited
partnership or limited liability company which at all times on and after the
date hereof:
(a) is organized solely for the purpose of (i) acquiring,
developing, owning, holding, selling, leasing, transferring,
exchanging, managing and operating the Property, entering into this
Agreement with Lender, refinancing the Property in connection with a
permitted repayment of the Loan, and transacting lawful business that
is incident, necessary and appropriate to accomplish the foregoing; or
(ii) acting as the general partner of the limited partnership that owns
the Property or as the managing member of the limited liability company
that owns the Property;
(b) has not engaged, is not engaged and will not engage
in any business unrelated to (i) the activities described in sub-clause
(a)(i) above, (ii) acting as the general partner of the limited
partnership that owns the Property or (iii) acting as the managing
member of the limited liability company that owns the Property, as
applicable;
(c) has not had, does not have and will not have any
assets other than those related to the Property or its partnership
interest in the limited partnership or the member interest in the
limited liability company that owns the Property;
(d) has not engaged, sought or consented to and will not
engage in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets,
transfer of partnership or membership interests (if such entity is the
general partner in a limited partnership or the managing member in a
limited liability company) or amendment of its limited partnership
agreement, articles of incorporation, articles of organization,
certificate of formation or operating agreement (as applicable) with
respect to the matters set forth in this definition;
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(e) if such entity is a limited partnership, then each
general partner must be a Special Purpose Entity that is either a
corporation that has at least two Independent Directors and that owns
at least one percent (1.0%) of the equity of the limited partnership or
a Special Purpose Entity that is a limited liability company that has
at least two Independent Managers and that owns at least one percent
(1.0%) of the equity of the limited partnership;
(f) if such entity is a corporation, has at least two
Independent Directors, and has not caused or allowed and will not cause
or allow the board of directors of such entity to take any action
requiring the unanimous affirmative vote of one hundred percent (100%)
of the members of its board of directors unless the two Independent
Directors shall have participated in such vote;
(g) if such entity is a limited liability company, is
either (i) a Delaware limited liability company and has at least two
Independent Managers and has not caused or allowed and will not cause
or allow the board of managers of such entity to take any action
requiring the unanimous affirmative vote of one hundred percent (100%)
of the members of its board of managers unless the two Independent
Managers shall have participated in such vote, or (ii) has at least one
(1) managing member that is a corporation that has at least two
Independent Directors and that owns at least one percent (1.0%) of the
equity of the limited liability company;
(h) if such entity is (i) a limited liability company,
has articles of organization, a certificate of formation and/or an
operating agreement, as applicable, (ii) a limited partnership, has a
limited partnership agreement, or (iii) a corporation, has a
certificate of incorporation or articles that, in each case, provide
that such entity will not: (A) dissolve, merge, liquidate, consolidate;
(B) sell all or substantially all of its assets or the assets of the
Borrower (as applicable); (C) engage in any other business activity, or
amend its organizational documents with respect to the matters set
forth in this definition, without the consent of the Lender; or (D)
without the affirmative vote of two Independent Directors, or
Independent Managers, as applicable, and of all other directors of the
corporation or all other managers of the limited liability company, as
applicable (that is such entity or the general partner or managing
member of such entity), file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings with respect to itself or
any other entity in which it has a direct or indirect legal or
beneficial ownership interest;
(i) has been, is and will remain solvent and pay its
debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its own assets as the same shall become due,
and has maintained, is maintaining and will maintain adequate capital
for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business
operations;
(j) has and will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any
other entity (including any Affiliate of Borrower, any constituent
party of Borrower, any Guarantor or any Affiliate of any constituent
party or Guarantor) and has not failed and will not fail to correct any
known misunderstanding regarding its status as a separate entity;
(k) has maintained and will maintain its accounts, books
and records separate from any other Person and will file its own tax
returns, except to the extent that it is required to file consolidated
tax returns by law;
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(l) has maintained and will maintain its own records,
books, resolutions and agreements;
(m) has not commingled and will not commingle its funds
or assets with those of any other Person and has not participated and
will not participate in any cash management system with any other
Person;
(n) has held and will hold its assets in its own name;
(o) has conducted and will conduct its business in its
own name or in a name franchised or licensed to it by an entity other
than an Affiliate of Borrower, except for services rendered under a
business management services agreement with an Affiliate that complies
with the terms contained in Subsection (cc) below, so long as the
manager, or equivalent thereof, under such business management services
agreement holds itself out as an agent of the Borrower;
(p) has maintained and will maintain its financial
statements, accounting records and other entity documents separate from
any other Person and has not permitted and will not permit its assets
to be listed as assets on the financial statement of any other entity
except as required by GAAP; provided, however, that any such
consolidated financial statement shall contain a note indicating that
its separate assets and liabilities are neither available to pay the
debts of the consolidated entity nor constitute obligations of the
consolidated entity;
(q) has paid and will pay its own liabilities and
expenses, including the salaries of its own employees, out of its own
funds and assets, and has maintained and will maintain a sufficient
number of employees in light of its contemplated business operations;
(r) has observed and will observe all partnership,
corporate or limited liability company formalities, as applicable;
(s) has and will have no Indebtedness other than (i) the
Loan, (ii) liabilities incurred in the ordinary course of business
relating to the ownership and operation of the Property and the routine
administration of Borrower, in amounts not to exceed $1,440,000.00 at
any one time, which liabilities are not more than sixty (60) days past
the date incurred, are not evidenced by a note and are paid when due,
and which amounts are normal and reasonable under the circumstances,
and (iii) such other liabilities that are permitted pursuant to this
Agreement;
(t) has not and will not assume or guarantee or become
obligated for the debts of any other Person or hold out its credit as
being available to satisfy the obligations of any other Person except
as permitted pursuant to this Agreement;
(u) has not and will not acquire obligations or
securities of its partners, members or shareholders or any other
Affiliate;
(v) has allocated and will allocate fairly and reasonably
any overhead expenses that are shared with any Affiliate, including,
but not limited to, paying for shared office space and services
performed by any employee of an Affiliate;
(w) maintained and used, maintains and uses and will
maintain and use a separate telephone number and separate stationery,
invoices and checks bearing its own name. The stationery, invoices, and
checks utilized by the Special Purpose Entity or utilized to collect
its funds or pay its expenses shall bear its own name and shall not
bear the name of any other entity unless such entity is clearly
designated as being the Special Purpose Entity's agent;
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(x) has not pledged and will not pledge its assets for
the benefit of any other Person;
(y) has held itself out and identified itself and will
hold itself out and identify itself as a separate and distinct entity
under its own name or in a name franchised or licensed to it by an
entity other than an Affiliate of Borrower and not as a division or
part of any other Person, except for services rendered under a business
management services agreement with an Affiliate that complies with the
terms contained in Subsection (cc) below, so long as the manager, or
equivalent thereof, under such business management services agreement
holds itself out as an agent of the Borrower;
(z) has maintained and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain
or identify its individual assets from those of any other Person;
(aa) has not made and will not make loans to any Person
or hold evidence of indebtedness issued by any other Person (other than
cash and investment-grade securities issued by an entity that is not an
Affiliate of or subject to common ownership with such entity);
(bb) has not identified and will not identify its
partners, members or shareholders, or any Affiliate of any of them, as
a division or part of it, and has not identified itself and shall not
identify itself as a division of any other Person;
(cc) has not entered into or been a party to, and will
not enter into or be a party to, any transaction with its partners,
members, shareholders or Affiliates except (i) in the ordinary course
of its business and on terms which are intrinsically fair, commercially
reasonable and are no less favorable to it than would be obtained in a
comparable arm's-length transaction with an unrelated third party and
(ii) in connection with this Agreement;
(dd) has not and will not have any obligation to, and
will not, indemnify its partners, officers, directors or members, as
the case may be, unless such an obligation is fully subordinated to the
Debt and will not constitute a claim against it in the event that cash
flow in excess of the amount required to pay the Debt is insufficient
to pay such obligation;
(ee) if such entity is a corporation, it shall consider
the interests of its creditors in connection with all corporate
actions;
(ff) except pursuant to the Guaranty, does not and will
not have any of its obligations guaranteed by any Affiliate; and
(gg) has complied and will comply with all of the terms
and provisions contained in its organizational documents. The statement
of facts contained in its organizational documents are true and correct
and will remain true and correct.
"State" shall mean the State or Commonwealth in which the
Property is located.
"Successor Borrower" shall have the meaning set forth in
Section 2.5.3 hereof.
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"Survey" shall mean a survey of the Property prepared by a
surveyor licensed in the State and satisfactory to Lender and the company or
companies issuing the Title Insurance Policy, and containing a certification of
such surveyor satisfactory to Lender.
"Tax and Insurance Escrow Fund" shall have the meaning set
forth in Section 7.2 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.
"Threshold Amount" shall have the meaning set forth in Section
5.1.21 hereof.
"Title Insurance Policy" shall mean an ALTA mortgagee title
insurance policy in the form acceptable to Lender (or, if the Property is in a
State which does not permit the issuance of such ALTA policy, such form as shall
be permitted in such State and acceptable to Lender) issued with respect to the
Property and insuring the lien of the Mortgage.
"Transfer" shall have the meaning set forth in Section 5.2.10
hereof.
"Treasury Rate" shall mean, as of the Anticipated Repayment
Date, the yield, calculated by linear interpolation (rounded to the nearest
one-thousandth of one percent (i.e., 0.001%) of the yields of noncallable United
State Treasury obligations with terms (one longer and one shorter) most nearly
approximately the period from such date of determination to the Maturity Date,
as determined by Lender on the basis of Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading U.S. Governmental
Security/Treasury Constant Maturities, or other recognized source of financial
market information selected by Lender.
"UCC" or "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect in the applicable State or Commonwealth in which
the Property is located.
"Underwriter Group" shall have the meaning set forth in
Section 9.2(b) hereof.
"U.S. Obligations" shall mean non-redeemable securities
evidencing an obligation to timely pay principal and/or interest in a full and
timely manner that are (a) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged, or (b) to the
extent acceptable to the Rating Agencies, other "government securities" within
the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as
amended.
"Yield Maintenance Premium" shall mean an amount equal to the
greater of (a) the present value as of the date of prepayment of the remaining
scheduled payments of principal and interests from the date of prepayment
through the Anticipated Repayment Date (including an amount equal to the
outstanding principal balance of the Loan on the Anticipated Repayment Date)
determined by discounting such payments at the Discount Rate less the amount of
principal being prepaid, or (b) one percent (1%) of the outstanding principal
balance of the Note as of the date of prepayment.
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.
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II. GENERAL TERMS
Section 2.1. Loan Commitment; Disbursement to Borrower.
2.1.1 Agreement to Lend and Borrow. Subject to and upon the
terms and conditions set forth herein, Lender hereby agrees to make and Borrower
hereby agrees to accept the Loan on the Closing Date.
2.1.2 Single Disbursement to Borrower. Borrower may request
and receive only one borrowing hereunder in respect of the Loan and any amount
borrowed and repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 The Note, Mortgage and Loan Documents. The Loan shall be
evidenced by the Note and secured by the Mortgage, the Assignment of Leases and
the other Loan Documents.
2.1.4 Use of Proceeds. Borrower shall use the proceeds of the
Loan to (a) finance the acquisition of the Property, (b) pay all past-due Basic
Carrying Costs, if any, (c) make deposits into the Reserve Funds on the Closing
Date in the amounts provided herein, (d) pay costs and expenses incurred in
connection with the closing of the Loan, as approved by Lender, (e) fund any
working capital requirements of the Property, and (f) distribute the balance, if
any, to Borrower.
Section 2.2. Interest Rate.
2.2.1 Initial Term Interest Rate. Interest on the outstanding
principal balance of the Loan shall accrue from the Closing Date to but
excluding the Anticipated Repayment Date at the Initial Term Interest Rate.
2.2.2 Extended Term Interest Rate. Interest on the outstanding
principal balance of the Loan shall accrue from and including the Anticipated
Repayment Date to and including the Maturity Date at the Extended Term Interest
Rate.
2.2.3 Interest Calculation. Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying (a) the actual
number of days elapsed in the period for which the calculation is being made by
(b) a daily rate based on a three hundred sixty (360) day year by (c) the
outstanding principal balance.
2.2.4 Default Rate. Notwithstanding anything to the contrary
contained herein, in the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal balance of the
Loan and, to the extent permitted by law, overdue interest in respect of the
Loan, shall accrue interest at the Default Rate, calculated from the date such
payment was due without regard to any grace or cure periods contained herein.
2.2.5 Usury Savings. This Agreement and the Note are subject
to the express condition that at no time shall Borrower be obligated or required
to pay interest on the principal balance of the Loan at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate. If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Applicable Interest Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate
and all previous payments in excess of the Maximum Legal Rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
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Section 2.3. Loan Payment.
2.3.1 Payment Before Anticipated Repayment Date. Borrower
shall pay to Lender (a) on the first Payment Date following the Closing Date, an
amount equal to interest only on the outstanding principal balance of the Loan
from the Closing Date up to but not including such Payment Date (unless such
Closing Date is the eleventh (11th) day of the month, in which case no such
interest only payment shall be due), and (b) on each Payment Date thereafter up
to and including the Anticipated Repayment Date, Borrower shall make a payment
to Lender of principal and interest in an amount equal to the Monthly Debt
Service Payment Amount, which payments shall be applied first to accrued and
unpaid interest and the balance to principal.
2.3.2 Payments After Anticipated Repayment Date. On each
Payment Date occurring after the Anticipated Repayment Date, Borrower shall (a)
make a payment to Lender of principal and interest in the amount of the Monthly
Debt Service Payment Amount, such payment to be applied to interest in an amount
equal to interest that would have accrued on the outstanding principal balance
of the Loan (without adjustment for Accrued Interest) at the Initial Term
Interest Rate and the balance applied to principal and (b) pay to Lender amounts
to be applied to principal as set forth in Section 2.7.2(c) hereof. Interest
accrued at the Extended Term Interest Rate and not paid pursuant to the
preceding sentence shall be added to the outstanding principal balance on the
first day following such Payment Date and shall earn interest at the Extended
Term Interest Rate to the extent permitted by law (such accrued interest,
"Accrued Interest").
2.3.3 Payments Generally. The first interest accrual period
hereunder shall commence on and include the date that principal is advanced
hereunder and shall end on and include the next tenth (10th) day of a calendar
month, unless principal is advanced on the tenth (10th) day of a month, in which
case the first interest accrual period shall consist of only such tenth (10th)
day. Each interest accrual period thereafter shall commence on the eleventh
(11th) day of each calendar month during the term of the Note and shall end on
and include the tenth (10th) day of the next occurring calendar month. For
purposes of making payments hereunder, but not for purposes of calculating
interest accrual periods, if the day on which such payment is due is not a
Business Day, then amounts due on such date shall be due on the immediately
preceding Business Day and with respect to payments of principal due on the
Maturity Date, interest shall be payable at the Applicable Interest Rate or the
Default Rate, as the case may be, through and including the day immediately
preceding such Maturity Date. All amounts due under the Note and this Agreement
shall be payable without setoff, counterclaim, defense or any other deduction
whatsoever.
2.3.4 Payment on Maturity Date. Borrower shall pay to Lender
on the Maturity Date the outstanding principal balance of the Loan, all accrued
and unpaid interest and all other amounts due hereunder and under the Note, the
Mortgage and the other Loan Documents.
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2.3.5 Late Payment Charge. If any principal, interest or any
other sums due under the Loan Documents is not paid by Borrower on the date on
which it is due, Borrower shall pay to Lender upon demand an amount equal to the
lesser of five percent (5%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray the expense incurred by Lender in handling
and processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment; provided, however, that such late charge
shall be waived by Lender with respect to the first overdue payment made by
Borrower, if any, each calendar year. Any such amount shall be secured by the
Mortgage and the other Loan Documents to the extent permitted by applicable law.
2.3.6 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 2:00 P.M., New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's office, and any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.
Section 2.4. Prepayments.
2.4.1 Voluntary Prepayments. Except as otherwise provided
herein, Borrower shall not have the right to prepay the Loan in whole or in part
prior to the Maturity Date. On the Payment Date that is three (3) months prior
to the Anticipated Repayment Date, or on any Payment Date thereafter, Borrower
may, at its option and upon at least thirty (30) days prior written notice to
Lender, prepay the Debt in whole, but not in part, without payment of the Yield
Maintenance Premium.
2.4.2 Mandatory Prepayments. On the next occurring Payment
Date following the date on which Borrower actually receives any Net Proceeds, if
Lender is not obligated to make such Net Proceeds available to Borrower for the
restoration of the Property, Borrower shall prepay the outstanding principal
balance of the Note in an amount equal to one hundred percent (100%) of such Net
Proceeds. Other than following an Event of Default, no Yield Maintenance Premium
shall be due in connection with any prepayment made pursuant to this Section
2.4.2. Any partial prepayment under this Section shall be applied to the last
payments of principal due under the Loan.
2.4.3 Prepayments After Default. If, following and during the
continuance of an Event of Default, payment of all or any part of the Debt is
tendered by Borrower or otherwise recovered by Lender, such tender or recovery
shall be (a) made on the next occurring Payment Date together with the Monthly
Debt Service Payment Amount and (b) deemed a voluntary prepayment by Borrower in
violation of the prohibition against prepayment set forth in Section 2.4.1 and
Borrower shall pay, in addition to the Debt, an amount equal to the Yield
Maintenance Premium.
2.4.4 Expiration of Defeasance. So long as no Securitization
shall have occurred as of the Defeasance Expiration Date, the Debt may be
prepaid, from and after the Defeasance Expiration Date, in whole (but not in
part) prior to the date permitted under Section 2.4.1 hereof upon not less than
thirty (30) days prior written notice to Lender specifying the Payment Date on
which prepayment is to be made (a "Prepayment Date") provided no Event of
Default exists and upon payment of the Yield Maintenance Premium. Lender shall
notify Borrower of the amount and the basis of determination of the required
prepayment consideration. If any notice of prepayment is given, the Debt shall
be due and payable on the Prepayment Date. Lender shall not be obligated to
accept any prepayment of the Debt unless it is accompanied by the prepayment
consideration due in connection therewith.
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Section 2.5. Defeasance.
2.5.1 Voluntary Defeasance.
(a) So long as no Event of Default shall then exist, Borrower
shall have the right at any time after the Permitted Release Date and prior to
the date voluntary prepayments are permitted under Section 2.4.1 or Section
2.4.4 hereof to voluntarily defease all of the Loan by and upon satisfaction of
the following conditions (such event being a "Defeasance Event"):
(i) Borrower shall provide not less than thirty (30) days
prior written notice to Lender specifying the Payment Date (the
"Defeasance Date") on which the Defeasance Event shall occur;
(ii) Borrower shall pay to Lender all accrued and unpaid
interest on the principal balance of the Loan to and including the
Defeasance Date;
(iii) Borrower shall pay to Lender all other sums, not
including scheduled interest or principal payments, then due under the
Note, this Agreement, the Mortgage and the other Loan Documents;
(iv) Borrower shall deliver to Lender the Defeasance
Deposit applicable to the Defeasance Event;
(v) Borrower shall execute and deliver a pledge and
security agreement, in form and substance that would be reasonably
satisfactory to a prudent lender creating a first priority lien on the
Defeasance Deposit and the U.S. Obligations purchased with the
Defeasance Deposit in accordance with the provisions of this Section
2.5 (the "Security Agreement");
(vi) Borrower shall deliver an opinion of counsel for
Borrower that is standard in commercial lending transactions and
subject only to customary qualifications, assumptions and exceptions
opining, among other things, that Borrower has legally and validly
transferred and assigned the U.S. Obligations and all obligations,
rights and duties under and to the Note to the Successor Borrower, that
Lender has a perfected first priority security interest in the
Defeasance Deposit and the U.S. Obligations delivered by Borrower and
that any REMIC Trust formed pursuant to a Securitization will not fail
to maintain its status as a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code as a result of such
Defeasance Event;
(vii) Borrower shall deliver confirmation in writing from
the applicable Rating Agencies to the effect that such release will not
result in a downgrade, withdrawal or qualification of the respective
ratings in effect immediately prior to such Defeasance Event for the
Securities issued in connection with the Securitization which are then
outstanding. If required by the applicable Rating Agencies, Borrower
shall also deliver or cause to be delivered a non-consolidation opinion
with respect to the Successor Borrower in form and substance
satisfactory to Lender and the applicable Rating Agencies;
(viii) Borrower shall deliver an Officer's Certificate
certifying that the requirements set forth in this Section 2.5.1(a)
have been satisfied;
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(ix) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the U.S.
Obligation purchased with the Defeasance Deposit generate monthly
amounts equal to or greater than the Scheduled Defeasance Payments;
(x) Borrower shall deliver such other certificates,
documents or instruments as Lender may reasonably request; and
(xi) Borrower shall pay all costs and expenses of Lender
incurred in connection with the Defeasance Event, including (A) any
costs and expenses associated with a release of the Lien of the
Mortgage as provided in Section 2.6 hereof, (B) reasonable attorneys'
fees and expenses incurred in connection with the Defeasance Event, (C)
the costs and expenses of the Rating Agencies, and (D) any revenue,
documentary stamp or intangible taxes or any other tax or charge due in
connection with the transfer of the Note, or otherwise required to
accomplish the defeasance.
(b) In connection with each Defeasance Event, Borrower shall use the
Defeasance Deposit to purchase U.S. Obligations which provide payments on or
prior to, but as close as possible to, all successive scheduled payment dates
after the Defeasance Date upon which interest and principal payments are
required under the Note, and in amounts equal to the scheduled payments due on
such dates under the Note (including, without limitation, scheduled payments of
principal, interest, servicing fees (if any), and any other amounts due under
the Loan Documents on such dates) and assuming the Note is prepaid in full on
the Anticipated Repayment Date (the "Scheduled Defeasance Payments"). Borrower,
pursuant to the Security Agreement or other appropriate document, shall
authorize and direct that the payments received from the U.S. Obligations may be
made directly to the Lockbox Account (unless otherwise directed by Lender) and
applied to satisfy the obligations of Borrower under the Note. Any portion of
the Defeasance Deposit in excess of the amount necessary to purchase the U.S.
Obligations required by this Section 2.5 and satisfy Borrower's other
obligations under this Section 2.5 and Section 2.6 shall be remitted to
Borrower.
2.5.2 Collateral. Each of the U.S. Obligations that are part of the
defeasance collateral shall be duly endorsed by the holder thereof as directed
by Lender or accompanied by a written instrument of transfer in form and
substance that would be satisfactory to a prudent lender (including, without
limitation, such instruments as may be required by the depository institution
holding such securities or by the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the book-entry facilities of
such institution) in order to perfect upon the delivery of the defeasance
collateral a first priority security interest therein in favor of the Lender in
conformity with all applicable state and federal laws governing the granting of
such security interests.
2.5.3 Successor Borrower. In connection with any Defeasance Event,
Borrower may at its option, or if so required by the applicable Rating Agencies
shall, establish or designate a successor entity (the "Successor Borrower")
which shall be a Single Purpose Entity with two (2) Independent Director or two
(2) Independent Managers, as applicable, approved by the Rating Agencies, and
Borrower shall transfer and assign all obligations, rights and duties under and
to the Note, together with the pledged U.S. Obligations, to such Successor
Borrower. Such Successor Borrower shall assume the obligations under the Note
and the Security Agreement and Borrower shall be relieved of its obligations
under such documents. Borrower shall pay $1,000 to any such Successor Borrower
as consideration for assuming the obligations under the Note and the Security
Agreement. Notwithstanding anything in this Agreement to the contrary, no other
assumption fee shall be payable upon a transfer of the Note in accordance with
this Section 2.5.3, but Borrower shall pay all costs and expenses incurred by
Lender, including Lender's attorneys' fees and expenses and any fees and
expenses of any Rating Agencies, incurred in connection therewith.
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Section 2.6. Release of Property. Except as set forth in this Section
2.6, no repayment, prepayment or defeasance of all or any portion of the Note
shall cause, give rise to a right to require, or otherwise result in, the
release of the Lien of the Mortgage on the Property.
2.6.1 Release of the Property.
(a) If Borrower has elected to defease the Loan and the requirements of
Section 2.5 and this Section 2.6 have been satisfied, the Property shall be
released from the Lien of the Mortgage and the U.S. Obligations, pledged
pursuant to the Security Agreement, shall be the sole source of collateral
securing the Note.
(b) In connection with the release of the Mortgage, Borrower shall
submit to Lender, not less than thirty (30) days prior to the Defeasance Date, a
release of Lien (and related Loan Documents) for the Property for execution by
Lender. Such release shall be in a form appropriate in the jurisdiction in which
the Property is located and that would be satisfactory to a prudent lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such releases in
accordance with the terms of this Agreement.
2.6.2 Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest due on the Loan and all other amounts due and payable under the
Loan Documents in accordance with the terms and provisions of the Note and this
Agreement, release the Lien of the Mortgage on the Property.
Section 2.7. Cash Management.
2.7.1 Lockbox Account.
(a) Borrower shall establish and maintain the Lockbox Account as a
segregated Eligible Account, which Lockbox Account shall be under the sole
dominion and control of Lender. Borrower hereby grants to Lender a first
priority security interest in the Lockbox Account and all deposits at any time
contained therein and the proceeds thereof and will take all actions necessary
to maintain in favor of Lender a perfected first priority security interest in
the Lockbox Account, including, without limitation, executing and filing UCC-1
Financing Statements and continuations thereof. Lender and the Servicer shall
have the sole right to make withdrawals from the Lockbox Account and all costs
and expenses for establishing and maintaining the Lockbox Account shall be paid
by Borrower.
(b) Borrower shall, or shall cause Manager to, deliver written
instructions to all tenants under Leases to deliver all Rents payable thereunder
directly to the Lockbox Account. Borrower shall, and shall cause Manager to,
deposit all amounts received by Borrower or Manager constituting Rents into the
Lockbox Account promptly upon receipt.
(c) Borrower shall obtain from the Servicer its agreement to transfer
to the Cash Management Account in immediately available funds by federal wire
transfer all amounts on deposit in the Lockbox Account once every Business Day
throughout the term of the Loan.
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2.7.2 Cash Management Account.
(a) Borrower shall establish and maintain a segregated Eligible Account
(the "Cash Management Account") to be held by the Servicer in trust for the
benefit of Lender, which Cash Management Account shall be under the sole
dominion and control of Lender. The Cash Management Account shall be entitled
"ORIX Capital Markets, LLC, as servicer of Column Financial, Inc. as mortgagee
of ▇▇ ▇▇▇▇▇▇ Valley Limited Partnership, Cash Collateral Account". Borrower
hereby grants to Lender a first priority security interest in the Cash
Management Account and all deposits at any time contained therein and the
proceeds thereof and will take all actions necessary to maintain in favor of
Lender a perfected first priority security interest in the Cash Management
Account, including, without limitation, executing and filing UCC-1 Financing
Statements and continuations thereof. Borrower will not in any way alter or
modify the Cash Management Account and will notify Lender of the account number
thereof. Lender and the Servicer shall have the sole right to make withdrawals
from the Cash Management Account and all costs and expenses for establishing and
maintaining the Cash Management Account shall be paid by Borrower.
(b) So long as no Event of Default shall have occurred and be
continuing, commencing on the first Business Day of each Collection Period,
Lender or the Servicer shall allocate amounts deposited in the Cash Management
Account from time to time during such Collection Period to subaccounts (as set
forth in the Cash Management Agreement) for payment of the following items in
the order indicated below and at the times set forth in the Cash Management
Agreement:
(i) First, payments to the Tax and Insurance Escrow Fund
in accordance with the terms and conditions of Section 7.2 hereof;
(ii) Second, payment of the Monthly Debt Service Payment
Amount, applied first to the payment of interest computed at the
Interest Rate with the remainder applied to the reduction of the
outstanding principal balance of the Note;
(iii) Third, payments to the Replacement Reserve Fund in
accordance with the terms and conditions of Section 7.3 hereof;
(iv) Fourth, scheduled monthly payments to the Sears
Reserve Fund in accordance with the terms and conditions of Section
7.5.1 hereof;
(v) Fifth, payment to the Lender of any other amounts
then due and payable under the Loan Documents;
(vi) Sixth, but only during a Sears Cash Trap Event (as
hereinafter defined) or on or after the Anticipated Repayment Date,
payments for monthly Cash Expenses incurred in accordance with the
related Approved Annual Budget pursuant to a written request for
payment submitted by Borrower to Lender specifying the individual Cash
Expenses in a form acceptable to Lender;
(vii) Seventh, but only during a Sears Cash Trap Event or
on or after the Anticipated Repayment Date, payments for Extraordinary
Expenses approved by Lender, if any;
(viii) Eighth, but only during a Sears Cash Trap Event,
payments to the Sears Reserve Fund in accordance with the terms and
conditions of Section 7.5.1 hereof
(ix) Ninth, on or after the Anticipated Repayment Date,
payments to Lender in reduction of the outstanding principal balance of
the Loan;
(x) Tenth, on or after the Anticipated Repayment Date,
payments to Lender for Accrued Interest; and
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(xi) Lastly, payment of any excess amounts ("Excess Cash
Flow") to Borrower, to be used by Borrower for any purpose determined
by Borrower and not otherwise prohibited hereunder.
(c) The insufficiency of funds on deposit in the Cash Management
Account shall not absolve Borrower of the obligation to make any payments, as
and when due pursuant to this Agreement and the other Loan Documents, and such
obligations shall be separate and independent, and not conditioned on any event
or circumstance whatsoever.
(d) All funds on deposit in the Cash Management Account following the
occurrence and during the continuance of an Event of Default may be applied by
Lender in such order and priority as Lender shall determine.
2.7.3 Payments Received Under the Cash Management Agreement.
Notwithstanding anything to the contrary contained in this Agreement or the
other Loan Documents, and provided no Event of Default has occurred and is
continuing, Borrower's obligations with respect to the monthly payment of
principal and interest and amounts due for the Tax and Insurance Escrow Fund,
the Required Repair Fund, the Replacement Reserve Fund and any other payment
reserves established pursuant to this Agreement or any other Loan Document shall
be deemed satisfied to the extent sufficient amounts are deposited in the Cash
Management Account established pursuant to the Cash Management Agreement to
satisfy such obligations on the dates each such payment is required, regardless
of whether any of such amounts are so applied by Lender.
III. CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Closing. The obligation of Lender
to make the Loan hereunder is subject to the fulfillment by Borrower or waiver
by Lender of the following conditions precedent no later than the Closing Date:
3.1.1 Representations and Warranties; Compliance with Conditions. The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of such date,
and no Default or an Event of Default shall have occurred and be continuing; and
Borrower shall be in compliance in all material respects with all terms and
conditions set forth in this Agreement and in each other Loan Document on its
part to be observed or performed.
3.1.2 Loan Agreement and Note. Lender shall have received a copy of
this Agreement and the Note, in each case, duly executed and delivered on behalf
of Borrower.
3.1.3 Delivery of Loan Documents; Title Insurance; Reports; Leases.
(a) Mortgage, Assignment of Leases. Lender shall have received from
Borrower fully executed and acknowledged counterparts of the Mortgage and the
Assignment of Leases and evidence that counterparts of the Mortgage and
Assignment of Leases have been delivered to the title company for recording, in
the reasonable judgment of Lender, so as to effectively create upon such
recording a valid and enforceable first priority Lien upon the Property in favor
of Lender (or such other trustee as may be required or desired under local law),
subject only to the Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents. Lender shall have also received from Borrower
fully executed counterparts of the Environmental Indemnity, the Guaranty, the
Cash Management Agreement, the Assignment of Management Agreement and the other
Loan Documents.
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(b) Title Insurance. Lender shall have received the Title Insurance
Policy issued by a title company acceptable to Lender and dated as of the
Closing Date, with reinsurance and direct access agreements acceptable to
Lender. Such Title Insurance Policy shall (i) provide coverage in amounts
satisfactory to Lender, (ii) insure Lender that the Mortgage creates a valid
first priority lien on the Property, free and clear of all exceptions from
coverage other than the Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements), (iii)
contain such endorsements and affirmative coverages as Lender may reasonably
request, and (iv) name Lender, its successors and assigns, as the insured. The
Title Insurance Policy shall be assignable. Lender also shall have received
evidence that all premiums in respect of such Title Insurance Policy have been
paid.
(c) Survey. Lender shall have received a current title survey for the
Property, certified to the title company and Lender and its successors and
assigns, in form and content reasonably satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the Accuracy Standards for ALTA/ACSM Land Title Surveys as
adopted by American Land Title Association, American Congress on Surveying &
Mapping and National Society of Professional Surveyors in 1999. The survey shall
reflect the same legal description contained in the Title Insurance Policy
relating to the Property and shall include, among other things, a metes and
bounds description of the real property comprising part of the Property
reasonably satisfactory to Lender. The surveyor's seal shall be affixed to the
survey and the surveyor shall provide a certification for the survey in form and
substance acceptable to Lender.
(d) Insurance. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.
(e) Environmental Reports. Lender shall have received a Phase I
environmental report (and, if recommended by the Phase I environmental report, a
Phase II environmental report) in respect of the Property, in each case
satisfactory in form and substance to Lender.
(f) Zoning. Lender shall have received copies of the final certificate
or certificates of occupancy for the Improvements and, at Lender's option,
letters or other evidence with respect to the Property from the appropriate
municipal authorities (or other Persons) concerning applicable zoning and
building laws in substance reasonably satisfactory to Lender.
(g) Encumbrances. Borrower shall have taken or caused to be taken such
actions in such a manner so that Lender has a valid and perfected first priority
Lien as of the Closing Date with respect to the Mortgage on the Property,
subject only to the Permitted Encumbrances and such other Liens as are permitted
pursuant to the Loan Documents, and Lender shall have received satisfactory
evidence thereof.
3.1.4 Related Documents. Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
be in form and substance reasonably satisfactory to Lender, and shall have been
duly authorized, executed and delivered by all parties thereto and Lender shall
have received and approved certified copies thereof.
3.1.5 Delivery of Organizational Documents. On or before the Closing
Date, Borrower shall deliver or cause to be delivered to Lender copies certified
by Borrower of all organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or qualification to do
business of Borrower, as Lender may request in its sole discretion, including,
without limitation, good standing certificates, qualifications to do business in
the appropriate jurisdictions, resolutions authorizing the entering into of the
Loan and incumbency certificates as may be requested by Lender.
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3.1.6 Opinions of Borrower's Counsel. Lender shall have received
opinions of Borrower's counsel (a) with respect to non-consolidation, true sale
or true contribution, and fraudulent transfer issues, and (b) with respect to
due execution, authority, enforceability of the Loan Documents and such other
matters as Lender may require, all such opinions in form, scope and substance
satisfactory to Lender and Lender's counsel in their sole discretion.
3.1.7 Budgets. Borrower shall have delivered, and Lender shall have
approved, the Annual Budget for the current Fiscal Year.
3.1.8 Basic Carrying Costs. Borrower shall have paid all Basic Carrying
Costs relating to the Property which are in arrears, including, without
limitation, (a) accrued but unpaid insurance premiums relating to the Property,
(b) currently due Taxes (including any in arrears) relating to the Property, and
(c) currently due Other Charges relating to the Property, which amounts shall be
funded with proceeds of the Loan.
3.1.9 Completion of Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and the other Loan Documents and all documents incidental thereto
shall be satisfactory in form and substance to Lender, and Lender shall have
received all such counterpart originals or certified copies of such documents as
Lender may reasonably request.
3.1.10 Payments. All payments, deposits or escrows required to be made
or established by Borrower under this Agreement, the Note and the other Loan
Documents on or before the Closing Date shall have been paid.
3.1.11 Tenant Estoppels. Lender shall have received an executed tenant
estoppel letter, which shall be in form and substance satisfactory to Lender,
from (a) each tenant identified by Lender as an "anchor tenant" of the Property
(i.e., each tenant leasing at least 150,000 square feet of space), and (b)
including the area leased by those tenants described in the preceding clause
(a), tenants of not less than eighty percent (80%) of the gross leasable area of
the Property.
3.1.12 Transaction Costs. Borrower shall have paid or reimbursed Lender
for all title insurance premiums, recording and filing fees, costs of
environmental reports, Physical Conditions Reports, appraisals and other
reports, the fees and costs of Lender's counsel and all other third party
out-of-pocket expenses incurred in connection with the origination of the Loan.
3.1.13 Material Adverse Change. There shall have been no material
adverse change in the financial condition or business condition of Borrower or
the Property since the date of the most recent financial statements delivered to
Lender. The income and expenses of the Property, the occupancy and leases
thereof, and all other features of the transaction shall be as represented to
Lender without material adverse change. Neither Borrower nor any of its
constituent Persons shall be the subject of any bankruptcy, reorganization, or
insolvency proceeding.
3.1.14 Leases and Rent Roll. Lender shall have received copies of all
tenant leases, certified copies of any tenant leases as requested by Lender and
certified copies of all ground leases affecting the Property. Lender shall have
received a current certified rent roll of the Property, reasonably satisfactory
in form and substance to Lender.
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3.1.15 Subordination and Attornment. Lender shall have received
appropriate instruments acceptable to Lender subordinating all of the Leases
affecting the Property designated by Lender to the Mortgage. Lender shall have
received an agreement to attorn to Lender satisfactory to Lender from any tenant
under a Lease that does not provide for such attornment by its terms.
3.1.16 Tax Lot. Lender shall have received evidence that the Property
constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
3.1.17 Physical Conditions Reports. Lender shall have received a
Physical Conditions Report with respect to the Property, which shall be
reasonably satisfactory in form and substance to Lender.
3.1.18 Management Agreement. Lender shall have received a certified
copy of the Management Agreement with respect to the Property which shall be
satisfactory in form and substance to Lender.
3.1.19 Appraisal. Lender shall have received an appraisal of the
Property, which shall be satisfactory in form and substance to Lender.
3.1.20 Financial Statements. Lender shall have received a balance sheet
with respect to the Property for the two most recent Fiscal Years and statements
of income and statements of cash flows with respect to the Property for the
three most recent Fiscal Years, each in form and substance satisfactory to
Lender.
3.1.21 Further Documents. Lender or its counsel shall have received
such other and further approvals, opinions, documents and information as Lender
or its counsel may have reasonably requested including the Loan Documents in
form and substance satisfactory to Lender and its counsel.
IV. REPRESENTATIONS AND WARRANTIES
Section 4.1. Borrower Representations. Borrower represents and warrants
as of the date hereof and as of the Closing Date that:
4.1.1 Organization. Borrower has been duly organized and is validly
existing and in good standing with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with its properties,
businesses and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged, and the
sole business of Borrower is the ownership, management and operation of the
Property.
4.1.2 Proceedings. Borrower has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and the other Loan
Documents. This Agreement and such other Loan Documents have been duly executed
and delivered by or on behalf of Borrower and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
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4.1.3 No Conflicts. The execution, delivery and performance of this
Agreement and the other Loan Documents by Borrower will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, partnership agreement, management agreement or other
agreement or instrument to which Borrower is a party or by which any of
Borrower's property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority having jurisdiction over Borrower or any of
Borrower's properties or assets, and any consent, approval, authorization,
order, registration or qualification of or with any Governmental Authority
required for the execution, delivery and performance by Borrower of this
Agreement or any other Loan Documents has been obtained and is in full force and
effect.
4.1.4 Litigation. There are no actions, suits or proceedings at law or
in equity by or before any Governmental Authority now pending or threatened
against or affecting Borrower or the Property, which actions, suits or
proceedings are not covered by insurance and, if determined against Borrower or
the Property, might materially adversely affect the condition (financial or
otherwise) or business of Borrower or the condition or ownership of the
Property.
4.1.5 Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which might materially and adversely
affect Borrower or the Property, or Borrower's business, properties or assets,
operations or condition, financial or otherwise, that is not a Permitted
Encumbrance. 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 indenture, mortgage, deed of trust, loan agreement or other
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 as permitted pursuant to clause (s) of
the definition of "Special Purpose Entity" set forth in Section 1.1 hereof, (b)
obligations under the Loan Documents, (c) maintenance and completion obligations
to governmental authorities incurred in connection with the development of the
Property and (d) reimbursement obligations under letters of credit issued to
secure the obligations described in the preceding clause (c).
4.1.6 Title. Borrower has good, marketable and insurable fee simple
title to the real property comprising part of the Property and good title to the
balance of the Property, free and clear of all Liens whatsoever except the
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. None of the Permitted
Encumbrances materially interfere with the security intended to be provided by
the Mortgage, the current primary use of the Property or the current ability of
the Property to generate income sufficient to service the Loan. The Mortgage,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (a) a valid, perfected first priority lien on the
Property, subject only to the Permitted Encumbrances and the Liens created by
the Loan Documents and (b) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. 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.
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4.1.7 Solvency. Borrower (a) has not entered into the transaction or
executed the Note, this Agreement or any other Loan Documents with the actual
intent to hinder, delay or defraud any creditor and (b) received reasonably
equivalent value in exchange for its obligations under such Loan Documents.
Giving effect to the Loan, the fair saleable value of Borrower's assets exceeds
and will, immediately following the making of the Loan, exceed Borrower's total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. The fair saleable value of Borrower's assets is and
will, immediately following the making of the Loan, be greater than Borrower's
probable liabilities, including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured. Borrower's assets do not
and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Borrower does not intend to, and does not believe that it will,
incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower
and the amounts to be payable on or in respect of obligations of Borrower).
Except as expressly disclosed to Lender in writing, no petition in bankruptcy
has been filed against Borrower or any constituent Person, and neither Borrower
nor any constituent Person has ever made an assignment for the benefit of
creditors or taken advantage of any insolvency act for the benefit of debtors.
Neither Borrower nor any of its constituent Persons are contemplating either the
filing of a petition by it under any state or federal bankruptcy or insolvency
laws or the liquidation of all or a major portion of Borrower's assets or
property, and Borrower has no knowledge of any Person contemplating the filing
of any such petition against it or such constituent Persons.
4.1.8 Full and Accurate Disclosure. No statement of fact made by
Borrower in this Agreement or in any of the other Loan Documents 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 which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can foresee, might
adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower in any material respect.
4.1.9 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 Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Agreement.
4.1.10 Compliance. To the best of Borrower's knowledge, Borrower and
the Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes. To the best of Borrower's knowledge, Borrower is
not in default or violation of any order, writ, injunction, decree or demand of
any Governmental Authority. There has not been committed by Borrower or any
other Person in occupancy of or involved with the operation or use of the
Property any act or omission affording the federal government or any other
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.
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4.1.11 Financial Information. To the best of Borrower's knowledge, all
financial data, including, without limitation, the statements of cash flow and
income and operating expense, that have been delivered to Lender in respect of
the Property (a) are true, complete and correct in all material respects, (b)
accurately represent the financial condition of the Property 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 GAAP
throughout the periods covered, except as disclosed therein. Except for
Permitted Encumbrances and obligations described in clauses (c) and (d) of
Section 4.1.5 hereof, Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on the Property or the
operation thereof as a retail shopping center, except as referred to or
reflected in said financial statements. Since the date of such financial
statements, there has been no materially adverse change in the financial
condition, operations or business of Borrower from that set forth in said
financial statements.
4.1.12 Condemnation. No Condemnation or other proceeding has been
commenced or, to Borrower's best 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.
4.1.13 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 by the terms and conditions of this
Agreement or the other Loan Documents.
4.1.14 Utilities and Public Access. The Property has rights of access
to public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service the Property for its intended uses. All public
utilities necessary or convenient to the full use and enjoyment of the Property
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 purpose have been completed and dedicated to public use
and accepted by all Governmental Authorities.
4.1.15 Not a Foreign Person. Borrower is not a "foreign person" within
the meaning of ss.1445(f)(3) of the Code.
4.1.16 Separate Lots. Except as may otherwise be disclosed to Lender,
the Property is comprised of one (1) or more parcels which constitute a separate
tax lot or lots and does not constitute a portion of any other tax lot not a
part of the Property.
4.1.17 Assessments. To the best of Borrower's knowledge, 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.
4.1.18 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 (subject to principles of equity and bankruptcy, insolvency and
other laws generally affecting creditors' rights and the enforcement of debtors'
obligations), and Borrower has not asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
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4.1.19 No Prior Assignment. There are no prior assignments of the
Leases or any portion of the Rents due and payable or to become due and payable
which are presently outstanding.
4.1.20 Insurance. Borrower has obtained and has delivered to Lender
certified copies of all insurance policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. No claims have been
made under any such policy, and no Person, including Borrower, has done, by act
or omission, anything which would impair the coverage of any such policy.
4.1.21 Use of Property. The Property is used exclusively for retail
purposes and other appurtenant and related uses.
4.1.22 Certificate of Occupancy; Licenses. All certifications, permits,
licenses and approvals, including without limitation, certificates of completion
and occupancy permits required for the legal use, occupancy and operation of the
Property as a retail shopping center (collectively, the "Licenses"), have been
obtained and are in full force and effect. Borrower shall keep and maintain all
licenses necessary for the operation of the Property as a retail shopping
center. The use being made of the Property is in conformity with the
certificates of occupancy issued for the Property.
4.1.23 Flood Zone. None of the Improvements on the Property are located
in an area as identified by the Federal Emergency Management Agency as an area
having special flood hazards or, if so located, the flood insurance required
pursuant to Section 6.1(a)(i) is in full force and effect with respect to the
Property.
4.1.24 Physical Condition. Except as may be disclosed in the Physical
Condition Reports delivered to Lender, 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, to the best of Borrower's
knowledge, there exists no structural or other material defects or damages in
the Property, whether latent or otherwise, and 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.
4.1.25 Boundaries. All of the improvements which were included in
determining the appraised value of the Property lie wholly within the boundaries
and building restriction lines of the Property, and 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 affect the
value or marketability of the Property except those which are insured against by
the Title Insurance Policy.
4.1.26 Leases. The Property is not subject to any Leases other than the
Leases described in Schedule 2 attached hereto and made a part hereof. Borrower
is the owner and lessor of landlord's interest in the Leases. No Person has any
possessory interest in the Property or right to occupy the same except under and
pursuant to the provisions of the Leases. The current Leases are in full force
and effect and, except as set forth on Schedule 4.1.26, there are no defaults
thereunder by either party and there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute defaults thereunder
(excluding Rent which is due but subject to an unexpired grace period). No Rent
(including security deposits) has been paid more than one (1) month in advance
of its due date. Except as set forth on Schedule 4.1.26, all work to be
performed by Borrower under each Lease has been performed as required and has
been accepted by the applicable tenant, and any payments, free rent, partial
rent, rebate of rent or other payments, credits, allowances or abatements
required to be given by Borrower to any tenant has already been received by such
tenant. Except as set forth on Schedule 4.1.26, all leasing commissions due and
owing with respect to each Lease in existence on the date hereof has been paid
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in full. There has been no prior sale, transfer or assignment, hypothecation or
pledge of any Lease or of the Rents received therein that continues in effect.
Except as set forth on Schedule 4.1.26, to the best of Borrower's knowledge, no
tenant listed on Schedule 2 has assigned its Lease or sublet all or any portion
of the premises demised thereby, no such tenant holds its leased premises under
assignment or sublease, nor does anyone except such tenant and its employees
occupy such leased premises. No tenant under any Lease has a right or option
pursuant to such Lease or otherwise to purchase all or any part of the leased
premises or the building of which the leased premises are a part. No tenant
under any Lease has any right or option for additional space in the
Improvements. To the best of Borrower's knowledge, no hazardous wastes or toxic
substances, as defined by applicable federal, state or local statutes, rules and
regulations, have been disposed, stored or treated by any tenant under any Lease
on or about the leased premises nor does Borrower have any knowledge of any
tenant's intention to use its leased premises for any activity which, directly
or indirectly, involves the use, generation, treatment, storage, disposal or
transportation of any petroleum product or any toxic or hazardous chemical,
material, substance or waste in violation of applicable law.
4.1.27 Survey. The Survey for the Property delivered to Lender in
connection with this Agreement has been prepared in accordance with the
provisions of Section 3.1.3(c) hereof, and does not fail to reflect any material
matter affecting the Property or the title thereto.
4.1.28 Principal Place of Business; State of Organization. Borrower's
principal place of business as of the date hereof is the address set forth in
the introductory paragraph of this Agreement. The Borrower is organized under
the laws of the State of Pennsylvania.
4.1.29 Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the transfer of the Property to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents, including, without
limitation, the Mortgage, have been paid, and, under current Legal Requirements,
the Mortgage is enforceable in accordance with its terms by Lender (or any
subsequent holder thereof), subject to principles of equity and bankruptcy,
insolvency and other laws generally applicable to creditors' rights and the
enforcement of debtors' obligations.
4.1.30 Special Purpose Entity/Separateness.
(a) Until the Debt has been paid in full, Borrower hereby represents,
warrants and covenants that (i) Borrower has been, is, shall be and shall
continue to be a Special Purpose Entity, and (ii) the Principal is, shall be and
shall continue to be a Special Purpose Entity.
(b) The representations, warranties and covenants set forth in Section
4.1.30(a) shall survive for so long as any amount remains payable to Lender
under this Agreement or any other Loan Document.
(c) All of the assumptions made in the Insolvency Opinion, including,
but not limited to, any exhibits attached thereto, are true and correct in all
respects and any assumptions made in any subsequent non-consolidation opinion
required to be delivered in connection with the Loan Documents (an "Additional
Insolvency Opinion"), including, but not limited to, any exhibits attached
thereto, will have been and shall be true and correct in all respects. Borrower
hereby represents, warrants and covenants that: (i) Borrower has complied and
will comply with, and each Principal has complied and Borrower will cause each
Principal to comply with, all of the assumptions made with respect to Borrower
or the Principal in the Insolvency Opinion; (ii) Borrower will have complied and
will comply with all of the assumptions made with respect to Borrower or the
Principal in any Additional Insolvency Opinion; and (iii) each entity other than
Borrower or the Principal with respect to which an assumption shall be made in
any Additional Insolvency Opinion will have complied and will comply with all of
the assumptions made with respect to it in any Additional Insolvency Opinion.
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4.1.31 Management Agreement. The Management Agreement is in full force
and effect and there is no default thereunder by any party thereto and no event
has occurred that, with the passage of time and/or the giving of notice, would
constitute a default thereunder.
4.1.32 Illegal Activity. No portion of the Property has been or will be
purchased by Borrower with proceeds of any illegal activity.
4.1.33 No Change in Facts or Circumstances; Disclosure. All information
submitted by Borrower to Lender and in all financial statements, rent rolls,
reports, certificates and other documents submitted in connection with the Loan
or in satisfaction of the terms thereof and all statements of fact made by
Borrower in this Agreement or in any other Loan 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 use, operation or value of the Property or the business
operations or the financial condition of Borrower in any material respect.
Borrower has disclosed to Lender all material facts known to Borrower and has
not failed to disclose any material fact that could cause any Provided
Information or representation or warranty made herein to be materially
misleading.
4.1.34 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 4.2. Survival of Representations. Borrower agrees that all of
the representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
V. BORROWER COVENANTS
Section 5.1. Affirmative Covenants. From the date hereof and until
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Lien of the Mortgage encumbering the
Property (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:
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5.1.1 Existence; Compliance with Legal Requirements. 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. There
shall never be committed by Borrower or 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 against the Property or any
part thereof or any monies paid in performance of Borrower's obligations under
any of the Loan Documents. Borrower hereby covenants and agrees not to commit,
permit or suffe
r to exist any act or omission affording such right of
forfeiture. Borrower shall at all times maintain, preserve and protect all
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Property in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgage. Borrower shall
keep the Property insured at all times by financially sound and reputable
insurers, to such extent and against such risks, and maintain liability and such
other insurance, as is more fully provided in this Agreement. 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 validity of any Legal Requirement, the applicability of
any Legal Requirement to Borrower or the Property or any alleged violation of
any Legal Requirement, provided that (a) no Default or Event of Default has
occurred and remains uncured; (b) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any instrument to which
Borrower is subject and shall not constitute a default thereunder and such
proceeding shall be conducted in accordance with all applicable statutes, laws
and ordinances; (c) neither the Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, cancelled or
lost; (d) Borrower shall promptly upon final determination thereof comply with
any such Legal Requirement determined to be valid or applicable or cure any
violation of any Legal Requirement; (e) such proceeding shall suspend the
enforcement of the contested Legal Requirement against Borrower or the Property;
and (f) Borrower shall furnish such security as may be required in the
proceeding, or as may be reasonably requested by Lender, to insure compliance
with such Legal Requirement, together with all interest and penalties payable in
connection therewith. Lender may apply any such security, as necessary to cause
compliance with such Legal Requirement at any time when, in the reasonable
judgment of Lender, the validity, applicability or violation of such Legal
Requirement is finally established or the Property (or any part thereof or
interest therein) shall be in danger of being sold, forfeited, terminated,
cancelled or lost.
5.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other
Charges now or hereafter levied or assessed or imposed against the Property or
any part thereof or the Adjacent Property (as hereinafter defined) as the same
become due and payable; provided, however, that Borrower's obligation to
directly pay Taxes shall be suspended for so long as Borrower complies with the
terms and provisions of Section 7.2 hereof. Borrower will deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes and
Other Charges have been so paid or are not then delinquent no later than ten
(10) days prior to the date on which the Taxes and/or Other Charges would
otherwise be delinquent if not paid. Borrower shall furnish to Lender receipts
for the payment of the Taxes and the Other Charges prior to the date the same
shall become delinquent (provided, however, that Borrower is not required to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Lender pursuant to Section 7.2 hereof). Borrower shall not suffer
and shall promptly cause to be paid and discharged any Lien or charge whatsoever
which may be or become a Lien or charge against the Property or the Adjacent
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Property, and shall promptly pay for all utility services provided to the
Property. 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 (a) no Default or
Event of Default has occurred and remains uncured; (b) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; (c) neither the Property nor any part
thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost; (d) 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; (e) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the Property; and (f) Borrower shall
furnish such security as may be required in the proceeding, or as may be
reasonably requested by Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon. Lender may pay over
any such cash deposit or part thereof held by Lender to the claimant entitled
thereto at any time when, in the judgment of Lender, the entitlement of such
claimant is established or the Property (or part thereof or interest therein) or
the Adjacent Property shall be in danger of being sold, forfeited, terminated,
cancelled or lost or there shall be any danger of the Lien of the Mortgage being
primed by any related Lien.
5.1.3 Litigation. Borrower shall give prompt written notice to Lender
of any litigation or governmental proceedings pending or threatened against
Borrower which might materially adversely affect Borrower's condition (financial
or otherwise) or business or the Property.
5.1.4 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.
5.1.5 Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower's condition, financial or otherwise, or of
the occurrence of any Default or Event of Default of which Borrower has
knowledge.
5.1.6 Cooperate in Legal Proceedings. Borrower shall cooperate fully
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
5.1.7 Perform Loan Documents. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
5.1.8 Award and Insurance Benefits. 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 reasonable expenses incurred in connection therewith
(including reasonable attorneys' fees and disbursements, and the payment by
Borrower of the expense of an appraisal on behalf of Lender in case of Casualty
or Condemnation affecting the Property or any part thereof) out of such
Insurance Proceeds.
5.1.9 Further Assurances. Borrower shall, at Borrower's sole cost and
expense:
(a) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require; and
(c) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
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5.1.10 Payment of Mortgage Recording Taxes. As of the date hereof,
Borrower represents that it has paid all state, county and municipal recording
and all other taxes imposed upon the execution and recordation of the Mortgage.
If at any time Lender determines, based on applicable law, that the applicable
taxes have not been paid with respect to the Property, Borrower agrees that
Borrower shall, on demand, pay any such additional taxes.
5.1.11 Financial Reporting.
(a) Borrower will keep and maintain or will cause to be kept and
maintained on a Fiscal Year basis, in accordance with GAAP or cash basis (or
such other accounting basis acceptable to Lender), proper and accurate books,
records and accounts reflecting all of the financial affairs of Borrower and all
items of income and expense in connection with the operation of the Property.
Lender shall have the right from time to time at all times during normal
business hours upon reasonable notice to examine such books, records and
accounts at the office of Borrower or any other Person maintaining such books,
records and accounts and to make such copies or extracts thereof as Lender shall
desire. After the occurrence, and during the continuance, of an Event of
Default, Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower's accounting records with respect to the Property, as Lender shall
determine to be necessary or appropriate in the protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within ninety (90) days
following the end of each Fiscal Year, a complete copy of Borrower's annual
financial statements covering the Property for such Fiscal Year and containing
statements of profit and loss for Borrower and the Property and a balance sheet
for Borrower, reviewed by an independent certified public accountant acceptable
to Lender. Lender agrees that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP is acceptable to Lender,
provided, however, that Lender may review such accounting firm on an annual
basis. Such statements shall set forth the financial condition and the results
of operations for the Property for such Fiscal Year, and shall include, but not
be limited to, amounts representing annual Net Cash Flow, Net Operating Income,
Gross Income from Operations and Operating Expenses. Borrower's annual financial
statements shall be accompanied by (i) a comparison of the budgeted income and
expenses and the actual income and expenses for the prior Fiscal Year, (ii) an
Officer's Certificate stating that each such annual financial statement presents
fairly the financial condition and the results of operations of Borrower and the
Property being reported upon and has been prepared in accordance with GAAP,
(iii) an unqualified opinion of an independent certified public accountant
reasonably acceptable to Lender, and (iv) a list of tenants, if any, occupying
more than twenty (20%) percent of the total floor area of the Improvements, (v)
a breakdown showing the year in which each Lease then in effect expires and the
percentage of total floor area of the Improvements and the percentage of base
rent with respect to which Leases shall expire in each such year, each such
percentage to be expressed on both a per year and cumulative basis, (vi) a
schedule reviewed by such independent certified public accountant reconciling
Net Operating Income to Net Cash Flow, which shall itemize all material
adjustments made to Net Operating Income to arrive at Net Cash Flow, and (vii) a
certification issued by the Pennsylvania Real Estate Investment Trust certifying
that it remains the general partner of PREIT Associates, L.P. and that it
maintains at least a fifty-one percent (51%) interest in PREIT Associates, L.P.
Together with Borrower's annual financial statements, Borrower shall furnish to
Lender an Officer's Certificate certifying as of the date thereof whether there
exists an event or circumstance which constitutes a Default or Event of Default
under the Loan Documents executed and delivered by, or applicable to, Borrower,
and if such Default or Event of Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy the same.
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(c) Borrower will furnish, or cause to be furnished, to Lender on or
before forty-five (45) days after the end of each calendar month the following
items, accompanied by an Officer's Certificate stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Property (subject to normal
year-end adjustments) as applicable: (i) a rent roll for the subject month
accompanied by an Officer's Certificate with respect thereto; (ii) monthly and
year-to-date operating statements (including Capital Expenditures) prepared for
each calendar month, noting Net Operating Income, Gross Income from Operations,
and Operating Expenses (not including any contributions to the Replacement
Reserve Fund and the Rollover Reserve Fund), and other information necessary and
sufficient to fairly represent the financial position and results of operation
of the Property during such calendar month, and containing a comparison of
budgeted income and expenses and the actual income and expenses together with a
detailed explanation of any variances of five percent (5%) or more, and at least
$10,000, between budgeted and actual amounts for such periods, all in form
satisfactory to Lender; and (iii) a calculation reflecting the annual Debt
Service Coverage Ratio for the immediately preceding twelve (12) month period as
of the last day of such month accompanied by an Officer's Certificate with
respect thereto. In addition, such Officer's Certificate shall also state that
the representations and warranties of Borrower set forth in Section 4.1.30 are
true and correct as of the date of such certificate and that there are no trade
payables outstanding for more than sixty (60) days other than those which are
subject to a bona fide dispute.
(d) For the partial year period commencing on the date hereof, and for
each Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget
not later than thirty (30) days prior to the commencement of such period or
Fiscal Year in form reasonably satisfactory to Lender. The Annual Budget
submitted for the year in which the Anticipated Repayment Date occurs, and for
each Fiscal Year thereafter, shall be subject to Lender's written approval (each
such Annual Budget, an "Approved Annual Budget"). In the event that Lender
objects to a proposed Annual Budget submitted by Borrower which requires the
approval of Lender hereunder, Lender shall advise Borrower of such objections
within fifteen (15) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall promptly
revise such Annual Budget and resubmit the same to Lender. Lender shall advise
Borrower of any objections to such revised Annual Budget within ten (10) days
after receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall promptly revise the same in accordance
with the process described in this subsection until Lender approves the Annual
Budget. Until such time that Lender approves a proposed Annual Budget which
requires the approval of Lender hereunder, the most recently Approved Annual
Budget shall apply; provided that, such Approved Annual Budget shall be adjusted
to reflect actual increases in real estate taxes, insurance premiums and
utilities expenses.
(e) In the event that, Borrower must incur an extraordinary operating
expense or capital expense not set forth in the Approved Annual Budget (each an
"Extraordinary Expense") in excess of $100,000.00, then Borrower shall promptly
deliver to Lender a reasonably detailed explanation of such proposed
Extraordinary Expense for Lender's approval.
(f) Any reports, statements or other information required to be
delivered under this Agreement shall be delivered (i) in paper form, (ii) with
respect to the Annual Budget and rent roll, on a diskette, and (iii) if
requested by Lender and within the capabilities of Borrower's data systems
without change or modification thereto, with respect to the Annual Budget and
rent roll, in electronic form and prepared using a Microsoft Word for Windows or
WordPerfect for Windows files (which files may be prepared using a spreadsheet
program (such as Excel) and saved as word processing files). Borrower agrees
that Lender may disclose information regarding the Property and Borrower that is
provided to Lender pursuant to this Section in connection with the
Securitization to such parties requesting such information in connection with
such Securitization.
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5.1.12 Business and Operations. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Property.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property.
5.1.13 Title to the Property. Borrower will warrant and defend (a) the
title to the Property and every part thereof, subject only to Liens permitted
hereunder (including the Permitted Encumbrances) and (b) the validity and
priority of the Liens of the Mortgage and the Assignment of Leases on the
Property, subject only to Liens permitted hereunder (including the Permitted
Encumbrances), in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in the Property, other than as permitted hereunder, is claimed by
another Person.
5.1.14 Costs of Enforcement. In the event (a) that the Mortgage
encumbering the Property is foreclosed in whole or in part or that the Mortgage
is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage other than the Mortgage
encumbering the Property in which proceeding Lender is made a party, or (c) of
the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and agrees to pay
all costs of collection and defense, including reasonable attorneys' fees and
costs, incurred by Lender or Borrower in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, together
with all required service or use taxes.
5.1.15 Estoppel Statements.
(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
unpaid principal amount of the Note, (iii) the Applicable Interest Rate of the
Note, (iv) the date installments of interest and/or principal were last paid,
(v) any offsets or defenses to the payment of the Debt, if any, and (vi) that
the Note, this Agreement, the Mortgage 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, upon request, use commercially reasonable efforts
to obtain tenant estoppel certificates from each commercial tenant leasing space
at the Property in form and substance reasonably satisfactory to Lender and
deliver the same to Lender, provided that Borrower shall not be required to
deliver such certificates more frequently than one (1) time in any calendar
year, unless such request is made in connection with a Securitization or if an
Event of Default has occurred and is continuing.
5.1.16 Loan Proceeds. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section
2.1.4.
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5.1.17 Performance by Borrower. Borrower (a) shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document executed and delivered by, or applicable to, Borrower, and (b)
shall not enter into or otherwise suffer or permit any amendment, waiver,
supplement, termination or other modification of any Loan Document executed and
delivered by, or applicable to, Borrower without the prior written consent of
Lender, except as otherwise permitted by the terms of this Agreement or of any
other Loan Document.
5.1.18 Confirmation of Representations. Borrower shall deliver, in
connection with any Securitization, (a) one or more Officer's Certificates
certifying as to the accuracy of all representations made by Borrower in the
Loan Documents as of the date of the closing of such Securitization in all
relevant jurisdictions, and (b) certificates of the relevant Governmental
Authorities in all relevant jurisdictions indicating the good standing and
qualification of Borrower and its general partners as of the date of the
Securitization.
5.1.19 No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (a) with any other real property
constituting a tax lot separate from the Property, and (b) which constitutes
real property with 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, levied or
charged to such real property portion of the Property.
5.1.20 Leasing Matters. Any Leases with respect to the Property written
after the date hereof for more than 10,000 square feet shall be approved by
Lender, which approval shall not be unreasonably withheld, conditioned or
delayed. Upon request, Borrower shall furnish Lender with executed copies of all
Leases. All renewals of Leases and all proposed Leases shall provide for rental
rates comparable to existing local market rates. All proposed Leases shall be on
commercially reasonable terms and shall not contain any terms which would
materially adversely affect Lender's rights under the Loan Documents. All Leases
executed after the date hereof shall provide that they are subordinate to the
Mortgage encumbering the Property and that the tenant agrees to attorn to Lender
or any purchaser at a sale by foreclosure or power of sale. Lender agrees to
execute an agreement in commercially reasonable form granting "non-disturbance"
benefits for each tenant under a Lease approved by Lender. Borrower (i) shall
observe and perform the obligations imposed upon the lessor under the Leases in
a commercially reasonable manner; (ii) shall enforce and may amend or terminate
the terms, covenants and conditions contained in the Leases upon the part of the
tenant thereunder to be observed or performed in a commercially reasonable
manner and in a manner not to impair the value of the Property involved except
that no termination by Borrower or acceptance of surrender by a tenant of any
Leases shall be permitted unless by reason of a tenant default and then only in
a commercially reasonable manner to preserve and protect the Property; provided,
however, that no such termination or surrender of any Lease covering more than
10,000 square feet will be permitted without the written consent of Lender,
which consent shall not be unreasonably withheld, conditioned or delayed; (iii)
shall not collect any of the rents more than one (1) month in advance (other
than security deposits); (iv) shall not execute any other assignment of lessor's
interest in the Leases or the Rents (except as contemplated by the Loan
Documents); (v) shall not alter, modify or change the terms of the Leases in a
manner inconsistent with the provisions of the Loan Documents; and (vi) shall
execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Leases as Lender shall from
time to time reasonably require. Notwithstanding anything to the contrary
contained herein, Borrower shall not enter into a lease of all or substantially
all of the Property without Lender's prior written consent.
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5.1.21 Alterations.
(a) Borrower shall obtain Lender's prior written consent to any
alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a material
adverse effect on Borrower's financial condition, the value of the Property or
the Net Operating Income. Notwithstanding the foregoing, Lender's consent shall
not be required in connection with any alterations that will not have a material
adverse effect on Borrower's financial condition, the value of the Property or
the Net Operating Income, provided that such alterations are made in connection
with (a) tenant improvement work performed pursuant to the terms of any Lease
executed on or before the date hereof, (b) tenant improvement work performed
pursuant to the terms and provisions of a Lease and not adversely affecting any
structural component of any Improvements, any utility or HVAC system contained
in any Improvements or the exterior of any building constituting a part of any
Improvements, or (c) alterations performed in connection with the restoration of
the Property after the occurrence of a Casualty or Condemnation in accordance
with the terms and provisions of this Agreement. If the total unpaid amounts due
and payable with respect to alterations to the Improvements at the Property
(other than such amounts to be paid or reimbursed by tenants under the Leases)
shall at any time exceed Two Hundred Fifty Thousand and 00/100 Dollars
($250,000) (the "Threshold Amount"), Borrower shall promptly deliver to Lender
as security for the payment of such amounts and as additional security for
Borrower's obligations under the Loan Documents any of the following: (i) cash,
(ii) U.S. Obligations, (iii) other securities having a rating acceptable to
Lender and that the applicable Rating Agencies have confirmed in writing will
not, in and of itself, result in a downgrade, withdrawal or qualification of the
initial, or, if higher, then current ratings assigned in connection with any
Securitization, or (iv) a completion and performance bond or an irrevocable
letter of credit (payable on sight draft only) issued by a financial institution
having a rating by Standard & Poor's Ratings Group of not less than A-1+ if the
term of such bond or letter of credit is no longer than three (3) months or, if
such term is in excess of three (3) months, issued by a financial institution
having a rating that is acceptable to Lender and that the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned in connection with any Securitization. Such security
shall be in an amount equal to the excess of the total unpaid amounts with
respect to alterations to the Improvements on the Property (other than such
amounts to be paid or reimbursed by tenants under the Leases) over the Threshold
Amount and Lender may apply such security from time to time at the option of
Lender to pay for such alterations.
(b) Notwithstanding anything contained herein to the contrary, Borrower
shall obtain Lender's prior written consent (which consent shall not be
unreasonably withheld or delayed except with respect to any of the following
that may have a material adverse effect on (1) Borrower's financial condition,
(2) the value of the Property, or (3) Net Operating Income) to any alterations,
additions, renewals, replacements and/or improvements to or on any of the
parking lot(s) situated, or to be constructed, on either the Property or the
Adjacent Property.
5.1.22 Operation of the Property.
(a) Borrower shall cause the Property to be operated, in all material
respects, in accordance with the Management Agreement (or Replacement Management
Agreement) as applicable. In the event that the Management Agreement expires or
is terminated (without limiting any obligation of Borrower to obtain Lender's
consent to any termination or modification of the Management Agreement in
accordance with the terms and provisions of this Agreement), Borrower shall
promptly enter into a Replacement Management Agreement with Manager or another
Qualified Manager, as applicable.
(b) Borrower shall: (i) promptly perform and/or observe, in all
material respects, all of the covenants and agreements 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 material default under the Management Agreement of which it
is aware; (iii) promptly deliver to Lender a copy of each financial statement,
business plan, Capital Expenditures plan, notice, report and estimate received
by it under the Management Agreement; and (iv) enforce the performance and
observance of all of the covenants and agreements required to be performed
and/or observed by Manager under the Management Agreement, in a commercially
reasonable manner.
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(c) Borrower shall: (i) promptly perform and/or observe, in all
material respects, all of the covenants, conditions, obligations, prohibitions,
restrictions, easements, rights of way and agreements required to be performed
and observed by it in connection with any other document or instrument affecting
title to the Property, or any part thereof, regardless of whether such document
or instrument is superior or subordinate to this Mortgage, including, without
limitation, any and all reciprocal easement, parking and access agreements, and
do all things necessary to preserve and to keep unimpaired its material rights
thereunder; and (ii) promptly notify Lender of any material default thereunder
of which it is aware or of any notice of default received by it thereunder.
Section 5.2. Negative Covenants. From the date hereof until payment and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Mortgage encumbering the Property in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that it will not do, directly or
indirectly, any of the following:
5.2.1 Operation of the Property.
(a) Borrower shall not, without Lender's prior written consent (which
consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement; provided, that Borrower
may, without Lender's consent, replace the Manager so long as the replacement
manager is a Qualified Manager pursuant to a Replacement Management Agreement;
(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
amend, or waive or release any of its rights and remedies under, the Management
Agreement in any material respect.
(b) Following the occurrence and during the continuance of an Event of
Default, Borrower shall not exercise any rights, make any decisions, grant any
approvals or otherwise take any action under the Management Agreement without
the prior written consent of Lender, which consent may be granted, conditioned
or withheld in Lender's sole discretion.
(c) Borrower shall not grant any easement or right-of-way nor amend any
existing easement or right-of-way (including, without limitation, any reciprocal
easement, parking or access agreement) with respect to all or any portion of the
Property without the prior written consent of Lender, which consent shall not be
unreasonably withheld or delayed.
5.2.2 Liens. Borrower shall not create, incur, assume or suffer to
exist any Lien on any portion of the Property or permit any such action to be
taken, except:
(i) the Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan Documents;
and
(iii) Liens for Taxes or Other Charges not yet due.
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5.2.3 Dissolution. Borrower shall not (a) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(b) engage in any business activity not related to the ownership and operation
of the Property, (c) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan
Documents, (d) modify, amend, waive or terminate its organizational documents or
its qualification and good standing in any jurisdiction, or (e) cause the
Principal to (i) dissolve, wind up or liquidate or take any action, or omit to
take an action, as a result of which the Principal would be dissolved, wound up
or liquidated in whole or in part, or (ii) amend, modify, waive or terminate the
organizational documents of the Principal or modify, amend, waive or terminate
the qualification and good standing of the Principal in any jurisdiction, in
each case, without obtaining the prior written consent of Lender.
5.2.4 Change In Business. Borrower shall not enter into any line of
business other than the ownership and operation of the Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
5.2.5 Debt Cancellation. Borrower shall not cancel or otherwise forgive
or release any claim or debt (other than termination of Leases in accordance
herewith) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower's business.
5.2.6 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.
5.2.7 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.
5.2.8 Principal Place of Business and Organization. Borrower shall not
change its principal place of business set forth in the introductory paragraph
of this Agreement without first giving Lender thirty (30) days prior written
notice. Borrower shall not change the place of its organization as set forth in
Section 4.1.28 without the consent of Lender, which consent shall not be
unreasonably withheld, conditioned or delayed. Upon Lender's request, Borrower
shall execute and deliver additional financing statements, security agreements
and other instruments which may be necessary to effectively evidence or perfect
Lender's security interest in the Property as a result of such change of
principal place of business or place of organization.
5.2.9 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.
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(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 (A) 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; (B) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.2510.3-101(b)(2);
(ii) 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. ss.2510.3-101(f)(2); or
(iii) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
ss.2510.3-101(c) or (e).
5.2.10 Transfers.
(a) Borrower acknowledges that Lender has examined and relied on the
experience of Borrower and its general partners, members, principals and (if
Borrower is a trust) beneficial owners in owning and operating properties such
as the Property in agreeing to make the Loan, and will continue to rely on
Borrower's ownership of the Property as a means of maintaining the value of the
Property as security for repayment of the Debt and the performance of the other
obligations under the Loan Documents. Borrower acknowledges that Lender has a
valid interest in maintaining the value of the Property so as to ensure that,
should Borrower default in the repayment of the Debt or the performance of such
other obligations, Lender can recover the Debt by a sale of the Property.
(b) Without the prior written consent of Lender and except to the
extent otherwise set forth in this Section 5.2.10, Borrower shall not, and shall
not permit any Restricted Party to, (i) sell, convey, mortgage, grant, bargain,
encumber, pledge, assign, grant options with respect to, or otherwise transfer
or dispose of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) the Property or any part thereof or any legal or beneficial interest
therein or (ii) permit a Sale or Pledge of an interest in any Restricted Party
(collectively, a "Transfer"), other than pursuant to Leases of space in the
Improvements to tenants in accordance with the provisions of Section 5.1.20.
(c) A 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; (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 partner or any profits or proceeds
relating to such partnership interest, or the Sale or Pledge of limited
partnership interests or any profits or proceeds relating to such limited
partnership interest or the creation or issuance of new limited 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 a managing member (or if no managing
member, any member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of non-managing membership interests or the
creation or issuance of new non-managing membership interests; (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 legal or beneficial interests; or (vii) the removal
or the resignation of the managing agent (including, without limitation, an
Affiliated Manager) other than in accordance with Section 5.1.22 hereof.
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(d) Notwithstanding the provisions of this Sections 5.2.10, the
following transfers shall not be deemed to be a Transfer and no assumption fee
will be charged in connection therewith:
(i) The (a) Sale of limited partnership interests to current
limited partners of a Restricted Party (or to Affiliates of such
limited partners) and (b) Sale or Pledge, in one or a series of
transactions, of not more than forty-nine percent (49%) of the stock in
a Restricted Party to any Person who is not a current limited partner
(or Affiliate) of a Restricted Party or under common control with such
limited partner; provided, however, that no such transfers shall result
in a change of voting control in the Restricted Party, and as a
condition to each such transfer, Lender shall receive not less than
thirty (30) days prior written notice of such proposed transfer,
together with copies of all instruments effecting such transfer and
such other information as shall reasonably allow Lender to determine if
such transfer meets the criteria set forth herein, and Borrower shall
pay all of the fees and expenses incurred by Lender in connection
therewith, including, without limitation, reasonable attorneys' fees;
(ii) The Sale or Pledge, in one or a series of transactions, of not
more than forty-nine percent (49%) of the limited partnership interests
or non-managing membership interests (as the case may be) in a
Restricted Party to any Person who is not a limited partner of a
Restricted Party as of the date hereof, or a Person who is wholly owned
and controlled by such limited partner; provided, however, that no such
transfers shall result in a change of voting control in the Restricted
Party, and as a condition to each such transfer, Lender shall receive
not less than thirty (30) days prior written notice of such proposed
transfer, together with copies of all instruments effecting such
transfer and such other information as shall reasonably allow Lender to
determine if such transfer meets the criteria set forth herein, and
Borrower shall pay all of the fees and expenses incurred by Lender in
connection therewith, including, without limitation, reasonable
attorneys' fees;
(iii) So long as Pennsylvania Real Estate Investment Trust remains
a publicly traded and listed entity on a nationally recognized stock
exchange, the sale or transfer of shares of stock in Pennsylvania Real
Estate Investment Trust; and
(iv) The sale or transfer of partnership interests in PREIT
Associates, L.P., provided, however, that Pennsylvania Real Estate
Investment Trust remains the general partner of PREIT Associates, L.P.
and maintains at all times at least a fifty-one percent (51%) interest
in PREIT Associates, L.P.
(e) No consent to any assumption of the Loan shall occur on or before
the first anniversary of the first Payment Date. Thereafter, Lender reserves the
right to condition the consent required hereunder upon (i) reasonable and
necessary modifications of the non-economic terms hereof and of the Mortgage,
the Note or the other Loan Documents; (ii) an assumption of this Agreement, the
Note, the Mortgage and the other Loan Documents as so modified by the proposed
transferee, subject to the provisions of Section 9.4 of this Agreement; (iii)
payment of all of the fees and expenses incurred in connection with such
Transfer, including, without limitation, the cost of any third party reports,
legal fees and expenses, rating agency fees and expenses or required legal
opinions; (iv) the payment of a non-refundable $5,000 application fee and an
assumption fee equal to one-half percent (0.5%) of the outstanding principal
balance of the Loan for the first Transfer and one percent (1.0%) of the
outstanding principal balance of the Loan for each subsequent Transfer; (v) the
delivery of an Additional Insolvency Opinion reflecting the proposed Transfer
satisfactory in form and substance to Lender; (vi) the proposed transferee's
continued compliance with the representations and covenants set forth in Section
4.1.30 of this Agreement; (vii) the delivery of evidence satisfactory to Lender
that the single purpose nature and bankruptcy remoteness of Borrower, its
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shareholders, partners or members, as the case may be, following such Transfer
are in accordance with the then current standards of Lender and the Rating
Agencies; (viii) prior to any release of any Guarantor, a substitute guarantor
reasonably acceptable to Lender shall have assumed the Guaranty executed by such
Guarantor or executed a replacement guaranty reasonably satisfactory to Lender;
(ix) if required by Lender, confirmation in writing from the applicable Rating
Agencies to the effect that such Transfer will not result in a re-qualification,
reduction or withdrawal of the then current rating assigned to the Securities in
any applicable Securitization; and (x) such other conditions as Lender shall
determine in its reasonable discretion to be in the interest of Lender,
including, without limitation, the creditworthiness, reputation and
qualifications of the transferee with respect to the Loan and the Property.
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 any Transfer by Borrower or any Restricted
Party without Lender's consent to the extent such consent is required herein.
This provision shall apply to every Transfer which requires Lender's consent
hereunder regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer.
In furtherance of Section 5.2.10(e)(viii) above, in the event that (x) PREIT
Associates, L.P. sells or transfers twenty-five percent (25%) or more of its
limited partnership interest in Borrower to any Person who is not a Restricted
Party as of the date hereof, and (y) such sale or transfer has been consented to
by Lender (to the extent required herein) and otherwise satisfies the criteria
set forth above for transfers, an additional guarantor (in addition to PREIT
Associates, L.P.) acceptable to Lender (including such guarantor's
creditworthiness) shall be permitted to execute an additional guaranty
satisfactory to Lender in an amount equal to only such transferees respective
limited partnership interest in Borrower, and PREIT Associates, L.P. shall
execute an amendment to the Guaranty confirming its obligations under the
Guaranty and reducing the same by such amount that the additional guarantor is
liable for under such additional guaranty following such sale or transfer.
VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
Section 6.1. Insurance.
(a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Property providing at least the following
coverages:
(i) all risk or so-called "special form" insurance on the
Improvements and the Personal Property, including contingent liability
from Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements, 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, but the amount shall in no
event be less than the outstanding principal balance of the Loan; (B)
containing an agreed amount endorsement with respect to the
Improvements and the Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of Ten Thousand
and No/100 Dollars ($10,000) for all such insurance coverage; and (D)
containing an "Ordinance or Law Coverage" or "Enforcement" endorsement
if any of the Improvements or the use of the Property shall at any time
constitute legal non-conforming structures or uses. In addition,
Borrower shall obtain: (w) insurance in amounts and in form and
substance satisfactory to Lender against terrorism (to the extent
terrorism insurance is commercially reasonably available at
commercially reasonable rates); (x) for so long as any portion of the
Improvements are located in a federally designated "special flood
hazard area", flood hazard insurance in an amount equal to $5,000,000;
or such greater amount as Lender shall reasonably require; (y)
earthquake insurance in amounts and in form and substance satisfactory
to Lender in the event the Property is located in an area with a high
degree of seismic activity; and (z) coastal windstorm insurance in
amounts and in form and substance satisfactory to Lender in the event
the Property is located in any coastal region, provided that the
insurance pursuant to clauses (w), (x), (y) and (z) hereof shall be on
terms consistent with the all risk or so-called "special form"
insurance policy required under this subsection (i);
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(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring
upon, in or about the Property, such insurance (A) to be on the
so-called "occurrence" form with limits of One Million and No/100
Dollars ($1,000,000) per occurrence, with no deductible, Two Million
and No/100 Dollars ($2,000,000) in the aggregate, with no deductible
(and, if on a blanket policy, containing an "Aggregate Per Location"
endorsement); (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 on an "if any" basis; (3) independent
contractors; (4) blanket contractual liability for all legal contracts;
and (5) contractual liability covering the indemnities contained in
Article 9 of the Mortgage to the extent the same is available;
(iii) business income insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided
for in subsection (i) above; (C) containing an extended period of
indemnity endorsement which provides that after the physical loss to
the Improvements and the 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 twenty-four (24) 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; and (D) in an amount equal to one hundred percent
(100%) of the projected gross income from the Property for a period of
twenty-four (24) months from the date that the Property is repaired or
replaced and operations are resumed. The amount of such business income
insurance 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 twenty-four (24)
month period. 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 this Agreement, the Note and the other
Loan Documents except to the extent such amounts are actually paid out
of the proceeds of such business income insurance;
(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;
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(v) if the Property includes commercial property, worker's
compensation insurance with respect to any employees of Borrower, as
required by any Governmental Authority or Legal Requirement;
(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;
(vii) umbrella liability insurance in an amount not less than
Twenty Million and No/100 Dollars ($20,000,000.00) per occurrence on
terms consistent with the commercial general liability insurance policy
required under subsection (ii) above;
(viii) motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including umbrella coverage, of not less than
One Million and No/100 Dollars ($1,000,000.00);
(ix) if the Property is or becomes a legal "non-conforming" use,
ordinance or law coverage and insurance coverage to compensate for the
cost of demolition of the undamaged portion of the Property, diminished
value of the Property and the increased cost of construction in amounts
as requested by Lender; and
(x) 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.
(b) All insurance provided for in Section 6.1(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 "AA" or better (and the equivalent thereof) by Standard &
Poor's Ratings Group (or "BBB-" or better with respect to any flood insurance
required by Section 6.1(a)(i)) or, if a Securitization of the Loan has occurred,
by at least two (2) of the Rating Agencies rating the Securities (one of which
shall be Standard & Poor's Ratings Group if they are rating the Securities and
one of which will be ▇▇▇▇▇'▇ Investors Service, Inc. if they are rating the
Securities), or if only one Rating Agency is rating the Securities, then only by
such Rating Agency. The Policies shall contain the complete address of the
Property (or a complete legal description) and shall be for a term of at least
one (1) year. The Policies described in this Section 6.1 (other than those
strictly limited to liability protection) shall designate Lender as mortgagee
and loss payee. Not less than ten (10) days prior to the expiration dates of the
Policies theretofore furnished to Lender, certificates of insurance evidencing
the 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 6.1(a).
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(d) All Policies provided for or contemplated by Section 6.1(a), except
for the Policy referenced in Section 6.1(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 6.1(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 any way
affect the validity or enforceability of the insurance insofar as
Lender is concerned;
(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least
thirty (30) days' 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 Policy has not been renewed fifteen (15) 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, the obtaining of 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
Mortgage and shall bear interest at the Default Rate.
Section 6.2. 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. In case of a Casualty covered by
any of the Polices, (a) if an Event of Default has occurred and is then
continuing, or if no Event of Default has occurred but Borrower fails to
commence to (and thereafter diligently seek to) settle and adjust any claim
within thirty (30) days after such Casualty has occurred, Lender (or, after
entry of decree of foreclosure, the purchaser at the foreclosure sale or decree
creditor, as the case may be) is hereby authorized to settle and adjust any
claim under such Policies without the consent of Borrower, or (b) if no Event of
Default has occurred, Borrower shall be permitted within thirty (30) days after
such Casualty to settle and adjust such claim with the consent of Lender, which
consent shall not be unreasonably withheld or delayed; provided, however, that
in either case Lender shall, and is hereby authorized to, collect and receive
any such Insurance Proceeds; and the reasonable expenses incurred by Lender in
the adjustment and collection of such Insurance Proceeds shall be added to the
Debt and shall be reimbursed to Lender within ten (10) days after the receipt by
Borrower of written demand therefor or, at Lender's option, in the event and to
the extent sufficient Insurance Proceeds are available, shall be deducted by
Lender from such Insurance Proceeds prior to any other application thereof. Each
insurance company which has issued a Policy is hereby authorized and directed to
make payment for all losses covered by such Policy to Lender alone, and not to
Lender and Borrower jointly. Borrower agrees to execute all documents and make
all deliveries reasonably required in order to permit adjustment and payment of
insurance proceeds as provided above. If the Property shall be damaged or
destroyed, in whole or in part, by a Casualty, Borrower shall promptly commence
and diligently prosecute the completion of the Restoration of the Property as
nearly as possible to the condition the Property was in immediately prior to
such Casualty, with such alterations as may be reasonably approved by Lender and
otherwise in accordance with Section 6.4. Borrower shall pay all costs of such
Restoration whether or not such costs are covered by insurance.
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Section 6.3. Condemnation. Borrower shall promptly give Lender notice
of the actual or threatened commencement of any proceeding for the Condemnation
of the Property 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 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 6.4. 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.
Section 6.4. Restoration. The following provisions shall apply in
connection with the Restoration of the Property:
(a) If the Net Proceeds shall be less than Five Hundred Thousand and
No/100 Dollars ($500,000.00) and the costs of completing the Restoration shall
be less than Five Hundred Thousand and No/100 Dollars ($500,000.00), then the
Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that
all of the conditions set forth in Section 6.4(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 Five Hundred
Thousand and No/100 Dollars ($500,000.00) or the costs of completing the
Restoration is equal to or greater than Five Hundred Thousand and No/100 Dollars
($500,000.00), then Lender shall make the Net Proceeds available for the
Restoration in accordance with the provisions of this Section 6.4. The term "Net
Proceeds" shall mean: (i) the net amount of all insurance proceeds received by
Lender pursuant to Section 6.1 (a)(i), (iv), (vi), (ix) and (x) as a result of
such damage or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
same ("Insurance Proceeds"), or (ii) the net amount of the Award, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting 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 twenty-five percent (25%) of the total floor area of the
Improvements on the Property has been damaged, destroyed or
rendered unusable as a result of such fire or other casualty or (2)
in the event the Net Proceeds are Condemnation Proceeds, less than
ten percent (10%) of the land constituting the Property is taken,
and such land is located along the perimeter or periphery of the
Property, and no portion of the Improvements (except for outparcel
buildings) is located on such land;
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(C) Leases demising in the aggregate ninety percent (90%) or
more 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, shall remain in full force and effect during and
after the completion of the Restoration, notwithstanding the
occurrence of any such Casualty or Condemnation, whichever the case
may be, and the tenants thereunder will make all necessary repairs
and restorations thereto at their sole cost and expense;
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than ninety (90) 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 (1) the Net
Proceeds, (2) the insurance coverage referred to in Section
6.1(a)(iii), if applicable, or (3) by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) the date that
is six (6) months prior to the Anticipated Repayment Date, (2) the
earliest date required for such completion under the terms of any
Leases then in effect and not cancelled by reason of such Casualty
or Condemnation, (3) such time as may be required under applicable
zoning law, ordinance, rule or regulation in order to repair and
restore the Property to the condition it was in immediately prior
to such Casualty or to as nearly as possible the condition it was
in immediately prior to such Condemnation, as applicable, or (4)
the expiration of the insurance coverage referred to in Section
6.1(a)(iii);
(G) the Property and the use thereof after the Restoration will
be in compliance with and permitted under all applicable zoning
laws, ordinances, rules and regulations;
(H) the Restoration shall be done and completed by Borrower in
an expeditious and diligent fashion and in compliance with all
applicable governmental laws, rules and regulations (including,
without limitation, all applicable environmental laws);
(I) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the Property or the related
Improvements;
(J) the Debt Service Coverage Ratio for the Property, after
giving effect to the Restoration, shall be equal to or greater than
1.71 to 1.0;
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(K) 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
(L) the Net Proceeds together with any cash or cash equivalent
deposited by Borrower with Lender are sufficient in Lender's
reasonable discretion to cover the cost of the Restoration.
Borrower shall, in good faith, undertake reasonable efforts to cause
the conditions described in this Section 6.4(b)(i) to be fully
satisfied (e.g., Borrower shall timely make application for necessary
governmental permits, shall prepare the detailed budget, etc.). If such
conditions are satisfied, Borrower shall be obligated to undertake
Restoration subject to the terms of this Section 6.4.
(ii) The Net Proceeds shall be held by Lender in an
interest-bearing account and, until disbursed in accordance with the
provisions of this Section 6.4(b), shall constitute additional security
for the Debt and the 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 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 Restoration have been paid for in full (other than Casualty
Retainage), and (B) 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.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prompt prior review and acceptance in
all respects by Lender and by an independent consulting engineer
selected by Lender (the "Casualty 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 under which they have been
engaged, shall be subject to prior review and acceptance by Lender and
the Casualty 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 Casualty 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 Casualty Consultant, minus the
Casualty Retainage. The term "Casualty 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 Casualty
Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 6.4(b), be less than the
amount actually held back by Borrower from contractors, subcontractors
and materialmen engaged in the Restoration. The Casualty Retainage
shall not be released until the Casualty Consultant certifies to Lender
that the Restoration has been completed in accordance with the
provisions of this Section 6.4(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 Lender that the costs of the Restoration have been paid
in full or will be paid in full out of the Casualty Retainage;
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provided, however, that Lender will release the portion of the Casualty
Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the
Casualty 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
and such lien, judgment and/or title searches as Lender may reasonably
request. If required by Lender, the release of any such portion of the
Casualty 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 Casualty Consultant, be sufficient to pay in full the balance
of the costs which are estimated by the Casualty 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 6.4(b) shall constitute additional security for the
Debt and the 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 Casualty Consultant certifies to Lender that the Restoration
has been completed in accordance with the provisions of this Section
6.4(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 6.4(b)(vii) may 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, at the
discretion of Lender, the same may be paid, either in whole or in part, to
Borrower for such purposes as Lender shall approve, in its discretion. Should
Lender elect to make the Net Proceeds available to Borrower for Restoration
notwithstanding the fact that any of the conditions set forth above in Section
6.4(b) have not been satisfied, then Borrower shall be obligated to undertake
Restoration consistent with the provisions of this Section 6.4.
(d) In the event of foreclosure of the Mortgage, 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 that are not
blanket Policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or Lender
or other transferee in the event of such other transfer of title.
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(e) Notwithstanding anything to the contrary contained in that certain
Consent Agreement by and among Borrower, Lender and May (as hereinafter defined)
dated March 15, 2002 (the "Consent Agreement"), Borrower acknowledges and agrees
that the disbursement procedures regarding insurance proceeds contained herein
shall govern.
VII. RESERVE FUNDS.
Section 7.1. Required Repair Funds.
7.1.1 Deposits. Borrower shall perform the repairs at the Property, as
more particularly set forth on Schedule 3 attached hereto (such repairs
hereinafter referred to as "Required Repairs"). Borrower shall complete all of
the Required Repairs on or before the applicable date set forth on Schedule 3
attached hereto. It shall be an Event of Default under this Agreement if (a)
Borrower does not complete all of the Required Repairs at the Property by the
date required pursuant to the immediately preceding sentence, or (b) Borrower
does not satisfy each condition contained in Section 7.1.2 hereof. Upon the
occurrence of such an Event of Default, Lender, at its option, may withdraw all
Required Repair Funds from the Required Repair Account and Lender may apply such
funds either to completion of the Required Repairs at the Property or toward
payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion. Lender's right to withdraw and apply Required
Repair Funds shall be in addition to all other rights and remedies provided to
Lender under this Agreement and the other Loan Documents. On the Closing Date,
Borrower shall deposit with Lender the amount of $1,929,025.00 as set forth on
Schedule 3 hereto to perform the Required Repairs. Amounts so deposited with
Lender shall be held by Lender in accordance with Section 7.7 hereof. Amounts so
deposited shall hereinafter be referred to as Borrower's "Required Repair Fund"
and the account in which such amounts are held shall hereinafter be referred to
as Borrower's "Required Repair Account".
7.1.2 Release of Required Repair Funds. Lender shall disburse to
Borrower the Required Repair Funds from the Required Repair Account from time to
time upon satisfaction by Borrower of each of the following conditions: (a)
Borrower shall submit a written request for payment to Lender at least thirty
(30) days prior to the date on which Borrower requests such payment be made and
specifies the Required Repairs to be paid, (b) on the date such request is
received by Lender and on the date such payment is to be made, no Default or
Event of Default shall exist and remain uncured, (c) Lender shall have received
an Officer's Certificate (i) stating that all Required Repairs at the Property
to be funded by the requested disbursement have been completed in good and
workmanlike manner and in accordance with all applicable federal, state and
local laws, rules and regulations, such certificate to be accompanied by a copy
of any license, permit or other approval by any Governmental Authority required
to commence and/or complete the Required Repairs, (ii) identifying each Person
that supplied materials or labor in connection with the Required Repairs
performed at the Property to be funded by the requested disbursement, and (iii)
stating that each such Person has been paid in full or will be paid in full upon
such disbursement, such Officer's Certificate to be accompanied by lien waivers
or other evidence of payment satisfactory to Lender, (d) Lender shall have
received, at Lender's option, a title search for the Property indicating that
the Property is free from all liens, claims and other encumbrances not
previously approved by Lender, and (e) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Repairs to be
funded by the requested disbursement have been completed and are paid for or
will be paid upon such disbursement to Borrower. Lender shall not be required to
make disbursements from the Required Repair Account unless such requested
disbursement is in an amount greater than $25,000 (or a lesser amount if the
total amount in the Required Repair Account is less than $25,000, in which case
only one disbursement of the amount remaining in the account shall be made) and
such disbursement shall be made only upon satisfaction of each condition
contained in this Section 7.1.2.
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Section 7.2. Tax and Insurance Escrow Fund. On the date hereof,
Borrower shall deposit with Lender an amount determined by Lender to be
sufficient (when added to the monthly deposits described below) to pay the next
due annual installment of Taxes on the Property and the property designated as
"Parcel No. 3" on the Survey for the Property delivered to Lender in connection
with this Agreement (the "Adjacent Property") at least thirty (30) days prior to
their respective due dates, plus an amount equal to one-twelfth of the Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof. Thereafter, Borrower shall
pay to Lender on each Payment Date an amount equal to one-twelfth of the Taxes
that Lender estimates will be payable during the next ensuing twelve (12) months
in order to accumulate with Lender sufficient funds to pay all such Taxes for
the Property and the Adjacent Property at least thirty (30) days prior to their
respective due dates (the "Monthly Tax Deposits"). In addition, if (a) not later
than thirty (30) days prior to the expiration date of any Policy, Borrower fails
to deliver to Lender evidence satisfactory to Lender that such Policy has been
renewed for a period of at least one (1) year, or (b) not later than ten (10)
days prior to the expiration date of any Policy, Borrower fails to deliver to
Lender evidence satisfactory to Lender that the Insurance Premiums due under
such Policy for the ensuing annual period have been paid in full, or (c) an
Event of Default has occurred and is continuing, then, in any such event,
commencing with the first Payment Date occurring thereafter, Borrower shall pay
to Lender on each Payment Date an additional amount equal to one-twelfth of the
Insurance Premiums that Lender estimates will be payable for the renewal of the
coverage afforded by the Policies upon the expiration thereof in order to
accumulate with Lender sufficient funds to pay all such Insurance Premiums at
least thirty (30) days prior to the expiration of the Policies (the "Monthly
Insurance Deposits"). All such amounts so deposited shall hereinafter be called
the "Tax and Insurance Escrow Fund". The Monthly Tax Deposits and, if
applicable, the Monthly Insurance Deposits and the payments of interest or
principal or both payable pursuant to the Note shall be added together and shall
be paid as an aggregate sum by Borrower to Lender. Lender will apply the Tax and
Insurance Escrow Fund to payments of Taxes and, if Monthly Insurance Deposits
are then being made, Insurance Premiums required to be made by Borrower pursuant
to Section 5.1.2 hereof and under the Mortgage. In making any payment relating
to the Tax and Insurance Escrow Fund, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such ▇▇▇▇, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts due for Taxes and, if Monthly Insurance Deposits are then being made,
Insurance Premiums pursuant to Section 5.1.2 hereof, plus a one (1) month
reserve, Lender shall, in its sole discretion, return any excess to Borrower or
credit such excess against future payments to be made to the Tax and Insurance
Escrow Fund. Any amount remaining in the Tax and Insurance Escrow Fund after the
Debt has been paid in full shall be promptly returned to Borrower. In allocating
such excess, Lender may deal with the Person shown on the records of Lender to
be the owner of the Property. If at any time Lender reasonably determines that
the Tax and Insurance Escrow Fund is not or will not be sufficient to pay Taxes
for the Property and the Adjacent Property at least thirty (30) days prior to
delinquency of the Taxes and, if Monthly Insurance Deposits are then required to
be made by Borrower hereunder, Insurance Premiums at least thirty (30) days
prior to expiration of the Policies, Lender shall notify Borrower of such
determination and Borrower shall increase its monthly payments to Lender by the
amount that Lender estimates is sufficient to make up the deficiency at least
thirty (30) days prior to delinquency of the Taxes and/or thirty (30) days prior
to expiration of the Policies, as the case may be. Until such time as the
Adjacent Property is the subject of a separate property tax assessment and
Lender receives evidence in form and substance satisfactory to Lender that the
Property and the Adjacent Property constitute separate tax lots, Lender shall
continue to collect escrows for Taxes on the Adjacent Property; thereafter, the
covenants contained herein and in Section 5.1.2 regarding the Adjacent Property
shall terminate.
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Section 7.3. Replacements and Replacement Reserve.
7.3.1 Replacement Reserve Fund. Borrower shall pay to Lender on each
Payment Date beginning on May 11, 2002 and continuing on each and every Payment
Date thereafter through and including April 11, 2004, one-twelfth (1/12) of
$128,000.00 (the "Replacement Reserve Initial Monthly Deposit"), which amount,
together with the Replacement Reserve Monthly Deposit, is reasonably estimated
by Lender in its sole discretion to be due for exterior, HVAC and mechanical
replacements and repairs required to be made to the Property during the calendar
year (collectively, the "Replacements") to be held in the Replacement Reserve
Account. In addition, Borrower shall pay to Lender on each Payment Date
beginning on May 11, 2004 and continuing on each and every Payment Date
thereafter through and including April 11, 2005, one-twelfth (1/12) of
$74,000.00 (the "Replacement Reserve Monthly Deposit") to be held in the
Replacement Reserve Account. Amounts so deposited shall hereinafter be referred
to as Borrower's "Replacement Reserve Fund" and the account in which such
amounts are held shall hereinafter be referred to as Borrower's "Replacement
Reserve Account". Lender may reassess its estimate of the amount necessary for
the Replacement Reserve Fund from time to time, and may increase the monthly
amounts required to be deposited into the Replacement Reserve Fund upon thirty
(30) days notice to Borrower if Lender determines in its reasonable discretion
that an increase is necessary to maintain the proper maintenance and operation
of the Property.
7.3.2 Disbursements from Replacement Reserve Account. Lender shall make
disbursements from the Replacement Reserve Fund as requested by Borrower, and
approved by Lender in its sole discretion, no more frequently than once in any
thirty (30) day period of no less than $5,000.00 upon delivery by Borrower of
Lender's standard form of draw request accompanied by copies of paid invoices
for the amounts requested and, if required by Lender for requests in excess of
$25,000.00 for a single item, lien waivers and releases from all parties
furnishing materials and/or services in connection with the requested payment.
Lender may require an inspection of the Property at Borrower's expense prior to
making a monthly disbursement in order to verify completion of replacements and
repairs of items in excess of $25,000.00 for which reimbursement is sought.
7.3.3 Balance in the Replacement Reserve Account. The insufficiency of
any balance in the Replacement Reserve Account shall not relieve Borrower from
its obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.
Section 7.4. Rollover Reserve.
7.4.1 Intentionally omitted prior to execution.
7.4.2 Intentionally omitted prior to execution.
7.4.3 Lease Termination Payments. Borrower shall pay to Lender all
funds received by Borrower from tenants in connection with any cancellation,
termination or surrender of any Lease, including, but not limited to, any
surrender or cancellation fees, buy-out fees, penalties, and payments relating
to unamortized tenant improvements and leasing commissions (collectively, "Lease
Termination Payments"), which amounts shall be deposited with and held by Lender
as additional security for the Loan (the "Rollover Reserve Fund"). So long as no
Event of Default has occurred and is continuing, Lender shall make disbursements
of Lease Termination Payments from the Rollover Reserve Fund for expenses
reasonably incurred by Borrower in connection with reletting the vacated space
as requested by Borrower on a quarterly basis in increments of no less than
$15,000.00 upon delivery by Borrower of Lender's standard form of draw request
accompanied by copies of paid invoices for the amounts requested and, if
required by Lender, lien waivers and releases from all parties furnishing
materials and/or services in connection with the requested payment and a copy of
the subject Lease. All such expenses shall be approved by Lender in its
reasonable discretion as part of Lender's approval of the subject lease. Lender
may require an inspection of the Property at Borrower's expense prior to making
a quarterly disbursement in order to verify completion of improvements for which
reimbursement is sought.
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Section 7.5. Sears Reserve.
7.5.1 Borrower shall pay to Lender on each Payment Date the sum of
$25,000.00 (the "Monthly Sears Deposit"), which amounts shall be deposited with
and held by Lender as additional security for the Loan and to be used for tenant
improvements and leasing commissions to retain or replace existing tenants at
the Property (the "Sears Reserve Fund") until such time as the balance in the
Sears Reserve Fund is equal to an amount not less than $1,500,000.00; provided,
however, that upon the occurrence of a Sears Condition (as hereinafter defined),
Borrower shall no longer be required to pay to Lender on each Payment Date the
Monthly Sears Deposit. Upon the occurrence and during the continuance of a Sears
Cash Trap Event, any excess amounts remaining after the allocation of the
amounts deposited in the Cash Management Account pursuant to Section 2.7.2
(b)(items (i) - (vii)) above shall, in addition to the Monthly Sears Deposit, be
deposited into the Sears Reserve Fund to be held by Lender as additional
security for the Loan and to be used for tenant improvements and leasing
commissions to retain or replace existing tenants at the Property until such
time as the balance in the Sears Reserve Fund is equal to or greater than
$1,500,000.00. The Sears Reserve Fund shall be held by Lender in accordance with
Section 7.7 hereof. Provided that no Event of Default has occurred and is then
continuing hereunder, Lender shall release the amounts contained in the Sears
Reserve Fund, if any, to Borrower promptly upon the occurrence of either (i) a
Sears Condition, or (ii) item (B) set forth in the definition for "Sears Cash
Trap Event" below, provided that the release of the funds contained in the Sears
Reserve Fund due to the satisfaction of the conditions in this clause (ii) shall
not terminate Borrower's obligation to continue making the Monthly Sears
Deposit, and Borrower shall continue or recommence making the Monthly Sears
Deposit, as applicable, for the remainder of the term of the Loan until the
earlier to occur of (x) a Sears Condition, or (y) the achievement of a balance
in the Sears Reserve Fund of not less than $1,500,000.00.
For the purposes of this Section 7.5.1:
(1) "Sears Cash Trap Event" shall mean the period of time commencing
upon the earlier to occur of either (x) the receipt by Borrower of a notice from
Sears, ▇▇▇▇▇▇▇ and Co., Inc., a New York corporation ("Sears"), of its intent to
vacate the premises (the "Sears Space") demised under the lease agreement with
Beaver Valley Mall, Inc. (predecessor-in-interest to Borrower) dated August 1,
1969, as amended (collectively, the "Sears Lease"), and/or not renew the Sears
Lease, or (y) the failure by Sears to deliver either a notice to renew the Sears
Lease or to vacate the Sears Space if such notice is required pursuant to the
terms of the Sears Lease, and continuing thereafter until the occurrence of
either (A) a Sears Condition, or (B) the receipt by Lender of (i) evidence in
form and substance satisfactory to Lender that Sears has renewed or extended the
Sears Lease or entered into a new lease of the Sears Space, on economic and
other terms and conditions at least as favorable as those contained in the Sears
Lease and otherwise satisfactory to Beneficiary (the "Sears Renewal Lease") and
for a term of not less than five (5) years (which evidence shall include,
without limitation, a copy of the Sears Renewal Lease and a tenant estoppel
certificate from Sears which shall be in form and substance reasonably
satisfactory to Beneficiary and provide, among other things, that Sears is
occupying the Sears Space, is open for business and is paying base rent in
accordance with the Sears Renewal Lease and that all tenant improvements have
been satisfactorily completed in accordance with the Sears Renewal Lease), and
(ii) a subordination, non-disturbance and attornment agreement from Sears in
form and substance reasonably satisfactory to Lender.
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(2) "Sears Condition" shall mean the receipt by Lender of
either (x) (i) evidence in form and substance satisfactory to Lender that the
Sears Renewal Lease is for a term ending no earlier than April 11, 2014 (which
evidence shall include, without limitation, a copy of the Sears Renewal Lease
and a tenant estoppel certificate from Sears which shall be in form and
substance satisfactory to Beneficiary and provide, among other things, that
Sears is occupying the Sears Space, is open for business and is paying base rent
in accordance with the Sears Renewal Lease and that all tenant improvements have
been satisfactorily completed in accordance with the Sears Renewal Lease), and
(ii) a subordination, non-disturbance and attornment agreement from Sears in
form and substance satisfactory, or (y) (i) evidence in form and substance
reasonably satisfactory to Lender that a replacement tenant or tenants
satisfactory to Lender in its sole discretion (collectively, the "Sears
Replacement Tenant") has entered into a lease or leases, as applicable, of all
of the Sears Space, on economic and other terms and conditions at least as
favorable as those contained in the Sears Lease and otherwise satisfactory to
Lender and for a term ending no earlier than April 11, 2014 (the "Sears
Replacement Lease") (which evidence shall include, without limitation, a copy of
the Sears Replacement Lease and a tenant estoppel certificate from the Sears
Replacement Tenant which shall be in form and substance satisfactory to
Beneficiary and provide, among other things, that the Sears Replacement Tenant
is occupying the Sears Space, is open for business and is paying base rent in
accordance with the Sears Replacement Lease and that all tenant improvements
have been satisfactorily completed in accordance with the Sears Replacement
Lease), and (ii) a subordination, non-disturbance and attornment agreement from
the Sears Replacement Tenant in form and substance satisfactory to Lender.
7.5.2 Intentionally omitted prior to execution.
7.5.3 Intentionally omitted prior to execution.
7.5.4 Intentionally omitted prior to execution.
7.5.5 Lender shall make disbursements from the Sears Reserve Fund for
tenant improvements and leasing commissions for tenants at the Property as
requested by Borrower, and approved by Lender in its sole discretion, no more
frequently than once in any thirty (30) day period of no less than $5,000.00
upon delivery by Borrower of Lender's standard form of draw request accompanied
by copies of paid invoices for the amounts requested and, if required by Lender
for requests in excess of $25,000.00 for a single item, lien waivers and
releases from all parties furnishing materials and/or services in connection
with the requested payment. Lender may require an inspection of the Property at
Borrower's expense prior to making a monthly disbursement in order to verify
completion of tenant improvements of items in excess of $25,000.00 for which
reimbursement is sought. Borrower shall reimburse Lender on a monthly basis
beginning on the first month immediately succeeding such disbursement in an
amount equal to the lesser of (x) the actual amount of such disbursement
request, and (y) $25,000.00, provided, however, that, to the extent Borrower has
not previously reimbursed Lender for such disbursement request(s), Borrower
shall reimburse Lender within two (2) years of such disbursement(s) an amount
equal to such disbursement(s), all of which shall be deposited with and held by
Lender in the Sears Reserve Fund and shall be in addition to the Monthly Sears
Deposit and any other deposits required to be made by Borrower to the Sears
Reserve Fund pursuant to Section 7.5.1 above. All reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees, incurred by Lender in
connection with the re-tenanting of the Sears Space and disbursement of the
Sears Reserve Fund shall be paid by Borrower within ten (10) Business Days after
written demand and, until paid, shall be secured by the Mortgage and shall bear
interest at the Default Rate.
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Section 7.6. Intentionally omitted prior to execution.
Section 7.7. Reserve Funds Generally.
7.7.1 Borrower grants to Lender a first-priority perfected security
interest in each of the Reserve Funds and any and all monies now or hereafter
deposited in each Reserve Fund as additional security for payment of the Debt.
Until expended or applied in accordance herewith, the Reserve Funds shall
constitute additional security for the Debt.
7.7.2 Upon the occurrence of an Event of Default, Lender may, in
addition to any and all other rights and remedies available to Lender, apply any
sums then present in any or all of the Reserve Funds to the payment of the Debt
in any order in its sole discretion.
7.7.3 The Reserve Funds shall not constitute trust funds and may be
commingled with other monies held by Lender.
7.7.4 The Reserve Funds shall be held in an Eligible Account and shall
bear interest at a money market rate that is customarily paid by the Deposit
Bank (as defined in the Cash Management Agreement). All interest on a Reserve
Fund shall be added to and become a part of such Reserve Fund and shall be
disbursed in the same manner as other monies deposited in such Reserve Fund,
except that interest on the Tax and Insurance Escrow Fund and the Required
Repair Fund shall not be added to or become a part thereof and shall be the sole
property of and shall be paid to Lender. Borrower shall be responsible for
payment of any federal, state or local income or other tax applicable to the
interest earned on the Reserve Funds, other than the Tax and Insurance Escrow
Fund or the Required Repair Fund.
7.7.5 Borrower shall not, without obtaining the prior written consent
of Lender, further pledge, assign or grant any security interest in any Reserve
Fund or the monies deposited therein or permit any lien or encumbrance to attach
thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect
thereto.
7.7.6 Lender shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds, other than that which
results from Lender's gross negligence or willful misconduct.
7.7.7 Borrower shall indemnify Lender and hold Lender harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including, without limitation,
litigation costs and reasonable attorneys fees and expenses) arising from or in
any way connected with the Reserve Funds or the performance of the obligations
for which the Reserve Funds were established. Borrower shall assign to Lender
all rights and claims Borrower may have against all Persons supplying labor,
materials or other services which are to be paid from or secured by the Reserve
Funds; provided, however, that Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.
VIII. DEFAULTS.
Section 8.1. Event of Default.
(a) Each of the following events shall constitute an event of default
hereunder (an "Event of Default"):
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(i) if any portion of the Debt is not paid when due (subject to
Section 2.7.3 hereof);
(ii) if any of the Taxes or Other Charges are not paid when the
same are due and payable (subject to Section 2.7.3 hereof);
(iii) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender upon
request;
(iv) if Borrower transfers or encumbers any portion of the Property
without Lender's prior written consent in violation of the provisions
of this Agreement and Article 6 of the Mortgage;
(v) if any representation or warranty made by Borrower herein or in
any other Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished to
Lender shall have been false or misleading in any material respect as
of the date the representation or warranty was made;
(vi) if Borrower, the Principal or any guarantor under any guaranty
issued in connection with the Loan shall make an assignment for the
benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
Borrower, the Principal or any guarantor under any guaranty issued in
connection with the Loan or if Borrower, the Principal or such
guarantor shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law, shall be
filed by or against, consented to, or acquiesced in by, Borrower, the
Principal or such guarantor, or if any proceeding for the dissolution
or liquidation of Borrower, the Principal or such guarantor shall be
instituted; provided, however, that if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by
Borrower, the Principal or such guarantor, then the same shall
constitute an Event of Default only upon the same not being discharged,
stayed or dismissed within ninety (90) days;
(viii) if Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if Borrower breaches any of its respective negative covenants
contained in Section 5.2 or any covenant contained in Section 4.1.30 or
if Borrower fails to deliver any of the financial statements within
thirty (30) days of the date on which such statements are required to
be delivered pursuant to Section 5.1.11 hereof;
(x) with respect to any term, covenant or provision set forth
herein which specifically contains a notice requirement or grace
period, if Borrower shall be in default under such term, covenant or
condition after the giving of such notice or the expiration of such
grace period;
(xi) if any of the assumptions contained in the Insolvency Opinion
delivered to Lender in connection with the Loan, or in the Additional
Insolvency Opinion delivered subsequent to the closing of the Loan, is
or shall become untrue in any material respect;
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(xii) if a material default has occurred and continues beyond any
applicable cure period under the Management Agreement (or any
Replacement Management Agreement) if such default permits the Manager
thereunder to terminate or cancel the Management Agreement (or any
Replacement Management Agreement) and such default has not been waived
in writing;
(xiii) if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xii) above, for ten (10) days after notice to
Borrower 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, however, that
if such non-monetary Default is susceptible of cure but cannot
reasonably be cured within such 30-day period and provided further that
Borrower shall have commenced to cure such Default within such 30-day
period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for such time as is
reasonably necessary for Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed ninety (90)
days;
(xiv) if there shall be a default under any of the other Loan
Documents beyond any applicable cure periods contained in such
documents, whether as to Borrower or the Property, or if any other such
event shall occur or condition shall exist, if the effect of such event
or condition is to accelerate the maturity of any portion of the Debt
or to permit Lender to accelerate the maturity of all or any portion of
the Debt; or
(xv) if there shall be a default by Borrower under the REA (as
hereinafter defined) or the Consent Agreement, which default shall
continue for twenty (20) days after notice to Borrower from Lender or
May (or any successor thereto).
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter, in addition to any other rights or remedies available to it pursuant
to this Agreement and the other Loan Documents or at law or in equity, Lender
may take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and in and to all or 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 clauses (vi), (vii) or (viii)
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.
Section 8.2. Remedies.
(a) 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 forth herein or in the other Loan Documents.
Without limiting the generality of the foregoing, Borrower agrees that if an
Event of Default is continuing (i) Lender is not subject to any "one action" or
"election of remedies" law or rule, and (ii) all liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against the Property and the
Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
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(b) The rights, powers and remedies of Lender under this Agreement
shall be cumulative and not exclusive of any other right, power or remedy which
Lender may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender's rights, powers
and remedies may be pursued 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.
IX. SPECIAL PROVISIONS
Section 9.1. Sale of Notes and Securitization. Borrower acknowledges
and agrees that the Lender may sell all or any portion of the Loan and the Loan
Documents, or issue one or more participations therein, or consummate one or
more private or public securitizations of rated single- or multi-class
securities (the "Securities") secured by or evidencing ownership interests in
all or any portion of the Loan and the Loan Documents or a pool of assets that
include the Loan and the Loan Documents (such sales, participations and/or
securitizations, collectively, a "Securitization"). At the request of Lender,
and to the extent not already required to be provided by Borrower under this
Agreement, Borrower shall use reasonable efforts to provide information not in
the possession of Lender and which may be reasonably required by Lender in order
to satisfy the market standards to which Lender customarily adheres or which may
be reasonably required in the marketplace or by the Rating Agencies in
connection with any such Securitization including, without limitation, to:
(a) (i) provide additional financial and other information with respect
to the Property, Borrower, the Principal, each Guarantor and the Manager, and
(ii) provide budgets relating to the Property (collectively, the "Provided
Information"), together with appropriate verification and/or consents of the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys reasonably acceptable to Lender and the Rating Agencies;
(b) assist in preparing descriptive materials for presentations to any
or all of the Rating Agencies, and work with, and if requested, supervise,
third-party service providers engaged by Borrower, the Principal and their
respective affiliates to obtain, collect, and deliver information requested or
required by Lender or the Rating Agencies;
(c) deliver (i) revised opinions of counsel as to non-consolidation,
due execution and enforceability with respect to the Property, Borrower, the
Principal and their respective affiliates and the Loan Documents, and (ii)
revised organizational documents for Borrower, which counsel opinions and
organizational documents shall be reasonably satisfactory to Lender and the
Rating Agencies;
(d) if required by any Rating Agency, use commercially reasonable
efforts to deliver such additional tenant estoppel letters, subordination
agreements or other agreements from parties to agreements that affect the
Property, which estoppel letters, subordination agreements or other agreements
shall be reasonably satisfactory to Lender and the Rating Agencies;
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(e) make such representations and warranties as of the closing date of
the Securitization with respect to the Property, Borrower, the Principal, the
Guarantor and the Loan Documents as may be reasonably requested by Lender or the
Rating Agencies and consistent with the facts covered by such representations
and warranties as they exist on the date thereof, including the representations
and warranties made in the Loan Documents;
(f) execute such amendments to the Loan Documents as may be requested
by Lender or the Rating Agencies to effect the Securitization and/or deliver one
or more new component notes to replace the original note or modify the original
note to reflect multiple components of the Loan (and such new notes or modified
note shall have the same initial weighted average coupon of the original note,
but such new notes or modified note may change the interest rate and
amortization of the Loan so long as the aggregate monthly payment of such
note(s) shall be the same as the constant monthly payment due under the Note),
and modify the cash management agreement with respect to the newly created
components such that the pricing and marketability of the Securities and the
size of each class of Securities and the rating assigned to each such class by
the Rating Agencies shall provide the most favorable rating levels and achieve
the optimum rating levels for the Loan;
(g) if requested by Lender, review any information regarding the
Property, Borrower, the Principal, the Manager, the Guarantor and the Loan which
is contained in the Disclosure Documents; and
(h) supply to Lender such documentation, financial statements and
reports in form and substance required in order to comply with any applicable
securities laws.
All reasonable third party costs and expenses incurred by Borrower or Lender in
connection with Borrower's compliance with requests made under this Section 9.1
(including, without limitation, the fees and expenses of the Rating Agencies)
shall be paid by Borrower; provided that Borrower shall not be required to pay
more than $10,000 of such cost and expenses (exclusive of Borrower's legal fees)
plus the fees and expenses of Rating Agencies.
Section 9.2. Securitization Indemnification.
(a) Borrower understands that certain of the Provided Information may
be included in the Disclosure Document in connection with the Securitization and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower will cooperate with the
holder of the Note in updating the Disclosure Document by providing all current
information necessary to keep the Disclosure Document accurate and complete in
all material respects.
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(b) Borrower, each Principal and Guarantor agree to provide in
connection with each of (i) a preliminary and a final private placement
memorandum, (ii) a preliminary and final prospectus or prospectus supplement,
(iii) such other offering materials as may be used for the securitization of the
Loan (such materials described in clauses (i), (ii) or (iii), as applicable,
being hereinafter referred to collectively as the "Offering Materials"), an
indemnification certificate (A) certifying that Borrower, each Principal and
Guarantor have carefully examined the Offering Materials, including without
limitation, the sections entitled "Special Considerations," "Description of the
Mortgages," "Description of the Mortgage Loans and Mortgaged Property," "The
Manager," "The Borrower" and "Certain Legal Aspects of the Mortgage Loan," and
that such sections (and any other sections reasonably requested) and such
Offering Materials as they relate to or include any Provided Information, and as
they relate to the Property, do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made, not
misleading, (B) indemnifying Lender (and for purposes of this Section 9.2,
Lender hereunder shall include its officers and directors), the Affiliate of
Lender ("Credit Suisse First Boston") that has filed the registration statement
relating to the securitization (the "Registration Statement"), each of its
directors, each of its officers who have signed the Registration Statement and
each Person who controls the Affiliate within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "Credit
Suisse First Boston Group"), and Credit Suisse First Boston, each of its
directors and each Person who controls Credit Suisse First Boston within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
(collectively, the "Underwriter Group") for any losses, claims, damages or
liabilities (collectively, the "Liabilities") to which Credit Suisse First
Boston, the Credit Suisse First Boston Group or the Underwriter Group may become
subject insofar as the Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in such
sections or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated in such sections or
necessary in order to make the statements in such sections or in light of the
circumstances under which they were made, not misleading and (C) agreeing to
reimburse Lender, the Credit Suisse First Boston Group and the Underwriter Group
for any legal or other expenses reasonably incurred by Lender and Credit Suisse
First Boston in connection with investigating or defending the Liabilities;
provided, however, that Borrower will be liable in any such case under clauses
(B) or (C) above only to the extent that any such Liabilities arise out of or
are based upon any such untrue statement or omission made therein in reliance
upon and in conformity with information furnished to Lender by or on behalf of
Borrower in connection with the preparation of the memorandum or prospectus or
in connection with the underwriting of the Loan, including, without limitation,
financial statements of Borrower and operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Property. This indemnity agreement will be in addition to any
liability which Borrower may otherwise have. Moreover, the indemnification
provided for in clauses (B) and (C) above shall be effective whether or not an
indemnification certificate described in clause (A) above is provided and shall
be applicable based on information previously provided by Borrower or its
Affiliates if Borrower does not provide the indemnification certificate.
(c) In connection with filings under the Exchange Act, Borrower and
Guarantor agree to (i) indemnify Lender, the Credit Suisse First Boston Group
and the Underwriter Group for Liabilities to which Lender, the Credit Suisse
First Boston Group or the Underwriter Group may become subject insofar as such
Liabilities arise out of or are based upon any untrue statement or misstatement
of any material fact in the Provided Information or the omission or alleged
omission to state in the Provided Information a material fact required to be
stated in the Provided Information in order to make the statements in the
Provided Information, in light of the circumstances under which they were made
not misleading and (ii) reimburse Lender, the Credit Suisse First Boston Group
or the Underwriter Group for any legal or other expenses reasonably incurred by
Lender, the Credit Suisse First Boston Group or the Underwriter Group in
connection with defending or investigating the Liabilities.
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(d) Borrower agrees that no Indemnified Person shall have any liability
to Borrower for or in connection with the Loan unless and to the extent that it
is finally judicially determined that liability for losses, claims, damages,
liabilities or expenses incurred by Borrower resulted directly from the fraud,
illegal acts, gross negligence or willful misconduct of such Indemnified Person.
(e) Promptly after receipt by an Indemnified Person of notice of any
claim or the commencement of any action, the Indemnified Person shall, if a
claim in respect thereof is to be made against Borrower pursuant to this Section
9.2, notify Borrower in writing of the claim or the commencement of that action;
provided, however, that the failure to notify Borrower shall not relieve
Borrower from any liability which Borrower may have under the indemnification
provisions of this Section 9.2 except to the extent that Borrower has been
materially prejudiced by such failure, and provided further that the failure to
notify Borrower shall not relieve Borrower from any liability which Borrower may
have to an Indemnified Person otherwise than under the provisions of this
Section 9.2. If any such claim or action shall be brought against an Indemnified
Person, and it shall notify Borrower thereof, Borrower shall be entitled to
participate therein and, to the extent that it wishes, assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Person. After
notice from Borrower to the Indemnified Person of its election to assume the
defense of such claim or action, Borrower shall not be liable to the Indemnified
Person for any legal or other expenses subsequently incurred by the Indemnified
Person in connection with the defense thereof except as hereinafter provided;
provided, however, if the defendants in any such action include both Borrower,
on the one hand, and one or more Indemnified Persons, on the other hand, and an
Indemnified Person shall have reasonably concluded that there are any legal
defenses available to it and/or other Indemnified Persons that are different or
in addition to those available to Borrower, the Indemnified Person or Persons
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
Indemnified Person or Persons. The Indemnified Person shall instruct its counsel
to maintain reasonably detailed billing records for fees and disbursements for
which such Indemnified Person is seeking reimbursement hereunder and shall
submit copies of such detailed billing records to substantiate that such
counsel's fees and disbursements are solely related to the defense of a claim
for which Borrower is required hereunder to indemnify such Indemnified Person.
Borrower shall not be liable for the expenses of more than one (1) such separate
counsel unless such Indemnified Person shall have reasonably concluded that
there may be legal defenses available to it that are different from or
additional to those available to another Indemnified Person.
(f) Without the prior written consent of Lender (which consent shall
not be unreasonably withheld, delayed or conditioned), Borrower will not settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless (A) Borrower
shall have given Lender reasonable prior written notice thereof and shall have
obtained an unconditional release of Lender and each other Indemnified Person
hereunder from all liability arising out of such claim, action, suit or
proceedings, or (B) Borrower reaffirms in writing its indemnity and contribution
obligations hereunder regardless of any common, federal, state or commonwealth
statutory law to the contrary. As long as Borrower has complied with its
obligations to defend and indemnify hereunder, Borrower shall not be liable for
any settlement made by Lender or any other Indemnified Person without the
consent of Borrower (which consent shall not be unreasonably withheld or
delayed).
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(g) Borrower agrees that if any indemnification or reimbursement sought
pursuant to this Section 9.2 is finally judicially determined to be unavailable
for a reason other than the fraud, illegal acts, gross negligence or willful
misconduct of an Indemnified Person or is insufficient to hold an Indemnified
Person harmless (with respect only to the losses, claims, damages, liabilities
or expenses that are the subject of this Section 9.2), then Borrower and such
Indemnified Person shall contribute to the losses, claims, damages, liabilities
and expenses for which such indemnification or reimbursement is held unavailable
or is insufficient: (i) in such proportion as is appropriate to reflect the
relative benefits to Borrower on the one hand, and such Indemnified Person on
the other hand, from the transactions to which such indemnification or
reimbursement relates; or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but also the relative
faults of Borrower on the one hand, and all Indemnified Persons on the other
hand, as well as any other equitable considerations. Notwithstanding the
provisions of this Section 9.2, (A) no party found liable for a fraudulent
misrepresentation shall be entitled to contribution from any other party who is
not also found liable for such fraudulent misrepresentation, and (B) Borrower
and Lender agree that in no event shall the amount to be contributed by the
Indemnified Persons collectively pursuant to this paragraph exceed the amount of
the fees (by underwriting discount or otherwise) actually received by the Credit
Suisse First Boston Group and the Underwriter Group in connection with the
closing of the Loan or the Securitization.
(h) Borrower agrees that the indemnification, contribution and
reimbursement obligations set forth in this Section 9.2 shall apply whether or
not Lender, any other Indemnified Person, the Credit Suisse First Boston Group
or the Underwriter Group is a formal party to any such lawsuits, claims or other
proceedings, and that such obligations shall extend upon the terms set forth in
this Section 9.2 to any controlling person, director, partner, officer,
employee, representative or agent of Lender, the Credit Suisse First Boston
Group and the Underwriter Group (each, an "Indemnified Person"). Borrower
further agrees that its indemnification, contribution and reimbursement
obligations shall be in addition to any liability which Borrower may otherwise
have and shall extend, upon the same terms and conditions, to each Person, if
any, who controls any Indemnified Persons within the meaning of the Securities
Act.
(i) The liabilities and obligations of both Borrower and Lender under
this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.
(j) Notwithstanding anything to the contrary contained herein, Borrower
shall have no obligation to act as depositor with respect to the Loan or an
issuer or registrant with respect to the Securities issued in any
Securitization.
Section 9.3. Achievements. Borrower shall achieve, and within
forty-five (45) days after the end of each calendar quarter (the "DSCR
Determination Date") provide evidence to Lender of the achievement of, a Debt
Service Coverage Ratio for the Property. If on any DSCR Determination Date the
Debt Service Coverage Ratio is not at least 1.28 to 1.0 (the "Default
Determination Ratio"), then Borrower shall deposit all Excess Cash Flow in the
Cash Management Account. Any such funds escrowed shall be returned to Borrower
if the Default Determination Ratio is achieved for two consecutive DSCR
Determination Dates. No Event of Default shall occur by reason of this Section
9.3 so long as Borrower deposits into the Cash Management Account the additional
amounts required by this Section. All such deposit amounts shall be treated as a
"Reserve Fund" for purposes of Section 7.7 hereof. All additional amounts
deposited under this Section shall be additional security for the repayment of
the Debt and may be withdrawn by Lender upon the occurrence of an Event of
Default and applied by Lender in such order and priority as Lender may
determine. All calculations of Debt Service Coverage Ratio shall be subject to
verification by Lender.
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Section 9.4. Exculpation. Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note, this Agreement, the Mortgage or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the
Note, this Agreement, the Mortgage and the other Loan Documents, or in the
Property, the Rents, or any other collateral given to Lender pursuant to the
Loan Documents; provided, however, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property, in the Rents
and in any other collateral given to Lender, and Lender, by accepting the Note,
this Agreement, the Mortgage and the other Loan Documents, agrees that it shall
not ▇▇▇ for, seek or demand any deficiency judgment against Borrower in any such
action or proceeding under or by reason of or under or in connection with the
Note, this Agreement, the Mortgage or the other Loan Documents. The provisions
of this Section 9.4 shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under the Mortgage; (c) affect the
validity or enforceability of or any guaranty made in connection with the Loan
or any of the rights and remedies of Lender thereunder; (d) impair the right of
Lender to obtain the appointment of a receiver; (e) impair the enforcement of
the Assignment of Leases; (f) constitute a prohibition against Lender to seek a
deficiency judgment against Borrower in order to fully realize the security
granted by the Mortgage or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against the Property; or
(g) constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, to the extent of any
loss, damage, cost, expense, liability, claim or other obligation incurred by
Lender (including, without limitation, reasonable attorneys' fees and costs
reasonably incurred) arising out of or in connection with the following:
(i) fraud or material misrepresentation by Borrower or any
guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower;
(iii) the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in the
Mortgage concerning environmental laws, hazardous substances and
asbestos and any indemnification of Lender with respect thereto in
either document, provided that so long as a secured creditor's
environmental insurance policy with respect to the Property reasonably
acceptable to Lender has been obtained by Borrower for the benefit of
Lender and is in full force and effect, this clause (iii) shall not
include any loss, damage, cost, expense, liability, claim or other
obligation incurred by Lender to the extent Lender may recover the same
under said secured creditor's environmental insurance policy;
(iv) the removal or disposal of any portion of the Property after
the occurrence of an Event of Default;
(v) the misapplication or conversion by Borrower of (A) any
Insurance Proceeds paid by reason of any loss, damage or destruction to
the Property, (B) any Awards received in connection with a Condemnation
of all or a portion of the Property, (C) any Rents following the
occurrence of an Event of Default, or (D) any Rents paid more than one
month in advance;
(vi) failure to pay Taxes, charges for labor or materials or other
charges that can create Liens on any portion of the Property or the
Adjacent Property;
(vii) physical waste of the Property;
(viii) any security deposits, advance deposits or any other
deposits collected with respect to the Property which are not delivered
to Lender upon a foreclosure of the Property or action in lieu thereof,
except to the extent any such security deposits were applied in
accordance with the terms and conditions of any of the Leases prior to
the occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof, and
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(ix) (A) the failure by Borrower to promptly perform and/or
observe, in all material respects, all of the terms, covenants,
conditions and obligations pertaining to parking (and the amount of
spaces required) for the benefit of the Property and for the site
currently owned by The May Department Stores Company, a New York
corporation ("May"), contained in any document or instrument affecting
title to the Property including, without limitation, that certain
Agreement by and among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Valley Mall, Inc., a
Pennsylvania corporation, and ▇▇▇▇▇▇ Brothers, Inc., a New York
corporation (predecessor-in-interest to May), dated November 15, 1967
and recorded on December 5, 1967 in Deed Book Volume 927, page 667, as
amended (collectively, the "REA"), (B) the failure by Borrower to
install any additional parking spaces required pursuant to and in
accordance with the REA and/or Section 2 of the Consent Agreement, and
(C) any loss, damage, cost, expense, liability, claim or other
obligation incurred by Lender (including, without limitation,
attorneys' fees and costs reasonably incurred) arising out of or in
connection with the construction, development or creation of any
additional parking spaces, parking facilities or parking structures at
the Property or any adjoining property required pursuant to the REA.
Notwithstanding anything to the contrary contained in this Agreement, the Note
or any of the other Loan Documents, (A) Lender shall not be deemed to have
waived any right which Lender may have under Section 506(a), 506(b), 1111(b) or
any other provisions of the U.S. Bankruptcy Code to file a claim for the full
amount of the Debt secured by the Mortgage or to require that all collateral
shall continue to secure all of the Debt owing to Lender in accordance with the
Loan Documents, and (B) the Debt shall be fully recourse to Borrower (i) in the
event of: (a) Borrower filing a voluntary petition under the Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law; (b) the filing of an
involuntary petition against Borrower by any Person (other than Lender) under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law
which is not dismissed within one hundred eighty (180) days after filing,
provided, however, that such filing has not been consented to or acquiesced in
by Borrower; provided, further, that so long as PREIT Associates, L.P. maintains
in effect that certain line of credit with ▇▇▇▇▇ Fargo Bank, National
Association, as agent, dated December 28, 2000 (or another financing arrangement
containing market standard financial covenants for net worth, leverage and
liquidity), Borrower shall have no personal liability under this clause b; (c)
Borrower filing an answer consenting to or otherwise acquiescing in or joining
in any involuntary petition filed against it by any other Person (other than
Lender) under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law, or Borrower soliciting or causing to be solicited petitioning
creditors for any involuntary petition from any Person; (d) Borrower consenting
to or acquiescing in or joining in an application for the appointment of a
custodian, receiver, trustee, or examiner for Borrower or any portion of the
Property; or (e) Borrower making an assignment for the benefit of creditors, or
admitting, in writing or in any legal proceeding, its insolvency or inability to
pay its debts as they become due; (ii) if the first full monthly payment of
principal and interest on the Note is not paid when due; (iii) if Borrower fails
to permit reasonable on-site inspections of the Property, fails to provide
required financial information after expiration of any applicable notice or
grace period, fails to maintain its status as a Single Purpose Entity or fails
to appoint a new property manager upon the request of Lender as permitted under
this Agreement, each as required by, and in accordance with, the terms and
provisions of this Agreement or the Mortgage; (iv) if Borrower fails to obtain
Lender's prior written consent to any subordinate financing or other voluntary
lien encumbering the Property; or (v) if Borrower fails to obtain Lender's prior
written consent to any assignment, transfer, or conveyance of the Property or
any interest therein as required by this Agreement or the Mortgage.
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Section 9.5. Matters Concerning Manager.
(a) If (i) at any time, the Debt Service Coverage Ratio for the
Property for the immediately preceding twelve (12) month period is less than
1.28 to 1.0, (ii) the Debt has been accelerated pursuant to Section 8.1(b)
hereof, (iii) the Manager shall be in default (beyond any applicable grace or
cure period) under the Management Agreement, (iv) at the Anticipated Repayment
Date, the Debt is not repaid in full, or (v) the Manager shall become bankrupt
or insolvent or a debtor in any bankruptcy or insolvency proceeding, Borrower
shall, at the request of Lender, terminate the Management Agreement and replace
the Manager with a Qualified Manager approved by Lender pursuant to a
Replacement Management Agreement containing 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.
(b) Borrower shall achieve, and by each DSCR Determination Date provide
evidence to Lender of the achievement of, a Debt Service Coverage Ratio for the
Property of not less than 1.28 to 1.0. If such ratio (the "Fee Termination
Ratio") is not maintained, the Borrower's right to pay, and the Manager's right
to receive, a management fee shall be suspended and an amount equal to the
management fee shall be retained by Lender. Subsequently, if the Fee Termination
Ratio is obtained for two consecutive DSCR Determination Dates, the Borrower
shall be entitled to pay, and the Manager to receive, the management fee
escrowed as well as the right thereafter to pay and receive the management fee
so long as the Fee Termination Ratio is maintained. No Event of Default shall
occur by reason of this Section 9.5(b) so long as Borrower deposits into the
Cash Management Account the additional amounts required by this Section. All
such deposited amounts shall be treated as a "Reserve Fund" for purposes of
Section 7.7 hereof. All additional amounts deposited under this Section shall be
additional security for the repayment of the Debt and may be withdrawn by Lender
upon the occurrence of an Event of Default and applied by Lender in such order
and priority as Lender may determine. All calculations of the Debt Service
Coverage Ratio shall be subject to verification by Lender. If Borrower fails to
comply with the terms of the provisions of this Section 9.5(b) above, Borrower
shall, at the request of Lender, terminate the Management Agreement and replace
the Manager with a Qualified Manager approved by Lender pursuant to a
Replacement Management Agreement containing terms and conditions satisfactory to
Lender.
Section 9.6. Servicer. At the option of Lender, the Loan may be
serviced by a servicer or trustee (the "Servicer") selected by Lender and Lender
may delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents to the Servicer pursuant to a servicing agreement (the
"Servicing Agreement") between Lender and the Servicer. Borrower shall be
responsible for any reasonable and customary set-up fees or any other initial
costs relating to or arising under the Servicing Agreement; provided, however,
that Borrower shall not be responsible for payment of the monthly servicing fee
due to the Servicer under the Servicing Agreement.
X. MISCELLANEOUS
Section 10.1. 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.
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Section 10.2. Lender's Discretion. Whenever pursuant to this Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive. Lender may, in Lender's sole and absolute discretion, accept or
reject any proposed cure of an Event of Default. In no event shall any provision
of this Agreement or any other Loan Document which provides that Lender shall
have certain rights and/or remedies only during the continuance of an Event of
Default be construed so as to require Lender to accept a cure of any such Event
of Default. Unless and until Lender expressly accepts any proposed cure of an
Event of Default, such Event of Default shall be deemed to be continuing for
purposes of this Agreement and the other Loan Documents.
Section 10.3. Governing Law.
(A) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, PROVIDED THAT TO THE EXTENT THAT
ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE
SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING; AND PROVIDED FURTHER THAT
THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED SHALL GOVERN AS TO THE
CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND SECURITY INTERESTS IN PROPERTY
LOCATED IN SUCH STATE.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:
CT Corporate System
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
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Section 10.4. 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 10.5. Delay Not a Waiver. Neither any failure nor any delay on
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under 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 10.6. 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 against a
signed receipt or sent by (a) certified or registered United States mail,
postage prepaid, return receipt requested or (b) expedited prepaid delivery
service, either commercial or United States Postal Service, with proof of
attempted delivery, and by telecopier (with answer back acknowledged), addressed
as follows (or at such other address and Person as shall be designated from time
to 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: Column Financial, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Beaver Valley Mall
with a copy to: Credit Suisse First Boston Mortgage Capital LLC
Legal & Compliance Department
One Madison Avenue, 7th Floor
New York, New York 10010
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Re: Beaver Valley Mall
and with a copy to: ORIX Real Estate Capital Markets, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Re: Beaver Valley Mall
or any successor Servicer of the Loan
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and with a copy to: Winston & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: ▇▇ ▇▇▇▇▇▇ Valley Limited Partnership
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., #▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: PREIT Associates, L.P.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇., #▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
and: Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
Suite 300, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; or in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery, upon the first attempted delivery on a Business Day;
or in the case of telecopy, upon sender's receipt of a machine-generated
confirmation of successful transmission after advice by telephone to recipient
that a telecopy notice is forthcoming, but if such receipt is later than 5:00 PM
local time, then on the next Business Day.
Section 10.7. Trial by Jury.
BORROWER 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 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 PARTY HERETO IS HEREBY AUTHORIZED TO FILE A
COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
BY THE OTHER.
Section 10.8. Headings. The Article and/or Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
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Section 10.9. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.10. Preferences. Lender shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments by Borrower
to any portion of the obligations of Borrower hereunder. To the extent Borrower
makes a payment or payments to Lender, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then, to the extent of such payment or payments 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 payments had not been received
by Lender.
Section 10.11. Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. 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 10.12. Remedies of Borrower. In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.
Section 10.13. Expenses; Indemnity.
(a) Borrower covenants and agrees to pay or, if Borrower fails to pay,
to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by Lender in connection with (i) the
preparation, negotiation, execution and delivery of this Agreement and the other
Loan Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including, without limitation, any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents); (ii)
Borrower's ongoing performance of and compliance with Borrower's respective
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and
insurance requirements; (iii) 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;
(iv) the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Lender; (v)
securing Borrower's compliance with any requests made pursuant to the provisions
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of this Agreement; (vi) the filing and recording fees and expenses, title
insurance and reasonable fees and expenses of counsel for providing to Lender
all required legal opinions, and other similar expenses incurred in creating and
perfecting the Liens in favor of Lender pursuant to this Agreement and the other
Loan Documents; (vii) 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 (viii) 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. Any cost and expenses due and payable to Lender may be
paid from any amounts in the Lockbox Account.
(b) Borrower shall indemnify, defend and hold harmless Lender from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, demands, costs, expenses and disbursements of
any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Lender shall be designated a party thereto), that may be imposed
on, incurred by, or asserted against Lender in any manner relating to or arising
from (i) any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the "Indemnified Liabilities"); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender. To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
(c) Borrower covenants and agrees to pay for or, if Borrower fails to
pay, to reimburse Lender for, any fees and expenses incurred by any Rating
Agency in connection with any Rating Agency review of the Loan, the Loan
Documents or any transaction contemplated thereby or any consent, approval,
waiver or confirmation obtained from such Rating Agency pursuant to the terms
and conditions of this Agreement or any other Loan Document and the Lender shall
be entitled to require payment of such fees and expenses as a condition
precedent to the obtaining of any such consent, approval, waiver or
confirmation.
Section 10.14. Schedules Incorporated. The Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 10.15. 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 10.16. 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.
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(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.
Section 10.17. Publicity. All news releases, publicity or advertising
by Borrower or their Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, Credit Suisse First Boston, or any of their Affiliates
shall be subject to the prior written approval of Lender.
Section 10.18. 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, or to a sale in inverse
order of alienation in the event of foreclosure of the Mortgage, 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 10.19. 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 10.20. 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.
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Section 10.21. Brokers and Financial Advisors. Borrower hereby
represents that it has dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement, other than First Union/▇▇▇▇▇ Partners, whose
fees have been paid in full by Borrower on the date hereof. Borrower hereby
agrees to indemnify, defend and hold Lender harmless from and against any and
all claims, liabilities, costs and expenses of any kind (including Lender's
attorneys' fees and expenses) in any way relating to or arising from a claim by
any Person that such Person acted on behalf of Borrower or Lender in connection
with the transactions contemplated herein. The provisions of this Section 10.21
shall survive the expiration and termination of this Agreement and the payment
of the Debt.
Section 10.22. Prior Agreements. This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or written, including,
without limitation, the Commitment Letter, dated March 5, 2002, between Borrower
and Lender, are superseded by the terms of this Agreement and the other Loan
Documents.
[No Further Text on this Page; Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
▇▇ ▇▇▇▇▇▇ VALLEY LIMITED PARTNERSHIP,
a Pennsylvania limited partnership
By: ▇▇ ▇▇▇▇▇▇ Valley LLC,
a Delaware limited liability company,
its sole general partner
By: PREIT Associates, L.P.,
a Delaware limited partnership,
its sole member
By: Pennsylvania Real Estate Investment
Trust,
a Pennsylvania business trust,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
COLUMN FINANCIAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
SCH. 3-1
