Exhibit 99.1
LOAN AGREEMENT
Dated as of June 30, 1999
by and between
LFSRI II SPV REIT CORP.
(as Borrower)
and
CAPITAL TRUST, INC.
(as Lender)
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.1. Amount of the Loan . . . . . . . . . . . . . . . 14
Section 2.2. Use of Proceeds . . . . . . . . . . . . . . . . 15
Section 2.3. Security for the Loan . . . . . . . . . . . . . 15
Section 2.4. Note . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.5. Principal and Interest Payments . . . . . . . . 15
Section 2.6. Payments . . . . . . . . . . . . . . . . . . . . 16
Section 2.7. Application of Payments . . . . . . . . . . . . 18
Section 2.8. Payment of Debt Service, Method and Place
of Payment . . . . . . . . . . . . . . . . . . . 18
Section 2.9. Taxes . . . . . . . . . . . . . . . . . . . . . 18
Section 2.10. Intentionally omitted . . . . . . . . . . . . . 19
Section 2.11. Exit Fee . . . . . . . . . . . . . . . . . . . . 19
Section 2.12. Payments . . . . . . . . . . . . . . . . . . . . 19
Section 2.13. Servicing Fee . . . . . . . . . . . . . . . . . 19
ARTICLE III
CONDITIONS PRECEDENT AND THE ACCOUNTS . . . . . . . . . . . . . . . . 20
Section 3.1. Conditions Precedent to the Making of the Loan . 20
Section 3.2. Form of Loan Documents and Related Matters . . . 23
Section 3.3. The Accounts . . . . . . . . . . . . . . . . . . 23
Section 3.4. Intentionally omitted . . . . . . . . . . . . . 24
Section 3.5. Investment and Control of Accounts . . . . . . . 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 25
Section 4.1. Representations and Warranties of Borrower . . . 25
Section 4.2. Survival of Representations and Warranties . . . 29
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ARTICLE V
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.1. Borrower Covenants . . . . . . . . . . . . . . . 29
Section 5.2. Intentionally omitted . . . . . . . . . . . . . 37
ARTICLE VI
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.1. Borrower Negative Covenants . . . . . . . . . . 36
ARTICLE VII
DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.1. Event of Default . . . . . . . . . . . . . . . . 39
Section 7.2. Remedies . . . . . . . . . . . . . . . . . . . . 42
Section 7.3. Remedies Cumulative . . . . . . . . . . . . . . 42
Section 7.4. Lender's Right to Perform . . . . . . . . . . . 43
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.1. Survival . . . . . . . . . . . . . . . . . . . . 43
Section 8.2. Lender's Discretion . . . . . . . . . . . . . . 43
Section 8.3. Governing Law . . . . . . . . . . . . . . . . . 43
Section 8.4. Modification, Waiver in Writing . . . . . . . . 44
Section 8.5. Delay Not a Waiver . . . . . . . . . . . . . . . 44
Section 8.6. Notices . . . . . . . . . . . . . . . . . . . . 45
Section 8.7. TRIAL BY JURY . . . . . . . . . . . . . . . . . 45
Section 8.8. Headings . . . . . . . . . . . . . . . . . . . . 45
Section 8.9. Assignment . . . . . . . . . . . . . . . . . . . 45
Section 8.10. Severability . . . . . . . . . . . . . . . . . . 46
Section 8.11. Preferences . . . . . . . . . . . . . . . . . . 46
Section 8.12. Waiver of Notice . . . . . . . . . . . . . . . . 46
Section 8.13. Remedies of Borrow . . . . . . . . . . . . . . . 46
Section 8.14. Full Recourse . . . . . . . . . . . . . . . . . 46
Section 8.15. Limited Recourse; Additional Indemnity
Obligation . . . . . . . . . . . . . . . . . . 47
Section 8.16. Exhibits Incorporated . . . . . . . . . . . . . . 47
Section 8.17. Offsets, Counterclaims and Defenses . . . . . . 49
Section 8.18. No Joint Venture or Partnership . . . . . . . . 49
Section 8.19. Waiver of Marshalling of Assets Defense . . . . 49
Section 8.20. Waiver of Counterclaim . . . . . . . . . . . . . 49
Section 8.21. Conflict; Construction of Documents . . . . . . 49
Section 8.22. Brokers and Financial Advisors . . . . . . . . . 50
Section 8.23. Counterparts . . . . . . . . . . . . . . . . . . 50
Section 8.24. Payment of Expenses . . . . . . . . . . . . . . 50
Section 8.25. Bankruptcy Waiver . . . . . . . . . . . . . . . 50
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Section 8.26. Entire Agreement . . . . . . . . . . . . . . . . 51
Section 8.27. Dissemination of Information . . . . . . . . . . 51
Section 8.28. Limitation of Interest . . . . . . . . . . . . . 51
Section 8.29. Indemnification . . . . . . . . . . . . . . . . 52
Section 8.30. Borrower Acknowledgments . . . . . . . . . . . . 54
Section 8.31. Publicity . . . . . . . . . . . . . . . . . . . 54
Section 8.32. Cross Collateralization . . . . . . . . . . . . 54
Section 8.33. Release . . . . . . . . . . . . . . . . . . . . 55
Section 8.34. Assignment by Lender; Participations;
Securitization . . . . . . . . . . . . . . . . 55
EXHIBIT A PERMITTED INDEBTEDNESS
EXHIBIT B Intentionally omitted.
EXHIBIT C AMORTIZATION SCHEDULE
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LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of June 30,1999 is by and between
CAPITAL TRUST, INC., a Maryland corporation, having an address at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Loan Administrator,
Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇ (together with its successors and assigns,
"Lender"), and LFSRI II SPV REIT CORP., a Delaware corporation with an
address c/o Lazard Freres Real Estate Investors L.L.C., ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: General Counsel, Telefax
Number: (▇▇▇) ▇▇▇-▇▇▇▇ ("Borrower").
RECITALS
WHEREAS, Borrower desires to obtain a loan (the "Loan") from
Lender in the principal amount of FIFTY-TWO MILLION FIVE HUNDRED THOUSAND
DOLLARS ($52,500,000.00) (the "Loan Amount");
WHEREAS, Lender is willing to make the Loan on the condition
that Borrower joins in the execution and delivery of this Agreement which
shall establish the terms and conditions of the Loan;
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 hereby covenant, agree, represent
and warrant as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this
Agreement:
(a) the terms defined in this Article I have the meanings
assigned to them in this Article 1, and include the plural as well as the
singular;
(b) all accounting terms have the meanings assigned to them
in accordance with GAAP;
(c) the words "herein", "hereof', and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section, or other subdivision; and
(d) the following terms have the following meanings:
"AAC III" means American Apartment Communities III, L.P., a
Delaware limited partnership.
"AAC. Inc." means American Apartment Communities III, Inc., a
Maryland corporation which is a REIT.
"Accounts" has the meaning set forth in Section 3.5.
"Affiliate" of any specified Person means any Person
controlling, controlled by or under common control with such specified
Person. For the purposes of this Agreement, "control" when used with
respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities or other beneficial interests, by contract
or otherwise; and the terms "controls", "controlling" and "controlled"
have the meanings correlative to the foregoing.
"Agreement" means this Loan Agreement, as the same may from
time to time hereafter be modified, supplemented or amended.
"Assignee" has the meaning set forth in Section 8.34.2.
"Borrower" has the meaning provided in the preamble to this
Agreement.
"Borrower's Certificate" means a certificate of the chief
financial officer of the Borrower in form and substance satisfactory to
Lender in Lender's discretion dated as of the Closing Date.
"Borrower Control Group" means each of (i) LFSRI II, LFSRI II
Alternative, LFSRI-CADIM, AAC, Inc., Prometheus SE LLC and Prometheus
SERT, and (ii) until such time as the Equity Interests of Prometheus ES
in Intown are released as Collateral under the Pledge Agreements, LFSRI
SPV, LFSRI II ES and Prometheus ES.
"Business Day" means any day other than (i) a Saturday or a
Sunday, and (ii) a day on which federally insured depository institutions
in New York are authorized or obligated by law, regulation, governmental
decree or executive order to be closed.
"Chase" means The Chase Manhattan Bank.
"Chase Agreement" means that certain Revolving Credit
Agreement, dated as of March 27, 1998, among LFSRI II, Prometheus
Acquisition Corp., the institutions from time to time party thereto as
lenders, and Chase as agent and arranger, as amended.
"Chief Financial Officer" means the chief financial officer of
Borrower.
"Claim" has the meaning set forth in Section 8.29.
"Closed Period" has the meaning set forth in Section 2.6.
"Closing Date" means the date of this Agreement.
"Code" or "IRC" means the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any
successor statutes thereto, together with applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or final form.
"Collateral" means, collectively, all property of any kind
whatsoever of Borrower, including, without limitation, the collateral
granted to Lender pursuant to the Pledge Agreements, and any collateral
described in any Loan Document, and all Proceeds and products of any of
the foregoing, all whether now owned or hereafter acquired, and all other
property in which Borrower may now or hereafter have an interest. In no
event shall any Dividends and Distributions in excess of 50% thereof paid
or payable from time to time by PMAIT to Borrower constitute Collateral
under this Agreement or any of the Loan Documents.
"Contest" has the meaning set forth in Section 8.15.
"Contingent Obligation" means any obligation of Borrower
guaranteeing any indebtedness, leases, dividends or other obligations
("primary obligations") of any other Person (the "primary obligor") in
any manner, whether directly or indirectly, including, without
limitation, any obligation of Borrower, whether or not contingent; (i) to
purchase any such primary obligation, or any property constituting direct
or indirect security therefor; (ii) to advance or supply funds (x) for
the purchase or payment of any such primary obligation or (y) to maintain
working capital or equity capital of the primary obligor; (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner or obligee under any such primary obligation of the
ability of the primary obligor to make payment of such primary
obligation; or (iv) otherwise to assure or hold harmless the owner or
obligee under such primary obligation against loss in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum anticipated liability in respect thereof
(assuming that Borrower is required to perform thereunder) as determined
by Lender in good faith.
"Convertible Securities" means, with respect to any Entity,
any security, right, subscription, warrant, option, "phantom" stock right
or any other agreement, instrument, indenture,, security agreement or
other contract that gives the right to (i) purchase or otherwise receive
or be issued any Equity Interests in such Entity or any security of any
kind convertible into or exchangeable or exercisable for any Equity
Interests in such Entity or (ii) receive or exercise any benefits or
rights similar to any rights enjoyed by or accruing to the holder of
Equity Interests of such Entity, including any rights to participate in
the equity or income of such Entity or to participate in or direct the
election of any directors or officers of such Entity or the manner in
which any Equity Interests in such Entity are voted.
"CVR Payment" has the meaning set forth in Section 2.6.
"Debt Service" means, for any Fiscal Quarter, the interest
payments (including Default Rate interest and Late Charges) that accrue
or are due and payable in accordance with the Loan Documents during such
period, plus the scheduled amortization payment becoming due on the day
following the end of such Fiscal Quarter.
"Default" means the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of
Default.
"Default Rate" means the per annum interest rate equal to the
lesser of (i) the Maximum Amount or (ii) the Interest Rate plus five
percent (5%).
"Deposit Account" has the meaning set forth in Section 3.3.
"Deposit Account Agreement" means that certain Deposit and
Security Agreement entered into among Borrower and certain members of the
Borrower Control Group, Lender and Chase, as the same may hereafter be
modified, amended or supplemented from time to time.
"Determination Date" means with respect to any Interest
Accrual Period, the date which is two (2) Eurodollar Business Days before
the commencement of such Interest Accrual Period.
"Dividends and Distributions" means all cash, securities,
dividends, distributions, proceeds and other property at any time paid or
payable to a Person on account of its Equity Interest in another Person.
"Entity" means, with respect to any Person, a (i) corporation
or trust, if such person is described as a corporation or trust in this
Agreement, (ii) limited partnership, if such Person is described as a
limited partnership in this Agreement or (iii) limited liability company,
if such Person is described as a limited liability company in this
Agreement.
"Equity Interests" means, with respect to an Entity (i) if
such Entity is a limited partnership, partnership interests, associated
voting rights and Convertible Securities in such Entity, or (ii) if such
Entity is a limited liability company, membership interests (or shares),
associated voting rights and Convertible Securities in such Entity, or
(iii) if such Entity is a corporation or a business trust the share or
stock interests, associated voting rights and Convertible Securities in
such Entity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
thereunder. Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and, as of the relevant date, any subsequent
provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" means any corporation or trade or business
that is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code, of which Borrower is a member, and (ii) solely
for purposes of potential liability under Section 302(c)(ii) of ERISA and
Section 412(c)(ii) of the Code and the lien created under Section 302(f)
of ERISA and Section 412(n) of the Code, described in Section 414(m) or
(o) of the Code, of which Borrower is a member.
"Eurodollar Business Day" means a Business Day on which banks
in the City of London, England are open for interbank or foreign exchange
transactions.
"Event of Default" has the meaning set forth in Section 7.1.
"Exit Fee" means an amount equal to two percent (2%) of the
Loan Amount.
"Fiscal Quarter" means each 3-month period beginning on
February 1, May 1, August 1 and November 1.
"Fiscal Year" means the 12-month period ending on December 31
of each year or such other fiscal year of Borrower as Borrower may select
from time to time with the prior written consent of Lender, such consent
not to be unreasonably withheld or delayed.
"GAAP" means generally accepted accounting principles
consistently applied in the United States of America as of the date of
the applicable financial report.
"Governmental Authority" means any national, federal, state,
regional or local government, or any other political subdivision of any
of the foregoing, in each case with jurisdiction over the relevant
Entity, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Impositions" means all taxes (including all real estate, ad
valorem, sales (including those imposed on lease rentals), use, single
business, franchise, income, gross receipts, value added, intangible
transaction privilege, privilege, license or similar taxes), assessments,
ground rents, water, sewer or other rents and charges, excises, levies,
fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in
each case whether general or special, ordinary or extraordinary, foreseen
or unforeseen, of every character.
"including" means including without limiting the generality of
the foregoing.
"Indebtedness" means, at any given time, the Principal
Indebtedness, together with all accrued and unpaid interest, including
Default Interest and Late Charges thereon, Prepayment Premiums, and Exit
Fees thereon and all other monetary obligations due to Lender pursuant
hereto, under the Note or in accordance with any of the other Loan
Documents, and all other amounts, sums and expenses paid by or payable to
Lender which Borrower is obligated to pay hereunder or pursuant to the
Note or any of the other Loan Documents at such time.
"Indemnified Obligations" shall have the meaning set forth in
Section 8.15(b).
"Indemnified Party" shall have the meaning set forth in
Section 8.29.
"Independent Director" means, with respect to a corporation, a
duly appointed member of the board of directors of such corporation,
reasonably satisfactory to Lender, who shall not have been at the time of
such individual's appointment, and may not have been at any time during
the preceding five years, and shall not be at any time while serving as
Independent Director: (i) a direct or indirect legal or beneficial owner
of, or an officer, director, attorney, counsel, partner, member or
employee of, such corporation or any Affiliate thereof, (ii) a customer
or creditor of, or supplier or contractor to, or other person who derives
more than 10% of its purchases or revenues from its activities with such
corporation or any Affiliate thereof, (iii) a person or other entity
controlling, controlled by or under common control with any such direct
or indirect legal or beneficial owner, officer, director, attorney,
counsel, partner, member, employee, customer, creditor, contractor
supplier or other Person, or (iv) a member of the immediate family of any
such direct or indirect legal or beneficial owner, officer, director,
attorney, counsel, partner, member, employee, customer, creditor,
contractor, supplier or other person. As used herein, the term "control"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management, policies or activities or a person
or entity, whether through ownership of voting securities or other
beneficial interest, by contract or otherwise and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
Notwithstanding the foregoing, a director designated in the ordinary
course of the provision of services by Corporation Trust Company, Inc. or
a similar corporate service Entity shall be deemed an Independent
Director.
"Initial Use" shall have the meaning set forth in Section 2.2.
"Instruments" means all instruments, chattel paper, documents
or other writings obtained by Borrower evidencing a right to payment,
including, without limitation, all notes, drafts, acceptances, documents
of title, and policies and certificates of insurance, including but not
limited to, liability, hazard, rental and credit insurance, guarantees
and securities, now or hereafter received. "Instruments" shall include
the meaning given such term in the UCC.
"Interest Accrual Period" means each period of time commencing
with and including the first (1st) day of a calendar month to and
including the last day of such calendar month during the term of the
Loan. If the Closing Date shall occur on a date other than the first day
of a calendar month, the first Interest Accrual Period shall commence on
and include the Closing Date and end on and include the last day of the
calendar month in which the Closing Date occurs. If the Closing Date
shall occur on the last day of a calendar month, the first Interest
Accrual Period shall consist of a one (1) day period consisting of the
Closing Date.
"Interest Rate" means, for any Interest Accrual Period, a per
annum interest rate equal to LIBOR plus five percent (5%), adjusted on
the first day of each Interest Accrual Period.
"Intown" means Intown Holding Company, LLC, a Delaware limited
liability company.
"Investor" has the meaning provided in Section 8.27.
"KPT" means Konover Property Trust, Inc., a Maryland
corporation.
"Late Charge" means the lesser of (i) five percent (5%) of any
amount due but unpaid and (ii) the maximum late charge permitted to be
charged under the laws of the State of New York.
"Lazard Freres REI" means Lazard Freres Real Estate Investors
L.L.C., a New York limited liability company which is the general partner
of each of LFSRI II, LFSRI II Alternative, and LFSRI-CADIM.
"Legal Requirements" means all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting Borrower, the Loan Documents, the
Collateral or any part thereof, enacted or entered and in force as of the
relevant date, and all Permits 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 Collateral or any part thereof.
"Lender" has the meaning provided in the preamble to this
Agreement.
"LFSRI II" means LF Strategic Realty Investors II L.P., a
Delaware limited partnership.
"LFSRI II Alternative" means LFSRI II Alternative Partnership,
L.P., a Delaware
limited partnership.
"LFSRI II ES" means LFSRI II Extended Stay L.L.C., a Delaware
limited liability company.
"LFSRI-CADIM" means LFSRI II-CADIM Alternative Partnership,
L.P., a Delaware limited partnership.
"LFSRI SPV" means LFSRI II E.S. Corp., a Delaware corporation.
"Liabilities" has the meaning set forth in Section 8.34.3.
"LIBOR" means with respect to each Interest Accrual Period,
the rate (expressed as a percentage per annum, rounded to the nearest
100th) for deposits in U.S. dollars for a one-month period that appears
on Telerate Page 3750 (or the successor thereto) as of 11:00 a.m.,
London, England time, on the related Determination Date. If such rate
does not appear on Telerate Page 3750 as of 11:00 a.m., London, England
time, on such Determination Date, LIBOR shall be the arithmetic mean of
the offered rates (expressed as a percentage per annum) for deposits in
U.S. dollars for a one-month period that appear on the Reuters Screen
LIBOR Page as of 11:00 a.m., London, England time, on such Determination
Date, if at least two such offered rates so appear. If fewer than two
such offered rates appear on the Reuters Screen LIBOR Page as of 11:00
a.m., London, England time, on such Determination Date, Lender shall
request the principal London, England office of any four major reference
banks in the London interbank market selected by Lender to provide such
bank's offered quotation (expressed as a percentage per annum) to prime
banks in the London interbank market for deposits in U. S. Dollars for a
one-month period as of 11:00 a.m., London, England time, on such
Determination Date for amounts of not less than One Million U.S. Dollars
(U.S. $1,000,000.00). If at least two such offered quotations are so
provided, LIBOR shall be the arithmetic mean of such quotations. If
fewer than two such quotations are so provided, Lender shall request any
three major banks in New York City selected by Lender to provide such
bank's rate (expressed as a percentage per annum) for loans in U.S.
Dollars to leading European banks for a one month period as of
approximately 11:00 a.m., New York City time on the applicable
Determination Date for amounts of not less than One Million U.S. Dollars
(U.S. $1,000,000.00). If at least two such rates are so provided, LIBOR
shall be the arithmetic mean of such rates. If fewer than two rates are
so provided, then LIBOR for the applicable Interest Accrual Period shall
be LIBOR that was in effect for the next preceding Interest Accrual
Period. LIBOR shall be determined by Lender or its agent in accordance
with this definition.
"Lien" means any mortgage, deed of trust, deed to secure debt,
lien (statutory or other), pledge, easement, restrictive covenant,
hypothecation, assignment, preference, priority, security interest, or
any other encumbrance or charge on or affecting any Collateral or
Borrower, or any interest in any of the foregoing, 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 or similar
instrument under the UCC or comparable law of any other jurisdiction,
domestic or foreign, and mechanic's, materialmen's and other similar
liens and encumbrances.
"Loan" has the meaning provided in the Recitals hereto.
"Loan Amount" has the meaning provided in the Recitals hereto.
"Loan Documents" means, collectively, this Agreement, the
Note, the Pledge Agreements, the Deposit Account Agreement and all other
agreements, instruments, certificates and documents executed and
delivered by or on behalf of Borrower or any other Person to evidence or
secure the Loan or otherwise in satisfaction of the requirements of this
Agreement, or the other documents listed above, as each such agreement,
instrument, certificate or document may be amended, supplemented or
modified from time to time.
"Material Adverse Condition" means a condition or circumstance
that results in or causes a material adverse effect upon (i) the business
or the financial condition or results of operation of Borrower or any
member of the Borrower Control Group (other than LFSRI II, LFSRI II
Alternative, and LFSRI-CADIM) or any Operating Company, (ii) the ability
of Borrower, any member of the Borrower Control Group (other than LFSRI
II, LFSRI II Alternative, and LFSRI-CADIM) to make any payment under or
to perform any or all of its obligations under this Agreement or any of
the other Loan Documents, (iii) the legality, validity or enforceability
of any of the Loan Documents or Lender's ability to enforce any of its
rights under the Loan Documents, or (iv) the Lien and security interest
of Lender or the value of the Collateral.
"Maturity Date" means September 30, 2002, or such earlier date
resulting from acceleration of the Indebtedness by Lender.
"Maximum Amount" means the maximum rate of interest designated
by applicable laws relating to payment of interest and usury.
"Money" means all moneys, cash, or other items of legal
tender.
"Monthly Payment Amount" means, with respect to any Payment
Date, an amount equal to all accrued and unpaid interest on the Loan as
of the end of the immediately preceding Interest Accrual Period plus, the
amount of any amortization payment due and payable on such Payment Date
in accordance with the amortization schedule attached hereto as Exhibit C.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a Multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by
Borrower or any ERISA Affiliate and which is covered by Title IV of
ERISA.
"Net Proceeds" means, without duplication, (A) all amounts
paid or to be paid by (i) PMAIT to Borrower, (ii) Intown to Prometheus
ES, (iii) Prometheus ES to LFSRI ES, and (iv) LFSRI ES to LFSRI II, LFSRI
Alternative, LFSRI-CADIM and LFSRI SPV in connection with any Transfer of
Equity Interests in Intown or ▇▇▇▇▇▇▇▇▇▇ or (B) all amounts paid or to be
paid by (i) KPT to Prometheus SERT, (ii) Prometheus SERT to Prometheus SE
LLC, and (iii) Prometheus SE LLC to Borrower in connection with the
Transfer of any "contingent value rights" referred to in Section 2.6(b),
less the reasonable and customary costs and expenses of any such Transfer
(including reasonable attorneys' fees and costs and commercially
reasonable brokerage commissions) as shall be reasonably approved by the
Lender pursuant to the terms hereof, and the amount of any Prepayment
Premium required to be paid from such Net Proceeds pursuant to Section
2.6(b).
"Note" means and refers to the promissory note, in form and
substance satisfactory to Lender in Lender's discretion, dated the
Closing Date, made by Borrower to Lender pursuant to this Agreement as
such promissory note may be modified, amended, supplemented, extended or
consolidated in writing, and any note(s) issued in exchange therefor or
in replacement thereof.
"Officers' Certificate" means a certificate delivered to
Lender by Borrower which is signed by a senior executive officer of
Borrower.
"Operating Company" means each of (i) AAC III, (ii) KPT, (iii)
until such time as the Equity Interests in, and Dividends and
Distributions of, Prometheus ES are released as Collateral under the
Pledge Agreements, Intown, and (iv) until such time as the Dividends and
Distributions of PMAIT are released as Collateral under the Pledge
Agreements, PMAIT and ▇▇▇▇▇▇▇▇▇▇.
"Other Borrowings" means, without duplication (but not
including the Indebtedness, the Permitted Indebtedness or any Transaction
Costs payable in connection with the Transactions), (i) all indebtedness
of Borrower for borrowed money or for the deferred purchase price of
property or services, (ii) all indebtedness of Borrower evidenced by a
note, bond, debenture or similar instrument, (iii) the face amount of all
letters of credit issued for the account of Borrower and, without
duplication, all unreimbursed amounts drawn thereunder, (iv) all
indebtedness of Borrower secured by a Lien on any property owned by
Borrower whether or not such indebtedness has been assumed, (v) all
Contingent Obligations of Borrower, and (vi) all payment obligations of
Borrower under any interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars or similar
agreements) and similar agreements.
"Payment Breach" means the failure of Borrower to pay to
Lender on any Payment Date the amount due and owing on such Payment Date
pursuant to this Agreement.
"Payment Date" means the first (lst) day of each calendar
month during the Term of the Loan, and the Maturity Date; provided,
however, that for purposes of making payments hereunder and under the
Note, but not for purposes of calculating Interest Accrual Periods, if
the first (1st) day of a given month shall not be a Business Day, then
the Payment Date for such month shall be the next succeeding Business
Day.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Permitted Indebtedness" has the meaning set forth on Exhibit
A hereto.
"Permitted Investments" shall mean the following; provided,
however, that any such investment shall mature not later than the
Business Day preceding the next Payment Date following the date of
acquisition thereof:
(a) obligations of, or obligations guaranteed as to principal
and interest by, the United States government or any agency or
instrumentality thereof, provided such obligations are backed by the full
faith and credit of the United Stated of America;
(b) Federal Housing Administration debentures;
(c) Federal Home Loan Mortgage Corp. Debt obligations, Farm
Credit System Consolidated system-wide bonds and notes, Federal Home Loan
Banks Consolidated Debt obligations, Federal National Mortgage
Association Debt obligations, Student Loan Marketing Association Debt
obligations, Finance Corp. debt obligations and Resolution Funding Corp.
("REFCORP") debt obligations;
(d) federal funds, unsecured certificates of deposit, time or
demand deposits, banker's acceptances and repurchase agreements having
maturities of not more than three hundred sixty-five (365) days, of any
bank, the short-term debt obligations of which satisfy the Rating
Criteria;
(e) deposits that are fully insured by the Federal Deposit
Insurance Corp., ("FDIC");
(f) debt obligations maturing in three hundred sixty-five
(365) days or less that are rated "A" or higher by S&P and "A" or higher
by Moody's;
(g) commercial paper rated "A-1" by S&P and "P-1" by Moody's
and maturing in 365 days or less;
(h) investment in money market funds rated "Am" or "Am-G" by
S&P and "A"
by Moody's; or
(i) principal-only strips and interest-only strips of
noncallable obligations issued by the U.S. Treasury, and REFCORP
securities stripped by Federal Reserve Bank of New York;
provided, however, that all instruments described above in subdivisions
(a), (c), (d), (e), (f) and (g) shall not have an "r" highlighter affixed
to their rating aud by its terms should have a predetermined fixed dollar
amount or principal due at maturity that cannot vary or change. Interest
may either be fixed or variable and should be tied to a single interest
rate index plus a single fixed spread (if any), and move proportionally
with that index.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated
association, or any other entity, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary
acting in such capacity on behalf of any of the foregoing.
"Plan" means an employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate and that is covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Pledge Agreements" means the individual and collective
reference to the Pledge Agreements dated as of the Closing Date required
to be given by Borrower and its Affiliates in favor of Lender, pursuant
to Section 3.1 of this Agreement, as the same may be hereafter modified,
amended or supplemented from time to time.
"PMAIT" means Prometheus Mid-Atlantic Investment Trust, a
Maryland real estate investment trust.
"Prepayment Period" has the meaning set forth in Section 2.6.
"Prepayment Premium" means (i) zero dollars in respect of
scheduled amortization payments set forth on Exhibit C and in respect of
Principal Indebtedness prepaid after the end of the Prepayment Period,
(ii) the product of (x) five percent (5%) of the portion of Principal
Indebtedness prepaid after the end of the Closed Period until the end of
the Prepayment Period times (y) a fraction, the numerator of which is the
number of days remaining until the end of the Prepayment Period on the
date of prepayment and the denominator of which is 360, and (iii) the
product of (xx) ten percent (10%) of the portion of Principal
Indebtedness prepaid prior to the end of the Closed Period and not
otherwise permitted under the provisions of Section 2.6(b), times (yy) a
fraction, the numerator of which is the number of days remaining until
the end of the Prepayment Period on the date of prepayment and the
denominator of which is 360. Notwithstanding the foregoing, no
Prepayment Premium shall be due in respect of the first $10 million which
constitutes a CVR Payment.
"Principal Indebtedness" means the principal amount of the
entire Loan outstanding as the same may be increased or decreased, as a
result of prepayment or otherwise, from time to time.
"Proceeds" means all "proceeds," as such term is defined in
the UCC, and, to the extent not included in such definition, all proceeds
whether cash or non-cash, movable or immovable, tangible or intangible
(including Insurance proceeds, condemnation proceeds and proceeds of
proceeds), from the Collateral, including, without limitation, those from
the sale, refinancing, exchange, transfer, collection, loss, damage,
disposition, substitution or replacement of any of the Collateral and all
income, gain, credit, distributions and similar items from or with
respect to the Collateral.
"Prometheus ES" means Prometheus Extended Stay LLC, a Delaware
limited liability company.
"Prometheus SE LLC" means Prometheus Southeast Retail LLC, a
Delaware limited liability company.
"Prometheus SERT" means Prometheus Southeast Retail Trust, a
Maryland real estate investment trust.
"Rating Agencies" means Fitch Investors Services, Inc.,
▇▇▇▇▇'▇, ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co. and S & P or any successor to
any thereof, and any other nationally recognized statistical rating
organization to the extent that any of the foregoing have been or will be
engaged by Lender or its designees in connection with or in anticipation
of a Securitization (each individually, a "Rating Agency").
"REIT" means an entity which qualifies as a real estate
investment trust under the provisions of Sections 856 through 860 of the
IRC or the corresponding provisions of any successor statute.
"Related Party" has the meaning set forth in Section 8.15.
"Reuters Screen LIBOR Page" means the display designated as
page "LIBOR" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBOR page on the service for the purpose of
displaying interbank rates from London in U.S. Dollars).
"▇▇▇▇▇▇▇▇▇▇" means The ▇▇▇▇▇▇▇▇▇▇ Company, L.P., a Delaware
limited partnership.
"S&P" means Standard & Poor's Rating Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"Securities" has the meaning set forth in Section 8.34.3.
"Securitization" has the meaning set forth in Section 8.34.3.
"Servicer" has the meaning given such term in the Deposit
Account Agreement.
"Servicing Fee" has the meaning set forth in Section 2.13.
"Special Purpose Bankruptcy Remote Entity" has the meaning set
forth in Section 5.1(n).
"Subsidiary" of any Person means any corporation, partnership,
limited liability company or other Entity in which such Person holds an
Equity Interest constituting more than 50% of the equity classes issued
by such Entity.
"Telerate Page 3750" means the display designated as "Page
3750 on the Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace
Page 3750 on that service or such other service as may be nominated by
the British Banker's Association as the information vendor for the
purpose of displaying British Bankers' Association Interest Settlement
Rates for the U.S. Dollar deposits).
"Term" means the period from and after the Closing Date to and
including the first to occur of the Maturity Date or the date the
Indebtedness is paid in full.
"Transaction Costs" means all fees, costs, expenses and
disbursements paid or payable by Borrower relating to the Transactions,
including, without limitation, all fees, costs, expenses and
disbursements described in Section 8.24.
"Transactions" means the transactions contemplated by the Loan
Documents.
"Transfer" means any conveyance, transfer, pledge, assignment,
hypothecation, refinancing, mortgage, encumbrance, gift, sale, lease
(including any amendment, extension, modification, waiver or renewal
thereof), Lien, or other disposition, whether direct or indirect, legal
or beneficial, by law or otherwise.
"UCC" means, with respect to any Collateral, the Uniform
Commercial Code in effect in the jurisdiction in which the relevant
Collateral is located.
"U.S. Obligations" means obligations of, or obligations fully
guaranteed as to payment of principal and interest by, the United States
or any agency or instrumentality thereof provided such obligations are
backed by the full faith and credit of the United States of America
including, without limitation, obligations of the U.S. Treasury (all
direct or fully guaranteed obligations), the Farmers Home Administration
(certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed pool
certificates), the U.S. Department of Housing and Urban Development
(local authority bonds) and the Washington Metropolitan Area Transit
Authority (guaranteed transit bonds); in each case as selected by
Borrower and approved by Lender which approval shall not be unreasonably
withheld, provided, however, that the investments described in this
definition must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have
an r highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest rate must be tied to a single
interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity.
ARTICLE II
GENERAL TERMS
Section 2.1. Amount of the Loan. Lender shall lend to
Borrower a total aggregate amount equal to the Loan Amount.
Section 2.2. Use of Proceeds. Proceeds of the Loan shall be
used to make a loan to Prometheus SQ Holdings Corp., an Affiliate of the
Borrower, or to another directly or indirectly wholly-owned (except for
preferred equity held by not more than 150 Persons) subsidiary of LFSRI
II (the "Initial Use").
Section 2.3. Security for the Loan. The Note and Borrower's
obligations hereunder and under the other Loan Documents shall be secured
by the Loan Documents.
Section 2.4. Note. Borrower's obligation to pay the
principal of and interest on the Loan (including Late Charges and Default
Rate interest), shall be evidenced by this Agreement and by the Note,
duly executed and delivered by Borrower. The Note shall be payable as to
principal, interest, Late Charges and Default Rate interest, as specified
in this Agreement, with a final maturity on the Maturity Date. Borrower
shall pay all outstanding Indebtedness on the Maturity Date.
Section 2.5. Principal and Interest Payments.
(a) Accrual of Interest. Interest shall accrue on the
outstanding principal balance of the Note and all other amounts due to
Lender under the Loan Documents at the Interest Rate.
(b) Payment of Principal and Interest.
(i) On the later of funding of the Loan or the Closing
Date, Borrower shall (x) pay to the Lender interest for the first
Interest Accrual Period with respect to the Loan (provided, however, that
if such date is less than five (5) Business Days before the end of a
month, such interest shall be payable on the next Payment Date), and (y)
deposit in the interest reserve sub-account of the Deposit Account an
amount equal to three (3) months' interest on the Loan, calculated on the
basis of the Principal Indebtedness and an Interest Rate (based on 90-day
LIBOR) reasonably projected by Lender;
(ii) On each Payment Date thereafter, Borrower shall pay
to the Lender the Monthly Payment Amount.
(c) Payment Dates. All payments required to be made pursuant
to subsections (a) and (b) above shall be made beginning on the first
Payment Date immediately after the end of the first Interest Accrual
Period; provided, however, that Borrower shall pay interest for the first
Interest Accrual Period in accordance with subsection (b)(i)(x) above.
(d) Calculation of Interest. Interest shall accrue on the
outstanding Principal Indebtedness and all other amounts due to Lender
under the Loan Documents commencing upon the Closing Date. Interest
shall be computed on the actual number of days elapsed in each Interest
Accrual Period over a 360 day year.
(e) Default Rate Interest. At any time that an Event of
Default has occurred and is continuing, the entire unpaid amount
outstanding hereunder and under the Note will bear interest at the
Default Rate.
(f) Late Charge. If Borrower fails to make any payment of
any sums due under the Loan Documents within three (3) Business Days
after receipt of notice that the same is due, Borrower shall pay the Late
Charge.
(g) Maturity Date. On the Maturity Date Borrower shall pay
to Lender all amounts owing under the Loan Documents, including without
limitation, interest, principal, Late Charges and Default Rate interest.
Section 2.6. Payments.
(a) Voluntary Prepayment. The provisions of this Section
2.6(a) are subject to Section 2.6(b). Borrower shall not have the right
to prepay all or any portion of the principal balance of the Loan prior
to December 31, 2000 (the "Closed Period"). The tender of payment of the
Indebtedness during the Closed Period or the Prepayment Period while an
Event of Default exists shall be deemed to constitute a voluntary
prepayment for all purposes of this Agreement, and Lender shall have no
obligation to accept such tender unless accompanied by the applicable
Prepayment Premium and Exit Fee. From and after the end of the Closed
Period, to and including September 30, 2001 (the "Prepayment Period")
Borrower shall have the right, on any Payment Date, to prepay the Loan in
whole, but not in part, upon at least ten (10) Business Days' irrevocable
notice to Lender, specifying the amount and the date of prepayment,
provided that on the date of such prepayment Borrower shall pay to Lender
the Prepayment Premium and the Exit Fee. From and after the Prepayment
Period, Borrower may, on any Payment Date, prepay the Loan, in whole but
not in part, upon at least ten (10) Business Days' irrevocable notice to
the Lender, specifying the date and amount of prepayment; provided that
on the date of any such prepayment Borrower shall be required to pay the
Exit Fee.
(b) Mandatory Prepayment. In the event of a Transfer of the
direct or indirect Equity Interests of the Borrower or Borrower Control
Group in KPT (other than with respect to certain "contingent value
rights", as to which the following sentence shall govern) or AAC III, or
upon a Transfer of Equity Interests in or control of Lazard Freres REI,
or change in the general partner of any of LFSRI II, LFSRI II Alternative
and LFSRI-CADIM, the entire Indebtedness shall become immediately due and
payable, together with the Exit Fee and any applicable Prepayment
Premium. In the event of a Transfer of any of the "contingent value
rights" in KPT owned by any member of the Borrower Control Group, a
portion of the Indebtedness equal to the lesser of the Net Proceeds of
such Transfer and the outstanding Indebtedness, together with any
applicable Prepayment Premium, shall become immediately due and payable
(a "CVR Payment"); provided, however, that Lender shall have the right,
in its sole discretion, to reject all or any portion of such prepayment,
in which event Borrower shall have no right or obligation to prepay the
amount so rejected by Lender. In the event that any Transfer of assets
of an Operating Company in the nature of a capital transaction ("Capital
Transaction"), whether in one transaction or a series of transactions,
yields to such Operating Company amounts used to pay Dividends and
Distributions to the Borrower or any member of the Borrower Control Group
in the aggregate amount of $2.5 million (the "Threshold") then an amount
of the Principal Indebtedness, less any applicable Prepayment Premium,
equal to the lesser of (A) all Dividends and Distributions from such
Operating Company in excess of the Threshold attributable to one or more
Capital Transactions and (B) the outstanding Indebtedness, together with
the applicable Prepayment Premium, shall become due and payable five (5)
Business Days after receipt thereof by Borrower or any member of the
Borrower Control Group, as applicable; provided, however, that (x) no
such prepayment shall be required until the portion of the Principal
Indebtedness to be so prepaid is at least $1,000,000, and (y) Lender
shall have the right, in its sole discretion, to reject all or any
portion of any such prepayment, in which event Borrower shall have no
right or obligation to prepay the amount so rejected by Lender, but
Borrower shall not thereby be released from the obligation to make
further prepayments hereunder. There shall be a separate Threshold for
each Operating Company. No rejection by Lender of a prepayment pursuant
to the terms hereof shall be deemed to constitute a release or waiver of
the requirements of the Deposit Account Agreement regarding deposit and
disposition of Dividends and Distributions. In the event of a Transfer
of the direct or indirect Equity Interests of the Borrower or Borrower
Control Group in ▇▇▇▇▇▇▇▇▇▇ or Intown, a portion of the Indebtedness
(calculated as set forth in the following sentence) together with any
applicable Prepayment Premium shall become immediately due and payable.
The amount of the Indebtedness required to be prepaid shall be equal to
the lesser of (i) the Net Proceeds of such Transfer (or, if such Transfer
is in respect of ▇▇▇▇▇▇▇▇▇▇, 50% thereof) and (ii) the outstanding
Indebtedness. Any pre-payment hereunder shall be made only with sixty
(60) days' prior written notice (which notice may be revoked by Borrower
as long as such notice specifies that it is revocable), and at least
thirty (30) days but not more than ninety (90) days' irrevocable prior
notice.
(c) Application of Prepayment. Upon the receipt of any
prepayment, as long as no Event of Default exists, Lender shall be
required, on the date of receipt thereof, to apply the amount of
prepayment to the principal on the Note in the inverse order of principal
payments coming due, together with accrued interest for the entire
Interest Accrual Period in which prepayment occurs, and all other amounts
then due and payable on the Note. Notwithstanding the provisions of this
Section 2.6 to the contrary, if Borrower is otherwise permitted to make a
prepayment hereunder, Borrower shall have the right to make such
prepayment on a date other than a Payment Date, provided that, with such
prepayment and any Prepayment Premium and Exit Fee, Borrower shall also
pay an amount necessary to reimburse Lender for any costs, losses or
expenses incurred in connection with breaking any LIBOR contracts or
redeploying funds as a consequence of such prepayment.
(d) Partial Release. As long as no Event of Default has
occurred and is continuing, at any time following the end of the Closed
Period when the aggregate dividend requirements set forth in Section 7.1
(xvi) with respect to AAC III, KPT and either one but not both of Intown
and ▇▇▇▇▇▇▇▇▇▇ have been and will be satisfied for the trailing two
quarters and pro forma following quarter, Borrower may request that
Lender release the Collateral comprised of the pledge of Dividends and
Distributions and Equity Interests, as applicable, of either ▇▇▇▇▇▇▇▇▇▇
or Intown. Lender shall have the right to elect which portion of the
Collateral (i.e., either ▇▇▇▇▇▇▇▇▇▇ or Intown) to release, and shall
grant such release upon the furnishing to Lender of (i) evidence
satisfactory to Lender that the foregoing conditions have been met, and
(ii) such financial and other information as Lender may reasonably
request for the purpose of making its election provided herein. The
costs and expenses of any such request for release and of any such
release shall be paid by the Borrower. Lender shall grant such release
promptly after Lender is satisfied with the evidence and information
supporting Borrower's right to a release.
Section 2.7. Application of Payments. Except while an Event
of Default exists, all proceeds of any repayment, including prepayments,
of the Loan shall be applied to pay: first, any costs and expenses of
Lender required to be reimbursed under the terms of the Loan Documents,
including, without limitation, the Lender's commercially reasonable
attorneys' fees and disbursements (i) arising as a result of such
repayment or (ii) expended by Lender to protect, preserve, foreclose, or
realize upon, or take any other action with respect to the Collateral;
second, accrued and unpaid interest at the Interest Rate; third to the
Principal Indebtedness; and fourth, any other amounts then due and owing
under the Loan Documents. During the existence of an Event of Default,
all proceeds of repayment, including any payment or recovery on the
Collateral shall be applied in such order and in such manner as Lender
shall elect in Lender's discretion.
Section 2.8. Payment of Debt Service, Method and Place of
Payment.
(a) Except as otherwise specifically provided herein, all
payments and prepayments under this Agreement and the Note shall be made
to Lender not later than 11: 00 A.M., New York time, on the date when
due, and shall be made in lawful money of the United States of America in
federal or other immediately available funds to an account specified to
Borrower by Lender in writing, and any funds received by Lender after
such time, for all purposes hereof, shall be deemed to have been paid on
the next succeeding Business Day.
(b) All payments made by Borrower hereunder or by Borrower
under the other Loan Documents, shall be made irrespective of, and
without any deduction for, any set-offs or counterclaims.
Section 2.9. Taxes. All payments made by Borrower under this
Agreement and under the other Loan Documents shall be made free and clear
of, and without deduction or withholding for or on account of, any
present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority.
Section 2.10. Intentionally omitted.
Section 2.11. Exit Fee. On the date of payment in full of
all of the Principal Indebtedness, whether upon a prepayment,
acceleration or at maturity of the Loan, Borrower shall pay the Exit Fee.
Section 2.12. Payments. It is expressly stipulated and
agreed to be the intent of Borrower and Lender at all times to comply
with applicable state law or applicable United States federal law (to the
extent that it permits Borrower and Lender to contract for, charge, take,
reserve, or receive a greater amount of interest than under state law)
and that this Section (and any similar Section contained in the Note)
shall control every other covenant and agreement in this Agreement, the
Note and the other Loan Documents. If the applicable law (state or
federal) is ever judicially interpreted so as to render usurious or
otherwise in contravention of applicable laws, any amount called for
under this Agreement, the Note or under any of the other Loan Documents,
or contracted for, charged, taken, reserved, or received with respect to
the Loan, or if Lender's exercise of the option to accelerate the
Maturity Date, or if any prepayment by Borrower results in Borrower
having paid any interest in excess of that permitted by applicable law,
then it is Lender's express intent that all excess amounts collected by
Lender shall be credited to the principal balance of the Note (or if paid
in full, then refunded to the Borrower) and the provisions of this
Agreement, the Note and the other Loan Documents immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new documents, so
as to comply with the applicable law, but so as to permit the recovery of
the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the Loan shall, to the extent permitted by applicable law,
be amortized, prorated, allocated, and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the maximum lawful rate
from time to time in effect and applicable to the Loan for so long as the
Loan is outstanding. Notwithstanding anything to the contrary contained
in this Agreement, the Note or the other Loan Documents, it is not the
intention of Lender to accelerate the maturity of any interest that has
not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.
Section 2.13. Servicing Fee. From and after the Closing Date
until the earlier to occur of the Maturity Date or the repayment in full
of the Indebtedness, Borrower shall pay to Lender a fee (the "Servicing
Fee") equal to the actual third party credit administration and servicing
fees incurred by Lender in connection with the Loan. The Servicing Fee
shall be payable monthly in arrears and shall not exceed an amount equal
to 0.05% per annum, on the weighted average Principal Indebtedness
outstanding during the applicable period.
ARTICLE III
CONDITIONS PRECEDENT AND THE ACCOUNTS
Section 3.1. Conditions Precedent to the Making of the Loan.
(a) As a condition precedent to the making of the Loan,
Borrower shall have satisfied the following conditions (unless waived by
Lender in accordance with Section [8.4]) on or before the Closing Date:
(1) Commitment Conditions.
(A) Borrower shall have paid to Lender a structuring fee
equal to $1,050,000, such amount having been earned upon
approval of the Loan by Lender's Board of Directors or Senior
Management. Borrower shall receive a credit against such fee
equal to the amount paid by Borrower to Lender as the
"Application Fee" upon execution of the term sheet for the
Loan. Lender acknowledges receipt of the Application Fee in
the amount of $250,000.
(B) Lender shall have completed its "due-diligence"
review of the Borrower, the members of the Borrower Control
Group, the Operating Companies and their respective
Affiliates, including the organizational and governing
documents, major agreements binding or affecting, and
financial condition of each of them, and such other documents
and information as Lender may request, and the results of such
review shall be satisfactory to Lender in its sole discretion.
(2) Loan Documents.
(A) Loan Agreement. Borrower shall have executed and
delivered Agreement to Lender.
(B) Note. Borrower shall have executed and delivered to
Lender the Note.
(C) Pledge Agreements. Borrower shall have executed and
delivered and shall have caused each of Prometheus SE LLC,
LFSRI II, LFSRI II Alternative, LFSRI-CADIM, and LFSRI II ES
to execute and deliver to Lender the respective Pledge
Agreements in form and substance satisfactory to Lender.
(D) Guaranty. LFSRI II, LFSRI II Alternative and LFSRI-
CADIM shall have executed and delivered to Lender a guaranty
of certain Borrower obligations.
(E) Chase Estoppel. (i) Borrower shall have used
commercially reasonable efforts to cause to be delivered to
Lender a confirmation letter reasonably acceptable to Lender
executed by Chase with respect to the Chase Agreement, and
(ii) Borrower shall deliver to Lender an estoppel in form and
substance satisfactory to Lender.
(F) Financing Statements. Borrower shall have executed
and delivered to Lender all financing statements required by
Lender and such financing statements shall have been filed of
record in the appropriate filing offices in each of the
appropriate jurisdictions.
(G) Stock, etc. Certificates. The Borrower and other
grantors under the Pledge Agreements shall have delivered the
certificates evidencing ownership of the Collateral to Lender,
together with separate endorsements executed in blank with
respect thereto and shall have taken all other action
necessary to grant Lender a first priority perfected security
in all "investment property" included in the Collateral (as
such term is defined in Article 9 of the UCC).
(H) Lockbox. Borrower shall have executed and delivered
and caused the applicable members of the Borrower Control
Group to execute and deliver to Lender the Deposit Account
Agreement and shall have delivered to Lender letters of
direction to the payors of Dividends and Distributions
intended to be paid into the Deposit Account, countersigned
and consented to by the Operating Companies.
(I) Custodial Agreement. Borrower shall have caused to
be delivered to LaSalle National Bank as custodian for Lender
and Prometheus SERT the certificates representing all Equity
Interests in KPT owned by any member of the Borrower Control
Group, together with a custodial agreement in form and
substance satisfactory to Lender.
(J) AAC III Estoppel. Borrower shall cause to be
executed and delivered to Lender an estoppel, in form and
substance reasonably satisfactory to Lender, from the limited
partner of AAC III to the effect that all capital
contributions and other payments to AAC III required to be
made at any time by AAC Inc. have been paid in full. Such
estoppel shall be delivered within 15 days following the
Closing Date.
(3) Opinions of Counsel. Lender shall have received
from counsel satisfactory to Lender, legal opinions in form and
substance satisfactory to Lender in Lender's discretion. All such
legal opinions will be addressed to Lender, dated as of the Closing
Date, and in form and substance satisfactory to Lender and its
counsel. Borrower hereby instructs counsel to deliver to Lender
such opinions addressed to Lender.
(4) Lien Search Reports. Lender shall have received
satisfactory reports of UCC, federal tax lien, bankruptcy, state
tax lien, judgment and pending litigation searches conducted by a
search firm reasonably acceptable to Lender. Such searches shall
have been received in relation to Borrower, and certain members of
the Borrower Control Group. Such searches shall have been
conducted in each of the locations designated by Lender in Lender's
reasonable discretion.
(5) Certificates. Lender shall have received an
Officer's Certificate, in each case in form and substance
satisfactory to Lender.
(6) Consents, Licenses, Approvals. Lender shall have
received copies of all consents, licenses and approvals, if any,
required in connection with the execution, delivery and performance
by Borrower and the members of the Borrower Control Group under,
and the validity and enforceability of, the Loan Documents, and
such consents, licenses and approvals shall be in full force and
effect.
(7) Additional Matters. Lender shall have received such
other Permits, certificates, opinions, documents and instruments
relating to the Loan as may be reasonably required by Lender and
all other documents and all legal matters in connection with the
Loan shall be satisfactory in form and substance to Lender.
(8) Representations and Warranties. The representations
and warranties herein and in the other Loan Documents shall be true
and correct.
(9) No Injunction. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority
shall have been issued or entered, and no litigation shall be
pending or threatened, which in the judgment of Lender would
enjoin, prohibit or restrain, or impose or result in an adverse
effect upon the making or repayment of the Loan or the consummation
of the Transactions.
(10) Financial Information. Lender shall have received
all financial information (which financial information shall be
satisfactory to Lender in Lender's discretion) relating to the
Borrower, the members of the Borrower Control Group and the
Operating Companies, requested by Lender in Lender's discretion.
Such financial information shall be (i) prepared by an accounting
firm approved by Lender in Lender's discretion, (ii) prepared based
on a scope of work determined by Lender in Lender's discretion and
(iii) in form and content acceptable to Lender in Lender's
discretion.
(11) Transaction Costs. Borrower shall have paid or
caused to be paid all Transaction Costs.
(12) Capital Call. Lender shall have received evidence
satisfactory to Lender (which may be in the form of a certificate
made by an executive officer of Lazard Freres REI) that (a) the
full amount of capital contributions called for June 30, 1999 from
each investor in LFSRI II, LFSRI II Alternative and LFSRI-CADIM has
been contributed by each such investor (such call having been for
$355,000,000), and (b) LFSRI II, LFSRI II Alternative and LFSRI-
CADIM have paid their remaining required capital contributions in
full to AAC III on or before June 30, 1999.
(13) Nationsbank Loan. Lender shall have received
evidence satisfactory to Lender (which may be in the form of a
certificate made by an executive officer of Lazard Freres REI) that
the loan made pursuant to that certain Credit Agreement, dated as
of December 22, 1997, among Nationsbank, N.A., AAC III, AAC Inc.
and the lenders named therein, has been repaid in full and all
collateral therefor, if any, has been released.
(b) Lender shall not make the Loan unless and until each of
the applicable conditions precedent set forth in this Article III is
satisfied and until Borrower provides any other information reasonably
required by Lender. In addition, Lender shall not be obligated to make
the Loan if a Material Adverse Condition shall exist.
(c) In connection with the Loan, Borrower shall execute and
deliver or cause to be executed and delivered to Lender all additions,
amendments, modifications and supplements to the items set forth in this
Article III, including, without limitation, amendments, modifications and
supplements to the Note, the Pledge Agreements and the other Loan
Documents, if reasonably requested by Lender to effectuate the provisions
hereof, and to provide Lender with the full benefit of the security
intended to be provided under the Loan Documents. Without in any way
limiting the foregoing, such additions, modifications and supplements
shall include those deemed reasonably desirable by Lender's counsel in
the jurisdiction in which the Collateral or any part thereof is located.
(d) The making of the Loan shall constitute, without the
necessity of specifically containing a written statement to such effect,
a confirmation, representation and warranty by Borrower to Lender that,
to the best of Borrower's knowledge, all of the applicable conditions to
be satisfied in connection with the making of the Loan have been
satisfied (unless waived by Lender in accordance with Section 8.4), and
that all of the representations and warranties of Borrower set forth in
the Loan Documents are true and correct in all material respects as of
the date of the making of the Loan.
Section 3.2. Form of Loan Documents and Related Matters. The
Loan Documents and all of the certificates, agreements, legal opinions
and other documents and papers referred to in this Article III, unless
otherwise specified, shall be delivered to Lender, and shall be in form
and substance satisfactory to Lender.
Section 3.3. The Accounts.
(a) On or before the Closing Date Borrower shall establish
such reserve accounts and deposit such amounts into such accounts as
required pursuant to the terms of the Loan Documents.
(b) On or before the Closing Date, Borrower shall establish
and maintain an account (the "Deposit Account") in Lender's name as
secured party at a financial institution designated by Borrower and
reasonably satisfactory to Lender. The Deposit Account shall be governed
by the Deposit Account Agreement which shall provide for, among other
things, the establishment and maintenance of an interest reserve sub-
account.
(c) Funds from the Deposit Account shall be disbursed from
time to time in accordance with and in such order and priority as
provided by the terms and provisions of the Deposit Account Agreement and
this Agreement. Until disbursed, Borrower shall have the right to direct
the investment of funds in the Deposit Account in Permitted Investments,
subject to Lender's reasonable approval.
Section 3.4. Intentionally omitted.
Section 3.5. Investment and Control of Accounts.
(a) All interest earned on amounts deposited into the
Accounts shall be held in the Accounts and shall be used or disbursed as
provided herein for the benefit of Borrower. Neither Lender nor the
Servicer shall have any liability for any loss of interest on funds in
any Accounts and no such loss shall affect Borrower's obligation to fund
any Account as required hereunder. Borrower hereby pledges, assigns and
grants a security interest to Lender, as security for payment of all sums
due under the Loan and the performance of all other terms, conditions and
provisions of the Loan Documents and this Agreement on Borrower's part to
be paid and performed, of all Borrower's right, title and interest in and
to the Deposit Account and all other accounts and subaccounts maintained
from time to time under the Deposit Account Agreement (collectively, the
"Accounts"). Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest
in any Account, 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. This Agreement is, among other things, intended by the parties
to be a security agreement for purposes of the Uniform Commercial Code in
effect in New York and each other jurisdiction in which Accounts may be
located.
(b) Notwithstanding the foregoing, at any time an Event of
Default exists and remains uncured, the Servicer, at Lender's option and
to the extent permitted under applicable law without adversely affecting
the other rights and remedies provided to Lender under this Agreement or
the other Loan Documents, shall distribute all funds then held in, and/or
received subsequently in, the Accounts to Lender to be applied in such
order as Lender in its sole discretion shall determine, to (1) the
payment of (y) interest and Principal Indebtedness on the Note and (z)
the other Indebtedness, until all such amounts are paid in full and (2)
to preserve the Collateral.
(c) The Lender shall have exclusive control over and sole
right of withdrawal from each of the Accounts, which shall be exercised
solely in accordance with the provisions of this Agreement and the
Deposit Account Agreement. The Accounts shall be released to or at the
direction of the Borrower upon payment in full of the Indebtedness.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of Borrower.
(a) Organization. Borrower (i) is a duly organized and
validly existing Entity in good standing under the laws of the State of
its formation, (ii) is duly qualified as a foreign Entity in each
jurisdiction in which the nature or location of its business, its assets,
or any of the Collateral makes such qualification necessary or desirable,
(iii) has the requisite Entity power and authority to carry on its
business as now being conducted, and (iv) has the requisite Entity power
to execute and deliver, and perform its obligations under, the Loan
Documents.
(b) Authorization. The execution and delivery by Borrower of
the Loan Documents, Borrower's performance of its obligations thereunder
and the creation of the security interests and Liens provided for in the
Loan Documents (i) have been duly authorized by all requisite Entity
action on the part of Borrower, (ii) will not violate any provision of
any applicable Legal Requirements, any order, writ, decree, injunction or
demand of any court or other Governmental Authority, any organizational
document of Borrower or any indenture or agreement or other instrument to
which Borrower is a party or by which Borrower is bound, (iii) will not
be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, or result in the
creation or imposition of any Lien of any nature whatsoever upon any of
the property or assets of Borrower pursuant to, any indenture or
agreement or instrument, and (iv) have been duly executed and delivered
by Borrower. Except for those obtained or filed on or prior to the
Closing Date, Borrower is not required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority or other agency in connection with or as a
condition to the execution, delivery or performance of the Loan
Documents. The Loan Documents to which Borrower is a party have been
duly authorized, executed and delivered by Borrower.
(c) Entity Status. Borrower has been, and will continue to
be, a duly formed and existing Entity in good standing in all relevant
jurisdictions. Borrower at all times since its formation has complied,
and will continue to comply, with the provisions of all of its
organizational documents, and the laws of the state in which Borrower was
formed or is doing business relating to the Entity.
(d) Litigation. There are no actions, suits or proceedings
at law or in equity by or before any Governmental Authority or other
agency now pending and served or, to the knowledge of Borrower,
threatened against Borrower or the Collateral.
(e) Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which is reasonably likely to
result in a Material Adverse Condition. Borrower is not in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any indenture,
agreement or instrument to which it is a party or by which Borrower or
its property is bound or affected.
(f) No Bankruptcy Filing. Borrower is not contemplating
either the filing of a petition by Borrower under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major
portion of the assets or property of Borrower, any member of the Borrower
Control Group or any Operating Company, and Borrower has no knowledge of
any Person contemplating the filing of any such petition against any such
Entity.
(g) Full and Accurate Disclosure. No written statement of
fact made by or on behalf of Borrower or any member of the Borrower
Control Group or in the Loan Documents or in any other document or
certificate delivered to Lender by or on behalf of Borrower or any member
of the Borrower Control Group 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 fact presently
known to Borrower which has not been disclosed to Lender which materially
adversely affects, nor as far as Borrower can reasonably foresee, would
materially adversely affect the business, operations or condition
(financial or otherwise) of Borrower or any member of the Borrower
Control Group or any Operating Company.
(h) Location of Chief Executive Offices. The location of
Borrower's principal place of business and the location of Borrower's
chief executive office is the address listed in the first paragraph of
this Agreement, and Borrower has no other places of business.
(i) Compliance. Borrower is not in default or violation of
any order, writ, injunction, decree or demand of any Governmental
Authority, the violation of which is reasonably likely to result in a
Material Adverse Condition.
(j) Other Debt and Obligations. Borrower has no 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 is bound, other than obligations under the Loan Documents
and other than the Permitted Indebtedness. Borrower has not borrowed or
received other debt financing that has not been heretofore repaid in full
and Borrower has no known material Contingent Liabilities.
(k) ERISA. Each Plan and, to the knowledge of Borrower, each
Multiemployer Plan, is in compliance with, and has been administered in
compliance with, its terms and the applicable provisions of ERISA, the
Code and any other federal or state law, except for such noncompliance as
is not reasonably likely to result in a Material Adverse Condition, and
to the knowledge of Borrower no event or condition has occurred as to
which Borrower would be under an obligation to furnish a report to Lender
under Section 5.1(j).
(l) Solvency. Borrower (i) has not entered into this Loan
Agreement or any Loan Document with the actual intent to hinder, delay,
or defraud any creditor, and (ii) has received reasonably equivalent
value in exchange for its obligations under the Loan Documents. Giving
effect to the transactions contemplated hereby, the fair saleable value
of Borrower's assets exceeds and will, immediately following the
execution and delivery of this Agreement, exceed Borrower's total
liabilities, including subordinated, unliquidated, or disputed
liabilities or Contingent Obligations. The fair saleable value of
Borrower's assets is and will, immediately following the execution and
delivery of this Agreement, be greater than Borrower's probable
liabilities, including the maximum amount of its Contingent Obligations
or its debts as such debts become absolute and matured. Borrower's
assets do not and, immediately following the execution and delivery of
this Agreement, will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including Contingent Obligations and other commitments)
beyond its ability to pay such debts as they mature (taking into account
the timing and amounts to be payable on or in respect of obligations of
Borrower).
(m) Not Foreign Person. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code.
(n) Investment Company Act, Public Utility Holding Company
Act. Borrower is not (i) an "investment company" or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended, (ii) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended, or (iii) subject
to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
(o) No Defaults. No Default or Event of Default exists under
or with respect to any Loan Document.
(p) Labor Matters. Borrower is not a party to any collective
bargaining agreements.
(q) Use of Proceeds; Margin Regulations. Borrower will use
the proceeds of the Loan for the purposes described herein. No part of
the proceeds of the Loan will be used, whether directly, indirectly,
immediately, incidentally or ultimately, (i) to purchase or carry any
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System ("Board") or to refund
indebtedness originally incurred for such purpose, or (ii) for any
purpose which entails a violation of, or is inconsistent with, such
Regulation U or any other Regulations of the Board, or (iii) for any
purposes prohibited by applicable Legal Requirements. If requested by
Lender, the Borrower, any applicable member of the Borrower Control Group
and the recipient of the loan constituting the Initial Use shall furnish
to Lender a statement on Federal Reserve Form U-1 referred to in said
Regulation U.
(r) Financial Information. To the best knowledge of
Borrower, all historical financial data concerning the members of the
Borrower Control Group and the Operating Companies that has been
delivered by or on behalf of Borrower or any member of the Borrower
Control Group to Lender is true, complete and correct in all material
respects. Since the delivery of such data, except as otherwise disclosed
in writing to Lender, there has been no material adverse change in the
financial position of Borrower or any member of the Borrower Control
Group or any Operating Company or in the results of operations of
Borrower or any member of the Borrower Control Group (other than LFSRI
II, LFSRI II Alternative and LFSRI-CADIM) or any Operating Company.
Neither Borrower, any member of the Borrower Control Group has nor any
Operating Company incurred any obligation or liability, contingent or
otherwise, not reflected in such financial data which might materially
adversely affect its business operations or the Collateral.
(s) Enforceability. The Loan Documents executed by Borrower
or any of its Affiliates in connection with the Loan, including, without
limitation, any Pledge Agreement, are the legal, valid and binding
obligations of Borrower or such Affiliate, enforceable against Borrower
or such Affiliate in accordance with their terms, subject only to
bankruptcy, insolvency and other limitations on creditors' rights
generally and to equitable principles. Such Loan Documents are, as of
the Closing Date, not subject to any right of rescission, set-off,
counterclaim or defense by Borrower or such Affiliate, including the
defense of usury, nor will the operation of any of the terms of the Note,
or any other Loan Documents, or the exercise of any right thereunder,
render the Loan Documents unenforceable against Borrower or such
Affiliate, in whole or in part, or subject to any right of rescission,
set-off, counterclaim or defense by Borrower or such Affiliate, including
the defense of usury, and neither Borrower nor any Affiliate has asserted
any right of rescission, set-off, counterclaim or defense with respect
thereto.
(t) No Liabilities. Borrower has no liabilities or
obligations including, without limitation, Contingent Obligations (and
including, without limitation, liabilities or obligations in tort, in
contract, at law, in equity, pursuant to a statute or regulation, or
otherwise) other than those liabilities and obligations expressly
permitted by this Agreement.
(u) Conduct of Business. Borrower does not conduct its
business "also known as", "doing business as" or under any name other
than the Borrower's name set forth in the preamble to this Agreement.
(v) Pledge Agreements. The representations and warranties
made by Borrower and the other pledgors under the Pledge Agreements are
true and correct in all material respects.
(w) REIT Status. Borrower has not and does not engage in
activities which would in fact jeopardize its election to qualify and be
taxed as a REIT.
Section 4.2. Survival of Representations and Warranties.
Borrower agrees that (i) all of the representations and warranties of
Borrower and its Affiliates set forth in this Agreement and in the other
Loan Documents delivered on the Closing Date are made as of the Closing
Date (except as expressly otherwise provided) and (ii) all such
representations and warranties made by Borrower and its Affiliates shall
survive the delivery of the Note and continue for so long as any amount
remains owing to Lender under this Agreement, the Note or any of the
other Loan Documents. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents shall be
deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Borrower Covenants. Borrower covenants and
agrees that, from the date hereof and until payment in full of the
Indebtedness:
(a) Existence; Compliance with Legal Requirements, Insurance.
Borrower shall do all things necessary to preserve, renew and keep in
full force and effect the Entity existence, rights, licenses, Permits and
franchises necessary for the conduct of its business and comply in all
respects with all applicable Legal Requirements. Borrower shall notify
Lender promptly of any written notice or order that Borrower receives
from any Governmental Authority relating to Borrower's or any of its
Affiliates' failure to comply with applicable Legal Requirements.
Borrower shall at all times maintain, preserve and protect all franchises
and trade names and preserve all the remainder of its property necessary
for the continued conduct of its business.
(b) Litigation. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or
threatened against Borrower.
(c) Taxes and Other Charges. Borrower shall pay, or cause to
be paid, all Impositions owed by Borrower as the same become due and
payable, and deliver to Lender receipts for payment or other evidence
satisfactory to Lender that the Impositions have been so paid no later
than 30 days before they would be delinquent if not paid. After prior
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 of
any Impositions, provided that (i) no Default or Event of Default has
occurred and remains uncured, (ii) such proceeding shall suspend the
collection of the Impositions, (iii) 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, (iv) no part of or interest in the Collateral will be
in danger of being sold, forfeited, terminated, canceled or lost, (v)
Borrower shall have furnished such security as may be required in the
proceeding, or as may be requested by Lender, to insure the payment of
any such Impositions, together with all interest and penalties thereon,
and (vi) Borrower shall promptly upon final determination thereof pay the
amount of such Impositions, together with all costs, interest and
penalties. 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.
(d) Performance of Other Agreements. Borrower shall observe
and perform or cause to be observed and performed each and every term to
be observed or performed by Borrower or any member of the Borrower
Control Group pursuant to the terms of any Pledge Agreement or other Loan
Document.
(e) Notice of Default. Borrower shall promptly advise Lender
of any material adverse change in Borrower's or any member of the
Borrower Control Group's (other than LFSRI II, LFSRI II Alternative and
LFSRI-CADIM) or Operating Company's condition, financial or otherwise, or
of the occurrence of any Default or Event of Default.
(f) Cooperate in Legal Proceedings. Except with respect to
any claim by Borrower against Lender, Borrower shall cooperate with
Lender with respect to any proceedings before any Governmental Authority
which may in any way affect the rights of Lender hereunder or any rights
obtained by Lender under any of the Loan Documents and, in connection
therewith, not prohibit Lender, at its election, from participating in
any such proceedings.
(g) Perform Loan Documents. Borrower shall, and shall cause
the members of the Borrower Control Group to, observe, perform and
satisfy all the terms, provisions, covenants and conditions required to
be observed, performed or satisfied by any of them, and to pay when due
all costs, fees and expenses required to be paid by any of them under the
Loan Documents.
(h) Further Assurances. Borrower shall, at Borrower's sole
cost and expense:
(1) upon Lender's request therefor given from time to
time after the occurrence of any Default or Event of Default pay
for reports of UCC, federal tax lien, state tax lien, judgment and
pending litigation searches relating to Borrower and the members of
the Borrower Control Group;
(2) furnish to Lender all instruments, documents,
certificates, and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished
pursuant to the terms of the Loan Documents;
(3) 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, as Lender may require in Lender's
reasonable discretion, including the filing of any financing or
continuation statements under the UCC with respect to the
Collateral, transferring the Collateral to Lender's possession (if
a security interest in such Collateral can be perfected by
possession) and endorsing to Lender any Collateral which may be
evidenced by an instrument; and
(4) do and execute, and cause each member of the
Borrower Control Group to do and execute, all such further lawful
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 require from time to time in
its discretion.
(i) Financial Statements, Reporting. Until payment in full
of the Indebtedness, Borrower shall cause the following financial
statements and information, in form satisfactory to Lender, to be
delivered to Lender as and when hereinafter provided:
(1) as soon as practicable and in any event within one
hundred twenty (120) days after the end of each fiscal year of the
applicable Entities, audited combined statements of financial
position of LFSRI II, LFSRI II Alternative, LFSRI-CADIM (which
shall be duly certified by the Chief Financial Officer of the
general partner of each such Entity) and audited statements of
financial position of each Operating Company as of the end of each
such fiscal year during the Term, including a balance sheet and
statement of profits and losses, as of the date thereof, prepared
in accordance with GAAP by a nationally recognized accounting firm
and accompanied by a statement of the accountants that such
financial statements present fairly, in all material respects, the
financial condition of each such Entity as of the end of the fiscal
year being reported on and that the results of the operations and
cash flows for such year were prepared and are being reported on in
conformity with GAAP;
(2) promptly and in any event within sixty (60) days
after the end of each fiscal quarter of the applicable Entities,
(i) quarterly combined statements of financial position of LFSRI
II, LFSRI II Alternative and LFSRI-CADIM (which shall be duly
certified by the Chief Financial Officer of the general partner of
each such Entity) and statements of financial position of each
Operating Company, including a balance sheet and statement of
profits and losses, and comparisons of results to prior year
results.
(3) within five (5) days after filing, the annual
Federal income tax return of Borrower, with accompanying schedules
prepared by Borrower;
(4) within three (3) days following receipt by any
member of the Borrower Control Group, a copy of any notice of
default regarding outstanding financial indebtedness of any member
of the Borrower Control Group or any Operating Company;
(5) (A) annual budgets and revisions thereto for each
Operating Company, approved by such Operating Company, and (B) from
time to time, such other reports and information which Lender
reasonably requires, subject to applicable restrictions on
providing reports or information at law or in any applicable
agreement.
(6) together with each of the financial statements and
information required pursuant to subdivisions (1) through (4)
above, inclusive, a certificate of the Chief Financial Officer of
Borrower that Borrower has observed and performed, in all material
respects, all of its covenants and other agreements contained in
this Agreement and the other Loan Documents, whether there exists
any material Default or Event of Default and, if there is,
specifying the nature and period of existence thereof and the
action taken or proposed to be taken with respect thereto; and
(7) from time to time, within five (5) days following
receipt thereof, such reports, financial statements and
correspondence related to the Borrower Control Group or any
Operating Company (subject to applicable restrictions on providing
such items at law or in any applicable agreement) which, in
Borrower's judgment, may have a material effect, either positive or
negative, on the financial performance or valuation of the Borrower
or any Operating Company. For purposes of this subsection (i)(7),
a "material effect" shall mean an effect in excess of $5 million
outside the ordinary course of business.
(j) ERISA. Borrower shall deliver to Lender as soon as
possible, and in any event within ten (10) days, after Borrower knows or
has reason to believe that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan has occurred or
exists, a statement signed by a senior financial officer of Borrower
setting forth details respecting such event or condition and the action,
if any, that Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed
with or given to PBGC by Borrower or an ERISA Affiliate with respect to
such event or condition):
(1) any reportable event, as defined in Section 4043(b)
of ERISA and the regulations issued thereunder, with respect to a
Plan, as to which PBGC has not by regulation waived the requirement
of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event that could reasonably be expected to
result in (a) the termination of such Plan (other than pursuant to
a standard termination under ERISA Section 4041(b), (b) the
imposition of a liability on the Borrower or its ERISA Affiliates
or (c) the imposition of a Lien on the assets of the Borrower or
its ERISA Affiliates (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section 302 of
ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of
the Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code); and any request for a waiver under
Section 412(d) of the Code for any Plan;
(2) the distribution under Section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by
Borrower or an ERISA Affiliate to terminate any Plan (other than in
a standard termination pursuant to ERISA Section 4041(b));
(3) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by Borrower or any
ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer
Plan which could result in the imposition of liability on the
Borrower or its ERISA Affiliates;
(4) the complete or partial withdrawal from a
Multiemployer Plan by Borrower or any ERISA Affiliate that results
in liability under Section 4201 or 4204 of ERISA (including the
obligation to satisfy secondary liability as a result of a
purchaser default) or the receipt by Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA which could result in the imposition of
liability on the Borrower or its ERISA Affiliates;
(5) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed or
settled within thirty (30) days;
(6) the adoption of an amendment to any Plan that,
pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA,
would result in the loss of tax-exempt status of the trust of which
such Plan is a part if Borrower or an ERISA Affiliate fails to
timely provide security to the Plan in accordance with the
provisions of said Sections; and
(7) the imposition of a lien or a security interest in
connection with a Plan.
(k) Entity Status. Borrower will and will cause each member
of the Borrower Control Group (other than LFSRI II, LFSRI II Alternative
and LFSRI-CADIM) to (i) continue to comply, and cause their respective
Subsidiaries to comply, with the provisions of all of their respective
organizational and governing documents, and the laws of the state in
which each such Entity was formed relating to each such Entity and (ii)
enter into such amendments and modifications to such organizational
documents as may reasonably be required by Lender or any Rating Agency to
facilitate a Securitization or other transaction as described in Section
8.34 below. All customary formalities regarding the Entity existence of
Borrower, and each member of the Borrower Control Group (other than LFSRI
II, LFSRI II Alternative LFSRI-CADIM) will continue to be observed.
(l) Impositions and Other Claims. Borrower shall or shall
cause each member of the Borrower Control Group (other than LFSRI II,
LFSRI II Alternative LFSRI-CADIM) to pay and discharge or cause to be
paid and discharged all Impositions, as well as all lawful claims for
labor, materials and supplies or otherwise, which could become a Lien on
the Collateral.
(m) Intentionally omitted.
(n) Special Purpose Bankruptcy Remote Entity. Borrower shall
continue to be a Special Purpose Bankruptcy Remote Entity. A "Special
Purpose Bankruptcy Remote Entity" means a corporation, limited
partnership or limited liability company which at all times since its
formation and at all times thereafter (i) was and is organized solely for
the purpose of (A) owning the Collateral or (B) acting as a member of a
limited liability company that owns the Collateral, (ii) has not engaged
and will not engage in any business unrelated to (A) the ownership of the
Collateral, or (B) acting as a member of the limited liability company
that owns the Collateral, (iii) has not had and will not have any assets
other than those related to the Collateral or its member interest in the
limited liability company that owns the Collateral, (iv) has not engaged,
sought or consented to and will not engage in, seek or consent to any
dissolution, winding up, liquidation, consolidation, merger, asset sale,
transfer of partnership or membership interests (if such entity is a
general partner in a limited partnership or a member in a limited
liability company), or amendment of its limited partnership agreement,
articles of incorporation, articles of organization, certificate of
formation or operating agreement (as applicable), (v) if such entity is a
limited partnership, has, as its only general partners, Special Purpose
Bankruptcy Remote Entities that are corporations, (vi) if such entity is
a corporation has at least one Independent Director, and 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
100% of the members of its board of directors unless an Independent
Director shall have participated in such vote, (vii) if such entity is a
limited liability company, has at least one member that is a Special
Purpose Bankruptcy Remote Entity that is a corporation and such
corporation is the managing member of such limited liability company,
(viii) if such entity is a limited liability company, has articles of
organization, a certificate of formation and/or an operating agreement,
as applicable, providing that (A) such entity will dissolve only upon the
bankruptcy of the managing member, (B) the vote of a majority-in-interest
of the remaining members is sufficient to continue the life of the
limited liability company in the event of such bankruptcy of the managing
member and (C) if the vote of a majority-in-interest of the remaining
members to continue the life of the limited liability company following
the bankruptcy of the managing member is not obtained, the limited
liability company may not liquidate its property without the consent of
the applicable Rating Agencies for as long as the Loan is outstanding,
(ix) without the unanimous consent of all of its partners, directors or
members, as applicable, shall not (A) file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings with respect to
itself or to any other entity in which it has a direct or indirect legal
or beneficial ownership interest, (B) dissolve, liquidate, consolidate,
merge, or sell all or substantially all of its assets or the assets of
any other entity in which it has a direct or indirect legal or beneficial
ownership interest, (C) engage in any other business activity, or amend
its organizational documents, (x) is and will remain solvent and is
maintaining and will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations, (xi) has not failed and
will not fail to correct any known misunderstanding regarding the
separate identity of such entity, (xii) has maintained and will maintain
its accounts, books and records separate from any other Person and will
file its own tax returns, (xiii) has maintained and will maintain its
books, records, resolutions and agreements as official records, (xiv)
except as required by the Deposit Account Agreement, has not commingled
and will not commingle its funds or assets with those of any other
Person, (xv) has held and will hold its assets in its own name, (xvi) has
conducted and will conduct its business in its name, (xvii) has
maintained and will maintain its financial statements, accounting records
and other entity documents separate from any other Person, (xviii) has
paid and will pay its own liabilities, including the salaries of its own
employees, only out of its own funds and assets, (xix) has observed and
will observe all partnership, corporate or limited liability company
formalities, as applicable, (xx) has maintained and will maintain an
arm's-length relationship with its Affiliates, (xxi) has no indebtedness
other than the Loan and liabilities in the ordinary course of business
relating to the ownership of the Collateral, (xxii) has not and will not
assume or guarantee or become obligated for the debts of any other Person
or hold out its credit as being available to satisfy the obligations of
any other Person except for the Loan and the liabilities permitted
pursuant to this Agreement, (xxiii) has not and will not acquire
obligations or securities of its partners, members or shareholders,
(xxiv) has allocated and will allocate fairly and reasonably any overhead
for shared office space and uses separate stationery, invoices and
checks, (xxv) except in connection with the Loan has not pledged and will
not pledge its assets for the benefit of any other Person, (xxvi) 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 and
not as a division or part of any other Person, (xxvii) 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, (xxviii) except for the Initial Use, has not
made and will not make loans to any Person, (xxix) 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, (xxx) except for the Initial
Use, 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 in the ordinary course of its business and on terms
which are intrinsically fair and are no less favorable to it than would
be obtained in a comparable arm's-length transaction with an unrelated
third party, (xxxi) except to the extent covered by insurance, has no
obligation to indemnify its partners, officers, directors or members, as
the case may be, or has such an obligation that is fully subordinated to
the Indebtedness and will not constitute a claim against it in the event
that cash flow in excess of the amount required to pay the Indebtedness
is insufficient to pay such obligation, and (xxxii) if such entity is a
corporation, it is required to consider the interests of its creditors in
connection with all corporate actions.
(o) Intentionally omitted.
(p) Expenses. Borrower shall reimburse Lender upon receipt
of notice for all reasonable costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with
(i) the preparation, negotiation, execution and delivery of the Loan
Documents and the consummation of the transactions contemplated thereby
and all the costs of furnishing all opinions by counsel for Borrower and
its Affiliates; (ii) Borrower's, its Affiliates' and Lender's ongoing
performance under and compliance with the Loan Documents; (iii) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications of or under any Loan
Document and any other documents or matters requested by Lender; (iv)
filing and recording of any Loan Documents; (v) inspections and
appraisals; (vi) enforcing or preserving any rights, in response to third
party claims or the prosecuting or defending of any action or proceeding
or other litigation, in each case against, under or affecting Borrower,
any member of the Borrower Control Group, the Loan Documents, the
Collateral, or any other security given for the Loan; and (vii) enforcing
any obligations of or collecting any payments due from Borrower or any
member of the Borrower Control Group under any Loan Document or with
respect to the Collateral or in connection with any refinancing or
restructuring of the Loan in the nature of a "work-out", or 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 costs and expenses due and
payable to Lender hereunder which are not paid by Borrower within ten
days after demand may be paid from any amounts in the Deposit Account,
with notice thereof to Borrower. The obligations and liabilities of
Borrower under this Section shall survive the Maturity Date and the
exercise by Lender of any of its rights or remedies under the Loan
Documents.
(q) REIT Status. For Fiscal Year 1999 and each subsequent
year during the Term, the Borrower shall and shall cause each of AAC
Inc., PMAIT and Prometheus SERT to, qualify and continue to be taxed as a
REIT, and shall not engage in or cause or suffer any of its Subsidiaries
under the direct or indirect control of the Borrower to engage in any
activities which would in fact jeopardize such qualification and tax
treatment.
Section 5.2. Intentionally omitted.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1. Borrower Negative Covenants. Borrower covenants
and agrees that, until payment in full of the Indebtedness, it will not
do, directly or indirectly, any of the following unless Lender consents
thereto in writing:
(a) Special Purpose Existence and Separateness of
Entities. (x): (i) take any actions in violation of the Borrower's
organizational or governing documents or that would otherwise
adversely affect the Borrower's existence as a Special Purpose
Bankruptcy Remote Entity, or (ii) amend, modify, waive or terminate
the Borrower's organizational or governing documents.
(y) (i) dissolve or liquidate, in whole or in part, or
take any action that could have the effect of causing a dissolution
or liquidation of any of its Subsidiaries, (ii) consolidate or
merge with or into any other entity, (iii) make an assignment for
the benefit of creditors, file a petition in bankruptcy, petition
or apply to any tribunal for the appointment of a custodian,
receiver, trustee or other similar official for it, or for a
substantial part of its property, commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment or debt or
liquidation law, or admit its inability to pay its debts generally
as they become due, (iv) cause or permit the Collateral or other
assets or property of Borrower to be subject to any Lien other than
as provided for in the Loan Documents, (v) Transfer, in one
transaction or a series of transactions, all, or substantially all,
of its assets, (vi) make any material changes in Borrower's present
method of conducting business, or (vii) lend money to any Person
(except for the Initial Use).
(z) (i) undertake the incurrence or assumption on behalf
of Borrower directly or indirectly, of any indebtedness other than
the Loan and the Permitted Indebtedness, or (ii) grant a security
interest of any nature whatsoever in Borrower's assets other than
as set forth in the Loan Documents.
(b) Liens on the Collateral. Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any Lien
with respect to any Collateral except Liens in favor of Lender.
(c) Transfer. Except as expressly provided to the contrary
in this Agreement, or except as otherwise approved by Lender in writing
in Lender's discretion, allow to occur any Transfer with respect to
Equity Interests in Borrower, any member of the Borrower Control Group
(other than LFSRI II, LFSRI II Alternative and LFSRI-CADIM) or any
Operating Company, or of any Dividends and Distributions payable to or by
Borrower, any member of the Borrower Control Group or any Operating
Company, or any other Collateral, except (i) those Equity Interests which
are not owned or controlled (directly or indirectly) by LFSRI II, LFSRI
II Alternative and LFSRI-CADIM, (ii) Dividends and Distributions payable
by LFSRI II, LFSRI II Alternative or LFSRI-CADIM, or to any of them by
any Entity other than the Borrower, any member of the Borrower Control
Group or any Operating Company, and (iii) Transfers with respect to which
Borrower makes payments in accordance with the provisions of Section
2.6(b).
(d) Other Borrowings. Incur, create, assume, become or be
liable or allow any member of the Borrower Control Group (except LFSRI
II, LFSRI II Alternative or LFSRI-CADIM) to become or be liable in any
manner with respect to Other Borrowings.
(e) Change In Business. 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.
(f) Debt Cancellation. Except for the indebtedness created
by the Initial Use, cancel or otherwise forgive or release any material
claim or debt owed to Borrower by any Person, except for adequate
consideration or in the ordinary course of Borrower's business.
(g) Affiliate Transactions. Except for the Initial Use,
enter into, or be a party to, any transaction with an Affiliate of
Borrower, except in the ordinary course of business and on terms which
are no less favorable to Borrower or such Affiliate than would be
obtained in a comparable arm's length transaction with an unrelated third
party, and, if the amount to be paid to the Affiliate pursuant to the
transaction or series of related transactions is greater than Fifty
Thousand Dollars ($50,000.00) (determined annually on an aggregate basis)
fully disclosed to Lender in advance.
(h) Certain Restrictions. Enter into any agreement which
expressly restricts the ability of Borrower or any member of the Borrower
Control Group to enter into amendments, modifications or waivers of any
of the Loan Documents.
(i) Issuance of Equity Interests. Issue or allow to be
created any stocks or shares or shareholder, partnership or membership
interests, as applicable, including Convertible Securities or other
ownership interests in Borrower except for the issuance of preferred
stock to no more than 150 Persons necessary for REIT qualification.
(j) Place of Business. Change its chief executive office or
its principal place of business or place where its books and records are
kept.
(k) Identity. Change its name, identity or organizational
structure in any manner which might make any financing or continuation
statement filed in connection herewith seriously misleading within the
meaning of Section 9-402(7) of the UCC (or any other applicable provision
of the UCC).
(l) Subsidiaries. Create any Subsidiaries or otherwise
acquire equity interests in any entity without the prior written consent
of Lender.
(m) Contractual Obligations. Other than the Loan Documents,
Borrower and its assets shall not be subject to any Other Borrowings, and
Borrower shall not enter into any agreement, instrument or undertaking by
which it or its assets are bound, except for incurring liabilities, not
material in the aggregate, that are incidental to its activities as an
owner of Collateral.
(n) Borrower Control Group. Borrower shall not cause or
suffer to occur any failure by any member of the Borrower Control Group
which it directly or indirectly controls to perform its obligations under
(i) the Loan Documents to which it is a party or by which it is bound, or
(ii) under its organizational or governing documents or any other
material agreement to which it is a party or by which it or its assets
are bound or affected.
ARTICLE VII
DEFAULTS
Section 7.1. Event of Default. The occurrence of one or more
of events shall be an "Event of Default" hereunder:
(i) if Borrower fails to pay the outstanding
Indebtedness on the Maturity Date;
(ii) the occurrence of a Payment Breach;
(iii) the occurrence of the events identified elsewhere
in the Loan Documents as constituting an "Event of Default"
hereunder or thereunder;
(iv) any Transfer in violation of Section 6.1(c) of this
Agreement;
(v) if Borrower fails to pay any other amount payable
pursuant to this Agreement or any other Loan Document when due and
payable in accordance with the provisions hereof or thereof, as the
case may be;
(vi) if any representation or warranty made by Borrower
or any member of the Borrower Control Group herein or in any other
Loan Document, or in any report, certificate, financial statement
or other Instrument, agreement or document furnished by or on
behalf of Borrower in connection with this Agreement, the Note or
any other Loan Documents shall have been false or misleading in any
material respect as of the date such representation or warranty was
made or remade;
(vii) any violation of the covenants set forth in
Section 5.1(n), 6.1(a), 6.1(b), 6.1(d), 6.1(i) or 6.1(1) of this
Agreement;
(viii) if Borrower or any member of the Borrower Control
Group or any Operating Company makes a general assignment for the
benefit of creditors;
(ix) if a receiver, liquidator or trustee shall be
appointed for Borrower, any member of the Borrower Control Group or
any Operating Company, or if Borrower or any member of the Borrower
Control Group or any Operating Company, shall be adjudicated as
bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law,
or any similar federal or state law, shall be filed by or against,
consented to, or acquiesced in by Borrower or any member of the
Borrower Control Group or any Operating Company, or if any
proceeding for the dissolution or liquidation of Borrower or any
member of the Borrower Control Group or any Operating Company,
shall be instituted or if Borrower or any member of the Borrower
Control Group or Operating Company, shall generally not be paying
their respective debts as they become due;
(x) if Borrower attempts to delegate its obligations or
assign its rights under this Agreement, any of the other Loan
Documents or any interest herein or therein;
(xi) if any provision of any organizational or governing
document of Borrower or any member of the Borrower Control Group
(other than LFSRI II, LFSRI II Alternative and LFSRI-CADIM) is
amended or modified in any respect, or if Borrower or any member of
the Borrower Control Group (other than LFSRI II, LFSRI II
Alternative and LFSRI-CADIM) fails to perform or enforce the
provisions of its organizational or governing documents or attempts
to dissolve;
(xii) the declaration of an "Event of Default" under the
Chase Agreement (as such term is defined therein);
(xiii) if an event or condition specified in Section
5.1(j) shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or condition,
together with all other such events or conditions, Borrower or any
ERISA Affiliate shall incur or be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or PBGC (or any
combination of the foregoing) which would result in or constitute a
Material Adverse Condition;
(xiv) if any financial statement, report or information
provided to Lender by or on behalf of Borrower concerning the
Borrower, any member of the Borrower Control Group or any Operating
Company proves to be inaccurate or misleading in any material
respect;
(xv) if a judgment is entered against Borrower or any
member of the Borrower Control Group (other than LFSRI II, LFSRI II
Alternative and LFSRI-CADIM) or any Operating Company that
adversely affects the ability of Borrower or any member of the
Borrower Control Group (other than LFSRI II, LFSRI II Alternative
and LFSRI-CADIM) to perform its obligations under the Loan
Documents, unless such judgment is paid in full within thirty (30)
days after the date of such judgment;
(xvi) if the aggregate quarterly dividends paid to the
applicable member of the Borrower Control Group by AAC III, KPT,
▇▇▇▇▇▇▇▇▇▇ and Intown during each Fiscal Quarter which ends (a)
before November 1, 2000 are not at least equal to 1.25 times the
amount of Debt Service payable during each such quarter (for
purposes of this Section 7. 1 (xvi)(a), the amount of Debt Service
payable during the first full Fiscal Quarter after the Closing Date
shall be deemed to include an amount equal to the first scheduled
amortization payment specified on Exhibit C attached hereto), and
(b) during the period commencing on November 1, 2000 and ending on
the date on which the Indebtedness has been paid in full are not at
least equal to 1.20 times the amount of Debt Service payable during
each such quarter;
(xvii) if Borrower or any member of the Borrower Control
Group or any Operating Company which is a REIT ceases to be taxed
as a REIT; or
(xviii) if Borrower or any member of the Borrower
Control Group or any other Person shall fail to perform any of the
other obligations, agreements, undertakings, terms, covenants,
provisions or conditions of this Agreement, the Note, or the other
Loan Documents, not otherwise referred to in this Section 7.1, for
twenty (20) Business Days after written notice to Borrower from
Lender or its successors or assigns; provided that if such default
cannot reasonably be cured within such twenty (20) Business Day
period and Borrower shall have commenced to cure such default
within such period and thereafter diligently and expeditiously
proceeds to cure the same, such twenty (20) Business Day period
shall be extended for so long as it shall require Borrower in the
exercise of due diligence to cure such default, it being agreed
that no such extension shall be for a period in excess of ninety
(90) days.
Section 7.2. Remedies. Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers and other remedies
available to Lender against Borrower or its Affiliates under this
Agreement, the Note, or any of the other Loan Documents, or at law or in
equity may be exercised by Lender at any time and from time to time
(including, without limitation, the right to accelerate and declare the
outstanding principal amount, unpaid interest, Default Rate interest,
Late Charges, and any other amounts owing by Borrower to be immediately
due and payable), without notice or demand, whether or not all or any
portion of the Indebtedness 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 all or any portion of the Collateral.
Any such rights of Lender shall be cumulative and may be pursued
independently, singly, successively, together or otherwise, at such time
and in such order as Lender may determine in its 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.
Notwithstanding anything contained to the contrary herein, the
outstanding principal amount, unpaid interest, Default Rate interest,
Late Charges, and any other amounts owing by Borrower shall be
accelerated and immediately due and payable, without any election by
Lender upon the occurrence of an Event of Default described in Section 7.
1 (viii) or Section 7.1(ix).
Section 7.3. Remedies Cumulative. The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not
exclusive of any other right, power or remedy which Lender may have
against Borrower or any other Person pursuant to this Agreement or the
other Loan Documents or existing at law or in equity or otherwise.
Lender's rights, powers and remedies may be pursued singly, concurrently
or otherwise, at such time and in such order as Lender may determine in
Lender's 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 any Default or Event of Default
shall not be construed to be a waiver of any subsequent Default or Event
of Default or to impair any remedy, right or power consequent thereon.
Any and all of Lender's rights with respect to the Collateral shall
continue unimpaired, and Borrower shall be and remain obligated in
accordance with the terms hereof, notwithstanding (i) the release or
substitution of Collateral at any time, or of any rights or interest
therein or (ii) any delay, extension of time, renewal, compromise or
other indulgence granted by Lender in the event of any Default or Event
of Default with respect to the Collateral or otherwise hereunder.
Section 7.4. Lender's Right to Perform. If Borrower fails to
perform any covenant or obligation contained herein and such failure
shall continue for a period of (5) five Business Days after Borrower's
receipt of written notice thereof from Lender, without in any way
limiting Section 7.1 hereof, Lender may, but shall have no obligation to,
itself perform, or cause performance of, such covenant or obligation, and
the expenses of Lender incurred in connection therewith shall be payable
by Borrower to Lender upon demand. Notwithstanding the foregoing, Lender
shall have no obligation to send notice to Borrower of any such failure.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival. Subject to Section 4.2, this
Agreement and all covenants, agreements, representations and warranties
made herein and in the certificates delivered pursuant hereto shall
survive the execution and delivery of this Agreement and the execution
and delivery by Borrower to Lender of the Note, and shall continue in
full force and effect so long as any portion of the Indebtedness is
outstanding and unpaid. Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and
agreements in this Agreement contained, by or on behalf of Borrower,
shall inure to the benefit of the respective successors and assigns of
Lender. Nothing in this Agreement or in any other Loan Document, express
or implied, shall give to any Person other than the parties and the
holder(s) of the Note, and the other Loan Documents, and their legal
representatives, successors and assigns, any benefit or any legal or
equitable right, remedy or claim hereunder.
Section 8.2. Lender's Discretion. Whenever pursuant to this
Agreement or any other Loan Document, Lender exercises any right, option
or election given to Lender to approve or disapprove, or consent or
withhold consent, or any arrangement or term is to be satisfactory to
Lender or is to be in Lender's discretion, the decision of Lender to
approve or disapprove, consent or withhold consent, or to decide whether
arrangements or terms are satisfactory or not satisfactory or acceptable
or not acceptable to Lender in Lender's discretion, shall (except as is
otherwise specifically herein provided) be in the sole and absolute
discretion of Lender.
Section 8.3. Governing Law.
(a) This Agreement and the obligations arising hereunder
shall be governed by, and construed in accordance with, the laws of the
State of New York applicable to contracts made and intended to be
performed in such State, without giving effect to principles of conflicts
of laws, and any applicable law of the United States of America. To the
fullest extent permitted by law, Borrower hereby unconditionally and
irrevocably waives any claim to assert that the law of any other
jurisdiction governs this Agreement and the Note, and this Agreement and
the Note shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to
principles of conflicts of laws.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN NEW YORK OR IN ANY FEDERAL OR STATE COURT IN
ANY JURISDICTION IN WHICH ANY COLLATERAL IS LOCATED, AND BORROWER WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
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 ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, ESQ., WHOSE ADDRESS IS ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, 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 AND AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS (OR AT SUCH OTHER
OFFICE AS MAY BE DESIGNATED BY BORROWER FROM TIME TO TIME IN ACCORDANCE
WITH THE TERMS HEREOF) WITH A COPY TO BORROWER AT C/O LAZARD FRERES REAL
ESTATE INVESTORS L.L.C., ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
ATTENTION: ▇▇▇▇ ▇. ▇▇▇▇▇ AND WRITTEN NOTICE OF SAID SERVICE OF BORROWER
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. BORROWER (1) 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 (WHICH OFFICE SHALL BE DESIGNATED AS THE
ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH
A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 8.4. Modification, Waiver in Writing. No
modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement, the Note or any other Loan Document, or
consent to any departure by Borrower or any of its Affiliates 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 8.5. 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 of any other Loan
Document, shall operate as or constitute a waiver thereof, nor shall a
single or partial exercise thereof preclude any other future exercise, or
the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the
due date of any amount payable under 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 8.6. 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 or sent by (a) hand delivery, with proof of attempted delivery,
(b) certified or registered United States mail, postage prepaid, (c)
expedited prepaid delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or (d) by telecopier
(with answer back acknowledged) provided that such telecopied notice must
also be delivered by one of the means set forth in (a), (b) or (c) above,
addressed if to Lender at its address set forth on the first page hereof,
and if to Borrower at its designated address set forth on the first page
hereof, 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
8.6. A copy of all notices, consents, approvals and requests directed to
Borrower shall be delivered concurrently, Phone Number (▇▇▇) ▇▇▇-▇▇▇▇,
Telefax Number (▇▇▇) ▇▇▇-▇▇▇▇. A copy of all notices, consents, approvals
and requests directed to Lender shall be delivered concurrently to each
of the following: Capital Trust, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Loan
Administrator; and Borrower, c/o Lazard Freres Real Estate Investors
L.L.C., ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇. A notice shall be deemed to have been given:
(a) in the case of hand delivery, at the time of delivery; (b) in the
case of registered or certified mail, when delivered or the first
attempted delivery on a Business Day; (c) in the case of expedited
prepaid delivery upon the first attempted delivery on a Business Day; or
(d) in the case of telecopier, upon receipt of answer back confirmation,
provided that such telecopied notice was also delivered as required in
this Section 8.6. A party receiving a notice which does not comply with
the technical requirements for notice under this Section 8.6 may elect to
waive any deficiencies and treat the notice as having been properly
given. If a party refuses delivery, such party shall be deemed to have
received notice on the date of attempted delivery, as evidenced by
courier's or post office proof of attempted delivery.
SECTION 8.7. TRIAL BY JURY. BORROWER AND LENDER, TO THE
FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY
IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT
ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE
NOTE OR THE OTHER LOAN DOCUMENTS.
Section 8.8. Headings. The Article and Section headings in
this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
Section 8.9. Assignment. Lender shall have the right to
assign in whole or in part this Agreement and/or any of the other Loan
Documents and the obligations hereunder or thereunder to any Person and
to sell or otherwise transfer participation interests in all or any
portion of the Loan evidenced hereby.
Section 8.10. 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 8.11. Preferences. Lender shall have no obligation
to marshal any assets in favor of Borrower or any other party or against
or in payment of any or all of the obligations of Borrower pursuant to
this Agreement, the Note or any other Loan Document. 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 for Borrower's benefit, which payment or receipt of proceeds or
any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender.
Section 8.12. Waiver of Notice. Neither Borrower nor any of
its Affiliates shall 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 or an Affiliate thereof and except
with respect to matters for which Borrower and any applicable Affiliate
are 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 does not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 8.13. Remedies of Borrow. 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, the Note, or the other Loan Documents, Lender or such agent,
as the case may be, has an obligation to act reasonably or promptly, then
in such event Borrower shall not be entitled to bring an action for
damages, but shall be limited to commencing an action seeking injunctive
relief or declaratory judgment.
Section 8.14. Full Recourse. The Loan and Borrower's
obligations thereunder shall be fully recourse to Borrower.
Section 8.15. Limited Recourse; Additional Indemnity
Obligation.
(a) Intentionally omitted.
(b) LFSRI II, LFSRI II Alternative, LFSRI-CADIM and Borrower
shall be jointly and severally liable for any liabilities, costs, losses
(including, without limitation, any reduction in value of the Collateral
or the loss of any such Collateral or Lender's security interest
therein), damages, expenses (including, without limitation, reasonable
attorneys' fees and disbursements, and court costs, if any), or claims
(such liabilities, costs, losses, damages, expenses and claims,
collectively, the "Indemnified Obligations") suffered or incurred by
Lender (or any Indemnified Party) by reason of or in connection with (1)
any fraud or breach of trust, or any willful and material
misrepresentation contained in any Loan Document or any report furnished
pursuant to any Loan Document by Borrower or any direct or indirect
partner, member, shareholder, principal, employee, officer, director or
agent of Borrower or of any member of the Borrower Control Group (each, a
"Related Party") (2) the failure of Borrower or any member of the
Borrower Control Group to direct or pay Dividends and Distributions
received by such Entity directly or indirectly from any Operating Company
to the Deposit Account as required by the Loan Documents, (3) any Legal
Requirement mandating the forfeiture by Borrower or any member of the
Borrower Control Group of the Collateral, or any portion thereof or of
any interest in Borrower, or any part thereof because of the conduct or
purported conduct of criminal activity by Borrower or any member of the
Borrower Control Group in connection therewith, (4) the amount of any
Lien voluntarily placed on the Collateral by Borrower (or any
predecessor-owner which is an Affiliate of Borrower) or, any member of
the Borrower Control Group in contravention of the provisions of Section
6.1(b) of this Agreement, and (5) the cost of enforcement of any of
Lender's rights or remedies hereunder or under any of the other Loan
Documents incurred in any bankruptcy or similar proceeding which may be
brought by Borrower, any member of the Borrower Control Group or any
Related Party with respect to Borrower or any member of the Borrower
Control Group.
(c) In addition, the Indebtedness shall be fully recourse,
jointly and severally, to LFSRI II, LFSRI II Alternative and LFSRI-CADIM
in the event of any of the following: (A) Borrower or any member of the
Borrower Control Group filing a voluntary petition under the Bankruptcy
Code or any other Federal or state bankruptcy or insolvency law; or (B)
any Person controlled, directly or indirectly, by Borrower, or by an
Affiliate which controls, directly or indirectly, Borrower, filing, or
joining in the filing of, an involuntary petition against Borrower or any
member of the Borrower Control Group under the Bankruptcy Code or any
other Federal or state bankruptcy or insolvency law, or soliciting or
causing to be solicited petitioning creditors for any involuntary
petition against Borrower or any member of the Borrower Control Group
from any Person; or (C) Borrower or any member of the Borrower Control
Group filing an answer consenting to or otherwise acquiescing in or
joining in any involuntary petition filed against it or against Borrower
or any member of the Borrower Control Group by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law, or soliciting or causing to be solicited petitioning creditors for
any involuntary petition from any Person; or (D) any Person controlled,
directly or indirectly, by Borrower or any member of the Borrower Control
Group or by any Affiliate which controls, directly or indirectly,
Borrower or any member of the Borrower Control Group consenting to or
acquiescing in or joining in an application for the appointment of a
custodian, receiver, trustee or examiner for Borrower or any member of
the Borrower Control Group or any portion of the Collateral (unless such
action is at the request of Lender) or any such controlled Person voting
adversely to Lender's interest in any proceeding under the Bankruptcy
Code or any other state or federal bankruptcy or insolvency law which
involves Borrower, any member of the Borrower Control Group or the
Collateral; or (E) Borrower or any member of the Borrower Control Group
making a general 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; or (F) any Person controlled by Borrower or
by any Affiliate which controls Borrower contesting in bad faith or in
any way interfering in bad faith with, directly or indirectly
(collectively, a "Contest"), any foreclosure action, Uniform Commercial
Code sale and/or deed in lieu of foreclosure transaction commenced by
Lender or with any other enforcement of Lender's rights, powers or
remedies under any of the Loan Documents or under any document
evidencing, securing or otherwise relating to any of the Collateral
(whether by making any motion, bringing any counterclaim, claiming any
defense, seeking any injunction or other restraint, commencing any
action, or otherwise); or (G) any Transfer occurs in violation of Section
6.1(c) of this Agreement; or (H) if any Lien is voluntarily placed on the
Collateral or any portion thereof or interest therein, or if any
indebtedness is incurred by Borrower in contravention of the provisions
of Section 6.1; or (1) the Borrower or any member of the Borrower Control
Group other than LFSRI II, LFSRI II Alternative or LFSRI-CADIM shall
become the subject of an involuntary petition by any Person other than a
Related Party or a Person otherwise acting at the direction of the
Borrower, any member of the Borrower Control Group or any Related Party,
under the Bankruptcy Code or any other state or federal bankruptcy or
insolvency law and the same shall not have been dismissed within 90 days
after filing, or (J) Borrower, LFSRI II, LFSRI II Alternative or LFSRI-
CADIM shall interfere with the lockbox arrangements contained in the
Deposit Agreement, or (K) the failure of any representation and warranty
made in Sections 3(g) and 4(a)(i) of the Pledge Agreements relating to
KPT to be true and correct in all material respects, or (L) the covenants
contained in Section 5(e) of the Pledge Agreements relating to KPT, or
Section 3(c) of the other Pledge Agreements shall have been violated.
(d) LFSRI II, LFSRI II Alternative and LFSRI-CADIM shall be
jointly and severally liable for all damages incurred by Lender as a
result of (i) the failure of any representation and warranty made in
Section 2(a)(i) of any of the Pledge Agreements other than the Pledge
Agreements relating to KPT to be true and correct in all material
respects or (ii) the Borrower or any member of the Borrower Control Group
which is a REIT ceasing to be taxed as a REIT for any reason other than
as a result of any event, action or circumstance occurring with respect
to an Operating Company.
Section 8.16. Exhibits Incorporated. The information set
forth on the cover, heading and recitals hereof, and the Exhibits and
Schedules attached hereto, are hereby incorporated herein as a part of
this Agreement with the same effect as if set forth in the body hereof.
Section 8.17. 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 the Loan, this
Agreement, the Note, and the other Loan Documents which Borrower or any
of its Affiliates may otherwise have against any assignor, and no such
unrelated counterclaim or defense shall be interposed or asserted by
Borrower or any of its Affiliates in any action or proceeding brought by
any such assignee upon this Agreement, the Note, and other Loan 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 8.18. No Joint Venture or Partnership. Borrower and
Lender intend that the relationship created hereunder be solely that of
borrower and lender. Nothing herein is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy relationship
between Borrower and Lender.
Section 8.19. Waiver of Marshalling of Assets Defense. To
the fullest extent that Borrower may legally do so, Borrower waives all
rights to a marshalling of the assets of Borrower, and others with
interests in Borrower, and of the Collateral, or to a sale in inverse
order of alienation in the event of foreclosure of the interests hereby
created, 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 Collateral for the collection
of the Indebtedness without any prior or different resort for collection,
or the right of Lender to the payment of the Indebtedness in preference
to every other claimant whatsoever.
Section 8.20. Waiver of Counterclaim. Borrower hereby waives
the right to assert a counterclaim, other than compulsory counterclaim,
in any action or proceeding brought against Borrower by Lender or
Lender's agents.
Section 8.21. Conflict; Construction of Documents. In the
event of any conflict between the provisions of this Agreement and the
provisions of the Note, or any of the other Loan Documents, the
provisions of this Agreement shall prevail. The parties hereto
acknowledge that they were represented by counsel in connection with the
negotiation and drafting of the Loan Documents and that the Loan
Documents shall not be subject to the principle of construing their
meaning against the party which drafted same.
Section 8.22. Brokers and Financial Advisors. Borrower and
Lender hereby represent that they have dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders ("Brokers") in
connection with the transactions contemplated by this Agreement.
Borrower hereby agrees to indemnify and hold Lender harmless from and
against any and all claims, liabilities, costs and expenses of any kind
in any way relating to or arising from a claim by any Person other than
Broker, that such Person acted on behalf of Borrower in connection with
the transactions contemplated herein. Borrower agrees to pay Broker any
commission or fee payable to Broker in connection with the transactions
contemplated by this Agreement pursuant to separate agreement. The
provisions of this Section shall survive the expiration and termination
of this Agreement and the repayment of the Indebtedness.
Section 8.23. Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument.
Section 8.24. Payment of Expenses. Borrower shall, whether
or not the Transactions are consummated, pay all Transaction Costs, which
shall include, without limitation, all commitment fees due and payable at
closing and all reasonable out-of-pocket fees, costs, expenses, and
disbursements of Lender and its attorneys, local counsel, accountants and
other contractors in connection with (i) the negotiation, preparation,
execution and delivery of the Loan Documents and the documents and
instruments referred to therein, (ii) the creation, perfection or
protection of Lender's Liens in the Collateral (including, without
limitation, fees and expenses for title and lien searches and filing and
recording fees, intangibles taxes, personal property taxes, mortgage
recording taxes, due diligence expenses, travel expenses, (iii) the
negotiation, preparation, execution and delivery of any amendment, waiver
or consent relating to any of the Loan Documents, and (iv) the
preservation of rights under and enforcement of the Loan Documents and
the documents and instruments referred to therein, including any
restructuring or rescheduling of the Indebtedness.
Section 8.25. Bankruptcy Waiver. Borrower hereby agrees
that, in consideration of the recitals and mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, if Borrower (i) files with
any bankruptcy court of competent jurisdiction or is the subject of any
petition under Title 11 of the U.S. Code, as amended, (ii) is the subject
of any order for relief issued under Title 11 of the U.S. Code, as
amended, (iii) files or is the subject of any petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future law relating to
bankruptcy, insolvency or other relief of debtors, (iv) has sought or
consents to or acquiesces in the appointment of any trustee, receiver,
conservator or liquidator or (v) is the subject of any order, judgment or
decree entered by any court of competent jurisdiction approving a
petition filed against such party for any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any present or future federal or state act or law relating to
bankruptcy, insolvency or other relief for debtors, the automatic stay
provided by the Federal Bankruptcy Code and any other such statute shall
be modified and annulled as to Lender, so as to permit Lender to exercise
any and all of its tights and remedies, upon request of Lender made on
notice to Borrower and any other party in interest but without the need
of further proof or hearing. Neither Borrower nor any Affiliate of
Borrower shall contest the enforceability of this Section.
Section 8.26. Entire Agreement. This Agreement, together
with the Exhibits hereto and the other Loan Documents constitutes the
entire agreement among the parties hereto with respect to the subject
matter contained in this Agreement, the Exhibits hereto and the other
Loan Documents and supersedes all prior agreements, understandings and
negotiations between the parties.
Section 8.27. Dissemination of Information. If Lender
determines at any time to sell, transfer or assign the Note, this Loan
Agreement and any other Loan Document and any or all servicing rights
with respect thereto, or to grant participations therein or issue
mortgage pass-through certificates or other securities evidencing a
beneficial interest in a rated or unrated public offering or private
placement, subject to receipt by Borrower of a confidentiality agreement
reasonably acceptable to it from any Investor (herein defined), Lender
may forward to each purchaser, transferee, assignee, servicer,
participant or investor in such securities (collectively, the "Investor")
or any Rating Agency rating such securities and each prospective
Investor, all documents and information which Lender now has or may
hereafter acquire relating to the Loan, Borrower, any member of the
Borrower Control Group (other than LFSRI II, LFSRI II Alternative and
LFSRI-CADIM), any guarantor, any indemnitor and the Collateral, which
shall have been furnished by or on behalf of Borrower, any member of the
Borrower Control Group (other than LFSRI 11, LFSRI II Alternative and
LFSRI-CADIM), any guarantor, any indemnitor, or any party to any Loan
Document, or otherwise furnished in connection with the Loan, as Lender
in its discretion determines necessary or desirable. Neither Borrower
nor any member of the Borrower Control Group (other than LFSRI II, LFSRI
II Alternative and LFSRI-CADIM) shall have any obligation to any such
third party to which Lender delivers such information unless such Entity
so agrees in writing directly with such third party.
Section 8.28. Limitation of Interest. It is the intention of
Borrower and Lender to conform strictly to applicable laws governing the
maximum rate of interest and other charges payable, including without
limitation usury laws. Accordingly, if the transactions contemplated
hereby would violate any such applicable law, then, in that event,
notwithstanding anything to the contrary in any Loan Document, it is
agreed as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law that is taken, reserved,
contracted for, charged or received under any Loan Document or otherwise
in connection with the Loan shall under no circumstances exceed the
maximum amount of interest allowed by applicable law, and any excess
shall be credited to principal by Lender (or if the Loan shall have been
paid in full, refunded to Borrower); and (ii) in the event that the
maturity of the Loan is accelerated by reason of an election by Lender
resulting from any default hereunder or otherwise, or in the event of any
required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount of
interest allowed by applicable law, and any interest in excess of the
maximum amount of interest allowed by applicable law, if any, provided
for in the Loan Documents or otherwise shall be canceled automatically as
of the date of such acceleration or prepayment and, if theretofore
prepaid, shall be credited to principal (or if the principal portion of
the Loan and any other amounts not constituting interest shall have been
paid in full, refunded to Borrower.)
In determining whether or not the interest paid or payable
under any specific contingency exceeds the maximum amount allowed by
applicable law, Lender shall, to the maximum extent permitted under
applicable law (a) exclude voluntary prepayments and the effects thereof,
and (b) amortize, prorate, allocate and spread, in equal parts, the total
amount of interest throughout the entire contemplated term of the Loan so
that the interest rate is uniform throughout the entire term of the Loan;
provided, that if the Loan is paid and performed in full prior to the end
of the full contemplated term hereof, and if the interest received for
the actual period of existence thereof exceeds the maximum amount allowed
by applicable law, Lender shall refund to Borrower the amount of such
excess, and in such event, Lender shall not be subject to any penalties
provided by any laws for contracting for, charging or receiving interest
in excess of the maximum amount allowed by applicable law.
Section 8.29. Indemnification.
(a) In addition to any other indemnifications provided for
herein or in the other Loan Documents, Borrower shall protect, defend,
indemnify and hold harmless Lender and each of its Affiliates and their
respective successors and assigns (including their respective trustees,
officers, directors, partners, employees, attorneys, accountants,
professionals and agents and each other person, if any, controlling
Lender or any of its affiliates within the meaning of either Section 15
of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended) (each, including Lender, an
"Indemnified Party") from and against all liabilities, obligations,
claims, and, damages, penalties, causes of action, losses, fines, costs,
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) imposed upon or incurred by or asserted against any
Indemnified Party (other than by reason of such Indemnified Party's
default under the Loan Documents or active gross negligence or willful
misconduct, as determined to have occurred pursuant to the final
nonappealable decision of a court of competent jurisdiction) by reason of
(i) ownership or holding of this Agreement, the other Loan Documents, the
Collateral or any of them or any interest therein, including any funds
deposited with Lender, (ii) receipt and application of any balances in
the Deposit Account, (iii) any failure on the part of Borrower or any of
its Affiliates, including the members of the Borrower Control Group, to
perform or comply with any of the terms of this Agreement or any other
Loan Document, (iv) any representation or warranty made in the Note, this
Agreement or any of the other Loan Documents being false or misleading in
any material respect as of the date such representation or warranty was
made, (x) except to the extent any such claims are made solely as a
result of any dealings between Lender and any broker, finder or similar
person claiming to be entitled to a commission in connection with the
Loan, and with whom Borrower has had no dealings in connection with the
Loan, (v) any claim by Borrower or any Affiliate of Borrower that the
relationship of Lender and Borrower is other than that of lender and
borrower, or (vi) the execution and delivery of this Agreement and the
other Loan Documents, the transactions contemplated hereby or thereby and
the performance of the parties hereto of their respective obligations
hereunder or thereunder. Any amounts payable to any Indemnified Party by
reason of the application of this Section 8.29 shall become immediately
due and payable and shall bear interest at the Default Rate from the date
loss or damage is sustained by any Indemnified Party until paid. The
indemnifications set forth in this Section 8.29 shall not be applicable
to the extent (1) occasioned, arising and caused solely as the result of
the negligence or willful misconduct of Lender, its nominee or wholly
owned subsidiary or their respective employees or agents and irrespective
of whether occurring prior to or subsequent to the date upon which
Lender, its nominee or wholly owned subsidiary acquires possession of any
interest in the Collateral by foreclosure, sale, acceptance of an
assignment in lieu of foreclosure or sale or otherwise, as determined to
have occurred pursuant to the final nonappealable decision of a court of
competent jurisdiction or (2) as to matters specific and relating solely
to the Collateral, occasioned, arising and caused solely as the result of
any act of any Person (other than an act of Borrower or any of its
Affiliates, or an act of any Governmental Authority, including, without
limitation, any change in any applicable law) and occurring subsequent to
the earlier to occur of (A) the date of payment and performance in full
of the Indebtedness and (B) the date upon which Lender, its nominee or
wholly owned subsidiary acquires ownership of the Collateral by
foreclosure, sale, acceptance of an assignment in lieu of foreclosure or
sale or otherwise of the Collateral. The obligations and liabilities of
Borrower under this Section 8.29 shall survive any termination,
satisfaction, or assignment of this Agreement and the exercise by Lender
of any of its rights or remedies hereunder, including, without
limitation, the acquisition of the Collateral by foreclosure or a
conveyance in lieu of foreclosure, or otherwise.
(b) In case any claim, action or proceeding (a "Claim") is
brought against any Indemnified Party in respect of which indemnification
may be sought by such Indemnified party pursuant to this Section 8.29,
such Indemnified Party shall give notice thereof to Borrower; provided,
however, that the failure of such Indemnified Party to so notify Borrower
shall not limit or affect such Indemnified Party's rights to be
indemnified pursuant to this Section 8.29 hereof, except to the extent
such delay shall materially and adversely prejudice Borrower's defense of
such Claim. Upon receipt of such notice of Claim, Borrower shall, at its
sole cost and expense, diligently defend any such Claim with counsel
reasonably satisfactory to such Indemnified Party. In the alternative,
the Indemnified Parties may elect to conduct their own defense through
counsel of their own choosing, and at the expense of Borrower, if (i) the
Indemnified Parties reasonably determine that the conduct of its defense
by Borrower presents a conflict or potential conflict between Borrower
and an Indemnified Party that would make separate representation
advisable or otherwise could be prejudicial to its interests, (ii)
Borrower refuses to defend or (iii) Borrower shall have failed, in
Lender's reasonable judgment, to diligently defend the Claim. Borrower.
may settle any Claim against Indemnified Parties without such Indemnified
Parties' consent, provided that (x) such settlement is without any
liability, cost or expense whatsoever to such Indemnified Parties, (y)
the settlement does not include or require any admission of liability or
culpability by such Indemnified Parties under any Legal Requirement,
whether criminal or civil in nature, and (z) Borrower obtains an
effective written release of liability for such Indemnified Parties from
the party to the Claim with whom such settlement is being made, which
release must be reasonably acceptable to such Indemnified Parties, and a
dismissal with prejudice with respect to all Claims made by the party
with whom such settlement is being made, with respect to any pending
legal action against such Indemnified Parties in connection with such
Claim. If the Indemnified Parties are conducting their own defense as
provided above, Borrower shall be responsible for any good faith
settlement of such Claim entered into by such Indemnified Parties;
provided that such Indemnified Parties have obtained Borrower's consent
to any such settlement, such consent not to be unreasonably withheld or
delayed. Nothing contained herein shall be construed as requiring any
Indemnified Parties to expend funds or incur costs to defend any Claim in
connection with the matters for which such Indemnified Parties are
entitled to indemnification pursuant to this Section 8.29 hereof.
Section 8.30. Borrower Acknowledgments. Borrower hereby
acknowledges to and agrees with Lender that (i) the scope of Lender's
business is wide and includes, but is not limited to, financing,
financing, investment in real estate and other transactions which may be
viewed as adverse to or competitive with the business of Borrower or its
Affiliates and (ii) Borrower has been represented by competent legal
counsel and Borrower has consulted with such counsel prior to executing
this Loan Agreement and of the other Loan Documents.
Section 8.31. Publicity. Lender shall have the right to
issue press releases, advertisements and other promotional materials
describing Lender's participation in the origination of the Loan, subject
to Borrower's approval which shall not be unreasonably withheld or
delayed.
Section 8.32. Cross Collateralization. Without limitation to
any other right or remedy provided to Lender in this Agreement or any of
the other Loan Documents, Borrower acknowledges and agrees that, to the
full extent permitted under applicable law, upon the occurrence of an
Event of Default (i) Lender shall have the right to pursue all of its
rights and remedies in one proceeding, or separately and independently in
separate proceedings which it, as Lender, in its sole and absolute
discretion, shall determine from time to time, (ii) Lender is not
required to either ▇▇▇▇▇▇▇▇ assets, sell Collateral in any inverse order
of alienation, or be subjected to any "one action" or "election of
remedies" law or rule, (iii) the exercise by Lender of any remedies
against any Collateral will not impede Lender from subsequently or
simultaneously exercising remedies against any other Collateral, (iv) all
Liens and other rights, remedies and privileges provided to Lender in
this Agreement and in the other Loan Documents or otherwise shall remain
in full force and effect until Lender has exhausted all of its remedies
against the Collateral and all Collateral has been foreclosed, sold
and/or otherwise realized upon and (v) all Collateral shall be security
for the performance of all of Borrower's obligations hereunder.
Section 8.33. Release. Upon full payment of the
Indebtedness, Lender shall execute such releases and reconveyances as are
customary to release and reconvey the Collateral which secures the Loan
and shall direct the custodial agent holding the certificates of shares
in KPT to return such shares to their owner.
Section 8.34. Assignment by Lender; Participations;
Securitization.
8.34.1 Assignments and Participations. Borrower acknowledges
that Lender may on or after the Closing Date sell and assign
participation interests in and to the Loan, or pledge, hypothecate or
encumber, or sell and assign all or any portion of the Loan, to or with
such domestic or foreign banks, insurance companies, pension funds,
trusts or other institutional lenders or other Persons, parties or
investors (including, without limitation, grantor trusts, owner trusts,
special purpose corporations, REMICs, FASITs, real estate investment
trusts or other similar or comparable investment vehicles) as may be
selected by Lender in its sole and absolute discretion and on terms and
conditions satisfactory to Lender in its sole and absolute discretion.
Borrower and the members of the Borrower Control Group shall cooperate in
all respects with Lender in connection with the sale of participation
interests in, or the pledge, hypothecation or encumbrance or sale of all
or any portion of, the Loan, and shall, in connection therewith, execute
and deliver such estoppels, certificates, instruments and documents as
may be reasonably requested by Lender, at no out-of-pocket cost to
Borrower. Subject to entry into a confidentiality agreement in customary
form for such transactions, Borrower grants to Lender the right to
distribute financial and other information concerning Borrower, the
Collateral, and all other pertinent information with respect to the Loan
to any Person who has purchased a participation interest in the Loan, or
who has purchased the Loan, or who has made a loan to Lender secured by
the Loan or who has expressed an interest in purchasing a participation
interest in the Loan, or expressed an interest in purchasing the Loan or
the making of a loan to Lender secured by the Loan. If requested by
Lender, Borrower shall execute and deliver, and shall cause the members
of the Borrower Control Group to execute and deliver, at no cost or
expense to Borrower, such documents and instruments as may be necessary
to split the Loan into two or more loans evidenced by separate sets of
notes and secured by separate sets of other related Loan Documents to the
full extent required by Lender to facilitate the sale of participation
interests in the Loan or the sale of the Loan or the making of a loan to
Lender secured by the Loan, it being agreed that (a) an such splitting of
the Loan will not adversely affect or diminish the rights of Borrower as
presently set forth herein and in the other Loan Documents and will not
increase the respective obligations and liabilities of Borrower or any
other Person associated or connected with the Loan or the Collateral, (b)
the Loan Documents securing the Loan as so split will have such priority
of lien as may be specified by Lender, and (c) the retained interest of
Lender in the Loan as so split shall be allocated to or among one or more
of such separate loans in a manner specified by Lender in its sole and
absolute discretion.
8.34.2 Effect of Assignment. From and after the effective
date of any assignment of all or any portion of the Loan to any Person
(an "Assignee") (a) such Assignee shall be a party hereto and to each of
the other Loan Documents to the extent of the applicable percentage or
percentages assigned to such Assignee and, except as otherwise specified
herein, shall succeed to the rights and obligations of Lender hereunder
in respect of such applicable percentage or percentages and (b) Lender
shall relinquish its rights and be released from its obligations
hereunder and under the Loan Documents to the extent of such applicable
percentage or percentages. The liabilities of Lender and each of the
other Assignees shall be separate and not joint and several. Neither
Lender nor any Assignee shall be responsible for the obligations of any
other Assignee.
8.34.3 Securitization. Lender, at its option, may elect to
effect a securitization of the Loan by means of the issuance of
certificates of interest therein or notes secured thereby (the
"Securities") rated by one or more Rating Agencies (the
"Securitization"). In such event and upon request by Lender to seek to
effect such a Securitization, Borrower shall promptly thereafter
cooperate (at no out-of-pocket cost to Borrower) in all reasonable
respects with Lender in the Securitization including, without limitation,
(a) amending this Agreement and the other Loan Documents, and executing
such additional documents, in order to bifurcate the Loan into two or
more constituent loans or to effect such other changes as may be
reasonably necessary or desirable in connection with a Securitization or
requested by a Rating Agency, (b) providing such information as may be
requested in connection with the preparation of a private placement
memorandum or registration statement required to privately place or
publicly distribute the Securities in a manner which does not conflict
with federal or state securities laws, (c) providing in connection with
such information, an indemnification certificate (i) certifying that
Borrower has carefully examined such private placement memorandum or
registration statement, as applicable, including, without limitation, the
sections entitled "Special Considerations", "Description of the Loan and
the Underlying Mortgaged Properties", "Operator", "The Borrower" and
"Certain Legal Aspects of the Loan" (or similarly titled sections), and
that such Sections (and any other Sections reasonably requested), insofar
as they relate solely to Borrower, its Affiliates, the Loan or (to
Borrower's knowledge) the Collateral, 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, (ii) indemnifying Lender, the underwriter
or placement agent and any of their Affiliates for any losses, claims,
damages or liabilities (the "Liabilities") to which such parties 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
relating to Borrower, its Affiliates, the Loan or the Collateral
contained in such Sections or arise out of or are based upon the omission
or alleged omission to state therein a material fact relating to
Borrower, its Affiliates, the Loan or (to Borrower's knowledge) the
Collateral required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading and (iii) agreeing to reimburse such parties
for any legal or other expenses reasonably incurred by such parties in
connection with investigating or defending the Liabilities, (d) causing
to be rendered (at Lender's expense) such customary and reasonable
opinion letters as may be requested by and satisfactory to any Rating
Agency including, without limitation, substantive nonconsolidation
opinion letters and an opinion letter from local counsel to the Borrower
stating that the assignment of the Loan and the Loan Documents to a
trustee in connection with the Securitization is enforceable, (e) making
such customary and reasonable representations, warranties and covenants
with respect to the Borrower, and the members of the Borrower Control
Group (other than LFSRI II, LFSRI II Alternative and LFSRI-CADIM), as may
be requested by any Rating Agency, (f) providing such information
regarding the Collateral and Borrower, members of the' Borrower Control
Group (other than LFSRI II, LFSRI II Alternative and LFSRI-CADIM), and
their respective Affiliates as may be reasonably requested by a Rating
Agency or potential investors in Securities or otherwise reasonably
required in connection with an election of REMIC or FASIT or other tax
status and ongoing administration and reporting by any trust formed in
connection with the Securitization, (g) amending Borrower's or
organizational documents or making such other reasonable changes to the
structure of Borrower or such partners or members or shareholders
required by any Rating Agency to conform to requirements customarily
imposed in similar transactions, and (h) obtaining a comfort letter (in
customary form and containing customary exceptions) from a nationally
recognized accounting firm in connection with financial information
relating to Borrower and the members of the Borrower Control Group (other
than LFSRI II, LFSRI II Alternative and LFSRI-CADIM) and which is, in
connection with the Securitization, presented in a private placement
memorandum or prospectus. In no event shall Borrower be required to pay
any Rating Agency or other fees or expenses or be required to pay any
costs or expenses whatsoever in connection with any such Securitization
other than the overhead and internal costs incurred by Borrower in
cooperating in the manner described in clauses (a) through (h) above.
8.34.4 Other Business. Lender, each Assignee and each
participant and their respective Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage
in any kind of business with, Borrower, members of the Borrower Control
Group or any of them, any Affiliate of Borrower, any of Borrower's
subsidiaries and any Person who may do business with or own interests in
or securities of Borrower or any such Affiliate or subsidiary, without
any duty to account therefor.
8.34.5 Privity of Contract. This Agreement is being entered
into by Lender individually and as agent for all present and future
Assignees, and privity of contract is hereby created among Lender and all
present and future Assignees, on the one hand, and Borrower, on the other
hand.
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.
LENDER:
CAPITAL TRUST, INC., a Maryland corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
BORROWER:
LFSRI II SPV REIT Corp., a Delaware corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
The undersigned are executing this Agreement solely for the purpose of
agreeing to be bound by the provisions of Section 8.15(d).
LF STRATEGIC REALTY INVESTORS II L.P., LFSRI II ALTERNATIVE PARTNERSHIP
L.P., and LFSRI II-CADIM ALTERNATIVE PARTNERSHIP L.P.,
all Delaware limited partnerships
By: LAZARD FRERES REAL ESTATE INVESTORS L.L.C., a New York
limited liability company, their general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Principal