EXHIBIT 10.101
LOAN AGREEMENT
DATED as of April _____, 2004
Between
THE ENTITIES SET FORTH ON SCHEDULE I OF THIS AGREEMENT
together, as Borrower
and
BEAR ▇▇▇▇▇▇▇ COMMERCIAL MORTGAGE, INC.,
as Lender
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1
Section l.l Definitions .............................................................................1
Section 1.2 Principles of Construction .............................................................20
ARTICLE II GENERAL TERMS 21
Section 2.1 Loan Commitment; Disbursement to Borrower ..............................................21
Section 2.2 Interest; Loan Payments; Late Payment Charge ...........................................21
Section 2.3 Prepayments ............................................................................22
Section 2.4 Intentionally Omitted ..................................................................24
Section 2.5 Release of Property ....................................................................24
Section 2.6 Manner of Making Payments ..............................................................25
Section 2.7 Property Substitutions 27
ARTICLE III CONDITIONS PRECEDENT 32
Section 3.1 Conditions Precedent to Closing ........................................................32
ARTICLE IV REPRESENTATIONS AND WARRANTIES 36
Section 4.1 Borrower Representations ...............................................................36
Section 4.2 Survival of Representations ............................................................43
ARTICLE V BORROWER COVENANTS 43
Section 5.1 Affirmative Covenants ..................................................................43
Section 5.2 Negative Covenants .....................................................................51
ARTICLE VI INSURANCE; CASUALTY; CONDEMNATION 56
Section 6.1 Insurance ..............................................................................56
Section 6.2 Casualty ...............................................................................60
Section 6.3 Condemnation ...........................................................................60
Section 6.4 Restoration ............................................................................61
ARTICLE VII RESERVE FUNDS 66
Section 7.1 Required Repair Funds ..................................................................66
Section 7.2 Tax and Insurance Escrow Fund ..........................................................67
Section 7.3 Replacements and Replacement Reserve ...................................................68
Section 7.4 Intentionally Omitted ..................................................................73
Section 7.5 Intentionally Omitted ..................................................................73
Section 7.6 Intentionally Omitted ..................................................................73
Section 7.7 Reserve Funds, Generally ...............................................................73
ARTICLE VIII DEFAULTS 74
Section 8.1 Event of Default .......................................................................74
Section 8.2 Remedies ...............................................................................76
Section 8.3 Remedies Cumulative; Waivers ...........................................................77
ARTICLE IX SPECIAL PROVISIONS 77
Section 9.1 Sale of Notes and Securitization .......................................................77
Section 9.2 Securitization .........................................................................78
Section 9.3 Rating Surveillance ....................................................................78
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Section 9.4 Exculpation ............................................................................78
Section 9.5 Termination of Manager .................................................................80
Section 9.6 Servicer ...............................................................................81
Section 9.7 Splitting the Loan .....................................................................81
ARTICLE X MISCELLANEOUS 81
Section l0.l Survival ..............................................................................81
Section l0.2 Lender's Discretion ...................................................................82
Section 10.3 Governing Law .........................................................................82
Section l0.4 Modification, Waiver in Writing .......................................................82
Section 10.5 Delay Not a Waiver ....................................................................82
Section 10.6 Notices ...............................................................................82
Section l0.7 Trial by Jury .........................................................................83
Section l0.8 Headings ..............................................................................84
Section 10.9 Severability ..........................................................................84
Section 10.10 Preferences ..........................................................................84
Section 10.11 Waiver of Notice .....................................................................84
Section 10.12 Remedies of Borrower .................................................................84
Section 10.13 Expenses; Indemnity ..................................................................85
Section 10.14 Schedules Incorporated ...............................................................86
Section 10.15 Offsets, Counterclaims and Defenses ..................................................86
Section 10.16 No Joint Venture or Partnership; No Third Party Beneficiaries ........................86
Section 10.17 Publicity ............................................................................87
Section 10.18 Waiver of Marshalling of Assets ......................................................87
Section 10.19 Waiver of Counterclaim ...............................................................87
Section 10.20 Conflict; Construction of Documents; Reliance ........................................87
Section 10.21 Brokers and Financial Advisors .......................................................88
Section 10.22 Prior Agreements .....................................................................88
Section 10.23 Transfer of Loan .....................................................................88
Section 10.24 Lender's Right to Unwind Cross-Collateralization/Cross-Default 83
SCHEDULES
Schedule I - List of Borrower
Schedule II - Partial Prepayment Conditions
Schedule III - Required Repairs
Schedule IV - Rent Rolls
Schedule V - Intentionally Omitted
Schedule VI - Intentionally Omitted
Schedule VII - Intentionally Omitted
Schedule VIII - Intentionally Omitted
Schedule IX - Intentionally Omitted
Schedule X - Other Contract Funds Agreements
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LOAN AGREEMENT
THIS
LOAN AGREEMENT, dated as of this _____ day of ____, 2004 (as
amended, restated, replaced, supplemented or otherwise modified from time to
time, this "AGREEMENT"), between BEAR ▇▇▇▇▇▇▇ COMMERCIAL MORTGAGE, INC., a
New
York corporation, having an address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ("LENDER"), and the entities set forth on Schedule I of this Agreement,
each a Delaware limited liability company, and having an address at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together, "BORROWER").
WITNESSETH:
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined)
from Lender; and
WHEREAS, Lender is willing to make the Loan to Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents
(as hereinafter defined).
NOW, THEREFORE, in consideration of the making of the Loan by Lender
and the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section l.l DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly indicates a contrary
intent:
"AFFILIATE" shall mean, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person or of an
Affiliate of such Person.
"AGGREGATE DEBT SERVICE COVERAGE RATIO" shall mean the Debt Service
Coverage Ratio for all of the Properties taken together for the applicable
period.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ANCHOR TENANT" shall mean, with respect to the Inland Western
▇▇▇▇▇▇▇▇ Property, Eckerds Corporation pursuant to the Anchor Tenant ▇▇▇▇▇▇▇▇
Lease; with respect to the Inland Western ▇▇▇▇▇▇ Property, Eckerds Corporation,
pursuant to the Anchor Tenant Norman Lease.
"ANCHOR TENANT ▇▇▇▇▇▇▇▇ LEASE" shall mean that certain Lease, dated
April 21, 2003 by and between Commercial Net Lease Realty Services, Inc., as
original landlord and predecessor-in-interest to Borrower, as landlord, and
Eckerds Corporation (or its predecessor-in-interest) as tenant for premises
located at the Inland Western ▇▇▇▇▇▇▇▇ Property as the same has
previously been amended and may be further amended, restated, renewed,
substituted or replaced (but only to the extent permitted under this Agreement).
"ANCHOR TENANT NORMAN LEASE" shall mean that certain Lease, dated
April 16, 2003, by and between Commercial Net Lease Realty Services, Inc. as
original landlord and predecessor-in-interest to Borrower, as landlord, and
Eckerds Corporation (or its predecessor-in-interest) as tenant for premises
located at the Inland Western ▇▇▇▇▇▇ Property as the same has previously been
amended and may be further amended, restated, renewed, substituted or replaced
(but only to the extent permitted under this Agreement).
"ANCHOR TENANT LEASE" shall mean either the Anchor Tenant ▇▇▇▇▇▇▇▇
Lease or the Anchor Tenant Norman Lease.
"ANNUAL BUDGET" shall mean the operating budget, including all planned
capital expenditures, for the Property prepared by Borrower for the applicable
Fiscal Year or other period.
"ASSIGNMENT OF LEASES" shall mean, with respect to each Property, that
certain first priority Assignment of Leases and Rents, dated as of the Closing
Date, from the applicable Borrower, as assignor, to Lender, as assignee,
assigning to Lender all of such Borrower's interest in and to the Leases and
Rents of each Property as security for the Loan, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean, with respect to each
Property, that certain Assignment of Management Agreement and Subordination of
Management Fees dated as of the Closing Date among Lender, the applicable
Borrower and applicable Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"AWARD" shall mean any compensation paid by any Governmental Authority
in connection with a Condemnation in respect of all or any part of a Property.
"BASIC CARRYING COSTS" shall mean, with respect to a Property, the sum
of the following costs associated with such Property for the relevant Fiscal
Year or payment period: (i) Taxes and (ii) Insurance Premiums.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in
New York,
New York are not open for
business.
"CAPITAL EXPENDITURES" shall mean, for any period, the amount expended
for items capitalized under accounting principles reasonably acceptable to
Lender, consistently applied (including expenditures for building improvements
or major repairs, leasing commissions and tenant improvements).
"CASH EXPENSES" shall mean, for any period, the operating expenses for
the operation of each Property as set forth in an Approved Annual Budget to the
extent that such expenses are actually incurred by Borrower minus any payments
into the Tax and Insurance Escrow Fund.
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"CASUALTY" shall have the meaning specified in Section 6.2 hereof.
"CASUALTY/CONDEMNATION PREPAYMENT" shall have the meaning specified in
Section 6.4(e) hereof.
"CASUALTY CONSULTANT" shall have the meaning set forth in
Section 6.4(b) (iii) hereof.
"CASUALTY RETAINAGE" shall have the meaning set forth in
Section 6.4(b) (iv) hereof.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, as it
may be further amended from time to time, and any successor statutes thereto,
and applicable U.S. Department of Treasury regulations issued pursuant thereto
in temporary or final form.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of a
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting such Property or any part
thereof.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and all of the Notes together with all interest
accrued and unpaid thereon and all other sums (including the Prepayment
Consideration) due to Lender in respect of the Loan under the Notes, this
Agreement, the Mortgages or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of
time, scheduled interest payments under the Notes.
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the applicable
period in which:
(a) the numerator is the Net Operating Income (excluding interest on
credit accounts) for such period as set forth in the statements required
hereunder, without deduction for (i) actual management fees incurred in
connection with the operation of each Property, (ii) amounts paid to the Reserve
Funds, less (A) management fees equal to the greater of (1) assumed management
fees of four and one-half percent (4.5%) of Gross Income from Operations or (2)
the actual management fees incurred, (B) assumed Replacement Reserve Fund
contributions equal to $0.15 per square foot of gross leaseable area with
respect to the Inland Western ▇▇▇▇▇▇▇▇ Property, $0.15 per square foot of gross
leaseable area with respect to the Inland Western ▇▇▇▇▇▇ Property, and $0.15 per
square foot of gross leaseable area with respect to the Inland Western Euless
Property; and (C) assumed reserves for tenant improvements and leasing
commissions equal to $1.16 per square foot of gross leaseable area with respect
to the Inland Western ▇▇▇▇▇▇▇▇ Property, $1.16 per square foot of gross
leaseable area with respect to
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the Inland Western ▇▇▇▇▇▇ Property, and $0.59 per square foot of gross leaseable
area with respect to the Inland Western Euless Property; and
(b) the denominator is the aggregate amount of interest due and
payable on the Note related to such Property for such applicable period.
"DEFAULT" shall mean the occurrence of any event hereunder or under
any other Loan Document which, but for the giving of notice or passage of time,
or both, would be an Event of Default.
"DEFAULT RATE" shall mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
five percent (5%) above the Interest Rate.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section 9.2
hereof.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from
all other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. Section
9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation the short term
unsecured debt obligations or commercial paper of which are rated at least A-l
by Standard & Poor's Ratings Services, P-l by ▇▇▇▇▇'▇ Investors Service, Inc.,
and F-1+ by Fitch, Inc. in the case of accounts in which funds are held for 30
days or less (or, in the case of accounts in which funds are held for more than
30 days, the long term unsecured debt obligations of which are rated at least
"AA" by Fitch and S&P and "Aa" by Moody's).
"ENVIRONMENTAL INDEMNITY" shall mean, with respect to each Property,
that certain Environmental Indemnity Agreement executed by the applicable
Borrower in connection with the Loan for the benefit of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ENVIRONMENTAL REPORT" shall have the meaning as defined in the
Environmental Indemnity executed by the Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 8.1 (a)
hereof.
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"EXCHANGE ACT" shall have the meaning set forth in Section 9.2 hereof.
"FISCAL YEAR" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during each year of the term of the Loan.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency,
commission, office or other authority of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"GROSS INCOME FROM OPERATIONS" shall mean, with respect to each
Property, all sustainable income as reported on the financial statements
delivered by the applicable Borrower in accordance with this Agreement, computed
in accordance with accounting principles reasonably acceptable to Lender,
consistently applied, derived from the ownership and operation of such Property
from whatever source, INCLUDING, but not limited to, (i) Rents from Tenants that
arc in occupancy, open for business and paying unabated Rent, (ii) utility
charges, (iii) escalations, (iv) intentionally omitted; (v) service fees or
charges, (vi) license fees, (vii) parking fees, and (viii) other required
pass-throughs but EXCLUDING (i) Rents from Tenants that are subject to any
bankruptcy proceeding (unless such Tenant has affirmed its Lease or Inland
Western Retail Real Estate Trust, Inc. has master leased such Tenant's premises
for full contract rent for a period not less than three years, and the net worth
of Inland Western Retail Real Estate Trust, Inc. (as determined by Lender) is
not less than such entity's net worth as of September 1, 2003), or are not in
occupancy, open for business or paying unabated Rent, (ii) sales, use and
occupancy or other taxes on receipts required to be accounted for by such
Borrower to any Governmental Authority, (iii) refunds and uncollectible
accounts, (iv) sales of furniture, fixtures and equipment, (v) Insurance
Proceeds (other than business interruption or other loss of income insurance),
(vi) Awards, (vii) unforfeited security deposits, (viii) utility and other
similar deposits and (ix) any disbursements to Borrower from the Reserve Funds.
Gross income shall not be diminished as a result of the applicable Mortgage or
the creation of any intervening estate or interest in the applicable Property or
any part thereof.
"GUARANTY" shall mean, with respect to each Borrower, that certain
Guaranty Agreement Regarding Cross-Collateralization executed by such Borrower
with respect to the obligations of the other Borrower.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause
of each Mortgage with respect to the applicable Property.
"INDEBTEDNESS" of a Person, at a particular date, means the sum
(without duplication) at such date of (a) indebtedness or liability for borrowed
money; (b) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under letters of credit;
(e) obligations under acceptance facilities; (f) all guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds, to invest in any Person or entity, or otherwise to assure a
creditor against loss; and (g) obligations secured by any Liens, whether or not
the obligations have been assumed.
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"INDEMNITOR" shall mean Inland Western Retail Real Estate Trust, Inc.,
a Maryland corporation.
"INDEMNITY AGREEMENT" shall mean that certain Indemnity Agreement
dated as of the Closing Date by and between each Borrower and Indemnitor in
favor of Lender.
"INLAND WESTERN EULESS GP. L.L.C." shall mean Inland Western Euless
GP, L.L.C., a Delaware limited liability company.
"INLAND RETAIL REAL ESTATE LIMITED PARTNERSHIP" shall mean Inland
Retail Real Estate Limited Partnership, an Illinois limited partnership.
"
INLAND WESTERN RETAIL REAL ESTATE TRUST INC." shall mean Inland
Western Retail Real Estate Trust, Inc., a Maryland corporation.
"INLAND WESTERN ▇▇▇▇▇▇▇▇ NOTE" shall mean that certain Promissory Note
of even date herewith given by Inland Western ▇▇▇▇▇▇▇▇, L.L.C. to Lender in the
original principal amount of One Million Eight Hundred Fifty Thousand and No/100
Dollars ($1,850,000.00).
"INLAND WESTERN ▇▇▇▇▇▇▇▇ PROPERTY" shall mean that certain Property
owned by Inland Western ▇▇▇▇▇▇▇▇, L.L.C. located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, and known as the Eckerds store.
"INLAND WESTERN EULESS NOTE" shall mean that certain Promissory Note
of even date herewith given by Inland Western Euless Limited Partnership to
Lender in the original principal amount of Eight Million Nine Hundred Fifty
Thousand and No/100 Dollars ($8,950,000.00).
"INLAND WESTERN EULESS PROPERTY" shall mean that certain Property
owned by Inland Western Euless Limited Partnership located at the Southeast
Corner of Glade and Heritage Roads, Euless, Texas, and known as the Heritage
Towne Crossing Shopping Centre.
"INLAND WESTERN ▇▇▇▇▇▇ NOTE" shall mean that certain Promissory Note
of even date herewith given by Inland Western ▇▇▇▇▇▇, L.L.C. to Lender in the
original principal amount of Two Million Nine Hundred Thousand and No/100
Dollars ($2,900,000.00).
"INLAND WESTERN NORMAN PROPERTY" shall mean that certain Property
owned by Inland Western ▇▇▇▇▇▇, L.L.C. located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and known as the Eckerds store.
"INSURANCE PREMIUMS" shall have the meaning set forth in
Section 6.1(b) hereof.
"INSURANCE PROCEEDS" shall have the meaning set forth in
Section 6.4(b) hereof.
"INTEREST RATE" shall mean, with respect to the:
Inland Western ▇▇▇▇▇▇▇▇ Note, Four and Three Hundred Seventy-Four
Thousandths percent (4.374%) per annum;
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Inland Western Euless Note, Four and Three Hundred Seventy-Four
Thousandths percent (4.374%) per annum; and
Inland Western ▇▇▇▇▇▇ Note, Four and Three Hundred Seventy-Four
Thousandths percent (4.374%) per annum.
"LEASE" shall mean any lease, sublease or subsublease, letting,
license, concession or other agreement (whether written or oral and whether now
or hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in each
Property of a Borrower, and every modification, amendment or other agreement
relating to such lease, sublease, subsublease, or other agreement entered into
in connection with such lease, sublease, subsublease, or other agreement and
every guarantee of the performance and observance of the covenants, conditions
and agreements to be performed and observed by the other party thereto.
"LEGAL REQUIREMENTS" shall mean, with respect to each Property, all
federal, state, county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting such Property or any part thereof, or the
construction, use, alteration or operation thereof, or any part thereof, whether
now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to the applicable Borrower, at any time in force affecting such Property
or any part thereof, including, without limitation, any which may (a) require
repairs, modifications or alterations in or to such Property or any part
thereof, or (b) in any way limit the use and enjoyment thereof.
"LENDER" shall mean Bear ▇▇▇▇▇▇▇ Commercial Mortgage, Inc., together
with its successors and assigns.
"LICENSES" shall have the meaning set forth in Section 4.1.22 hereof.
"LIEN" shall mean, with respect to a Property, any mortgage, deed of
trust, deed to secure debt, lien, pledge, hypothecation, assignment, security
interest, or any other encumbrance, charge or transfer of, on or affecting the
applicable Borrower, such Property, any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the entire loan made by Lender to the Borrowers,
collectively, pursuant to this Agreement, and evidenced by the Notes.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Notes,
the Mortgages, the Assignments of Leases and Rents, the Environmental
Indemnities, the Assignments of Management Agreement, the Indemnity Agreements,
the Guaranties and all other documents executed and/or delivered in connection
with the Loan.
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"MANAGEMENT AGREEMENT" shall mean, with respect to each Property, the
management agreement entered into by and between the applicable Borrower and the
Manager, pursuant to which the Manager is to provide management and other
services with respect to the Property.
"MANAGER" shall mean Inland Southwest Management Corp., a Delaware
corporation.
"MATURITY DATE" shall mean May 1, 2009, or such other date on which
the final payment of principal of the Note becomes due and payable as therein or
herein provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate,
if any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Notes and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean, with respect
to the:
Inland Western ▇▇▇▇▇▇▇▇ Note, an amount equal to $6,743.25;
Inland Western Euless Note, an amount equal to $32,622.75; and
Inland Western ▇▇▇▇▇▇ Note, an amount equal to $10,570.50;
provided, however, following a prepayment of less than all of the of
the Note, the amount shall be recalculated pursuant to Section 2.3.1 hereof.
"MORTGAGE" shall mean, with respect to each Property, that certain
first priority mortgage, deed of trust, deed to secure debt or similar
instrument, as applicable, dated the Closing Date, executed and delivered by the
applicable Borrower as security for the Loan and such Borrower's Guaranty
thereof and encumbering the applicable Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
"NET CASH FLOW" shall mean, with respect to any Property, for any
period the amount obtained by subtracting Operating Expenses and Capital
Expenditures for such period from Gross Income from Operations for such period.
"NET CASH FLOW AFTER DEBT SERVICE" shall mean, with respect to any
Property, for any period the amount obtained by subtracting Debt Service for
such period from Net Cash Flow for such period.
"NET CASH FLOW SCHEDULE" shall have the meaning set forth in Section
5.1.11(b) hereof.
"NET OPERATING INCOME" shall mean with respect to any Property, the
amount obtained by subtracting from Gross Income from Operations (i) Operating
Expenses, and (ii) a
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vacancy allowance equal to the greater of (x) market vacancy (as reasonably
determined by Lender), less actual vacancy, and (y) underwritten vacancy of five
percent (5%), less actual vacancy. Notwithstanding the foregoing, if actual
vacancy exceeds market vacancy and underwritten vacancy, then there shall be no
adjustment for a vacancy allowance.
"NET PROCEEDS" shall have the meaning set forth in Section 6.4(b)
hereof.
"NET PROCEEDS PREPAYMENT" shall have the meaning set forth in Section
6.4(e) hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
6.4(b)(vi) hereof.
"NOTE" shall mean, individually or collectively as the context
requires, the Inland Western ▇▇▇▇▇▇▇▇ Note, the Inland Western Euless Note, and
the Inland Western ▇▇▇▇▇▇ Note.
"OFFICERS' CERTIFICATE" shall mean a certificate delivered to Lender
by a Borrower which is signed by the Sole Member/General Partner.
"OPERATING EXPENSES" shall mean, with respect to a Property, the total
of all expenditures, computed in accordance with accounting principles
reasonably acceptable to Lender, consistently applied, of whatever kind relating
to the operation, maintenance and management of such Property that are incurred
by Borrower on a regular monthly or other periodic basis, including without
limitation, utilities, ordinary repairs and maintenance, insurance, license
fees, property taxes and assessments, advertising expenses, management fees,
payroll and related taxes, computer processing charges, operational equipment or
other lease payments as approved by Lender, and other similar costs, but
excluding depreciation, Debt Service, Capital Expenditures and contributions to
the Reserve Funds.
"OTHER CHARGES" shall mean, with respect to a Property, all ground
rents, maintenance charges, impositions other than Taxes, and any other charges,
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Property, now or hereafter levied
or assessed or imposed against such Property or any part thereof.
"OTHER CONTRACT FUNDS" shall mean any payment due to a Borrower under
any of the agreements described on SCHEDULE X.
"PARTIAL PREPAYMENT CONDITIONS" shall have the meaning set forth in
Schedule II hereof.
"PAYMENT DATE" shall mean the first (1st) day of each calendar month
during the term of the Loan or, if such day is not a Business Day, the
immediately succeeding Business Day.
"PERMITTED ENCUMBRANCES" shall mean, with respect to the Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens,
9
encumbrances and other matters disclosed in the Title Insurance Policy relating
to the Property or any part thereof, (c) Liens, if any, for Taxes imposed by any
Governmental Authority not yet due or delinquent, and (d) such other title and
survey exceptions as Lender has approved or may approve in writing in Lender's
reasonable discretion, which Permitted Encumbrances in the aggregate do not
materially adversely affect the value or use of the Property or the applicable
Borrower's ability to repay the Loan.
"PERMITTED INVESTMENTS" shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Securitization or any
of their respective Affiliates, payable on demand or having a maturity date not
later than the Business Day immediately prior to the first Payment Date
following the date of acquiring such investment and meeting one of the
appropriate standards set forth below:
(i) obligations of, or obligations fully guaranteed as to
payment of principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full
faith and credit of the United States of America including, without
limitation, obligations of: the U.S. Treasury (all direct or fully
guaranteed obligations), the Farmers Home Administration (certificates of
beneficial ownership), the General Services Administration (participation
certificates), the U.S. Maritime Administration (guaranteed Title XI
financing), the Small Business Administration (guaranteed participation
certificates and guaranteed pool certificates), the U.S. Department of
Housing and Urban Development (local authority bonds) and the Washington
Metropolitan Area Transit Authority (guaranteed transit bonds); PROVIDED,
HOWEVER, that the investments described in this clause must (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;
(ii) Federal Housing Administration debentures;
(iii) obligations of the following United States government
sponsored agencies: Federal Home Loan Mortgage Corp. (debt obligations),
the Farm Credit System (consolidated systemwide bonds and notes), the
Federal Home Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the Student Loan
Marketing Association (debt obligations), the Financing Corp. (debt
obligations), and the Resolution Funding Corp. (debt obligations);
PROVIDED, HOWEVER, that the investments described in this clause must (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;
10
(iv) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with maturities of
not more than 365 days of any bank, the short term obligations of which at
all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least
one Rating Agency in the highest short term rating category and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current
ratings assigned to the Securities); PROVIDED, HOWEVER, that the
investments described in this clause must (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;
(v) fully Federal Deposit Insurance Corporation-insured demand
and time deposits in, or certificates of deposit of, or bankers'
acceptances issued by, any bank or trust company, savings and loan
association or savings bank, the short term obligations of which at all
times are rated in the highest short term rating category by each Rating
Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current
ratings assigned to the Securities); PROVIDED, HOWEVER, that the
investments described in this clause must (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;
(vi) debt obligations with maturities of not more than 365 days
and at all times rated by each Rating Agency (or, if not rated by all
Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current
ratings assigned to the Securities) in its highest long-term unsecured
rating category; PROVIDED, HOWEVER, that the investments described in this
clause must (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;
(vii) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or
on a specified date not
11
more than one year after the date of issuance thereof) with maturities of
not more than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating
Agency and otherwise acceptable to each other Rating Agency, as confirmed
in writing that such investment would not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest short-term
unsecured debt rating; PROVIDED, HOWEVER, that the investments described in
this clause must (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;
(viii) units of taxable money market funds, which funds are
regulated investment companies, seek to maintain a constant net asset value
per share and invest solely in obligations backed by the full faith and
credit of the United States, which funds have the highest rating available
from each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating
Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial,
or, if higher, then current ratings assigned to the Securities) for money
market funds; and
(ix) any other security, obligation or investment which has been
approved as a Permitted Investment in writing by (a) Lender and (b) each
Rating Agency, as evidenced by a written confirmation that the designation
of such security, obligation or investment as a Permitted Investment will
not, in and of itself, result in a downgrade, qualification or withdrawal
of the initial, or, if higher, then current ratings assigned to the
Securities by such Rating Agency;
PROVIDED, HOWEVER, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
"PERMITTED PREPAYMENT DATE" shall mean the date that is three (3)
years from the first day of the calendar month immediately following the Closing
Date.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgage with respect to the applicable Property.
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"PHYSICAL CONDITIONS REPORT" shall mean, with respect to each
Property, a report prepared by a company satisfactory to Lender regarding the
physical condition of such Property, satisfactory in form and substance to
Lender in its sole discretion, which report shall, among other things, (a)
confirm that the Property and its use complies, in all material respects, with
all applicable Legal Requirements (including, without limitation, zoning,
subdivision and building laws) and (b) include a copy of a final certificate of
occupancy with respect to all Improvements on the Property.
"POLICIES" shall have the meaning specified in Section 6.1(b) hereof.
"PREPAYMENT CONSIDERATION" shall have the meaning set forth in
Section 2.3.1.
"PREPAYMENT RATE" shall mean the bond equivalent yield (in the
secondary market) on the United States Treasury Security that as of the
Prepayment Rate Determination Date has a remaining term to maturity closest to,
but not exceeding, the remaining term to the Maturity Date, as most recently
published in the "Treasury Bonds, Notes and Bills" section in The Wall Street
Journal as of the date of the related tender of the payment. If more than one
issue of United States Treasury Securities has the remaining term to the
Maturity Date referred to above, the "Prepayment Rate" shall be the yield on the
United States Treasury Security most recently issued as of such date. If the
publication of the Prepayment Rate in The Wall Street Journal is discontinued,
Lender shall determine the Prepayment Rate on the basis of "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication, published by
the Board of Governors of the Federal Reserve System, or on the basis of such
other publication or statistical guide as Lender may reasonably select.
"PREPAYMENT RATE DETERMINATION DATE" shall mean the date which is five
(5) Business Days prior to the prepayment date.
"PROPERTY" shall mean, individually or collectively as the context
requires, the Inland Western ▇▇▇▇▇▇▇▇ Property, the Inland Western Euless
Property, and the Inland Western ▇▇▇▇▇▇ Property.
"PROVIDED INFORMATION" shall have the meaning set forth in Section
9.1(a) hereof.
"QUALIFYING ENTITY" shall have the meaning set forth in Section
5.2.l3(b) hereof.
"QUALIFYING MANAGER" shall mean either (a) a reputable and experienced
management organization reasonably satisfactory to Lender, which organization or
its principals possess at least ten (10) years experience in managing properties
similar in size, scope and value of the Properties and which, on the date Lender
determines whether such management organization is a Qualifying Manager, manages
at least one million square feet of retail space, provided that a Borrower shall
have obtained prior written confirmation from the Rating Agency that management
of the applicable Property by such entity will not cause a downgrading,
withdrawal or qualification of the then current rating of the securities issued
pursuant to the Securitization, or (b) the fee owner of the Property, provided
that such owner possesses experience in managing and operating properties
similar in size, scope and value of the Property.
13
Lender acknowledges that on the Closing Date Manager shall be deemed to be a
Qualifying Manager.
"RATINE AGENCIES" shall mean each of Standard & Poor's Ratings
Services, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc. and
Fitch, Inc., or any other nationally-recognized statistical rating agency which
has been approved by Lender.
"RATING SURVEILLANCE CHARGE" shall have the meaning set forth in
Section 9.3 hereof.
"RELATED DOCUMENTS" shall mean the Related Mortgage, as well as the
Assignment of Leases, Guaranty, and other Loan Documents executed by the
Borrower that is the obligor under the Release Note (hereinafter defined).
"RELATED MORTGAGE" shall mean the Mortgage executed by the Borrower
that is the obligor under the Release Note (hereinafter defined).
"RELEASE PRINCIPAL PREPAYMENT" shall have the meaning set forth in
Section 2.3.l(b) hereof.
"RELATED PROPERTY" shall mean the Property encumbered by the Related
Mortgage.
"RELEASE NOTE" shall have the meaning set forth in Section 2.3.l(b)
hereof.
"RELEVANT LEASING THRESHOLD" shall mean, any Lease for an amount of
leaseable square footage equal to or greater than 5,000 square feet.
"RELEVANT RESTORATION THRESHOLD" shall mean Three Hundred Fifty
Thousand and No/100 dollars ($350,000.00).
"REMAINING MORTGAGES" shall mean the Mortgages executed by a Borrower
under the Remaining Notes.
"REMAINING NOTES" shall mean the Notes which are NOT the Release Note,
and which have not previously been a Release Note.
"REMAINING PROPERTY" shall mean, collectively, the Properties
encumbered by the Remaining Mortgages.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code that holds the Note.
"RENTS" shall mean, with respect to the Property, all rents, rent
equivalents, moneys payable as damages or in lieu of rent or rent equivalents,
royalties (including, without limitation, all oil and gas or other mineral
royalties and bonuses), income, receivables, receipts, revenues, deposits
(including, without limitation, security, utility and other deposits), accounts,
cash, issues, profits, charges for services rendered, and other consideration of
whatever form or
14
nature received by or paid to or for the account of or benefit of the applicable
Borrower or its agents or employees from any and all sources arising from or
attributable to such Property, and proceeds, if any, from business interruption
or other loss of income insurance, including the Other Contract Funds.
"REPLACEMENT PROPERTY" shall have the meaning set forth in Section
2.7.1 hereof.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in
Section 7.3.1 hereof.
"REPLACEMENT RESERVE FUND" shall have the meaning set forth in Section
7.3.1 hereof.
"REPLACEMENT RESERVE MONTHLY DEPOSIT" shall have the meaning set forth
in Section 7.3.1 hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 7.3.l(a)
hereof.
"REQUIRED REPAIR ACCOUNT" shall have the meaning set forth in Section
7.1.1 hereof.
"REQUIRED REPAIR FUND" shall have the meaning set forth in Section
7.1.1 hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section 7.1.1
hereof.
"RESERVE FUNDS" shall mean the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Required Repair Fund (if any), or any other escrow
fund established by the Loan Documents.
"RESTORATION" shall have the meaning set forth in Section 6.2 hereof.
"SECURITIES" shall have the meaning set forth in Section 9.1 hereof.
"SECURITIES ACT" shall have the meaning set forth in Section 9.2
hereof.
"SECURITIZATION" shall have the meaning set forth in Section 9.1
hereof.
"SERVICER" shall have the meaning set forth in Section 9.6 hereof.
"SERVICING AGREEMENT" shall have the meaning set forth in Section 9.6
hereof.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in Section
8.2(c) hereof.
"SEVERING DOCUMENTATION" shall have the meaning set forth in Section
9.7 hereof.
15
"SOLE MEMBER/GENERAL PARTNER" shall mean Indemnitor with respect to
the Inland Western ▇▇▇▇▇▇▇▇, L.L.C. and Inland Western ▇▇▇▇▇▇, L.L.C.; and
Inland Western Euless GP, L.L.C. with respect to Inland Western Euless Limited
Partnership.
"SPECIAL PURPOSE ENTITY" means a corporation, limited partnership,
limited liability company, or Delaware statutory trust which at all times on and
after the Closing Date:
(i) is organized solely for the purpose of (A) acquiring,
developing, owning, holding, selling, leasing, transferring, exchanging,
managing and operating a Property, entering into this Agreement with the
Lender, refinancing such Property in connection with a permitted repayment
of the Loan, and transacting lawful business that is incident, necessary
and appropriate to accomplish the foregoing; or (B) acting as a general
partner of the limited partnership that owns such Property, a member of the
limited liability company that owns such Property or the beneficiary or
trustee of a Delaware statutory trust that owns such Property;
(ii) is not engaged and will not engage in any business unrelated
to (A) the acquisition, development, ownership, management or operation of
a Property, (B) acting as general partner of the limited partnership that
owns such Property, (C) acting as a member of the limited liability company
that owns such Property, or (D) acting as the beneficiary or trustee of a
Delaware statutory trust that owns such Property, as applicable;
(iii) does not have and will not have any assets other than those
related to a Property or its partnership interest in the limited
partnership, the member interest in the limited liability company or the
beneficial interest in the Delaware statutory trust that owns such Property
or acts as the general partner, managing member or beneficiary or trustee
thereof, as applicable;
(iv) has not engaged, sought or consented to and will not engage
in, seek or consent to any dissolution, winding up, liquidation,
consolidation, merger, sale of all or substantially all of its assets,
transfer of partnership, membership or beneficial or trustee interests (if
such entity is a general partner in a limited partnership, a member in a
limited liability company or a beneficiary of a Delaware trust) or
amendment of its limited partnership agreement, articles of incorporation,
articles of organization, certificate of formation, operating agreement or
trust formation and governance documents (as applicable) with respect to
the matters set forth in this definition;
(v) if such entity is a limited partnership, has as its only
general partners, Special Purpose Entities that are corporations, limited
partnerships or limited liability companies;
(vi) intentionally omitted;
(vii) if such entity is a limited liability company and such
limited liability company has more than one member, such limited liability
company has as its manager a Special Purpose Entity that is a corporation
and that owns at least 1.0% (one percent) of the equity of the limited
liability company;
16
(viii) if such entity is a limited liability company and such
limited liability company has only one member, such limited liability
company (a) has been formed under Delaware law, and (b) has either a
corporation or other person or entity that shall become a member of the
limited liability company upon the dissolution or disassociation of the
member;
(ix) if such entity is (a) a limited liability company, has
articles of organization, a certificate of formation and/or an operating
agreement, as applicable, (b) a limited partnership, has a limited
partnership agreement, (c) a corporation, has a certificate or articles of
incorporation and/or bylaws, as applicable, or (d) a Delaware statutory
trust, has organizational documents that, in each case, provide that such
entity will not: (1) dissolve, merge, liquidate, consolidate; (2) except as
permitted herein, sell all or substantially all of its assets or the assets
of the Borrower (as applicable) except as permitted herein; (3) engage in
any other business activity, or amend its organizational documents with
respect to the matters set forth in this definition without the consent of
the Lender; or (4) without the affirmative vote of all directors of the
corporation (that is such entity or the general partner or managing or
co-managing member or manager of such entity), 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;
(x) 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,
beneficiaries, shareholders or Affiliates except (A) in the ordinary course
of its business and on terms which are intrinsically fair, commercially
reasonable and are no less favorable to it than would be obtained in a
comparable arm's-length transaction with an unrelated third party and (B)
in connection with this Agreement;
(xi) is solvent and pays its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) from its assets as the
same become due, and is maintaining adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations;
(xii) has not failed and will not fail to correct any known
misunderstanding regarding the separate identity of such entity;
(xiii) will file its own tax returns; PROVIDED, however, that
Borrower's assets and income may be included in a consolidated tax return
of its parent companies if inclusion on such consolidated tax return is in
compliance with applicable law;
(xiv) has maintained and will maintain its own resolutions and
agreements;
(xv) (a) has not commingled and will not commingle its funds or
assets with those of any other Person and (b) has not participated and will
not participate in any cash management system with any other Person, except
with respect to a custodial account maintained by the Manager on behalf of
Affiliates of Borrower and, with respect to funds
17
in such custodial account, has separately accounted, and will continue to
separately account for, each item of income and expense applicable to the
Property and Borrower;
(xvi) has held and will hold its assets in its own name;
(xvii) has conducted and will conduct its business in its name or
in a name franchised or licensed to it by an entity other than an Affiliate
of Borrower;
(xviii) has maintained and will maintain its balance sheets,
operating statements and other entity documents separate from any other
Person and has not permitted and will not permit its assets to be listed as
assets on the financial statement of any other entity except as required or
permitted by applicable accounting principles acceptable to Lender,
consistently applied; PROVIDED, HOWEVER, that (i) any such consolidated
Financial statement shall contain a note indicating that it maintains
separate balance sheets and operating statements for the Borrower and the
Property, or (ii) if such Person is controlled by Inland Western Retail
Real Estate Trust, Inc., then such Person may be included in the
consolidated financial statement of Inland Western Retail Real Estate
Trust, Inc. provided such consolidated financial statement contains a note
indicating that it maintains separate financial records for each Person
controlled by Inland Western Retail Real Estate Trust, Inc.;
(xix) has a sufficient number of employees in light of its
contemplated business operations, which may be none;
(xx) has observed and will observe all partnership, corporate,
limited liability company or Delaware statutory trust formalities, as
applicable;
(xxi) has and will have no Indebtedness (including loans (whether
or not such loans are evidenced by a written agreement) between Borrower
and any Affiliates of Borrower and relating to the management of funds in
the custodial account maintained by the Manager) other than (i) the Loan,
(ii) liabilities incurred in the ordinary course of business relating to
the ownership and operation of its Property and the routine administration
of Borrower, which liabilities are not more than sixty (60) days past the
date incurred (unless disputed in accordance with applicable law), are not
evidenced by a note and are paid when due, and which amounts are normal and
reasonable under the circumstances, and (iii) such other liabilities that
are permitted pursuant to this Agreement;
(xxii) has not and will not assume or guarantee or become obligated
for the debts of any Person or hold out its credit as being available to
satisfy the obligations of any Person except (other than another Borrower)
permitted pursuant to this Agreement;
(xxiii) has not and will not acquire obligations or securities of
its partners, members, beneficiaries or shareholders or any other
Affiliate;
18
(xxiv) has allocated and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including, but not
limited to, paying for shared office space and services performed by any
employee of an affiliate;
(xxv) has not maintained or used, and will not maintain or use,
invoices and checks bearing the name of any other Person, PROVIDED,
HOWEVER, that Manager, on behalf of such Person, may maintain and use
invoices and checks bearing Manager's name;
(xxvi) has not pledged and will not pledge its assets for the
benefit of any other Person except as permitted or required pursuant to
this Agreement;
(xxvii) has held itself out and identified itself and will hold
itself out and identify itself as a separate and distinct entity under its
own name or in a name franchised or licensed to it by an entity other than
an Affiliate of Borrower and not as a division or part of any other Person,
except for services rendered by Manager under the Management Agreement, so
long as Manager holds itself out as an agent of the Borrower;
(xxviii) 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;
(xxix) has not made and will not make loans to any Person or hold
evidence of indebtedness issued by any other person or entity (other than
cash and investment-grade securities issued by an entity that is not an
Affiliate of or subject to common ownership with such entity);
(xxx) has not identified and will not identify its partners,
members, beneficiaries or shareholders, or any Affiliate of any of them, as
a division or part of it, and has not identified itself and shall not
identify itself as a division of any other Person;
(xxxi) 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,
beneficiaries, shareholders or Affiliates except (A) in the ordinary course
of its business and on terms which are intrinsically fair, commercially
reasonable and are no less favorable to it than would be obtained in a
comparable arm's-length transaction with an unrelated third party and (B)
in connection with this Agreement;
(xxxii) does not and will not have any of its obligations guaranteed
by any Affiliate except as otherwise required in the Loan Documents; and
(xxxiii) has complied and will comply with all of the terms and
provisions contained in its organizational documents. The statement of
facts contained in its organizational documents are true and correct and
will remain true and correct.
"STATE" shall mean, with respect to a Property, the State or
Commonwealth in which such Property or any part thereof is located.
19
"SUBSTITUTED PROPERTY" shall have the meaning set forth in Section
2.7.1 hereof.
"SURVEY" shall mean, with respect to a Property, a survey of such
Property in question prepared by a surveyor licensed in the State and
satisfactory to Lender and the company or companies issuing the Title Insurance
Policies, and containing a certification of such surveyor satisfactory to
Lender.
"TAX AND INSURANCE ESCROW FUND" shall have the meaning set forth in
Section 7.2 hereof regardless of whether the funds held therein are held by
Lender for the payment of Taxes or Insurance Premiums or both.
"TAXES" shall mean, with respect to a Property, all real estate and
personal property taxes, assessments, water rates or sewer rents, now or
hereafter levied or assessed or imposed against such Property or any part
thereof.
"TENANT" shall mean any person or entity with a possessory right to
all or any part of the Property pursuant to a Lease or other written agreement.
"TERRORISM INSURANCE GUARANTOR" shall have the meaning set forth in
Section 6.1 hereof.
"TITLE INSURANCE POLICIES" shall mean, with respect to a Property, an
ALTA mortgagee title insurance policy in the form (acceptable to Lender) (or, if
the Property is in a State which does not permit the issuance of such ALTA
policy, such form as shall be permitted in such State and acceptable to Lender)
issued with respect to such Property and insuring the lien of the Mortgage
encumbering the Property.
"TRANSFEREE" shall have the meaning set forth in Section 5.2.13
hereof.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial
Code as in effect in the applicable State in which the applicable Property is
located.
"U.S. OBLIGATIONS" shall mean direct non-callable obligations of the
United States of America as defined in Section 2(a)(16) of the Investment
Company Act as amended (15 USC 80a-l) stated in REMIC Section 1.86 OG-2(a)(8).
Section 1.2 PRINCIPLES OF CONSTRUCTION. All references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified. All uses of the word "including" shall mean "including, without
limitation" unless the context shall indicate otherwise. Unless otherwise
specified, the words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement. Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.
20
ARTICLE II
GENERAL TERMS
Section 2.1 LOAN COMMITMENT; DISBURSEMENT TO BORROWER.
2.1.1 THE LOAN. Subject to and upon the terms and conditions set
forth herein. Lender hereby agrees to make and Borrower hereby agrees to accept
the Loan on the Closing Date.
2.1.2 DISBURSEMENT TO BORROWER. Borrower may request and receive
only one borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.
2.1.3 THE NOTE, MORTGAGE AND LOAN DOCUMENTS. The Loan shall be
evidenced by the Inland Western ▇▇▇▇▇▇▇▇ Note, the Inland Western Euless Note,
and the Inland Western ▇▇▇▇▇▇ Note, collectively, and shall be secured by a
Mortgage, an Assignment of Leases, a Guaranty and certain other Loan Documents
signed by each Borrower.
2.1.4 USE OF PROCEEDS. Each Borrower shall use the proceeds of the
Loan to (a) acquire its Property and/or repay and discharge any existing loans
relating to its Property, (b) pay all past-due Basic Carrying Costs, if any, in
respect of its Property, (c) make deposits into the Reserve Funds on the Closing
Date in the amounts provided herein, (d) pay costs and expenses incurred in
connection with the closing of the Loan, as approved by Lender, (e) fund any
working capital requirements of its Property, and (f) distribute the balance, if
any, to Borrower.
Section 2.2 INTEREST; LOAN PAYMENTS; LATE PAYMENT CHARGE.
2.2.1 INTEREST GENERALLY. Interest on the outstanding principal
balance of the Loan shall accrue from the Closing Date to but excluding the
Maturity Date at the Interest Rate.
2.2.2 INTEREST CALCULATION. Interest on the outstanding principal
balance of the Loan shall be calculated on the basis of a three hundred sixty
(360) day year comprised of twelve (12) months of thirty (30) days each, except
that interest due and payable for a period of less than a full month shall be
calculated by multiplying the actual number of days elapsed in the period for
which the calculation is being made by a daily rate based on a three hundred
sixty (360) day year.
2.2.3 PAYMENTS GENERALLY. Borrower shall pay to Lender (a) on the
Closing Date, an amount equal to interest only on the outstanding principal
balance of the Loan from the Closing Date up to but not including the first
Payment Date following the Closing Date, and (b) on June 1, 2004 and each
Payment Date thereafter up to but not including the Maturity Date, an amount
equal to the Monthly Debt Service Payment Amount, which shall be applied to
interest on the outstanding principal amount of the Loan for the prior calendar
month at the Interest Rate.
2.2.4 INTENTIONALLY OMITTED.
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2.2.5 PAYMENT ON MATURITY DATE. Borrower shall pay to Lender on
the Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Notes, the
Mortgages and other the Loan Documents.
2.2.6 PAYMENTS AFTER DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan, shall accrue at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein. Interest at the Default Rate shall be computed
from the occurrence of the Event of Default until the earlier of (i) in the
event of a non-monetary default, the cure of such Event of Default by Borrower
and acceptance of such cure by Lender, and (ii) in the event of a monetary
default, the actual receipt and collection of the Debt (or that portion thereof
that is then due). To the extent permitted by applicable law, interest at the
Default Rate shall be added to the Debt, shall itself accrue interest at the
same rate as the Loan and shall be secured by the Mortgage. This paragraph shall
not be construed as an agreement or privilege to extend the date of the payment
of the Debt, nor as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default and Lender retains its rights
under the Note and this Agreement to accelerate and to continue to demand
payment of the Debt upon the happening and continuance of any Event of Default.
2.2.7 LATE PAYMENT CHARGE. If any principal, interest or any other
sums due under the Loan Documents is not paid by Borrower on or prior to the
date which is five (5) days after the date on which it is due, Borrower shall
pay to Lender upon demand an amount equal to the lesser of five percent (5%) of
such unpaid sum or the maximum amount permitted by applicable law in order to
defray the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Mortgages and the other Loan
Documents to the extent permitted by applicable law. The foregoing late payment
charge shall not apply to the payment of all outstanding principal, interest and
other sums due on the Maturity Date.
2.2.8 USURY SAVINGS. This Agreement and the Notes are subject to
the express condition that at no time shall Borrower be obligated or required to
pay interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being hi excess of
the Maximum Legal Rate. The provisions of Article IV of each Note, titled
"Savings Clause" shall be deemed incorporated by reference herein.
Section 2.3 PREPAYMENTS.
2.3.1 VOLUNTARY PREPAYMENTS.
(a) Except as otherwise provided herein, Borrower shall not have the
right to prepay the Loan in whole or in part prior to the Permitted Prepayment
Date. After the Permitted Prepayment Date, Borrower may, provided it has given
Lender prior written notice in accordance with the terms of this Agreement,
prepay the unpaid principal balance of the Loan in whole, but (subject to
Section 2.3.l(b) below) not in part, by paying, together with the amount to be
prepaid, (i) interest accrued and unpaid on the outstanding principal balance of
the Loan being prepaid to and including the date of prepayment, (ii) unless
prepayment is tendered on a Payment Date, an
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such notice or any day following such projected date occurring in the same
calendar month as such projected date.
2.3.2 MANDATORY PREPAYMENTS. (a) On the next occurring Payment
Date following the date on which Borrower actually receives any Net Proceeds, if
Lender is not obligated to make such Net Proceeds available to Borrower pursuant
to this Agreement for the restoration of the applicable Property, Borrower
shall, at Lender's option, prepay the outstanding principal balance of the
applicable Note in an amount equal to one hundred percent (100%) of such Net
Proceeds. No Prepayment Consideration or other penalty or premium shall be due
in connection with any prepayment made pursuant to this Section 2.3.2. Any
partial prepayment under this Section shall be applied to the last payments of
principal due under the applicable Note.
(b) On the date on which Borrower tenders a
Casualty/Condemnation Prepayment pursuant to Section 6.4(e) below, such tender
shall include (a) all accrued and unpaid interest and the principal indebtedness
being prepaid, including interest on the outstanding principal amount of the
applicable Note through the last day of the month within which such tender
occurs, and (b) any other sums due hereunder relating to the applicable Note.
Except as set forth in this Section 2.3.2(b), other than following an Event of
Default, no Prepayment Consideration or other penalty or premium shall be due in
connection with any Casualty/Condemnation Prepayment.
2.3.3 PREPAYMENTS AFTER DEFAULT. Following an Event of Default, if
Borrower or anyone on Borrower's behalf makes a tender of payment of all or any
portion of the Debt at any time prior to a foreclosure sale (including a sale
under the power of sale under the Mortgage), or during any redemption period
after foreclosure, (i) the tender of payment shall constitute an evasion of
Borrower's obligation to pay any Prepayment Consideration due under this
Agreement and such payment shall, therefore, to the maximum extent permitted by
law, include a premium equal to the Prepayment Consideration that would have
been payable on the date of such tender had the Loan not been so accelerated, or
(ii) if at the time of such tender a prepayment of the principal amount of the
Loan would have been prohibited under this Agreement had the principal amount of
the Loan not been so accelerated, the tender of payment shall constitute an
evasion of such prepayment prohibition and shall, therefore, to the maximum
extent permitted by law, include an amount equal to the greater of (i) 1% of the
then principal amount of the Loan (or the relevant portion thereof being
prepaid) and (ii) an amount equal to the excess of (A) the sum of the present
values of a series of payments payable at the times and in the amounts equal to
the payments of principal and interest (including, but not limited to the
principal and interest payable on the Maturity Date) which would have been
scheduled to be payable after the date of such tender under this Agreement had
the Loan (or the relevant portion thereof) not been accelerated, with each such
payment discounted to its present value at the date of such tender at the rate
which when compounded monthly is equivalent to the Prepayment Rate, over (B) the
then principal amount of the Loan.
Section 2.4 INTENTIONALLY OMITTED.
Section 2.5 RELEASE OF PROPERTY. Except as set forth in this Section
2.5, no repayment or prepayment of all or any portion of the Loan shall cause,
give rise to a right to
24
amount equal to the interest that would have accrued on the amount being prepaid
after the date of prepayment through and including the next Payment Date had the
prepayment not been made (which amount shall constitute additional consideration
for the prepayment), (iii) all other sums then due under this Agreement, the
Notes, the Mortgages and the other Loan Documents, and (iv) if prepayment occurs
prior to the Payment Date which is one month prior to the Maturity Date, a
prepayment consideration (the "PREPAYMENT CONSIDERATION") equal to the greater
of (A) one percent (1%) of the outstanding principal balance of the Loan being
prepaid or (B) the excess, if any, of (1) the sum of the present values of all
then-scheduled payments of principal and interest under this Agreement
including, but not limited to, principal and interest on the Maturity Date (with
each such payment discounted to its present value at the date of prepayment at
the rate which, when compounded monthly, is equivalent to the Prepayment Rate),
over (2) the aggregate outstanding principal amount of the Notes. Lender shall
notify Borrower of the amount and the basis of determination of the required
prepayment consideration.
(b) After the Permitted Prepayment Date, Borrower may, provided it has
satisfied the Partial Prepayment Conditions, prepay the unpaid principal balance
of either the Inland Western ▇▇▇▇▇▇▇▇ Note and/or the Inland Western ▇▇▇▇▇▇ Note
(but not the Inland Western Euless Note) (such Note or Notes being the "RELEASE
NOTE") in whole, but not in part, and obtain a release of the Related Documents,
by paying, (i) an amount equal to 115% of the outstanding principal balance of
the Release Note (such amount being referred to herein as the "RELEASE PRINCIPAL
PAYMENT"), (ii) interest accrued and unpaid on the Release Principal Payment at
the applicable Interest Rate to and including the date of prepayment, (iii)
unless prepayment is tendered on a Payment Date, an amount equal to the interest
that would have accrued on the Release Principal Payment after the date of
prepayment through and including the next Payment Date had the prepayment not
been made (which amount shall constitute additional consideration for the
prepayment), (iv) all other sums then due under this Agreement, the Release
Note, the Release Mortgage and the other Loan Documents, and (v) the Prepayment
Consideration (calculated on the amount of the Release Principal Payment). From
the Release Principal Payment, an amount equal to 15% of the outstanding
principal balance of the Release Note shall be applied to the outstanding
principal balance of the Remaining Notes; the Monthly Debt Service Payment
Amount under the Remaining Notes shall be recalculated based on the Interest
Rate and the unpaid principal balance effective as of the day following the next
occurring Payment Date. Lender promptly shall notify Borrower in writing of the
new Monthly Debt Service Payment Amount with respect to the Remaining Notes.
(c) On the Payment Date that is one month prior to the Maturity Date,
and on each day thereafter through the Maturity Date, Borrower may, at its
option, prepay the Debt without payment of any Prepayment Consideration or other
penalty or premium; PROVIDED, HOWEVER, if such prepayment is not paid on a
regularly scheduled Payment Date, the Debt shall include interest that would
have accrued on such prepayment through and including the day immediately
preceding the Maturity Date. Borrower's right to prepay any portion of the
principal balance of the Loan shall be subject to (i) Borrower's submission of a
notice to Lender setting forth the amount to be prepaid and the projected date
of prepayment, which date shall be no less than thirty (30) days from the date
of such notice, and (ii) Borrower's actual payment to Lender of the amount to be
prepaid as set forth in such notice on the projected date set forth in
23
require, or otherwise result in, the release of any Lien of the Mortgage on any
Property. If Borrower has elected to prepay the entire amount of the Loan
pursuant to Section 2.3.1(a) or 2.3.l(c) and the requirements of this Section
2.5 have been satisfied, the Property shall be released from the Lien of the
Mortgages.
2.5.1 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest on the Loan and all other amounts due and payable under the Loan
Documents in accordance with the terms and provisions of Section 2.3.1 of this
Loan Agreement, release the Lien of the Mortgages on the Properties not
theretofore released.
2.5.2 RELEASE UPON PREPAYMENT OF RELEASE NOTE. Lender shall, upon
the written request and at the expense of Borrower, upon prepayment in full of a
Release Note in accordance with the terms and provisions of Section 2.3.1(b) of
this
Loan Agreement, release the Lien of the Related Mortgage and the other
Related Documents.
2.5.3 RELEASE UPON PROPERTY SUBSTITUTION. Lender shall, upon the
written request and at the expense of Borrower, upon the replacement of a
Substituted Property in accordance with the terms and provisions of Section
2.7.1 of this
Loan Agreement, release the Lien of the applicable Mortgage and
the other Loan Documents
Section 2.6 MANNER OF MAKING PAYMENTS.
2.6.1 MAKING OF PAYMENTS. Each payment by Borrower hereunder or
under the Note shall be made in funds settled through the
New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 1:00 p.m.,
New York City time, on the date such payment is due, to Lender by
deposit to such account as Lender may designate by written notice to Borrower.
Whenever any payment hereunder or under the Notes shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day.
2.6.2 NO DEDUCTIONS, ETC. All payments made by Borrower hereunder
or under the Notes or the other Loan Documents shall be made irrespective of,
and without any deduction for, any setoff, defense or counterclaims.
Section 2.7 PROPERTY SUBSTITUTIONS.
2.7.1 SUBSTITUTION OF PROPERTY. Pursuant to the Anchor Tenant
▇▇▇▇▇▇▇▇ Lease and the Anchor Tenant ▇▇▇▇▇▇ Lease, the Eckerd Corporation, as
tenant thereunder, has the right to substitute its leased premises with another
unproved property subject to, among other things, the consent of the Lender. In
connection therewith, notwithstanding the provisions of Section 2.5 hereof but
subject to the terms and conditions set forth in this Section 2.7, the Borrower
which owns the Inland Western ▇▇▇▇▇▇▇▇ Property or the Inland Western ▇▇▇▇▇▇
Property (individually and collectively the "Eckerd Borrower") may obtain a
release of the Lien of its Related Mortgage (and the related Loan Documents)
encumbering its Property (a "SUBSTITUTED PROPERTY") by substituting therefor
another retail property acquired by the applicable Eckerd Borrower
(individually, a "REPLACEMENT PROPERTY" and collectively, the
25
"REPLACEMENT PROPERTY"), and leased to Eckerd Corporation provided that the
Eckerd Corporation has made a written request of the applicable Eckerd Borrower
to substitute such properties pursuant to the Anchor Tenant ▇▇▇▇▇▇▇▇ Lease or
Anchor Tenant ▇▇▇▇▇▇ Lease, as the case may be and (a) such substitution shall
be subject to the satisfaction of the following conditions precedent:
(i) Lender shall have received a copy of a deed conveying all of
such Eckerd Borrower's right, title and interest in and to the Substituted
Property to an entity other than such Eckerd Borrower or the sole member of
such Eckerd Borrower and a letter from such Eckerd Borrower countersigned
by a title Insurance company acknowledging receipt of such deed and
agreeing to record such deed in the real estate records of the appropriate
recording office in the county in which the Substituted Property is
located.
(ii) Lender shall have received an appraisal of each of the
Replacement Property and the Substituted Property, each dated no more than
sixty (60) days prior to the substitution by an appraiser acceptable to the
Rating Agencies, indicating an appraised value of the Replacement Property
that is not less than the greater of (a) the value of the Substituted
Property as set forth in the appraisal delivered to Lender at the time of
the encumbrance of the Substituted Property by the Related Mortgage or (b)
the value of the Substituted Property on the date of substitution.
(iii) After giving effect to the substitution, the Aggregate Debt
Service Coverage Ratio for the Loan for all of the Properties (including
the Replacement Property but excluding the Substituted Property) is not
less than the greater of (a) the Aggregate Debt Service Coverage Ratio on
the Closing Date or (b) the Aggregate Debt Service Coverage Ratio
(including the Substituted Property but excluding the Replacement Property)
as of the date immediately preceding the substitution.
(iv) The Net Operating Income for the Replacement Property does
not show a downward trend over three (3) consecutive years prior to the
date of substitution or, with respect to a Replacement Property for which
information regarding the Net Operating Income of such Replacement Property
for the three (3) years immediately prior to the date of substitution
cannot be obtained by the Eckerd Borrower after such Borrower's exercise of
diligent efforts, the Net Operating Income shall not show a downward trend
for such period of time immediately prior to the date of substitution as
may be determined from the information regarding such Net Operating Income
available.
(v) The Net Operating Income and Debt Service Coverage Ratio
(for the twelve (12) month period immediately preceding the substitution)
for the Replacement Property is not less than the Net Operating Income and
Debt Service Coverage Ratio (for the twelve (12) month period immediately
preceding the substitution) for the related Substituted Property, provided,
however, if the Replacement Property has less than twelve month's operating
history, for purposes of this determination, Net Operating Income shall be
calculated by Lender acting in its reasonable discretion using annualized
actual rental income and budgeted annual operating expenses set forth on a
budget approved by Lender pursuant to the terms hereof.
26
(vi) The Tenant of the Replacement Property shall have comparable
credit quality and financial strength (as determined by Lender) the tenant
of the applicable Substituted Property.
(vii) Lender shall have received confirmation in writing from the
Rating Agencies to the effect that such substitution will not result in a
withdrawal, qualification or downgrade of the respective ratings in effect
immediately prior to such substitution for any class of Securities issued
in connection with the Securitization that are then outstanding.
(viii) No Event of Default shall then exist. Lender shall have
received a certificate from each Borrower confirming the foregoing, stating
that the representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of the substitution with respect to each
Borrower, the Substituted Property and the Replacement Property, such
certificate to be in form and substance satisfactory to Lender and the
Rating Agencies.
(ix) The applicable Eckerd Borrower shall have executed,
acknowledged and delivered to Lender (A) a Mortgage and an Assignment of
Leases with respect to the Replacement Property, together with a letter
from such Borrower countersigned by a title insurance company acknowledging
receipt of such Mortgage, and Assignment of Leases and agreeing to record
in the real estate records for the county in which the Replacement Property
is located and to file any UCC Financing Statements in the public records
of the jurisdictions in which Lender shall require such UCC Financing
Statements to be filed, so as to effectively create upon such recording and
filing valid and enforceable first priority Liens upon the Replacement
Property, in favor of Lender (or such other trustee as may be required
under local law), subject only to the Permitted Encumbrances and such other
Liens as are permitted pursuant to the Loan Documents and (B) and an
Environmental Indemnity, Indemnity Agreement, Guaranty regarding cross
collateralization, Borrower's estoppel regarding tenants, and other loan
documents or certifications with respect to the Replacement Property as
Lender shall request. The Mortgage, Assignment of Leases and Rents, UCC
Financing Statements, Indemnity, Guranty, and Borrower's estoppel shall be
the same in form and substance as the counterparts of such documents
executed and delivered with respect to the related Substituted Property
subject to modifications reflecting the Replacement Property as the
Property that is the subject of such documents and such modifications
reflecting the laws of the state in which the Replacement Property is
located as shall be recommended by the counsel admitted to practice in such
state and delivering the opinion as to the enforceability of such documents
required pursuant to clause (xiv) below. The Mortgage encumbering the
Replacement Property shall secure all amounts evidenced by the Note and
Guaranty executed by the applicable Borrower.
(x) Each other Borrower shall have executed and delivered to
Lender an instrument ratifying its obligations under its respective
Guaranty notwithstanding the applicable Property substitution, which
instrument shall be in form and substance satisfactory to Lender in its
reasonable discretion.
27
(xi) Lender shall have received (A) any "tie-in" or similar
endorsement to each applicable Title Insurance Policy insuring the Lien of
an existing Mortgage as of the date of the substitution available with
respect to the Title Insurance Policy insuring the Lien of the Mortgage
with respect to the Replacement Property and (B) a Title Insurance Policy
(or a marked, signed and redated commitment to issue such Title Insurance
Policy) insuring the Lien of the Mortgage encumbering the Replacement
Property, issued by the title company that issued the Title Insurance
Policies insuring the lien of the existing Mortgages and dated as of the
date of the substitution. The Title Insurance Policy issued with respect to
the Replacement Property shall (1) provide coverage in the amount of the
Related Note if the "tie-in" or similar endorsement described above is
available or, if such endorsement is not available, in an amount equal to
one hundred twenty-five percent (125%) of such amount, (2) insure Lender
that the Related Mortgage creates a valid first priority lien on the
Replacement Property encumbered thereby, free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard exceptions and
exclusions from coverage (as modified by the terms of any endorsements),
(3) contain such endorsements and affirmative coverages as are contained in
the Title Insurance Policies insuring the Liens of the existing Mortgages,
and (4) name Lender, together with its successors and assigns, as the
insured. Lender also shall have received copies of paid receipts or other
evidence showing that all premiums in respect of such endorsements and
Title Insurance Policies have been paid.
(xii) Lender shall have received a title survey for each
Replacement Property, certified to the title company and Lender and their
successors and assigns, in the materially same form and having the same
content as the certification of the Survey of the Substituted Property
prepared by a professional land surveyor licensed in the state in which the
Replacement Property is located and acceptable to the Rating Agencies in
accordance with the 1992 Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys. Such survey shall reflect the same legal description
contained in the Title Insurance Policy relating to such Replacement
Property. The surveyor's seal shall be affixed to each survey and each
survey shall certify that the surveyed property is not located in a
"one-hundred-year flood hazard area."
(xiii) Lender shall have received valid certificates of insurance
indicating that the requirements for the policies of insurance required for
each Property hereunder have been satisfied with respect to the Replacement
Property and evidence of the payment of all premiums payable for the
existing policy period.
(xiv) Lender shall have received a Phase I environmental report
and, if recommended under the Phase I environmental report, a Phase II
environmental report, which conclude that the Replacement Property does not
contain any Hazardous Substance (as defined in the Mortgage) and is not
subject to any risk of contamination from any off-site Hazardous Substance.
(xv) The applicable Eckerd Borrower shall deliver or cause to be
delivered to Lender (A) updates certified by Borrower of all organizational
documentation related to Borrower and/or the formation, structure,
existence, good standing and/or qualification to
28
do business delivered to Lender in connection with the Closing Date;
(B) good standing certificates, certificates of qualification to do
business in the jurisdiction in which the Replacement Property is located
(if required in such jurisdiction) and (C) resolutions of the member of
such Borrower authorizing the substitution and any actions taken in
connection with such substitution.
(xvi) Lender shall have received the following opinions of the
applicable Eckerd Borrower's counsel: (A) an opinion or opinions of counsel
admitted to practice under the laws of the state in which the Replacement
Property is located stating that the Loan Documents delivered with respect
to the Replacement Property pursuant to clause (ix) above are valid and
enforceable in accordance with their terms, subject to the laws applicable
to creditors' rights and equitable principles, and that such Borrower is
qualified to do business and in good standing under the laws of the
jurisdiction where the Replacement Property is located or that such
Borrower is not required by applicable law to qualify to do business in
such jurisdiction; (B) an opinion of counsel stating that the Loan
Documents delivered with respect to the Replacement Property pursuant to
clause (ix) above were duly authorized, executed and delivered by such
Borrower and that the execution and delivery of such Loan Documents and the
performance by such Borrower of its obligations thereunder will not cause a
breach of, or a default under, any agreement, document or instrument to
which such Borrower is a party or to which it or its properties are bound;
(C) an opinion of counsel or other evidence acceptable to the Rating
Agencies stating that subjecting the Replacement Property to the Lien of
the Related Mortgage and the execution and delivery of the related Loan
Documents does not and will not affect or impair the ability of Lender to
enforce its remedies under all of the Loan Documents or to realize the
benefits of the cross-collateralization provided for thereunder; and (D) an
opinion of counsel acceptable to the Rating Agencies that the substitution
does not constitute a "significant modification" of the Loan under Section
1001 of the Code or otherwise cause a tax to be imposed on a "prohibited
transaction" by any REMIC Trust holding an interest in the Loan.
(xvii) The applicable Eckerd Borrower shall have paid all Basic
Carrying Costs relating to the Properties and the Replacement Property,
including without limitation, (i) accrued but unpaid insurance premiums
relating to the Properties and the Replacement Property, (ii) currently due
and payable Taxes (including any in arrears) relating to the Properties and
the Replacement Property and (iii) currently due Other Charges relating to
the Properties and Replacement Property.
(xviii) The applicable Eckerd Borrower shall have paid or reimbursed
Lender for all costs and expenses incurred by Lender (including, without
limitation, reasonable attorneys fees and disbursements) in connection with
the substitution and such Borrower shall have paid all recording charges,
filing fees, taxes or other expenses (including, without limitation,
mortgage and intangibles taxes and documentary stamp taxes) payable in
connection with the substitution. The applicable Eckerd Borrower shall have
paid all costs and expenses of the Rating Agencies incurred in connection
with the substitution.
29
(xix) Lender shall have received annual operating statements and
occupancy statements for the Replacement Property for the most recently
completed fiscal year and a current operating statement for the Substituted
Property, each certified to Lender as being, to the best of the applicable
Eckerd Borrower's knowledge, true and correct and a certificate from the
applicable Eckerd Borrower certifying that there has been no adverse change
in the financial condition of the Replacement Property since the date of
such operating statements.
(xx) The applicable Eckerd Borrower shall have delivered to
Lender estoppel certificates from Eckerd Corporation at the Replacement
Property. All such estoppel certificates shall indicate that (1) the
subject lease is a valid and binding obligation of the tenant thereunder,
(2) to the knowledge of such tenant, there are no defaults under such lease
on the part of the landlord or tenant thereunder, (3) the tenant thereunder
has no defense or offset to the payment of rent under such leases, (4) no
rent under such lease has been paid more than one (1) month in advance, (5)
the tenant thereunder has no option or right of first refusal under such
lease to purchase all or any portion of the Replacement Property and (6)
all tenant improvement work required under such lease has been completed
and the tenant under such lease is in actual occupancy of its leased
premises.
(xxi) Lender shall have received copies of the Tenant Lease with
Eckerd Corporation or an amendment to the applicable Anchor Tenant Lease
and any ground leases from Eckerd Corporation affecting the Replacement
Property certified by the applicable Eckerd Borrower as being true and
correct. Lender shall have received a current rent roll of the Replacement
Property certified by such Eckerd Borrower as being true and correct.
(xxii) Lender shall have received subordination, nondisturbance and
attornment agreements from all Tenants at the Replacement Property (unless
such Tenant Leases that are, by their terms, subordinate to the Mortgage
with respect to the Replacement Property).
(xxiii) Lender shall have received an endorsement to the Title
Insurance Policy insuring the Lien of the Mortgage encumbering the
Replacement Property insuring that the Replacement Property constitutes a
separate tax lot or, if such an endorsement is not available in the state
in which the Replacement Property is located, other evidence acceptable to
Lender that the Substitute Policy constitutes a separate tax lot.
(xxiv) Lender shall have received a Physical Conditions Report with
respect to the Replacement Property stating that the Replacement Property
and its use comply in all material respects with all applicable Legal
Requirements (including, without limitation, zoning, subdivision and
building laws), and is in good condition and repair and free of damage or
waste. If the Physical Conditions Report recommends that any repairs be
made with respect to the Replacement Property, such Physical Conditions
Report shall include an estimate of the cost of such recommended repairs.
If the Eckerd Borrower has not delivered to Lender within six (6) months
after the date of substitution evidence reasonably satisfactory to Lender
that it has completed such repairs, such Borrower shall
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deposit with Lender an amount equal to one hundred twenty-five percent
(125%) of such estimated cost, which deposit shall constitute part of the
Required Repair Fund and shall be held and disbursed in accordance with
Section 7.1 hereof.
(xxv) Lender shall have received evidence reasonably acceptable to
Lender that the Replacement Property and its use comply in all material
respects with all applicable Legal Requirements (including, without
limitation, zoning, subdivision and building laws). Such compliance shall
be confirmed by delivery to Lender by one of the following: a letter from
the municipality in which such Replacement Property is located, or a
certificate of a surveyor that is licensed in the state in which the
Replacement Property is located (with respect to zoning and subdivision
laws), or an ALTA 3.1 zoning endorsement to the Title Insurance Policy
delivered pursuant to clause (ix) above (with respect to zoning laws) or a
subdivision endorsement to the Title Insurance Policy delivered pursuant to
clause (ix) above (with respect to subdivision laws).
(xxvi) Lender shall have received a certified copy of the
Management Agreement for the Replacement Property and Manager shall have
executed and delivered to Lender an amendment to the Assignment of
Management Agreement pertaining to the Management Agreement for the
Replacement Property, each of which shall be in the same form as delivered
by the parties thereto on the date hereof.
(xxvii) Lender shall have received a certification of the applicable
Eckerd Borrower, together with supporting documentation, certifying that
the Replacement Property is a retail property that is comparable to the
Substituted Property.
(xxviii) Lender shall have received such other and further approvals,
opinions, documents and information in connection with the substitution as
the Lender or Rating Agencies may have requested.
(xxix) Lender shall have received copies of all contracts and
agreements relating to the leasing and operation of the Replacement
Property (other than the Management Agreement) together with a
certification of the Borrower attached to each such contract or agreement
certifying that the attached copy is a true and correct copy of such
contract or agreement and all amendments thereto.
(xxx) The applicable Eckerd Borrower shall submit to Lender, not
less than fifteen (15) days prior to the date of such substitution, a
release of Lien (and related Loan Documents) for the Substituted Property
for execution by Lender. Such release shall be in a form appropriate for
the recordation in the jurisdiction in which the Substituted Property is
located.
(xxxi) The applicable Eckerd Borrower shall deliver an Officer's
Certificate certifying that the requirements set forth in this Section
2.7.1 have been satisfied.
(xxxii) The applicable Eckerd Borrower shall pay a fee to Lender in
the amount equal to one percent (1%) of the outstanding principal balance
of its Note.
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Upon the satisfaction of the foregoing conditions precedent, Lender will
release its Lien from the Substituted Property and the Replacement Property
shall be deemed to be a Property for purposes of this Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS PRECEDENT TO CLOSING. The obligation of Lender
to make the Loan hereunder is subject to the fulfillment by Borrower or waiver
by Lender of the following conditions precedent no later than the Closing Date:
3.1.1 REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH CONDITIONS.
The representations and warranties of Borrower contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the Closing Date with the same effect as if made on and as of such
date, and no Default or an Event of Default shall have occurred and be
continuing; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan
Document on its part to be observed or performed.
3.1.2
LOAN AGREEMENT AND NOTE. Lender shall have received an
original copy of this Agreement and the Notes, in each case, duly executed and
delivered by each Borrower.
3.1.3 DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS;
LEASES, ETC.
(a) MORTGAGE, ASSIGNMENT OF LEASES AND OTHER LOAN DOCUMENTS. Lender
shall have received from each Borrower fully executed and acknowledged
counterparts of the applicable Mortgage and the Assignment of Leases and
evidence that counterparts of the Mortgage and Assignment of Leases have been
delivered to the title company for recording, in the reasonable judgment of
Lender, so as to effectively create upon such recording valid and enforceable
first priority Liens upon the Property in favor of Lender (or such trustee as
may be required under local law), subject only to the Permitted Encumbrances and
such other Liens as are permitted pursuant to the Loan Documents. Lender shall
have also received from Borrower fully executed counterparts of the Assignment
of Management Agreement and the other Loan Documents.
(b) TITLE INSURANCE. Lender shall have received a Title Insurance
Policy (or Title Insurance Policies, as applicable) issued by a title company
acceptable to Lender and dated as of the Closing Date. Such Title Insurance
Policy shall (i) provide coverage in an amount equal to the principal amount of
the Loan allocated to the applicable Property together with a "tie-in" or
similar endorsement, if applicable and available, with respect to any Title
Insurance Policies related to other Properties (ii) insure Lender that each
Mortgage creates a valid first priority lien on the Property encumbered thereby,
free and clear of all exceptions from coverage other than Permitted Encumbrances
and standard exceptions and exclusions from coverage (as modified by the terms
of any endorsements), (iii) contain such endorsements and affirmative coverages
as Lender may reasonably request, and (iv) name Lender, its successors and
assigns, as the insured.
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The Title Insurance Policy shall be assignable without cost to Lender. Lender
also shall have received evidence that all premiums in respect of such Title
Insurance Policy have been paid.
(c) SURVEY. Lender shall have received a title survey for each
Property, certified to the title company and Lender and their successors and
assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the most recent Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys. The following additional items from the list of
"Optional Survey Responsibilities and Specifications" (Table A) should be added
to each survey: 2, 3, 4, 6, 8, 9, 10, 11 and 13. The survey shall reflect the
same legal description contained in the Title Insurance Policy relating to the
Property referred to in clause (ii) above and shall include, among other things,
a legal description of the real property comprising part of such Property
reasonably satisfactory to Lender. The surveyor's seal shall be affixed to each
survey and the surveyor shall provide a certification for each survey in form
and substance acceptable to Lender.
(d) INSURANCE. Lender shall have received valid certificates of
insurance for the policies of insurance required hereunder, satisfactory to
Lender in its sole discretion, and evidence of the payment of all premiums
payable for the existing policy period.
(e) ENVIRONMENTAL REPORTS. Lender shall have received an environmental
report in respect of each Property, in each case reasonably satisfactory to
Lender.
(f) ZONING. With respect to each Property, Lender shall have received,
at Lender's option, (i) letters or other evidence with respect to the Property
from the appropriate municipal authorities (or other Persons) concerning
applicable zoning and building laws, (ii) an ALTA 3.1 zoning endorsement to the
Title Insurance Policy or (iii) other evidence of zoning compliance, in each
case in substance reasonably satisfactory to Lender.
(g) ENCUMBRANCES. Borrower shall have taken or caused to be taken such
actions in such a manner so that Lender has a valid and perfected first Lien on
each Property as of the Closing Date with respect to the applicable Mortgage,
subject only to applicable Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents, and Lender shall have received
satisfactory evidence thereof.
3.1.4 RELATED DOCUMENTS. Each additional document not specifically
referenced herein, but relating to the transactions contemplated herein, shall
have been duly authorized, executed and delivered by all parties thereto and
Lender shall have received and approved certified copies thereof.
3.1.5 DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or before the
Closing Date, each Borrower shall deliver or cause to be delivered to Lender
copies certified by such Borrower of all organizational documentation related
to Borrower and/or the formation, structure, existence, good standing and/or
qualification to do business, as Lender may request in its sole discretion,
including, without limitation, good standing certificates, qualifications to
do business in the appropriate jurisdictions, resolutions authorizing the
entering into of the Loan and incumbency certificates as may be requested by
Lender.
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3.1.6 OPINIONS OF BORROWER'S COUNSEL. Lender shall have received
opinions of Borrower's counsel (and if applicable, Borrower's local counsel)
with respect to due execution, authority, enforceability of the Loan Documents
and such other matters as Lender may reasonably require, all such opinions in
form, scope and substance reasonably satisfactory to Lender and Lender's counsel
in their reasonable discretion.
3.1.7 BUDGETS. Each Borrower has delivered, and Lender has
approved, the Annual Budget for its Property for the current Fiscal Year.
3.1.8 BASIC CARRYING COSTS. Each Borrower shall have paid all
Basic Carrying Costs relating to its Property which are in arrears, including
without limitation, (a) accrued but unpaid insurance premiums relating to the
Property, (b) currently due and payable Taxes (including any in arrears)
relating to the Property, and (c) currently due Other Charges relating to the
Property, which amounts shall be funded with proceeds of the Loan.
3.1.9 COMPLETION OF PROCEEDINGS. All organizational proceedings
taken or to be taken in connection with the transactions contemplated by this
Agreement and other Loan Documents and all documents incidental thereto shall be
reasonably satisfactory in form and substance to Lender, and Lender shall have
received all such counterpart originals or certified copies of such documents as
Lender may reasonably request.
3.1.10 PAYMENTS. All payments, deposits or escrows required to be
made or established by Borrower under this Agreement, the Notes and the other
Loan Documents on or before the Closing Date shall have been paid.
3.1.11 TENANT ESTOPPELS. Borrower shall exercise reasonable
commercial efforts to deliver estoppel letters from Tenants occupying not less
than eighty percent (80%) of the gross leasable area of the Property; provided,
however, that, in the event that Borrower is unable to deliver some or all of
the estoppels described in this Section 3.1.11, Lender agrees that the
requirement to deliver such letters to Lender shall be waived by Lender as a
condition precedent to the closing of the Loan so long as Borrower delivers on
or before the Closing Date, a certificate executed by Borrower with respect to
all applicable leases which shall be in substantially the same form and contain
the same terms as set forth in Lender's standard form of estoppel certificate.
Borrower shall deliver to Lender an estoppel letter executed by Anchor Tenant in
form reasonably acceptable to Lender.
3.1.12 TRANSACTION COSTS. Borrower shall have paid or reimbursed
Lender for all title insurance premiums, recording and filing fees or taxes,
costs of environmental reports, Physical Conditions Reports, appraisals and
other reports, the fees and costs of Lender's counsel and all other third party
out-of-pocket expenses incurred in connection with the origination of the Loan.
3.1.13 MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the financial condition or business condition of any Borrower
or any Property since the date of the most recent financial statements delivered
to Lender. The income and expenses of each Property, the occupancy leases
thereof, and all other features of the transaction shall be as represented to
Lender without material adverse change. Neither a Borrower, not any of its
34
constituent Persons, shall be the subject of any bankruptcy, reorganization, or
insolvency proceeding.
3.1.14 LEASES AND RENT ROLL. Lender shall have received copies of
all tenant leases, certified copies of any tenant leases as requested by Lender
and certified copies of all ground leases affecting each Property. Lender shall
have received a current certified rent roll of each Property, reasonably
satisfactory in form and substance to Lender.
3.1.15 SUBORDINATION AND ATTORNMENT. Lender shall have received
appropriate instruments acceptable to Lender in its commercially reasonable
discretion subordinating any Leases of record prior to the Mortgage and
including an agreement by such Tenants to attorn to Lender in the event of a
foreclosure or delivery of a deed in lieu thereof.
3.1.16 TAX LOT. Lender shall have received evidence that each
Property constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
3.1.17 PHYSICAL CONDITIONS REPORTS. Lender shall have received
Physical Conditions Reports with respect to each Property, which reports shall
be reasonably satisfactory in form and substance to Lender.
3.1.18 MANAGEMENT AGREEMENT. Lender shall have received a certified
copy of the Management Agreement with respect to each Property which shall be
satisfactory in form and substance to Lender.
3.1.19 APPRAISAL. Lender shall have received an appraisal of each
Property, which shall be satisfactory in form and substance to Lender.
3.1.20 FINANCIAL STATEMENTS. Lender shall have received (a) balance
sheet with respect to each Property for the two most recent Fiscal Years and
statements of income and statements of cash flows with respect to each Property
for the three most recent Fiscal Years, each in form and substance reasonably
satisfactory to Lender or (b) such other financial statements relating to the
ownership and operation of each Property, in form and substance reasonably
satisfactory to Lender.
3.1.21 FURTHER DOCUMENTS. Lender or its counsel shall have received
such other and further approvals, opinions, documents and information as Lender
or its counsel may have reasonably requested including the Loan Documents in
form and substance reasonably satisfactory to Lender and its counsel.
3.1.22 ENVIRONMENTAL INSURANCE. If required by Lender, Borrower
shall have obtained a secured creditor environmental insurance policy with
respect to one or more of the Properties, as designated by Lender, which shall
be in form and substance satisfactory to Lender. Any such policy shall have a
term not less than the term of the Loan. Borrower shall have provided to Lender
evidence that the premiums for all such policies has been paid in full.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 BORROWER REPRESENTATIONS. Each Borrower represents and
warrants as of the date hereof and as of the Closing Date that:
4.1.1 ORGANIZATION. Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
its Property and to transact the businesses in which it is now engaged. Borrower
is duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with its properties,
businesses and operations. Borrower possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged, and the
sole business of Borrower is the ownership, management and operation of its
Property.
4.1.2 PROCEEDINGS. Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents. This Agreement and such other Loan Documents have been
duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms, subject only to applicable bankruptcy,
insolvency and similar laws affecting rights of creditors generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
4.1.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement and the other Loan Documents by Borrower will not conflict with
or result in a breach of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower pursuant to the terms of any indenture, mortgage, deed of
trust,
loan agreement, partnership agreement or other agreement or instrument to
which Borrower is a party or by which any of Borrower's property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over Borrower or any of Borrower's properties or
assets, and any consent, approval, authorization, order, registration or
qualification of or with any court or any such regulatory authority or other
governmental agency or body required for the execution, delivery and performance
by Borrower of this Agreement or any other Loan Documents has been obtained and
is in full force and effect.
4.1.4 LITIGATION. To Borrower's knowledge, there are no actions,
suits or proceedings at law or in equity by or before any Governmental Authority
or other agency now pending or threatened against or affecting Borrower or the
Property, which actions, suits or proceedings, if determined against Borrower or
the Property, might materially adversely affect the condition (financial or
otherwise) or business of Borrower or the condition or ownership of the
Property.
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4.1.5 AGREEMENTS. Except such instruments and agreements set forth
as Permitted Exceptions in the applicable Title Insurance Policy, Borrower is
not a party to any agreement or instrument or subject to any restriction which
might materially and adversely affect Borrower or its Property, or Borrower's
business, properties or assets, operations or condition, financial or otherwise.
To Borrower's knowledge, Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or
by which Borrower or its Property are bound. Borrower has no material financial
obligation under any indenture, mortgage, deed of trust,
loan agreement or other
agreement or instrument to which Borrower is a party or by which Borrower or its
Property is otherwise bound, other than (a) obligations incurred in the ordinary
course of the operation of its Property and (b) obligations under the Loan
Documents.
4.1.6 TITLE. Borrower has good and indefeasible fee simple title
to the real property comprising part of its Property and good title to the
balance of its Property, free and clear of all Liens whatsoever except the
Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan
Documents and the Liens created by the Loan Documents. The applicable Mortgage,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (a) a valid, perfected lien on Borrower's Property,
subject only to Permitted Encumbrances and the Liens created by the Loan
Documents and (b) perfected security interests in and to, and perfected
collateral assignment of, all personalty (including the applicable Leases), all
in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances, such other Liens as are permitted pursuant to
the Loan Documents and the Liens created by the Loan Documents. There are no
claims for payment for work, labor or materials affecting its Property which are
due and unpaid under the contracts pursuant to which such work or labor was
performed or materials provided which are or may become a lien prior to, or of
equal priority with, the Liens created by the Loan Documents.
4.1.7 SOLVENCY; NO BANKRUPCY FILING. Borrower (a) has not entered
into the transaction or executed the Note, this Agreement or any other Loan
Documents with the actual intent to hinder, delay or defraud any creditor and
(b) received reasonably equivalent value in exchange for its obligations under
such Loan Documents. Giving effect to the Loan, the fair saleable value of
Borrower's assets exceeds and will, immediately following the making of the
Loan, exceed Borrower's total liabilities, including, without limitation,
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower's assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur debt and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debt and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of obligations of Borrower). Except as expressly disclosed to Lender
in writing, no petition in bankruptcy has been filed against Borrower, or to the
best of Borrower's knowledge, any constituent Person in
37
the last seven (7) years, and neither Borrower, nor to the best of Borrower's
knowledge, any constituent Person in the last seven (7) years has ever made an
assignment for the benefit of creditors or taken advantage of any insolvency act
for the benefit of debtors. Neither Borrower nor any of its constituent Persons
are contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of Borrower's assets or property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it or such
constituent Persons.
4.1.8 FULL AND ACCURATE DISCLOSURE. To Borrower's knowledge, no
statement of fact made by Borrower in this Agreement or in any of the other Loan
Documents contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
misleading. There is no material fact presently known to Borrower which has not
been disclosed to Lender which adversely affects, nor as far as Borrower can
foresee, might adversely affect, its Property or the business, operations or
condition (financial or otherwise) of Borrower.
4.1.9 NO PLAN ASSETS. Borrower is not an "employee benefit plan,"
as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and none of
the assets of Borrower constitutes or will constitute "plan assets" of one or
more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition,
(a) Borrower is not a "governmental plan" within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to state statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or Section
4975 of the Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this
Loan Agreement.
4.1.10 COMPLIANCE. To Borrower's knowledge, Borrower and the
Property and the use thereof comply in all material respects with all applicable
Legal Requirements, including, without limitation, building and zoning
ordinances and codes. Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority. There has not
been committed by Borrower or, to Borrower's knowledge, any other Person in
occupancy of or involved with the operation or use of its Property any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against its Property or any part thereof or any
monies paid in performance of Borrower's obligations under any of the Loan
Documents.
4.1.11 FINANCIAL INFORMATION. All financial data, including,
without limitation, the statements of cash flow and income and operating
expense, that have been delivered to Lender in respect of its Property (i) are,
to the best of Borrower's knowledge, true, complete and correct in all material
respects, (ii) accurately represent the financial condition of such Property as
of the date of such reports, and (iii) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with accounting principles reasonably acceptable to Lender, consistently applied
throughout the periods covered, except as disclosed therein; PROVIDED, HOWEVER,
that if any financial data is delivered to Lender by any Person other than
Borrower, Indemnitor or any of their Affiliates, or if such financial data has
been prepared by or at the direction of any Person other than Borrower,
Indemnitor or any of
38
their Affiliates, then the foregoing representations with respect to such
financial data shall be to the best of Borrower's knowledge, after due inquiry.
Borrower does not have any contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments that are known to Borrower and reasonably
likely to have a materially adverse effect on its Property or the operation
thereof as a retail store or shopping center, except as referred to or reflected
in said financial statements. Since the date of such financial statements, there
has been no materially adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.
4.1.12 CONDEMNATION. No Condemnation or other proceeding has been
commenced or, to Borrower's knowledge, is contemplated with respect to all or
any portion of its Property or for the relocation of roadways providing access
to its Property.
4.1.13 FEDERAL RESERVE REGULATIONS. No part of the proceeds of the
Loan will be used for the purpose of purchasing or acquiring any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.
4.1.14 UTILITIES AND PUBLIC ACCESS. Borrower's Property has rights
of access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service such Property for its respective intended
uses. All public utilities necessary or convenient to the full use and enjoyment
of such Property are located either in the public right-of-way abutting the
Property (which are connected so as to serve such Property without passing over
other property) or in recorded easements serving the Property and such easements
are set forth in and insured by the applicable Title Insurance Policy. All
roads necessary for the use of the Property for their current respective
purposes have been completed and dedicated to public use and accepted by all
Governmental Authorities.
4.1.15 NOT A FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code.
4.1.16 SEPARATE LOTS. Borrower's Property is comprised of one (1)
or more parcels which constitute a separate tax lot or lots and does not
constitute a portion of any other tax lot not a part of its Property.
4.1.17 ASSESSMENTS. There are no pending, or to Borrower's
knowledge, proposed special or other assessments for public improvements or
otherwise affecting its Property, nor are there any contemplated improvements to
its Property that may result in such special or other assessments.
4.1.18 ENFORCEABILITY. The Loan Documents are not subject to any
right of rescission, set-off, counterclaim or defense by Borrower, including the
defense of usury, nor would the operation of any of the terms of the Loan
Documents, or the exercise of any right
39
thereunder, render the Loan Documents unenforceable, and Borrower has not
asserted any right of rescission, set-off, counterclaim or defense with respect
thereto.
4.1.19 NO PRIOR ASSIGNMENT. There is no prior assignment of the
Leases or any portion of the Rents by Borrower or any of its predecessors in
interest, given as collateral security which are presently outstanding.
4.1.20 INSURANCE. Borrower has obtained and has delivered to Lender
certified copies of all insurance policies reflecting the insurance coverages,
amounts and other requirements set forth in this Agreement. To the best of
Borrower's knowledge, no claims have been made under any such policy, and no
Person, including Borrower, has done, by act or omission, anything which would
impair the coverage of any such policy.
4.1.21 USE OF PROPERTY. The Property is used exclusively for retail
purposes and other appurtenant and related uses.
4.1.22 CERTIFICATE OF OCCUPANCY; LICENSES. All certifications,
permits, licenses and approvals, including without limitation, certificates of
completion and occupancy permits required to be obtained by Borrower for the
legal use, occupancy and operation of its Property as a retail store or shopping
center have been obtained and are in full force and effect, and to the best of
Borrower's knowledge, after due inquiry, all certifications, permits, licenses
and approvals, including without limitation, certificates of completion and
occupancy permits required to be obtained by any Person other than Borrower for
the legal use, occupancy and operation of its Property as a retail store or
shopping center, have been obtained and are in full force and effect (all of the
foregoing certifications, permits, licenses and approvals are collectively
referred to as the "LICENSES"). Borrower shall and shall cause all other Persons
to, keep and maintain all licenses necessary for the operation of its Property
as a retail store or shopping center. To Borrower's knowledge, the use being
made of its Property is in conformity with all certificates of occupancy issued
for its Property.
4.1.23 FLOOD ZONE. To the best of Borrower's knowledge, after due
inquiry, none of the Improvements on its Property are located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards.
4.1.24 PHYSICAL CONDITION. Except as disclosed in the Physical
Conditions Reports delivered to Lender in connecting with this Loan, to
Borrower's knowledge, its Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; there exists no structural or other
material defects or damages in its Property, whether latent or otherwise, and
Borrower has not received notice from any insurance company or bonding company
of any defects or inadequacies in its Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
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4.1.25 BOUNDARIES. To the best of Borrower's knowledge, after due
inquiry, all of the improvements which were included in determining the
appraised value of its Property lie wholly within the boundaries and building
restriction lines of its Property, and no improvements on adjoining properties
encroach upon its Property, and no easements or other encumbrances upon the
Property encroach upon any of the improvements, so as to affect the value or
marketability of its Property except those which are insured against by title
insurance.
4.1.26 LEASES. The Property is not subject to any Leases other than
the Leases described on the Rent Roll attached as SCHEDULE IV hereto and made a
part hereof (and subleases permitted under any Anchor Lease). No Person has any
possessory interest in the Property or right to occupy the same except under and
pursuant to the provisions of the Leases. The current Leases are in full force
and effect and to Borrower's knowledge after inquiry, there are no defaults
thereunder by either party and there are no conditions that, with the passage of
time or the giving of notice, or both, would constitute defaults thereunder. No
Rent (including security deposits) has been paid more than one (1) month in
advance of its due date. All work to be performed by Borrower under each Lease
has been performed as required and has been accepted by the applicable tenant,
and any payments, free rent, partial rent, rebate of rent or other payments,
credits, allowances or abatements required to be given by Borrower to any tenant
has already been received by such tenant. There has been no prior sale, transfer
or assignment, hypothecation or pledge of any Lease or of the Rents received
therein which is outstanding. To Borrower's knowledge after inquiry, except as
set forth on SCHEDULE IV, no tenant listed on SCHEDULE IV has assigned its Lease
or sublet all or any portion of the premises demised thereby, no such tenant
holds its leased premises under assignment or sublease, nor does anyone except
such tenant and its employees occupy such leased premises. No tenant under any
Lease has a right or option pursuant to such Lease or otherwise to purchase all
or any part of the leased premises or the building of which the leased premises
are a part. Except as set forth in SCHEDULE IV, no tenant under any Lease has
any right or option for additional space in the Improvements except as set
forth in SCHEDULE IV. To Borrower's actual knowledge based on the
Environmental Report delivered to Lender in connection herewith, no hazardous
wastes or toxic substances, as defined by applicable federal, state or local
statutes, rules and regulations, have been disposed, stored or treated by any
tenant under any Lease on or about the leased premises nor does Borrower have
any knowledge of any tenant's intention to use its leased premises for any
activity which, directly or indirectly, involves the use, generation,
treatment, storage, disposal or transportation of any petroleum product or
any toxic or hazardous chemical, material, substance or waste, except in
either event, in compliance with applicable federal, state or local statues,
rules and regulations.
4.1.27 SURVEY. The Survey for its Property delivered to Lender in
connection with this Agreement has been prepared in accordance with the
provisions of Section 3.1.3(c) hereof, and does not fail to reflect any material
matter affecting its Property or the title thereto.
4.1.28 LOAN TO VALUE. The maximum principal amount of Borrower's
Note does not exceed one hundred twenty-five percent (125%) of the fair market
value of its Property as set forth on the appraisal of its Property delivered to
Lender.
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4.1.29 FILING AND RECORDING TAXES. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid by any Person under applicable Legal Requirements currently in effect in
connection with the acquisition of its Property by Borrower have been paid or
are simultaneously being paid. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
applicable Mortgage, have been paid, and, under current Legal Requirements, such
Mortgage is enforceable in accordance with its terms by Lender (or any
subsequent holder thereof).
4.1.30 SPECIAL PURPOSE ENTITY/SEPARATENESS. (a) Until the Debt has
been paid in full, each Borrower hereby represents, warrants and covenants that
such Borrower is, shall be and shall continue to be a Special Purpose Entity. If
Borrower consists of more than one Person, each such Person shall be a Special
Purpose Entity.
(b) The representations, warranties and covenants set forth in Section
4.1.30(a) shall survive for so long as any amount remains payable to Lender
under this Agreement or any other Loan Document.
(c) Intentionally omitted
4.1.31 MANAGEMENT AGREEMENT. The Management Agreement is in full
force and effect and, to Borrower's knowledge, there is no default thereunder by
any party thereto and no event has occurred that, with the passage of time
and/or the giving of notice would constitute a default thereunder.
4.1.32 ILLEGAL ACTIVITY. To Borrower's knowledge, no portion of the
Property has been or will be purchased with proceeds of any illegal activity.
4.1.33 NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE. All
information submitted by Borrower to Lender and in all financial statements,
rent rolls, reports, certificates and other documents submitted in connection
with the Loan or in satisfaction of the terms thereof and all statements of fact
made by Borrower in this Agreement or in any other Loan Document, are accurate,
complete and correct in all material respects, provided, however, that if such
information was provided to Borrower by non-affiliated third parties, Borrower
represents that such information is, to the best of its knowledge after due
inquiry, accurate, complete and correct in all material respects. There has been
no material adverse change in any condition, fact, circumstance or event that
would make any such information inaccurate, incomplete or otherwise misleading
in any material respect or that otherwise materially and adversely affects or
might materially and adversely affect its Property or the business operations or
the financial condition of Borrower. Borrower has disclosed to Lender all
material facts and has not failed to disclose any material fact that could cause
any representation or warranty made herein to be materially misleading.
4.1.34 Intentionally deleted.
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4.1.35 PRINCIPAL PLACE OF BUSINESS AND ORGANIZATION. Borrower shall
not change its principal place of business set forth in the introductory
paragraph of this Agreement without first giving Lender thirty (30) days prior
written notice. Borrower shall not change the place of its organization as set
forth in the introductory paragraph of this Agreement without the consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed. Upon Lender's request, Borrower shall execute and deliver additional
financing statements, security agreements and other instruments which may be
necessary to effectively evidence or perfect Lender's security interest in the
Property as a result of such change of principal place of business or place of
organization.
4.1.36 INVESTMENT COMPANY ACT. Borrower is not (a) an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (b) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (c) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
Section 4.2 SURVIVAL OF REPRESENTATIONS. Borrower agrees that all of
the representations and warranties of Borrower set forth in Section 4.1 and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower. All representations, warranties, covenants and
agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
ARTICLE V
BORROWER COVENANTS
Section 5.1 AFFIRMATIVE COVENANTS. From the Closing Date and until
payment and performance in full of all obligations of Borrower under the Loan
Documents or the earlier release of the Lien of the Mortgage encumbering the
Property (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, each Borrower hereby covenants and
agrees with Lender that:
5.1.1 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS; INSURANCE.
Borrower shall do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its existence, rights, licenses, permits and
franchises and comply with all Legal Requirements applicable to it and its
Property. Borrower shall not commit, nor shall Borrower permit or any other
Person in occupancy of or involved with the operation or use of the Property to
commit any act or omission affording the federal government or any state or
local government the right of forfeiture as against the Property or any part
thereof or any monies paid in performance of Borrower's obligations under any of
the Loan Documents. Borrower hereby covenants and agrees not to commit, permit
or suffer to exist any act or omission affording such right of forfeiture.
Borrower shall at all times maintain, preserve and protect all its franchises
and trade names and preserve all the remainder of its property used or useful in
the conduct of its
43
business and shall keep its Property in good working order and repair, and from
time to time make, or cause to be made, all reasonably necessary repairs,
renewals, replacements, betterments and improvements thereto, all as more fully
provided in the applicable Mortgage. Borrower shall keep the Property insured at
all times by financially sound and reputable insurers, to such extent and
against such risks, and maintain liability and such other insurance, as is more
fully provided in this Agreement. After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding
promptly initiated and conducted in good faith and with due diligence, the
validity of any Legal Requirement, the applicability of any Legal Requirement to
Borrower or the Property or any alleged violation of any Legal Requirement,
provided that (i) no Event of Default has occurred and remains uncured; (ii)
intentionally omitted; (iii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any instrument to which Borrower
is subject and shall not constitute a default thereunder and such proceeding
shall be conducted in accordance with all applicable statutes, laws and
ordinances; (iv) the Property or any part thereof or interest therein will not
be in danger of being sold, forfeited, terminated, cancelled or lost; (v)
Borrower shall promptly upon final determination thereof comply with any such
Legal Requirement determined to be valid or applicable or cure any violation of
any Legal Requirement; (vi) such proceeding shall suspend the enforcement of the
contested Legal Requirement against Borrower or the Property; and (vii) Borrower
shall furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure compliance with such Legal Requirement, together
with all interest and penalties payable in connection therewith. Lender may
apply any such security, as necessary to cause compliance with such Legal
Requirement at any time when, in the reasonable judgment of Lender, the
validity, applicability or violation of such Legal Requirement is finally
established or the Property (or any part thereof or interest therein) shall be
in danger of being sold, forfeited, terminated, cancelled or lost.
5.1.2 TAXES AND OTHER CHARGES. Borrower shall pay or cause to be
paid all Taxes and Other Charges now or hereafter levied or assessed or imposed
against its Property or any part thereof as the same become due and payable;
PROVIDED, HOWEVER, Borrower's obligation to directly pay to the appropriate
taxing authority Taxes shall be suspended for so long as Borrower complies with
the terms and provisions of Section 7.2 hereof. Borrower will deliver to Lender
receipts for payment or other evidence satisfactory to Lender that the Taxes and
Other Charges have been so paid or are not then delinquent no later than ten
(10) days prior to the date on which the Taxes and/or Other Charges would
otherwise be delinquent if not paid (PROVIDED, HOWEVER, that Borrower is not
required to furnish such receipts for payment of Taxes in the event that such
Taxes have been paid by Lender pursuant to Section 7.2 hereof). If Borrower pays
or causes to be paid all Taxes and Other Charges and provides a copy of the
receipt evidencing the payment thereof to Lender, then Lender shall reimburse
Borrower, provided that there are then sufficient proceeds in the Tax and
Insurance Escrow Fund and provided that the Taxes are being paid pursuant to
Section 7.2. Upon written request of Borrower, if Lender has paid such Taxes
pursuant to Section 7.2 hereof, Lender shall provide Borrower with evidence that
such Taxes have been paid. Borrower shall not suffer and shall promptly cause to
be paid and discharged any Lien or charge whatsoever which may be or become a
Lien or charge against its Property, and shall promptly pay for all utility
services provided to the Property. After prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or
44
application in whole or in part of any Taxes or Other Charges, provided that (i)
Borrower is permitted to do so under the provisions of any mortgage or deed of
trust superior in lien to the Mortgage; (ii) such proceeding shall be permitted
under and be conducted in accordance with the provisions of any other instrument
to which Borrower is subject and shall not constitute a default thereunder and
such proceeding shall be conducted in accordance with all applicable statutes,
laws and ordinances; (iii) the Property nor any part thereof or interest therein
will be in danger of being sold, forfeited, terminated, cancelled or lost; (iv)
Borrower shall promptly upon final determination thereof pay the amount of any
such Taxes or Other Charges, together with all costs, interest and penalties
which may be payable in connection therewith; (v) such proceeding shall suspend
the collection of such contested Taxes or Other Charges from the Property; and
(vi) Borrower shall furnish such security as may be required in the proceeding,
or as may be reasonably requested by Lender, to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon. Lender
may pay over any such cash deposit or part thereof held by Lender to the
claimant entitled thereto at any time when, in the reasonable judgment of
Lender, the entitlement of such claimant is established.
5.1.3 LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against Borrower which might materially adversely affect Borrower's condition
(financial or otherwise) or business or its Property.
5.1.4 ACCESS TO PROPERTY. Borrower shall permit agents,
representatives and employees of Lender to inspect its Property or any part
thereof at reasonable hours upon reasonable advance notice, subject to the
rights of Tenants under their respective Leases.
5.1.5 NOTICE OF DEFAULT. Borrower shall promptly advise Lender of
any material adverse change in Borrower's condition, financial or otherwise, or
of the occurrence of any Default or Event of Default of which Borrower has
knowledge.
5.1.6 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
5.1.7 PERFORM LOAN DOCUMENTS. Borrower shall observe, perform and
satisfy all the terms, provisions, covenants and conditions of, and shall pay
when due all costs, fees and expenses to the extent required under the Loan
Documents executed and delivered by, or applicable to, Borrower.
5.1.8 INSURANCE BENEFITS. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable in connection with the Property, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements, and the payment by Borrower of the
expense of an appraisal on behalf of Lender in case of a fire or other casualty
affecting the Property or any part thereof) out of such Insurance Proceeds.
45
5.1.9 FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost
and expense:
(a) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or reasonably requested
by Lender in connection therewith;
(b) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the obligations of Borrower under the Loan
Documents, as Lender may reasonably require, including, but not limited to,
executing new Notes reflecting a re-allocation of the entire Loan amount; and
(c) do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
5.1.10 INTENTIONALLY OMITTED.
5.1.11 FINANCIAL REPORTING. (a) Borrower will keep and maintain or
will cause to be kept and maintained on a Fiscal Year basis, in accordance with
the requirements for a Special Purpose Entity set forth above, proper and
accurate books, records and accounts reflecting all of the financial affairs of
Borrower and all items of income and expense in connection with the operation on
an individual basis of its Property. Lender shall have the right from time to
time at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of Borrower or other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof as Lender shall desire. After the occurrence and during the continuance
of an Event of Default, Borrower shall pay any costs and expenses incurred by
Lender to examine Borrower's accounting records with respect to the Property, as
Lender shall reasonably determine to be necessary or appropriate in the
protection of Lender's interest.
(b) Borrower will furnish to Lender annually, within ninety (90) days
following the end of each Fiscal Year of Borrower, either (i) a complete copy of
Borrower's annual financial statements audited by an accounting firm or other
independent certified public accountant reasonably acceptable to Lender in
accordance with the requirements for a Special Purpose Entity set forth above,
or (ii) a consolidated and annotated financial statement of Borrower and the
Sole Member/General Partner, audited by an accounting firm or other independent
certified public accountant reasonably acceptable to Lender in accordance with
the requirements for a Special Purpose Entity set forth above, together with
unaudited financial statements relating to the Borrower and its Property. Such
financial statements for the Property for such Fiscal Year and shall contain
statements of profit and loss for Borrower and the Property and a balance sheet
for Borrower. Such statements shall set forth the financial condition and the
results of operations for the Property for such Fiscal Year, and shall include,
but not be limited to, amounts representing annual Net Cash Flow, Net Operating
Income, Gross Income from Operations and Operating Expenses. Borrower's annual
financial statements shall be
46
accompanied by (i) a comparison of the budgeted income and expenses and the
actual income and expenses for the prior Fiscal Year, (ii) a certificate
executed by the chief financial officer of Borrower or Sole Member/General
Partner, as applicable, stating that each such annual financial statement
presents fairly the financial condition and the results of operations of
Borrower and the Property being reported upon and has been prepared in
accordance with accounting principles reasonably acceptable to Lender,
consistently applied, (iii) an unqualified opinion of an accounting firm or
other independent certified public accountant reasonably acceptable to Lender,
(iv) a certified rent roll containing current rent, lease expiration dates and
the square footage occupied by each tenant; (v) a schedule audited by such
independent certified public accountant reconciling Net Operating Income to Net
Cash Flow (the "NET CASH FLOW SCHEDULE"), which shall itemize all adjustments
made to Net Operating Income to arrive at Net Cash Flow deemed material by such
independent certified public accountant. Together with Borrower's annual
financial statements, Borrower shall furnish to Lender an Officer's Certificate
certifying as of the date thereof whether there exists an event or circumstance
which constitutes a Default or Event of Default under the Loan Documents
executed and delivered by, or applicable to, Borrower, and if such Default or
Event of Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy the same.
(c) Borrower will furnish, or cause to be furnished, to Lender on or
before forty five (45) days after the end of each calendar quarter the following
items, accompanied by a certificate of the chief financial officer of Borrower
or Sole Member/General Partner, as applicable, stating that such items are true,
correct, accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Property (subject to normal
year-end adjustments) as applicable: (i) a rent roll for the subject month
accompanied by an Officer's Certificate with respect thereto; (ii) quarterly and
year-to-date operating statements (including Capital Expenditures) prepared for
each calendar quarter, noting Net Operating Income, Gross Income from
Operations, and Operating Expenses (not including any contributions to the
Replacement Reserve Fund, and other information necessary and sufficient to
fairly represent the financial position and results of operation of the Property
during such calendar month, and containing a comparison of budgeted income and
expenses and the actual income and expenses together with a detailed explanation
of any variances of five percent (5%) or more between budgeted and actual
amounts for such periods, all in form satisfactory to Lender; (iii) a
calculation reflecting the annual Debt Service Coverage Ratio for each Property
and the Aggregate Debt Service Coverage Ratio for the immediately preceding
twelve (12) month period as of the last day of such month accompanied by an
Officer's Certificate with respect thereto; and (iv) a Net Cash Flow Schedule
(such Net Cash Flow for the Borrower may be unaudited if it is certified by an
officer of the Borrower). In addition, such certificate shall also be
accompanied by a certificate of the chief financial officer of Borrower or Sole
Member/General Partner stating that the representations and warranties of
Borrower or Sole Member/General Partner (as applicable) set forth in Section
4.1.30(a) are true and correct as of the date of such certificate.
(d) For the partial year period commencing on the Closing Date, and
for each Fiscal Year thereafter, Borrower shall submit to Lender an Annual
Budget not later than thirty (30) days after the commencement of such period or
Fiscal Year in form reasonably satisfactory to Lender.
47
(e) Borrower shall furnish to Lender, within ten (10) Business Days
after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of its Property and
the financial affairs of Borrower as may be reasonably requested by Lender.
(f) Borrower shall furnish to Lender, within ten (10) Business Days
after Lender's request (or as soon thereafter as may be reasonably possible),
financial and sales information from any tenant designated by Lender (to the
extent such financial and sales information is required to be provided under the
applicable Lease and same is received by Borrower after request therefor).
(g) Borrower will cause Indemnitor to furnish to Lender annually,
within one hundred twenty (120) days following the end of each Fiscal Year of
Indemnitor, financial statements audited by an independent certified public
accountant, which shall include an annual balance sheet and profit and loss
statement of Indemnitor, in the form reasonably required by Lender.
(h) Any reports, statements or other information required to be
delivered under this Agreement shall be delivered (i) in paper form, (ii) on a
diskette, and (iii) if requested by Lender and within the capabilities of
Borrower's data systems without change or modification thereto, in electronic
form and prepared using a Microsoft Word for Windows or WordPerfect for Windows
files (which files may be prepared using a spreadsheet program and saved as word
processing files).
5.1.12 BUSINESS AND OPERATIONS. Borrower will continue to engage in
the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of its
Property. Borrower will qualify to do business and will remain in good standing
under the laws of each jurisdiction as and to the extent the same are required
for the ownership, maintenance, management and operation of its Property.
5.1.13 TITLE TO THE PROPERTY. Borrower will warrant and defend (a)
the title to its Property and every part thereof, subject only to Liens
permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Liens of the Mortgage and the Assignment of Leases on the
Property, subject only to Liens permitted hereunder (including Permitted
Encumbrances), in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys' fees and court costs) incurred by Lender if an
interest in its Property, other than as permitted hereunder, is claimed by
another Person.
5.1.14 COSTS OF ENFORCEMENT. In the event (a) that the Mortgage
encumbering the Property is foreclosed in whole or in part or that the Mortgage
is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage prior to or subsequent to
the Mortgage encumbering the Property in which proceeding Lender is made a
party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar
proceeding in respect of Borrower or any of its constituent Persons or an
assignment by Borrower or any of its constituent Persons for the benefit of its
creditors, Borrower, its successors or assigns, shall be chargeable with and
agrees to pay all costs of collection and defense, including reasonable
48
attorneys' fees and costs, incurred by Lender or Borrower in connection
therewith and in connection with any appellate proceeding or post-judgment
action involved therein, together with all required service or use taxes.
5.1.15 ESTOPPEL STATEMENT. (a) After request by Lender, each
Borrower shall within ten (10) days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the applicable Note, (ii) the unpaid principal amount of
such Note, (iii) the applicable Interest Rate of such Note, (iv) the date
installments of interest and/or principal were last paid, (v) any offsets or
defenses to the payment of the Debt, if any, and (vi) that the applicable Note,
this Agreement, the applicable Mortgage, the applicable Guaranty, and the other
Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification.
(b) Borrower shall use commercially reasonable efforts to deliver to
Lender upon request, tenant estoppel certificates from each commercial tenant
leasing space at the Property in form and substance reasonably satisfactory to
Lender provided that Borrower shall not be required to deliver such certificates
more frequently than one (1) time in any calendar year.
(c) Within thirty (30) days of request by Borrower, Lender shall
deliver to Borrower a statement setting forth the items described at (a)(i),
(ii), (iii) and (iv) of this Section 5.1.15.
5.1.16 LOAN PROCEEDS. Borrower shall use the proceeds of the Loan
received by it on the Closing Date only for the purposes set forth in Section
2.1.4.
5.1.17 PERFORMANCE BY BORROWER. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document executed and delivered by, or applicable to, Borrower, and shall
not enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower without the prior written consent of Lender.
5.1.18 CONFIRMATION OF REPRESENTATIONS. Borrower shall deliver, in
connection with any Securitization, (a) one or more Officer's Certificates
certifying as to the accuracy of all representations made by Borrower in the
Loan Documents as of the date of the closing of such Securitization, and (b)
certificates of the relevant Governmental Authorities in all relevant
jurisdictions indicating the good standing and qualification of Borrower and its
member as of the date of the Securitization.
5.1.19 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (a) with any other real property
constituting a tax lot separate from the Property, and (b) which constitutes
real property with any portion of the Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such real property portion of the Property.
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5.1.20 LEASING MATTERS. Any Leases with respect to the Property
written after the Closing Date (and in the case of Inland Western Euless Limited
Partnership for more than the Relevant Leasing Threshold) shall be subject to
the prior written approval of Lender, which approval may be given or withheld in
the sole discretion of Lender. Lender shall approve or disapprove any such Lease
within ten (10) Business Days of Lender's receipt of a final execution draft of
such Lease (including all exhibits, schedules, supplements, addenda or other
agreements relating thereto) and a written notice from Borrower requesting
Lender's approval to such Lease, and such Lease shall be deemed approved, if
Lender does not disapprove such Lease within said ten (10) Business Day period
PROVIDED such written notice conspicuously states, in large bold type, that
"PURSUANT TO SECTION 5.1.20 OF THE LOAN AGREEMENT, THE LEASE SHALL BE DEEMED
APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS
DAYS OF LENDER'S RECEIPT OF SUCH LEASE AND WRITTEN NOTICE". Borrower shall
furnish Lender with executed copies of all Leases. All renewals of Leases and
all proposed Leases shall provide for rental rates comparable to existing local
market rates (unless such rental rates are otherwise set forth in the Leases
executed prior to the Closing Date). All proposed Leases shall be on
commercially reasonable terms and shall not contain any terms which would
materially affect Lender's rights under the Loan Documents. All Leases executed
after the Closing Date shall provide that they are subordinate to the Mortgage
encumbering the Property and that the tenant thereunder agrees to attorn to
Lender or any purchaser at a sale by foreclosure or power of sale. Borrower (i)
shall observe and perform the obligations imposed upon the lessor under the
Leases in a commercially reasonable manner; (ii) shall enforce the terms,
covenants and conditions contained in the Leases upon the part of the tenant
thereunder to be observed or performed in a commercially reasonable manner and
in a manner not to impair the value of the Property involved except that no
termination by Borrower or acceptance of surrender by a tenant of any Lease
shall be permitted unless by reason of a tenant default and then only in a
commercially reasonable manner to preserve and protect the Property PROVIDED,
HOWEVER, that no such termination or surrender of any Anchor Tenant Lease or
Lease covering more than the Relevant Leasing Threshold will be permitted
without the written consent of Lender which consent may be withheld in the sole
discretion of Lender; (iii) shall not collect any of the rents more than one (1)
month in advance (other than security deposits); (iv) shall not execute any
other assignment of lessor's interest in the Leases or the Rents (except as
contemplated by the Loan Documents); (v) shall not alter, modify or change the
terms of the Leases in a manner inconsistent with the provisions of the Loan
Documents without the prior written consent of Lender, which consent may be
withheld in the sole discretion of Lender; and (vi) shall execute and deliver at
the request of Lender all such further assurances, confirmations and assignment
in connection with the Leases as Lender shall from time to time reasonably
require. Notwithstanding the foregoing, Borrower may, without the prior written
consent of Lender, terminate any Lease which demises less than the Relevant
Leasing Threshold under any of the following circumstances: (i) the tenant under
said Lease is in default beyond any applicable grace and cure period, and
Borrower has the right to terminate such Lease; (ii) such termination is
permitted by the terms of the Lease in question and Borrower has secured an
obligation from a third party to lease the space under the Lease to be
terminated at a rental equal to or higher than the rental due under the Lease to
be terminated; and (iii) if the tenant under the Lease to be terminated, has
executed a right under said Lease to terminate its lease upon payment of a
termination fee to Borrower, and has in fact terminated its lease and paid said
fee, Borrower may accept said termination.
50
5.1.21 ALTERATIONS. Subject to the rights of tenants to make
alterations pursuant to the terms of their respective Leases, Borrower shall
obtain Lender's prior written consent to any alterations to any Improvements,
which consent shall not be unreasonably withheld or delayed except with respect
to alterations that may have a material adverse effect on Borrower's financial
condition, the value of its Property or the Net Operating Income.
Notwithstanding the foregoing, Lender's consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower's financial condition, the value of its Property or the Net Operating
Income, provided that such alterations are made in connection with (a) tenant
improvement work performed pursuant to the terms of any Lease executed on or
before the Closing Date, (b) tenant improvement work performed pursuant to the
terms and provisions of a Lease and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any
Improvements or the exterior of any building constituting a part of any
Improvements, (c) alterations performed in connection with the restoration of
the Property after the occurrence of a casualty in accordance with the terms and
provisions of this Agreement or (d) any structural alteration which costs less
than $50,000.00 in the aggregate for all components thereof which constitute
such alteration or any non-structural alteration which costs less than
$100,000.00 in the aggregate for all components thereof which constitute such
alteration. If the total unpaid amounts due and payable with respect to
alterations to the Improvements at the Property (other than such amounts to be
paid or reimbursed by tenants under the Leases) shall at any time equal or
exceed $350,000.00 (the "THRESHOLD AMOUNT"), Borrower, upon Lender's request,
shall promptly deliver to Lender as security for the payment of such amounts and
as additional security for Borrower's obligations under the Loan Documents any
of the following: (A) cash, (B) U.S. Obligations, (C) other securities having a
rating acceptable to Lender and that the applicable Rating Agencies have
confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned in connection with any Securitization, or (D) a completion bond or
letter of credit issued by a financial institution having a rating by Standard &
Poor's Ratings Group of not less than A-l+ if the term of such bond or letter of
credit is no longer than three (3) months or, if such term is in excess of three
(3) months, issued by a financial institution having a rating that is acceptable
to Lender and that the applicable Rating Agencies have confirmed in writing will
not, in and of itself, result in a downgrade, withdrawal or qualification of the
initial, or, if higher, then current ratings assigned in connection with any
Securitization. Such security shall be in an amount equal to the excess of the
total unpaid amounts with respect to alterations to the Improvements on the
Property (other than such amounts to be paid or reimbursed by tenants under the
Leases) over the Threshold Amount and, if cash, may be applied from time to
time, at the option of Borrower, to pay for such alterations. At the option of
Lender, following the occurrence and during the continuance of an Event of
Default, Lender may terminate any of the alterations and use the deposit to
restore the Property to the extent necessary to prevent any material adverse
effect on the value of the Property.
5.1.22 INTENTIONALLY OMITTED.
5.1.23 INTENTIONALLY OMITTED.
Section 5.2 NEGATIVE COVENANTS. From the Closing Date until payment
and performance in full of all obligations of Borrower under the Loan Documents
or the earlier
51
release of the Lien of the Mortgage encumbering the Property in accordance with
the terms of this Agreement and the other Loan Documents, Borrower covenants and
agrees with Lender that it will not do, directly or indirectly, any of the
following:
5.2.1 OPERATION OF PROPERTY. Borrower shall not, without the prior
consent of Lender, terminate the Management Agreement or otherwise replace the
Manager or enter into any other management agreement with respect to the
Property unless the Manager is in default thereunder beyond any applicable grace
or cure period, in which event no consent by Lender shall be required. Lender
agrees that its consent will not be unreasonably withheld, delayed or
conditioned provided that the Person chosen by Borrower as the replacement
Manager is a Qualifying Manager and provided further that Borrower shall deliver
an acceptable non-consolidation opinion covering such replacement Manager if
such Person was not covered by such opinion delivered at the closing of the
Loan.
5.2.2 LIENS. Borrower shall not, without the prior written consent
of Lender, create, incur, assume or suffer to exist any Lien on any portion of
the Property or permit any such action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted pursuant to the Loan
Documents; and
(iii) Liens for Taxes or Other Charges not yet due (or that
Borrower is contesting in accordance with the terms of Section 5.1.2
hereof).
5.2.3 DISSOLUTION. Borrower shall not (a) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (b) engage in any business activity not related to the
ownership and operation of its Property, (c) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent
permitted by the Loan Documents, (d) modify, amend, waive or terminate its
organizational documents or its qualification and good standing in any
jurisdiction or (e) cause the Sole Member/General Partner to (i) dissolve, wind
up or liquidate or take any action, or omit to take an action, as a result of
which the Sole Member/General Partner would be dissolved, wound up or liquidated
in whole or in part, or (ii) amend, modify, waive or terminate the certificate
of limited partnership or partnership agreement of the Sole Member/General
Partner, in each case, without obtaining the prior written consent of Lender or
Lender's designee.
5.2.4 CHANGE IN BUSINESS. Borrower shall not enter into any line
of business other than the ownership and operation of its Property, or make any
material change in the scope or nature of its business objectives, purposes or
operations, or undertake or participate in activities other than the continuance
of its present business.
5.2.5 DEBT CANCELLATION. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.
52
5.2.6 AFFILIATE TRANSACTIONS. Borrower shall not enter into, or be
a party to, any transaction with an Affiliate of Borrower or any of the partners
of Borrower except in the ordinary course of business and on terms which are
fully disclosed to Lender in advance and are no less favorable to Borrower or
such Affiliate than would be obtained in a comparable arm's-length transaction
with an unrelated third party.
5.2.7 ZONING. Borrower shall not initiate or consent to any zoning
reclassification of any portion of its Property or seek any variance under any
existing zoning ordinance or use or permit the use of any portion of such
Property in any manner that could result in such use becoming a non-conforming
use under any zoning ordinance or any other applicable land use law, rule or
regulation, without the prior consent of Lender.
5.2.8 ASSETS. Borrower shall not purchase or own any properties
other than the Property owned by Borrower as of the date hereof as reflected in
the applicable Title Insurance Policy.
5.2.9 DEBT. Borrower shall not create, incur or assume any
Indebtedness other than the Debt except to the extent expressly permitted
hereby.
5.2.10 NO JOINT ASSESSMENT. Borrower shall not suffer, permit or
initiate the joint assessment of its Property with (a) any other real property
constituting a tax lot separate from the Property, or (b) any portion of the
Property which may be deemed to constitute personal property, or any other
procedure whereby the Lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to the Property.
5.2.11 INTENTIONALLY OMITTED.
5.2.12 ERISA. (a) Borrower shall not engage in any transaction
which would cause any obligation, or action taken or to be taken, hereunder (or
the exercise by Lender of any of its rights under its Note, this Agreement or
the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (B) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) one or more of the following circumstances is true:
(i) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan investors"
within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
53
(iii) Borrower qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(c) or (e).
5.2.13 TRANSFERS. Unless such action is permitted by the
provisions of this Section 5.2.13, each Borrower agrees that it will not (i)
sell, assign, convey, transfer or otherwise dispose of its interests in its
Property or any part thereof, (ii) permit any owner, directly or indirectly, of
an ownership interest in ites Property, to transfer such interest, whether by
transfer of stock or other interest in Borrower or any entity, or otherwise,
(iii) incur Indebtedness (other than the Indebtedness permitted pursuant to the
terms of this Agreement), (iv) mortgage, hypothecate or otherwise encumber or
grant a security interest in the Property or any part thereof, (v) sell, assign,
convey, transfer, mortgage, encumber, grant a security interest in, or otherwise
dispose of any direct or indirect ownership interest in Borrower, or permit any
owner of an interest in Borrower to do the same, or (vi) file a declaration of
condominium with respect to its Property (any of the foregoing transactions, a
"TRANSFER"). For purposes hereof, a "Transfer" shall not include (A) any
issuance, sale or transfer of interests in Inland Western Retail Real Estate
Trust, Inc., (B) transfer by devise or descent or by operation of law upon the
death of a member of Borrower, and (C) a sale, transfer or hypothecation of a
membership or partnership interest in Borrower, whichever the case may be, by
the current member(s), as applicable, to an immediate family member (i.e.,
parents, spouses, siblings, children or grandchildren) of such member (or a
trust for the benefit of any such persons).
(a) On and after the date that is twelve (12) months following the
Closing Date, Lender shall not withhold its consent to a Transfer of all of the
Properties as part of a single transaction, provided that the following
conditions are satisfied:
(1) the transferee of the Property shall be a Special Purpose
Entity (the "TRANSFEREE") which at the time of such transfer
will be in compliance with the covenants contained in
Section 5.1.1 and the representations contained in 4.1.30
hereof and which shall have assumed in writing (subject to
the terms of Section 9.4 hereof) and agreed to comply with
all the terms, covenants and conditions set forth in this
Loan Agreement and the other Loan Documents, expressly
including the covenants contained in Section 5.1.1 and the
representations contained in 4.1.30 hereof;
(2) if requested by Lender, Borrower shall deliver confirmation
in writing from the Rating Agencies that such proposed
Transfer will not cause a downgrading, withdrawal or
qualification of the then current rating of any securities
issued pursuant to such Securitization;
(3) if Manager does not act as manager of the transferred
Property then the manager of the Property must be a
Qualifying Manager;
(4) no Event of Default shall have occurred and be continuing;
(5) if required or requested by any of the Rating Agencies,
Borrower shall deliver a substantive non-consolidation
opinion with respect to Transferee, which opinion shall be
acceptable to Lender in its reasonable discretion;
54
(6) Borrower shall have paid (A) an assumption fee equal to one
percent (1.0%) of the then outstanding principal balance of
the Loan, and (B) the reasonable and customary third-party
expenses (including reasonable attorneys' fees and
disbursements) actually incurred by Lender in connection
with such Transfer; PROVIDED, HOWEVER, no assumption fee
shall be required for a Transfer of the Property to a
Transferee acceptable to Lender in connection with a joint
venture between Inland Western Retail Real Estate Trust,
Inc. or Inland Retail Real Estate Limited Partnership and an
institution acceptable to Lender provided
Inland Western
Retail Real Estate Trust Inc., or an Affiliate wholly-owned
(directly or indirectly) by Inland Western Retail Real
Estate Trust, Inc., owns at least twenty percent (20%) of
the ownership interests in such Transferee and for which
Inland Western Retail Real Estate Trust, Inc., or an
Affiliate wholly-owned (directly or indirectly) by Inland
Western Retail Real Estate Trust, Inc., is the managing
entity and otherwise maintains operational and managerial
control of such Transferee, provided that Borrower shall pay
all of Lender's reasonable and customary third-party
expenses (including reasonable attorneys' fees and
disbursements) actually incurred by Lender in connection
with such Transfer and a processing fee of $5,000.
Lender shall approve or disapprove any proposed Transfer governed by this
Section 5.2.13(a) within thirty (30) days of Lender's receipt of a written
notice from Borrower requesting Lender's approval, provided such notice includes
all information necessary to make such decision, and further provided that such
written notice from Borrower shall conspicuously state, in large bold type, that
"PURSUANT TO SECTION 5.2.13 OF THE LOAN AGREEMENT, A RESPONSE IS REQUIRED WITHIN
THIRTY (30) DAYS OF LENDER'S RECEIPT OF THIS WRITTEN NOTICE". If Lender fails to
disapprove any such matter within such period, Borrower shall provide a second
written notice requesting approval, which written notice shall conspicuously
state, in large bold type, that "PURSUANT TO SECTION 5.2.13 OF THE LOAN
AGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE DEEMED APPROVED IF LENDER DOES
NOT RESPOND TO THE CONTRARY WITHIN TEN (10) DAYS OF LENDER'S RECEIPT OF THIS
WRITTEN NOTICE". Thereafter, if Lender does not disapprove such matter within
said ten (10) day period such matter shall be deemed approved.
(b) On and after the date that is twelve (12) months following the
Closing Date, Lender shall not withhold its consent to, and shall not charge an
assumption fee in connection with, (1) a Transfer of up to, in the aggregate,
forty-nine percent (49%) of the ownership interests in Inland Retail Real Estate
Limited Partnership, or (2) a Transfer of greater than forty-nine percent (49%)
of the ownership interest in Inland Retail Real Estate Limited Partnership,
PROVIDED that (A) such transfer is to a Qualified Entity (as defined below), and
(B) Borrower shall pay all of Lender's reasonable and customary third-party
expenses (including reasonable attorneys' fees and disbursements) actually
incurred by Lender in connection with such Transfer and a processing fee of
$5,000. For purposes of this Agreement, a "QUALIFIED ENTITY" shall mean an
entity (x) with a net worth of $200,000,000 or more, (y) with sufficient
experience
55
(determined by Lender in its reasonable discretion) in the ownership and
management of properties similar to the Property, and (z) which owns or manages
retail properties containing at least 1,000,000 square feet of gross leasable
area. If required or requested by any of the Rating Agencies, Borrower shall
deliver a substantive non-consolidation opinion with respect to any party not
now owning more than 49% of the ownership interests in Borrower acquiring more
than 49% of the ownership interests in Borrower.
(c) Notwithstanding anything in this Section 5.2.13 to the contrary,
on or after the date that is twelve (12) months after the Closing Date, Borrower
shall be permitted to Transfer the entire Property in a single transaction to
one newly-formed Special Purpose Entity which shall be wholly-owned subsidiary
of Inland Western Retail Real Estate Trust, Inc. ("PERMITTED AFFILIATE
TRANSFEREE") which shall be approved by Lender in its reasonable discretion
("PERMITTED AFFILIATE TRANSFER"), provided (1) no Event of Default shall have
occurred and be continuing, (2) the creditworthiness of Inland Western Retail
Real Estate Trust, Inc., as applicable, has not deteriorated, in the sole
discretion of Lender, from the Closing Date to the date of the proposed
Transfer, and (3) Borrower shall have paid all reasonable and customary third
party expenses (including reasonable attorneys' fees and disbursements) actually
incurred by Lender in connection with such Transfer (but not any assumption or
processing fee).
(d) Borrower, without the consent of Lender, may grant easements,
restrictions, covenants, reservations and rights of way in the ordinary course
of business for water and sewer lines, telephone and telegraph lines, electric
lines and other utilities or for other similar purposes, provided that no
transfer, conveyance or encumbrance shall materially impair the utility and
operation of the Property or materially adversely affect the value of the
Property or the Net Operating Income of the Property. If Borrower shall receive
any consideration in connection with any of said described transfers or
conveyances, Borrower shall have the right to use any such proceeds in
connection with any alterations performed in connection therewith, or required
thereby. In connection with any transfer, conveyance or encumbrance permitted
above, the Lender shall execute and deliver any instrument reasonably necessary
or appropriate to evidence its consent to said action or to subordinate the Lien
of the applicable Mortgage to such easements, restrictions, covenants,
reservations and rights of way or other similar grants upon receipt by the
Lender of: (A) a copy of the instrument of transfer; and (B) an Officer's
Certificate stating with respect to any transfer described above, that such
transfer does not materially impair the utility and operation of the Property or
materially reduce the value of the Property or the Net Operating Income of the
Property.
ARTICLE VI
INSURANCE; CASUALTY; CONDEMNATION
Section 6.1 INSURANCE. (a) Each Borrower shall obtain and maintain,
or cause Anchor Tenant (if applicable) to obtain and maintain, insurance for
Borrower and its Property providing at least the following coverages:
(i) comprehensive all risk insurance on the Improvements and the
Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount
56
equal to one hundred percent (100%) of the "Full Replacement Cost," which
for purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation; (B) containing an agreed amount
endorsement with respect to the Improvements and Personal Property waiving
all co-insurance provisions; (C) providing for no deductible in excess of
Ten Thousand and No/100 Dollars ($10,000) for all such insurance coverage;
and (D) containing an "Ordinance or Law Coverage" or "Enforcement"
endorsement if any of the Improvements or the use of the Property shall at
any time constitute legal non-conforming structures or uses. In addition,
Borrower shall obtain: (y) if any portion of the Improvements is currently
or at any time in the future located in a federally designated "special
flood hazard area", flood hazard insurance in an amount equal to the lesser
of (1) the outstanding principal balance of the Note or (2) the maximum
amount of such insurance available under the National Flood Insurance Act
of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended or such greater amount
as Lender shall require; and (z) earthquake insurance in amounts and in
form and substance satisfactory to Lender in the event the Property is
located in an area with a high degree of seismic activity, provided that
the insurance pursuant to clauses (y) and (z) hereof shall be on terms
consistent with the comprehensive all risk insurance policy required under
this subsection (i).
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in
or about the Property, such insurance (A) to be on the so-called
"occurrence" form with a combined limit, including umbrella coverage, of
not less than Five Million and No/100 Dollars ($5,000,000.00); (B) to
continue at not less than the aforesaid limit until required to be changed
by Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations on an "if
any" basis; (3) independent contractors; (4) blanket contractual liability
for all legal contracts; and (5) contractual liability covering the
indemnities contained in Article 9 of the Mortgage to the extent the same
is available;
(iii) business income insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for
in subsection (i) above; (C) covering rental losses or business
interruption, as may be applicable, for a period of at least twelve (12)
months after the date of the casualty; and (D) in an annual amount equal to
(100%) of the rents or estimated gross revenues from the operation of the
Property (as reduced to reflect expenses not incurred during Restoration).
The amount of such business income insurance shall be determined prior to
the Closing Date and at least once each year thereafter based on Borrower's
reasonable estimate of the gross income from the Property for the
succeeding twelve (12) month period. All proceeds payable to Lender
pursuant to this subsection shall be held by Lender and shall be applied to
the obligations secured by the Loan Documents from time to time due and
payable hereunder and under the Note; PROVIDED, HOWEVER, that nothing
herein contained shall be deemed to relieve Borrower of its obligations to
pay the obligations secured by the Loan Documents on the respective dates
of payment provided for in the Note and the other Loan
57
Documents except to the extent such amounts are actually paid out of the
proceeds of such business income insurance;
(iv) at all times during which structural construction, repairs
or alterations are being made with respect to the Improvements, and only if
the Property coverage form does not otherwise apply, (A) owner's contingent
or protective liability insurance covering claims not covered by or under
the terms or provisions of the above mentioned commercial general liability
insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder's risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the Property, and
(4) with an agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of
the State;
(vi) comprehensive boiler and machinery insurance, if applicable,
in amounts as shall be reasonably required by Lender on terms consistent
with the commercial property insurance policy required under subsection (i)
above;
(vii) umbrella liability insurance in an amount not less than Five
Million and No/100 Dollars ($5,000,000.00) per occurrence on terms
consistent with the commercial general liability insurance policy required
under subsection (ii) above;
(viii) if any of the policies of insurance covering the risks
required to be covered under subsections (i) through (vii) above contains
an exclusion from coverage for acts of terrorism, Borrower shall obtain and
maintain a separate policy providing such coverages in the event of any act
of terrorism, provided such coverage is commercially available for
properties similar to the Property and located in or around the region in
which the Property is located. Notwithstanding the foregoing, Borrower
shall not be required to obtain such a policy, provided (I) Borrower
confirms to Lender, in writing, that it shall protect and hold Lender
harmless from any losses associated with such risks by, among other things,
either (A) depositing with Lender sums sufficient to pay for all uninsured
costs related to a Restoration of the Property following any act of
terrorism (which sum shall be treated as a Net Proceeds Deficiency), or (B)
provided such act of terrorism occurs on or after the Permitted Prepayment
Date, prepaying the Loan in accordance with the terms hereof; (II) Inland
Western Retail Real Estate Trust, Inc. ("TERRORISM INSURANCE GUARANTOR")
executes a guaranty, in form and substance satisfactory to Lender,
guaranteeing in the event of any act of terrorism, payment to Lender of any
sums that Borrower is obligated to pay to Lender under clause (I) above
(which shall be applied in accordance with Section 6.4 hereof) and (III)
Terrorism Insurance Guarantor maintains a net worth of at least
$300,000,000 (as determined by such entity's most recent audited financial
statements), such entity maintains a direct or indirect ownership interest
in Borrower, and the aggregate loan-to-value ratio (as determined by
Lender) ("LTV") for all properties on which such entity has a direct or
indirect ownership interest shall not exceed 55%, however, Terrorism
Insurance Guarantor may exceed the 55% LTV for a period not to exceed six
(6) months out of any twelve (12) month period either 1) during the time
period when Terrorism Insurance Guarantor is offering securities to
58
the public, or 2) when in the business judgement of Terrorism Insurance
Guarantor, exceeding an LTV of 55% is necessary given existing
circumstances of the credit environment, but in no event shall the LTV
exceed 65% if Terrorism Insurance Guarantor maintains a net worth greater
than or equal to $300,000,000, but less than $400,000,000, or 70% if
Terrorism Insurance Guarantor maintains a net worth of at least
$400,000,000.
(ix) upon sixty (60) days' written notice, such other reasonable
insurance and in such reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the Property located
in or around the region in which the Property is located.
(b) All insurance provided for in Section 6.1(a) shall be obtained
under valid and enforceable policies (collectively, the "POLICIES" or in the
singular, the "POLICY"), and shall be subject to the approval of Lender as to
insurance companies, amounts, deductibles, loss payees and insureds. The
Policies shall be issued by financially sound and responsible insurance
companies authorized to do business in the State and having a rating of "A:X" or
better in the current Best's Insurance Reports and a claims paying ability
rating of "AA" or better by at least two (2) of the Rating Agencies including,
(i) Standard & Poor's Ratings Group, and (ii) ▇▇▇▇▇'▇ Investors Services, Inc.
if ▇▇▇▇▇'▇ Investors Service, Inc. is rating the Securities. The Policies
described in Section 6.1 (other than those strictly limited to liability
protection) shall designate Lender as loss payee. Not less than thirty (30) days
prior to the expiration dates of the Policies theretofore furnished to Lender,
certificates of insurance evidencing the Policies accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the "INSURANCE
PREMIUMS"), shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 6.1(a).
(d) All Policies of insurance provided for or contemplated by Section
6.1(a), except for the Policy referenced in Section 6.1(a)(v), shall name
Borrower, or the applicable Tenant, as the insured and Lender as the additional
insured, as its interests may appear, and in the case of property damage, boiler
and machinery, flood and earthquake insurance, shall contain a so-called
New
York standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Section 6.1(a) shall
contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any Tenant or other occupant, or failure to comply with the
provisions of any Policy, which might otherwise result in a forfeiture of
the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;
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(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least thirty
(30) days' written notice to Lender and any other party named therein as an
additional insured;
(iii) the issuers thereof shall give written notice to Lender if
the Policy has not been renewed fifteen (15) days prior to its expiration;
and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right, after ten (10) Business Days written notice to Borrower, to take such
action as Lender deems necessary to protect its interest in the Property,
including, without limitation, the obtaining of such insurance coverage as
Lender in its sole discretion deems appropriate. All premiums incurred by Lender
in connection with such action or in obtaining such insurance and keeping it in
effect shall be paid by Borrower to Lender upon demand and, until paid, shall be
secured by the Mortgage and shall bear interest at the Default Rate. If Borrower
fails in so insuring the Property or in so assigning and delivering the
Policies, Lender may, at its option, obtain such insurance using such carriers
and agencies as Lender shall elect from year to year and pay the premiums
therefor, and Borrower will reimburse Lender for any premium so paid, with
interest thereon as stated in the Note from the time of payment, on demand, and
the amount so owning to Lender shall be secured by the Mortgage. The insurance
obtained by Lender may, but need not, protect Borrower's interest and the
coverage that Lender purchases may not pay any claim that Borrower makes or any
claim that is made against Borrower in connection with the Property.
Section 6.2 CASUALTY. If a Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty (a "CASUALTY"), the applicable
Borrower (a) shall give to Lender prompt notice of such damage reasonably
estimated by Borrower to cost more than One Hundred Thousand Dollars
($100,000.00) to repair, and (b) shall promptly commence and diligently
prosecute the completion of the repair and restoration of the Property as nearly
as possible to the condition the Property was in immediately prior to such fire
or other casualty, with such alterations as may be reasonably approved by Lender
(a "RESTORATION") and otherwise in accordance with Section 6.4. Borrower shall
pay all costs of such Restoration whether or not such costs are covered by
insurance. Lender may, but shall not be obligated to make proof of loss if not
made promptly by Borrower.
Section 6.3 CONDEMNATION. Each Borrower shall promptly give Lender
notice of the actual or threatened commencement of any proceeding for the
Condemnation of the Property and shall deliver to Lender copies of any and all
papers served in connection with such proceedings. Lender may participate in any
such proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time
60
and in the manner provided for its payment in the Note and in this Agreement and
the Debt shall not be reduced until any Award shall have been actually received
and applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt, Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If the Property or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 6.4. If the
Property is sold, through foreclosure or otherwise, prior to the receipt by
Lender of the Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt.
Section 6.4 RESTORATION. The following provisions shall apply in
connection with the Restoration of the Property:
(a) If the Net Proceeds shall be less than Relevant Restoration
Threshold and the costs of completing the Restoration shall be less than the
Relevant Restoration Threshold, the Net Proceeds will be disbursed by Lender to
the applicable Borrower upon receipt, provided that all of the conditions set
forth in clauses (A), (E), (F), (G), (H), (J) and (L) of Section 6.4(b)(i) below
are met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than the Relevant
Restoration Threshold or the costs of completing the Restoration is equal to
or greater than the Relevant Restoration Threshold, then in either case,
Lender shall make the Net Proceeds available for the Restoration in
accordance with the provisions of this Section 6.4(b). The term "NET
PROCEEDS" for purposes of this Section 6.4 shall mean: (x) the net amount of
all insurance proceeds received by Lender pursuant to Section 6.1 (a)(i),
(iv), (vi) and (viii) as a result of such damage or destruction, after
deduction of its reasonable costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting same ("INSURANCE
PROCEEDS"), or (y) the net amount of the Award, after deduction of its
reasonable costs and expenses (including, but not limited to, reasonable
counsel fees), if any, in collecting same ("CONDEMNATION PROCEEDS").
whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be
continuing;
(B) (1) in the event the Net Proceeds are Insurance
Proceeds, and (x) less than twenty-five percent (25%) of the
total floor area of the Improvements on the Property has
been damaged, destroyed or rendered unusable as a result of
such fire or other casualty, or (y) Borrower is required
under a Lease exceeding the Relevant Leasing Threshold to
use the Net Proceeds for the restoration of the Property, or
(2) in the event the Net Proceeds are Condemnation Proceeds,
and (x) less than ten percent
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(10%) of the land constituting the Property is taken, and
such land is located along the perimeter or periphery of the
Property, and no portion of the Improvements is located on
such land, or (y) Borrower is required under a Lease
exceeding the Relevant Leasing Threshold to use the Net
Proceeds for the restoration of the Property;
(C) Leases demising in the aggregate a percentage
amount equal to or greater than the Rentable Space
Percentage of the total rentable space in the Property which
has been demised under executed and delivered Leases in
effect as of the date of the occurrence of such fire or
other casualty or taking, whichever the case may be, shall
remain in full force and effect during and after the
completion of the Restoration, notwithstanding the
occurrence of any such fire or other casualty or taking,
whichever the case may be, and will make all necessary
repairs and restorations thereto at their sole cost and
expense. The term "RENTABLE SPACE PERCENTAGE" shall mean (x)
in the event the Net Proceeds are Insurance Proceeds, a
percentage amount equal to fifty percent (50%) and (y) in
the event the Net Proceeds are Condemnation Proceeds, a
percentage amount equal to fifty percent (50%);
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than ninety
(90) days after such damage or destruction or taking,
whichever the case may be, occurs) and shall diligently
pursue the same to satisfactory completion;
(E) Lender shall be satisfied that any operating
deficits, including all scheduled payments of principal and
interest under the Note, which will be incurred with respect
to the Property as a result of the occurrence of any such
fire or other casualty or taking, whichever the case may be,
will be covered out of (1) the Net Proceeds, (2) the
insurance coverage referred to in Section 6.1(a)(iii), if
applicable, or (3) by other funds of Borrower;
(F) Lender shall be satisfied that the Restoration will
be completed on or before the earliest to occur of (1) the
Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases, (3) such time as
may be required under applicable zoning law, ordinance, rule
or regulation in order to repair and restore the Property to
the condition it was in immediately prior to such fire or
other casualty or to as nearly as possible the condition it
was in immediately prior to such taking, as applicable or
(4) the expiration of the insurance coverage referred to in
Section 6.1(a)(iii);
(G) the Property and the use thereof after the
Restoration will be in compliance with and permitted under
all applicable zoning laws, ordinances, rules and
regulations provided, however, that compliance with such
zoning laws, ordinances, rules and regulations (including,
without
62
limitation, parking requirements) will not require
restoration of the Improvements or the Property to a size,
condition, or configuration materially different than that
which existed immediately prior to such Casualty or taking;
(H) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
compliance with all applicable governmental laws, rules and
regulations (including, without limitation, all applicable
environmental laws);
(I) such fire or other casualty or taking, as
applicable, does not result in the loss of access to the
Property or the related Improvements;
(J) the Debt Service Coverage Ratio, after giving
effect to the Restoration, shall be equal to or greater than
2.90:1.0 with respect to such Property;
(K) Borrower shall deliver or cause to be delivered to
Lender a signed detailed budget approved in writing by
Borrower's architect or engineer stating the entire cost of
completing the Restoration, which budget should be
consistent with restoration budgets of similar retail
properties then owned and operated by nationally recognized
owners and operators of retail properties located in the
areas in which the Property is located; and
(L) the Net Proceeds together with any cash or cash
equivalent deposited by Borrower with Lender are sufficient
in Lender's discretion to cover the cost of the Restoration.
(ii) The Net Proceeds shall be held by Lender in an interest
bearing account and, until disbursed in accordance with the provisions of
this Section 6.4(b), shall constitute additional security for the Debt and
other obligations under the Loan Documents. The Net Proceeds shall be
disbursed by Lender to, or as directed by, Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory
to Lender that (A) all materials installed and work and labor performed to
be paid for out of the requested disbursement in connection with the
Restoration have been performed, and (B) there exist no notices of
pendency, stop orders, mechanic's or materialman's liens or notices of
intention to file same, or any other liens or encumbrances of any nature
whatsoever on the Property which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company issuing the
Title Insurance Policy.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance in all respects
by Lender and by an independent consulting engineer selected by Lender (the
"CASUALTY CONSULTANT"), such review and acceptance not to be unreasonably
withheld or delayed. Lender shall have the
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use of the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The identity of
the contractors, subcontractors and materialmen engaged in the Restoration,
as well as the contracts under which they have been engaged, shall be
subject to prior review and acceptance by Lender and the Casualty
Consultant, such review and acceptance not to be unreasonably withheld or
delayed. All costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make disbursements
of the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration, as
certified by the Casualty Consultant, MINUS the Casualty Retainage. The
term "CASUALTY RETAINAGE" shall mean an amount equal to ten percent (10%)
of the costs actually incurred for work in place as part of the
Restoration, as certified by the Casualty Consultant, until the Restoration
has been completed. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this Section
6.4(b), be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant
certifies to Lender that the Restoration has been completed in accordance
with the provisions of this Section 6.4(b) and that all approvals necessary
for the re-occupancy and use of the Property have been obtained from all
appropriate governmental and quasi-governmental authorities, and Lender
receives evidence satisfactory to Lender that the costs of the Restoration
have been paid in full or will be paid in full out of the Casualty
Retainage; PROVIDED, HOWEVER, that Lender will release the portion of the
Casualty Retainage being held with respect to any contractor, subcontractor
or materialman engaged in the Restoration as of the date upon which the
Casualty Consultant certifies to Lender that the contractor, subcontractor
or materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor's,
subcontractor's or materialman's contract, the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of
all sums due to the contractor, subcontractor or materialman as may be
reasonably requested by Lender or by the title company issuing the Title
Insurance Policy, and Lender receives an endorsement to the Title Insurance
Policy insuring the continued priority of the lien of the Mortgage and
evidence of payment of any premium payable for such endorsement. If
required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has issued
a payment or performance bond with respect to the contractor, subcontractor
or materialman.
(v) Lender shall not be obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in consultation with
the Casualty Consultant, be sufficient to pay in full the balance of the
costs which are estimated by the Casualty
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Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the "NET PROCEEDS
DEFICIENCY") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender
shall be held by Lender and shall be disbursed for costs actually incurred
in connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Section 6.4(b) shall constitute additional security for the Debt and other
obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 6.4(b), and the
receipt by Lender of evidence satisfactory to Lender that all costs
incurred in connection with the Restoration have been paid in full, shall
be remitted by Lender to Borrower, provided no Event of Default shall have
occurred and shall be continuing under the Note, this Agreement or any of
the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 6.4(b)(vii) may be retained and applied by Lender toward the payment
of the Debt whether or not then due and payable in such order, priority and
proportions as Lender in its sole discretion shall deem proper (provided no
Event of Default exists, such Borrower shall not be required to pay any
Prepayment Consideration in connection with such payment), or, at the discretion
of Lender, the same may be paid, either in whole or in part, to Borrower for
such purposes as Lender shall designate, in its discretion.
(d) In the event of foreclosure of the Mortgage with respect to the
Property, or other transfer of title to the Property in extinguishment in whole
or in part of the Debt all right, title and interest of Borrower in and to the
Policies that are not blanket Policies then in force concerning the Property and
all proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Lender or other transferee in the event of such other transfer of
title.
(e) Lender shall with reasonable promptness following any Casualty or
Condemnation notify Borrower whether or not Net Proceeds are required to be made
available to Borrower for restoration pursuant to this Section 6.4. All Net
Proceeds not required to be made available for Restoration shall be retained and
applied by Lender in accordance with SECTION 2.3.2(a) hereof (a "NET PROCEEDS
PREPAYMENT"). If such Net Proceeds Prepayment shall be equal to or greater than
Two Million and 00/100 Dollars ($2,000,000.00) for the Inland Western ▇▇▇▇▇▇
Property, or equal to or greater than One Million Five Hundred Thousand and
00/100 Dollars ($1,500,000.00) for the Inland Western ▇▇▇▇▇▇▇▇ Property or equal
to or greater than Five Million Five Hundred Thousand and 00/100 Dollars
($5,500,000.00) for the Inland Western Euless Property, Borrower shall have the
right to elect to prepay the remaining outstanding principal balance of the
applicable Note (a "CASUALTY/CONDEMNATION PREPAYMENT") in accordance with
SECTION 2.3.2(b) hereof upon satisfaction of the following conditions: (i)
within
65
thirty (30) days following the date of the Net Proceeds Prepayment, Borrower
shall provide Lender with written notice of Borrower's intention to pay the
applicable Note in full, (ii) Borrower shall prepay the applicable Note in
accordance with Section 2.3.2(b) hereof on or before the second Payment Date
occurring following the date of the Net Proceeds Prepayment, and (iii) no Event
of Default shall exist on the date of such Casualty/Condemnation Prepayment
Notwithstanding anything in Section 6.2 or Section 6.3 to the contrary, Borrower
shall have no obligation to commence Restoration of the Property upon delivery
of the written notice set forth in clause (i) of the preceding sentence (unless
Borrower subsequently shall fail to satisfy the requirement of clause (ii) of
the preceding sentence).
ARTICLE VII
RESERVE FUNDS
Section 7.1 REQUIRED REPAIR FUNDS.
7.1.1 DEPOSITS. Borrower shall perform the repairs at its Property, if
any, as more particularly set forth on SCHEDULE III hereto (such repairs
hereinafter referred to as "REQUIRED REPAIRS") within six (6) months from the
Closing Date, or such earlier time as specified on SCHEDULE III. If Borrower has
not delivered to Lender evidence reasonably satisfactory to Lender that it has
completed all Required Repairs on or before the date that is six (6) months from
the Closing Date, or such earlier time as specified on SCHEDULE III. each
Borrower shall deposit with Lender the amount for its Property set forth on such
SCHEDULE III hereto, if any (less the amount allocated to the performance of
Required Repairs for which evidence of completion has been delivered to Lender),
to perform the Required Repairs for the Property. Amounts so deposited with
Lender, if any, shall be held by Lender in an interest bearing account. Amounts
so deposited, if any, shall hereinafter be referred to as Borrower's "REQUIRED
REPAIR FUND" and the account, if any, in which such amounts are held shall
hereinafter be referred to as Borrower's "REQUIRED REPAIR ACCOUNT". It shall be
an Event of Default under this Agreement if Borrower does not either (i) does
not deposit with Lender the Required Repair Fund as set forth above, or (ii)
complete the Required Repairs at the Property within nine (9) months from the
Closing Date. Upon the occurrence of such an Event of Default, Lender, at its
option, may withdraw all Required Repair Funds from the Required Repair Account
and Lender may apply such funds either to completion of the Required Repairs at
the Property or toward payment of the Debt in such order, proportion and
priority as Lender may determine in its sole discretion. Lender's right to
withdraw and apply Required Repair Funds shall be in addition to all other
rights and remedies provided to Lender under this Agreement and the other Loan
Documents.
7.1.2 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse to
Borrower the Required Repair Funds from the Required Repair Account from time to
time upon satisfaction by Borrower of each of the following conditions: (i)
Borrower shall submit a written request for payment to Lender at least fifteen
(15) days prior to the date on which Borrower requests such payment be made and
specifies the Required Repairs to be paid, (ii) on the date such request is
received by Lender and on the date such payment is to be made, no Default or
Event of Default shall exist and remain uncured, (iii) Lender shall have
received a certificate from Borrower (A)
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stating that all Required Repairs at the Property to be funded by the requested
disbursement have been completed in good and workmanlike manner and in
accordance with all applicable federal, state and local laws, rules and
regulations, such certificate to be accompanied by a copy of any license, permit
or other approval by any Governmental Authority required to commence and/or
complete the Required Repairs, (B) identifying each Person that supplied
materials or labor in connection with the Required Repairs performed at the
Property to be funded by the requested disbursement under a contract in excess
of $50,000, and (C) stating that each Person who has supplied materials or labor
in connection with the Required Repairs to be funded by the requested
disbursement has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (iv) at Lender's option, a title
search for the Property indicating that the Property is free from all liens,
claims and other encumbrances not previously approved by Lender, and (v) Lender
shall have received such other evidence as Lender shall reasonably request that
the Required Repairs at the Property to be funded by the requested disbursement
have been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to make disbursements from the Required
Repair Account with respect to the Property more than once each calendar month
and such disbursement shall be made only upon satisfaction of each condition
contained in this Section 7.1.2.
Section 7.2 TAX AND INSURANCE ESCROW FUND.
Each Borrower shall pay to Lender on each Payment Date (a) one-twelfth of
the Taxes that Lender estimates will be payable during the next ensuing twelve
(12) months in order to accumulate with Lender sufficient funds to pay all such
Taxes at least thirty (30) days prior to their respective due dates and (b)
one-twelfth of the Insurance Premiums that Lender estimates will be payable for
the renewal of the coverage afforded by the Policies upon the expiration thereof
in order to accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies,
(said amounts in (a) and (b) above are hereinafter called the "TAX AND INSURANCE
ESCROW FUND"). The Tax and Insurance Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note, shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply the
Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Borrower pursuant to this Agreement and under the
Mortgage. In making any payment relating to the Tax and Insurance Escrow Fund,
Lender may do so according to any ▇▇▇▇, statement or estimate procured from the
appropriate public office (with respect to Taxes) or insurer or agent (with
respect to Insurance Premiums) or from Borrower without inquiry into the
accuracy of such ▇▇▇▇, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof, provided,
however, Lender shall use reasonable efforts to pay such real property taxes
sufficiently early to obtain the benefit of any available discounts of which it
has knowledge. If the amount of the Tax and Insurance Escrow Fund shall exceed
the amounts due for Taxes and Insurance Premiums, Lender shall, in its sole
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. The Tax and Insurance
Escrow Fund shall be held by Lender in an interest-bearing account and shall at
Lender's option be held in Eligible Account at an Eligible Institution. Any
interest earned on said account shall accrue in said account for the benefit of
Borrower, but shall remain in and constitute part of the Tax and Insurance
Escrow
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Fund, and shall be disbursed in accordance with the terms hereof. Any amount
remaining in the Tax and Insurance Escrow Fund after the Debt has been paid in
full shall be returned to Borrower. In allocating such excess, Lender may deal
with the Person shown on the records of Lender to be the owner of the Property.
If at any time Lender reasonably determines that the Tax and Insurance Escrow
Fund is not or will not be sufficient to pay Taxes or Insurance Premiums by the
dates set forth above, Lender shall notify Borrower of such determination and
Borrower shall increase its monthly payments to Lender by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes or Insurance Premiums.
Notwithstanding anything to the contrary hereinbefore contained, in the
event that Borrower provides (1) evidence satisfactory to Lender that the
Property is insured in accordance with Section 6.1 of this Agreement and (2)
evidence satisfactory to Lender that the Taxes for the Property have been paid
in accordance with the requirements set forth in this Agreement, Lender will
waive the requirement set forth herein for Borrower to make deposits into the
Tax and Insurance Escrow Fund for the payment of Insurance Premiums and for
payment of such Taxes, provided, however, Lender expressly reserves the right to
require Borrower to make deposits to the Tax and Insurance Escrow Fund for the
payment of Insurance Premiums if at any time the Property is not insured in
accordance with Section 6.1 of this Agreement or Taxes are not paid in
accordance with the requirements of this Agreement.
Section 7.3 REPLACEMENTS AND REPLACEMENT RESERVE.
Section 7.3.1 REPLACEMENT RESERVE FUND. Each Borrower shall pay to
Lender on the Closing Date and on each Payment Date one twelfth of the amount
(the "REPLACEMENT RESERVE MONTHLY DEPOSIT") reasonably estimated by Lender in
its sole discretion to be due for replacements and repairs required to be made
to its Property during the calendar year (collectively, the "REPLACEMENTS"),
which Replacement Reserve Monthly Deposit shall be in an amount equal to no less
than $0.15 per year per square foot of gross leasable area. Amounts so deposited
shall hereinafter be referred to as Borrower's "REPLACEMENT RESERVE FUND" and
the account in which such amounts are held shall hereinafter be referred to as
Borrower's "REPLACEMENT RESERVE ACCOUNT". Lender may reassess its estimate of
the amount necessary for the Replacement Reserve Fund from time to time, and may
increase the monthly amounts required to be deposited into the Replacement
Reserve Fund upon thirty (30) days notice to Borrower if Lender determines in
its reasonable discretion that an increase is necessary to maintain the proper
maintenance and operation of the Property. Any amount held in the Replacement
Reserve Account and allocated for the Property shall be retained by Lender in an
interest bearing account, or, at the option of Lender, in an Eligible Account at
an Eligible Institution; PROVIDED, HOWEVER, that, any interest earned on said
account shall accrue in said account for the benefit of Borrower, but shall
remain in and constitute part of the Replacement Reserve Fund, and shall be
disbursed in accordance with the terms hereof.
Notwithstanding anything to the contrary in this Section 7.3, Borrower
shall not be required to make Replacement Reserve Monthly Deposits, provided
that: (i) no Event of Default shall have occurred; and (ii) Borrower makes all
necessary Replacements and otherwise maintains the Property to Lender's
satisfaction. Upon notice from Lender following: (a) an
68
Event of Default; or (b) the failure of Borrower to make necessary Replacements
or otherwise maintain the Property to Lender's satisfaction, Borrower shall
begin to deposit the Replacement Reserve Monthly Deposit into the Replacement
Reserve Fund beginning on the Payment Date (as defined herein) immediately
following the date of such notice.
Section 7.3.2 DISBURSEMENTS FROM REPLACEMENT RESERVE ACCOUNT.
(a) Lender shall make disbursements from the Replacement Reserve
Account to pay Borrower only for the costs of the Replacements. Lender shall not
be obligated to make disbursements from the Replacement Reserve Account to
reimburse Borrower for the costs of routine maintenance to the Property or for
costs which are to be reimbursed from the Required Repair Fund (if any).
(b) Lender shall, upon written request from Borrower and satisfaction
of the requirements set forth in this Section 7.3.2, disburse to Borrower
amounts from the Replacement Reserve Account necessary to pay for the actual
approved costs of Replacements or to reimburse Borrower therefor, upon
completion of such Replacements (or, upon partial completion in the case of
Replacements made pursuant to Section 7.3.2(f)) as determined by Lender. In no
event shall Lender be obligated to disburse funds from the Replacement Reserve
Account if a Default or an Event of Default exists.
(c) Each request for disbursement from the Replacement Reserve Account
shall be in a form specified or approved by Lender and shall specify (i) the
specific Replacements for which the disbursement is requested, (ii) the quantity
and price of each item purchased, if the Replacement includes the purchase or
replacement of specific items, (iii) the price of all materials (grouped by type
or category) used in any Replacement other than the purchase or replacement of
specific items, and (iv) the cost of all contracted labor or other services
applicable to each Replacement for which such request for disbursement is made.
With each request Borrower shall certify that all Replacements have been made in
accordance with all applicable Legal Requirements of any Governmental Authority
having jurisdiction over the Property to which the Replacements are being
provided and, unless Lender has agreed to issue joint checks as described below,
each request shall include evidence of payment of all such amounts. Each request
for disbursement shall include copies of invoices for all items or materials
purchased and all contracted labor or services provided. Except as provided in
Section 7.3.2(e), each request for disbursement from the Replacement Reserve
Account shall be made only after completion of the Replacement for which
disbursement is requested. Borrower shall provide Lender evidence of completion
satisfactory to Lender in its reasonable judgment.
(d) Borrower shall pay all invoices in connection with the
Replacements with respect to which a disbursement is requested prior to
submitting such request for disbursement from the Replacement Reserve Account
or, at the request of Borrower, Lender will issue joint checks, payable to
Borrower and the contractor, supplier, materialman, mechanic, subcontractor or
other party to whom payment is due in connection with a Replacement. In the case
of payments made by joint check, Lender may require a waiver of lien from each
Person receiving payment prior to Lender's disbursement from the Replacement
Reserve Account. In addition, as a condition to any disbursement, Lender may
require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an
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amount equal to or greater than $100,000 for completion of its work or delivery
of its materials. Any lien waiver delivered hereunder shall conform to the
requirements of applicable law and shall cover all work performed and materials
supplied (including equipment and fixtures) for the Property by that contractor,
supplier, subcontractor, mechanic or materialman through the date covered by the
current reimbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint check,
the release of lien shall be effective through the date covered by the previous
release of funds request).
(e) If (i) the cost of a Replacement exceeds $100,000, (ii) the
contractor performing such Replacement requires periodic payments pursuant to
terms of a written contract, and (iii) Lender has approved in writing in advance
such periodic payments, a request for reimbursement from the Replacement Reserve
Account may be made after completion of a portion of the work under such
contract, provided (A) such contract requires payment upon completion of such
portion of the work, (B) the materials for which the request is made are on site
at the Property and are properly secured or have been installed in the Property,
(C) all other conditions in this Agreement for disbursement have been satisfied,
(D) funds remaining in the Replacement Reserve Account are, in Lender's
judgment, sufficient to complete such Replacement and other Replacements when
required, and (E) if required by Lender, each contractor or subcontractor
receiving payments under such contract shall provide a waiver of lien with
respect to amounts which have been paid to that contractor or subcontractor.
(f) Borrower shall not make a request for disbursement from the
Replacement Reserve Account more frequently than once in any calendar month and
(except in connection with the final disbursement) the total cost of all
Replacements in any request shall not be less than $5,000.00.
Section 7.3.3 PERFORMANCE OF REPLACEMENTS.
(a) Borrower shall make Replacements when required in order to keep
the Property in condition and repair consistent with other first class retail
properties in the same market segment in the metropolitan area in which the
Property is located, and to keep the Property or any portion thereof from
deteriorating. Borrower shall complete all Replacements in a good and
workmanlike manner as soon as practicable following the commencement of making
each such Replacement.
(b) Lender reserves the right, at its option, to approve all contracts
or work orders with materialmen, mechanics, suppliers, subcontractors,
contractors or other parties providing labor or materials under contracts for an
amount in excess of $100,000 in connection with the Replacements performed by
Borrower. Upon Lender's request, Borrower shall assign any contract or
subcontract to Lender.
(c) In the event Lender determines in its reasonable discretion that
any Replacement is not being performed in a workmanlike or timely manner or that
any Replacement has not been completed in a workmanlike or timely manner, and
such failure continues to exist for more than thirty (30) days after notice from
Lender to Borrower, Lender shall have the option to withhold disbursement for
such unsatisfactory Replacement and to proceed under existing contracts or to
contract with third parties to complete such Replacement and to apply the
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Replacement Reserve Fund toward the labor and materials necessary to complete
such Replacement, without providing any prior notice to Borrower and to exercise
any and all other remedies available to Lender upon an Event of Default
hereunder.
(d) In order to facilitate Lender's completion or making of the
Replacements pursuant to Section 7.3.3(b) above, Borrower grants Lender the
right to enter onto the Property and perform any and all work and labor
necessary to complete or make the Replacements and/or employ watchmen to protect
the Property from damage, subject to the rights of Tenants. All sums so expended
by Lender, to the extent not from the Replacement Reserve Fund, shall be deemed
to have been advanced under the Loan to Borrower and secured by the Mortgage.
For this purpose Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Replacements in the name of Borrower. Such power of attorney shall be deemed to
be a power coupled with an interest and cannot be revoked but shall only be
effective following an Event of Default. Borrower empowers said attorney-in-fact
as follows: (i) to use any funds in the Replacement Reserve Account for the
purpose of making or completing the Replacements; (ii) to make such additions,
changes and corrections to the Replacements as shall be necessary or desirable
to complete the Replacements; (iii) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for such purposes; (iv)
to pay, settle or compromise all existing bills and claims which are or may
become Liens against the Property, or as may be necessary or desirable for the
completion of the Replacements, or for clearance of title; (v) to execute all
applications and certificates in the name of Borrower which may be required by
any of the contract documents; (vi) to prosecute and defend all actions or
proceedings in connection with the Property or the rehabilitation and repair of
the Property; and (vii) to do any and every act which Borrower might do in its
own behalf to fulfill the terms of this Agreement.
(e) Nothing in this Section 7.3.3 shall: (i) make Lender responsible
for making or completing the Replacements; (ii) require Lender to expend funds
in addition to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with the Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.
(f) Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, Lender's engineer, architect, or
inspector) or third parties making Replacements pursuant to this Section 7.3.3
to enter onto the Property during normal business hours (subject to the rights
of tenants under their Leases) to inspect the progress of any Replacements and
all materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the Property,
and to complete any Replacements made pursuant to this Section 7.3.3. Borrower
shall cause all contractors and subcontractors to cooperate with Lender or
Lender's representatives or such other persons described above in connection
with inspections described in this Section 7.3.3(f) or the completion of
Replacements pursuant to this Section 7.3.3.
(g) Lender may require an inspection of the Property at Borrower's
expense prior to making a monthly disbursement in excess of $10,000 from the
Replacement Reserve Account in order to verify completion of the Replacements
for which reimbursement is sought. Lender
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may require that such inspection be conducted by an appropriate independent
qualified professional selected by Lender and/or may require a copy of a
certificate of completion by an independent qualified professional acceptable to
Lender prior to the disbursement of any amounts from the Replacement Reserve
Account. Borrower shall pay the expense of the inspection as required hereunder,
whether such inspection is conducted by Lender or by an independent qualified
professional.
(h) The Replacements and all materials, equipment, fixtures, or any
other item comprising a part of any Replacement shall be constructed, installed
or completed, as applicable, free and clear of all mechanic's, materialman's or
other liens (except for those Liens existing on the date of this Agreement which
have been approved in writing by Lender).
(i) Before each disbursement from the Replacement Reserve Account,
Lender may require Borrower to provide Lender with a search of title to the
Property effective to the date of the disbursement, which search shows that no
mechanic's or materialmen's liens or other liens of any nature have been placed
against the Property since the date of recordation of the Mortgage and that
title to the Property is free and clear of all Liens (other than the lien of the
Mortgage and any other Liens previously approved in writing by Lender, if any).
(j) All Replacements shall comply with all applicable Legal
Requirements of all Governmental Authorities having jurisdiction over the
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(k) In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement. All
such policies shall be in form and amount reasonably satisfactory to Lender. All
such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such
policies shall be delivered to Lender.
Section 7.3.4 FAILURE TO MAKE REPLACEMENTS. (a) It shall be an Event of
Default under this Agreement if a Borrower fails to comply with any provision of
this Section 7.3 and such failure is not cured within thirty (30) days after
notice from Lender; PROVIDED, HOWEVER, if such failure is not capable of being
cured within said thirty (30) day period, then provided that Borrower commences
action to complete such cure and thereafter diligently proceeds to complete such
cure, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower, in the exercise of due diligence, to cure
such failure, but such additional period of time shall not exceed sixty (60)
days. Upon the occurrence of such an Event of Default, Lender may use the
Replacement Reserve Fund (or any portion thereof) for any purpose, including but
not limited to completion of the Replacements as provided in Section 7.3.3, or
for any other repair or replacement to the Property or toward payment of the
Debt in such order, proportion and priority as Lender may determine in its sole
discretion. Lender's right to withdraw and apply the Replacement Reserve Funds
shall be in addition to all other rights and remedies provided to Lender under
this Agreement and the other Loan Documents.
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(b) Nothing in this Agreement shall obligate Lender to apply all or
any portion of the Replacement Reserve Fund on account of an Event of Default to
payment of the Debt or in any specific order or priority.
Section 7.3.5 BALANCE IN THE REPLACEMENT RESERVE ACCOUNT. The insufficiency
of any balance in the Replacement Reserve Account shall not relieve Borrower
from its obligation to fulfill all preservation and maintenance covenants in the
Loan Documents.
Section 7.3.6 INDEMNIFICATION. BORROWER SHALL INDEMNITY LENDER AND HOLD
LENDER HARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, SUITS, CLAIMS, DEMANDS,
LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS AND COSTS AND EXPENSES (INCLUDING
LITIGATION COSTS AND REASONABLE ATTORNEYS FEES AND EXPENSES) ARISING FROM OR IN
ANY WAY CONNECTED WITH THE PERFORMANCE OF THE REPLACEMENTS UNLESS THE SAME ARE
SOLELY DUE TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER. BORROWER SHALL
ASSIGN TO LENDER ALL RIGHTS AND CLAIMS BORROWER MAY HAVE AGAINST ALL PERSONS OR
ENTITIES SUPPLYING LABOR OR MATERIALS IN CONNECTION WITH THE REPLACEMENTS;
PROVIDED, HOWEVER, THAT LENDER MAY NOT PURSUE ANY SUCH RIGHT OR CLAIM UNLESS AN
EVENT OF DEFAULT HAS OCCURRED AND REMAINS UNCURED.
Section 7.4 INTENTIONALLY OMITTED.
Section 7.5 INTENTIONALLY OMITTED.
Section 7.6 INTENTIONALLY OMITTED.
Section 7.7 RESERVE FUNDS, GENERALLY.
7.7.1 Borrower grants to Lender a first-priority perfected
security interest in each of the Reserve Funds and any and all monies now or
hereafter deposited in each Reserve Fund as additional security for payment of
the Debt. Until expended or applied in accordance herewith, the Reserve Funds
shall constitute additional security for the Debt.
7.7.2 Upon the occurrence of an Event of Default, Lender may, in
addition to any and all other rights and remedies available to Lender, apply any
sums then present in any or all of the Reserve Funds to the payment of the Debt
in any order in its sole discretion.
7.7.3 The Reserve Funds shall not constitute trust funds and may
be commingled with other monies held by Lender.
7.7.4 INTENTIONALLY OMITTED.
7.7.5 Borrower shall not, without obtaining the prior written
consent of Lender, further pledge, assign or grant any security interest in any
Reserve Fund or the monies deposited therein or permit any lien or encumbrance
to attach thereto, or any levy to be made thereon, or
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any UCC-1 Financing Statements, except those naming Lender as the secured party,
to be filed with respect thereto.
7.7.6 Lender shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds unless occasioned by the
gross negligence or willful misconduct of Lender.
7.7.7 Upon payment in full of the Debt and performance of all
other obligations under this Agreement and the other Loan Documents, Lender
shall disburse to Borrower all remaining Reserve Funds.
ARTICLE VIII
DEFAULTS
Section 8.1 EVENT OF DEFAULT. (a) Each of the following events shall
constitute an event of default hereunder (an "EVENT OF DEFAULT"):
(i) if any portion of the Debt is not paid within five (5) days
of the applicable due date;
(ii) if any of the Taxes or Other Charges are not paid prior to
the date when the same become delinquent, except to the extent that
Borrower is contesting same in accordance with the terms of Section 5.1.2
hereof, or there are sufficient funds in the Tax and Insurance Escrow Fund
to pay such Taxes or Other Charges and Lender fails to or refuses to
release the same from the Tax and Insurance Escrow Fund;
(iii) if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender within ten
(10) days of request;
(iv) if any Borrower transfers or encumbers any portion of its
Property without Lender's prior written consent (to the extent such consent
is required) or otherwise violates the provisions of Section 5.2.13 of this
Loan Agreement;
(v) if any material representation or warranty made by any
Borrower herein or in any other Loan Document, or in any report,
certificate, financial statement or other instrument, agreement or document
furnished to Lender shall have been false or misleading in any material
respect as of the date the representation or warranty was made;
(vi) if any Borrower or indemnitor or any guarantor under any
guaranty or indemnity issued in connection with the Loan shall make an
assignment for the benefit of creditors;
(vii) if a receiver, liquidator or trustee shall be appointed for
any Borrower or any guarantor or indemnitor under any guarantee or
indemnity issued in connection with the Loan or if any Borrower or such
guarantor or indemnitor shall be adjudicated a
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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,
any Borrower or such guarantor or indemnitor, or if any proceeding for the
dissolution or liquidation of any Borrower or such guarantor or indemnitor
shall be instituted; PROVIDED, HOWEVER, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by any Borrower
or such guarantor or indemnitor, upon the same not being discharged, stayed
or dismissed within one hundred eighty (180) days;
(viii) if any Borrower attempts to assign its rights under this
Agreement or any of the other Loan Documents or any interest herein or
therein in contravention of the Loan Documents;
(ix) if any Borrower breaches any of its respective negative
covenants contained in Section 5.2 or any covenant contained in Section
4.1.30 hereof;
(x) with respect to any term, covenant or provision set forth
herein which specifically contains a notice requirement or grace period, if
a Borrower shall be in default under such term, covenant or condition after
the giving of such notice or the expiration of such grace period;
(xi) if any of the assumptions contained in any substantive
non-consolidation opinion are or shall become untrue in any material
respect;
(xii) if any Borrower shall continue to be in Default under any of
the other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xi) above, for ten (10) days after notice to Borrower
from Lender, in the case of any Default which can be cured by the payment
of a sum of money, or for thirty (30) days after notice from Lender in the
case of any other Default; PROVIDED, HOWEVER, that if such non-monetary
Default is susceptible of cure but cannot reasonably be cured within such
30-day period and provided further that Borrower shall have commenced to
cure such Default within such 30-day period and thereafter diligently and
expeditiously proceeds to cure the same, such 30-day period shall be
extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such Default, such additional period not
to exceed one hundred eighty (180) days; or
(xiii) if there shall be default under any of the other Loan
Documents beyond any applicable cure periods contained in such documents,
whether as to Borrower or the Property, or if any other such event shall
occur or condition shall exist, if the effect of such event or condition is
to accelerate the maturity of any portion of the Debt or to permit Lender
to accelerate the maturity of all or any portion of the Debt.
(b) Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents or at law or in
equity, Lender may take such action, without notice or demand, that Lender deems
advisable to protect and enforce its rights against Borrower and in the
Property,
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including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents against Borrower and the Property, including,
without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in clauses (vi), (vii) or (viii) above, the
Debt and all other obligations of Borrower hereunder and under the other Loan
Documents shall immediately and automatically become due and payable, without
notice or demand, and Borrower hereby expressly waives any such notice or
demand, anything contained herein or in any other Loan Document to the contrary
notwithstanding.
Section 8.2 REMEDIES. (a) Upon the occurrence of an Event of Default,
all or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement or any of the other
Loan Documents executed and delivered by, or applicable to, Borrower or at law
or in equity may be exercised by Lender at any time and from time to time,
whether or not all or any of the Debt shall be declared due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents with respect to any Property. Any such actions taken by Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity or contract or as set forth herein or in the other Loan
Documents. Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing (i) Lender is not subject to any "one
action" or "election of remedies" law or rule, and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies against each Property and
each Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
(b) Lender shall have the right from time to time to partially
foreclose a Mortgage in any manner and for any amounts secured by such Mortgage
then due and payable as determined by Lender in its sole discretion including,
without limitation, the following circumstances: (i) in the event Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and interest, Lender may foreclose a Mortgage to
recover such delinquent payments, or (ii) in the event Lender elects to
accelerate less than the entire outstanding principal balance of the Loan,
Lender may foreclose a Mortgage to recover so much of the principal balance of
the Loan as Lender may accelerate and such other sums secured by such Mortgages
as Lender may elect. Notwithstanding one or more partial foreclosures, the one
or more applicable Property shall remain subject to the applicable Mortgage to
secure payment of sums secured by such Mortgage and not previously recovered.
(c) Lender shall have the right from time to time to sever the Note
and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the "SEVERED LOAN DOCUMENTS") in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
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effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender following the occurrence of an Event of Default as
its true and lawful attorney, coupled with an interest, in its name and stead to
make and execute all documents necessary or desirable to effect the aforesaid
severance, Borrower ratifying all that its said attorney shall do by virtue
thereof; PROVIDED, HOWEVER, Lender shall not make or execute any such documents
under such power until three (3) days after notice has been given to Borrower by
Lender of Lender's intent to exercise its rights under such power. Borrower
shall not be obligated to pay any costs or expenses incurred in connection with
the preparation, execution, recording or filing of the Severed Loan Documents,
and the Severed Loan Documents shall not contain any representations, warranties
or covenants not contained in the Loan Documents and any such representations
and warranties contained in the Severed Loan Documents will be given by Borrower
only as of the Closing Date.
(d) As used in this Section 8.2, a "foreclosure" shall include any
sale by power of sale.
Section 8.3 REMEDIES CUMULATIVE: WAIVERS. The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive of
any other right, power or remedy which Lender may have against Borrower pursuant
to this Agreement or the other Loan Documents, or existing at law or in equity
or otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
ARTICLE IX
SPECIAL PROVISIONS
Section 9.1 SALE OF NOTES AND SECURITIZATION. At the request of the
holder of a Note and, to the extent not already required to be provided by
Borrower under this Agreement, Borrower shall cooperate with Lender to allow
Lender to satisfy the market standards to which the holder of the Note
customarily adheres or which may be reasonably required in the marketplace or by
the Rating Agencies in connection with the sale of the Note or participations
therein or the first successful securitization (such sale and/or securitization,
the "SECURITIZATION") of rated single or multi-class securities (the
"SECURITIES") secured by or evidencing ownership interests in the Note and the
applicable Mortgage. In this regard Borrower shall:
(a) (i) provide such financial and other information with respect to
the Property, Borrower and the Manager, (ii) provide budgets relating to the
Property and (iii) to perform or permit or cause to be performed or permitted
such site inspection, appraisals, market studies, environmental reviews and
reports (Phase I's and, if appropriate, Phase II's), engineering reports and
other due diligence investigations of the Property, as may be reasonably
requested by the
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holder of the Note or the Rating Agencies or as may be necessary or appropriate
in connection with the Securitization (the "PROVIDED INFORMATION"), together, if
customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to Lender and the Rating Agencies;
(b) cause counsel to render opinions, which may be relied upon by the
holder of the Note, the Rating Agencies and their respective counsel, agents and
representatives, as to non-consolidation, fraudulent conveyance, and true sale
and/or lease or any other opinion customary in securitization transactions,
which counsel and opinions shall be reasonably satisfactory to the holder of the
Note and the Rating Agencies;
(c) make such representations and warranties as of the closing date of
the Securitization with respect to the Property, Borrower, and the Loan
Documents as are consistent with the representations and warranties made in the
Loan Documents; and
(d) execute such amendments to the Loan Documents and organizational
documents as may be reasonably requested by the holder of the Note or the Rating
Agencies or otherwise to effect the Securitization; PROVIDED, HOWEVER, that
Borrower shall not be required to modify or amend any Loan Document if such
modification or amendment would (i) change the interest rate, the stated
maturity or the amortization of principal set forth in the Note, or (ii) modify
or amend any other material economic term of the Loan.
All material out-of-pocket third party costs and expenses incurred by
Borrower in connection with complying with requests made under this Section 9.1
shall be paid by Lender.
Section 9.2 SECURITIZATION. Borrower understands that certain of the
Provided Information may be included in disclosure documents in connection with
the Securitization, including, without limitation, a prospectus, prospectus
supplement or private placement memorandum (each, a "DISCLOSURE DOCUMENT") and
may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, Borrower will cooperate with the
holder of the Note in updating the Disclosure Document by providing all current
information necessary to keep the Disclosure Document accurate and complete in
all material respects.
Section 9.3 RATING SURVEILLANCE. Lender, at its option, may retain the
Rating Agencies to provide rating surveillance services on any certificates
issued in a Securitization. Such rating surveillance will be at the expense of
Lender (the "RATING SURVEILLANCE CHARGE").
Section 9.4 EXCULPATION. Subject to the qualifications below, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Notes, this Agreement, the Mortgages or
the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower, except that Lender may bring a foreclosure
action, an action for specific performance or any other appropriate action or
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proceeding to enable Lender to enforce and realize upon its interest under the
Notes, this Agreement, the Mortgages and the other Loan Documents, or one or
more Properties, the Rents following an Event of Default, or any other
collateral given to Lender pursuant to the Loan Documents; provided, however,
that, except as specifically provided herein, any judgment in any such action or
proceeding shall be enforceable against a Borrower only to the extent of
Borrower's interest in the Property, in the Rents following an Event of Default
and in any other collateral given to Lender, and Lender, by accepting the Notes,
this Agreement, the Mortgages and the other Loan Documents, agrees that it shall
not ▇▇▇ for, seek or demand any deficiency judgment against Borrower in any such
action or proceeding under or by reason of or under or in connection with the
Notes, this Agreement, the Mortgages or the other Loan Documents. The provisions
of this section shall not, however, (a) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(b) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under any of the Mortgages; (c) affect
the validity or enforceability of or any guaranty made in connection with the
Loan or any of the rights and remedies of Lender thereunder; (d) impair the
right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of any of the Assignments of Leases following an Event of Default;
(f) constitute a prohibition against Lender commencing any other appropriate
action or proceeding in order for Lender to exercise its remedies against any
Property; or (g) constitute a waiver of the right of Lender to enforce the
liability and obligation of a Borrower, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or other obligation
incurred by Lender (including attorneys' fees and costs reasonably incurred)
arising out of or in connection with the following:
(i) fraud or intentional misrepresentation by Borrower or any
guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Borrower;
(iii) material physical waste of its Property;
(iv) the breach of any representation, warranty, covenant or
indemnification provision in the applicable Environmental Indemnity or in
the applicable Mortgage concerning environmental laws, hazardous substances
and asbestos and any indemnification of Lender with respect thereto in
either document;
(v) the removal or disposal of any portion of the Property after
an Event of Default;
(vi) the misapplication or conversion by Borrower of (A) any
insurance proceeds paid by reason of any loss, damage or destruction to the
Property which are not applied by Borrower in accordance with this
Agreement, (B) any awards or other amounts received in connection with the
condemnation of all or a portion of the Property which are not applied by
Borrower in accordance with this Agreement, or (C) any Rents following an
Event of Default;
(vii) failure to pay charges for labor or materials or other
charges that can create liens on any portion of the Property; or
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(viii) any security deposits, advance deposits or any other
deposits collected with respect to the Property which are not delivered to
Lender upon a foreclosure of the Property or action in lieu thereof, except
to the extent any such security deposits were applied in accordance with
the terms and conditions of any of the Leases prior to the occurrence of
the Event of Default that gave rise to such foreclosure or action in lieu
thereof.
Notwithstanding anything to the contrary in this Agreement, the Note
or any of the Loan Documents, (A) the Debt shall be fully recourse to each
Borrower and (B) Lender shall not be deemed to have waived any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the U.S. Bankruptcy Code to file a claim for the full amount of the Debt secured
by the Mortgages or to require that all collateral shall continue to secure all
of the Debt owing to Lender in accordance with the Loan Documents in the event
that the (I) first full monthly payment under any Note is not paid within five
(5) days of notice that such payment is late (provided, however, that such grace
period relates only to the recourse trigger described in this paragraph), or
(II) failure of any Borrower to permit on-site inspections of the Property
subject to the rights of Tenants and any applicable cure period set forth in the
Loan Documents, to provide financial information as required under the Loan
Documents subject to any applicable cure period (except for financial
information required to be delivered by a tenant pursuant to the applicable
Lease that has not been delivered to Borrower, provided Borrower has requested
such financial information from such tenant), or to comply with Section 4.1.30
hereof, or (III) failure of any Borrower to obtain Lender's prior written
consent (to the extent such consent is required) to any subordinate financing or
other voluntary lien encumbering its Property, or (IV) failure of any Borrower
to obtain Lender's prior written consent to any assignment, transfer or
conveyance of the Property, or any portion thereof, or any interest therein as
required by this Agreement. Notwithstanding the provision set forth in clause
(III) of this paragraph, a voluntary lien OTHER THAN a lien securing an
extension of credit filed against a Property shall not constitute a recourse
trigger for purposes of this paragraph provided such lien (A) is fully bonded to
the satisfaction of Lender and discharged of record within ninety (90) days of
filing, or (B) within such ninety (90) day period, Lender receives affirmative
title insurance from the title insurance company insuring the lien of the
Mortgage that such lien is subject and subordinate to the lien of the applicable
Mortgage and no enforcement action is commenced by the applicable lien holder.
Section 9.5 TERMINATION OF MANAGER. If (a) the amounts evidenced by
the Note have been accelerated pursuant to Section 8.1(b) hereof, (b) the
Manager shall become insolvent, (c) the Manager is in default under the terms of
the Management Agreement beyond any applicable grace or cure period, or (d)
Manager is not managing the Property in accordance with the management practices
of nationally recognized management companies managing similar properties in
locations comparable to those of the Property, then, in the case of (a), (b),
(c) or (d), Borrower shall, at the request of Lender, terminate the Management
Agreement and replace the Manager with a manager reasonably approved by Lender
on terms and conditions reasonably satisfactory to Lender, it being understood
and agreed that the management fee for such replacement manager shall not exceed
then prevailing market rates. In addition and without limiting the rights of
Lender hereunder or under any of the other Loan Documents, in the event that (i)
the Management Agreement is terminated, (ii) the Manager no longer manages the
Property, or (iii) a receiver, liquidator or trustee shall be appointed for
Manager or if Manager
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shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Manager, or if any proceeding for the dissolution or liquidation of
Manager shall be instituted, then Borrower (at Borrower's sole cost and expense)
shall immediately, in its name, establish new deposit accounts separate from any
other Person with a depository satisfactory to Lender into which all Rents and
other income from the Property shall be deposited and shall grant Lender a first
priority security interest in such account pursuant to documentation
satisfactory in form and substance to Lender.
Section 9.6 SERVICER. At the option of Lender, the Loan may be
serviced by a servicer/trustee (the "SERVICER") selected by Lender and Lender
may delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents to the Servicer pursuant to a servicing agreement (the
"SERVICING AGREEMENT") between Lender and Servicer. Lender shall be responsible
for any set-up fees or any other costs relating to or arising under the
Servicing Agreement.
Section 9.7 SPLITTING THE LOAN. At the election of Lender in its sole
discretion, the Loan or any individual Note making up the Loan shall be split
and severed into two or more loans which, at Lender's election, shall not be
cross-collateralized or cross-defaulted with each other. Borrower hereby agrees
to deliver to Lender to effectuate such severing of the Loan or any individual
Note, as the case may be, as reasonably requested by Lender, (a) additional
executed documents, or amendments and modifications to the applicable Loan
Documents, (b) new opinions or updates to the opinions delivered to Lender in
connection with the closing of the Loan, (c) endorsements and/or updates to the
title insurance policies delivered to Lender in connection with the closing of
the Loan, and (d) any other certificates, instruments and documentation
reasonably determined by Lender as necessary or appropriate to such severance
(the items described in subsections (a) through (d) collectively hereinafter
shall be referred to as "Severing Documentation"), which Severing Documentation
shall be acceptable to Lender in form and substance in its reasonable
discretion. Lender hereby agrees to be responsible for all reasonable
third-party expenses incurred in connection with the preparation and delivery of
the Severing Documentation and the effectuation of the uncrossing of the Loan
from the additional Loans. Borrower hereby acknowledges and agrees that upon
such severing of the Loan, Lender may effect, in its sole discretion, one or
more Securitizations of which the severed loans may be apart.
ARTICLE X
MISCELLANEOUS
Section 10.1 SURVIVAL. This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth herein or in the other Loan Documents. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the legal representatives, successors and assigns of such
party. All covenants,
81
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
Section 10.2 LENDER'S DISCRETION. Whenever pursuant to this Agreement,
Lender exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Lender, the decision of Lender to
approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
Section 10.3 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF
NEW YORK AND SHALL IN
ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF
NEW YORK AND APPLICABLE FEDERAL LAWS, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS
AND SECURITY INTERESTS CREATED PURSUANT HERETO WITH RESPECT TO A PROPERTY OR
ACCOUNT SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN
WHICH SUCH PROPERTY OR ACCOUNT IS LOCATED.
Section 10.4 MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Note, or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party against whom enforcement is sought,
and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or other
circumstances.
Section 10.5 DELAY NOT A WAIVER. Neither any failure nor any delay on
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note or under any other Loan Document, or any other
instrument given as security therefor, shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other
future exercise, or the exercise of any other right, power, remedy or privilege.
In particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement, the Note or any other Loan
Document, Lender shall not be deemed to have waived any right either to require
prompt payment when due of all other amounts due under this Agreement, the Note
or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount.
Section 10.6 NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as
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shall be designated from time to time by any party hereto, as the case may be,
in a written notice to the other parties hereto in the manner provided for in
this Section):
If to Lender:
Bear ▇▇▇▇▇▇▇ Commercial Mortgage, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to any Borrower:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
Inland Western Retail Real Estate Trust, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
and to:
Inland Western Retail Real Estate Trust, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or certified mail,
when delivered or the first attempted delivery on a Business Day; or in the case
of expedited prepaid delivery and telecopy, upon the first attempted delivery on
a Business Day.
Section 10.7 TRIAL BY JURY. BORROWER AND LENDER HEREBY AGREE NOT TO
ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY
RIGHT TO TRIAL BY JURY FULLY TO THE
83
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH
IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER AND LENDER.
Section 10.8 HEADINGS. The Article and/or Section headings and the
Table of Contents in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.
Section 10.9 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 10.10 PREFERENCES.
Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrower to any portion of the
obligations of Borrower hereunder. To the extent Borrower makes a payment or
payments to Lender, which payment or 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 10.11 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lender to Borrower and except with respect
to matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.
Section 10.12 REMEDIES OF BORROWER. In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower's sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The
84
parties hereto agree that any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.
Section 10.13 EXPENSES; INDEMNITY.
(a) Borrower covenants and agrees to pay or, if Borrower fails to pay,
to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Property); (ii) Borrower's ongoing performance of and compliance with
Borrower's respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) Lender's ongoing performance and
compliance with all agreements and conditions contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iv) except as otherwise provided in this Agreement, the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters reasonably requested by
Lender; (v) securing Borrower's compliance with any requests made pursuant to
the provisions of this Agreement; (vi) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Liens in favor of Lender pursuant to
this Agreement and the other Loan Documents; (vii) enforcing or preserving any
rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or
affecting Borrower, this Agreement, the other Loan Documents, the Property, or
any other security given for the Loan; and (viii) enforcing any obligations of
or collecting any payments due from Borrower under this Agreement, the other
Loan Documents or with respect to the Property or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of
the gross negligence, illegal acts, fraud or willful misconduct of Lender.
(b) BORROWER SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER FROM AND
AGAINST ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND
OR NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL FOR LENDER IN CONNECTION WITH ANY INVESTIGATIVE,
ADMINISTRATIVE OR JUDICIAL PROCEEDING COMMENCED OR THREATENED, WHETHER OR NOT
LENDER SHALL BE DESIGNATED A PARTY THERETO), THAT MAY BE IMPOSED ON, INCURRED
BY, OR ASSERTED
85
AGAINST LENDER IN ANY MANNER RELATING TO OR ARISING OUT OF (I) ANY BREACH BY
BORROWER OF ITS OBLIGATIONS UNDER, OR ANY MATERIAL MISREPRESENTATION BY BORROWER
CONTAINED IN, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR (II) THE USE OR
INTENDED USE OF THE PROCEEDS OF THE LOAN (COLLECTIVELY, THE "INDEMNIFIED
LIABILITIES"); PROVIDED, HOWEVER, THAT BORROWER SHALL NOT HAVE ANY OBLIGATION TO
LENDER HEREUNDER TO THE EXTENT THAT SUCH INDEMNIFIED LIABILITIES ARISE FROM THE
GROSS NEGLIGENCE, ILLEGAL ACTS, FRAUD OR WILLFUL MISCONDUCT OF LENDER. TO THE
EXTENT THAT THE UNDERTAKING TO INDEMNIFY, DEFEND AND HOLD HARMLESS SET FORTH IN
THE PRECEDING SENTENCE MAY BE UNENFORCEABLE BECAUSE IT VIOLATES ANY LAW OR
PUBLIC POLICY, BORROWER SHALL PAY THE MAXIMUM PORTION THAT IT IS PERMITTED TO
PAY AND SATISFY UNDER APPLICABLE LAW TO THE PAYMENT AND SATISFACTION OF ALL
INDEMNIFIED LIABILITIES INCURRED BY LENDER.
Section 10.14 SCHEDULES INCORPORATED. The Schedules annexed hereto are
hereby incorporated herein as a part of this Agreement with the same effect as
if set forth in the body hereof.
Section 10.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of
Lender's interest in and to this Agreement, the Note and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrower may otherwise have
against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.
Section 10.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY
BENEFICIARIES.
(a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender. Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such
86
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender's sole discretion, Lender deems it advisable or desirable
to do so.
Section 10.17 PUBLICITY. All news releases, publicity or advertising
by Borrower or their Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, Bear ▇▇▇▇▇▇▇, or any of their Affiliates shall be subject
to the prior written approval of Lender. All news releases, publicity or
advertising by Lender through any media intended to reach the general public
which refers solely to the Borrower or to the Loan made by the Lender to the
Borrower shall be subject to the prior written approval of Borrower, provided
however, the foregoing shall not apply to Provided Information included in
disclosure documents in connection with a Securitization.
Section 10.18 WAIVER OF MARSHALLING OF ASSETS. To the fullest extent
permitted by law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets of Borrower, Borrower's partners and
others with interests in Borrower, and of the Property, or to a sale in inverse
order of alienation in the event of foreclosure of the Mortgage or sale of the
Property by power of sale, and agrees not to assert any right under any laws
pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Property for the collection of the
Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Property in
preference to every other claimant whatsoever.
Section 10.19 WAIVER OF COUNTERCLAIM. Borrower hereby waives the right
to assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.
Section 10.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE. In the
event of any conflict between the provisions of this Loan Agreement and any of
the other Loan Documents, the provisions of this Loan Agreement shall control.
The parties hereto acknowledge that they were represented by competent counsel
in connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
87
Section 10.21 BROKERS AND FINANCIAL ADVISORS. BORROWER HEREBY
REPRESENTS THAT IT HAS DEALT WITH NO FINANCIAL ADVISORS, BROKERS, UNDERWRITERS,
PLACEMENT AGENTS, AGENTS OR FINDERS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OTHER THAN INLAND MORTGAGE CORP. BORROWER HEREBY
AGREES TO INDEMNIFY, DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, LIABILITIES, COSTS AND EXPENSES OF ANY KIND (INCLUDING LENDER'S
REASONABLE ATTORNEYS' FEES AND EXPENSES) IN ANY WAY RELATING TO OR ARISING FROM
A CLAIM BY ANY PERSON THAT SUCH PERSON ACTED ON BEHALF OF BORROWER OR LENDER IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREIN. THE PROVISIONS OF THIS
SECTION 10.21 SHALL SURVIVE THE EXPIRATION AND TERMINATION OF THIS AGREEMENT AND
THE PAYMENT OF THE DEBT.
Section 10.22 PRIOR AGREEMENTS. This Agreement and the other Loan
Documents contain the entire agreement of the parties hereto and thereto in
respect of the transactions contemplated hereby and thereby, and all prior
agreements or understandings among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan
Documents and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of such prior agreement do not
survive execution of this Agreement.
Section 10.23 TRANSFER OF LOAN. In the event that Lender transfers the
Loan, Borrower shall continue to make payments at the place set forth in the
Note until such time that Borrower is notified in writing by Lender that
payments are to be made at another place.
Section 10.24 JOINT AND SEVERAL LIABILITY. If Borrower consists of
more than one person or party, the obligations and liabilities of each person or
party shall be joint and several.
Section 10.25 LENDER'S RIGHT TO UNWIND
CROSS-COLLATERALIZATION/CROSS-DEFAULT Lender shall have the right, at any
time and from time to time, to release any Property or Borrower from the
cross-defaulting and the cross-collateralization effected pursuant to the
grant of the Guaranty from each Borrower and secured by the lien of the
applicable Mortgage. Borrower shall cooperate with Lender in executing all
documents as may be required in connection therewith. Borrower shall properly
deliver or cause to be delivered to Lender or its designee any replacement or
substitute loan agreements, promissory notes, security instruments and other
loan documents, title, hazard and liability insurance policies, opinions of
counsel and other documents and instruments as Lender may reasonably request
in order to effectuate the foregoing. Borrower agrees to reimburse Lender
upon demand for all costs and expenses (including, but not limited to,
reasonable attorneys' fees and expenses) in connection with the foregoing.
(THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
88
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
INLAND WESTERN ▇▇▇▇▇▇▇▇, L.L.C., a
Delaware limited liability company
By: Inland Western Retail Real Estate Trust,
Inc., a Maryland corporation, its sole
member and manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
WITNESSES: Title: Assistant Secretary
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
INLAND WESTERN EULESS LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Inland Western Euless GP, L.L.C., a
Delaware limited liability company, its
sole general partner
By: Inland Western Retail Real Estate
Trust, Inc., a Maryland corporation,
its sole member
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
WITNESSES: Title: Assistant Secretary
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SCH. X-89
INLAND WESTERN ▇▇▇▇▇▇, L.L.C., a
Delaware limited liability company
By: Inland Western Retail Real Estate Trust,
Inc., a Maryland corporation, its sole
member and manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
WITNESSES: Title: Assistant Secretary
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
90
LENDER:
BEAR ▇▇▇▇▇▇▇ COMMERCIAL
MORTGAGE, INC., a
New York corporation
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Managing Director
WITNESSES:
-------------------------
Name:
-------------------------
Name:
91
SCHEDULE I
Inland Western ▇▇▇▇▇▇▇▇, L.L.C., a Delaware limited liability company
Inland Western Euless Limited Partnership, an Illinois limited partnership
Inland Western ▇▇▇▇▇▇, L.L.C., a Delaware limited liability company
92
SCHEDULE II
PARTIAL PREPAYMENT CONDITIONS
Borrower shall have provided Lender with not less than thirty (30) and not more
than sixty (60) days' prior written notice setting forth the date on which
Borrower shall prepay the Release Note.
No Event of Default, and no event which, with the passage of time, the provision
of notice or both would constitute an Event of Default (except a default which
would be cured by the release of the Related Property), shall then exist.
Lender shall have received evidence satisfactory to Lender that there are no
subordinate liens, mortgages or other security instruments encumbering the
Remaining Property, including without limitation a "bring down" or "date down"
of the title insurance policy insuring the lien of the Mortgage on the Remaining
Property;
The Debt Service Coverage Ratio with respect to the Remaining Notes (after the
Monthly Debt Service Payment Amount is recalculated pursuant to Section 2.3.l(b)
hereof) shall be equal to or greater than the greater of (a) 2.90 to 1.00 or (b)
the Aggregate Debt Service Coverage Ratio existing prior to prepayment, as
determined by Lender;
Lender shall have determined that the outstanding balance of the Remaining Notes
(after the partial prepayment of the Remaining Notes pursuant to
Section 2.3.l(b) hereof) will not exceed 55% of the fair market value of
Remaining Properties, as determined by Lender on the basis of an appraisal
satisfactory to Lender of the Remaining Properties commissioned by Lender at
Borrower's expense.
Each Borrower shall continue to be a Special Purpose Entity.
93
SCHEDULE III
REQUIRED REPAIRS
None.
SCH. X-94
SCHEDULE IV
RENT ROLLS
SCH. X-95
SCHEDULE V
Intentionally Omitted.
SCH. X-96
SCHEDULE VI
Intentionally omitted.
SCH. X-97
SCHEDULE VII
PROPERTY AFFECTED BY SECTION 4.1.22
Not Applicable.
SCH. X-98
SCHEDULE VIII
Intentionally Omitted.
SCH. X-99
SCHEDULE IX
Intentionally Omitted.
SCH. X-100
SCHEDULE X
OTHER CONTRACT FUNDS AGREEMENTS
None.
101