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LOAN AGREEMENT
Dated as of November 14, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ LLC,
as Borrower
and
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
DOING BUSINESS AS ▇▇▇▇▇▇ CAPITAL,
A DIVISION OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
as Lender
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TABLE OF CONTENTS
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1
Section 1.1 Definitions. 1
Section 1.2 Principles of Construction 1
II. GENERAL TERMS 19
Section 2.1 Loan Commitment; Disbursement to Borrower 19
2.1.1 The Loan 19
2.1.2 Disbursement to Borrower 19
2.1.3 The Note 19
Section 2.2 Use of Proceeds 20
Section 2.3 Loan Repayment and Defeasance 20
2.3.1 Repayment 20
2.3.2 Voluntary Defeasance of the Loan 20
Section 2.4 Release of Property 21
2.4.1 Release of the Property 22
2.4.2 Successor Borrower 22
2.4.3 Release on Payment in Full 22
Section 2.5 Interest 22
2.5.1 Generally 22
2.5.2 Default Rate; Additional Payments after Default 22
Section 2.6 Payments and Computations 23
2.6.1 Making of Payments 23
2.6.2 Annual Budget; Payments After Anticipated Repayment
Date 23
2.6.3 Computations 24
2.6.4 Late Payment Charge 24
2.6.5 Payments Received in the Deposit Account 24
III. CONDITIONS PRECEDENT 24
Section 3.1 Conditions Precedent to Closing 24
IV. REPRESENTATIONS AND WARRANTIES 27
Section 4.1 Borrower Representations 27
Section 4.2 Survival of Representations 33
V. AFFIRMATIVE COVENANTS 33
Section 5.1 Borrower Covenants 33
VI. NEGATIVE COVENANTS 40
Section 6.1 Borrower's Negative Covenants 40
VII.CASUALTY; CONDEMNATION; ESCROW 42
Section 7.1 Insurance; Casualty and Condemnation 42
7.1.1 Insurance 42
7.1.2 Condemnation and Insurance Proceeds 45
Section 7.2 Required Repairs; Required Repair Funds 48
Section 7.3 Tax and Insurance Escrow Fund 48
Section 7.4 Replacements and Replacement Reserve 48
VIII.DEFAULTS 48
Section 8.1 Event of Default 48
Section 8.2 Remedies 49
Section 8.3 Remedies Cumulative 50
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IX. SPECIAL PROVISIONS 51
Section 9.1 Sale of Notes and Securitization 51
Section 9.2 Securitization Indemnification 53
Section 9.3 Rating Surveillance 55
Section 9.4 Exculpation 55
Section 9.5 Achievements 56
Section 9.6 Cash Management 57
9.6.1 Lockbox Account 57
9.6.2 Cash Management Account 57
Section 9.7 Servicer 58
X. MISCELLANEOUS 58
Section 10.1 Survival 58
Section 10.2 Lender's Discretion 58
Section 10.3 Governing Law 58
Section 10.4 Modification, Waiver in Writing 59
Section 10.5 Delay Not a Waiver 59
Section 10.6 Notices 59
Section 10.7 Trial by Jury 60
Section 10.8 Headings 60
Section 10.9 Severability 60
Section 10.10 Preferences 61
Section 10.11 Waiver of Notice 61
Section 10.12 Remedies of Borrower 61
Section 10.13 Expenses; Indemnity 61
Section 10.14 Schedules Incorporated 62
Section 10.15 Offsets, Counterclaims and Defenses 62
Section 10.16 No Joint Venture or Partnership; 62
Section 10.17 Publicity 63
Section 10.18 Waiver of Marshaling of Assets; 63
Section 10.19 Waiver of Counterclaim 63
Section 10.20 Conflict; Construction of Documents; Reliance 63
Section 10.21 Brokers and Financial Advisors 64
Section 10.22 Prior Agreements 64
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 14, 1997 (as
amended, restated, replaced, supplemented or otherwise modified
from time to time, this "AGREEMENT"), between ▇▇▇▇▇▇ Brothers
Holdings Inc., doing business as ▇▇▇▇▇▇ Capital, a division of
▇▇▇▇▇▇ Brothers Holdings Inc., having an address at Three World
Financial Center, New York, New York 10285 ("LENDER") and Fox
Valley Mall LLC, having an address at c/o Urban Shopping Centers,
Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ("BORROWER").
All capitalized terms used herein shall have the respective
meanings set forth in Article I hereof.
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, Borrower desires to obtain the Loan from Lender;
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;
NOW, THEREFORE, in consideration of the making of the Loan
by Lender and the covenants, agreements, representations and
warranties set forth in this Agreement, the parties hereto hereby
covenant, agree, represent and warrant as follows:
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
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Section 1.1 DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:
"ACCRUED INTEREST" shall have the meaning set forth in SECTION 2.6.2(C).
"ACQUIRED PROPERTIES" shall have the meaning set forth in SECTION 9.1.1.
"ACQUIRED PROPERTY STATEMENTS" shall have the meaning set forth in
SECTION 9.1.1.
"AFFILIATE" shall mean, in respect to any Person, (x) any
Person controlling, controlled by or under common control with,
whether by virtue of ownership or otherwise, such Person and (y)
any spouse, parent or sibling of any such Person who is a natural
person, and any ancestor or lineal descendent of such spouse,
parent or sibling.
"AFFIRMATIVE COVENANT" shall mean a promise or covenant by
any Person to perform, act, suffer, permit or consent to.
"AGREEMENT" shall mean this Loan Agreement, as the same may
be amended, restated, replaced, supplemented, or otherwise
modified from time to time.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ALTERATION" shall have the meaning set forth in SECTION 5.1(U)(III).
"ALLOCATED LOAN AMOUNT" shall mean the portion of the Loan
allocated solely for purposes of performing certain calculations
hereunder to each portion of the Property as set forth on
Schedule II hereto.
"ANNUAL BUDGET" shall mean the operating budget, including
all planned capital expenditures, for the Property prepared by
Borrower for the applicable Fiscal Year or other period.
"ANTICIPATED REPAYMENT DATE" shall mean November 10, 2006.
"APPLICABLE INTEREST RATE" shall mean (a) from the date
hereof through but not including the Anticipated Repayment Date,
the Regular Interest Rate and (b) from and after the Anticipated
Repayment Date through and including the date the Loan is paid in
full, the Matured Performing Rate.
"APPROVED BANK" shall mean a bank or other financial
institution which has a minimum long-term unsecured debt rating
of at least "A" (or its equivalent) by each of the Rating
Agencies, or if any such bank or other financial institution is
not rated by all the Rating Agencies, then a minimum long-term
rating of at least "A" (or its equivalent) by two of the Rating Agencies.
"ASSIGNMENT OF AGREEMENTS" shall mean that certain first
priority Assignment of Agreements, Permits and Contracts dated as
of the date hereof, from Borrower and the Land Trustee, as
assignor, to Lender, as assignee, assigning to Lender all of
Borrower's interest in and to all licenses, permits and contracts
necessary for the use and operation of the Property, as the same
may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
"ASSIGNMENT OF LEASES" shall mean that certain first
priority Assignment of Leases and Rents, dated as of the date
hereof, from Borrower and Land Trustee, as assignor, to Lender,
as assignee, assigning to Lender all of Borrower's interest in
and to the Leases and Rents of such Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified
from time to time.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean that certain
Assignment of Management Agreement and Subordination of
Management Fees dated as of the date hereof, among Borrower, as
assignor, Manager, as manager, and Lender, as assignee, as the
same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"BASIC CARRYING COSTS" shall mean the sum of the following
costs associated with the Property for the relevant Fiscal Year
or payment period: (i) real property taxes with respect to the
Property and (ii) insurance premiums with respect to the Property.
"BEST KNOWLEDGE" or "KNOWLEDGE" shall mean for the purpose
of this Agreement and the other Loan Documents the actual
knowledge of the Person in question, after having made due
inquiry. If any entity with respect to which this term would be
applicable is a corporation, knowledge of such entity shall refer
to actual knowledge of its officers or directors, after having
made due inquiry. If any such entity is a partnership, knowledge
of such entity shall refer to actual knowledge of each of its
partners who participates in the management of such partnership
(directly or indirectly), after having made due inquiry. If any
such entity is a limited liability company, knowledge of such
entity shall refer to actual knowledge of its managing members,
after having made due inquiry. The knowledge of Borrower for purposes
of this definition shall also include the knowledge of Manager if it is
an Affiliate of Borrower or if not an Affiliate of Borrower, after due
inquiry of Manager.
"BORROWER" shall mean Fox Valley Mall LLC, together with its
successors and assigns.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
any other day on which national banks in New York, New York, the State of
Illinois and the Commonwealth of Pennsylvania are not open for business.
"CAPITAL EXPENDITURES" for any period shall mean the amount
expended for items capitalized under GAAP (including expenditures
for building improvements or major repairs, leasing commissions
and tenant improvements).
"CASH" shall mean coin or currency of the government of the
United States of America.
"CASH COLLATERAL ACCOUNT" shall have the meaning set forth
in SECTION 9.6.2(A).
"Cash Equivalents" shall mean (i) Cash or (ii) U.S. Obligations.
"CASH EXPENSES" shall mean, for any period, the operating
expenses for the operation of the Property as set forth in the
Annual Budget to the extent that such expenses are actually
incurred by Borrower.
"CASUALTY/CONDEMNATION INVOLUNTARY PREPAYMENT" shall have
the meaning set forth in SECTION 7.1.2(c).
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any
successor statutes thereto, and applicable U.S. Department of Treasury
regulations issued pursuant thereto in temporary or final form.
CONSUMER PRICE INDEX" OR "CPI" shall mean the Consumer Price
Index for All Urban Consumers (CPI-U) published by the Bureau of
Labor Statistics of the United States Department of Labor, New
York, N.Y. - Northeastern N.J. Area, All Items (1982-84 = 100),
or any successor or substitute index thereto.
"CONTROL" (and the correlative terms "CONTROLLED BY" and
"CONTROLLING") shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management and
policies of the business and affairs of the entity in question by
reason of the ownership of beneficial interests, by contract or otherwise.
"DEBT" shall mean the outstanding principal amount set forth
in, and evidenced by, this Agreement and the Note together with
all interest accrued and unpaid thereon and all other sums
(including the Yield Maintenance Premium) due to Lender in
respect of the Loan under the Note, this Agreement, the Mortgage
or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular
period of time, scheduled principal and interest payments due
under the Note.
"DEBT SERVICE COVERAGE RATIO" shall mean a ratio for the
applicable period in which:
(a) the numerator is the Net Operating Income for
such period as set forth in the statements
required thereunder less management fees (but only
to the extent not included in the calculation of
Operating Expenses) equal to the greater of (i)
assumed management fees of three (3%) percent of
Gross Income from Operations and (ii) the actual
management fees incurred and paid by Borrower; and
(b) the denominator is the Debt Service.
"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 Applicable Interest Rate.
"DEFEASANCE DATE" shall have the meaning set forth in SECTION 2.3.2(a)(i).
"DEFEASANCE DEPOSIT" shall mean (A), with respect to a
Defeasance Event involving a portion of the Property, an amount
equal to the aggregate of either (i) one hundred (100%) percent
of the Allocated Loan Amount for the portion of the Property to
be released on the Defeasance Date or (ii) the principal amount
of the Defeased Note, as applicable, plus, any costs and expenses
incurred or to be incurred in the purchase of U.S. Obligations
necessary to meet the Scheduled Defeasance Payments and any
revenue, documentary stamp or intangible taxes or any other tax
or charge due in connection with the transfer of the Note or the
Defeased Note, as applicable, the creation of the Defeased Note
and the Undefeased Note, if applicable, or otherwise required to
accomplish the agreements of SECTIONS 2.3 and 2.4 hereof or (B)
with respect to a Defeasance Event involving all of the Property,
an amount equal to the aggregate of either (i) the outstanding
Principal Amount of the Loan or (ii) the principal amount of the
Defeased Note, as applicable, plus any costs and expenses
incurred or to be incurred in the purchase of U.S. Obligations
necessary to meet the Scheduled Defeasance Payments and any
revenue, documentary stamp or intangible taxes or any other tax
or charge due in connection with the transfer of the Note or the
Defeased Note, as applicable, the creation of the Defeased Note
and the Undefeased Note, if applicable, or otherwise required to
accomplish the agreements of SECTIONS 2.3 and 2.4 hereof.
"DEFEASANCE EVENT" shall have the meaning set forth in SECTION 2.3.2(a).
"DEFEASED NOTE" shall have the meaning set forth in SECTION 2.3.2(a)(v)
hereof.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in SECTION 9.2(a).
"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 Title 12 of the Code of Federal Regulations
Section 9.10(b) and has a combined capital and surplus of at least
Fifty Million and No/100 Dollars ($50,000,000) and is subject to
supervision or examination by federal and state authority. An
Eligible Account may not be evidenced by a certificate of deposit,
passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution
or trust company the short term unsecured debt obligations or
commercial paper of which are rated at least A-1 by S&P, P-1 by
▇▇▇▇▇'▇ Investors Service, Inc., D-1 by Duff & ▇▇▇▇▇▇ Credit
Rating Co. and F-1+ by Fitch Investors Service, L.P. in the case
of accounts in which funds are held for thirty (30) days or less
(or, in the case of accounts in which funds are held for more
than thirty (30) days, the long term unsecured debt obligations
of which are rated at least "A" by Fitch Investors Service, L.P.,
Duff & ▇▇▇▇▇▇ Credit Rating Co. and S&P and "A" by ▇▇▇▇▇'▇
Investors Service, Inc.).
"ELIGIBLE INVESTMENTS" shall mean any one or more of the
following obligations or securities payable on demand or having a
scheduled maturity on or before the Business Day preceding the
date upon which such funds are required to be drawn, regardless
of whether issued by Lender, the Servicer, Trustee or any of
their respective Affiliates and having at all times the required
ratings, if any, provided for in this definition, unless each
Rating Agency shall have confirmed in writing to the Servicer
that a lower rating would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current
ratings assigned to the Securities
(i) obligations of, or mutual funds which
invest solely in 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 or mutual funds which invest
solely in such debentures;
(iii)obligations of, or mutual funds
which invest solely in 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;
(iv) federal funds, unsecured certificates
of deposit, time or similar deposits,
bankers' acceptances and repurchase
agreements, with maturities of not more
than three hundred sixty-five (365) days,
of any bank, the short term obligations of
which are rated in the highest short term
rating category by each Rating Agency (or,
if such obligations are not rated by Duff &
▇▇▇▇▇▇ Credit Rating Co., ▇▇▇▇▇'▇ Investors
Service, Inc. or Fitch Investors Service,
L.P., otherwise acceptable to Duff & ▇▇▇▇▇▇
Credit Rating Co., ▇▇▇▇▇'▇ Investors
Service, Inc. or Fitch Investors Service,
L.P., as applicable, as confirmed in
writing that such investment would not, in
and of itself, result in a downgrade,
qualification or withdrawal of the 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 mortgage loan
association or savings bank, the short term
obligations of which are rated in the
highest short term rating category by each
Rating Agency (or, if such obligations are
not rated by Duff & ▇▇▇▇▇▇ Credit Rating
Co., ▇▇▇▇▇'▇ Investors Service, Inc.
or Fitch Investors Service, L.P.,
otherwise acceptable to Duff & ▇▇▇▇▇▇
Credit Rating Co., ▇▇▇▇▇'▇ Investors
Service, Inc. or Fitch Investors Service,
L.P., as applicable, as confirmed in
writing that such investment would not, in
and of itself, result in a downgrade,
qualification or withdrawal of the 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 three hundred sixty-five
(365) days rated by each Rating Agency (or,
if such obligations are not rated by Duff &
▇▇▇▇▇▇ Credit Rating Co., ▇▇▇▇▇'▇ Investors
Service, Inc. or Fitch Investors Service,
L.P., otherwise acceptable to Duff & ▇▇▇▇▇▇
Credit Rating Co., ▇▇▇▇▇'▇ Investors
Service, Inc. or Fitch Investors Service,
L.P., as applicable, as confirmed in
writing that such investment would not, in
and of itself, result in a downgrade,
qualification or withdrawal of the 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 more than
one (1) year after the date of issuance
thereof) with maturities of not more than
three hundred sixty-five (365) days and
that is rated by each Rating Agency (or, if
such obligations are not rated by Duff &
▇▇▇▇▇▇ Credit Rating Co., ▇▇▇▇▇'▇ Investors
Service, Inc. or Fitch Investors Service,
L.P., otherwise acceptable to Duff & ▇▇▇▇▇▇
Credit Rating Co., ▇▇▇▇▇'▇ Investors
Service, Inc. or Fitch Investors Service,
L.P., as applicable, as confirmed in
writing that such investment would not, in
and of itself, result in a downgrade,
qualification or withdrawal of the 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)the Federated Prime Obligation
Money Market Fund so long as the Federated
Prime Obligation Money Market Fund is rated
by each Rating Agency as AAAm or AAAm-G
(or, if such obligations are not rated by
Duff & ▇▇▇▇▇▇ Credit Rating Co., ▇▇▇▇▇'▇
Investors Service, Inc. or Fitch Investors
Service, L.P., otherwise acceptable to Duff
& ▇▇▇▇▇▇ Credit Rating Co., ▇▇▇▇▇'▇
Investors Service, Inc. or Fitch Investors
Service, L.P., as applicable, as confirmed
in writing that such investment would not,
in and of itself, result in a downgrade,
qualification or withdrawal of the then
current ratings assigned to the
Securities); and
(ix) any other demand, money market or time
deposit, demand obligation or any other
obligation, security or investment,
provided that each Rating Agency has
confirmed in writing to the Servicer,
special servicer (if any) or Trustee, as
applicable, that such investment would not,
in and of itself, result in a downgrade,
qualification or withdrawal of the then
current ratings assigned to the Securities;
provided, however, that, in the
judgment of the Servicer, such instrument
continues to qualify as a "cash flow
investment" pursuant to Section 860G(a)(6)
of the Code earning a passive return in the
nature of interest and that no instrument
or security shall be an Eligible Investment
if (x) such instrument or security
evidences a right to receive only interest
payments, (y) the right to receive
principal and interest payments derived
from the underlying investment provides a
yield to maturity in excess of one hundred
twenty percent (120%) of the yield to
maturity at par of such underlying
investment or (z) such instrument or
security has a maturity of more than three
hundred sixty-five (365) days.
"ENVIRONMENTAL INDEMNITY" shall mean that certain
Environmental Indemnity Agreement executed by Borrower in
connection with the Loan for the benefit of Lender.
"EQUIPMENT" shall have the meaning set forth in the granting
clause of the Mortgage.
"ERISA" shall have the meaning set forth in SECTION 6.1(l)(i).
"EXCUSABLE DELAY" shall mean a delay due to acts of God,
governmental restrictions, enemy actions, civil commotion, fire,
casualty, strikes, shortages of supplies or labor, work stoppages
or other causes beyond the reasonable control of Borrower, but
lack of funds shall not be deemed a cause beyond the reasonable
control of Borrower.
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 8.1(a).
"EXCHANGE ACT" shall have the meaning set forth in SECTION 9.2.(a).
"EXCHANGE ACT FILING" shall have the meaning set forth in SECTION 9.1.6.
"EXPANSION" shall have the meaning set forth in SECTION 5.1(u)(vi).
"EXTRAORDINARY EXPENSE" shall have the meaning set forth in SECTION
2.6.2(b).
"FISCAL YEAR" shall mean each twelve month period commencing
on January 1 and ending on December 31 during each year of the
term of the Loan.
"FOX VALLEY RENOVATION" shall mean the cosmetic renovation
and refurbishment of the Improvements, generally described
including, but not limited to, the following elements:
replacement of existing flooring, new drywall ceiling treatments
(at wood ceiling areas), new escalators at boutique level, new
feature elevator, infill of recessed areas at anchor courts, new
children's area, new coffee kiosk, food court renovation, new
lighting package, landscaping, customer service desk, directional
signage program, modification of existing entries and new
furnishing, fixtures and equipment package.
"GAAP" shall mean generally accepted accounting principles
in the United States of America as of the date of the applicable
financial report.
"GOVERNMENTAL AUTHORITY" shall mean any court, board,
agency, commission, office or 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 a
specified period, without duplication, all income paid or to be
paid (as applicable) to Borrower (or to the Manager for the
account of Borrower) by any Person during such period in
connection with the operation of the Property (determined as
described in the final paragraph of this definition), including,
without limitation, the following:
(i) all amounts payable as rent (including
percentage rent), charges for electricity, oil, gas,
water, steam, heat, ventilation, air conditioning and
any other energy, telecommunications, telephone,
utility or similar items, including overtime usage,
HVAC equipment charges, sprinkler charges, escalation
charges, license fees, maintenance fees, charges for
improvements, Impositions and other amounts payable to
Borrower (or to the Manager for the account of
Borrower) under any Lease or other agreement relating
to the Property pursuant to which space (including
storage space rentals and rentals for community hall
usage), utilities, facilities, equipment, parking
facilities or other services are furnished by Borrower
and including late charges, default interest and
temporary investment income but excluding any security
deposits received;
(ii) condemnation proceeds under a temporary
Taking to the extent that such proceeds are
compensation for lost rent;
(iii) business interruption and loss of
"rental value" insurance proceeds;
(iv) proceeds of any sale of Equipment pursuant to
Section 6.3(ii) of the Mortgage but only to the extent
that the same are of a generally recurring type; and
(v) all amounts payable under any Lease of an
anchor department store or a peripheral site at the
Property reasonably expected by the Borrower to recur
in the ordinary course of business;
provided, however, that the items of income described in
subparagraph (i) shall be reduced (x) by the average bad
debts expense for the first two calendar years preceding the
year in which the calculation of Gross Income from
Operations is made, as established annually by Borrower in
accordance with its bad debts policy and generally
acceptable accounting procedures, and (y) to the extent such
average exceeds the amount described in (x), the amount of
any receivables for tenants at the Property which are more
than ninety days old and which have been created during the
last calendar year in which such calculation of Gross Income
from Operations is made.
Notwithstanding the foregoing clauses (i)-(v), Gross Income from
Operations shall not include (A) any condemnation or insurance
proceeds (other than of the types described in clauses (ii) and
(iii) above), (B) any proceeds resulting from the sale, exchange,
transfer, financing or refinancing of all or any part of the
Property (other than of the types described in clauses (ii) and
(iv) above), (C) any rent accrued by Borrower but not received
because of any free rent provisions or other rental provisions or
other rental concessions in any Lease, (D) any repayments
received from tenants under Leases of principal loaned or
advanced to tenants under Leases by Borrower pursuant to the
terms hereof, or (E) any type of income which would otherwise be
considered Gross Income from Operations pursuant to the
provisions above but is paid directly by any Tenant to a Person
other than Borrower (or the Manager on account of Borrower) in
accordance with GAAP.
"HEALTH CLUB PARCEL" shall mean that portion of the Property
described on Schedule I(B).
"IMPROVEMENTS" shall have the meaning set forth in the
granting clause of the Mortgage.
"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.
"INDEMNIFIED LIABILITIES " shall have the meaning set forth
in SECTION 10.13(b).
"INDEPENDENT ARCHITECT" shall mean, with respect to a
particular project, an independent architect or engineer, as
appropriate for such project, selected by Borrower, licensed or
registered to practice in the state where the Property is located
and having at least five (5) years' experience in respect of the
subject matter of such project.
"INDEPENDENT DIRECTOR" shall have the meaning set forth in
SECTION 4.1(dd)(xvi).
"INSOLVENCY OPINION" shall have the meaning set forth in
SECTION 4.1(dd)(xviii).
"INSURANCE REQUIREMENTS" shall mean all terms of any
insurance Policy required hereunder covering or applicable to the
Property or Equipment or any part thereof, all requirements of
the issuer of any such Policy, and all orders, rules, regulations
and other requirements of the national board of fire underwriters
(or any other body exercising similar functions) applicable to or
affecting the Property or Equipment or any part thereof or any
use of the Property or Equipment or any part thereof.
"INTEREST PERIOD" shall mean (a) the period commencing on
the date hereof and ending on the ninth (9th) day of December,
1997 for the first period hereunder, and (b) for each period
thereafter, the period commencing on the tenth (10th) day of each
calendar month during the term of the Loan and ending on the
ninth (9th) day of the next occurring calendar month.
"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 the Property, 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 the
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 Borrower, at any time in force affecting such Property
or any part thereof, including, without limitation, any which may
(i) require repairs, modifications or alterations in or to such
Property or any part thereof, or (ii) in any way limit the use
and enjoyment thereof.
"▇▇▇▇▇▇" shall have the meaning set forth in SECTION 9.2(b).
"▇▇▇▇▇▇ GROUP" shall have the meaning set forth in SECTION 9.2(b).
"LENDER" shall mean ▇▇▇▇▇▇ Brothers Holdings Inc. doing
business as ▇▇▇▇▇▇ Capital, a division of ▇▇▇▇▇▇ Brothers
Holdings Inc., together with its successors and assigns.
"LETTER OF CREDIT" shall mean an irrevocable, unconditional,
transferable, clean sight draft letter in favor of Lender and entitling
Lender to draw thereon in New York, New York, based solely on a
statement purportedly executed by an officer of Lender stating
that it has the right draw thereon, and issued by a domestic
Approved Bank or the U.S. agency or branch of a foreign Approved
Bank, or if there are no domestic Approved Banks or U.S. agencies
or branches of a foreign Approved Bank then issuing letters of
credit, then such letter of credit may be issued by a domestic
bank, the long term unsecured debt rating of which is the highest
such rating then given by the Rating Agencies to a domestic
commercial bank. If at any time the bank issuing any such Letter
of Credit shall cease to be an Approved Bank, Lender shall have
the right immediately to draw down the same in full and hold the
proceeds of such draw in accordance with the applicable
provisions hereof, unless Borrower shall deliver a replacement
Letter of Credit within thirty (30) days after such bank shall
have ceased to be an Approved Bank.
"LIABILITIES" shall have the meaning set forth in SECTION 9.2(b).
"LICENSES" shall have the meaning set forth in SECTION 4.1(v).
"LIEN" shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting the Property
or any portion thereof or Borrower, or any interest therein,
including, without limitation, any conditional sale or other
title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing,
the filing of any financing statement, and mechanic's,
materialmen's and other similar liens and encumbrances.
"LOAN" shall mean the loan made by Lender to Borrower in the
original principal amount set forth in, and evidenced by, the
Note executed and delivered by Borrower and secured by the
Mortgage and the other Loan Documents executed and delivered by Borrower.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement,
the Note, the Mortgage and Assignment of Leases, the Assignment
of Agreements, the Environmental Indemnity, the Assignment of
Management Agreement and any other document pertaining to the
Property as well as all other documents executed and/or delivered
in connection with the Loan.
"LOCKBOX ACCOUNT" shall have the meaning set forth in
SECTION 9.6.1(a).
"LOCKBOX EVENT" shall mean the occurrence of any one or more
of the following events: (a) an Event of Default, (b) the date
which is six (6) months after the Anticipated Repayment Date, or
(c) the Debt Service Coverage Ratio for the immediately preceding
twelve (12) full calendar month period shall be less than 1.25:1.
"LOCKOUT YIELD MAINTENANCE PREMIUM" shall mean an amount
equal to the greater of (a) one percent (1%) of the outstanding
principal amount of the Loan to be prepaid or satisfied, as
applicable, or (b) the Yield Maintenance Premium that would be
required if a Defeasance Event had occurred in an amount equal to
the outstanding principal amount of the Loan to be satisfied or
prepaid, as applicable.
"MANAGEMENT AGREEMENT" shall mean the management agreement
entered into by and between Borrower and the Manager, pursuant to
which the Manager is to provide management and other services
with respect to the Property.
"MANAGER" shall mean Urban Shopping Centers, L.P. or Urban
Retail Properties Co.
"MATERIAL ALTERATION" shall have the meaning set forth in SECTION
5.1(u)(iv).
"MATERIAL LEASE" shall have the meaning ascribed to it in
Section 3.6 of the Mortgage.
"MATURED PERFORMING RATE" shall mean a rate per annum equal
to the greater of (i) the Regular Interest Rate plus two
percentage (2%) points or (ii) the Treasury Rate plus two
percentage (2%) points.
"MATURITY DATE" shall mean November 10, 2031, or such other
date on which the final payment of principal of the Note becomes
due and payable as therein provided, whether at such stated
maturity date, by declaration of acceleration, or otherwise.
"MAXIMUM FORESEEABLE CASUALTY LOSS" shall have the meaning
set forth in SECTION 7.1.1(c).
"MAXIMUM MANAGEMENT FEE" shall mean an amount not to exceed
that amount which is reasonable and customarily incurred and paid
by owners and operators of regional shopping malls in the region
in which the Property is located.
"MINIMUM DEPOSIT AMOUNT" shall have the meaning set forth in
SECTION 7.1.2.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean a monthly
payment of (i), prior to the Anticipated Repayment Date, interest
calculated on the basis of the Regular Interest Rate, and (ii),
after the Anticipated Repayment Date, interest calculated at the
Matured Performing Rate and principal calculated on the basis of
a self-amortizing loan having a term of three hundred (300) months.
"MORTGAGE" shall mean that certain first priority Mortgage,
Assignment of Leases and Rents and Security Agreement, dated the
date hereof, executed and delivered by Borrower and the Land
Trustee as security for the Loan made to Borrower and encumbering
the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
"MOVIE THEATRE PARCEL" shall mean that portion of the
Property described on Schedule I(C).
"NET CASH FLOW" for any period shall mean the amount
obtained by subtracting Operating Expenses and Capital
Expenditures for such period from Gross Income from Operations
for such period.
"NET CASH FLOW AFTER DEBT SERVICE" for any period shall mean
the amount obtained by subtracting Debt Service for such period
from Net Cash Flow for such period.
"NET OPERATING INCOME" means the amount obtained by
subtracting Operating Expenses from Gross Income from Operations.
"NOTE" shall mean that certain note of even date herewith,
made by Borrower and the Land Trustee in favor of Lender, as the
same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, including any Defeased Note
and Undefeased Note that may exist from time to time.
"OFFERING DOCUMENT DATE" shall have the meaning set forth in SECTION
9.1.4.
"OFFERING DOCUMENT" shall have the meaning set forth in SECTION 9.1.4.
"OFFICERS' CERTIFICATE" shall mean a certificate delivered
to Lender by Borrower which is signed by an authorized senior
officer of the SPC Managing Member of Borrower.
"OPERATING AGREEMENTS" shall mean those certain agreements
identified on Schedule V (including any reciprocal easement
agreements affecting the Property) as said Schedule V may be
amended, restated, replaced, supplemented or otherwise modified
from time to time.
"OPERATING EXPENSES" shall mean with respect to a specified
period, without duplication, all expenses paid or to be paid (as
applicable) by Borrower (or by the Manager for the account of
Borrower) during such period in connection with the ownership,
maintenance and operation of the Property (determined as
described in the final paragraph of this definition), including,
without limitation:
(i) costs and expenses related to tenant
improvements and leasing commissions, any other
expenditures on behalf of tenants of the Property any
Equipment and any capital expenditures; but in each
such case only to the extent not recovered from such
tenants, from insurance proceeds or condemnation
proceeds, from the proceeds of sales of Equipment
pursuant to Section 6.3(ii) of the Mortgage or from
any other Persons (unless, in each case corresponding
amounts recovered have been included in Gross Income
from Operations) and in each such case only to the
extent that the same are a generally recurring type
of expense; provided, however, that if the Borrower
finances all or part of the cost of any such items,
the amount paid or payable by the Borrower to any
creditor on account of any period in respect of such
financing (including principal, interest and any
other payments) shall be included as an Operating
Expense for such period, and the portion of the
aggregate cost of such item which is so financed
shall not be deemed to be an Operating Expense during
the period in which it is incurred except to the
extent that payments are actually made during such
period;
(ii) all payments required to be made pursuant to the
Operating Agreements;
(iii) legal, accounting, appraisal and other
professional fees and disbursements;
(iv) fees and expenses of the Lender paid by the
Borrower hereunder;
(v) expenses in connection with cleaning, repair,
maintenance, management, leasing, decoration or
painting thereof, or the provision of services to any
tenant under a Lease, net of any insurance proceeds
or condemnation proceeds in respect to any of the
foregoing;
(vi) wages, benefits, payroll taxes, uniforms,
insurance costs and all other related expenses for on-
site building personnel, up to and including the
level of the on-site property manager, engaged in
cleaning, repair, maintenance, management,
leasing, decoration or painting thereof or the
provision of services to any tenant under a Lease;
(vii) reasonable allocations of wages, benefits,
payroll taxes, insurance costs and all other related
expenses for bookkeeping, accounting and other
building management functions and home office
expenses and computer usage, but only if the amount
of such allocations in the aggregate exceeds the
reasonable and customary compensation described in
clause (viii) for the same or similar services;
(viii) the compensation being paid for
bookkeeping, accounting and building management
services for the Property, and all other items of
compensation and reimbursement payable by the
Borrower to the Manager;
(ix) the cost of all electricity, oil, gas, water,
steam, heat, ventilation, air conditioning and any
other energy, telecommunications, utility or similar
items, including overtime usage, and the cost of
building and cleaning supplies;
(x) Taxes and Other Charges;
(xi) premiums for liability, casualty, fidelity,
business interruption, loss of "rental value" and
other insurance (which, in the case of any policy
covering multiple properties, shall be equitable
allocated to the Property pro rata in proportion of
the replacement value of each of the properties
covered by such policy for casualty insurance, the
respective size and experience rating of each of the
properties covered by such policy for liability
insurance, and the insured value of each of the
properties covered by such policy for the other
coverages);
(xii) amounts paid in consideration of any
modification, amendment, supplement, waiver, renewal,
or termination of any Lease; and
(xiii) all amounts paid or expenses incurred under
any Lease of an anchor department store or a
peripheral site at the Property.
Notwithstanding the foregoing, Operating Expenses shall not
include (1) depreciation or amortization, (2) the principal of
and interest and premium, if any, on the Note or any additional
indebtedness of the Borrower (except as otherwise provided in
clause (i) above), (3) income taxes or other impositions in the
nature of income taxes, (4) any expenses (including legal,
accounting and other professional fees, expenses and
disbursements) incurred in connection with the issuance of the
Note or the sale, exchange, transfer, financing or refinancing of
all or any portion of the Property or in connection with the
recovery of insurance or condemnation proceeds which are applied
to prepay the Note, (5) any expenses which in accordance with
GAAP should be capitalized (other than any such expenses included
in the preceding sentence), (6) any item of expense which would
otherwise be considered within Operating Expenses pursuant to the
provisions above but is paid directly by any tenant under a
Lease, and (7) any amounts deposited into a reserve or escrow
account (until expended or paid).
"OTHER CHARGES" shall mean all ground rents, maintenance
charges, impositions other than Taxes, and any other charges,
including, without limitation, vault charges and license fees for
the use of vaults, chutes and similar areas adjoining the Property,
now or hereafter levied or assessed or imposed against the Property
or any part thereof.
"PAYMENT DATE" shall mean the tenth (10th) day of each
calendar month commencing on the tenth (10th) day of December,
1997 or, if such day is not a Business Day, the next preceding
Business Day.
"PERMITTED ENCUMBRANCES" shall mean, collectively, (a) the
Liens and security interests created by the Loan Documents, (b)
all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy 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 sole discretion, which in the aggregate do
not materially adversely affect the value or use of the Property
or Borrower's ability to repay the Loan.
"PERMITTED OWNER" shall mean:
(i) one or more Sponsors; or
(ii) a partnership or limited liability company in
which any one or a combination of Sponsors is a general
partner or managing member, as the case may be, that
owns and controls, or otherwise directly or indirectly
owns and controls, at least a 25% interest.
Control means, for purposes of this definition, primary
responsibility to make or veto all material decisions with
respect to the operation, management, financing and disposition
of the specified interest, rather than a beneficial ownership
requirement, and without being compromised by the fact that
responsibility for such day-to-day operating and management
functions as are ordinarily handled by a property manager has
been delegated by such controlling Person pursuant to an
agreement in writing.
"PERSON" shall mean any individual, corporation, limited
liability company, partnership, joint venture, estate, trust,
unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof
and any fiduciary acting in such capacity on behalf of any of the foregoing.
"PHYSICAL CONDITIONS REPORT" shall mean a report prepared by
a company satisfactory to Lender regarding the physical condition
of the Property, satisfactory in form and substance to Lender in
its sole discretion, which report shall, among other things, (i)
include a copy of a final certificate of occupancy (or its equivalent)
with respect to all Improvements on the Property, and (ii) set forth
in reasonable detail the physical conditions of the Property.
"POLICIES" shall mean the policies of insurance specified in SECTION
7.1.1(a).
"PROCEEDS" shall have the meaning set forth in SECTION 7.1.2(b).
"PROPERTY" shall mean the real property consisting of the
Health Club Parcel, the Movie Theatre Parcel and the Retail
Parcel, together with the Improvements thereon located, described
in SCHEDULE I hereto, which property is subject to the terms of
this Agreement and encumbered by the Mortgage.
"PROPERTY REQUIRED REPAIRS" shall mean the repairs described
in the report prepared by Horn, Chandler & ▇▇▇▇▇▇ dated April 9,
1997 regarding the Property.
"PROVIDED INFORMATION" shall have the meaning set forth in
SECTION 9.1(a)(i).
"QUALIFIED FIRE PROTECTION ENGINEER" shall mean one of the
following: (a) an engineer duly licensed in the State of Illinois
who shall either (x) have five (5) years' experience evaluating
fire and life safety systems and estimating casualty insurance
claims or (y) be certified as a qualified fire protection
engineer (or equivalent) by a professional, trade or other,
similar association of recognized standing, (b) a reputable
insurance broker having an in-house engineering and loss control
group capable of estimating casualty insurance claims, or (c) an
insurer meeting the criteria set forth in SECTION 7.1.1(b) hereof
or a qualified employee thereof, in each case selected by the
Borrower and to which Lender shall not object within five (5)
Business Days after notice by Borrower of the identity of the
proposed Qualified Fire Protection Engineer.
"QUALIFIED TRANSFEREE" shall mean (i) a pension fund,
pension trust or pension account, (ii) an insurance company which
is subject to supervision by the insurance commissioner, or a
similar official or agency, of a state of territory of the United
States (including the District of Columbia), (iii) a corporation
organized under the banking laws of the United States or any
state or territory of the United States (including the District
of Columbia) with a combined capital and surplus of at least
$100,000,000, (iv) any Person with a long-term, unsecured debt
rating from the Rating Agencies of at least investment grade, or
(v) a Person who owns or operates at least twelve (12) regional
or super-regional malls totalling at least 6,000,000 square feet;
provided that such entity is,
(a) a Person (x) (1) with a net worth, as of date no more
that 6 months prior to the date of such transfer, of at least
$500 million, and (2) who, immediately prior to such transfer,
controls real estate equity assets of at least $1 billion, or (y)
if such Person is a pension fund advisor, only the condition set
forth in (x) (2) above must be satisfied, or
(b) a pension fund, pension trust or pension account that
has total assets of at least $500 million, managed by a Person
who controls at least $1 billion of real estate equity assets.
"RATING AGENCIES" shall mean each of Standard & Poor's
Ratings Group, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc. ("S&P"), ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"), Duff & ▇▇▇▇▇▇ Credit Rating
Co. and Fitch Investors Service, L.P., or any other nationally-
recognized statistical rating agency which has been approved by
Lender and which issues ratings of the Securities at the
request of a party to this transaction.
"RATING SURVEILLANCE CHARGE" shall have the meaning set
forth in SECTION 9.3.
"REGISTRATION STATEMENT" shall have the meaning set forth in SECTION
9.2(b).
"REGULAR INTEREST RATE" shall mean six and three-quarters
percent (6.75%).
"RELEASE DATE" shall mean the date that is the earlier of
(a) two (2) years from the "startup day" within the meaning of
Section 860G(a)(9) of the Code of the REMIC Trust or (b) three
(3) years from the Closing Date.
"REMIC TRUST" shall mean a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code that
holds the Note.
"RENT ROLL" shall mean the information regarding Leases at
the Property contained in Schedule IV.
"RENTS" shall mean 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 nature received by or paid to or for the
account of or benefit of Borrower or its agents or employees from
any and all sources arising from or attributable to the Property,
and proceeds, if any, from business interruption or other loss of
income insurance.
"RESTORATION" shall have the meaning set forth in SECTION 7.1.2(b).
"RETAIL PARCEL" shall mean that portion of the Property
described on Schedule I(A).
"SCHEDULED DEFEASANCE PAYMENTS" shall have the meaning set
forth in SECTION 2.3.2(b).
"SECONDARY MARKET TRANSACTION" shall mean the sale or
assignment by Lender of all or a portion of its interest in the Note.
"SECURITIES" shall have the meaning set forth in SECTION 9.1.
"SECURITIES ACT" shall have the meaning set forth in SECTION 9.2(a).
"SECURITIZATION" shall have the meaning set forth in SECTION 9.1.
"SECURITY AGREEMENT" shall have the meaning set forth in
SECTION 2.3.2(a)(vi).
"SERVICER" shall have the meaning set forth in SECTION 9.7.
"SERVICING AGREEMENT" shall have the meaning set forth in SECTION 9.7.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in
SECTION 8.2(c).
"SINGLE PURPOSE ENTITY" shall mean a Person, other than an
individual, which is formed or organized solely for the purpose
of holding, directly, an ownership interest in one (1) property,
does not engage in any business unrelated to such property and
the financing thereof, does not have any assets other than those
related to its interest in the property or the financing thereof
or any indebtedness other than as permitted by this Agreement or
the other Loan Documents, has its own separate books and records
and its own account, in each case which are separate and apart
from the books and records and accounts of any other Person,
holds itself out as being a Person, separate and apart from any
other Person and otherwise satisfies the requirements of SECTION
4.1(dd).
"SPC MANAGING MEMBER" shall have the meaning set forth in
SECTION 4.1(dd)(xv).
"SPONSOR" shall mean Urban Shopping Centers, Inc. or Urban
Shopping Centers L.P.; any corporation that is directly or
indirectly majority-owned by or controlled by or under common
control with Urban Shopping Centers, Inc. or Urban Shopping
Centers L.P.; any general partnership having Urban Shopping
Centers, Inc. or Urban Shopping Centers L.P. as the general
partner(s) with at least equal power with all other general
partners to direct and control the general partnership; any
limited partnership having Urban Shopping Centers, Inc. or Urban
Shopping Centers L.P. as the general partner(s) with at least
equal power with all other general partners to direct and control
the limited partnership; any limited liability company having
Urban Shopping Centers, Inc. or Urban Shopping Centers L.P. as
the managing member with at least equal power with all other
managing members to direct and control the limited liability
company or any real estate investment trust, multi-investor
trust, foundation, common fund or investor account for investment
trust, multi-investor trust, foundation, common fund or investor
account for which Urban Shopping Centers, Inc. or Urban Shopping
Centers L.P. acts as the investment manager or advisor.
"STANDARD STATEMENT" shall have the meaning set forth in SECTION 9.1.1.
"STATE" shall mean the State of Illinois.
"SUCCESSOR BORROWER" shall have the meaning set forth in SECTION 2.4.2
"SURVEY" shall mean a survey of the Property prepared by a
surveyor licensed in the State and satisfactory to Lender and the
company or companies issuing the Title Insurance Policies, and
containing a certification of such surveyor satisfactory to
Lender and which otherwise satisfies the requirements of SECTION
3.1(c)(iii).
"TAKING" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in
anticipation of the exercise of the right of condemnation or
eminent domain, of all or any part of the Property, or any
interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting the Property
or any part thereof.
"TAXES" shall mean all real estate and personal property
taxes, assessments, water rates or sewer rents, now or hereafter
levied or assessed or imposed against any of the Property or part
thereof.
"THRESHOLD AMOUNT" shall mean an amount equal to
$4,276,382.00 adjusted on the 1st day of November, 1998 and on
the 1st day of each succeeding November through and including the
November which immediately precedes the Maturity Date to reflect
increases in the CPI for the prior twelve (12) calendar months.
"TITLE INSURANCE POLICY" shall mean an ALTA mortgagee title
insurance policy in form acceptable to Lender issued and insuring
the lien of the Mortgage on the Property.
"TRANSFER" shall mean a sale, conveyance or other form of
transfer of the Property or a portion therein or of an interest
therein as described in Article 6 of the Mortgage.
"TREASURY RATE" shall mean a rate per annum equal to the
yield, as of the related determination date, calculated by linear
interpolation (rounded to the nearest one-thousandth of one
percent (i.e., 0.001%)) of the yields of noncallable United
States Treasury obligations with terms (one longer and one
shorter) most nearly approximating the period from such
determination date to the Maturity Date, as determined by Lender
on the basis of Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading U.S. Governmental
Security/Treasury Constant Maturities, or other recognized source
of financial market information selected by Lender.
"TRUST" shall mean the Land Trusts owning record title to
the Property described on Schedule III hereof.
"TRUSTEE" shall mean as the Trustee under the Land Trust and
its successors and assigns.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform
Commercial Code as in effect in the applicable State or Commonwealth.
"UNDEFEASED NOTE" shall have the meaning set forth in
SECTION 2.3.2(v) hereof.
"UNDERWRITER GROUP" shall have the meaning set forth in SECTION 9.2(b).
"U.S. OBLIGATIONS" shall mean obligations or securities not
subject to prepayment, call or early redemption which are direct
obligations of, or obligations fully guaranteed as to timely
payment by, the United States of America or of any agency or
instrumentality of the United States of America, the obligations
of which are backed by the full faith and credit of the United
States of America, which qualify under 1.860G-2(a)(8) of the
Treasury regulations. All such obligations or securities shall
mature or be redeemable, or provide for payments of interest
thereon, on or prior to the Business Day preceding the date such
amounts are required to be applied under this Agreement or any of
the other Loan Documents.
"YIELD MAINTENANCE PREMIUM" shall mean the amount (if any)
which, when added to the remaining principal amount of the Note
or the principal amount of Defeased Note, as applicable, will be
sufficient to purchase U.S. Obligations providing the required
Scheduled Defeasance Payments.
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. 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.
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 the
Loan to Borrower on the Closing Date, in the original principal
amount of $85,527,649.00. The Loan shall mature on the Maturity Date.
Borrower hereby agrees to accept the Loan on the Closing Date, subject
to and upon the terms and conditions set forth herein.
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. The Loan shall be evidenced by the
Note of Borrower, in the original principal amount of the Loan.
The Note shall be entitled to the benefits of this Agreement and
shall be secured by the Mortgage, the Assignment of Leases and
the other Loan Documents.
Section 2.2 USE OF PROCEEDS.
---------------
Borrower shall use the proceeds of the Loan disbursed
to it pursuant to SECTION 2.1 to pay off an existing loan on the
Property and to distribute, as set forth on the written closing
direction letter delivered by Borrower to and approved by Lender,
the balance of the proceeds of the Loan.
Section 2.3 LOAN REPAYMENT AND DEFEASANCE.
-----------------------------
2.3.1 REPAYMENT. Borrower shall repay any outstanding
principal indebtedness of the Loan in full on the Maturity Date
of the Loan, together with interest thereon to (but excluding)
the date of repayment. On the Anticipated Repayment Date, or on
any scheduled Payment Date thereafter, Borrower may, at its
option and upon thirty (30) days prior written notice to Lender
prepay in whole or in part the Debt without payment of the Yield
Maintenance Premium or any other premium or consideration. Any
such payment shall be applied to the last payments of principal
due under the Loan. If prior to the Anticipated Repayment Date
and following the occurrence and during the continuance of any
Event of Default, Borrower shall tender payment of an amount
sufficient to satisfy all or any portion of the Debt, such tender
by Borrower shall be deemed to be voluntary and Borrower shall
pay, in addition to the Debt, the Lockout Yield Maintenance Premium,
if any, that would be required if a Defeasance Event had occurred.
2.3.2 VOLUNTARY DEFEASANCE OF THE LOAN. (a) Provided
no Event of Default exists, at any time after the Release Date
and prior to the Anticipated Repayment Date, Borrower may
voluntarily defease (hereinafter, a "DEFEASANCE EVENT") all or,
subject to the provisions of SECTION 2.3.2(c), any portion of
the Loan by providing Lender with U.S. Obligations that produce
payments which replicate the Scheduled Defeasance Payments. Each
Defeasance Event by the Borrower shall be subject to the
satisfaction of the following conditions precedent:
(i) Borrower shall provide not less than thirty (30)
days prior written notice to Lender specifying a Payment
Date on which the Defeasance Event is to occur (the
"DEFEASANCE DATE"). Such notice shall indicate the
principal amount of the Loan to be defeased and whether all
or a portion of the Property is to be the subject to the
Defeasance Event and if a portion of the Property shall
identify such portion of the Property and the Allocated Loan
Amount applicable thereto;
(ii) Borrower shall pay to Lender all accrued and
unpaid interest on the principal balance of the Note to but
not including the Defeasance Date. If for any reason the
Defeasance Date is not a Payment Date, the Borrower shall
also pay interest that would have accrued on the Note
through the next Payment Date;
(iii) Borrower shall pay to Lender all other sums,
not including scheduled interest or principal payments, due
under the Note, this Agreement, the Mortgage, and the other
Loan Documents;
(iv) Borrower shall pay to Lender the required
Defeasance Deposit applicable to the Defeasance Event;
(v) In the event only a portion of the Loan is the
subject of the Defeasance Event, Borrower shall prepare all
necessary documents to modify this Agreement and to amend
and restate the Note and issue two substitute notes, one
note having a principal balance equal to the defeased
portion of the original Note (the "DEFEASED NOTE") and the
other note having a principal balance equal to the
undefeased portion of the Note (the "UNDEFEASED NOTE"). The
Defeased Note and Undefeased Note shall have identical terms
as the Note except for the principal balance. A Defeased
Note cannot be the subject of any further Defeasance Event;
(vi) Borrower shall execute and deliver a security
agreement (the "SECURITY AGREEMENT"), in form and substance
satisfactory to Lender, creating a first priority lien on
the Defeasance Deposit and the U.S. Obligations purchased
with the Defeasance Deposit in accordance with this
provision of this SECTION 2.3.2;
(vii) Borrower shall deliver an opinion of counsel
for Borrower in form satisfactory to Lender in its
reasonable discretion stating, among other things, that
Borrower has legally and validly transferred and assigned
the U.S. Obligations and all obligations, rights and duties
under and to the Note or Defeased Note (as applicable) to
the Successor Borrower, that Lender has a perfected first
priority security interest in the Defeasance Deposit and the
U.S. Obligations delivered by Borrower, and that any REMIC
Trust formed pursuant to a Securitization will not fail to
maintain its status as a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code as a
result of such Defeasance Event;
(viii) Borrower shall deliver evidence in writing
from the applicable Rating Agencies to the effect that such
release will not result in a downgrading, withdrawal or
qualification of the respective ratings in effect
immediately prior to such Defeasance Event for the
Securities issued in connection with the Securitization
which are then outstanding. If required by the applicable
Rating Agencies, the Borrower shall also deliver or cause to
be delivered to Lender and the applicable Rating Agencies a
non-consolidation opinion with respect to the Successor
Borrower in form and substance satisfactory to Lender and
the applicable Rating Agencies;
(ix) Borrower shall deliver an Officers' Certificate
certifying that the requirements set forth in this SECTION
2.3.2(a) have been satisfied;
(x) Borrower shall deliver a certificate of Borrower's
independent certified public accountant certifying that the
U.S. Obligations purchased with the Defeasance Deposit
generate monthly amounts equal to or greater than the
Scheduled Defeasance Payments;
(xi) Borrower shall deliver such other certificates,
documents or instruments as Lender may reasonably request; and
(xi) Borrower shall pay all costs and expenses of
Lender and the Rating Agencies incurred in connection with
the Defeasance Event, including any costs and expenses
associated with a release of the Lien of the Mortgage as
provided in SECTION 2.4 hereof as well as reasonable
attorneys' fees and expenses.
(b) In connection with each Defeasance Event, Borrower
hereby appoints Lender as its agent and attorney-in-fact for the
purpose of using the Defeasance Deposit to purchase U.S.
Obligations in Borrower's name which provide payments on or prior
to, but as close as reasonably possible to, all successive
Payment Dates after the Defeasance Date upon which interest and
principal payments are required under the Note, in the case of a
Defeasance Event for the entire outstanding principal balance of
the Loan, or the Defeased Note, in the case of a Defeasance Event
for only a portion of the outstanding principal balance of the
Loan, as applicable, and in amounts equal to the Monthly Debt
Service Payment Amount due on such dates under the Note or the
Defeased Note, as applicable, and assuming such Note or Defeased
Note is prepaid in full on the Anticipated Repayment Date (the
"SCHEDULED DEFEASANCE PAYMENTS"). Borrower, pursuant to the
Security Agreement or other appropriate document, shall authorize
and direct that the payments received from the U.S. Obligations
may be made directly to the Cash Collateral Account (unless
otherwise directed by Lender) and applied to satisfy the
obligations of Borrower under the Note or the Defeased Note, as
applicable. Any portion of the Defeasance Deposit in excess of
the amount necessary to purchase the U.S. Obligations required by
this SECTION 2.3 and satisfy Borrower's obligations under this
SECTION 2.3 and SECTION 2.4 shall be remitted to Borrower.
(c) Notwithstanding anything to the contrary
hereinbefore contained, the Retail Parcel may only be released
from the lien of the Mortgage in connection with a Defeasance
Event wherein the entire Property is released from the lien of
the Mortgage.
Section 2.4 RELEASE OF PROPERTY.
-------------------
Except as set forth in this SECTION 2.4, no repayment, prepayment
or defeasance of all or any portion of the Note shall cause, give
rise to a right to require, or otherwise result in, the release
of any Lien of any Mortgage on the Property.
2.4.1 RELEASE OF THE PROPERTY. (a) If the Borrower has
elected to defease all or a portion of the Loan and the
requirements of SECTION 2.3 and this SECTION 2.4 have been
satisfied, the Property, in the event of a Defeasance Event
involving the entire outstanding amount of the Loan, or such
portion thereof applicable to the Defeasance Deposit paid to
Lender by Borrower pursuant to SECTION 2.3.2(a)(iv) in the event
of a Defeasance Event involving a portion of the Property, shall
be released from the Lien of the Mortgage and the U.S.
Obligations, pledged pursuant to the Security Agreement, shall be
the sole source of collateral securing the Note or portion
thereof applicable to the Defeasance Deposit.
(b) In connection with a Defeasance Event, Borrower
shall submit to Lender, not less than thirty (30) days prior to
the Defeasance Date, a release of Lien (and related Loan
Documents) for the Property or portion thereof applicable to the
Defeasance Event for execution by Lender. Such release shall be
in a form appropriate in the jurisdiction in which the Property
is located and satisfactory to Lender in its sole discretion. In
addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such
release, together with an Officers' Certificate certifying that such
documentation (i) is in compliance with all Legal Requirements, and (ii)
will effect such release in accordance with the terms of this Agreement.
2.4.2 SUCCESSOR BORROWER. In connection with any
release of a Lien under this SECTION 2.4, Borrower may, or at the
request of Lender shall, establish or designate a successor
entity (the "SUCCESSOR BORROWER") which shall be a Single Purpose
Entity approved by Lender, and Borrower shall transfer and assign
all obligations, rights and duties under and to the Note or the
Defeased Note, as applicable, together with the pledged U.S.
Obligations to such Successor Borrower. Such Successor Borrower
shall assume the obligations under the Note or the Defeased Note,
as applicable, and the Security Agreement and Borrower shall be
relieved of its obligations under such documents. The Borrower
shall pay $1,000 to any such Successor Borrower as consideration
for assuming the obligations under the Note or the Defeased Note,
as applicable, and the Security Agreement. Notwithstanding
anything in this Agreement to the contrary, no other assumption
fee shall be payable upon a transfer of the Note or the Defeased
Note, as applicable, in accordance with this SECTION 2.4, but
Borrower shall pay all costs and expenses incurred by Lender,
including Lender's attorneys' fees and expenses, incurred in
connection therewith.
2.4.3 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 the Note and this Loan
Agreement, release the Lien of the Mortgage not theretofore
released.
Section 2.5 INTEREST.
--------
2.5.1 GENERALLY. Interest on the Loan and the Note
shall accrue at the Applicable Interest Rate, and will be paid as
follows: on the tenth day of December, 1997, and on the tenth
day of each calendar month thereafter up to and including the
tenth day of October, 2031, interest will be paid in installments
of the applicable Monthly Debt Service Amount; each of such
payments to be applied to the payment of interest computed at the
Applicable Interest Rate and, after the Anticipated Repayment
Date, the balance shall be applied against the outstanding
principal balance of the Loan. The principal sum together with
all accrued and unpaid interest thereon shall be due and payable
on the Maturity Date.
2.5.2 DEFAULT RATE; ADDITIONAL PAYMENTS AFTER DEFAULT.
Upon the occurrence and during the continuance of an Event of
Default, Lender shall be entitled to receive and Borrower shall
pay to Lender (a) interest on the entire unpaid principal sum and
any other amounts due at the Default Rate, and (b) on the
twentieth (20th) day of each month during which such Event of
Default shall continue, an aggregate amount equal to the Net Cash
Flow After Debt Service for the prior month, such Net Cash Flow
After Debt Service to be applied by Lender to the payment of the
Debt in such order as Lender shall determine in its sole
discretion, including, without limitation, alternating
applications thereof between interest and principal. Interest at
the Default Rate and Net Cash Flow After Debt Service shall both
be computed from the occurrence of the Event of Default until the
actual receipt and collection of the Debt (or that portion
thereof that is then due) or the cure of the Event of Default.
Interest at the Default Rate shall be added to the Debt and shall
be secured by the Mortgage. This paragraph, however, 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; the acceptance of any payment of Net Cash Flow After Debt
Service shall not be deemed to cure or constitute a waiver of any Event
of Default; and Lender retains its rights under this Note to accelerate and
to continue to demand payment of the Debt upon the happening of any
Event of Default, despite any payment of Net Cash Flow After Debt Service.
Section 2.6 PAYMENTS AND COMPUTATIONS.
-------------------------
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 11:00 a.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 Note
shall be stated to be due on a day which is not a Business Day,
such payment shall be made on the immediately preceding Business Day.
2.6.2 ANNUAL BUDGET; PAYMENTS AFTER ANTICIPATED
REPAYMENT DATE. (a) For each Fiscal Year commencing on January
1, 1998, the Borrower shall submit to Lender an Annual Budget not
later than forty five (45) days prior to the commencement of such
period or Fiscal Year in form reasonably satisfactory to Lender.
(b) In the event that, after the Anticipated Repayment
Date, the Borrower must incur an extraordinary operating expense
or capital expense in an amount in excess of $500,000 not set
forth in the Annual Budget (each an "EXTRAORDINARY EXPENSE"),
then the Borrower shall promptly deliver to Lender a reasonably
detailed explanation of such proposed Extraordinary Expense for
the Lender's approval.
(c) From and after the Anticipated Repayment Date,
interest shall accrue on the unpaid principal balance from time
to time outstanding on the Note at the Matured Performing Rate.
Borrower shall make payments of principal and interest in monthly
installments beginning on the Anticipated Repayment Date and on
the tenth day of each calendar month thereafter up to and
including the Maturity Date in an amount equal to the Monthly
Debt Service Payment Amount and, notwithstanding the following
provision with respect to Accrued Interest, the failure to make
any such payment as and when due shall constitute an Event of
Default. Each Monthly Debt Service Payment Amount paid after the
Anticipated Repayment Date shall be applied to the payment of
interest computed at the Regular Interest Rate with remainder
applied to reduce the outstanding principal balance of the Note.
Interest accrued at the Matured Performing Rate and not paid
pursuant to the preceding sentence shall be deferred and added to
the Debt and shall earn interest at the Matured Performing Rate
to the extent permitted by applicable law (such accrued interest
is hereinafter defined as "Accrued Interest"). In addition to
such payments of the Monthly Debt Service Amount, from and after
the Anticipated Repayment Date, Borrower shall make payments in
reduction of the outstanding principal balance of the Loan in
monthly installments beginning on the Anticipated Repayment Date
and on the tenth day of each calendar month thereafter up to and
including the Maturity Date in accordance with the terms and
provisions of Section 9.6 below. All of the Debt, including any
Accrued Interest, shall be due and payable on the Maturity Date.
2.6.3 COMPUTATIONS. Interest payable hereunder or under
the Note by Borrower shall be computed on the basis of the actual
number of days elapsed in a 360-day year.
2.6.4 LATE PAYMENT CHARGE. If any principal, interest
or any other sums due under the Loan Documents is not paid by
Borrower on the date on which it is due, Borrower shall pay to
Lender upon demand an amount equal to the lesser of three percent
(3%) 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 Mortgage and
the other Loan Documents.
2.6.5 PAYMENTS RECEIVED IN THE DEPOSIT ACCOUNT.
Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, and provided no Event of
Default has occurred and is continuing, Borrower's obligations
with respect to the monthly payment of principal and interest and
amounts due for the Tax and Insurance Escrow Fund, Replacement
Reserve Fund, and any other payment reserves established pursuant
to this Agreement or any other Loan Document shall be deemed
satisfied to the extent sufficient amounts are deposited in the
Cash Collateral Account to satisfy such obligations on the dates
each such payment is required, regardless of whether any of such
amounts are so applied by Lender.
III. CONDITIONS PRECEDENT
--------------------
Section 3.1 CONDITIONS PRECEDENT TO CLOSING.
-------------------------------
The obligation of Lender to make the Loan hereunder is
subject to the fulfillment by Borrower or waiver by Lender of the
following conditions precedent no later than the Closing Date:
(a) 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.
(b) LOAN AGREEMENT AND NOTE. Lender shall have
received this Agreement and the Note, in each case, duly executed
and delivered on behalf of Borrower.
(c) DELIVERY OF LOAN DOCUMENTS; TITLE INSURANCE;
REPORTS; LEASES.
(i) MORTGAGE, ASSIGNMENT OF LEASES, ASSIGNMENTS
OF AGREEMENTS. Lender shall have received from Borrower fully
executed and acknowledged counterparts of the Mortgage, the
Assignment of Leases and Assignment of the Agreements 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 Liens upon such
Property, of the requisite priority, in favor of Lender (or such
other trustee as may be required or desired under local law),
subject only to the Permitted Encumbrances and such other Liens
as are permitted pursuant to the Loan Documents; Lender shall
have also received from Borrower fully executed counterparts of
the Environmental Indemnity and the Assignment of Management Agreement.
(ii) TITLE INSURANCE. Lender shall have received
the Title Insurance Policy issued by a title company acceptable
to Lender and dated as of the Closing Date, with reinsurance and
direct access agreements acceptable to Lender. Such Title
Insurance Policy shall (A) provide coverage in amounts
satisfactory to Lender, (B) insure Lender that the Mortgage
creates a valid lien on the Property encumbered thereby of the
requisite priority, 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), (C) contain such endorsements and
affirmative coverages as Lender may reasonably request, and (D)
name Lender and its successors and assigns, as the insured. The
Title Insurance Policy shall be assignable. Lender also shall
have received evidence that all premium in respect of such Title
Insurance Policy has been paid.
(iii) SURVEY. Lender shall have received a
current title survey for the 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 1992 Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys. The survey should meet the
classification of an "Urban Survey" and 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. Such 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 metes and bounds description
of the Property reasonably satisfactory to Lender. The
surveyor's seal shall be affixed to the survey and the surveyor
shall provide a certification for the survey in form and
substance acceptable to Lender.
(iv) 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.
(v) ENVIRONMENTAL REPORT. Lender shall have
received an environmental report in respect of the Property
satisfactory to Lender.
(vi) ZONING. With respect to the Property, Lender
shall have received, at Lender's option, (i) letters or other
evidence from the appropriate municipal authorities (or other
Persons) confirming that the Property and its use complies in all
material respects with all applicable legal requirements,
including without limitation, all applicable zoning and building
laws, (ii) an ALTA 3.1 zoning endorsement for the applicable
Title Insurance Policy, or (iii) a zoning opinion letter, in
substance reasonably satisfactory to Lender.
(vii) ENCUMBRANCES. Borrower shall have taken
or caused to be taken such actions in such a manner so that
Lender has a valid and perfected Lien of the requisite priority
as of the Closing Date with respect to the Mortgage in the
Property, 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.
(d) 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.
(e) DELIVERY OF ORGANIZATIONAL DOCUMENTS. On or
before the Closing Date, Borrower shall deliver or cause to be
delivered to Lender copies certified by Borrower of all
organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or
qualification to do business, 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.
(f) OPINIONS OF BORROWER'S COUNSEL. Lender shall have
received opinions of Borrower's counsel (i) with respect to non-
consolidation, true sale or true contribution, and fraudulent
transfer issues, and (ii) with respect to due execution,
authority, enforceability of the Loan Documents and such other
matters as Lender may require, all such opinions in form, scope
and substance satisfactory to Lender and Lender's counsel in
their reasonable discretion.
(g) BUDGETS. Borrower shall have delivered to Lender
the Annual Budget for the current Fiscal Year.
(h) BASIC CARRYING COSTS. Borrower shall have paid
all Basic Carrying Costs relating to the Property which are in
arrears, including without limitation, (i) accrued but unpaid
insurance premiums relating to the Property, (ii) currently due
Taxes (including any in arrears) relating to the Property, and
(iii) currently due Other Charges relating to the Property, which
amounts shall be funded with proceeds of the Loan.
(i) COMPLETION OF PROCEEDINGS. All corporate and
other 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
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.
(j) PAYMENTS. All payments, deposits or escrows
required to be made or established by Borrower under this
Agreement, the Note and the other Loan Documents on or before the
Closing Date shall have been paid.
(k) ESTOPPELS. Lender shall have received executed
tenant estoppel letters, in form and substance satisfactory to
Lender from (i) all anchor tenants, and (ii) at least 75% by
gross leaseable area of the "in line" tenants. Lender shall also
receive estoppel letters from each of the parties to the
Operating Agreements.
(l) TRANSACTION COSTS. Borrower shall have paid or
reimbursed Lender for all title insurance premiums and recording
and filing fees incurred in connection with the origination of
the Loan.
(m) MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the financial condition or business
condition of Borrower or the Property since the date of the most
recent financial statements delivered to Lender. The income and
expenses of the Property, the occupancy leases thereof, and all
other features of the transaction shall be as represented to
Lender without material adverse change. Borrower shall not be
the subject of any bankruptcy, reorganization, or insolvency
proceeding.
(n) LEASES AND RENT ROLL. Lender shall have received
(i) copies of all tenant leases, which leases shall be certified
by Borrower as true and complete for tenants occupying in excess
of 10,000 square feet, (ii) certified copies of all Operating Agreements
affecting the Property, and (iii) a current certified Rent Roll of the
Property, which shall be true and complete in all material respects and
shall be reasonably satisfactory in form and substance to Lender.
(o) SUBORDINATION AND ATTORNMENT. Intentionally Deleted.
(p) TAX LOT. Except as disclosed to Lender on
Schedule VII, Lender shall have received evidence that the
Property constitutes a separate tax lot, with a separate tax
payor identification number, which evidence shall be reasonably
satisfactory in form and substance to Lender.
(q) PHYSICAL CONDITIONS REPORT. Lender shall have
received Physical Conditions Report, which report shall be
reasonably satisfactory in form and substance to Lender.
(r) MANAGEMENT AGREEMENT. Lender shall have received
a certified copy of the Management Agreement which shall be
reasonably satisfactory in form and substance to Lender.
(s) MARKET STUDY. Lender shall have received a market
study of the Property, which shall be satisfactory in form and
substance to Lender; provided, however, satisfaction of this
condition shall not constitute a condition precedent to Closing.
(t) FINANCIAL STATEMENTS. Lender shall have received
a balance sheet for the two most recent Fiscal Years and
statements of income and statements of cash flows, if any, with
respect to the Property for the two (2) most recent Fiscal Years.
(u) 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 and the form and content of all the Loan Documents.
IV. REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 BORROWER REPRESENTATIONS.
------------------------
Borrower represents and warrants as of the date hereof
and as of the Closing Date that:
(a) ORGANIZATION. Borrower has been duly organized
and is validly existing and in good standing with requisite power
and authority to own its properties and to transact the businesses in
which it is now engaged. Borrower is duly qualified to do business and is
in good standing in each jurisdiction where it is required to be so
qualified in connection with its properties, businesses and operations.
Borrower possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to entitle it to own its properties and
to transact the businesses in which it is now engaged, and the sole business
of Borrower is the ownership, management and operation of the Property.
(b) 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 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).
(c) 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 material 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.
(d) LITIGATION. Except as otherwise set forth on
SCHEDULE VI hereto, there are no actions, suits or proceedings at
law or in equity by or before any Governmental Authority or other
agency now pending or, to Borrower's knowledge, 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.
(e) AGREEMENTS. Borrower is not a party to any
agreement or instrument or subject to any restriction which might
materially and adversely affect Borrower or the Property, or
Borrower's business, properties or assets, operations or
condition, financial or otherwise. 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 the Borrower is a party or by which the Borrower or the
Property is otherwise bound, other than obligations incurred in
the ordinary course of the operation of the Property and other
than obligations under the Loan Documents.
(f) TITLE. Simultaneously herewith the Land Trustee
under the Land Trust will acquire good, marketable and insurable
title in fee simple to the real property comprising the Property,
free and clear of all Liens whatsoever except the Permitted
Encumbrances, such other Liens as are permitted pursuant to the
Loan Documents and the Liens created by the Loan Documents. The
Mortgage, when properly recorded in the appropriate records,
together with any Uniform Commercial Code financing statements
required to be filed in connection therewith, will create (i) a
valid, perfected lien on the Property, subject only to Permitted
Encumbrances and the Liens created by the Loan Documents and (ii)
perfected security interests in and to, and perfected collateral
assignments of, all personalty (including the Leases), all in
accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by
the Loan Documents. Borrower has not performed or caused to be
performed or provided any work, labor or materials which would give
rise to any, and Borrower has no knowledge of any other person making,
claims for payment for work, labor or materials affecting Property
which are or may become a lien prior to, or of equal priority with, the
Liens created by the Loan Documents.
(g) NO BANKRUPTCY FILING. Borrower is not
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.
(h) FULL AND ACCURATE DISCLOSURE. No statement of
fact made by Borrower in this Agreement or in any of the other
Loan Documents contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements
contained herein or therein not misleading. There is no material
fact presently known to Borrower which has not been disclosed to
Lender which materially and adversely affects, nor as far as
Borrower can foresee, which would materially and adversely
affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower.
(i) 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, (i)
Borrower is not a "governmental plan" within the meaning of
Section 3(32) of ERISA and (ii) to Borrower's actual knowledge,
without investigation, transactions by or with Borrower are not
subject to state statutes regulating investment of, and fiduciary
obligations with respect to, governmental plans.
(j) COMPLIANCE. To Borrower's knowledge, the Property
and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation,
building and zoning ordinances and codes. To Borrower's
knowledge, Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority,
the violation of which might materially adversely affect the
condition (financial or otherwise) or business of Borrower. To
Borrower's knowledge, there has not been any act or omission
affording the federal government or any state or local government
the right of forfeiture as against any of 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.
(k) 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 the Property (i) are true, complete and correct in
all material respects, (ii) accurately represent the financial
condition of the 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 GAAP throughout the periods covered, except as
disclosed therein. Borrower does not have any contingent
liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any
unfavorable commitments that are known to Borrower and reasonably
likely to have a materially adverse effect on the Property or the
operation thereof as a retail shopping center, except as referred
to or reflected in said financial statements. Since the date of
such financial statements, there has been no materially adverse
change in the financial condition, operations or business of Borrower
from that set forth in said financial statements. Notwithstanding
anything to the contrary hereinbefore provided, Borrower shall not be
deemed to represent or warrant the truth, accuracy, completeness or
correctness of any financial data prepared or furnished by any prior
owner of the Property.
(l) CONDEMNATION. No Condemnation or other proceeding
has been commenced or, to Borrower's best knowledge, is
contemplated with respect to all or any portion of any of the
Property or for the relocation of roadways providing access to
the Property.
(m) 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.
(n) UTILITIES AND PUBLIC ACCESS. The Property has
rights of access to public ways and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service
such Property for its intended uses. All public utilities
necessary or convenient to the full use and enjoyment of each of
the Property are located either in the public right-of-way
abutting such Property (which are connected so as to serve the
Property without passing over other property) or in recorded
easements serving such Property and such easements are set forth
in the Title Insurance Policies. All roads necessary for the use
of the Property for its current purposes have been completed and
dedicated to public use and accepted by all Governmental
Authorities.
(o) NOT A FOREIGN PERSON. Borrower is not a "foreign
person" within the meaning of 1445(f)(3) of the Code.
(p) SEPARATE LOTS. Except as disclosed on Schedule
VII, the Property is comprised of one (1) or more parcels which
constitutes a separate tax lot(s) and no property is part of such
tax lot other than the Property encumbered by the Mortgage.
(q) ASSESSMENTS. There are no pending or, to
Borrower's knowledge, proposed special or other assessments for
public improvements or otherwise affecting the Property, nor are
there any contemplated improvements to the Property that may
result in such special or other assessments.
(r) ENFORCEABILITY. The Loan Documents are not
subject to any right of rescission, set-off, counterclaim or
defense by Borrower, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the
exercise of any right thereunder, render the Loan Documents
unenforceable, and Borrower has not asserted any right of
rescission, set-off, counterclaim or defense with respect thereto.
(s) NO PRIOR ASSIGNMENT. There are no prior
assignments of the Leases or any portion of the Rents due and
payable or to become due and payable which are presently outstanding.
(t) INSURANCE. Borrower has obtained and has
delivered to Lender certificates of all insurance Policies
reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement. No claims which
materially reduce coverages afforded by such Policies 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.
(u) USE OF THE PROPERTY. The Property is used
exclusively for retail purposes and other appurtenant and related
uses customary for a regional shopping center.
(v) CERTIFICATE OF OCCUPANCY; LICENSES. All
certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy
permits required for the legal use, occupancy and operation of
the Property as a retail shopping center (collectively, the
"Licenses"), have been obtained and are in full force and effect.
The Borrower shall keep and maintain all licenses necessary for
the operation of the Property as a retail shopping center. The
use being made of the Property is in conformity with the
certificate of occupancy issued for such Property.
(w) NATURAL HAZARD ZONE. None of the Improvements on
the Property are located in an area as identified by the Federal
Emergency Management Agency as (i) an area having special flood hazards; or
(ii) identified or designated as a federally designated seismic zone.
(x) PHYSICAL CONDITION. To Borrower's knowledge and
except as disclosed in the physical conditions report delivered
to Lender pursuant to SECTION 3.1 (q) hereof, the Property,
including, without limitation, all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior sidings and
doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all
material respects; there exists no structural or other material
defects or damages in the Property, whether latent or otherwise,
and Borrower has not received notice from any insurance company
or bonding company of any defects or inadequacies in the
Property, or any part thereof, which would adversely affect the
insurability of the same or cause the imposition of extraordinary
premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
(y) BOUNDARIES. Except as shown on the survey
delivered to Lender, all of the improvements which were
identified by Borrower or Sponsor as being the subject Property
lie wholly within the boundaries and building restriction lines
of the Property, and no improvements on adjoining properties
encroach upon the Property, and no easements or other
encumbrances upon the Property encroach upon any of the
improvements, so as to affect the value or marketability of the
Property except those which are insured against by title
insurance.
(z) OPERATING AGREEMENTS. The Operating Agreements are
in full force and effect and to Borrower's knowledge, there are
no material defaults thereunder by any party and there are no
conditions that, with the passage of time or the giving of
notice, or both, would constitute material defaults thereunder.
(aa) SURVEY. The Survey for the Property delivered to
Lender in connection with this Agreement does not fail to reflect
any material matter affecting any of the Property or the title
thereto.
(bb) LOAN TO VALUE. The fair market value of the
Property as of the date hereof is at least equal to eighty
percent (80%) of the original principal balance of the Loan.
(cc) FILING AND RECORDING TAXES. All transfer taxes,
deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by any Person under applicable
Legal Requirements currently in effect in connection with the
transfer of the Property to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar
tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration,
perfection or enforcement of any of the Loan Documents,
including, without limitation, the Mortgage encumbering the
Property have been paid, and, under current Legal Requirements,
the Mortgage encumbering the Property are enforceable in
accordance with their respective terms by Lender (or any
subsequent holder thereof).
(dd) SINGLE-PURPOSE. Borrower hereby represents and
warrants to, and covenants with, Lender that as of the date
hereof and until such time as the Debt shall be paid in full:
(i) Borrower does not own and will not own any
asset or property other than (A) the Property, and (B) incidental
personal property necessary for the ownership or operation of the Property.
(ii) Borrower will not engage in any business
other than the ownership, management and operation of the
Property and Borrower will conduct and operate its business as
presently conducted and operated.
(iii) Borrower will not enter into any
contract or agreement with any affiliate of the Borrower, any
constituent party of Borrower or any affiliate of any constituent
party, except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available
on an arms-length basis with third parties other than any such party.
(iv) Borrower has not incurred and will not incur
any Indebtedness, secured or unsecured, direct or indirect,
absolute or contingent (including guaranteeing any obligation)
other than the Debt and such other obligations permitted pursuant
to SECTION 6.5 of the Mortgage. No Indebtedness other than the
Debt may be secured (subordinate or PARI PASSU) by the Property.
(v) Borrower has not made and will not make any
loans or advances to any third party (including any affiliate or
constituent party), and shall not acquire obligations or
securities of its affiliates.
(vi) Borrower is and will remain solvent and
Borrower will pay its debts and liabilities (including, as
applicable, shared personnel and overhead expenses) from its
assets as the same shall become due.
(vii) Borrower has done or caused to be done
and will do all things necessary to observe organizational
formalities and preserve its existence, and Borrower will not,
nor will Borrower permit any constituent party to amend, modify
or otherwise change the organizational documents of Borrower or
SPC Managing Member without the prior written consent of Lender.
(viii) Borrower will maintain all of its books,
records, financial statements and bank accounts separate from
those of its affiliates and any constituent party and Borrower
will file its own tax returns. Borrower shall maintain its
books, records, resolutions and agreements as official records.
(ix) Borrower will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct
from any other entity (including any affiliate of Borrower or any
constituent party of Borrower), shall correct any known
misunderstanding regarding its status as a separate entity, shall
conduct business in its own name, shall not identify itself or
any of its affiliates as a division or part of the other and
shall maintain and utilize separate stationery, invoices and checks.
(x) Borrower will maintain adequate capital for
the normal obligations reasonably foreseeable in a business of
its size and character and in light of its contemplated business operations.
(xi) Neither Borrower nor any constituent party
will seek or effect the liquidation, dissolution, winding up,
liquidation, consolidation or merger, in whole or in part, of the Borrower.
(xii) Borrower will not commingle the funds
and other assets of Borrower with those of any affiliate or
constituent party or any other Person.
(xiii) Borrower has 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 affiliate or constituent party or any other Person.
(xiv) Borrower does not and will not hold
itself out to be responsible for the debts or obligations of any
other Person.
(xv) If Borrower is a limited liability company,
each managing member is a corporation whose sole asset is its
interest in Borrower (the "SPC MANAGING MEMBER") and the SPC
Managing Member will at all times comply, and will cause Borrower
to comply, with each of the representations, warranties, and
covenants contained in this SECTION 4.1(dd) as if such
representation, warranty or covenant was made directly by the SPC
Managing Member.
(xvi) Borrower shall at all times cause there
to be at least one duly appointed member of the board of
directors (an "Independent Director") of the SPC Managing Member
reasonably satisfactory to Lender who shall not have been at the
time of such individual's appointment, and may not have been at
any time during the preceding five years (i) a shareholder of, or
an officer, director, partner or employee of, Borrower or any of
its shareholders, subsidiaries or affiliates, (ii) a customer of,
or supplier to, Borrower or any of its shareholders, subsidiaries
or affiliates, (iii) a person or other entity controlling or
under common control with any such shareholder, partner supplier
or customer, or (iv) a member of the immediate family of any such
shareholder, officer, director, partner, employee, supplier or
customer of any other director of Borrower.
(xvii) Borrower shall not cause or permit the
board of directors of the SPC Managing Member to take any action
which, under the terms of any certificate of incorporation, by-
laws or any voting trust agreement with respect to any common
stock, requires a vote of the board of directors of the SPC
Managing Member of Borrower unless at the time of such action
there shall be at least one member who is an Independent Director.
(xviii) Borrower shall conduct its business so
that the assumptions made with respect to Borrower in that
certain opinion letter dated the date hereof (the "Insolvency
Opinion") delivered by ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ in connection with
the Loan shall be true and correct in all respects.
(xix) Borrower will not permit any Affiliate
(other than Manager in connection with the discharge of its
obligations under the Management Agreement) or constituent party
independent access to its bank accounts.
(xx) Borrower shall pay the salaries of its own
employees and maintain a sufficient number of employees in light
of its contemplated business operations.
(xxi) Borrower shall compensate each of its
consultants and agents from its funds for services provided to it
and pay from its own assets all obligations of any kind incurred.
Upon the withdrawal or the disassociation of the SPC Managing
Member from Borrower, Borrower shall immediately appoint a new
member whose articles of incorporation are substantially similar
to those of the SPC Managing Member and deliver a new non-
consolidation opinion to the Rating Agency or Rating Agencies, as
applicable, with respect to the new special purpose member and
its equity owners.
(ee) 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 by or on behalf of Borrower (excluding those
prepared or furnished by any prior owner of the Property) in
connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower in this Agreement or
in any other Loan Document, are accurate, complete and correct in
all material respects. There has been no material adverse change
in any condition, fact, circumstance or event that would make any
such information inaccurate, incomplete or otherwise misleading
in any material respect or that otherwise materially and
adversely affects or might materially and adversely affect the
Property or the business operations or the financial condition of
Borrower. To Borrower's knowledge, 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.
(ff) ILLEGAL ACTIVITY. No portion of the Property has
been or will be purchased with proceeds of any illegal activity.
(gg) RENT ROLL. The Rent Roll attached hereto as
Schedule IV is true and complete in all material respects.
(hh) ENVIRONMENTAL COMPLIANCE. To Borrower's
knowledge, no hazardous wastes or toxic substances, as defined by
applicable federal, state or local statutes, rules and
regulations, have been disposed, stored or treated by any tenant
under any Lease on or about the leased premises in violation of
any applicable law, rule or regulation, 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 transaction
of any petroleum product or any toxic or hazardous chemical,
material, substance or waste which is in violation of applicable law.
(ii) TRUST. Borrower is the only beneficiary under the
Trust and no land or other property encumbered by the Mortgage is
part of the Trust property. Except with regard to Transfers
permitted by Article 6 of the Mortgage, Borrower will not give
nor will Borrower allow any other Person authority to give any
direction to Trustee with regard to the Trust or the Trust
property. Borrower shall do all acts reasonably required to
extend the term of the Trust to a date beyond the Maturity Date
and shall, upon termination of the Trust take all steps necessary
to vest title to the Trust property in Borrower subject to the
terms of the Mortgage.
Section 4.2 SURVIVAL OF REPRESENTATIONS.
---------------------------
Borrower agrees that all of the representations and
warranties of Borrower set forth in SECTION 4.1 and elsewhere in
this Agreement and in the other Loan Documents shall survive for
so long as any amount remains owing to Lender under this
Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in
this Agreement or in the other Loan Documents by Borrower shall
be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its
behalf.
V. AFFIRMATIVE COVENANTS
---------------------
Section 5.1 BORROWER COVENANTS.
------------------
From the date hereof and until payment and performance
in full of all obligations of Borrower under the Loan Documents
or the earlier release of the Lien of all Mortgage encumbering
the Property (and all related obligations) in accordance with the
terms of this Agreement and the other Loan Documents, Borrower
hereby covenants and agrees with Lender that:
(a) 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 at all times maintain, preserve and
protect all franchises and trade names and preserve all the
remainder of its property used or useful in the conduct of its
business and shall keep the Property in good working order and
repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments
and improvements thereto, all as more fully provided in the
Mortgage encumbering such Property. 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.
(b) TAXES AND OTHER CHARGES. Borrower shall pay all
Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Property or any part thereof as the same
become due and payable; provided, however, Borrower's obligation
to directly pay Taxes shall be suspended for so long as Borrower
complies with the terms and provisions of SECTION 7.3 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 the
date on which the Taxes and/or Other Charges would otherwise be
delinquent if not paid. Borrower shall furnish to Lender
receipts for the payment of the Taxes and the Other Charges promptly
after payment of said Taxes and the Other Charges (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 7.3 HEREOF). Borrower shall not
suffer and shall promptly cause to be paid and discharged any
lien or charge whatsoever which may be or become a lien or charge
against the Property, and shall promptly pay for all utility
services provided to the Property. After prior written notice to
Lender, Borrower, at its own expense, may contest by appropriate
legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i)
no Default or Event of Default has occurred and remains uncured;
(ii) Borrower is permitted to do so under the provisions of any
mortgage or deed of trust superior in lien to the applicable
Mortgage; (iii) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute
a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances;
(iv) the Property nor any part thereof or interest therein will
be in danger of being sold, forfeited, terminated, canceled or
lost; (v) 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; (vi) such proceeding shall
suspend the collection of Taxes or Other Charges from the
Property; and (vii) Borrower shall furnish such security as may
be required in the proceeding, or as may be reasonably requested
by Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon.
Lender may pay over any such cash deposit or part thereof held by
Lender to the claimant entitled thereto at any time when, in the
judgment of Lender, the entitlement of such claimant is established.
(c) LITIGATION. Borrower shall give prompt written
notice to Lender of any litigation or governmental proceedings
pending or threatened against Borrower which might materially
adversely affect Borrower's condition (financial or otherwise) or
business or the Property.
(d) ACCESS TO THE PROPERTY. Borrower shall permit
agents, representatives and employees of Lender to inspect the
Property or any part thereof at reasonable hours upon reasonable
advance notice.
(e) Notice of Default. Borrower shall promptly advise
Lender of any material adverse change in Borrower's financial
condition or of the occurrence of any Default or Event of Default
of which Borrower has knowledge.
(f) 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.
(g) 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.
(h) INSURANCE BENEFITS. Borrower shall cooperate with
Lender in obtaining for Lender the benefits of any Proceeds of
any Policies lawfully or equitably payable in connection with the
Property, and Lender shall be reimbursed for any expenses incurred in
connection therewith (including attorneys' fees and disbursements, and
the payment by Borrower of the expense of an appraisal (if necessary,
required or, in Lender's reasonable discretion appropriate under the
circumstances) on behalf of Lender in case of a fire or other
casualty affecting any of the Property or any part thereof) out
of such Proceeds.
(i) FURTHER ASSURANCES; SUPPLEMENTAL MORTGAGE
AFFIDAVITS. 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, market studies, 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 provided, however, such documents,
instruments, certificates, assignments and other writings and
such other acts will not change the rate of interest or change,
modify or amend any of the material business terms of the Loan
Documents; 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 provided that such acts,
conveyances and assurance will not create new liability or
increase existing liability of or on the part of Borrower.
(j) As of the date hereof, Borrower represents that it
has paid or will cause to be paid all state, county and municipal
recording and all other taxes imposed upon the execution and
recordation of the Mortgage encumbering the Property.
(k) FINANCIAL REPORTING.
(i) Borrower will keep and maintain or will cause
to be kept and maintained on a Fiscal Year basis, in accordance
with GAAP (or such other accounting basis reasonably acceptable
to Lender), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower and all items
of income and expense in connection with the operation of the
Property. Lender shall have the right from time to time at all
times during normal business hours upon reasonable notice to
examine such books, records and accounts at the office of
Borrower or other Person maintaining such books, records and
accounts and to make such copies or extracts thereof as Lender
shall desire. After the occurrence of an Event of Default,
Borrower shall pay any reasonable costs and expenses incurred by
Lender for outside auditors to examine Borrower's accounting
records with respect to the Property, as Lender shall determine
to be necessary or appropriate in the protection of Lender's interest.
(ii) Borrower will furnish to Lender annually,
within ninety (90) days following the end of each Fiscal Year of
Borrower, a complete copy of Borrower's annual financial
statements audited by a "Big Six" accounting firm or other
independent certified public accountant acceptable to Lender in
accordance with GAAP (or such other accounting basis acceptable to
Lender) covering the Property for such Fiscal Year and containing
statements of profit and loss for the Borrower and the Property
and a balance sheet for the Property. 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. The annual financial statements for the Property shall
be accompanied by (i) a certificate executed by the chief
financial officer of Borrower or the SPC Managing Member of
Borrower, as applicable, stating that each such annual financial
statement presents fairly the financial condition and the results
of operations of the Property being reported upon and has been
prepared in accordance with GAAP, and (ii) an unqualified opinion
of a "Big Six" accounting firm or other independent certified
public accountant reasonably acceptable to Lender. Together with
the annual financial statements for the Property, 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.
(iii) 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 the
SPC Managing Member, as applicable, stating that such items are
true, correct, accurate, and complete and fairly present the
financial condition and results of the operations of the Property
on a combined basis (subject to normal year-end adjustments) as
applicable: (i) a rent roll for the subject quarter 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, and other information necessary and sufficient to
fairly represent the financial position and results of operation
of the Property during such calendar quarter; and (iii) a
calculation reflecting the annual Debt Service Coverage Ratio for
the immediately preceding twelve (12) month period as of the last
day of such quarter accompanied by an Officer's Certificate with
respect thereto. In addition, such certificate shall also be
accompanied by a certificate of the chief financial officer of
Borrower or the SPC Managing Member of Borrower stating that the
representations and warranties of Borrower set forth in SECTION
4.1(dd)(iv) are true and correct as of the date of such
certificate and that there are no trade payables outstanding for
more than sixty (60) days.
(iv) 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 the Property and the financial
affairs of Borrower as may be reasonably requested by Lender.
(l) BUSINESS AND OPERATIONS. Borrower will continue
to engage in the businesses presently conducted by it as and to
the extent the same are necessary for the ownership, maintenance,
management and operation of the Property. Borrower will qualify
to do business and will remain in good standing under the laws of
each jurisdiction as and to the extent the same are required for
the ownership, maintenance, management and operation of the Property.
(m) TITLE TO THE PROPERTY. Borrower will warrant
and defend (i) the title to the Property and the Trust and every
part thereof, subject only to Liens permitted hereunder
(including Permitted Encumbrances), and (ii) the validity and
priority of the Liens of the Mortgage and the Assignment of
Leases on the Property and the Trust, 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 the Property and the Trust, other
than as permitted hereunder, is claimed by another Person.
(n) COSTS OF ENFORCEMENT. In the event (i) 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, (ii) of the
foreclosure of any mortgage prior to or subsequent to any
Mortgage encumbering the Property in which proceeding Lender is
made a party, or (iii) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of Borrower
or an assignment by Borrower for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and
agrees to pay all reasonable costs of collection and defense,
including attorneys' fees in connection therewith and in connection with
any appellate proceeding or post-judgment action involved therein, which
shall be due and payable together with all required service or use taxes.
(o) ESTOPPEL STATEMENT. (a) After request by Lender,
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 Note, (ii) the
unpaid principal amount of the Note, (iii) the Applicable
Interest Rate of the Note, (iv) the date installments of interest
and/or principal were last paid, (v) any offsets or defenses to
the payment of the Debt, if any, and (vi) that the Note, this
Agreement, the Mortgage and the other Loan Documents are valid,
legal and binding obligations and have not been modified or if
modified, giving particulars of such modification.
(b) Borrower shall deliver to Lender upon
request, tenant estoppel certificates from each tenant occupying
10,000 square feet of gross leasable area or more 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.
(p) 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 2.2.
(q) 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.
(r) CONFIRMATION OF REPRESENTATIONS. In addition to
and not in limitation of the covenants and agreements of Borrower
contained in SECTION 7.1, Borrower shall deliver, in connection
with any Securitization, (i) one or more Officers' 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 Secondary Market Transaction in all relevant jurisdictions
(provided that such certificates may, to maintain the accuracy of such
representations, reflect the occurrence of any events after the
Closing), and (ii) certificates of the relevant Governmental
Authorities in all relevant jurisdictions indicating the good
standing and qualification of Borrower and its SPC Managing
Member as of the date of the Secondary Market Transaction.
(s) NO JOINT ASSESSMENT. Borrower shall not suffer,
permit or initiate the joint assessment of any Property (i) with
any other real property constituting a tax lot separate from such
Property, and (ii) 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 the Property.
(t) LEASING MATTERS. Borrower shall comply with the
provisions of SECTION 3.6 of the Mortgage pertaining to Leases.
(u) MAINTENANCE OF MORTGAGED PROPERTY; ALTERATIONS;
INSPECTIONS; UTILITIES.
(i) Borrower shall keep and maintain the Property
and every part thereof in good condition and repair, subject to
ordinary wear and tear, and, subject to Excusable Delays and the
provisions of this Agreement and the Mortgage with respect to
damage or destruction caused by casualty events or Takings, shall
not permit or commit any waste, impairment, or deterioration of
the Property in any material respect. Borrower further covenants
to do all other acts which a reasonable and prudent owner and
operator of regional shopping centers would deem reasonably
necessary to protect the security hereof and will make every
reasonable effort to complete the Required Repairs brought to
Borrower's attention in the Property Condition Report. Borrower
shall not remove or demolish any of the Improvements on the
Property except as the same may be necessary in connection with
an Alteration or a restoration in connection with a Taking or
casualty in accordance with the terms and conditions hereof.
(ii) Except as may be necessary in connection with
an Alteration permitted by this SECTION 5.1(u), Borrower shall
not make any changes or allow any material changes to be made in
the nature of the use of the Property or any part thereof, or
initiate or take any action in furtherance of any change in any
zoning or other land use classification affecting all or any
portion of the Property now or hereafter in effect and affecting
all or any portion of the Property.
(iii) Provided that no Event of Default shall
have occurred and be continuing hereunder, Borrower shall have
the right, without Lender's consent, to undertake any Expansion
or any alteration, improvement, demolition or removal of the
Property or any portion thereof (any Expansion and any such
alteration, improvement, demolition or removal performed by
Borrower, an "ALTERATION") so long as such Alteration is
undertaken in accordance with the applicable provisions of the
Mortgage and other Loan Documents, is permitted by the Operating
Agreements and the Leases and shall not either (x) materially
adversely affect the value of the Property taken as a whole or
(y) materially adversely reduce the Gross Income from Operations
from the level available immediately prior to commencement of
such Alteration (unless the amount of such reduction is secured
by Cash, Cash Equivalents or a Letter of Credit). Any Alteration
which involves an estimated cost of more than the Threshold
Amount shall be conducted under the supervision of an Independent
Architect and no such Alteration shall be undertaken until five
(5) Business Days after there shall have been filed with the
Lender, for information, purposes only and not for approval by
the Lender, detailed plans and specifications and cost estimates
therefor, prepared and approved in writing by such Independent
Architect. Such plans and specifications may be revised at any
time and from time to time provided that material revisions of
such plans and specifications are filed with the Lender, for
information purposes only, together with the written approval
thereof by such Independent Architect. All work done in
connection with any Alteration shall be performed with due
diligence in a good and workmanlike manner, all materials used in
connection with any Alteration shall not be less than the
standard of quality of the materials currently used at the Property
and all work performed and all materials used shall be in accordance
with all applicable Legal Requirements and Insurance Requirements.
(iv) Notwithstanding anything to the contrary
contained in this SECTION 5.1(u) hereof, no Alteration (excluding
for the purposes of this sentence, the Fox Valley Renovation)
contracted for by the Borrower shall be performed by or on behalf
of Borrower if the cost thereof, individually or in the aggregate
with all other related Alterations, as reasonably estimated by an
Independent Architect, that are due and payable and unpaid exceed
the Threshold Amount (any such Alteration, a "MATERIAL
ALTERATION"), unless Borrower shall have delivered to Lender
security in an amount not less than the difference between such
due and payable and unpaid costs and the Threshold Amount. Prior
to commencing any Alteration (excluding for the purposes of this
sentence, the Fox Valley Renovation) which involves an estimated
cost of more than the Threshold Amount, the Rating Agencies shall
have confirmed in writing to the Lender that such Alteration will
not result in a downgrade, withdrawal or qualification of the
then-current ratings assigned to the Securities. The Threshold
Amount shall be reduced on any given date by the Independent
Architect's estimate of the cost, if work on the Alterations were
to be terminated on such date, to restore the Property to the
extent necessary so that, as restored, there would be no material
adverse effect on the value of the Property as a whole. Costs
which are subject to retainage shall be treated as due and
payable and unpaid from the date they would be due and payable
but for their characterization as subject to retainage. In the
event that any Alteration (excluding for the purposes of this
sentence, the Fox Valley Renovation) shall be made in conjunction
with any Restoration with respect to which Borrower shall be
entitled to withdraw Proceeds pursuant to SECTION 7.1.2 hereof,
the amount of the Cash and Cash Equivalents and/or Letter of
Credit to be furnished pursuant hereto need not exceed the
aggregate cost of such Restoration and such Alteration (as
estimated by the Independent Architect), less the sum of the
amount of any Proceeds which Borrower may be entitled to withdraw
pursuant to SECTION 7.1.2 hereof and the Threshold Amount
(adjusted as described above). The Independent Architect shall
deliver to Lender a schedule setting forth the projected stages
of completion of the Alteration and the corresponding amounts
equal to such completion. Any Cash which Borrower shall deliver
pursuant hereto (or the proceeds of any Cash and Cash Equivalents
and/or Letter of Credit) shall be held by Lender in the cash
collateral account established by Lender for such purpose. From
time to time as the Alteration progresses, the amount of any Cash
or Cash Equivalents so furnished may be released by Lender and
paid or otherwise applied by or returned to Borrower in an amount
equal to the amount Borrower would be entitled to so withdraw if
SECTION 7.1.2 hereof were applicable, and any Letter of Credit so
furnished may be reduced by Borrower in an amount equal to the
amount Borrower would be entitled to so reduce if SECTION 7.1.2
hereof were applicable. At any time after substantial completion
of any Alteration in respect whereof Cash and Cash Equivalents
and/or a Letter of Credit was deposited pursuant hereto, the
whole balance of any Cash so deposited with Lender and then
remaining on deposit shall be paid by Lender to Borrower, and any
Cash and Cash Equivalents and/or a Letter of Credit so deposited
or delivered shall, to the extent it has not been called upon,
reduced or theretofore released, be released by Lender to
Borrower, within ten (10) days after receipt by Lender of an
application for such withdrawal and/or release
together with an Officer's Certificate, and signed also (as to
the following clause (A)) by the Independent Architect, setting
forth in substance as follows:
(A) that the Alteration in respect of which such
Cash and Cash Equivalents and/or a Letter of Credit was
deposited has been substantially completed in all material
respects in accordance with any plans and specifications
therefor previously filed with Lender under SECTION
5.1(u)(iii) hereof; and
(B) that to the knowledge of the certifying
Person all amounts which Borrower is or may become liable to
pay in respect of such Alteration through the date of the
certification have been paid in full or adequately provided
for or are being contested in accordance with SECTION 3.9(b)
of the Mortgage; and, to the extent that such are customary
and reasonably obtainable by prudent managers in the
metropolitan area where the Property is located and Borrower
is not contesting payment as aforesaid, that lien waivers
have been obtained from the general contractor and major
subcontractors performing such Alterations.
(v) Lender and any Persons authorized by Lender
may at all reasonable times and upon reasonable notice enter and
examine the Property and may inspect all work done, labor
performed and materials furnished in and about the Property
subject in all instances to the rights of tenants under Leases.
Lender shall not have any duty to make any such inspection and
shall not have any liability or obligation for making (except for
its gross negligence or willful misconduct) or not making any
such inspection.
(vi) Provided that no Event of Default shall have
occurred and be continuing hereunder, Borrower shall have the
right, without Lender's consent, to expand or reduce the size of
the Property through the addition of one or more anchor stores
and/or the addition of one or more mall or peripheral stores form
time to time (either retail or non-retail facilities) including,
without limitation, by the conversion of an existing department
store to additional mall stores, the transfer of a portion of the
Property to a department store for the construction of its store,
or the construction of a decked parking facility (an
"EXPANSION"), so long as:
(A) such Expansion (1) shall not materially
adversely affect the value of the Property, including any
anchor parcel to be conveyed to a department store, taken as
a whole, (2) shall not result in any violation of the terms
of any Operating Agreement or Lease at the Property, (3)
shall be conducted in accordance with SECTION 5.1(u)(iii)
hereof, and (4) shall not materially, adversely affect the
income of the Property;
(B) Borrower delivers an Officer's Certificate
stating that (1) such transactions and the particular plans
developed for the Expansion (x) shall not violate any
existing Material Lease or Operating Agreements, and shall
not affect the utility or operation of the Property in any
material adverse respect, (2) any connection to, or
contemplated shared use of, the common area in order to
provide utilities services and access to the Expansion shall
not affect the availability or provision of utility services
to the Property in any material adverse respect, and (3) any
such transaction shall not materially reduce the rentable
square footage of the Improvements;
(C) Borrower receives written confirmation from
the Rating Agencies that the Expansion would not result in a
downgrade, qualification or withdrawal of the then-current
ratings on the Securities; and
(D) Borrower obtains an agreement from the third-
party developer, if any, conducting such Expansion which
provides that in the event the third-party developer does
not complete construction of the improvements on the
expansion parcel, Borrower will have the right, at either
Borrower's or the developer's expense as Borrower shall
elect, to enter the Expansion parcel and either complete the
improvements or demolish the uncompleted improvements with
no liability to the third-party developer; and
(E) Lender shall execute and deliver to Borrower
such instruments and agreements as are reasonably
requested of it by Borrower, at Borrower's expense, in order
to consummate any Expansion permitted hereby.
(vii) FOX VALLEY RENOVATION. Borrower shall
commence the Fox Valley Renovation not later than February 15,
1998 and shall substantially complete same not later than April
1, 1999 in a good and workmanlike manner consistent with the
quality of construction existent at the Property. The Fox Valley
Renovation shall cost Borrower not less than $7,000,000, which
Borrower will pay out of its own funds.
(viii) TRUST.
(a) Borrower hereby covenants,
that until the Loan is paid in
full, to do or take or cause to be
done or taken all acts and steps
necessary to preserve, protect and
defend the lien of the Mortgage on
the Trust and the Trust Property.
(b) Except with regard to
Transfers permitted by Article 6 of
the Mortgage, Borrower will not
direct or allow Trustee to transfer
title to the Property or the Trust
or grant any other person an
interest in, to or under the Trust
or the Property or designate any
other Person a beneficiary under
the Trust.
(c) Upon termination of the Trust,
while any portion of the Loan is
unpaid, Borrower will do or take or
cause to be done or taken all acts
necessary or required to vest title
in the Trust property subject to
the lien of the Mortgage.
VI. NEGATIVE COVENANTS
------------------
Section 6.1 BORROWER'S NEGATIVE COVENANTS.
-----------------------------
From the date hereof until payment and performance in
full of all obligations of Borrower under the Loan Documents or the
earlier release of the Liens of all 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:
(a) OPERATION OF PROPERTY. Borrower shall not,
without the prior consent of Lender (which consent shall not be
unreasonably withheld and shall not be required if such
termination is in compliance with the Mortgage), terminate the
Management Agreement or otherwise replace the Manager (unless
such replacement Manager is a Sponsor) or enter into any other
management agreement with respect to the Property.
(b) 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 the Trust or
permit any such action to be taken, except:
(i) Permitted Encumbrances;
(ii) Liens created by or permitted, pursuant to the Loan
Documents;
(iii)Liens for Taxes, or Other Charges not yet due;
(iv) The matters set forth in SECTION 6.5 of the Mortgage.
(c) DISSOLUTION. Borrower shall not (i) engage in any
dissolution, liquidation or consolidation or merger with or into
any other business entity, (ii) engage in any business activity
not related to the ownership and operation of the Property, (iii)
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 the Borrower except to the extent
permitted by the Loan Documents, or (iv) cause the SPC Managing
Member to (A) dissolve, wind up or liquidate or take any action,
or omit to take an action, as a result of which the SPC Managing
Member would be dissolved, wound up or liquidated in whole or in
part, or (B) amend, modify, waive or terminate the certificate of
incorporation or bylaws of the SPC Managing Member, in each case,
without obtaining the prior written consent of Lender or Lender's designee.
(d) CHANGE IN BUSINESS. Borrower shall not enter into
any line of business other than the ownership and operation of
the Property, or make any material change in the scope or nature
of its business objectives, purposes or operations, or undertake
or participate in activities other than the continuance of its
present business.
(e) 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.
(f) 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 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.
(g) ZONING. Borrower shall not initiate or consent to
any zoning reclassification of any portion of the Property or seek any
variance under any existing zoning ordinance or use or permit the use of
any portion of the Property in any manner that could result in
such use becoming a non-conforming use under any zoning ordinance
or any other applicable land use law, rule or regulation, without
the prior consent of Lender.
(h) ASSETS. Borrower shall not purchase or own any
properties other than the Property and assets used in connection
with the operation and management of the Property.
(i) DEBT. Except as expressly permitted by the terms
of the Mortgage or this Agreement, Borrower shall not create,
incur or assume any debt other than the Debt.
(j) NO JOINT ASSESSMENT. Borrower shall not suffer,
permit or initiate the joint assessment of the Property (i) with
any other real property constituting a tax lot separate from the
Property, and (ii) 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 the Property.
(k) PRINCIPAL PLACE OF BUSINESS. Borrower shall not
change its principal place of business set forth on the first
page of this Agreement without first giving Lender thirty (30)
days prior written notice.
(l) ERISA. (i) Borrower shall not engage in any
transaction which would cause any obligation, or action taken or
to be taken, hereunder (or the exercise by Lender of any of its
rights under the Note, this Agreement or the other Loan
Documents) to be a non-exempt (under a statutory or
administrative exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(ii) 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 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) to Borrower's actual
knowledge, without investigation, 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:
(1) Equity interests in Borrower are publicly
offered securities, within the meaning of 29 C.F.R. 2510.3-101(b)(2);
(2) 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.
2510.3-101(f)(2); or
(3) Borrower qualifies as an "operating company"
or a "real estate operating company" within the meaning of
29 C.F.R. 2510.3-101(c) or (e) or an investment company
registered under The Investment Company Act of 1940.
VII. CASUALTY; CONDEMNATION
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Section 7.1 INSURANCE; CASUALTY AND CONDEMNATION.
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7.1.1 INSURANCE.
(a) INSURANCE COVERAGE REQUIREMENTS. Borrower shall,
at its sole cost and expense, keep in full force and effect
policies of insurance coverage (the "Policies") of the types and
minimum limits as follows during the term of the Mortgage:
(i) Property Insurance. Insurance with respect
to the Improvements and the Equipment against any peril included
within the classification "All Risks of Physical Loss" in amount
at all times sufficient to prevent the Borrower from becoming co-
insurer within the terms of the applicable Policies, but in any
event such insurance shall be maintained in an amount equal to
the full insurable value of the Improvements and the Equipment,
the term "full insurable value" to mean the actual replacement
cost of the Improvements and the Equipment (without taking into
account any depreciation, and exclusive of excavations, footing
and foundations, landscaping and paving, but inclusive of
demolition and debris removal) determined annually by an insurer,
a recognized independent insurance broker or an appraiser
selected and paid by the Borrower and in no event less than the
coverage required pursuant to the terms of any Lease; provided,
however, if the terms of the applicable insurance policies
expressly provide for insurance to be provided in the amount of
the actual replacement cost of the Improvements and the Equipment
or such Policies contain a replacement cost endorsement, no such
annual determination will be necessary;
(ii) Liability Insurance. Commercial general
liability insurance, including bodily injury, death and property
damage liability, and excess liability insurance against any and
all claims, including all legal liability to the extent insurable
imposed upon the Lender and all court costs and attorneys' fees
and expenses, arising out of or connected with the possession,
use, leasing, operation, maintenance or condition of the Real
Estate for a combined single limit of not less than $15,000,000;
(iii) Workers' Compensation Insurance.
Statutory workers' compensation insurance (to the extent the
risks to be covered thereby are not already covered by other
Policies of insurance maintained by the Borrower), with respect
to any work on or about the Property;
(iv) Business Interruption. Business interruption
and/or loss of "rental value" insurance in an amount sufficient
to avoid any co-insurance penalty and to provide Proceeds which
will cover, at Borrower's option, (i) twenty-four (24) months
following the date of casualty or loss or (ii) the period of
restoration from the date of casualty or loss, the term "rental
value" to mean the sum of (A) the total Rents payable under the
Leases and (B) the total amount of all other amounts to be
received by the Borrower from third parties which are the legal
obligation of the tenants, reduced to the extent such amounts
would not be received because of Operating Expenses not incurred
during a period of non-occupancy of that portion of the Property
then not being occupied; provided, however, if the Borrower is
unable to obtain business interruption insurance in the foregoing
amount at commercially reasonable premiums, then the Borrower
will obtain business interruption insurance in an amount which is
generally required by institutional leaders for properties
comparable to the Property, but in no event in an amount less
than that sufficient to provide Proceeds which will cover a
period equal to the lesser of (x) the period of restoration from
the date of casualty or loss of (y) three hundred and sixty-five
(365) days, unless the Rating Agencies shall confirm that to
obtain less coverage will not result in a downgrade,
qualification or withdrawal of on the then current rating of the
Securities;
(v) Boiler and Machinery Insurance. Broad form
boiler and machinery insurance (without exclusion for explosion)
covering all boilers or other pressure vessels, machinery and
equipment located in, on or about the Property and insurance
against loss of occupancy or use arising from any such breakdown
in such amounts as are generally available at commercially
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Property;
(vi) Flood Insurance. If all or any portion of
the Property is located within a federally designated flood
hazard zone, flood insurance if available, in such amount as
generally required by institutional lenders for similar
properties provided, however, if flood insurance shall be
unavailable from private carriers, such flood insurance may be
provided by the federal government, if available; and
(vii) Other Insurance. Such other insurance
requested by Lender with respect to the Property against loss or
damage of the kinds from time to time customarily insured against
and in such amounts as are generally available at commercially
reasonable premiums and are generally required by institutional
lenders for properties comparable to the Property.
(b) (i) Property and Business Interruption Insurance.
The Borrower will maintain a portion of the insurance coverage
described in SECTION 7.1.1(a)(i) above at least equal to the
Maximum Foreseeable Casualty Loss, and the insurance coverage
described in SECTION 7.1.1(a)(iv) above, with either (x) the
insurers who insure the Improvements and Equipment on the date of
this Agreement or (y) one or more other primary insurers having
(or a syndicate of insurers through which at least 75% of the
coverage (if there are 4 or fewer members of the syndicate) or at
least 60% of the coverage (if there are 5 or more members of the
syndicate) is with carriers having), a claims-paying-ability
rating by S&P not lower than "AA" and a claims-paying ability
rating by ▇▇▇▇▇'▇ not lower than "Aa".
(ii) Liability and Boiler and Machinery Insurance.
The Borrower will maintain a portion of the insurance coverage
described in SECTIONS 7.1.1(a)(ii) and 7.1.1 (a)(v) with either
(x) the insurers who insure the Property on the date of this
Agreement or (y) one or more other domestic primary insurers
having (or a syndicate of insurers through which at least 75% of
the coverage (if there are 4 or fewer members of the syndicate)
or at least 60% of the coverage (if there are 5 or more members
of the syndicate) is with carriers having), a claims-paying-
ability rating by S&P not lower than two categories below the
then rating of the Securities by S&P, but in either case of (x)
or (y) above, such insurers' rating shall in no event be less
than "Investment Grade" by S&P and ▇▇▇▇▇'▇.
(iii) Other Insurance. Borrower will maintain
a portion of the insurance coverage described in SECTION
7.1.1(a)(iii) above with either an insurer having a claims-paying-
ability rating of not less than "Investment Grade" or the
applicable state workers' compensation fund.
In each case as to a syndicate or an individual
insurer, however, if no domestic providers of such insurance are
so rated, the requirement for such rating shall be the highest
rating then given to primary insurers by S&P; provided that in
the case of an individual insurer or a syndicate failing to
satisfy the foregoing test, supplementary qualifying coverage
shall be required within ninety (90) days after the date Borrower
learns of such failure (in the case of a syndicate, only to the
extent the syndicate fails to satisfy the test); and provided
further that in the event of any loss, claims in respect of such
portion of such insurance maintained in accordance with
SECTION 7.1.1(a)(iii) above shall be payable prior to claims in
respect of the remaining portion(s) of the insurance required by
such provisions.
Notwithstanding anything to the contrary set forth
herein, all insurance required coverage shall be provided by one
or more primary insurers having an ▇▇▇▇▇▇ ▇. Best Company, Inc.
rating of "A" or better and financial size category of not less
than VIII, except to the extent that insurance in force on the
date of this Agreement does not satisfy such criteria or if
otherwise approved by the Lender. Any insurance in force on the
date of this Agreement which is accepted or approved by Lender
and which is provided by a group or syndicate of insurers shall
be satisfactory so long as a sufficient number of members of the
syndicate providing the coverage satisfy the foregoing criteria
for claims-paying ability even if one or more of the insurers
comprising the group or syndicate no longer participates in the
group or syndicate. All insurers providing insurance required by
this Mortgage shall be authorized to issue insurance in the state
where the Property is located.
(c) "MAXIMUM FORESEEABLE CASUALTY LOSS" shall mean the
estimate of the Qualified Fire Protection Engineer then being
used by the Borrower in connection with its existing insurance
package of the maximum probable casualty loss which would be
suffered in respect of the Improvements and Equipment as a result
of damage caused by the perils covered by the insurance described
in SECTION 7.1.1(a)(i) hereof.
(d) Blanket Coverage. The insurance coverage required
under SECTION 7.1.1(a) may be effected under a blanket Policy or
Policies covering the Property and other property and assets not
constituting a part of the Property; provided that any such
certificates of insurance evidencing the coverage required herein
shall specify, except in the case of general liability insurance,
the portion of the total coverage of such policy that is
allocated exclusively to the Property, and any sublimits in such
blanket Policy applicable to the Property, which amounts shall
not be less than the amounts required pursuant to SECTION
7.1.1(a) and which shall in any case comply in all other respects
with the requirements of this SECTION 7.1.
(e) Form of Insurance Policies; Endorsements. All
insurance Policies shall be in such form and with such
endorsements as are comparable to the forms of and endorsements
to Borrower's insurance Policies in effect on the date hereof or
otherwise in accordance with commercially reasonable standards
applied by prudent owners of first class regional shopping
centers in the general vicinity of the Property. Certificates of
insurance with respect to all of the insurance Policies required
hereunder have been delivered to Lender (or will be so delivered
promptly after the date hereof), and originals or certified
copies of all such Policies shall be delivered to Lender when the
same are available and shall be held by Lender. All such
Policies shall name Lender as an additional insured, shall
provide that all Proceeds be payable to Lender as set forth in
SECTION 7.1 hereof, and shall contain: (i) a standard "non-
contributory mortgagee" endorsement or its equivalent relating,
inter alia, to recovery by Lender notwithstanding the negligent
or willful acts or omissions of Borrower; (ii) to the extent
available at commercially reasonable rates a waiver of
subrogation endorsement in favor of Lender; (iii) an endorsement
providing that no Policy shall be impaired or invalidated by
virtue of any act, failure to act, negligence of, or violation of
declarations, warranties or conditions contained in such Policy
by Borrower, Lender or any other named insured, additional
insured or loss payee, except for the willful misconduct of
Lender knowingly in violation of the conditions of such Policy;
(iv) an endorsement providing for a deductible per loss of an
amount not more than that which is customarily
maintained by prudent owners of first class regional shopping
centers in the general vicinity of the Property, but in no event
in excess of $50,000; and (v) a provision that such Policies
shall not be canceled or terminated without at least thirty (30)
days prior written notice to Lender in each instance.
Certificates of insurance with respect to all renewal and
replacement Policies shall be delivered to Lender not less than
ten (10) days prior to the expiration date of any of the
insurance Policies required to be maintained hereunder which
certificates shall bear notations evidencing payment of
applicable premiums. Originals or certified copies of such
replacement insurance Policies shall be delivered to Lender
promptly after Borrower's receipt thereof but in any case within
sixty (60) days after the effective date thereof. If Borrower
fails to maintain insurance required by this Agreement, Lender
may procure such insurance.
(f) Compliance with Insurance Requirements. Borrower
shall comply with all Insurance Requirements and shall not bring
or keep or permit to be brought or kept any article upon any of
the Property or cause or permit any condition to exist thereon
which would be prohibited by any Insurance Requirement, or would
invalidate insurance coverage required hereunder to be maintained
by Borrower on or with respect to any part of the Property
pursuant to this SECTION 7.1.
(g) Separate Insurance. The Borrower will not take
out separate insurance contributing in the event of loss with
that required to be maintained pursuant to this SECTION 7.1
unless such insurance complies with SECTION 7.1.1(e).
7.1.2 CONDEMNATION AND INSURANCE PROCEEDS
(a) Borrower will promptly notify Lender in writing
upon obtaining knowledge of (i) the institution of any
proceedings relating to any Taking or (ii) the occurrence of any
casualty, damage or injury to the Property or Equipment or any
portion thereof the restoration of which is estimated by Borrower
in good faith to cost more than Two Million Dollars ($2,000,000).
In addition, notice of any casualty damage or loss the
restoration of which is estimated by Borrower in good faith to
cost more than Two Million Dollars ($2,000,000) shall set forth
such good faith estimate of the cost of repairing or restoring
such damage or destruction in reasonable detail if the same is
then available and, if not, as soon thereafter as it can
reasonably be provided.
(b) In the event of any Taking of or casualty or other
damage or injury to the Property, Borrower's right, title and
interest in and to all compensation, awards, proceeds, damages,
claims, insurance recoveries, causes and rights of action
(whether accrued prior to or after the date hereof) and payments
which Borrower may receive or to which Borrower may become
entitled with respect to the Property or any part thereof
(collectively, "PROCEEDS"), in connection with any such Taking
(subject to the terms of the Operating Agreements and the
Leases), casualty or other damage or injury to the Property, or
any part thereof, are hereby assigned to and shall be paid to
Lender. Notwithstanding anything to the contrary set forth
herein or in the Mortgage, to the extent the Proceeds are not in
excess of Four Million Dollars ($4,000,000) (the "MINIMUM DEPOSIT
AMOUNT") (excluding, solely for purposes of such calculation,
Proceeds paid in respect of the insurance described in SECTION
7.1.1(a)(iv) then, provided that no Event of Default shall have
occurred and be continuing, Lender hereby consents to and agrees
that such Proceeds shall be paid directly to Borrower to be
applied to restoration of the Property in accordance with the
terms hereof (provided, however, unless an Event of Default shall
have occurred and be continuing, Proceeds paid in
respect of the insurance described in SECTION 7.1.1(a)(iv) shall
be paid directly to Borrower.) Promptly after the occurrence of
any damage or destruction to all or any portion of the Property
or a Taking of a portion of the Property, Borrower shall commence
and diligently prosecute to completion, subject to Excusable
Delays, the repair, restoration and rebuilding of the Property
(in the case of a Taking, to the extent it is capable of being
restored) (such repair, restoration and rebuilding are sometimes
hereinafter collectively referred to as the "RESTORATION") so
damaged, destroyed or remaining after such Taking, in full
compliance with all Legal Requirements and free and clear of any
and all Liens except the Permitted Exceptions. Borrower will, in
good faith and in a commercially reasonable manner, file and
prosecute the adjustment, compromise or settlement of any claim
for Proceeds and, subject to Borrower's right to receive the
direct payment of any Proceeds up to the Minimum Deposit Amount
and, with respect to Proceeds from a Taking, subject to the
applicable terms of the Operating Agreements and the Leases and
the provisions below, will cause the same to be collected and
paid over to Lender, to be held and applied in accordance with
the provisions of this Agreement. Borrower hereby irrevocably
authorizes Lender to file and prosecute such claim and to collect
and to make receipt for any such payment in the event Borrower
fails so to act or if an Event of Default shall have occurred and
be continuing, and in such case Lender shall be authorized to
file such claim and prosecute it with counsel satisfactory to it
at the expense of Borrower. Lender shall have the right to
approve, such approval not to be unreasonably withheld, any
settlement which might result in any Proceeds in excess of the
Minimum Deposit Amount, and Borrower will deliver or cause to be
delivered to Lender all instruments reasonably requested by
Lender to permit such approval. Borrower will pay all costs,
fees and expenses reasonably incurred by Lender (including all
reasonable attorneys' fees and expenses, the fees of insurance
experts and adjusters and reasonable costs incurred in any
litigation or arbitration) in connection with the settlement of
any claim for insurance in excess of the Minimum Deposit Amount
or Proceeds in excess of the Minimum Deposit Amount and seeking
and obtaining of any payment on account thereof in accordance
with the foregoing provisions and for any of the foregoing
expenses, regardless of whether or not the Proceeds exceed the
Minimum Deposit Amount, if any Event of Default shall have
occurred and be continuing. If any Proceeds are received by
Borrower, such Proceeds shall, until the completion of the
related Restoration, be held in trust and segregated from other
funds of the Borrower to be used to pay for the cost of the
Restoration in accordance with the terms hereof, and in the event
such Proceeds are in excess of the Minimum Deposit Amount such
Proceeds shall, subject to the provisions of the Operating
Agreements and the Leases, be forthwith paid to Lender to be held
by Lender in a segregated account in trust for Borrower, in each
case to be applied or disbursed in accordance with the provisions
hereof.
(c) In the event that any Proceeds (other than
Proceeds paid with respect to the insurance described in SECTION
7.1(a)(iv) are in excess of the Minimum Deposit Amount, then all
Proceeds (other than Proceeds paid with respect to the insurance
described in Section 7.1(a)(iv) and except that Proceeds in
respect of a Taking shall be subject to the terms and conditions
of the Operating Agreements and the Leases) shall be paid over to
Lender (a "Casualty/Condemnation Involuntary Prepayment") and
shall be applied as follows: first, toward reimbursement of
Lender's reasonable costs and expenses in connection with
recovery of the Proceeds and disbursement of the proceeds (as
further described below), including, without limitation,
reasonable administrative costs and inspection fees, and then, to
the prepayment of the Indebtedness secured hereby (which prepayment shall
be made on the next Payment Date following notice to Lender of an elected
or required prepayment hereunder, which notice Borrower shall
promptly give), without prepayment premium or penalty, only if:
(i) (A) Borrower is not required to restore the Property
pursuant to any Operating Agreement or Lease, and
(B) either:
(x) the expected cost to repair
the Property would exceed the Threshold Amount
and, provided that the Taking or casualty
adversely affects leased areas of the Property,
the restoration of the Property cannot reasonably
be completed before the date of expiration of any
insurance maintained pursuant to SECTION
7.1.1(a)(iv) or any Letter of Credit or Cash or
Cash Equivalents posted with Lender in lieu of or
in addition to such insurance, which shall be
determined based on a cost estimate and schedule
for restoration prepared by an Independent
Architect and delivered to Lender, or
(y) Borrower elects not to restore the
Property, or
(ii) if such Proceeds were the result of a
Taking, then after restoration is completed, the
Proceeds have not been required to effect such
restoration, in which event prepayment shall be made to
the extent of such unneeded Proceeds.
(d) If Proceeds are not required to be applied towards
payment of a Casualty/Condemnation Involuntary Prepayment
pursuant to SECTION 7.1.2(c) above, then after prepayment of the
expenses described in clause first of SECTION 7.1.2(c), Lender
shall make the Proceeds (except Proceeds paid with respect to the
insurance described in SECTION 7.1.1(a)(iv)) which it is holding
pursuant to the terms hereof available to Borrower for payment of
or reimbursement of Borrower's expenses incurred with respect to
the Restoration, upon the terms and subject to the conditions set
forth in SECTION 7.1.2(e);
(i) there shall be no continuing Event of Default
hereunder;
(ii) to the extent, if any, that the
estimated cost of the Restoration (as estimated by an
Independent Architect) shall exceed the Proceeds
available, Borrower shall (within a reasonable period
of time after receipt of such estimate, and in any
event prior to any further disbursement by Lender)
deposit with or deliver to Lender Cash and Cash
Equivalents and/or a Letter of Credit in the amounts of
such excess; and
(iii) Lender shall, within a reasonable
period of time prior to Borrower's request for initial
disbursement, be furnished with an estimate of the cost
of the Restoration accompanied by an Independent
Architect's certification as to such costs and
appropriate plans and specifications for the
Restoration to the extent that the same are required by
law or are prepared by the Borrower. The plans and
specifications shall require that the Restoration be
done in a first-class workmanlike manner substantially
equivalent to the quality and character of the original
construction of the Improvements, so that upon
completion thereof (taking into account a commercially
reasonable time to relet the affected portion of the Property),
the Property shall be at least substantially equal in value
and general utility to the Property prior to the damage
or destruction (or, in the case of a partial Taking, to
the state to which it is capable of being restored).
Borrower shall restore all Improvements such that when
they are fully restored and/or repaired that such
Improvements and their contemplated use fully comply
with all applicable Legal Requirements, including,
without limitation, zoning, environmental and building
laws, codes, ordinances and regulations.
(e) Disbursement of Proceeds shall be made from
time to time (but not more frequently than once in any month) by
Lender as the Restoration progresses upon receipt by Lender of
(i) an Officer's Certificate dated not more than thirty (30) days
prior to the application for such payment, requesting such
payment or reimbursement and setting forth the Restoration
performed which is the subject of such request, the parties which
performed such Restoration and the actual cost thereof, and also
certifying that such Restoration and materials are free and clear
of Liens other than Permitted Exceptions and (ii) an Independent
Architect's certificate certifying performance of the Restoration
together with an estimate of the cost to complete the
Restoration. No payment made prior to the final completion of
the Restoration shall exceed ninety-five percent (95%) of the
value of the Restoration performed or materials furnished and
incorporated into the Improvements from time to time (except in
the case of contractors' or subcontractors' Restoration as to
which final completion has been attained), and at all times the
undisbursed balance of said Proceeds, together with all amounts
for which Cash or Cash Equivalents or a Letter of Credit
deposited or delivered pursuant to clause (ii) above, shall be at
least sufficient to pay for the cost of completion of the
Restoration, free and clear of Liens other than Permitted
Exceptions; final payment of all Proceeds remaining with Lender
shall be made upon receipt by Lender of a certification by an
Independent Architect as to the completion of the Restoration
substantially in accordance with the submitted plans and
specifications, and the filing of a notice of completion (if such
filing is required by applicable law). If the Proceeds shall be
more than the Threshold Amount, Lender shall require (i) evidence
of mechanic's lien waivers, and (ii) an endorsement to its Title
Insurance Policy insuring the continued priority of the Lien of
this Mortgage (subject to Permitted Exceptions) as to all sums
advanced hereunder, such endorsement to be paid for by Borrower.
From time to time as the Restoration progresses, the amount of
any Cash or Cash Equivalents so furnished may be withdrawn by
Borrower and paid or otherwise applied by or returned to Borrower
in an amount equal to the amount Borrower would be entitled to so
withdraw if the same were Proceeds, and any Letter of Credit so
furnished may be reduced by Borrower in an amount equal to the
amount Borrower would be entitled to reduce if the same were
Proceeds. At any time after substantial completion of any
Restoration in respect whereof Cash and Cash Equivalents and/or a
Letter of Credit was deposited pursuant hereto, the whole balance
of any Cash so deposited with Lender and then remaining on
deposit may be withdrawn by Borrower and shall be paid by Lender
to Borrower and any Cash and Cash Equivalents and/or Letter of
Credit so deposited or delivered shall, to the extent it has not
been called upon, reduced or theretofore released, be released by
Lender to Borrower, within ten (10) days after receipt by Lender
of an application for such withdrawal and/or release together
with an Officer's Certificate, and signed also (as to the
following clause (1)) by the Independent Architect, setting forth
in substance as follows:
(1) that the Restoration in respect of which such Cash
and Cash Equivalents and/or a Letter of Credit was deposited
has been substantially completed in all material respects in
accordance with any plans and specifications therefor previously
filed with Lender under SECTION 7.1.2(d) hereof; and
(2) that to the knowledge of the certifying Person all
amounts which Borrower is or may become liable to pay in
respect of such Restoration through the date of the
certification have been paid in full or adequately provided
for or are being contested in accordance with SECTION 3.9(B)
of the Mortgage; and, to the extent that such are customary
and reasonably obtainable by prudent managers in the
metropolitan area where the Property is located and Borrower
is not contesting payment in accordance with SECTION 3.9(b)
of the Mortgage, that lien waivers have been obtained from
the general contractor and major subcontractors performing
such Restoration.
Section 7.2 REQUIRED REPAIRS; REQUIRED REPAIR FUNDS
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Intentionally Deleted.
Section 7.3 TAX AND INSURANCE ESCROW FUND
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Intentionally Deleted.
Section 7.4 REPLACEMENTS AND REPLACEMENT RESERVE.
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Intentionally Deleted.
VIII. DEFAULTS
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Section 8.1 EVENT OF DEFAULT.
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(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 when due;
(ii) if any of the Taxes or Other Charges are not
paid when the same are due and payable and such failure continues for more
than five (5) days after notice from Lender;
(iii) if the Policies are not kept in full force and
effect, or if after ten (10) days notice to Borrower, original certificates
evidencing the coverage afforded by the Policies are not delivered to Lender
upon request;
(iv) if Borrower transfers or encumbers any portion of the
Property, except as permitted by the Mortgage, without Lender's prior written
consent;
(v) if any representation or warranty made by
Borrower herein or in any other Loan Document, or in any report,
certificate, financial statement or other instrument, agreement
or document furnished to Lender shall have been false or
misleading in any material respect as of the date the
representation or warranty was made;
(vi) if Borrower shall make an assignment for the
benefit of creditors;
(vii) if a receiver, liquidator or trustee
shall be appointed for Borrower or if Borrower shall be
adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be
filed by or against, consented to, or acquiesced in by, Borrower,
or if any proceeding for the dissolution or liquidation of
Borrower shall be instituted; PROVIDED, HOWEVER, if such
appointment, adjudication, petition or proceeding was involuntary
and not consented to by Borrower, upon the same not being
discharged, stayed or dismissed within sixty (60) days;
(viii) if Borrower attempts to assign its
rights under this Agreement or any of the other Loan Documents or
any interest herein or therein in contravention of the Loan Documents;
(ix) if Borrower breaches any of its respective
negative covenants contained in SECTION 6.1 or any covenant
contained in SECTION 4.1.1(dd) hereof;
(x) with respect to any term, covenant or
provision set forth herein which specifically contains a notice
requirement or grace period, if Borrower shall be in default
under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;
(xi) if any of the assumptions contained in the
Insolvency Opinion, or in any other "non-consolidation" opinion
delivered to Lender in connection with the Loan, or in any other
"non-consolidation" delivered subsequent to the closing of the
Loan, is or shall become untrue in any material respect;
(xii) if Borrower shall continue to be in
Default under any of the other terms, covenants or conditions of
this Agreement not specified in subsections (i) to (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 twenty (120) 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 any of 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 the 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 and to all or any of the Property, including,
without limitation, declaring the Debt to be immediately due and payable,
and Lender may enforce or avail itself of any or all rights or
remedies provided in the Loan Documents against Borrower and any
or all of 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 all or any portion of the 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 the Property and the Mortgage has been
foreclosed, sold and/or otherwise realized upon in satisfaction
of the Debt or the Debt has been paid in full.
(b) With respect to Borrower and the Property, nothing
contained herein or in any other Loan Document shall be construed
as requiring Lender to resort to the Property for the
satisfaction of any of the Debt in preference or priority, and
Lender may seek satisfaction out of the Property or any part
thereof, in its absolute discretion in respect of the Debt. In
addition, Lender shall have the right from time to time to
partially foreclose the Mortgage in any manner and for any
amounts secured by the 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 the 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 the Mortgage to recover so much of
the principal balance of the Loan as Lender may accelerate and
such other sums secured by the Mortgage as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property
shall remain subject to the Mortgage to secure payment of sums
secured by the 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 effect the
severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Except as may be
required in connection with a Securitization pursuant to SECTION
9.1 hereof, (i) 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
(ii) 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.
Section 8.3 REMEDIES CUMULATIVE.
-------------------
The rights, powers and remedies of Lender under this
Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower
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.
IX. SPECIAL PROVISIONS
------------------
Section 9.1 SALE OF NOTES AND SECURITIZATION.
--------------------------------
At the request of the holder of the Note and, to the
extent not already required to be provided by Borrower under this
Agreement, Borrower shall use reasonable efforts 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
participation 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 Mortgages,
including, without limitation, to:
(a) (i) provide, at Lender's sole
reasonable cost, such financial and other
information with respect to the Property, the
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
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 the Lender and the Rating Agencies;
(b) at Borrower's expense, use reasonable
efforts to 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 or any other opinion customary in
securitization transactions with respect to the
Property and Borrower and Manager and its or their
respective affiliates, which counsel and opinions
shall be reasonably satisfactory to the holder of
the Note and the Rating Agencies;
(c) make updates of such representations and
warranties made as of the Closing Date with
respect to the Property, Borrower, and the Loan
Documents and make such additional representations
or warranties as of the closing date of the
Securitization which do not materially increase
the obligations of Borrower under this Agreement
or any of the other Loan Documents or materially
decrease any of Borrower's rights under this
Agreement or any of the other Loan Documents, and
which, in either event, are customarily provided
in securitization transactions and may be
reasonably requested by the holder of the Note or
the Rating Agencies and consistent with the facts
covered by such representations and warranties as
they exist on the date thereof, including the
representations and warranties made in the Loan
Documents;
(d) execute such amendments to the Loan
Documents and organizational documents as may be
requested by the holder of the Note or the Rating
Agencies or otherwise to effect the
Securitization; provided, however, that the
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, or
(iii) materially modify or increase any of
Borrower's obligations or liabilities under this
Agreement or any of the other Loan Documents or
materially decrease any of Borrower's rights under
this Agreement or any of the other Loan Documents; and
(e) use reasonable efforts to deliver to
Lender appropriate instruments subordinating the
Leases identified on Schedule VIII to the lien of
the Mortgage together with an agreement to attorn
to Lender from each such tenant that under a lease
which does not provide for such attornment by its
terms; provided, however, the failure of Borrower
to deliver such instruments following the exercise
of reasonable efforts to do so, shall not
constitute a default hereunder.
Except as set forth in SECTION 9.1(a)(i), all
reasonable third party costs and expenses incurred by Lender in
connection with Borrower's complying with requests made under
this SECTION 9.1 shall be paid by the Borrower.
If requested by Lender, Borrower shall provide Lender
with the following financial statements (it being understood that
Lender shall request such financial statements if it anticipates
that the principal amount of the Loan at the time of
Securitization may, or if the principal amount of the Loan at any
time during which the Loan is included in a Securitization does,
equal or exceed 20% of the aggregate principal amount of all
mortgage loans included in the Securitization), and summaries of
such financial statements if the principal amount of the Loan at
any such time equals or exceeds 10% of such aggregate principal amount:
1. As of the Closing Date, a balance sheet with respect to
the Property for the two most recent fiscal years, meeting the
requirements of SECTION 210.3-01 of Regulation S-X of the
Securities Act, and statements of income and statements of cash
flows with respect to the Property for the three most recent
fiscal years, meeting the requirements of SECTION 210.3-02 of
Regulation S-X, and, to the extent that such balance sheet is
more than 135 days old as of the Closing Date, interim financial
statements of the Property meeting the requirements of SECTION
210.3-01 and 210.3-02 of Regulation S-X (all of such financial
statements, collectively, the "STANDARD STATEMENTS") ; provided,
however, that with respect to any Properties that would be deemed
to constitute a business and not real estate under Regulation S-X
that have been acquired by the Borrower from an unaffiliated
third party (such properties, "ACQUIRED PROPERTIES"), as to which
the other conditions set forth in SECTION 210.3-05 of Regulation
S-X for provision of financial statements in accordance with such
Section have been met, in lieu of the Standard Statements
otherwise required by this paragraph, the Borrower shall instead
provide the financial statements acquired by such SECTION 210.3-
05 of Regulation S-X ("ACQUIRED PROPERTY STATEMENTS").
2. Not later than 45 days after the end of each fiscal
quarter following the Closing Date, a balance sheet of the
Property as of the end of such fiscal quarter, meeting the
requirements of SECTION 210.3-01 of Regulation S-X, and
statements of income and statements of cash flows of the Property
for the period commencing following the last day of the most
recent fiscal year and ending on the date of such balance sheet
and for the corresponding period of the most recent fiscal year,
meeting the requirements of SECTION 210.3-02 of Regulation S-X
(provided, that if for such corresponding period of the most
recent fiscal year Acquired Property Statements were permitted to
be provided hereunder pursuant to paragraph 1, the Borrower shall
instead provide Acquired Property Statements for such
corresponding period). If requested by Lender, Borrower shall
also provide "summarized financial information," as defined in
SECTION 210.1-02(BB) of Regulation S-X, with respect to such
quarterly financial statements.
3. Not later than 90 days after the end of each fiscal
year following the Closing Date, a balance sheet of the Property
as of the end of such fiscal year, meeting the requirements of
SECTION 210.3-01 of Regulation S-X, and statements of income and
statements of cash flows of the Property for such fiscal year,
meeting the requirements of SECTION 210.3-02 of Regulation S-X.
If requested by Lender, Borrower shall provide summarized
financial information with respect to such annual financial
statements.
4. Upon ten (10) Business Days after notice from the
Lender in connection with the Securitization of this Loan, such
additional financial statements, such that, as of the date (each
an "OFFERING DOCUMENT DATE") of each prospectus, private
placement memorandum, offering circular or other offering
document for such Securitization (each an "OFFERING DOCUMENT"),
Borrower shall have provided Lender with all financial statements
as described in paragraph 1; provided that the fiscal year and
interim periods for which such financial statements shall be
provided shall be determined as of such Offering Document Date.
5. In the event Lender determines, in connection with a
Securitization, that the financial statements required in order
to comply with Regulation S-X or Legal Requirements are other
than as provided herein, then notwithstanding the provisions of
this Section, Lender may request, and Borrower shall promptly
provide, such combination of Acquired Property Statements and/or
Standard Statements as may be necessary for such compliance.
6. Any other or additional financial statements, or
financial, statistical or operating information, as shall be
required pursuant to Regulation S-X or other Legal Requirements
in connection with any Offering Document or any filing under or
pursuant to the Exchange Act in connection with or relating to a
Securitization (hereinafter an "EXCHANGE ACT FILING") or as shall
otherwise be reasonably requested by the Lender to meet
disclosure, rating agency or marketing requirements.
All financial statements provided by Borrower hereunder
shall be prepared in accordance with generally accepted
accounting principles, and shall meet the requirements of
Regulation S-X and other applicable Legal Requirements. All
financial statements relating to a fiscal year shall be audited
by the Independent Accountants of the Borrower in accordance with
generally accepted auditing standards, Regulation S-X and all
other applicable Legal Requirements, shall be accompanied by the
manually executed report of the Independent Accountants thereon,
which report shall meet the requirements of Regulation S-X and
all other applicable Legal Requirements, and shall be further
accompanied by a manually executed written consent of the
Independent Accountants, in form and substance acceptable to
Lender, to the inclusion of such financial statements in any
Offering Document and any Exchange Act Filing and to the use of
the name of such Independent Accountants and the reference to
such Independent Accountants as "experts" in any Offering
Document and Exchange Act Filing, all of which shall be provided
at the same time as the related financial statements are required
to be provided. All other financial statements shall be
certified by the chief financial officer of the Borrower, which
certification shall state that such financial statements meet the
requirements set forth in the first sentence of this paragraph.
Section 9.2 SECURITIZATION INDEMNIFICATION.
------------------------------
(a) 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, the 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.
(b) Borrower agrees to provide in connection with each
of (i) a preliminary and a private placement memorandum or (ii) a
preliminary and final prospectus or prospectus supplement, as
applicable, an indemnification certificate (A) certifying that
Borrower has carefully examined such memorandum or prospectus, as
applicable, including without limitation, the sections entitled
"Risk Factors," "Description of the Mortgage Loans and Mortgaged
Property," "The Manager," and "The Borrower," only as they relate
to Borrower, the Loan, the Loan Documents, and the Property and
such sections relating to Borrower, the Loan, the Loan Documents,
and the Property (and any other sections reasonably related
thereto) do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which
they were made, not misleading, (B) indemnifying Lender (and for
purposes of this SECTION 9.2, Lender hereunder shall include its
officers and directors), the affiliate of ▇▇▇▇▇▇ Brothers Inc.
("▇▇▇▇▇▇") that has filed the registration statement relating to
the securitization (the "REGISTRATION STATEMENT"), each of its
directors, each of its officers who have signed the Registration
Statement and each person or entity who controls the affiliate
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act (collectively, the "▇▇▇▇▇▇ GROUP"), and
▇▇▇▇▇▇, each of its directors and each person who controls ▇▇▇▇▇▇
within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act (collectively, the "UNDERWRITER
GROUP") for any losses, claims, damages or liabilities
(collectively, the "LIABILITIES") to which Lender, the ▇▇▇▇▇▇
Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
such sections or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated in such sections or necessary in order to make the
statements in such sections or in light of the circumstances
under which they were made, not misleading and (C) agreeing to
reimburse Lender, the ▇▇▇▇▇▇ Group and the Underwriter Group for
any legal or other expenses reasonably incurred by Lender and
▇▇▇▇▇▇ in connection with investigating or defending the
Liabilities; provided, however, that Borrower will be liable in
any such case under clauses (B) or (C) above only to the extent
that any such loss claim, damage or liability arises out of or is
based upon any such untrue statement or omission made therein in
reliance upon and in conformity with information furnished to
Lender by or on behalf of Borrower in connection with the
preparation of the memorandum or prospectus or in connection with
the underwriting of the debt, including, without limitation,
financial statements of Borrower, operating statements, rent
rolls, environmental site assessment reports and property
condition reports with respect to the Property (which Borrower
knew, in the normal course of owning and operating the Property
to be untrue, inaccurate or incomplete). This indemnity
agreement will be in addition to any liability which Borrower may
otherwise have.
(c) In connection with filings under the Exchange Act,
Borrower agrees to indemnify (i) Lender, the ▇▇▇▇▇▇ Group and the
Underwriter Group for Liabilities to which Lender, the ▇▇▇▇▇▇
Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission or
alleged omission to state in the Provided Information a material
fact required to be stated in the Provided Information in order
to make the statements in the Provided Information, in light of
the circumstances under which they were made not misleading and
(ii) reimburse Lender, the ▇▇▇▇▇▇ Group or the Underwriter Group
for any reasonable legal or other expenses reasonably incurred
by Lender, the ▇▇▇▇▇▇ Group or the Underwriter Group in connection
with defending or investigating the Liabilities.
(d) Promptly after receipt by an indemnified party
under this SECTION 9.2 of notice of the commencement of any
action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this
SECTION 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from
any liability which the indemnifying party may have to any
indemnified party hereunder except to the extent that failure to
notify causes prejudice to the indemnifying party. In the event
that any action is brought against any indemnified party, and its
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent
that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with
counsel satisfactory to such indemnified party. After notice
from the indemnifying party to such indemnified party under this
SECTION 9.2 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however,
if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall
have reasonably concluded that there are any legal defenses
available to it and/or other indemnified parties that are
different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party to parties. The
indemnifying party shall not be liable for the expenses of more
than one separate counsel unless an indemnified party shall have
reasonably concluded that there may be legal defenses available
to it that are different from or additional to those available to
another indemnified party. No indemnifying party shall, without
the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be
sought hereunder unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party
from all liability arising out of such action or claim and (ii)
does not include any statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any
indemnified party.
(e) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement
provided for in SECTION 9.2(b) or (c) is for any reason held to
be unenforceable by an indemnified party in respect of any
losses, claims, damages or liabilities (or action in respect
thereof) referred to therein which would otherwise be
indemnifiable under SECTION 9.2(b) or (c), the indemnifying party
shall contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages or liabilities
(or action in respect thereof); PROVIDED, HOWEVER, that no person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. In determining the amount of
contribution to which the respective parties are entitled, the
following factors shall be considered: (i) ▇▇▇▇▇▇'▇ and
Borrower's relative knowledge and access to information
concerning the matter with respect to which claim was asserted;
(ii) the opportunity to correct and prevent any statement or
omission; and (iii) any other equitable considerations
appropriate in the circumstances. Lender and Borrower hereby
agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita
allocation.
(f) The liabilities and obligations of both Borrower
and Lender under this SECTION 9.2 shall survive the termination
of this Agreement and the satisfaction and discharge of the Debt.
Section 9.3 RATING SURVEILLANCE.
-------------------
The Borrower will 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 the Borrower in an amount determined by Lender in its
reasonable discretion prior to the occurrence of a
Securitization, not to exceed a maximum cost of $15,000 per year,
and such expense (the "RATING SURVEILLANCE CHARGE") will be paid
pursuant to the terms of the Disbursement Agreement.
Section 9.4 EXCULPATION.
-----------
Subject to the qualifications below, Lender shall not
enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note, this Agreement,
the Mortgage or the other Loan Documents by any action or
proceeding wherein a money judgment shall be sought against
Borrower, except that Lender may bring a foreclosure action, an
action for specific performance or any other appropriate action
or proceeding to enable Lender to enforce and realize upon its
interest under the Note, this Agreement, the Mortgage and the
other Loan Documents, or in the Property, the Rents, or any other
collateral given to Lender pursuant to the Loan Documents;
PROVIDED, HOWEVER, that, except as specifically provided herein,
any judgment in any such action or proceeding shall be
enforceable against Borrower only to the extent of Borrower's
interest in the Property, in the Rents and in any other
collateral given to Lender, and Lender, by accepting the Note,
this Agreement, the Mortgage and the other Loan Documents, agrees
that it shall not ▇▇▇ for, seek or demand any deficiency judgment
against Borrower, Sponsor or the SPC Managing Member or other
member of Borrower in any such action or proceeding under or by
reason of or under or in connection with the Note, this
Agreement, the Mortgage or the other Loan Documents. The
provisions of this section 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 or the SPC Managing Member or other
member of Borrower as a party defendant in any action or suit for
foreclosure and sale under any of the Mortgage; (c) affect the
validity or enforceability of or any guaranty made in connection
with the Loan or any of the rights and remedies of the Lender
thereunder; (d) impair the right of Lender to obtain the
appointment of a receiver; (e) impair the enforcement of any of
the Assignment of Leases; (f) constitute a prohibition against
Lender to seek a judgment against Borrower in order to fully
realize the security granted by the Mortgage or to commence any
other appropriate action or proceeding in order for Lender to
exercise its remedies against the Property; or (g) constitute a
waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, to the
extent of any loss, damage, cost, expense, liability, claim or
other obligation incurred by Lender (including 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)the removal or disposal of any portion of the Property after
and during the continuance of an Event of Default;
(iv) Borrower's indemnification of Lender set forth in SECTION
9.2 hereof.
Notwithstanding anything to the contrary in this
Agreement, the Note or any of the Loan Documents, (A) Lender
shall not be deemed to have waived any right which Lender may
have under Section 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the
full amount of the Debt secured by the Mortgage or to require
that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Loan Documents, and (B)
the Debt shall be fully recourse to Borrower in the event that:
(i) the first full monthly payment of principal and interest
under the Note is not paid when due; (ii) Borrower fails,
following five (5) days notice, to permit on-site inspections of
the Property, or fails, following five (5) days notice, to
provide financial information, or fails to maintain its status as
a single purpose entity, or fails, following five (5) days
notice, to appoint, a new property manager upon the request of
Lender after an Event of Default, each as required by, and in
accordance with the terms and provisions of, this Loan Agreement
and the Mortgage; (iii) Borrower fails to obtain Lender's prior
written consent to any subordinate financing or other voluntary
lien encumbering the Property; (iv) Borrower fails to obtain
Lender's prior written consent to any assignment, transfer, or
conveyance of the Property or any interest therein as required by
the Mortgage except as permitted by the Mortgage; or (v)
Borrower, Sponsor or the SPC Managing Member willfully fails to
direct tenants of the Property to make payments of Rents to
Lender following a Lockbox Event.
Section 9.5 ACHIEVEMENTS.
------------
Intentionally Deleted
Section 9.6 CASH MANAGEMENT.
---------------
9.6.1 LOCKBOX ACCOUNT. (a) Upon the occurrence of
a Lockbox Event, Borrower shall establish and maintain a
segregated Eligible Account (the "LOCKBOX ACCOUNT") to be held by
the Servicer in the trust for the benefit of Lender, which
Lockbox Account shall be under the sole dominion and control of
Lender. The Lockbox Account shall be entitled "Fox Valley Mall
LLC, as Borrower, and ▇▇▇▇▇▇ Brothers Holdings Inc., as Lender,
pursuant to Loan Agreement dated as of November 14, 1997, 1997-
Lockbox Account." Borrower hereby grants to Lender a first
priority security interest in the Lockbox Account and all
deposits at any time contained therein and the proceeds thereof
and will take all actions necessary to maintain in favor of
Lender a perfected first priority security interest in the
Lockbox Account, including, without limitation, executing and
filing UCC-1 Financing Statements and continuations thereof.
Borrower will not in any way alter or modify the Lockbox Account
and will notify Lender of the account number thereof. Lender and
Servicer shall have the sole right to make withdrawals from the
Lockbox Account and all costs and expenses for establishing and
maintaining the Lockbox Account shall be paid by Borrower.
(b) Borrower shall, or shall cause Manager to, deliver
written instructions to all tenants under Leases to deliver all
Rents payable thereunder following a Lockbox Event, directly to
the Lockbox Account. Borrower shall, and shall cause Manager to,
deposit all amounts received by Borrower or Manager constituting
Rents into the Lockbox Account promptly upon receipt.
(c) Borrower shall obtain from Account Holder its
agreement to transfer to the Cash Collateral Account in
immediately available funds by federal wire transfer all amounts
on deposit in the Lockbox Account once every other Business Day
following a Lockbox Event.
9.6.2 CASH COLLATERAL ACCOUNT. (a) Upon the
occurrence of a Lockbox Event Borrower shall establish and
maintain a segregated Eligible Account (the "CASH COLLATERAL
ACCOUNT") to be held by Servicer in trust for the benefit of
Lender, which Cash Collateral Account shall be under the sole
dominion and control of Lender. The Cash Collateral Account
shall be entitled "Fox Valley Mall LLC, as Borrower, and ▇▇▇▇▇▇
Brothers Holdings Inc., as Lender, pursuant to Loan Agreement
dated as of November 14, 1997 - Cash Collateral Account."
Borrower hereby grants to Lender a first priority security
interest in the Cash Collateral Account and all deposits at any
time contained therein and the proceeds thereof and will take all
actions necessary to maintain in favor of Lender a perfected
first priority security interest in the Cash Collateral Account,
including, without limitation, executing and filing UCC-1
Financing Statements and continuations thereof. Borrower will
not in any way alter or modify the Cash Collateral Account and
will notify Lender of the account number thereof. Lender and
Servicer shall have the sole right to make withdrawals from the
Cash Collateral Account and all costs and expenses for
establishing and maintaining the Cash Collateral Account shall be
paid by Borrower.
(b) Following a Lockbox Event, all funds on deposit in
the Cash Collateral Account shall be applied by Lender to the
payment of the following items in the order indicated:
(i) First, payment of the Monthly Debt Service
Payment Amount, applied first to the payment of interest computed
at the Regular Interest Rate with the remainder applied to the
reduction of the outstanding principal balance of the Note;
(ii) Second, payments for monthly Cash Expenses
incurred in accordance with the related Annual Budget pursuant to
a written request for payment submitted by Borrower to Lender
specifying the individual Cash Expenses in a form acceptable to
Lender:
(iii) Third, on or after the Anticipated
Repayment Date, payments for Extraordinary Expenses approved by
Lender, if any;
(iv) Fourth, on or after the Anticipated Repayment
Date, payments to Lender in reduction of the outstanding
principal balance of the Loan;
(v) Fifth, on or after the Anticipated Repayment
Date, payments to Lender for Accrued Interest;
(vi) Sixth, payment to the Lender of any other
amounts then due and payable under the Loan Documents; and
(vii) Lastly, payment of any excess amounts to Borrower.
(c) The insufficiency of funds on deposit in the Cash
Collateral Account shall not absolve Borrower of the obligation
to make any payments, as and when due pursuant to this Agreement
and the other Loan Documents, and such obligations shall be
separate and independent, and not conditioned on any event or
circumstance whatsoever.
Section 9.7 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. Borrower shall be responsible for
any reasonable set-up fees or any other initial costs relating to
or arising under the Servicing Agreement, which fees and costs
shall not exceed $10,000, provided, however, that Borrower shall
not be responsible for payment of the monthly servicing fee due
to the Servicer under the Servicing Agreement.
X. MISCELLANEOUS
-------------
Section 10.1 Survival.
--------
This Agreement and all covenants, agreements,
representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making
by Lender of the Loan and the execution and delivery to Lender of
the Note, and shall continue in full force and effect so long as
all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth herein or in the other Loan
Documents. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the
legal representatives, successors and assigns of such party. All
covenants, promises and agreements in this Agreement, by or on
behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.
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.
-------------
(A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW
YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF
NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO
WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL
RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT
LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA,
EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS
CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE
STATE IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW
OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS
AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO
THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE
NOTE, AND THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT
MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE
COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, AND BORROWER
WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON
VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
BORROWER DOES HEREBY DESIGNATE AND APPOINT CT CORPORATION
SYSTEMS, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ AS ITS
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE
OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,
NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT
SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT
ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE
AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH
A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN
NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
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, or (b) expedited prepaid delivery service,
either commercial or United States Postal Service, with proof of
attempted delivery, or (c) by telecopier (with answer back
acknowledged), addressed as follows (or at such other address and
person as shall be designated from time to time by any party
hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this Section):
If to Lender:
▇▇▇▇▇▇ Brothers Holdings Inc.,
doing business as ▇▇▇▇▇▇ Capital, a
division of ▇▇▇▇▇▇ Brothers Holding Inc.
Three World Financial Center, 12th Floor
Commercial Mortgage Surveillance Group
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower:
Fox Valley Mall LLC
c/o Urban Shopping Centers, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Urban Shopping Centers, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or
certified mail, when delivered or the first attempted delivery on
a Business Day; or in the case of expedited prepaid delivery and
telecopy, upon the first attempted delivery on a Business Day.
Section 10.7 TRIAL BY JURY.
-------------
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF
ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL
BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND 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.
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 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) the negotiation,
preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this
Agreement and the other Loan Documents and any other documents or
matters requested by Lender; (iv) securing Borrower's compliance
with any requests made pursuant to SECTION 9.1 hereof; (v) 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; (vi) enforcing or
preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower,
this Agreement, the other Loan Documents, the Property, or any
other security given for the Loan; and (vii) enforcing any
obligations of or collecting any payments due from Borrower under
this Agreement, the other Loan Documents or with respect to the
Property or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature of a
"work-out" or of any insolvency or bankruptcy proceedings;
PROVIDED, HOWEVER, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same
arise by reason of the gross negligence, illegal acts, fraud or
willful misconduct of Lender. Any cost and expenses due and
payable to Lender may be paid from any amounts in the Deposit Account.
(b) Borrower shall indemnify, defend and hold harmless
Lender from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for Lender in connection with
any investigative, administrative or judicial proceeding
commenced or threatened, whether or not Lender shall be
designated a party thereto), that may be imposed on, incurred by,
or asserted against Lender in any manner relating to or arising
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 the 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 the Borrower and nothing
contained in this Agreement or the other Loan Documents shall be
deemed to confer upon anyone other than the Lender and the
Borrower any right to insist upon or to enforce the performance
or observance of any of the obligations contained herein or
therein. All conditions to the obligations of Lender to make the
Loan hereunder are imposed solely and exclusively for the benefit
of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or
be entitled to assume that Lender will refuse to make the Loan in
the absence of strict compliance with any or all thereof and no
other Person shall under any circumstances be deemed to be a
beneficiary of such conditions, any or all of which may be freely
waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
Section 10.17 PUBLICITY.
---------
The Lender shall have the right to issue press
releases, advertisements and other promotional materials
describing the Lender's participation in the origination of the
Loan or the Loan's inclusion in any Secondary Market Transaction
effectuated by the Lender. Lender shall also be permitted to use
the Borrower or Sponsor's logo in its offering memorandum or
marketing materials; provided, however, that Borrower shall have
the opportunity to review the use of such logo in marketing
materials prior to its publication.
Section 10.18 WAIVER OF MARSHALING OF ASSETS.
------------------------------
To the fullest extent permitted by law, Borrower, for
itself and its successors and assigns, waives all rights to a
marshaling of the assets of Borrower, Borrower's partners and
others with interests in Borrower, and of the Property, or to a
sale in inverse order of alienation in the event of foreclosure
of the Mortgage, and agrees not to assert any right under any
laws pertaining to the marshaling 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 the Borrower or its affiliates.
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. Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any
and all claims, liabilities, costs and expenses of any kind
(including Lender's attorneys' fees and expenses) in any way
relating to or arising from a claim by any Person that such
Person acted on behalf of Borrower or Lender in connection with
the transactions contemplated herein. The provisions of this
SECTION 10.21 shall survive the expiration and termination of
this Agreement and the payment of the Debt.
Section 10.22 PRIOR AGREEMENTS.
----------------
This Agreement and the other Loan Documents contain the
entire agreement of the parties hereto and thereto in respect of
the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or
written, including, without limitation, the Commitment Letter
dated September 30, 1997 between Borrower and Lender are
superseded by the terms of this Agreement and the other Loan Documents.
IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be duly executed by their duly authorized
representatives, all as of the day and year first above written.
FOX VALLEY MALL LLC,
a Delaware limited liability company
By: USC FOX VALLEY, INC.
a Delaware corporation, its managing member
By:______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.,
DOING BUSINESS AS ▇▇▇▇▇▇ CAPITAL, A
DIVISION OF ▇▇▇▇▇▇ BROTHERS HOLDING INC.,
By:______________________________________
Name:
Title: