EXHIBIT 10.4
LOAN AGREEMENT
Dated as of ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ (▇▇) LIMITED PARTNERSHIP,
as Borrower
and
BANK OF AMERICA, N.A.,
as Lender
Loan Number: 57367
Servicing Number: 3166659
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS; PRINCIPLES OF CONSTRUCTION ............................................... 1
Section 1.1 Definitions ........................................................................... 1
Section 1.2 Principles of Construction ............................................................ 20
ARTICLE 2 - GENERAL TERMS ......................................................................... 20
Section 2.1 Loan Commitment; Disbursement to Borrower ............................................. 20
Section 2.2 Loan Payments ......................................................................... 20
Section 2.3 Late Payment Charge ................................................................... 22
Section 2.4 Prepayment; Defeasance ............................................................... 22
Section 2.5 Payments after Default ................................................................ 29
Section 2.6 Usury Savings ......................................................................... 29
Section 2.7 Release of Property ................................................................... 30
Section 2.8 Substitution of Properties ............................................................ 31
ARTICLE 3 - CONDITIONS PRECEDENT .................................................................. 38
Section 3.1 Representations and Warranties; Compliance with Conditions ............................ 38
Section 3.2 Delivery of Loan Documents; Title Insurance; Reports; Leases .......................... 38
Section 3.3 Related Documents ..................................................................... 40
Section 3.4 Organizational Documents .............................................................. 40
Section 3.5 Opinions of Borrower's Counsel ........................................................ 40
Section 3 6 Intentionally Omitted ................................................................. 40
Section 3.7 Taxes and Other Charges ............................................................... 40
Section 3.8 Completion of Proceedings ............................................................. 40
Section 3.9 Payments .............................................................................. 41
Section 3.10 Transaction Costs ................................................................... 41
Section 3.11 No Material Adverse Change .......................................................... 41
Section 3.12 Leases .............................................................................. 41
Section 3.13 Intentionally Omitted ............................................................... 41
Section 3.14 REA Estoppels ....................................................................... 41
Section 3.15 Subordination and Attornment ........................................................ 42
Section 3.16 Tax Lot ............................................................................. 42
Section 3.17 Physical Conditions Report .......................................................... 42
Section 3.18 Management Agreement/Operating Lease ................................................ 42
Section 3.19 Appraisal ........................................................................... 42
Section 3 20 Financial Statements ................................................................ 42
Section 3.21 Intentionally Omitted ............................................................... 43
Section 3.22 Further Documents ................................................................... 43
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES ........................................................ 43
Section 4.1 Organization .......................................................................... 43
Section 4.2 Status of Borrower .................................................................... 43
Section 4.3 Validity of Documents ................................................................. 44
Section 4.4 No Conflicts .......................................................................... 44
Section 4.5 Litigation ............................................................................ 44
Section 4.6 Agreements ............................................................................ 44
Section 4.7 Solvency .............................................................................. 45
Section 4.8 Full and Accurate Disclosure .......................................................... 45
Section 4.9 No Plan Assets ........................................................................ 45
Section 4.10 Not a Foreign Person ................................................................ 46
Section 4.11 Intentionally Omitted ............................................................... 46
Section 4.12 Business Purposes ................................................................... 46
Section 4.13 Compliance .......................................................................... 46
Section 4.14 Financial Information ............................................................... 46
Section 4.15 Condemnation ........................................................................ 47
Section 4.16 Utilities and Public Access; Parking ................................................ 47
Section 4.17 Separate Lots ....................................................................... 47
Section 4.18 Assessments ......................................................................... 47
Section 4.19 Insurance ........................................................................... 47
Section 4.20 Use of Properties ................................................................... 48
Section 4.21 Certificate of Occupancy; Licenses .................................................. 48
Section 4.22 Flood Zone .......................................................................... 48
Section 4.23 Physical Condition .................................................................. 48
Section 4.24 Intentionally Omitted ............................................................... 49
Section 4.25 Leases and Rent Roll ................................................................ 49
Section 4.26 Filing and Recording Taxes .......................................................... 50
Section 4.27 Operating Lease ..................................................................... 50
Section 4.28 Illegal Activity .................................................................... 50
Section 4.29 Construction Expenses ............................................................... 50
Section 4.30 Personal Property ................................................................... 50
Section 4.31 Taxes ............................................................................... 50
Section 4.32 Permitted Encumbrances .............................................................. 51
Section 4.33 Federal Reserve Regulations ......................................................... 51
Section 4.34 Investment Company Act .............................................................. 51
Section 4.35 Reciprocal Easement Agreements ...................................................... 51
Section 4.36 No Change in Facts or Circumstances; Disclosure ..................................... 52
Section 4.37 Management Agreement ................................................................ 52
Section 4.38 Survey .............................................................................. 52
Section 4.39 Intentionally Omitted ............................................................... 52
Section 4.40 Survival ............................................................................ 52
ARTICLE 5 - BORROWER COVENANTS .................................................................... 53
Section 5.1 Existence; Compliance with Legal Requirements ......................................... 53
Section 5.2 Maintenance and Use of Properties ..................................................... 53
Section 5.3 Waste ................................................................................. 53
Section 5.4 Taxes and Other Charges ............................................................... 54
Section 5.5 Litigation ............................................................................ 55
Section 5.6 Access to Properties .................................................................. 55
Section 5.7 Notice of Default ..................................................................... 55
Section 5.8 Cooperate in Legal Proceedings ........................................................ 55
Section 5.9 Performance by Borrower ............................................................... 55
Section 5.10 Awards; Insurance Proceeds .......................................................... 55
Section 5.11 Financial Reporting ................................................................. 56
Section 5.12 Estoppel Statement .................................................................. 57
Section 5.13 Leasing Matters ..................................................................... 58
Section 5.14 Management Agreement ................................................................ 59
Section 5.15 Liens ............................................................................... 60
Section 5.16 Debt Cancellation ................................................................... 60
Section 5.17 Zoning .............................................................................. 60
Section 5.18 ERISA ............................................................................... 60
Section 5.19 No Joint Assessment ................................................................. 61
Section 5.20 Reciprocal Easement Agreements ...................................................... 61
Section 5.21 Alterations ......................................................................... 61
Section 5.22 Operating Lease ..................................................................... 61
ARTICLE 6 - ENTITY COVENANTS ...................................................................... 62
Section 6.1 Single Purpose Entity/Separateness .................................................... 62
Section 6.2 Change of Name, Identity or Structure ................................................. 65
Section 6.3 Business and Operations ............................................................... 66
Section 6.4 Independent Director .................................................................. 66
ARTICLE 7 NO SALE OR ENCUMBRANCE ANCE .......................................................... 67
Section 7.1 Transfer Definitions .................................................................. 67
Section 7.2 No Sale/Encumbrance ................................................................... 67
Section 7.3 Permitted Transfers ................................................................... 68
Section 7.4 Lender's Rights ....................................................................... 68
Section 7.5 Assumption of Borrower's Interest ..................................................... 69
Section 7.6 Reserved .............................................................................. 71
ARTICLE 8 - INSURANCE; CASUALTY; CONDEMNATION; RESTORATION ........................................ 71
Section 8.1 Insurance ............................................................................. 71
Section 8.2 Casualty .............................................................................. 75
Section 8.3 Condemnation .......................................................................... 75
Section 8.4 Restoration ........................................................................... 76
ARTICLE 9 - RESERVE FUNDS ......................................................................... 80
Section 9.1 Required Repairs ...................................................................... 80
Section 9.2 Replacements .......................................................................... 80
Section 9.3 Groundwater Monitoring Reserve Funds .................................................. 81
Section 9.4 Required Work ......................................................................... 81
Section 9.5 Release of Reserve Funds .............................................................. 83
Section 9.6 Tax and Insurance Reserve Funds ....................................................... 83
Section 9.7 Required DSCR Reserve ................................................................. 84
Section 9.8 Reserve Account Balances .............................................................. 85
Section 9.9 Reserve Funds Generally ............................................................... 85
ARTICLE 10 - CASH MANAGEMENT ..................................................................... 88
Section 10.1 Cash Management Agreement ........................................................... 88
ARTICLE 11 - EVENTS OF DEFAULT; REMEDIES ......................................................... 88
Section 11.1 Event of Default .................................................................... 88
Section 11.2 Remedies ............................................................................ 91
ARTICLE 12 - ENVIRONMENTAL PROVISIONS ............................................................ 92
Section 12.1 Environmental Representations and Warranties ........................................ 92
Section 12.2 Environmental Covenants ............................................................. 93
Section 12.3 Lender's Rights ..................................................................... 93
section 12.4 Operations and Maintenance Programs ................................................. 94
Section 12.5 Environmental Definitions ........................................................... 94
Section 12.6 Indemnification ..................................................................... 94
ARTICLE 13 - SECONDARY MARKET .................................................................... 96
Section 13.1 Transfer of Loan .................................................................... 96
Section 13.2 Delegation of Servicing ............................................................. 96
Section 13.3 Dissemination of Information ........................................................ 96
Section 13.4 Cooperation ......................................................................... 96
Section 13.5 Securitization Indemnification ...................................................... 98
Section 13.6 Rating Surveillance ................................................................. 101
ARTICLE 14 - INDEMNIFICATIONS .................................................................... 101
Section 14.1 General Indemnification ............................................................. 101
Section 14.2 Mortgage and Intangible Tax Indemnification ......................................... 102
Section 14.3 ERISA Indemnification ............................................................... 102
Section 14.4 Survival ............................................................................ 102
ARTICLE 15 - EXCULPATION ......................................................................... 103
Section 15.1 Exculpation ......................................................................... 103
ARTICLE 16 - NOTICES ............................................................................. 105
Section 16.1 Notices ............................................................................. 105
ARTICLE 17 - FURTHER ASSURANCES .................................................................. 106
Section 17.1 Replacement Documents ............................................................... 106
Section 17.2 Recording of Mortgages, Etc. ........................................................ 106
Section 17.3 Further Acts, Etc ................................................................... 107
Section 17.4 Changes in Tax, Debt, Credit and Documentary Stamp Laws ............................. 107
Section 17.5 Expenses ............................................................................ 108
ARTICLE 18 - WAIVERS ............................................................................. 109
Section 18.1 Remedies Cumulative; Waivers ........................................................ 109
Section 18.2 Modification, Waiver in Writing ..................................................... 109
Section 18.3 Delay Not a Waiver .................................................................. 109
Section 18.4 Trial by Jury ....................................................................... 110
Section 18.5 Waiver of Notice .................................................................... 110
Section 18.6 Remedies of Borrower ................................................................ 110
Section 18.7 Cross-Default; Cross-Collateralization; Waiver of Marshalling of Assets ............. 111
Section 18.8 Waiver of Statute of Limitations .................................................... 111
Section 18.9 Waiver of Counterclaim .............................................................. 111
ARTICLE 19 - GOVERNING LAW ....................................................................... 112
Section 19.1 Choice of Law ....................................................................... 112
Section 19.2 Severability ........................................................................ 112
Section 19.3 Preferences ......................................................................... 112
ARTICLE 20 - MISCELLANEOUS ....................................................................... 112
Section 20.1 Survival ............................................................................ 112
Section 20.2 Lender's Discretion ................................................................. 113
Section 20.3 Headings ............................................................................ 113
Section 20.4 Cost of Enforcement ................................................................. 113
Section 20.5 Schedules Incorporated .............................................................. 113
Section 20.6 Offsets, Counterclaims and Defenses ................................................. 113
Section 20.7 No Joint Venture or Partnership; No Third Party Beneficiaries ....................... 113
Section 20.8 Publicity ........................................................................... 115
Section 20.9 Conflict; Construction of Documents; Reliance ....................................... 115
Section 20.10 Entire Agreement .................................................................... 115
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 29, 2004 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), between BANK OF AMERICA, N.A., a national banking association,
having an address at Hearst Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together with its successors and/or assigns, "LENDER") and UH
STORAGE (DE) LIMITED PARTNERSHIP, a Delaware limited partnership, having an
address c/o W.P. ▇▇▇▇▇ & Co. LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (together with its successors and/or assigns, "BORROWER").
RECITALS:
Borrower desires to obtain the Loan (defined below) from Lender.
Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents
(defined below).
In consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the
parties hereto hereby covenant, agree, represent and warrant as follows:
ARTICLE 1 - DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1 Definitions
For all purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:
"ACCEPTABLE ACCOUNTANT" shall mean (i) a "Big Four" accounting firm, (ii)
Sarvas King & ▇▇▇▇▇▇▇ P.C. or (iii) other regional or national independent
certified public accountant reasonably acceptable to Lender.
"ACQUIRED PROPERTY" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"ACQUIRED PROPERTY STATEMENTS" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"ACT" shall have the meaning set forth in Section 6.1(c).
"AFFILIATE" shall mean, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such Person or of an Affiliate
of such Person.
"AFFILIATED LOANS" shall mean a loan made by Lender to a parent,
subsidiary or such other entity affiliated with Borrower or Borrower Principal.
"AFFILIATED MANAGER" shall have the meaning set forth in Section 7.1
hereof.
"AGENT" shall mean Bank of America, N.A. or any successor Eligible
Institution acting as Agent under the Cash Management Agreement.
"ALLOCATED LOAN AMOUNT" shall, for each Individual Property, have the
meaning set forth on Schedule III hereto.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"APPRAISAL" shall mean an appraisal prepared in accordance with the
requirements of FIRREA, prepared by an independent third party appraiser holding
an MAI designation, who is State licensed or State certified if required under
the laws of the State where the applicable Individual Property is located, who
meets the requirements of FIRREA and who is otherwise satisfactory to Lender.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean, with respect to the
Properties, that certain Assignment and Subordination of Management Agreement
dated the date hereof among Lender, Borrower and Manager, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"ATC" shall mean ATC Associates.
"AWARD" shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of any Individual
Property.
"BANKRUPTCY CODE" shall mean Title 11 U.S.C. Section 101 et seq., and the
regulations adopted and promulgated pursuant thereto (as the same may be amended
from time to time).
"BORROWER PRINCIPAL" shall mean CPA: 15.
"BORROWER QUALIFIED SUBSIDIARY" shall mean an Affiliate of Borrower which
is directly or indirectly wholly owned and Controlled by a Borrower REIT,
provided such Borrower REIT has a net worth, as calculated by Lender, of at
least $100 Million.
"BORROWER REIT" shall mean, individually and collectively, CIP, CPA: 12,
CPA: 14, CPA: 15, CPA: 16.
"BUSINESS DAY" shall mean a day on which Lender is open for the conduct of
substantially all of its banking business at its office in the city in which the
Note is payable (excluding Saturdays and Sundays).
"BUSINESS INCOME" shall mean, solely for purposes of Section 8.1(a)(iii)
hereof, (a) net income (as such term is used in accordance with GAAP) that would
have been earned or incurred and (b) continuing normal operating expenses
incurred, including payroll, to the extent that the insurance policy does not
specifically exclude or limit the calculation of payroll in the coverage under
the insurance policy
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"CAPITAL EXPENDITURES" shall mean, for any period, the amount expended for
items capitalized under GAAP (including expenditures for building improvements
or major repairs and FF&E Expenditures).
"CASH MANAGEMENT AGREEMENT" shall mean that certain Cash Management
Agreement by and among Borrower, Agent and Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time,
relating to funds deposited in the Lockbox Account.
"CASUALTY" shall have the meaning set forth in Section 8.2.
"CIP" shall mean ▇▇▇▇▇ Institutional Properties Incorporated.
"CPA: 12" shall mean Corporate Property Associates 12 Incorporated.
"CPA: 14" shall mean Corporate Property Associates 14 Incorporated.
"CPA: 15" shall mean Corporate Property Associates 15 Incorporated.
"CPA: 16" shall mean Corporate Property Associates 16-Global Incorporated.
"CPI" shall have the meaning set forth in the Operating Lease.
"CLOSING DATE" shall mean the date of the funding of the Loan.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result, in lieu or in anticipation, of the
exercise of the right of condemnation or eminent domain, of all or any part of
any Individual Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting such
Individual Property or any part thereof.
"CONDEMNATION PROCEEDS" shall have the meaning set forth in Section
8.4(b).
"CONTROL" shall have the meaning set forth in Section 7.1 hereof.
"CREDITORS RIGHTS LAWS" shall mean with respect to any Person any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to its debts or debtors.
"DEBT" shall mean the outstanding principal amount set forth in, and
evidenced by, this Agreement and the Note together with all interest accrued and
unpaid thereon and all other sums due to Lender in respect of the Loan under the
Note, this Agreement, the Mortgages or any other Loan Document.
"DEBT SERVICE" shall mean, with respect to any particular period of time,
scheduled principal and/or interest payments under the Note.
3
"DEBT SERVICE COVERAGE RATIO" shall mean, as of any date of determination,
for the applicable period of calculation, the ratio, as determined by Lender, of
(i) Operating Lease Payments to (ii) the aggregate amount of Debt Service which
would be due for the same period assuming the maximum principal amount of the
Loan is outstanding (including, without limitation, any sums then contained in
the Required DSCR Reserve) and calculated at a mortgage constant equal to nine
and one-quarter percent (9.25%) or such other mortgage constant as may be
required from time to time by the Rating Agencies.
"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)
four percent (4%) above the Note Rate.
"DEFEASED NOTE" shall have the meaning set forth in Section 2.4 hereof.
"DEFEASED PROPERTY" shall have the meaning set forth in Section 2.4
hereof.
"DEFEASANCE COLLATERAL" shall have the meaning set forth in Section 2.4
hereof.
"DEFEASANCE DATE" shall have the meaning set forth in Section 2.4 hereof.
"DEFEASANCE EVENT" shall have the meaning set forth in Section 2.4 hereof.
"DEFEASANCE SECURITY AGREEMENT" shall have the meaning set forth in
Section 2.4 hereof.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in Section 13.5
hereof.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. Section
9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean Bank of America, N.A. or a depository
institution or trust company insured by the Federal Deposit Insurance
Corporation, the short term unsecured debt obligations or commercial paper of
which are rated at least "A-1+" by S&P, "P-1" by ▇▇▇▇▇'▇ and "F-1+" by Fitch (to
the extent such Rating Agency has rated the Securities in a Securitization) in
the case of accounts in which funds are
4
held for thirty (30) days or less (or, in the case of accounts in which funds
are held for more than thirty (30) days, the long term unsecured debt
obligations of which are rated at least "AA" by Fitch and S&P and "Aa2" by
Moody's (to the extent such Rating Agency has rated the Securities in a
Securitization)).
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL LIENS" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL REPORT" shall have the meaning set forth in Section 12.5
hereof.
"ENVIRONMENTAL VIOLATION" shall have the meaning set forth in the
Operating Lease.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statutes thereto and applicable
regulations issued pursuant thereto in temporary or final form.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 11.1
hereof.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"EXCHANGE ACT FILING" shall have the meaning set forth in Section 5.11(c)
hereof.
"FF&E EXPENDITURES" shall mean, for any period, the amount expended for
the purchase of furniture, fixtures or equipment.
"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as the same may be amended from time to time.
"FISCAL YEAR" shall mean each twelve (12) month period commencing on
January 1 and ending on December 31 during the term of the Loan.
"FITCH" shall mean Fitch, Inc.
"FORCE MAJEURE" shall mean the failure or inability of Borrower to perform
any obligation hereunder by reason of any act of God, enemy or hostile
government action, civil commotion, insurrection, sabotage, acts of terrorism,
strikes or lockouts or any other reason solely due to cause or causes beyond the
control of Borrower, Operating Lessee or any Affiliate of either of the
foregoing.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as of the date of the applicable financial report.
"GROUNDWATER MANAGEMENT PLAN" shall mean the groundwater management plan
prepared by ATC as #▇▇-▇▇▇▇-▇▇▇ "Proposal for Ltd Assessment (3-MW
5
Installations) & Semi-Annual Monitoring Activities for Three Years", as the same
may be amended, replaced, supplemented or otherwise modified from time to time.
"GROUNDWATER MONITORING EVENTS" shall have the meaning set forth in
Section 9.3 hereof.
"GROUNDWATER MONITORING RESERVE ACCOUNT" shall have the meaning set forth
in Section 9.3 hereof.
"GROUNDWATER MONITORING RESERVE FUNDS" shall have the meaning set forth in
Section 9.3 hereof.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, department,
commission, office or other authority of any nature whatsoever for any
governmental unit (federal, state, county, municipal, city, town, special
district or otherwise) whether now or hereafter in existence.
"HAZARDOUS MATERIALS" shall have the meaning set forth in Section 12.5
hereof.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause of
the related Mortgage with respect to each Individual Property.
"INDEMNIFIED PARTIES" shall mean (a) Lender, (b) any prior owner or holder
of the Loan or Participations in the Loan, (c) any servicer or prior servicer of
the Loan, (d) any Investor or any prior Investor in any Securities, (e) any
trustees, custodians or other fiduciaries who hold or who have held a full or
partial interest in the Loan for the benefit of any Investor or other third
party, (f) any receiver or other fiduciary appointed in a foreclosure or other
Creditors Rights Laws proceeding, (g) any officers, directors, shareholders,
partners, members, employees, agents, servants, representatives, contractors,
subcontractors, affiliates or subsidiaries of any and all of the foregoing, and
(h) the heirs, legal representatives, successors and assigns of any and all of
the foregoing (including, without limitation, any successors by merger,
consolidation or acquisition of all or a substantial portion of the Indemnified
Parties' assets and business), in all cases whether during the term of the Loan
or as part of or following a foreclosure of the Mortgages.
"INDEPENDENT DIRECTOR" shall have the meaning set forth in Section 6.4(a).
"INDIVIDUAL PROPERTY" shall mean each parcel of real property, the
Improvements thereon and all Personal Property owned by Borrower and encumbered
by a Mortgage, together with all rights pertaining to such Property and
Improvements, as more particularly described in each Mortgage and referred to
therein as the "Property", including any Release Property prior to its release
or any Substitute Property upon its substitution.
"INITIAL CURE DATE" shall have the meaning set forth in Section 11.1(o)
hereof.
"INSURANCE PREMIUMS" shall have the meaning set forth in Section 8.1(b)
hereof.
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"INSURANCE PROCEEDS" shall have the meaning set forth in Section 8.4(b)
hereof.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"INVESTMENT GRADE" shall mean a rating of "BBB-" or its equivalent by the
Rating Agencies.
"INVESTOR" shall have the meaning set forth in Section 13.3 hereof.
"ISSUER GROUP" shall have the meaning set forth in Section 13.5(b) hereof.
"ISSUER PERSON" shall have the meaning set forth in Section 13.5(b)
hereof.
"LEASE" shall have the meaning set forth in the Mortgage with respect to
each Individual Property, including, without limitation, the Operating Lease.
"LEGAL REQUIREMENTS" shall mean, with respect to each Individual Property,
all statutes, laws, rules, orders, regulations, ordinances, judgments, decrees
and injunctions of Governmental Authorities affecting such Individual Property
or any part thereof, or the construction, use, alteration or operation thereof,
whether now or hereafter enacted and in force, and all permits, licenses,
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
actually known to Borrower, at any time in force affecting such Individual
Property or any part thereof, including, without limitation, any which may (a)
require repairs, modifications or alterations in or to such Individual Property
or any part thereof, or (b) in any way limit the use and enjoyment thereof.
"LIEN" shall mean, with respect to each Individual Property, any mortgage,
deed of trust, lien, pledge, hypothecation, assignment, security interest, or
any other encumbrance, charge or transfer of, on or affecting Borrower,
Borrower's interest in the related Individual Property, any portion thereof or
any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances, but excluding any furniture, fixtures and/or equipment owned by
Operating Lessee or any subtenant at the Properties.
"LLC AGREEMENT" shall have the meaning set forth in Section 6.1(c).
"LOAN" shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
"LOAN DOCUMENTS" shall mean, collectively, this Agreement, the Note, the
Mortgages, the Assignment of Management Agreement, the Cash Management
Agreement, the Subordination Agreement and any and all other documents,
agreements
7
and certificates executed and/or delivered in connection with the Loan, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"LOCKBOX ACCOUNT" shall mean an Eligible Account established pursuant to
the Cash Management Agreement for deposit of all Rents and other receipts from
the Properties.
"LOCKOUT PERIOD" shall mean the period commencing on the date hereof and
ending on the date which is six (6) months prior to the Maturity Date.
"LOSSES" shall mean any and all direct claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties, charges,
fees, judgments, awards, amounts paid in settlement of whatever kind or nature
(including but not limited to reasonable attorneys' fees and costs).
"MANAGEMENT AGREEMENT" shall mean, with respect to any Individual
Property, the management agreement entered into by and between Mercury Partners
and Manager, pursuant to which Manager is to provide management and other
services with respect to such Individual Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified in accordance with the
terms of this Agreement.
"MANAGER" shall mean U-HAUL SELF-STORAGE MANAGEMENT (WPC), INC., a Nevada
corporation or such other entity selected as the manager of the Properties or
any Individual Property in accordance with the terms of this Agreement.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect, as
determined by Lender in its reasonable discretion, on (i) the business,
operations, property or condition (financial or otherwise) of Borrower, (ii) the
ability of Borrower to repay principal and interest on the Loan or to pay or
perform any of its material obligations, liabilities and indebtedness under this
Agreement, the Note or the Mortgages as such payment or performance becomes due
in accordance with the terms thereof, (iii) the ability of Borrower Principal to
pay or perform its obligations, liabilities and indebtedness under this
Agreement as such payment or performance becomes due in accordance with the
terms thereof, or (iv) the rights, powers and remedies of Lender under this
Agreement, the Note and the Mortgages or the validity, legality or
enforceability of this Agreement, the Note or the Mortgages.
"MATURITY DATE" shall mean May 1, 2014.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
"MEMBER" shall have the meaning set forth in Section 6.1(c).
8
"MERCURY 99 GUARANTY" shall mean that certain Guaranty and Suretyship
Agreement dated as of March 31, 2004 made by Mercury 99, LLC, a Nevada limited
liability company to Borrower.
"MERCURY OPERATING INCOME" shall mean, with respect to any period of time,
with respect to the operation of the Properties as contemplated by the Mercury
Partners Lease, all income of Borrower and/or Operating Lessee, as applicable,
computed on a cash basis, derived from the ownership and operation of the
Properties from whatever source, including, but not limited to, Rents, utility
charges, escalations, forfeited security deposits, interest on credit accounts,
service fees or charges, license fees, parking fees, rent concessions or
credits, and other required pass-throughs but excluding sales, use and occupancy
or other taxes on receipts required to be accounted for by Borrower to any
Governmental Authority, refunds and uncollectible accounts, sales of furniture,
fixtures and equipment, interest income from any source other than the escrow
accounts, Reserve Accounts or other accounts required pursuant to the Loan
Documents, Insurance Proceeds (other than business interruption or other loss of
income insurance), Awards, percentage rents, unforfeited security deposits,
utility and other similar deposits, income from tenants not paying rent, income
from tenants in bankruptcy, non-recurring or extraordinary income, including,
without limitation, proceeds from the sale of an Individual Property, lease
termination payments, and any disbursements to Borrower from the Reserve Funds
"MERCURY PARTNERS" shall mean Mercury Partners Limited Partnership.
"MERCURY PARTNERS LEASE" shall mean that certain Lease Agreement dated as
of March 31, 2004 between Borrower, as landlord, and Mercury Partners, as
tenant.
"MERCURY PARTNERS SUBORDINATION AGREEMENT" shall mean that certain
Subordination Agreement dated as of the date hereof between Mercury Partners and
Lender.
"MONTHLY PAYMENT AMOUNT" shall mean the monthly payment of interest and
principal due on each Scheduled Payment Date as set forth in Section 2.2(b)
hereof.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investor Services, Inc.
"MORTGAGE" shall mean, with respect to each Individual Property, that
certain first priority mortgage/deed of trust/deed to secure debt and security
agreement dated the date hereof, executed and delivered by Borrower as security
for the Loan and encumbering such Individual Property, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"NEGATIVE PLEDGE AGREEMENT" shall mean collectively those certain Negative
Pledge Agreements by and between Borrower and Mercury Investments, Inc. with
respect to the ownership interests of Mercury Investments, Inc. in Mercury
Partners and by and between Borrower and ▇▇▇▇ ▇▇▇▇▇ with respect to the
ownership interests of ▇▇▇▇ ▇▇▇▇▇ in Mercury Investments, Inc.
9
"NET OPERATING INCOME" shall mean, with respect to any period of time, the
amount obtained by subtracting Operating Expenses from Operating Income.
"NET PROCEEDS" shall have the meaning set forth in Section 8.4(b) hereof.
"NET PROCEEDS DEFICIENCY" shall have the meaning set forth in Section
8.4(b)(vi) hereof.
"NON-COMPETE AGREEMENT" shall have the meaning set forth in the Operating
Lease.
"NOTE" shall mean that certain promissory note of even date herewith in
the principal amount of $183,000,000.00, made by Borrower in favor of Lender, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.
"NOTE RATE" shall mean an interest rate equal to 6.449% per annum.
"O&M PROPERTIES" shall mean, the following Individual Properties: (i) ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇, (ii) ▇▇▇▇ ▇. ▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇, ▇▇, (iii) ▇▇▇▇ ▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇, (iv) 11855 ▇. ▇▇▇▇▇▇, Alsip, IL, (v) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇, (vi) ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇, (vii) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
▇▇▇, ▇▇, (viii) ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇, (ix) ▇▇▇▇ ▇. ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇,
▇▇, (x) 499 Montgomery, Chicopee, MA, (xi) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇,
(xii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ (xiii) ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇, (xiv)
499 Montgomery, Chicopee, MA.
"OFFERING DOCUMENT DATE" shall have the meaning set forth in Section
5.11(c)(i)(D) hereof.
"OPERATING EXPENSES" shall mean, with respect to any period of time, the
sum of (i) the greater of (a) with respect to the operation of the Properties as
contemplated by the Mercury Partners Lease, the total of all expenses actually
paid or payable, computed on a cash basis, of whatever kind relating to the
operation, maintenance and management of the Properties, including without
limitation, utilities, ordinary repairs and maintenance, Insurance Premiums,
license fees, Taxes and Other Charges, advertising expenses, payroll and related
taxes, computer processing charges, management fees equal to the greater of 6%
of the Operating Income of the Properties as contemplated by the Mercury
Partners Lease and the management fees actually paid under the Management
Agreement, operational equipment or other lease payments as approved by Lender,
but specifically excluding depreciation and amortization, income taxes, Debt
Service, Operating Lease Payments, any incentive fees due under the Management
Agreement, any item of expense that in accordance with GAAP should be
capitalized but only to the extent the same would qualify for funding from the
Reserve Accounts, any item of expense that would otherwise be covered by the
provisions hereof but which is paid by any Tenant under such Tenant's Lease or
other agreement, and deposits into the Reserve Accounts and (b) forty-percent
(40%) of the Mercury Operating Income plus (ii) normalized Capital Expenditures
equal to $0.15 per square foot per annum.
10
"OPERATING INCOME" shall mean, with respect to any period of time, the sum
of (i) the Mercury Operating Income and (ii) fifty percent (50%) of the
Operating Lease Payment due pursuant to the U-Move Lease.
"OPERATING LEASE" shall mean, individually and/or collectively, as the
context may require, the Mercury Partners Lease and the U-Move Lease.
"OPERATING LEASE DEFAULT DEPOSIT" shall have the meaning set forth in
Section 11.l(o) hereof.
"OPERATING LEASE GUARANTY" shall mean, individually and/or collectively,
as the context may require, (i) that UHaul Guaranty and (ii) the Mercury 99
Guaranty.
"OPERATING LEASE PAYMENTS" shall mean all rent (including, without
limitation, base rent and additional rent) and all other charges due and payable
by Operating Lessee to Borrower pursuant to the Operating Lease.
"OPERATING LESSEE" shall mean, individually and/or collectively, as the
context may require, Mercury Partners and UHaul Moving.
"OPERATING LESSEE PRINCIPAL" shall have the respective meaning set forth
in the Mercury Partners Subordination Agreement.
"OPERATING LESSEE SPE ENTITIES" shall mean collectively, Operating Lessee
and Operating Lessee Principal.
"OPERATIONS DEBT SERVICE COVERAGE RATIO" shall mean, as of any date of
determination, for the applicable period of calculation, the ratio, as
determined by Lender, of (i) Net Operating Income to (ii) the aggregate amount
of Debt Service which would be due for the same period assuming the maximum
principal amount of the Loan is outstanding (but, for the purpose of this
definition only, any sums then contained in the Required DSCR Reserve shall not
be deemed outstanding) and calculated at a mortgage constant equal to nine and
one-quarter percent (9.25%) or such other mortgage constant as may be required
from time to time by the Rating Agencies.
"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 any Individual Property, now or hereafter levied or
assessed or imposed against such Individual Property or any part thereof.
"PARTICIPATIONS" shall have the meaning set forth in Section 13.1 hereof.
"PERMITTED ENCUMBRANCES" shall mean, with respect to an Individual
Property, collectively, (a) the Lien and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to such Individual Property, (c) Liens, if any, for
Taxes imposed by any Governmental
11
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.
"PERMITTED INVESTMENTS" shall mean to the extent available from Lender or
Lender's servicer for deposits in the Reserve Accounts and the Lockbox Account,
any one or more of the following obligations or securities acquired at a
purchase price of not greater than par, including those issued by a servicer of
the Loan, the trustee under any securitization or any of their respective
Affiliates, payable on demand or having a maturity date not later than the
Business Day immediately prior to the date on which the funds used to acquire
such investment are required to be used under this Agreement and meeting one of
the appropriate standards set forth below:
(a) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States or any agency or instrumentality
thereof provided such obligations are backed by the full faith and credit of the
United States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates), the U.S.
Department of Housing and Urban Development (local authority bonds) and the
Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) be rated "AAA" or the equivalent by each of the Rating Agencies,
(iii) if rated by S&P, must not have an "r" highlighter affixed to their rating,
(iv) if such investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (v) such investments must not be
subject to liquidation prior to their maturity;
(b) Federal Housing Administration debentures;
(c) obligations of the following United States government sponsored
agencies: Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (i) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (ii) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(d) federal funds, unsecured certificates of deposit, time deposits,
bankers' acceptances and repurchase agreements with maturities of not more than
365 days of any bank, the short term obligations of which at all times are rated
in the highest short term
12
rating category by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency in the highest short term rating category
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities); provided, however, that the investments described
in this clause must (i) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (ii) if rated by S&P, must not have an "r"
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(e) fully Federal Deposit Insurance Corporation-insured demand and time
deposits in, or certificates of deposit of, or bankers' acceptances with
maturities of not more than 365 days and issued by, any bank or trust company,
savings and loan association or savings bank, the short term obligations of
which at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise acceptable
to each other Rating Agency, as confirmed in writing that such investment would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
initial, or, if higher, then current ratings assigned to the Securities);
provided, however, that the investments described in this clause must (i) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (ii) if rated by S&P, must not have an "r" highlighter affixed to their
rating, (iii) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (iv) such
investments must not be subject to liquidation prior to their maturity;
(f) debt obligations with maturities of not more than 365 days and at all
times rated by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency and otherwise acceptable to each other
Rating Agency, as confirmed in writing that such investment would not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities) in its highest
long-term unsecured rating category; provided, however, that the investments
described in this clause must (i) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (ii) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (iii) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(g) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) with maturities
of not more than 365 days and that at all times is rated by each Rating Agency
(or, if not rated by all Rating Agencies, rated by at least one Rating Agency
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of
13
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned to the Securities) in its highest
short-term unsecured debt rating; provided, however, that the investments
described in this clause must (i) have a predetermined fixed dollar of principal
due at maturity that cannot vary or change, (ii) if rated by S&P, must not have
an "r" highlighter affixed to their rating, (iii) if such investments have a
variable rate of interest, such interest rate must be tied to a single interest
rate index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;
(h) units of taxable money market funds or mutual funds, with maturities
of not more than 365 days and which funds are regulated investment companies,
seek to maintain a constant net asset value per share and invest solely in
obligations backed by the full faith and credit of the United States, which
funds have the highest rating available from each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to the
Securities) for money market funds or mutual funds; and
(i) any other security, obligation or investment which has been approved
as a Permitted Investment in writing by (i) Lender and (ii) each Rating Agency,
as evidenced by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments, (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of one hundred twenty percent (120%) of
the yield to maturity at par of such underlying investment or (C) such
obligation or security has a remaining term to maturity in excess of one (1)
year.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited liability company, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clause of the Mortgages.
"PHYSICAL CONDITIONS REPORT" shall mean, with respect to each Individual
Property, a report prepared by a company satisfactory to Lender regarding the
physical condition of such Individual Property, satisfactory in form and
substance to Lender in its sole discretion.
"POLICIES" shall have the meaning specified in Section 8.1(b) hereof.
14
"PROHIBITED TRANSFER" shall have the meaning set forth in Section 7.2
hereof.
"PROPERTIES" shall mean, collectively, each and every Individual Property
which is subject to the terms of this Agreement.
"PROPERTY" shall mean, as the context may require, the Properties or an
Individual Property.
"PROVIDED INFORMATION" shall have the meaning set forth in Section 13.4(a)
hereof.
"QUALIFIED MANAGER" shall mean (1) Manager or one or more of its
Affiliates, (2) an Affiliate of WPC formed solely to manage the Properties, or
(3) such other reputable professional management organization that has (or whose
principals or key management have), together with its Affiliates, (a) not less
than five (5) years experience managing properties of a type, quality and size
similar to the Properties, totaling in the aggregate not less than (y) 3,000,000
square feet and (z) 30,000 units and (b) prior to whose employment as manager of
the Properties (i) prior to the occurrence of a Securitization, such employment
shall have been approved by Lender, and (ii) after the occurrence of a
Securitization, Lender shall have received written confirmation from the Rating
Agencies that the employment of such manager will not result in a downgrade,
withdrawal or qualification of the then current ratings of the Securities.
"QUALIFIED TRANSFEREE" shall mean any one of the following Persons:
(i) a pension fund, pension trust or pension account that (a) has
total real estate assets of at least $750 Million and (b) is managed by a
Person who controls at least $750 Million of real estate equity assets; or
(ii) a pension fund advisor who (a) immediately prior to such
transfer, controls at least $750 Million of real estate equity assets and
(b) is acting on behalf of one or more pension funds that, in the
aggregate, satisfy the requirements of clause (i) of this definition; or
(iii) an insurance company which is subject to supervision by the
insurance commissioner, or a similar official or agency, of a state or
territory of the United States (including the District of Columbia) (a)
with a net worth, as of a date no more than six (6) months prior to the
date of the transfer, of at least $500 Million and (b) who, immediately
prior to such transfer, controls real estate equity assets of at least
$750 Million; or
(iv) 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) (a) with a combined capital and surplus of at least
$500 Million and (b) who, immediately prior to such transfer, controls
real estate equity assets of at least $750 Million; or
15
(v) any Person (a) with a long-term unsecured debt rating from the
Rating Agencies of at least "BBB-" (or its equivalent) or (b) who (i) is,
or, simultaneously with the applicable transfer enters into a Management
Agreement with, a Qualified Manager and (ii) has a net worth, as of a date
no more than six (6) months prior to the date of such transfer, of at
least $500 Million; or
(vi) any other Person (a) approved by Lender or (b) if a
Securitization shall have occurred, approved by Lender and the Rating
Agencies.
"RATING AGENCIES" shall mean (i) prior to a Securitization, each of S&P,
▇▇▇▇▇'▇ and Fitch and any other nationally-recognized statistical rating agency
which has been approved by Lender, and (ii) after a Securitization has occurred,
each such Rating Agency which has rated the Securities in such Securitization.
If only a portion of the Loan is part of a Securitization, clause (i) shall
apply to the portion that is not part of a Securitization and clause (ii) shall
apply only to that portion that is part of a Securitization.
"REA" shall mean any construction, operation and reciprocal easement
agreement or similar agreement (including any separate agreement or other
agreement between Borrower and one or more other parties to an REA with respect
to such REA) affecting any Individual Property or portion thereof.
"RELEASE" shall have the meaning set forth in Section 12.5 hereof.
"RELEASE PRICE" shall mean, for each Individual Property, one hundred
twenty-five percent (125%) of the Allocated Loan Amount for such Individual
Property.
"RELEASE PROPERTY" shall have the meaning set forth in Section 2.8 hereof.
"REMAINING PROPERTY" shall have the meaning set forth in Section 2.4
hereof.
"REMIC PROHIBITION PERIOD" shall have the meaning set forth in Section 2.4
hereof.
"REMIC TRUST" shall mean a "real estate mortgage investment conduit"
(within the meaning of Section 860D, or applicable successor provisions, of the
Code) that holds the Note.
"RENT ROLL" shall have the meaning set forth in Section 4.24 hereof.
"RENTS" shall have the meaning set forth in the Mortgages with respect to
each Individual Property.
"REPLACEMENT MANAGEMENT AGREEMENT" shall mean, collectively, (a) either
(i) a management agreement with a Qualified Manager substantially in the same
form and substance as the Management Agreement, or (ii) a management agreement
with a Qualified Manager, which management agreement shall be subject to then
current market terms and conditions; and (b) an assignment of management
agreement substantially in
16
the form of the Assignment of Management Agreement (or such other form
reasonably acceptable to Lender), executed and delivered to Lender by Borrower
and such Qualified Manager.
"REPLACEMENT RESERVE ACCOUNT" shall have the meaning set forth in Section
9.2(b) hereof.
"REPLACEMENT RESERVE FUNDS" shall have the meaning set forth in Section
9.2(b) hereof.
"REPLACEMENTS" shall have the meaning set forth in Section 9.2(a) hereof.
"REQUIRED DSCR OPERATIONS DEBT SERVICE COVERAGE RATIO" shall mean, as of
any date of determination, for the applicable period of calculation, the ratio,
as determined by Lender, of (i) Net Operating income to (ii) the aggregate
amount of Debt Service which would be due for the same period assuming the
maximum principal amount of the Loan is outstanding (including, without
limitation, any sums then contained in the Required DSCR Reserve) and calculated
at a mortgage constant equal to nine and one-quarter percent (9.25%) or such
other mortgage constant as may be required from time to time by the Rating
Agencies.
"REQUIRED DSCR RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.7(a) hereof.
"REQUIRED DSCR RESERVE FUNDS" shall have the meaning set forth in Section
9.7(b) hereof.
"REQUIRED REPAIRS" shall have the meaning set forth in Section 9.1 hereof.
"REQUIRED WORK" shall have the meaning set forth in Section 9.4 hereof.
"RESERVE ACCOUNTS" shall mean the Tax and Insurance Reserve Account, the
Replacement Reserve Account, the Required DSCR Reserve Account, the Groundwater
Monitoring Reserve Account or any other escrow account established by the Loan
Documents.
"RESERVE FUNDS" shall mean the Tax and Insurance Reserve Funds, the
Replacement Reserve Funds, the Required DSCR Reserve Funds, the Groundwater
Monitoring Reserve Funds or any other escrow funds established by the Loan
Documents.
"RESPONSIBLE OFFICER" means with respect to a Person, the chairman of the
board, president, chief operating officer, chief financial officer, senior vice
president, executive vice president, treasurer or vice president-finance of such
Person.
"RESTORATION" shall mean, following the occurrence of a Casualty or a
Condemnation which is of a type necessitating the repair of an Individual
Property, the completion of the repair and restoration of such Individual
Property as nearly as possible
17
to the condition the Individual Property was in immediately prior to such
Casualty or Condemnation, with such alterations as may be reasonably approved by
Lender.
"RESTORATION CONSULTANT" shall have the meaning set forth in Section
8.4(b)(iii) hereof.
"RESTORATION RETAINAGE" shall have the meaning set forth in Section
8.4(b)(iv) hereof.
"RESTRICTED PARTY" shall have the meaning set forth in Section 7.1 hereof.
"REVIEWED SECTIONS" shall have the meaning set forth in Section 13.5(b)
hereof.
"SALE OR PLEDGE" shall have the meaning set forth in Section 7.1 hereof.
"SCHEDULED PAYMENT DATE" shall have the meaning set forth in Section
2.2(b) hereof.
"SECURITIES" shall have the meaning set forth in Section 13.1 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES LIABILITIES" shall have the meaning set forth in Section 13.5
hereof.
"SECURITIZATION" shall have the meaning set forth in Section 13.1 hereof.
"SERVICE LICENSES" shall have the meaning set forth in Section 4.1.21
hereof.
"SPECIAL MEMBER" shall have the meaning set forth in Section 6.1(c).
"SPE COMPONENT ENTITY" shall have the meaning set forth in Section 6.1(b)
hereof.
"STANDARD STATEMENTS" shall have the meaning set forth in Section
5.11(c)(i)(A) hereof.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"STATE" shall mean, with respect to an Individual Property the State in
which such Individual Property or any part thereof is located.
"SUBORDINATION AGREEMENT" shall mean, individually and/or collectively, as
the context may require, the Mercury Partners Subordination Agreement and U-Move
Subordination Agreement.
"SUBORDINATION AGREEMENT DEFAULT DEPOSIT" shall have the meaning set forth
in Section 11.1(k) hereof.
18
"SUBORDINATION AGREEMENT INITIAL CURE DATE" shall have the meaning set
forth in Section 11.1 (k) hereof.
"SUBSTITUTE ALLOCATED LOAN AMOUNT" shall have the meaning set forth in
Section 2.8 hereof.
"SUBSTITUTE PROPERTY" shall have the meaning set forth in Section 2.8
hereof.
"SUCCESSOR BORROWER" shall have the meaning set forth in Section 2.4
hereof.
"SURVEY" shall mean, with respect to an Individual Property, a survey
prepared by a surveyor licensed in the State where such Individual Property is
located and satisfactory to Lender and the company or companies issuing the
Title Insurance Policies, and containing a certification of such surveyor
satisfactory to Lender.
"TAX AND INSURANCE RESERVE FUNDS" shall have the meaning set forth in
Section 9.6 hereof.
"TAX AND INSURANCE RESERVE ACCOUNT" shall have the meaning set forth in
Section 9.6 hereof.
"TAXES" shall mean all real estate and personal property taxes,
assessments, condominium charges or assessments, water rates or sewer rents, now
or hereafter levied or assessed or imposed against any Individual Property or
part thereof.
"TENANT" shall mean any Person leasing, subleasing or otherwise occupying
any portion of any Individual Property under a Lease or other occupancy
agreement with Borrower.
"TERMINATION AMOUNT" shall have the meaning set forth in the Operating
Lease.
"THRESHOLD AMOUNT" shall have the meaning set forth in the Operating
Lease.
"TITLE INSURANCE POLICY" shall mean that certain ALTA mortgagee title
insurance policy issued with respect to each Individual Property and insuring
the Lien of a Mortgage.
"TRANSFEREE" shall have the meaning set forth in Section 7.5 hereof.
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code
as in effect in the State where the applicable Individual Property is located.
"UHAUL GUARANTY" shall mean that certain Guaranty and Suretyship Agreement
dated as of March 31, 2004 made by U-Haul International, Inc., a Nevada
corporation to Borrower.
"UHAUL MOVING" shall mean UHaul Moving Partners, Inc., a Nevada
corporation
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"U-MOVE LEASE" shall mean that certain Lease Agreement dated as of March
31, 2004 between Borrower, as landlord, and UHaul Moving, as tenant.
"U-MOVE SUBORDINATION AGREEMENT" shall mean that certain Subordination
Agreement dated as of the date hereof between UHaul Moving and Lender.
"UNDEFEASED NOTE" shall have the meaning set forth in Section 2.4 hereof.
"UNDERWRITER GROUP" shall have the meaning set forth in Section 13.5(b)
hereof.
"WPC" shall mean W.P. ▇▇▇▇▇ & Co LLC.
Section 1.2 Principles of Construction.
All references to sections and schedules are to sections and schedules in
or to this Agreement unless otherwise specified. All uses of the word
"including" shall mean "including, without limitation" unless the context shall
indicate otherwise. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
ARTICLE 2 - GENERAL TERMS
Section 2.1 Loan Commitment; Disbursement to Borrower
(a) Subject to and upon the terms and conditions set forth herein, Lender
hereby agrees to make and Borrower hereby agrees to accept the Loan on the
Closing Date.
(b) Borrower may request and receive only one borrowing in respect of the
Loan and any amount borrowed and repaid in respect of the Loan may not be
reborrowed.
(c) The Loan shall be evidenced by the Note and secured by the Mortgages
and the other Loan Documents.
(d) Borrower shall use the proceeds of the Loan to (i) pay certain costs
in connection with the acquisition and financing of the Properties, (ii) make
deposits into the Reserve Funds on the Closing Date in the amounts provided
herein, (iii) pay costs and expenses incurred in connection with the closing of
the Loan, as approved by Lender, (iv) fund any working capital requirements of
the Properties, and (v) distribute the balance, if any, to its partners, members
or shareholders, as applicable.
Section 2.2 Loan Payments
(a) The Loan shall bear interest at a fixed rate per annum equal to the
Note Rate. Interest shall be computed based on the daily rate produced assuming
a three
20
hundred sixty (360) day year, multiplied by the actual number of days elapsed.
Except as otherwise set forth in this Agreement, interest shall be paid in
arrears.
(b) Borrower hereby agrees to pay sums due under the Note as follows: An
initial payment of $65,564.84 is due on the Closing Date for interest from the
Closing Date through and including April 30, 2004. Thereafter, except as may be
adjusted in accordance with the last sentence of Section 2.2(c), consecutive
monthly installments of principal and interest in an amount equal to
$1,229,803.60 shall be payable pursuant to the terms of Section 2.2(d) (the
"MONTHLY PAYMENT AMOUNT") on the first (1st) day of each month beginning on June
1, 2004 (each a "SCHEDULED PAYMENT DATE") until the entire indebtedness
evidenced hereby is fully paid, except that any remaining indebtedness, if not
sooner paid, shall be due and payable on the Maturity Date.
(c) The Monthly Payment Amount shall mean the amount of interest and
principal which would be due in order to fully amortize the principal amount of
the Loan, over an amortization term of twenty-five (25) years assuming an annual
interest rate equal to the Note Rate, computed on the basis of a three hundred
sixty (360) day year consisting of twelve (12) months of thirty (30) days each.
Borrower expressly understands and agrees that such computation of interest
based on a three hundred sixty (360) day year consisting of twelve (12) months
of thirty (30) days each is solely for the purpose of determining the Monthly
Payment Amount, and, notwithstanding such computation, interest shall accrue on
the outstanding principal amount of the Loan as provided in Section 2.2(a)
above. Borrower understands and acknowledges that such interest accrual
requirement results in more interest accruing on the Loan than if either a
thirty (30) day month and a three hundred sixty (360) day year or the actual
number of days and a three hundred sixty-five (365) day year were used to
compute the accrual of interest on the Loan. Borrower recognizes that such
interest accrual requirement will not fully amortize the Loan within the
amortization period set forth above. Following any partial prepayment occurring
solely as a result of the application of Insurance Proceeds or Awards pursuant
to the terms of this Agreement, Lender may, in its sole and absolute discretion,
adjust the Monthly Payment Amount to give effect to any such partial prepayment,
provided, however, that in no event will any such adjustment result in any such
installment becoming due and payable on any date after the Maturity Date.
(d) Each payment by Borrower hereunder or under the Note shall be payable
at ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: Commercial
Mortgage Loan Servicing #1777, or at such other place as the Lender may
designate from time to time in writing, 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
first Business Day preceding such scheduled due date.
(e) Prior to the occurrence of an Event of Default, all monthly payments
made as scheduled under this Agreement and the Note shall be applied first to
the payment of interest computed at the Note Rate, and the balance toward the
reduction of the principal amount of the Note. All voluntary and involuntary
prepayments on the Note shall be applied, to the extent thereof, to accrued but
unpaid interest on the amount prepaid, to the
21
remaining principal amount, and any other sums due and unpaid to Lender in
connection with the Loan, in such manner and order as Lender may elect in its
sole and absolute discretion, including, but not limited to, application to
principal installments in inverse order of maturity. Following the occurrence of
an Event of Default, any payment made on the Note shall be applied to accrued
but unpaid interest, late charges, accrued fees, the unpaid principal amount of
the Note, and any other sums due and unpaid to Lender in connection with the
Loan, in such manner and order as Lender may elect in its sole and absolute
discretion.
(f) All payments made by Borrower hereunder or under the Note or the other
Loan Documents shall be made irrespective of, and without any deduction for, any
setoff, defense or counterclaims.
Section 2.3 Late Payment Charge
If any principal or interest payment is not paid by Borrower on or before
the date after the same is due, Borrower shall pay to lender upon demand an
amount equal to the lesser of four percent (4%) of such unpaid sum or the
maximum amount permitted by applicable law in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Any such
amount shall be secured by the Mortgages and the other Loan Documents to the
extent permitted by applicable law.
Section 2.4 Prepayment; Defeasance
Except as otherwise expressly permitted by this Section 2.4 no voluntary
prepayments, whether in whole or in part, of the Loan or any other amount at any
time due and owing under the Note can be made by Borrower or any other Person
without the express written consent of Lender.
(a) Lockout Period. Borrower has no right to make, and Lender shall have
no obligation to accept, any voluntary prepayment, whether in whole or in part,
of the Loan during the Lockout Period. Notwithstanding the foregoing, if either
(i) Lender, in its sole and absolute discretion, accepts a full or partial
voluntary prepayment during the Lockout Period or (ii) there is an involuntary
prepayment during the Lockout Period, then, in either case, Borrower shall, in
addition to any portion of the Loan prepaid (together with all interest accrued
and unpaid thereon), pay to Lender a prepayment premium in an amount calculated
in accordance with Section 2.4(e) hereof.
(b) Defeasance.
(i) Notwithstanding, any other provision of this Section 2.4 to the
contrary, including, without limitation, subsection (a) of this Section
2.4, at any time other than during a REMIC Prohibition Period, Borrower
may (1) voluntarily defease in whole the Note and obtain releases from the
Liens of the Mortgages of all of the Properties or (2) partially defease
the Note and obtain a release from the Lien of the Mortgage of one or more
Individual Property, but less than all of the Properties, in each case
together with all improvements thereon and other
22
property appurtenant thereto which is collateral for the Loan evidenced
hereby (each Individual Property being released from the Lien of the
Mortgage is referred to as a "DEFEASED PROPERTY", and the Individual
Properties remaining subject to the Lien of the Mortgages are referred to
collectively as the "REMAINING PROPERTY"), upon the satisfaction of the
following conditions (a "DEFEASANCE EVENT"):
(A) Borrower shall give Lender not less than sixty (60) (but
not more than ninety (90)) days prior written notice, specifying (i)
the date (the "DEFEASANCE DATE") on which the Defeasance Collateral
is to be delivered, such date being on a Scheduled Payment Date;
provided, however, that Borrower shall have the right (1) to cancel
such notice by providing Lender with notice of cancellation ten (10)
days prior to the scheduled Defeasance Date, or (2) to extend the
scheduled Defeasance Date until the next Scheduled Payment Date;
provided that in each case, Borrower shall pay all of Lender's costs
and expenses incurred as a result of such cancellation or extension,
(ii) the principal amount of the Loan to be defeased and (iii) the
Individual Property to be released;
(B) All accrued and unpaid interest and other sums due under
this Agreement, the Note and under the other Loan Documents up to
the Defeasance Date, including, without limitation, all reasonable
costs and expenses incurred by Lender or its agents in connection
with such partial release (including, without limitation, any legal
fees and expenses incurred in connection with obtaining and
reviewing the Defeasance Collateral and the preparation of the
Defeased Note, the Undefeased Note, the Defeasance Security
Agreement and related documentation), shall be paid in full on or
prior to the Defeasance Date;
(C) No Event of Default shall exist under any of the Loan
Documents;
(D) In the event only a portion of the Note is the subject of
a Defeasance Event, Lender, at Borrower's expense, shall prepare all
necessary documents to sever the indebtedness evidenced by the Note
into two substitute notes, one (the "DEFEASED NOTE") having a
principal balance equal to the defeased portion of the original
Note, and the other (the "UNDEFEASED NOTE") having a principal
balance equal to the undefeased portion of the original Note as of
the Defeasance Date. The Defeased Note and the Undefeased Note shall
have identical terms as the original Note, except for the principal
balance, and the Defeased Note or Defeased Notes and the Undefeased
Note or Undefeased Notes shall be crossed-defaulted with each other.
A Defeased Note cannot be the subject of any further Defeasance. An
Undefeased Note may be the subject of a further Defeasance in
accordance with the terms of this Section;
23
(E) Borrower shall deliver the following to Lender on or prior
to the Defeasance Date:
(1) a pledge and security agreement, in form and
substance which would be satisfactory to a prudent
lender, creating a first priority security interest in
favor of Lender in the Defeasance Collateral (the
"DEFEASANCE SECURITY AGREEMENT"), which shall provide,
among other things, that any excess received by Lender
from the Defeasance Collateral over the amounts payable
under the Note or the Defeased Note, as applicable,
which excess amounts are not required to cover all or
any portion of amounts payable on a Scheduled Payment
Date, shall be refunded to Borrower promptly after each
such Scheduled Payment Date;
(2) direct non-callable obligations of the United States
of America or other obligations which are "government
securities" within the meaning of Section 2(a)(16) of
the Investment Company Act of 1940, to the extent the
applicable Rating Agencies rating the Securities have
confirmed in writing will not cause a downgrade,
withdrawal or qualification of the initial, or, if
higher, then applicable ratings of the Securities (the
"DEFEASANCE COLLATERAL"), which provide payments on or
prior to, but as close as possible to, all successive
scheduled payment dates after the Defeasance Date upon
which interest and principal payments are required under
the Note, in the case of a Defeasance Event for the
entire outstanding principal balance of the Note, or the
Defeased Note, in the case of a Defeasance Event for
only a portion of the outstanding principal balance of
the Note, as applicable and in amounts equal to the
scheduled payments due on such dates under the Note or
the Defeased Note, as applicable (including without
limitation scheduled payments of principal, interest and
the charges of the Rating Agencies) and assuming such
the Note or the Defeased Note, as applicable, is paid in
full on the Maturity Date, each of which shall be duly
endorsed by the holder thereof as directed by Lender or
accompanied by a written instrument of transfer in form
and substance wholly satisfactory to Lender in its sole
discretion (including, without limitation, such
certificates, documents and instruments as may be
required by the depository institution holding such
securities or the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the
book-entry facilities of such institution) in order to
perfect upon the delivery of the
24
Defeasance Security Agreement the first priority
security interest therein in favor of Lender in
conformity with all applicable state and federal laws
governing granting of such security interests;
(3) a certificate of Borrower certifying that all of the
requirements set forth in this Section have been
satisfied in all material respects;
(4) one or more opinions of counsel for Borrower in form
and substance and delivered by counsel which would be
satisfactory to a prudent lender stating, among other
things, that (i) Lender has a perfected first priority
security interest in the Defeasance Collateral and that
the Defeasance Security Agreement is enforceable against
Borrower in accordance with its terms, (ii) in the event
of a bankruptcy proceeding or similar occurrence with
respect to Borrower, none of the Defeasance Collateral
nor any proceeds thereof will be property of Borrower's
estate under Section 541 of the Bankruptcy Code or any
similar statute and the grant of security interest
therein to Lender shall not constitute an avoidable
preference under Section 547 of the Bankruptcy Code or
applicable state law, (iii) the release of the Lien of
the Mortgage and the pledge of Defeasance Collateral
will not directly or indirectly result in or cause any
REMIC Trust that then holds the Note to fail to maintain
its status as a REMIC Trust and (iv) the defeasance will
not cause any REMIC Trust to be an "investment company"
under the Investment Company Act of 1940;
(5) Lender has received written confirmation from any
Rating Agency rating any Securities that such
substitution of the Defeasance Collateral will not
result in a downgrade, withdrawal or qualification of
the ratings then assigned to any of the Securities;
(6) a certificate in form and scope acceptable to Lender
in its sole discretion from an Acceptable Accountant
certifying that the Defeasance Collateral will
generate amounts sufficient to make all payments of
principal and interest due under the Note or the
Defeased Note, as applicable (including the scheduled
outstanding principal balance of the Note or the
Defeased Note, as applicable, due on the Maturity Date);
25
(7) in the event only a portion of the Note is the
subject of a Defeasancs Event, evidence reasonably
acceptable to Lender that the Undefeased Note will
continue to be secured by the Mortgages; and
(8) such other certificates, opinions, documents or
instruments as Lender may reasonably require.
(ii) Upon a defeasance in accordance with Section, Borrower shall,
at Lender's sole and absolute discretion, assign all its obligations and
rights under the Defeased Note to a special-purpose bankruptcy-remote
entity ("SUCCESSOR BORROWER") to be formed by Borrower at its sole cost
and expense. In connection therewith, the Successor Borrower shall execute
an assumption agreement in form and substance satisfactory to Lender in
its sole discretion pursuant to which it shall assume Borrower's
obligations under the Note or the Defeased Note, as applicable, and the
Defeasance Security Agreement. The sole asset of Successor Borrower shall
be the Defeasance Collateral. In connection with such assignment and
assumption, Borrower and/or Successor Borrower shall:
(A) deliver to Lender an opinion of counsel in form and
substance (but subject to customary qualifications and limitations)
and delivered by counsel satisfactory to Lender in its sole
discretion stating, among other things, that such assumption
agreement is enforceable against Borrower and Successor Borrower, as
applicable, in accordance with its terms and that the Note or the
Defeased Note, as applicable, and the Defeasance Security Agreement
and any other documents executed in connection with such defeasance
are enforceable against Successor Borrower, and, in the event only a
portion of the Note is the subject of a Defeasance Event, the
Undefeased Note remains enforceable against Borrower, each in
accordance with their respective terms, and
(B) pay all costs and expenses incurred by Lender or its
agents in connection with such assignment and assumption (including,
without limitation, reasonable attorneys' fees, costs and
disbursements).
Upon an assumption by Successor Borrower acceptable to Lender, (i) Borrower
shall be relieved of its obligations under the Note or the Defeased Note, as
applicable, and the Defeasance Security Agreement and, to the extent such
documents relate to the Defeased Property, the other Loan Documents, and (ii) in
the event only a portion of the Note is the subject of a Defeasance Event, if
the Defeased Property is owned other than by the owner of the Remaining
Property, then the owner of the Defeased Property shall be relieved of its
obligations under the Undefeased Note and the other Loan Documents for matters
occurring following the partial defeasance.
(c) Upon compliance with the requirements of this Section, (1) in the
event the entire Note is the subject of a Defeasance Event, the Properties shall
be released from the Liens of the Mortgages and the other Loan Documents, and
the Defeasance Collateral
26
shall constitute collateral which shall secure the Note or (2) in the event only
a portion of the Note is the subject of a Defeasance Event the Defeased Property
shall be released from the Lien of the Mortgage and the other Loan Documents,
and the Defeasance Collateral shall constitute collateral which shall secure the
Defeased Note. Lender will, at Borrower's expense, execute and deliver any
agreements reasonably requested by Borrower to release the Lien of the Mortgage
from the Defeased Property.
(d) For purposes of this Section 2.4, "REMIC PROHIBITION PERIOD" mean the
latest to occur of (i) two (2) years from the "startup day" within the meaning
of Section 860G(a)(9) of the Code of the REMIC Trust with respect to a
Securitization of Note A-1 and (ii) two (2) years from the "startup day" within
the meaning of Section 860G(a)(9) of the Code of the REMIC Trust with respect to
a Securitization of Note A-2, (iii) two (2) years from the "startup day" within
the meaning of Section 860G(a)(9) of the Code of the REMIC Trust with respect to
a Securitization of Note B or (iv) four (4) years from the Closing Date. In no
event shall Lender have any obligation to notify Borrower that a REMIC
Prohibition Period is in effect with respect to the Loan, except that Lender
shall notify Borrower if any REMIC Prohibition Period is in effect with respect
to the Loan after receiving any notice described in this Section 2.4; provided,
however, that the failure of Lender to so notify Borrower shall not impose any
liability on Lender or grant Borrower any right to defease the Loan during any
such REMIC Prohibition Period.
(e) Involuntary Prepayment During the Lockout Period. During the Lockout
Period, in the event of any involuntary prepayment of the Loan or any other
amount under the Note, whether in whole or in part, in connection with or
following Lender's acceleration of the Note or otherwise, and whether the
Mortgage is satisfied or released by foreclosure (whether by power of sale or
judicial proceeding), deed in lieu of foreclosure or by any other means,
including, without limitation, repayment of the Loan by Borrower or any other
Person pursuant to any statutory or common law right of redemption, Borrower
shall, in addition to any portion of the principal balance of the Loan prepaid
(together with all interest accrued and unpaid thereon and in the event the
prepayment is made on a date other than a Scheduled Payment Date, a sum equal to
the amount of interest which would have accrued under the Note on the amount of
such prepayment if such prepayment had occurred on the next Scheduled Payment
Date), pay to Lender a prepayment premium in an amount calculated in accordance
with this Section 2.4(e). Such prepayment premium shall be in an amount equal to
the greater of:
(i) 1% of the portion of the Loan being prepaid; or
(ii) the product obtained by multiplying:
(A) the portion of the Loan being prepaid, times;
(B) the difference obtained by subtracting (I) the Yield Rate
from (II) the Note Rate, times;
(C) the present value factor calculated using the following
formula:
27
1-(1+r)-n
---------
r
r = Yield Rate
n = the number of years and any fraction thereof,
remaining between the date the prepayment is
made and the Maturity Date of the Note.
As used herein, "YIELD RATE" means the yield rate for the 4.00% U.S. Treasury
Security due February 15, 2014, as reported in The Wall Street Journal on the
fifth Business Day preceding the Prepayment Calculation Date. If the Yield Rate
is not published for such U.S. Treasury Security, then the "Yield Rate" shall
mean the yield rate for the nearest equivalent U.S. Treasury Security (as
selected at Lender's sole and absolute discretion) as reported in The Wall
Street Journal on the fifth Business Day preceding the Prepayment Calculation
Date. If the publication of such Yield Rate in The Wall Street Journal is
discontinued, Lender shall determine such Yield Rate from another source
selected by Lender in Lender's sole and absolute discretion. The "PREPAYMENT
CALCULATION DATE" shall mean, as applicable, the date on which (i) Lender
applies any partial prepayment to the reduction of the outstanding principal
amount the Note, in the case of a voluntary partial prepayment which is accepted
by Lender, (ii) Lender accelerates the Loan, in the case of a prepayment
resulting from acceleration, or (iii) Lender applies funds held under any
Reserve Account, in the case of a prepayment resulting from such an application
(other than in connection with acceleration of the Loan).
(f) Insurance and Condemnation Proceeds; Excess Interest. Notwithstanding
any other provision herein to the contrary, and provided no Event of Default
exists, Borrower shall not be required to pay any prepayment premium and no
Defeasance Collateral shall be due in connection with any prepayment occurring
solely as a result of (i) the application of Insurance Proceeds or Condemnation
Proceeds (including any Termination Amount paid in accordance with the Operating
Lease) pursuant to the terms of the Loan Documents or (ii) the application of
any interest in excess of the maximum rate permitted by applicable law to the
reduction of the Loan.
(g) After the Lockout Period. Commencing on the day after the expiration
of the Lockout Period, and upon giving Lender at least sixty (60) days (but not
more than ninety (90) days) prior written notice, Borrower may voluntarily
prepay (without premium) the Note in whole (but not in part) on a Scheduled
Payment Date. Lender shall accept a prepayment pursuant to this Section 2.4(g)
on a day other than a Scheduled Payment Date provided that, in addition to
payment of the full outstanding principal balance of the Note, Borrower pays to
Lender a sum equal to the amount of interest which would have accrued on the
Note if such prepayment occurred on the next Scheduled Payment Date.
28
(h) Limitation on Partial Prepayments. Subject to the provisions of
Sections 2.4(e) and (f) hereof, in no event shall Lender have any obligation to
accept a partial prepayment.
Section 2.5 Payments after Default
Upon the occurrence and during the continuance of an Event of Default,
interest on the outstanding principal balance of the Loan and, to the extent
permitted by law, overdue interest and other amounts due in respect of the Loan,
(a) shall accrue at the Default Rate, and (b) Lender shall be entitled to
receive and Borrower shall pay to Lender all cash flow from the Operating Lease
in accordance with the terms of the Cash Management Agreement, such amount 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 shall be computed from the occurrence of the Event of Default until the
earlier of (i) the actual receipt and collection of the Debt (or that portion
thereof that is then due) and (ii) the cure of such Event of Default; provided,
however, after payment in full of the Debt, any excess proceeds received by
Lender shall be distributed in accordance with the provisions set forth in the
Cash Management Agreement. To the extent permitted by applicable law, interest
at the Default Rate shall be added to the Debt, shall itself accrue interest at
the same rate as the Loan and shall be secured by the Mortgages. This paragraph
shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to
Lender by reason of the occurrence of any Event of Default; the acceptance of
any payment from Borrower shall not be deemed to cure or constitute a waiver of
any Event of Default; and Lender retains its rights under this Agreement to
accelerate and to continue to demand payment of the Debt upon the happening of
and during the continuance any Event of Default, despite any payment by Borrower
to Lender.
Section 2.6 Usury Savings
This Agreement and the Note are subject to the express condition that at
no time shall Borrower be obligated or required to pay interest on the principal
balance of the Loan at a rate which could subject Lender to either civil or
criminal liability as a result of being in excess of the Maximum Legal Rate. If,
by the terms of this Agreement or the other Loan Documents, Borrower is at any
time required or obligated to pay interest on the principal balance due
hereunder at a rate in excess of the Maximum Legal Rate, the Note Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to
the Maximum Legal Rate and all previous payments in excess of the Maximum Legal
Rate shall be deemed to have been payments in reduction of principal (without
prepayment premium or penalty) and not on account of the interest due hereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.
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Section 2.7 Release of Property.
Provided no Event of Default has occurred and is continuing, at any time
other than during a REMIC Prohibition Period, Borrower may obtain the release of
an Individual Property from the Lien of the Mortgage thereon (and related Loan
Documents) and the release of Borrower's obligations under the Loan Documents
with respect to such Individual Property (other than those expressly stated to
survive), but only upon the satisfaction of each of the following conditions:
(a) Borrower shall provide Lender with at least twenty (20) days but no
more than ninety (90) days prior written notice of its request to obtain a
release of the Individual Property;
(b) A wire transfer to Lender of immediately available federal funds (or
the delivery to Lender of Defeasance Collateral, if applicable) in an amount
equal to the Release Price for the applicable Individual Property, together with
(i) all accrued and unpaid interest on the amount of principal being prepaid on
the date of such prepayment and (ii) all other sums due under this Agreement,
the Note or the other Loan Documents in connection with a partial prepayment to
be calculated and applied in accordance with the provisions of Section 2.4(b)
hereof;
(c) Borrower shall submit to Lender, not less than twenty (20) days prior
to the date of such release, a release of Lien (and related Loan Documents) for
such Individual Property for execution by Lender. Such release shall be in a
form appropriate in each State in which the Individual Property is located and
shall contain standard provisions, if any, protecting the rights of the
releasing lender. In addition, Borrower shall provide all other documentation
Lender reasonably requires to be delivered by Borrower in connection with such
release, together with an certificate of Borrower certifying that (i) such
documentation is in compliance with all applicable Legal Requirements, and (ii)
the release will not impair or otherwise adversely affect the Liens, security
interests and other rights of Lender under the Loan Documents not being released
(or as to the parties to the Loan Documents and Properties subject to the Loan
Documents not being released);
(d) After giving effect to such release, Lender shall have determined that
the Operations Debt Service Coverage Ratio for the Properties then remaining
subject to the Liens of the Mortgages shall be at least equal to the greater of
(i) 1.60:1.00, and (ii) the lesser of (y) the Operations Debt Service Coverage
Ratio for all of the then remaining Properties (including the Individual
Property to be released) for the twelve (12) full calendar months immediately
preceding the release of the Individual Property and (z) 1.85:1.00;
(e) After giving effect to such release, Lender shall have determined that
the Debt Service Coverage Ratio for the Properties then remaining subject to the
Liens of the Mortgages shall be at least equal to the greater of (i) 1.69:1.00,
and (ii) the lesser of (y) the Debt Service Coverage Ratio for all of the then
remaining Properties (including the
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Individual Property to be released) for the twelve (12) full calendar months
immediately preceding the release of the Individual Property and (z) 1.90:1.00;
(f) After giving effect to such release, Lender shall have determined that
the loan-to-value ratio with respect to the Properties then remaining subject to
the Lien of the Mortgages shall be not greater than the lesser of (i) the
aggregate loan-to-value ratio as of the Closing Date with respect to all of the
Properties and (ii) the aggregate loan-to-value ratio with respect to the
Properties remaining subject to the Lien of the Mortgages immediately prior to
the release of the Individual Property;
(g) Lender shall have received evidence reasonably acceptable to Lender
that the Individual Property to be released shall be conveyed to a Person other
than Borrower, Borrower Principal, or any Affiliate of either of the foregoing;
(h) Lender shall have received a certified copy of an amendment to the
Operating Lease reflecting the deletion of the Individual Property to be
released, but only to the extent that the Operating Lease does not provide for
such deletion to occur automatically; and
(i) Lender shall have received payment of all Lender's reasonable costs
and expenses, including due diligence review costs and reasonable counsel fees
and disbursements incurred in connection with the release of the Individual
Property from the Lien of the related Mortgage and the review and approval of
the documents and information required to be delivered in connection therewith.
Section 2.8 Substitution of Properties.
Subject to the terms of this Section, Borrower shall have the right to
obtain a release of the Lien of a Mortgage (and the related Loan Documents)
encumbering one or more Individual Properties (each, a "RELEASE PROPERTY") by
substituting therefor one or more self-storage facilities of like kind and
quality acquired by Borrower or an Affiliate of Borrower (provided, however, if
the Substitute Property shall be owned by an Affiliate of Borrower said
Affiliate (i) shall assume all the obligations of Borrower under this Agreement,
the Note and the other Loan Documents and (ii) shall become a party to the Note
and the other Loan Documents and shall be bound by the terms and provisions
thereof as if it had executed the Note and the other Loan Documents and shall
have the rights and obligations of Borrower thereunder) (individually, a
"SUBSTITUTE PROPERTY" and collectively, the "SUBSTITUTE PROPERTIES"), provided
that the following conditions precedent are satisfied:
(a) Borrower's right to release and substitute Properties in accordance
with this Section shall terminate from and after the time Borrower has
substituted fifteen (15) Properties, provided, however, in no event may
Properties which represent, in the aggregate, more than twenty-five percent
(25%) of the original aggregate Basic Rent be released and substituted in
accordance with this Section 2.8.
(b) Lender shall have received at least thirty (30) days prior written
notice requesting the substitution and identifying the Substitute Property and
Release Property.
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(c) If the applicable Borrower continues to own an Individual Property
subject to the Lien of a Mortgage, Lender shall have received (i) a copy of a
deed conveying all of Borrower's right, title and interest in and to the Release
Property to a Person other than Borrower, Borrower Principal, or any Affiliate
of either of the foregoing pursuant to an arms length transaction and (ii) a
letter from Borrower countersigned by a title insurance company acknowledging
receipt of such deed and agreeing to record such deed in the real estate records
for the county in which the Release Property is located.
(d) Lender shall have received a current Appraisal of the Substitute
Property prepared within one hundred eighty (180) days prior to the release and
substitution (i) showing an appraised value equal to or greater than the
appraised value of the Release Property as of the Closing Date, and (ii) which
supports an aggregate loan-to-value ratio with respect to the Properties
remaining subject to the Lien of the Mortgages after the substitution not
greater than the lesser of (A) the aggregate loan-to-value ratio as of the
Closing Date with respect to all of the Properties and (B) the aggregate
loan-to-value ratio with respect to the Properties remaining subject to the Lien
of the Mortgages immediately prior to the date of the proposed substitution.
(e) Lender shall have received a certificate of Borrower certifying,
together with other evidence that would be satisfactory to a prudent
institutional mortgage loan lender that, after the substitution of a Substitute
Property and the release of the Release Property, (i) the Operations Debt
Service Coverage Ratio for the twelve (12) full calendar months immediately
preceding the date of the substitution with respect to all Properties remaining
subject to the Lien of the Mortgages after the substitution shall be equal to or
greater than (A) 1.60:1.00 and (B) the lesser of (y) the Operations Debt Service
Coverage Ratio for the twelve (12) full calendar months immediately preceding
the substitution (including the Release Property and excluding the Substitute
Property) and (z) 1.85:1.00 and (ii) the Operations Debt Service Coverage Ratio
for the twelve (12) months immediately preceding the substitution with respect
to the Substitute Property is equal to or greater than 1.60:1.00.
(f) Lender shall have received a certificate of Borrower certifying,
together with other evidence that would be satisfactory to a prudent
institutional mortgage loan lender that, after the substitution of a Substitute
Property and the release of the Release Property, (i) the Debt Service Coverage
Ratio for the twelve (12) full calendar months immediately preceding the date of
the substitution with respect to all Properties remaining subject to the Lien of
the Mortgages after the substitution shall be equal to or greater than (A)
1.69:1.00 and (B) the lesser of (y) the Debt Service Coverage Ratio for the
twelve (12) full calendar months immediately preceding the substitution
(including the Release Property and excluding the Substitute Property) and (z)
1.90:1.00 and (ii) the Debt Service Coverage Ratio for the twelve (12) months
immediately preceding the substitution with respect to the Substitute Property
is equal or greater than 1.69:1.00.
(g) If the Loan is part of a Securitization, Lender shall have received
confirmation in writing from the Rating Agencies to the effect that such release
and substitution will not result in a withdrawal, qualification or downgrade of
the respective ratings in effect immediately prior to such release and
substitution for the Securities
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issued in connection with the Securitization that are then outstanding. If the
Loan is not part of a Securitization, Lender shall have consented in writing to
such release and substitution, which consent shall be given in Lender's
reasonable discretion applying the requirements of a prudent institutional
mortgage loan lender with respect to real estate collateral of similar size,
scope and value of the Substitute Property.
(h) No 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 Borrower's part
to be observed or performed. Lender shall have received a certificate from
Borrower confirming the foregoing, stating that the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
are true and correct on and as of the date of the release and substitution with
respect to Borrower, the Properties and the Substitute Property and containing
any other representations and warranties with respect to Borrower, the
Properties, the Substitute Property or the Loan as (i) Lender, if a
Securitization has not occurred, or (ii) the Rating Agencies, if a
Securitization has occurred, may reasonably require, unless such certificate
would be inaccurate, such certificate to be in form and substance satisfactory
to Lender or the Rating Agencies, as applicable.
(i) Borrower shall have executed, acknowledged and delivered to Lender (I)
a Mortgage and two UCC-1 Financing Statements with respect to the Substitute
Property, together with a letter from Borrower countersigned by a title
insurance company acknowledging receipt of such Mortgage and UCC-1 Financing
Statements and agreeing to record or file, as applicable, such Mortgage and one
of the UCC-1 Financing Statements in the real estate records for the county in
which the Substitute Property is located and to file one of the UCC-1 Financing
Statements in the office of the Secretary of State (or other central filing
office) of the State in which the Substitute Property is located, so as to
effectively create upon such recording and filing valid and enforceable first
priority Liens upon the Substitute Property, in favor of Lender (or such other
trustee as may be desired under local law), subject only to the Permitted
Encumbrances and such other Liens as are permitted pursuant to the Loan
Documents and (II) an environmental indemnity with respect to the Substitute
Property from Borrower Principal. The Mortgage and UCC-1 Financing Statements
and environmental indemnity shall be the same in form and substance as the
counterparts of such documents executed and delivered with respect to the
related Release Property subject to modifications reflecting only the Substitute
Property as the Individual Property and such modifications reflecting the laws
of the State in which the Substitute Property is located. The Mortgage
encumbering the Substitute Property shall secure all amounts then outstanding
under the Note, provided that in the event that the jurisdiction in which the
Substitute Property is located imposes a mortgage recording, intangibles or
similar tax and does not permit the allocation of indebtedness for the purpose
of determining the amount of such tax payable, the principal amount secured by
such Mortgage shall be equal to one hundred twenty-five percent (125%) of the
Allocated Loan Amount of the Substitute Property. The amount of the Loan
allocated to the Substitute Property (such amount being hereinafter referred to
as the "SUBSTITUTE ALLOCATED LOAN AMOUNT") shall equal the Allocated Loan Amount
of the related Release Property.
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(j) Lender shall have received (A) to the extent available in the
applicable jurisdictions, any "tie-in" or similar endorsement, together with a
"first loss" endorsement, to each Title Insurance Policy insuring the Lien of
the existing Mortgages as of the date of the substitution with respect to the
Title Insurance Policy insuring the Lien of the Mortgage with respect to the
Substitute Property and (B) a Title Insurance Policy (or a marked, signed and
redated commitment to issue such Title Insurance Policy) insuring the Lien of
the Mortgage encumbering the Substitute Property, issued by the title company
that issued the Title Insurance Policies insuring the Lien of the existing
Mortgages and dated as of the date of the substitution, with reinsurance and
direct access agreements that replace such agreements issued in connection with
the Title Insurance Policy insuring the Lien of the Mortgage encumbering the
Release Property. The Title Insurance Policy issued with respect to the
Substitute Property shall (1) provide coverage in the amount of the Substitute
Allocated Loan Amount if the "tie-in" or similar endorsement described above is
available or, if such endorsement is not available, in an amount equal to one
hundred twenty-five percent (125%) of the Substitute Allocated Loan Amount,
together with "last dollar endorsement," (2) insure Lender that the relevant
Mortgage creates a valid first Lien on the Substitute Property encumbered
thereby, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (3) contain such endorsements and affirmative
coverages as are then available and are contained in the Title Insurance
Policies insuring the Liens of the existing Mortgages, and such other
endorsements or affirmative coverage, to the extent the same are available in
the State where the Substitute Property is located, that a prudent institutional
mortgage lender would require, and (4) name Lender as the insured. Lender also
shall have received copies of paid receipts or other evidence showing that all
premiums in respect of such endorsements and Title Insurance Policies have been
paid.
(k) Lender shall have received a current Survey for each Substitute
Property, certified to the title company and Lender and its successors and
assigns, in the same form and having the same content as the certification of
the Survey of the Release Property prepared by a professional land surveyor
licensed in the State in which the Substitute Property is located and acceptable
to the Rating Agencies in accordance with the 1999 Minimum Standard Detail
Requirements for ALTA/ACSM Land Title Surveys. Such Survey shall reflect the
same legal description contained in the Title Insurance Policy relating to such
Substitute Property and shall include, among other things, a metes and bounds
description of the real property comprising part of such Substitute Property
(unless such real property has been satisfactorily designated by lot number on a
recorded plat). The surveyor's seal shall be affixed to each Survey and each
Survey shall certify whether or not the surveyed property is located in a
"one-hundred-year flood hazard area."
(l) Lender shall have received valid certificates of insurance indicating
that the requirements for the policies of insurance required for an Individual
Property hereunder have been satisfied with respect to the Substitute Property
and evidence of the payment of all Insurance Premiums payable for the existing
policy period.
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(m) Lender shall have received a Phase I environmental report dated not
more than one hundred eighty (180) days prior to the proposed date of
substitution and otherwise acceptable to a prudent institutional mortgage loan
lender and, if recommended under the Phase I environmental report, a Phase II
environmental report that would be acceptable to a prudent institutional
mortgage loan lender, which conclude that the Substitute Property does not
contain any Hazardous Materials in violation of applicable Environmental Laws or
which require remediation under any Environmental Law and is not subject to any
significant risk of contamination from any off site Hazardous Materials.
(n) Borrower shall deliver or cause to be delivered to Lender (A) updates
or, if the Substitute Property is to be owned by an Affiliate of Borrower,
originals, in either case certified by Borrower or such Affiliate, as
applicable, of all organizational documentation related to Borrower or such
Affiliate, as applicable, and/or the formation, structure, existence, good
standing and/or qualification to do business delivered to Lender on the Closing
Date; (B) good standing certificates, certificates of qualification to do
business in the jurisdiction in which the Substitute Property is located (if
required in such jurisdiction); and (C) resolutions of Borrower or such
Affiliate, as applicable, authorizing the substitution and any actions taken in
connection with such substitution.
(o) Lender shall have received the following opinions of Borrower's
counsel: (A) an opinion or opinions of counsel admitted to practice under the
laws of the State in which the Substitute Property is located stating that the
Loan Documents delivered with respect to the Substitute Property pursuant to
clause (i) above are valid and enforceable in accordance with their terms,
subject to customary exceptions and qualifications (including, without
limitation, that the original Loan Documents were enforceable) as to the laws
applicable to creditors' rights and equitable principles, and that Borrower is
qualified to do business and in good standing under the laws of the jurisdiction
where the Substitute Property is located or that Borrower is not required by
Applicable Law to qualify to do business in such jurisdiction; (B) an opinion of
counsel acceptable to the Rating Agencies if the Loan is part of a
Securitization, or Lender if the Loan is not part of a Securitization, stating
that the Loan Documents delivered with respect to the Substitute Property
pursuant to this Section, among other things, duly authorized, executed and
delivered by Borrower and that the execution and delivery of such Loan Documents
and the performance by Borrower of its obligations thereunder will not cause a
breach of, or a default under, any agreement, document or instrument to which
Borrower is a party or to which it or its properties are bound; (C) an update of
the non-consolidation opinion delivered on the Closing Date indicating that the
substitution does not affect the opinions set forth therein; (D) if the Loan is
part of a Securitization, an opinion of counsel acceptable to the Rating
Agencies that the substitution does not constitute a "significant modification"
of the Loan under Section 1001 of the Code or otherwise cause a tax to be
imposed on a "prohibited transaction" by any REMIC Trust.
(p) To the extent required under the Loan Documents, Borrower shall (i)
have paid or (ii) have escrowed with Lender, (x) accrued but unpaid Insurance
Premiums relating to each of the Properties and the Substitute Property, and (y)
currently due and payable Taxes (including any in arrears) relating to each of
the Properties and the
35
Substitute Property and (z) currently due and payable Other Charges relating to
each of the Properties and Substitute Property.
(q) Borrower shall have paid or reimbursed Lender for all reasonable costs
and expenses incurred by Lender (including, without limitation, reasonable
attorneys' fees and disbursements) in connection with the release and
substitution and Borrower shall have paid all recording charges, filing fees,
taxes or other expenses (including, without limitation, mortgage and intangibles
taxes and documentary stamp taxes) payable in connection with the substitution.
Borrower shall have paid all costs and expenses of the Rating Agencies incurred
in connection with the substitution.
(r) Lender shall have received annual operating statements and occupancy
statements for the Substitute Property for the most current completed Fiscal
Year and a current operating statement for the Release Property, each certified
by Borrower to Lender as being true and correct in all material respects and a
certificate from Borrower certifying that there has been no material adverse
change in the financial condition of the Substitute Property since the date of
such operating statements.
(s) Borrower shall have delivered to Lender an estoppel certificate from
the Operating Lessee with respect to the Operating Lease. Such estoppel
certificate shall be substantially in the form approved by Lender in connection
with the origination of the Loan and shall indicate that (1) the Operating Lease
is a valid and binding obligation of the Operating Lessee, (2) to the best of
the Operating Lessee's knowledge, there are no defaults under the Operating
Lease on the part of the landlord or tenant thereunder, (3) the Operating Lessee
has no knowledge of any defense or offset to the payment of rent under the
Operating Lease, (4) no rent under such Operating Lease has been paid more than
three (3) months in advance and (5) other than expressly set forth in the
Operating Lease, the Operating Lessee has no option under the Operating Lease to
purchase all or any portion of the Substitute Property.
(t) Lender shall have received copies of all Leases affecting the
Substitute Property certified by Borrower as being true and correct copies
thereof.
(u) Lender shall have received subordination, non-disturbance and
attornments agreements in the form approved by Lender in connection with the
origination of the Loan (or such other form approved by Lender, which approval
shall not be unreasonably withheld) with respect to tenants under all Leases at
the Substitute Property to the extent such Leases for such tenants are not
automatically subordinate (in lien and in terms) pursuant to the terms of the
applicable Leases.
(v) Lender shall have received (A) an endorsement to the Title Insurance
Policy insuring the Lien of the Mortgage encumbering the Substitute Property
insuring that the Substitute Property constitutes a separate tax lot or, if such
an endorsement is not available in the State in which the Substitute Property is
located, a letter from the title insurance company issuing such Title Insurance
Policy stating that the Substitute Property constitutes a separate tax lot or
(B) a letter from the appropriate taxing authority stating that the Substitute
Property constitutes a separate tax lot.
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(w) Lender shall have received a Physical Conditions Report with respect
to the Substitute Property stating that the Substitute Property and its use
comply in all material respects with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws) and that
the Substitute Property is in good condition and repair and free of damage or
waste.
(x) Lender shall have received evidence which would be satisfactory to a
prudent institutional mortgage loan lender to the effect that all material
building and operating licenses and permits necessary for the use and occupancy
of the Substitute Property as a self-storage facility including, but not limited
to, current certificates of occupancy, have been obtained and are in full force
and effect.
(y) Lender shall have received a certified copy of an amendment to the
Operating Lease reflecting the deletion of the Release Property and the addition
of the Substitute Property as a property encumbered pursuant thereto, but only
to the extent that the Operating Lease does not provide for such deletion and
addition to occur automatically.
(z) Lender shall have received such other approvals, opinions, documents
and information in connection with the substitution as reasonably requested by
the Rating Agencies if the Loan is part of a Securitization, or Lender if the
Loan is not part of a Securitization.
(aa) Lender shall have received approval of the proposed substitution from
such Investors as reasonably determined by Lender.
(bb) Lender shall have received copies of all material contracts and
agreements relating to the leasing and operation of the Substitute Property,
each of which shall be in a form and substance which would be satisfactory to a
prudent institutional mortgage loan lender together with a certification of
Borrower attached to each such contract or agreement certifying that the
attached copy is a true and correct copy of such contract or agreement and all
amendments thereto.
(cc) Lender shall have received certified copies of all material consents,
licenses and approvals, if any, required in connection with the substitution of
a Substitute Property, and evidence that such consents, licenses and approvals
are in full force and effect.
(dd) Lender shall have received satisfactory (i.e., showing no Liens other
than Permitted Encumbrances) UCC searches, together with tax lien, judgment and
litigation searches with respect to the Substitute Property and Borrower in the
State where the Substitute Property is located and the jurisdictions where each
such Person has its principal place of business.
(ee) Borrower shall submit to Lender, not less than twenty (20) days prior
to the date of such substitution, a release of Lien (and related Loan Documents)
for the Release Property for execution by Lender. Such release shall be in a
form appropriate for
37
the jurisdiction in which the Release Property is located and shall contain
standard provisions, if any, protecting the rights of the releasing lender.
(ff) Borrower shall deliver a certificate certifying that the requirements
set forth in this Section have been satisfied.
Upon the satisfaction of the foregoing conditions precedent, Lender will
release its Lien from the Release Property and the Substitute Property shall be
deemed to be an Individual Property for purposes of this Agreement and the
Substitute Allocated Loan Amount with respect to such Substitute Property shall
be deemed to be the Allocated Loan Amount with respect to such Substitute
Property for all purposes hereunder.
ARTICLE 3 - CONDITIONS PRECEDENT
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.
Section 3.1 Representations and Warranties; Compliance with Conditions
The representations and warranties of Borrower contained in this Agreement
and the other Loan Documents shall be true and correct in all material respects
on and as of the Closing Date with the same effect as if made on and as of such
date, and Lender shall have determined that no Default or an Event of Default
shall have occurred and be continuing nor will any Default or Event of Default
occur immediately following the Closing Date; 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.
Section 3.2 Delivery of Loan Documents; Title Insurance; Reports; Leases
(a) Mortgages, Loan Agreement and Note. Lender shall have received from
Borrower a fully executed and acknowledged counterpart of the Mortgages and
evidence that counterparts of the Mortgages and Uniform Commercial Code
financing statements 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 the Properties, 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 Cash Management
Agreement, this Agreement, the Note and Assignment of Management, the
Subordination Agreement and all other Loan Documents.
(b) Title Insurance. Lender shall have received a Title Insurance Policy
issued by a title company acceptable to Lender and dated as of the Closing Date,
with reinsurance and direct access agreements acceptable to Lender. Such Title
Insurance Policy shall (i) provide coverage in the amount of the Loan, (ii)
insure Lender that the Mortgages create a valid Lien on the Properties of the
requisite priority, free and clear of
38
all exceptions from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the terms of any
endorsements), (iii) contain such endorsements and affirmative coverages as
Lender may reasonably request, to the extent the same are available in the State
where the applicable Individual Property is located, and (iv) name Lender as the
insured. The Title Insurance Policy shall be assignable. Lender also shall have
received evidence that all premiums in respect of such Title Insurance Policy
have been paid.
(c) Survey. Lender shall have received a current title survey for each
Individual 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 1999 Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys. The survey shall 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 referred to in subsection
(b) above and shall include, among other things, a metes and bounds description
of the real property comprising part of such Individual Property reasonably
satisfactory to Lender. The surveyor's seal shall be affixed to the survey and
the surveyor shall provide a certification for each survey in form and substance
acceptable to Lender.
(d) Insurance. Lender shall have received copies of the Policies required
hereunder, satisfactory to Lender in its sole discretion, and evidence of the
payment of all Insurance Premiums payable for the existing policy period.
(e) Environmental Reports. Lender shall have received an Environmental
Report in respect of each Individual Property satisfactory to Lender.
(f) Zoning/Building Code. Lender shall have received evidence of
compliance with zoning and building ordinances and codes, including, without
limitation, required certificates of occupancy, reasonably acceptable to Lender.
(g) Encumbrances. Borrower shall have taken or caused to be taken such
actions in such a manner so that Lender has valid and perfected first Liens as
of the Closing Date on the Properties, 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.
(h) Lien Searches. Borrower shall have delivered to Lender certified
search results pertaining to the Borrower, Borrower Principal and such other
Persons or any SPE Component Entity as reasonably required by Lender for state
and federal tax liens, bankruptcy, judgment, litigation and state and local UCC
filings
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Section 3.3 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 at Lender's written request,
Lender shall have received and approved certified copies thereof.
Section 3.4 Organizational Documents
On or before the Closing Date, Borrower shall deliver or cause to be
delivered to Lender (a) copies certified by Borrower of all organizational
documentation related to Borrower, each SPE Component Entity, Borrower Principal
and the Operating Lessee SPE Entities which must be acceptable to Lender in its
sole discretion, and (b) such other evidence of the formation, structure,
existence, good standing and/or qualification to do business of the Borrower,
each SPE Component Entity, Borrower Principal, and the Operating Lessee SPE
Entities as Lender may request in its sole discretion, including, without
limitation, good standing or existence 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.
Section 3.5 Opinions of Borrower's Counsel
Lender shall have received opinions (i) of Borrower's counsel (a) with
respect to non-consolidation issues and (b) with respect to due execution,
authority, enforceability of the Loan Documents and the Operating Lease 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 and (ii) of Operating Lessee's counsel (a) with respect to
non-consolidation issues and (b) with respect to due execution, authority,
enforceability of the Subordination Agreement and the Operating Lease and such
other matters as Lender may require, all such opinions in form, scope and
substance satisfactory to Lender and Lender's counsel in their sole discretion.
Section 3.6 Intentionally Omitted
Section 3.7 Taxes and Other Charges
Borrower shall have paid (or cause to have been paid) all Taxes and Other
Charges (including any in arrears) relating to the Properties, which amounts may
be funded with proceeds of the Loan.
Section 3.8 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.
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Section 3.9 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.
Section 3.10 Transaction Costs
Except as otherwise expressly provided herein, Borrower shall have paid or
reimbursed Lender for all out of pocket expenses in connection with the
underwriting, negotiation and closing of the Loan, including title insurance
premiums and other title company charges; recording, registration, filing and
similar fees, taxes and charges; transfer, mortgage, deed, stamp or documentary
taxes or similar fees or charges; costs of third-party reports, including
without limitation, environmental studies, credit reports, seismic reports,
engineer's reports, appraisals and surveys; underwriting expenses; and all
actual, reasonable legal fees and expenses charged by counsel to Lender.
Section 3.11 No Material Adverse Change
There shall have been no material adverse change in the financial
condition or business condition of the Properties, Borrower, Borrower Principal,
any SPE Component Entity, the Operating Lessee SPE Entities or any other person
or party contributing to the operating income and operations of the Properties
since the date of the most recent financial statements and/or other information
delivered to Lender. The income and expenses of the Properties, the occupancy
and leases thereof, and all other features of the transaction shall be as
represented to Lender without material adverse change. Neither Borrower nor
Borrower Principal, any SPE Component Entity, Affiliated Manager or any of the
Operating Lessee SPE Entities shall be the subject of any bankruptcy,
reorganization, or insolvency proceeding.
Section 3.12 Leases
Lender shall have received a schedule of all Leases affecting the
Properties and copies of all Leases affecting the Properties which have been
requested to be delivered to Lender, which shall be satisfactory in form and
substance to Lender.
Section 3.13 Intentionally Omitted
Section 3.14 REA Estoppels
If required by Lender, Borrower shall have delivered (or caused to be
delivered) to Lender an executed REA estoppel letter, which shall be in form and
substance reasonably satisfactory to Lender, from each party to any REA for each
Individual Property.
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Section 3.15 Subordination and Attornment
Borrower shall have delivered (or caused to be delivered) to Lender
executed instruments reasonably acceptable to Lender subordinating to the
Mortgages all of the Leases affecting the Properties previously designated by
Lender. Lender shall have received fully executed Subordination Agreements.
Section 3.16 Tax Lot
Lender shall have received evidence that each Individual Property
constitutes one (1) or more separate tax lots, which evidence shall be
reasonably satisfactory in form and substance to Lender.
Section 3.17 Physical Conditions Report
Lender shall have received a Physical Conditions Report with respect to
each Individual Property, which report shall be reasonably satisfactory in form
and substance to Lender.
Section 3.18 Management Agreement/Operating Lease
Lender shall have received a certified copy of (i) the Management
Agreement and (ii) the Operating Lease, which shall be satisfactory in form and
substance to Lender.
Section 3.19 Appraisal
Lender shall have received an appraisal of each Individual Property, which
shall be satisfactory in form and substance to Lender.
Section 3.20 Financial Statements
Lender shall have received financial statements and related information in
form and substance reasonably satisfactory to Lender and in compliance with any
Legal Requirements promulgated by the Securities and Exchange Commission,
including, without limitation, a pro-forma balance sheet for Borrower and
Operating Lessee, an income and expense statement and statement of cash flows
with respect to Borrower and Operating Lessee and an operating statement with
respect to each Individual Property for the six month period ending September
30, 2003 and year-to-date 2002 and 2001 with a limited scope audit by an
Acceptable Accountant and together with (x) an opinion of such Acceptable
Accountant that such statements have been prepared in accordance with GAAP
(except as noted in such opinion) applied on a consistent basis and (y) a letter
from such Acceptable Accountant consenting to the utilization and/or
incorporation by reference of such financial statements and opinion in a
Securitization involving the Loan.
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Section 3.21 Intentionally Omitted
Section 3.22 Further Documents
Lender or its counsel shall have received such other and further
approvals, opinions, documents and information as Lender or its counsel may have
reasonably requested including the Loan Documents in form and substance
satisfactory to Lender and its counsel.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
Borrower and, where specifically indicated, each Borrower Principal
represents and warrants to Lender as of the Closing Date that:
Section 4.1 Organization
Borrower and each Borrower Principal (when not an individual) (a) has been
duly organized and is validly existing and in good standing with requisite power
and authority to own its properties and to transact the businesses in which it
is now engaged, (b) is duly qualified to do business and is in good standing in
each jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations, (c) possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management and operation of
the Properties, and (d) in the case of Borrower, has full power, authority and
legal right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer
and convey the Properties pursuant to the terms of the Loan Documents, and in
the case of Borrower and each Borrower Principal, has full power, authority and
legal right to keep and observe all of the terms of the Loan Documents to which
it is a party. Borrower and each Borrower Principal represent and warrant that
the chart attached hereto as Exhibit A sets forth an accurate listing of the
direct and indirect owners of the equity interests in Borrower, each SPE
Component Entity (if any) and each Borrower Principal (when not an individual).
Section 4.2 Status of Borrower
Borrower's exact legal name is correctly set forth on the first page of
this Agreement, on the Mortgages and on any UCC-1 Financing Statements filed in
connection with the Loan. Borrower is an organization of the type specified on
the first page of this Agreement. Borrower is incorporated in or organized under
the laws of the state of Delaware. Borrower's principal place of business and
chief executive office, and the place where Borrower keeps its books and
records, including recorded data of any kind or nature, regardless of the medium
of recording, including software, writings, plans, specifications and
schematics, has been for the preceding four months (or, if less, the entire
period of the existence of Borrower) the address of Borrower set forth on the
first page of this Agreement. Borrower's organizational identification number,
if any, assigned by the state of incorporation or organization is 3657661.
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Section 4.3 Validity of Documents
Borrower and each Borrower Principal have taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents to which they are parties. This Agreement and such other
Loan Documents have been duly executed and delivered by or on behalf of Borrower
and each Borrower Principal and constitute the legal, valid and binding
obligations of Borrower and each Borrower Principal enforceable against Borrower
and each Borrower Principal in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).
Section 4.4 No Conflicts
The execution, delivery and performance of this Agreement and the other
Loan Documents by Borrower and each Borrower Principal will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any Lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property
or assets of Borrower or any Borrower Principal pursuant to the terms of any
agreement or instrument to which Borrower or any Borrower Principal is a party
or by which any of Borrower's or Borrower Principal's property or assets is
subject, nor will such action result in any violation of the provisions of any
statute or any order, rule or regulation of any Governmental Authority having
jurisdiction over Borrower or any Borrower Principal or any of Borrower's or
Borrower Principal's properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any Governmental
Authority required for the execution, delivery and performance by Borrower or
Borrower Principal of this Agreement or any of the other Loan Documents has been
obtained and is in full force and effect.
Section 4.5 Litigation
There are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending or, to Borrower's
or Borrower Principal's knowledge, threatened against or affecting Borrower, any
Borrower Principal, or any Individual Property, which actions, suits or
proceedings, if determined against Borrower, any Borrower Principal, or any
Individual Property, would materially adversely affect the condition (financial
or otherwise) or business of Borrower or any Borrower Principal or the condition
or ownership of such Individual Property.
Section 4.6 Agreements
Borrower is not a party to any agreement or instrument or subject to any
restriction which would materially and adversely affect Borrower or any
Individual 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,
44
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 any Individual Property is bound. Borrower has no material financial
obligation under any agreement or instrument to which Borrower is a party or by
which Borrower or any Individual Property is otherwise bound, other than (a)
obligations incurred in the ordinary course of the operation of such Individual
Property and (b) obligations under the Loan Documents.
Section 4.7 Solvency
Borrower and each Borrower Principal have (a) not entered into the
transaction or executed the Note, this Agreement or any other Loan Documents
with the actual intent to hinder, delay or defraud any creditor and (b) received
reasonably equivalent value in exchange for their obligations under such Loan
Documents. Giving effect to the Loan, the fair saleable value of the assets of
Borrower and each Borrower Principal exceeds and will, immediately following the
making of the Loan, exceed the total liabilities of Borrower and each Borrower
Principal, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities. No petition in bankruptcy has been filed against
Borrower, any Borrower Principal, any SPE Component Entity (if any) or
Affiliated Manager in the last ten (10) years, and neither Borrower nor any
Borrower Principal, any SPE Component Entity (if any) or Affiliated Manager in
the last ten (10) years has made an assignment for the benefit of creditors or
taken advantage of any Creditors Rights Laws (in a capacity as debtor or
obligor). Neither Borrower nor any Borrower Principal, any SPE Component Entity
(if any) or Affiliated Manager is contemplating either the filing of a petition
by it under any Creditors Rights Laws or the liquidation of all or a major
portion of Borrower's assets or property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against Borrower or any
Borrower Principal, any SPE Component Entity (if any) or Affiliated Manager.
Section 4.8 Full and Accurate Disclosure
No statement of fact made by or on behalf of Borrower or any Borrower
Principal in this Agreement or in any of the other Loan Documents or in any
other document or certificate delivered by or on behalf of Borrower or any
Borrower Principal contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained herein or therein
not misleading. There is no material fact presently known to Borrower or any
Borrower Principal which has not been disclosed to Lender which adversely
affects, nor as far as Borrower or any Borrower Principal can reasonably
foresee, might adversely affect, the Properties or the business, operations or
condition (financial or otherwise) of Borrower or any Borrower Principal.
Section 4.9 No Plan Assets
Borrower is not an "employee benefit plan," as defined in Section 3(3) of
ERISA, subject to Title I of ERISA, and none of the assets of Borrower
constitutes or will constitute "plan assets" of one or more such plans within
the meaning of 29 C.F.R.
45
Section 2510.3-101. In addition, (a) Borrower is not a "governmental plan"
within the meaning of Section 3(32) of ERISA and (b) transactions by or with
Borrower are not subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code
currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Agreement.
Section 4.10 Not a Foreign Person
Neither Borrower nor Borrower Principal is a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code.
Section 4.11 Intentionally Omitted
Section 4.12 Business Purposes
The Loan is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural purposes.
Section 4.13 Compliance
Except as specifically provided on Schedule IV attached hereto, Borrower
and each Individual Property, and the use and operation thereof, comply in all
material respects with all Legal Requirements, including, without limitation,
building and zoning ordinances and codes and, to the best of Borrower's
knowledge, the Americans with Disabilities Act; provided, however, compliance
with Environmental Laws shall be governed by Article 12 hereof. To Borrower's
knowledge, Borrower is not in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority and Borrower has
received no written notice of any such default or violation. There has not been
committed by Borrower or, to Borrower's knowledge, any other Person in occupancy
of or involved with the operation or use of any Individual Property any act or
omission affording any Governmental Authority the right of forfeiture as against
such Individual Property or any part thereof or any monies paid in performance
of Borrower's obligations under any of the Loan Documents.
Section 4.14 Financial Information
To the best of Borrower's knowledge, all financial data, including,
without limitation, the balance sheets, statements of cash flow, statements of
income and operating expense and rent rolls, that have been delivered to Lender
in respect of Borrower, any Borrower Principal and/or each Individual Property
(a) are true, complete and correct in all material respects, (b) accurately
represent the financial condition of Borrower, Borrower Principal or the
Properties, as applicable, as of the date of such reports, and (c) to the extent
prepared or audited by an independent certified public accounting firm, have
been prepared in accordance with 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
46
reasonably likely to have a material adverse effect on the any Individual
Property or the current and/or intended operation thereof, except as referred to
or reflected in said financial statements. To the best of Borrower's knowledge,
since the date of such financial statements, there has been no materially
adverse change in the financial condition, operations or business of Borrower or
Borrower Principal from that set forth in said financial statements.
Section 4.15 Condemnation
No Condemnation or other proceeding has been commenced or, to Borrower's
best knowledge, is threatened or contemplated with respect to all or any portion
of the Properties or for the relocation of roadways providing access to any
Individual Property.
Section 4.16 Utilities and Public Access; Parking
Except as expressly provided on Schedule V attached hereto, each
Individual Property has rights of access to public ways and, to the best of
Borrower's knowledge, is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service such Individual Property for its intended uses.
All public utilities necessary to the full use and enjoyment of each Individual
Property as currently used and enjoyed are located either in the public
right-of-way abutting such Individual Property (which are connected so as to
serve the Individual Property without passing over other property) or in
recorded easements serving the Individual Property and such easements are set
forth in and insured by the Title Insurance Policy. All roads necessary for the
use of the Individual Property for its current purposes have been completed and
dedicated to public use and accepted by all Governmental Authorities. Each
Individual Property has, or is served by, parking to the extent required to
comply with all Legal Requirements.
Section 4.17 Separate Lots
Each Individual Property is assessed for real estate tax purposes as one
or more wholly independent tax lot or lots, separate from any adjoining land or
improvements not constituting a part of such lot or lots, and no other land or
improvements is assessed and taxed together with such Individual Property or any
portion thereof.
Section 4.18 Assessments
To Borrower's actual knowledge, there are no pending or proposed special
or other assessments for public improvements or otherwise affecting any
Individual Property, nor are there any contemplated improvements to such
Individual Property that may result in such special or other assessments.
Section 4.19 Insurance
Borrower has obtained and has delivered (or has caused to be obtained and
delivered) to Lender copies of all Policies or, to the extent such Policies are
not available as of the Closing Date (or were not requested by Lender),
certificates of insurance with respect to all such Policies reflecting the
insurance coverages, amounts and other
47
requirements set forth in this Agreement. No pending claims have been made under
any of the Policies, and to Borrower's knowledge, no Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any of
the Policies in a manner, in either case, which materially and adversely affects
the value of any Individual Property, impairs the use or the operation of any
Individual Property or impairs Borrower's ability to pay its obligations in a
timely manner.
Section 4.20 Use of Properties
Each Individual Property is used as provided in Section 4 of the Operating
Lease or such other use as may be approved by Lender in writing.
Section 4.21 Certificate of Occupancy; Licenses
To the best of Borrower's knowledge, all certifications, permits, licenses
and approvals, including, without limitation, certificates of completion or
occupancy and any applicable liquor license required for the legal use,
occupancy and operation of the each Individual Property for the purpose intended
herein, have been obtained and are valid and in full force and effect. Borrower
shall keep and maintain (or cause to be kept and maintained) all licenses
necessary for the operation of each Individual Property as a self storage and
truck rental facility, unless such failure would not have a material and adverse
affect on the value of the any Individual Property, impair the use or the
operation of any Individual Property or impair Borrower's ability to pay its
obligations in a timely manner. To the best of Borrower's knowledge, the use
being made of each Individual Property is in conformity with each applicable
certificate of occupancy and any permits or licenses issued for such Individual
Property. To the best of Borrower's knowledge, all certifications, permits,
licenses and approvals required for the legal use, occupancy and operation of a
self storage and truck rental facility and material ancillary services provided
at each Individual Property (collectively, the "SERVICE LICENSES"), have been
obtained and are in full force and effect and are not subject to any pending
proceeding for revocation, suspension or forfeiture, unless such failure would
not have a material and adverse affect on the value of the any Individual
Property, impair the use or the operation of any Individual Property or impair
Borrower's ability to pay its obligations in a timely manner.
Section 4.22 Flood Zone
None of the Improvements on any Individual Property are located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards, or, if any portion of the Improvements is located within such
area, Borrower has obtained the insurance prescribed in Section 8.1(a)(i).
Section 4.23 Physical Condition
To Borrower's actual knowledge, and except as expressly disclosed in the
Physical Conditions Reports, the Properties, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment,
48
elevators, exterior sidings and doors, landscaping, irrigation systems and all
structural components, are in good condition, order and repair in all material
respects. To Borrower's actual knowledge, and except as expressly disclosed in
the Physical Conditions Reports, there exists no structural or other material
defects or damages in any Individual Property, as a result of a Casualty or
otherwise, and whether latent or otherwise. Borrower has not received notice
from any insurance company or bonding company of any defects or inadequacies in
any Individual Property, or any part thereof, which would adversely affect the
insurability of the same or cause the imposition of extraordinary premiums or
charges thereon or of any termination or threatened termination of any policy of
insurance or bond.
Section 4.24 Intentionally Omitted
Section 4.25 Leases and Rent Roll
Borrower has delivered to Lender true, correct and complete rent rolls for
the Properties (collectively, a "RENT ROLL") which consists of the Operating
Lease affecting the Properties. Except as set forth in the Rent Roll (as same
has been updated by written notice thereof to Lender) and estoppel certificates
delivered to Lender on or prior to the Closing Date: (a) the Operating Lease is
in full force and effect; (b) the premises demised under the Operating Lease
have been completed and the Operating Lessee has accepted possession of and is
in occupancy of all of the demised premises; (c) the Operating Lessee has
commenced the payment of rent under the Operating Lease, there are no offsets,
claims or defenses to the enforcement thereof, and Borrower has no monetary
obligations to the Operating Lessee or any other Tenant; (d) all Rents due and
payable under the Operating Lease have been paid and, no portion thereof has
been paid for any period more than ninety (90) days in advance; (e) the rent
payable under the Operating Lease is the amount of fixed rent set forth in the
Rent Roll, and there is no claim or basis for a claim by the Operating Lessee
thereunder for an offset or adjustment to the rent; (f) the Operating Lessee has
not made any written claim of a default against the landlord under the Operating
Lease which remains outstanding nor has Borrower or Manager received, by
telephonic, in-person, e-mail or other communication, any notice of a default
under the Operating Lease; (g) to Borrower's knowledge there is no present
default by the Operating Lessee under the Operating Lease; (h) all security
deposits under the Operating Lease have been collected by Borrower; (i) Borrower
is the sole owner of the entire landlord's interest in the Operating Lease; (j)
the Operating Lease is the valid, binding and enforceable obligation of Borrower
and the Operating Lessee and there are no agreements with the Operating Lessee
other than as expressly set forth in the Operating Lease; (k) no Person has any
possessory interest in, or right to occupy, any Individual Property or any
portion thereof except under the terms of the Operating Lease or pursuant to a
sublease, license or concession agreement with Operating Lessee or a subtenant
thereof; and (1) neither the Operating Lease nor the Rents have been assigned,
pledged or hypothecated except to Lender, and no other Person has any interest
therein except the Operating Lessee thereunder.
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Section 4.26 Filing and Recording Taxes
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid by any Person under applicable Legal Requirements currently
in effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgages, have been paid or will be paid.
Section 4.27 Operating Lease
The Operating Lease is in full force and effect and there is no default
thereunder by any party thereto and, to Borrower's knowledge, no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder. No fees payable under the Operating Lease are
accrued and unpaid.
Section 4.28 Illegal Activity
No portion of the Properties have been or will be purchased with proceeds
of any illegal activity, and no part of the proceeds of the Loan will be used in
connection with any illegal activity.
Section 4.29 Construction Expenses
To the best of Borrower's knowledge, except as expressly disclosed on
Schedule VI attached hereto and made a part hereof, all costs and expenses of
any and all labor, materials, supplies and equipment used in the construction
maintenance or repair of the Improvements have been paid in full. To Borrower's
knowledge after due inquiry, there are no claims for payment for work, labor or
materials affecting the Properties which are or may become a Lien prior to, or
of equal priority with, the Liens created by the Loan Documents.
Section 4.30 Personal Property
Borrower has paid in full for, and, to the best of Borrower's knowledge,
is the owner of, all Personal Property (other than tenants' property) used in
connection with the operation of the Properties, free and clear of any and all
security interests, Liens or encumbrances, except for Permitted Encumbrances and
the Lien and security interest created by the Loan Documents.
Section 4.31 Taxes
Borrower and Borrower Principal have filed all federal, state, county,
municipal, and city income, personal property and other tax returns required to
have been filed by them and have paid all taxes and related liabilities which
have become due pursuant to such returns or pursuant to any assessments received
by them. Neither Borrower nor Borrower Principal knows of any basis for any
additional assessment in respect of any such taxes and related liabilities for
prior years.
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Section 4.32 Permitted Encumbrances
None of the Permitted Encumbrances, individually or in the aggregate,
materially interferes with the benefits of the security intended to be provided
by the Loan Documents, materially and adversely affects the value of the any
Individual Property, materially and adversely impairs the use or the operation
of any Individual Property or impairs Borrower's ability to pay its obligations
in a timely manner.
Section 4.33 Federal Reserve Regulations
Borrower will use the proceeds of the Loan for the purposes set forth in
Section 2.1(d) hereof and not for any illegal activity. 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 my other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of Governors, or for
any purposes prohibited by Legal Requirements or prohibited by the terms and
conditions of this Agreement or the other Loan Documents.
Section 4.34 Investment Company Act
Borrower is not (a) an "investment company" or a company "controlled" by
an "investment company," within the meaning of the Investment Company Act of
1940, as amended; (b) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended; or (c) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
Section 4.35 Reciprocal Easement Agreements
(a) Neither Borrower, nor, to the best of Borrower's knowledge, any other
party is currently in default (nor has any notice been given or received with
respect to an alleged or current default that remains uncured) under any of the
terms and conditions of the REA, and the REA remains unmodified and in full
force and effect;
(b) To the best of Borrower's knowledge, all sums due and owing by
Borrower to the other parties to the REA (or by the other parties to the REA to
the Borrower) pursuant to the terms of the REA, including without limitation,
all sums, charges, fees, assessments, costs, and expenses in connection with any
taxes, site preparation and construction, non-shareholder contributions, and
common area and other property management activities have been paid, are
current, and no Lien has attached on any Individual Property or threat thereof
been made for failure to pay any of the foregoing;
(c) To the best of Borrower's knowledge, the terms, conditions, covenants,
uses and restrictions contained in the REA do not conflict in any material
respect with any terms, conditions, covenants, uses and restrictions contained
in the Operating Lease
51
or in any agreement between Borrower and occupant of any peripheral parcel,
including without limitation, conditions and restrictions with respect to kiosk
placement, tenant restrictions (type, location or exclusivity), sale of certain
goods or services, and/or other use restrictions; and
Section 4.36 No Change in Facts or Circumstances; Disclosure
All information submitted by Borrower or its agents to Lender and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan or in satisfaction of the terms thereof
and all statements of fact made by Borrower in this Agreement or in any other
Loan Document, are accurate, complete and correct in all material respects. To
the best of Borrower's knowledge, 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 any Individual Property or the business operations or the financial
condition of Borrower or Operating Lessee. To the best of 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.
Section 4.37 Management Agreement
The Management Agreement is in full force and effect and there is no
default thereunder by any party thereto and, to Borrower's knowledge, no event
has occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder. No management fees payable under the Management
Agreement are accrued and unpaid.
Section 4.38 Survey
To Borrower's actual knowledge, no Survey fails to reflect any material
matter affecting such Individual Property or the title thereto.
Section 4.39 Intentionally Omitted
Section 4.40 Survival
Borrower agrees that, unless expressly provided otherwise, all of the
representations and warranties of Borrower set forth in this Agreement and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any portion of the Debt remains owing to Lender. All representations,
warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.
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ARTICLE 5 - BORROWER COVENANTS
From the date hereof and until repayment of the Debt in full and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Liens of the Mortgages (and all related obligations)
in accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:
Section 5.1 Existence; Compliance with Legal Requirements
(a) Borrower shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to it and the Properties as the same made be used from time to time.
Borrower hereby covenants and agrees not to commit, permit or suffer to exist
any act or omission affording any Governmental Authority the right of forfeiture
as against any Individual Property or any part thereof or any monies paid in
performance of Borrower's obligations under any of the Loan Documents.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest (or allow Operating Lessee to contest) by appropriate legal
proceeding, promptly initiated and conducted in good faith and with due
diligence, the Legal Requirements affecting an Individual Property, provided
that (i) no Default or Event of Default has occurred and is continuing; (ii)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower or the any Individual
Property is subject and shall not constitute a default thereunder; (iii) neither
the Properties, any part thereof or interest therein, any of the tenants or
occupants thereof, nor Borrower shall be affected in any material adverse way as
a result of such proceeding; (iv) non-compliance with the Legal Requirements
shall not impose civil or criminal liability on Borrower or Lender; (v) in the
event that the cost of non-compliance is reasonably estimated to exceed the
Threshold Amount, Borrower shall have furnished such security as may be
reasonably required in the proceeding or by Lender to ensure compliance by
Borrower with the Legal Requirements; and (vi) Borrower shall have furnished to
Lender all other items reasonably requested by Lender.
Section 5.2 Maintenance and Use of Properties
Borrower shall cause the Properties to be maintained in accordance with
Article 12 of the Operating Lease. If under applicable zoning provisions the use
of all or any portion of any Individual Property is or shall become a
nonconforming use, Borrower will not cause or permit the nonconforming use to be
discontinued or the nonconforming Improvement to be abandoned without the
express written consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed.
Section 5.3 Waste
Borrower shall not commit or suffer any actual, physical waste of the
Properties or make any change in the use of the Properties which will in any way
materially increase
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the risk of fire or other hazard arising out of the operation of any Individual
Property, or take any action that might invalidate or give cause for
cancellation of any Policy, or do or permit to be done thereon anything that may
in any way impair the value of the any Individual Property or the security for
the Loan. Borrower will not, without the prior written consent of Lender, permit
any drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of any Individual Property,
regardless of the depth thereof or the method of mining or extraction thereof,
except as expressly permitted pursuant to a Permitted Encumbrance.
Section 5.4 Taxes and Other Charges
(a) Subject to the provisions of Section 5.4(b), Borrower shall pay or
cause to be paid all Taxes and Other Charges now or hereafter levied or assessed
or imposed against the Properties or any part thereof before interest and
penalties are due thereon; 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 9.6 hereof. Borrower shall furnish or cause to be
furnished to Lender receipts for the payment of the Taxes and the Other Charges
within fifteen (15) days of written request therefor (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 9.6 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 any
Individual Property, and shall promptly pay (or cause to be paid) for all
utility services provided to the Properties.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Taxes or Other Charges, provided that (i) no Default or
Event of Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable Legal Requirements; (iii) neither the Properties nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of such contested Taxes or Other Charges
from the applicable Individual Property; and (vi) in the event that the cost of
such Taxes and/or Other Charges (including penalties and interest thereon) is
reasonably estimated to exceed the Threshold Amount, Borrower shall furnish such
security as may be required in the proceeding, or deliver to Lender such reserve
deposits 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
(unless Borrower has paid all of the Taxes or Other Charges under protest).
Lender may pay over any such cash deposit or part thereof held by Lender to the
claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established or any Individual Property (or part
thereof or interest
54
therein) shall be in danger of being sold, forfeited, terminated, canceled or
lost or there shall be any danger of the Lien of any of the Mortgages being
primed by any related Lien.
Section 5.5 Litigation
Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened in writing against Borrower which
might materially adversely affect Borrower's condition (financial or otherwise)
or business or any Individual Property.
Section 5.6 Access to Properties
Subject to the rights of Operating Lessee and other Tenants, Borrower
shall permit agents, representatives and employees of Lender to inspect the
Properties or any part thereof at reasonable hours upon reasonable advance
notice.
Section 5.7 Notice of Default
Borrower shall promptly advise Lender of any material adverse change in
the condition (financial or otherwise) of Borrower, any Borrower Principal or
any Individual Property or of the occurrence of any Default or Event of Default
of which Borrower has knowledge.
Section 5.8 Cooperate in Legal Proceedings
Borrower shall at Borrower's expense cooperate fully with Lender with
respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Lender hereunder or any
rights obtained by Lender under any of the other Loan Documents and, in
connection therewith, permit Lender, at its election, to participate in any such
proceedings.
Section 5.9 Performance by Borrower
Borrower shall in a timely manner observe, perform and fulfill each and
every covenant, term and provision to be observed and performed by Borrower
under this Agreement and the other Loan Documents and cause Operating Lessee to
observe, perform and fulfill in a timely manner each and every covenant, term
and provision to be observed and performed by Operating Lessee under any other
agreement or instrument affecting or pertaining to each Individual Property and
any amendments, modifications or changes thereto.
Section 5.10 Awards; Insurance Proceeds
Borrower shall cooperate with Lender in obtaining for Lender the benefits
of any Awards or Insurance Proceeds lawfully or equitably payable in connection
with the Properties, and Lender shall be reimbursed for any expenses incurred in
connection therewith (including reasonable, actual attorneys' fees and
disbursements, and the
55
payment by Borrower of the expense of an appraisal on behalf of Lender in case
of a Casualty or Condemnation affecting any Individual Property or any part
thereof) out of such Awards or Insurance Proceeds.
Section 5.11 Financial Reporting
(a) Borrower and Borrower Principal shall keep, or cause to be kept,
adequate books and records of account of each Individual Property and in
accordance with GAAP, or in accordance with other methods acceptable to Lender
in its sole discretion, consistently applied and shall furnish, or cause to be
furnished, to Lender:
(i) annually, within one hundred twenty (120) days following the end
of each Fiscal Year, a complete copy of Borrower's annual financial
statements audited by an Acceptable Accountant in accordance with GAAP (or
such other accounting basis acceptable to Lender) covering Borrower for
such Fiscal Year and containing statements of profit and loss for Borrower
and the Properties and a balance sheet and statement of cash flows for
Borrower. Such statements shall set forth the financial condition and the
results of operations for Borrower for such Fiscal Year, and shall
include, but not be limited to, amounts representing annual Net Operating
Income, Operating Income and Operating Expenses. Borrower's annual
financial statements shall be accompanied a certificate executed by a
Responsible Officer or other appropriate officer of Borrower or Borrower
Principal, as applicable, stating that each such annual financial
statement presents fairly the financial condition and the results of
operations of Borrower and the Properties being reported upon and has been
prepared in accordance with GAAP, (iii) an unqualified opinion of an
Acceptable Accountant, and (iv) a list of tenants, if any, occupying more
than twenty (20%) percent of the total floor area of the Improvements.
Together with Borrower's annual financial statements, Borrower shall
furnish to Lender a certificate executed by a Responsible Officer or other
appropriate officer of Borrower or Borrower Principal, as applicable
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;
(ii) quarterly, within seventy-five (75) days after the end of each
calendar quarter or, prior to a Securitization and at the request of
Lender, monthly, within twenty (20) days after the end of each calendar
month, as applicable, the following item, accompanied by a certificate of
a Responsible Officer or other appropriate officer of Borrower or Borrower
Principal, as applicable, stating that such items are true, correct,
accurate, and complete and fairly present the financial condition and
results of the operations of Borrower and the Properties (subject to
normal year-end adjustments): quarterly (or monthly, as applicable) and
year-to-date operating statements (including Capital Expenditures)
prepared for each calendar quarter or month, as applicable, noting Net
Operating Income, Operating Income, and Operating Expenses, and other
56
information necessary and sufficient to fairly represent the financial
position and results of operation of the Properties during such calendar
quarter or month, as applicable, all in form reasonably satisfactory to
Lender;
(iii) all financial statements and books and records required to be
delivered by Operating Lessee to Borrower in accordance with Section 28 of
the Operating Lease.
(b) Upon request from Lender, Borrower shall promptly furnish to Lender:
(i) Intentionally Omitted;
(ii) an accounting of all security deposits held by Borrower in
connection with any Lease of any part of each Individual Property,
including the name and identification number of the accounts in which such
security deposits are held, the name and address of the financial
institutions in which such security deposits are held and the name of the
Person to contact at such financial institution, along with any authority
or release necessary for Lender to obtain information regarding such
accounts directly from such financial institutions; and
(iii) a report of all letters of credit provided to Borrower by any
Tenant in connection with any Lease of any part of each Individual
Property, including the account numbers of such letters of credit, the
names and addresses of the financial institutions that issued such letters
of credit and the names of the Persons to contact at such financial
institutions, along with any authority or release necessary for Lender to
obtain information regarding such letters of credit directly from such
financial institutions.
(c) Intentionally Omitted.
(d) Borrower and Borrower Principal shall furnish Lender with such other
additional financial or management information (including state and federal tax
returns) as may, from time to time, be reasonably required by Lender in form and
substance reasonably satisfactory to Lender (including, without limitation, any
financial reports required to be delivered by any Tenant or any guarantor of any
Lease pursuant to the terms of such Lease), and shall furnish to Lender and its
agents convenient facilities for the examination and audit of any such books and
records.
(e) All items requiring the certification of Borrower shall, except where
Borrower is an individual, require a certificate executed by a Responsible
Officer of Borrower (and the same rules shall apply to any sole shareholder,
general partner or managing member which is not an individual).
Section 5.12 Estoppel Statement
(a) After request by Lender, Borrower shall within ten (10) Business Days
furnish Lender with a statement, duly acknowledged and certified, setting forth
(i) the amount of the original principal amount of the Note, (ii) the rate of
interest on the Note,
57
(iii) the unpaid principal amount of the Note, (iv) the date installments of
interest and/or principal were last paid, (v) any offsets or defenses to the
payment of the Debt, if any, (vi) that the Note, this Agreement, the Mortgages
and the other Loan Documents have not been modified or if modified, giving
particulars of such modification and (vii) that the Operating Lease is in full
force and effect and whether, to the best of Borrower's knowledge, there are any
defaults thereunder on the part of any party.
(b) Borrower shall use its commercially reasonable efforts to deliver to
Lender, promptly upon request, duly executed estoppel certificates from the
Operating Lessee attesting to such facts regarding the Operating Lease as Lender
may reasonably require, including, but not limited to attestations whether the
Operating Lease is in full force and effect with no defaults thereunder on the
part of any party and whether the Operating Lessee claims no defense or offset
against the full and timely performance of its obligations under the Operating
Lease.
Section 5.13 Leasing Matters
(a) Borrower may not enter into a proposed Lease (including the renewal or
extension of an existing Lease, unless such renewal or extension is expressly
provided for in such existing Lease) without the prior written consent of
Lender; provided, however, the foregoing shall not limit Operating Lessee's
right to sublet any portion of the Properties pursuant to the terms of the
Operating Lease.
(b) Borrower (i) shall observe and perform all the obligations imposed
upon the landlord under the Operating Lease and shall not do or permit to be
done anything to impair the value of the Operating Lease as security for the
Debt; (ii) shall promptly send copies to Lender of all notices of default which
Borrower shall receive thereunder; (iii) shall enforce all of the material
terms, covenants and conditions contained in the Operating Lease upon the part
of the Operating Lessee to be observed or performed; (iv) shall not collect any
of the Rents more than three (3) months in advance (except security deposits
shall not be deemed Rents collected in advance); (v) shall not execute any other
assignment of the landlord's interest in the Operating Lease or the Rents; and
(vi) shall not consent to any assignment of or subletting under the Operating
Lease not in accordance with its terms, without the prior written consent of
Lender.
(c) Borrower may not, without the prior written consent of Lender, amend,
modify or waive the provisions of the Operating Lease or terminate, reduce Rents
under, accept a surrender of space under, or shorten the term of, the Operating
Lease (including the UHaul Guaranty, any letter of credit or other credit
support with respect thereto).
(d) Notwithstanding anything to the contrary contained herein or any of
the other Loan Documents, Borrower may amend or modify the terms of the Negative
Pledge Agreement, the Mercury 99 Guaranty and/or the Non-Compete Agreement
without the prior written consent of Lender.
(e) Notwithstanding anything to the contrary contained in this Section
5.13, Operating Lessee may enter into subleases without the prior written
consent of Lender
58
provided (i) such subleases are in compliance with the terms of the Operating
Lease and the Subordination Agreement, (ii) Borrower shall have no obligations
(whether financial or otherwise) under such subleases and (iii) Operating Lessee
is not relieved of its obligations, as primary obligor, (whether financial or
otherwise) under the Operating Lease as a result of such subleases.
Section 5.14 Management Agreement
(a) Each Individual Property shall be managed at all times by a Qualified
Manager, Borrower shall (i) promptly notify Lender of any default under the
Management Agreement of which it is aware; (ii) promptly deliver to Lender a
copy of any notice of default or other material notice received by Borrower
under the Management Agreement; and (iii) promptly give notice to Lender of any
notice or information that Borrower receives which indicates that Manager is
terminating the Management Agreement or that Manager is otherwise discontinuing
its management of any Individual Property.
(b) Borrower shall (i) promptly perform and observe all of the covenants
required to be performed and observed by it under the Management Agreement and
do all things necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any default under the Management
Agreement of which it is aware; (iii) promptly deliver to Lender a copy of any
notice of default or other material notice received by Borrower under the
Management Agreement; (iv) promptly give notice to Lender of any notice or
information that Borrower receives which indicates that Manager is terminating
the Management Agreement or that Manager is otherwise discontinuing its
management of any Individual Property; and (v) promptly enforce the performance
and observance of all of the covenants required to be performed and observed by
Manager under the Management Agreement.
(c) If at any time, (i) Manager shall become insolvent or a debtor in a
bankruptcy proceeding; (ii) an Event of Default has occurred and is continuing;
or (iii) a default has occurred and is continuing under the Management Agreement
and such default may have a Material Adverse Effect; Borrower shall, at the
request of Lender, terminate the Management Agreement upon thirty (30) days
prior notice to Manager and replace Manager with a Qualified Manager, it being
understood and agreed that the management agreement for such replacement manager
shall contain market terms and conditions (including, management fees).
(d) Intentionally Omitted.
(e) Borrower shall not, without the prior written consent of Lender (which
consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement or otherwise replace
Manager or enter into any other management agreement with respect to any
Individual Property unless a Replacement Management Agreement will be in full
force and effect immediately succeeding such surrender, termination or
cancellation; (ii) reduce or consent to the reduction of the term of the
Management Agreement; (iii) increase or consent to the
59
increase of the amount of any charges under the Management Agreement; or (iv)
otherwise modify, change, supplement, alter or amend, or waive or release any of
its rights and remedies under, the Management Agreement in any material respect.
In the event that Borrower replaces Manager at any time during the term of Loan
pursuant to this subsection, such Manager shall be a Qualified Manager.
Section 5.15 Liens
Borrower shall not, without the prior written consent of Lender, create,
incur, assume or suffer to exist any Lien on any portion of Borrower's interest
in any Individual Property or permit any such action to be taken, except
Permitted Encumbrances.
Section 5.16 Debt Cancellation
Borrower shall not cancel or otherwise forgive or release any claim or
debt (other than termination of Leases in accordance herewith) owed to Borrower
by any Person, except for adequate consideration and in the ordinary course of
Borrower's business.
Section 5.17 Zoning
Borrower shall not initiate or consent to any zoning reclassification of
any portion of any Individual Property or seek any variance under any existing
zoning ordinance or use or permit the use of any portion of the Properties 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 written consent of Lender; provided, however, this Section
5.17 shall not prevent the continued use of any Individual Property as a "legal,
non-conforming" use.
Section 5.18 ERISA
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non- exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (i) Borrower is not
and does not maintain an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(3) of ERISA; (ii) Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
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(B) Less than twenty-five percent (25%) of each outstanding
class of equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2);
or
(C) Borrower qualifies as an "operating company" or a "real
estate operating company within the meaning of 29 C.F.R. Section
2510.3- 101(c) or (e).
Section 5.19 No Joint Assessment
Borrower shall not suffer, permit or initiate the joint assessment of any
Individual Property with (a) any other real property constituting a tax lot
separate from such Individual Property, or (b) any portion of such Individual
Property which may be deemed to constitute personal property, or any other
procedure whereby the Lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such Individual
Property.
Section 5.20 Reciprocal Easement Agreements
Borrower shall not enter into, terminate or modify in any material respect
any REA without Lender's prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. Borrower shall use commercially
reasonable efforts to enforce, comply with, and cause each of the parties to the
REA to comply with all of the material economic terms and conditions contained
in the REA; provided, however, Borrower may allow Operating Lessee to enter into
easement and similar agreements in accordance with the provisions of Section
10(b) of the Operating Lease.
Section 5.21 Alterations
With respect to each Individual Property, Borrower shall obtain Lender's
prior written consent to any alterations to any Improvements prior to allowing
Operating Lessee to perform any such alterations to any Improvements, which
consent shall not be unreasonably withheld, which (a) cost, in the aggregate at
any given time, in excess of the Threshold Amount, (b) have a material adverse
effect on Borrower's and/or Operating Lessee's financial condition, the value of
the related Individual Property or the Operating Income of the applicable
Individual Property or (c) include the construction of any new buildings, or the
raising or demolishing any then existing buildings (other than in connection
with a Restoration of any Individual Property).
Section 5.22 Operating Lease
Borrower shall:
(i) promptly perform and/or observe all of the covenants and
agreements required to be performed and observed by it under the Operating
Lease and do all things necessary to preserve and to keep unimpaired its
rights thereunder;
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(ii) promptly notify Lender of any event of default under the
Operating Lease;
(iii) promptly enforce the performance and observance of all of the
covenants and agreements required to be performed and/or observed by the
Operating Lessee under the Operating Lease.
ARTICLE 6 - ENTITY COVENANTS
Section 6.1 Single Purpose Entity/Separateness
Until the Debt has been paid in full, Borrower represents, warrants and
covenants as follows:
(a) Borrower has not and will not:
(i) engage in any business or activity other than the ownership,
operation and maintenance of the Properties, and activities incidental
thereto;
(ii) acquire or own any assets other than (A) the Properties and (B)
such incidental Personal Property as may be necessary for the operation of
the Properties;
(iii) merge into or consolidate with any Person, or dissolve,
terminate, liquidate in whole or in part, transfer or otherwise dispose of
all or substantially all of its assets or change its legal structure;
(iv) fail to observe all organizational formalities, or fail to
preserve its existence as an entity duly organized, validly existing and
in good standing (if applicable) under the applicable Legal Requirements
of the jurisdiction of its organization or formation, or amend, modify,
terminate or fail to comply with the provisions of its organizational
documents;
(v) own any subsidiary, or make any investment in, any Person;
(vi) commingle its assets with the assets of any other Person;
(vii) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Debt;
(viii) fail to maintain its records, books of account, bank
accounts, financial statements, accounting records and other entity
documents separate and apart from those of any other Person; except that
Borrower's financial position, assets, liabilities, net worth and
operating results may be included in the consolidated financial statements
of an Affiliate, provided that such consolidated financial statements
contain a footnote indicating that such financial statements include
accounts of such Affiliates, its subsidiaries and controlling majority
owned interests;
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(ix) enter into any contract or agreement with any general partner,
member, shareholder, principal, guarantor of the obligations of Borrower,
or any Affiliate of the foregoing, except upon terms and conditions that
are intrinsically fair, commercially reasonable and substantially similar
to those that would be available on an arm's-length basis with
unaffiliated third parties;
(x) maintain its assets in such a manner that it will be costly or
difficult to segregate, ascertain or identify its individual assets from
those of any other Person;
(xi) assume or guaranty the debts of any other Person, hold itself
out to be responsible for the debts of any other Person, or otherwise
pledge its assets for the benefit of any other Person or hold out its
credit as being available to satisfy the obligations of any other Person;
(xii) make any loans or advances to any Person;
(xiii) fail to file its own tax returns or files a consolidated
federal income tax return with any Person (unless prohibited or required,
as the case may be, by applicable Legal Requirements);
(xiv) fail either to hold itself out to the public as a legal entity
separate and distinct from any other Person or to conduct its business
solely in its own name or fail to correct any known misunderstanding
regarding its separate identity;
(xv) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations;
(xvi) if it is a partnership or limited liability company, without
the unanimous written consent of all of its partners or members, as
applicable, and the written consent of 100% of the directors of each SPE
Component Entity, including, without limitation, each Independent
Director, (a) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any Creditors Rights Laws,
(b) seek or consent to the appointment of a receiver, liquidator or any
similar official, (c) take any action that might cause such entity to
become insolvent, or (d) make an assignment for the benefit of creditors;
(xvii) fail to allocate shared expenses, if any (including, without
limitation, shared office space and services performed by an employee of
an Affiliate), among the Persons sharing such expenses and to use separate
stationery, invoices and checks;
(xviii) fail to remain solvent or pay its own liabilities
(including, without limitation, salaries of its own employees) only from
its own funds;
63
(xix) acquire obligations or securities of its partners, members,
shareholders or other affiliates, as applicable;
(xx) violate or cause to be violated the assumptions made with
respect to Borrower and its principals in any opinion letter pertaining to
substantive consolidation delivered to Lender in connection with the Loan;
or
(xxi) fail to maintain a sufficient number of employees in light of
its contemplated business operations.
(b) If Borrower is a partnership or limited liability company, each
general partner in the case of a general partnership, each general partner in
the case of a limited partnership, or the managing member in the case of a
limited liability company (each an "SPE COMPONENT ENTITY") of Borrower, as
applicable, shall be a corporation whose sole asset is its interest in Borrower.
Each SPE Component Entity (i) will at all times comply with each of the
covenants, terms and provisions contained in Section 6.1(a)(iii)-(vi) and
(viii)-(xxi), as if such representation, warranty or covenant was made
directly by such SPE Component Entity; (ii) will not engage in any business or
activity other than owning an interest in Borrower; (iii) will not acquire or
own any assets other than its partnership, membership, or other equity interest
in Borrower; (iv) will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation); and (v) will cause Borrower
to comply with the provisions of this Section 6.1 and Section 6.4. Prior to the
withdrawal or the disassociation of any SPE Component Entity from Borrower,
Borrower shall immediately appoint a new general partner or managing member
whose articles of incorporation are substantially similar to those of such SPE
Component Entity and, if an opinion letter pertaining to substantive
consolidation was required at closing, deliver a new opinion letter acceptable
to Lender and the Rating Agencies with respect to the new SPE Component Entity
and its equity owners. Notwithstanding the foregoing, to the extent Borrower is
a single member Delaware limited liability company, so long as Borrower
maintains such formation status, no SPE Component Entity shall be required.
(c) In the event Borrower is a single member Delaware limited liability
company, the limited liability company agreement of Borrower (the "LLC
AGREEMENT") shall provide that (i) upon the occurrence of any event that causes
the sole member of Borrower ("MEMBER") to cease to be the member of Borrower
(other than (A) upon an assignment by Member of all of its limited liability
company interest in Borrower and the admission of the transferee in accordance
with the Loan Documents and the LLC Agreement, or (B) the resignation of Member
and the admission of an additional member of Borrower in accordance with the
terms of the Loan Documents and the LLC Agreement), any person acting as
Independent Director of Borrower shall, without any action of any other Person
and simultaneously with the Member ceasing to be the member of Borrower,
automatically be admitted to Borrower ("SPECIAL MEMBER") and shall continue
Borrower without dissolution and (ii) Special Member may not resign from
Borrower or transfer its rights as Special Member unless (A) a successor Special
Member has been admitted to Borrower as Special Member in accordance with
requirements of Delaware law and (B) such successor Special Member has also
accepted its appointment as an Independent Director. The LLC Agreement shall
further provide that (i) Special
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Member shall automatically cease to be a member of Borrower upon the admission
to Borrower of a substitute Member, (ii) Special Member shall be a member of
Borrower that has no interest in the profits, losses and capital of Borrower and
has no right to receive any distributions of Borrower assets, (iii) pursuant to
Section 18-301 of the Delaware Limited Liability Company Act (the "ACT"),
Special Member shall not be required to make any capital contributions to
Borrower and shall not receive a limited liability company interest in Borrower,
(iv) Special Member, in its capacity as Special Member, may not bind Borrower
and (v) except as required by any mandatory provision of the Act, Special
Member, in its capacity as Special Member, shall have no right to vote on,
approve or otherwise consent to any action by, or matter relating to, Borrower,
including, without limitation, the merger, consolidation or conversion of
Borrower; provided, however, such prohibition shall not limit the obligations of
Special Member, in its capacity as Independent Director, to vote on such matters
required by the Loan Documents or the LLC Agreement. In order to implement the
admission to Borrower of Special Member, Special Member shall execute a
counterpart to the LLC Agreement. Prior to its admission to Borrower as Special
Member, Special Member shall not be a member of Borrower.
Upon the occurrence of any event that causes the Member to cease to be a
member of Borrower, to the fullest extent permitted by law, the personal
representative of Member shall, within ninety (90) days after the occurrence of
the event that terminated the continued membership of Member in Borrower, agree
in writing (i) to continue Borrower and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of Borrower, effective as of the occurrence of the event that terminated
the continued membership of Member of Borrower in Borrower. Any action initiated
by or brought against Member or Special Member under any Creditors Rights Laws
shall not cause Member or Special Member to cease to be a member of Borrower and
upon the occurrence of such an event, the business of Borrower shall continue
without dissolution. The LLC Agreement shall provide that each of Member and
Special Member waives any right it might have to agree in writing to dissolve
Borrower upon the occurrence of any action initiated by or brought against
Member or Special Member under any Creditors Rights Laws, or the occurrence of
an event that causes Member or Special Member to cease to be a member of
Borrower.
Section 6.2 Change of Name, Identity or Structure
Borrower shall not change or permit to be changed (a) Borrower's name, (b)
Borrower's identity (including its trade name or names), (c) Borrower's
principal place of business set forth on the first page of this Agreement, (d)
the corporate, partnership or other organizational structure of Borrower, each
SPE Component Entity (if any), or Borrower Principal, (e) Borrower's state of
organization, or (f) Borrower's organizational identification number, without in
each case notifying Lender of such change in writing at least thirty (30) days
prior to the effective date of such change and, in the case of a change in
Borrower's structure, without first obtaining the prior written consent of
Lender. In addition, Borrower shall not change or permit to be changed any
organizational documents of Borrower or any SPE Component Entity (if any) if
such change would adversely impact the covenants set forth in Section 6.1 and
Section 6.4
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hereof. Borrower authorizes Lender to file any financing statement or financing
statement amendment required by Lender to establish or maintain the validity,
perfection and priority of the security interest granted herein. At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate the Properties,
and representing and warranting that Borrower does business under no other trade
name with respect to the Properties. If Borrower does not now have an
organizational identification number and later obtains one, or if the
organizational identification number assigned to Borrower subsequently changes,
Borrower shall promptly notify Lender of such organizational identification
number or change.
Section 6.3 Business and Operations
Borrower will qualify to do business and will remain in good standing
under the laws of the States to the extent the same are required for the
ownership, maintenance, management and operation of the Properties.
Section 6.4 Independent Director
(a) The organizational documents of each SPE Component Entity (if any)
shall provide that at all times there shall be, and Borrower shall cause there
to be, at least two duly appointed members of the board of directors (each an
"INDEPENDENT DIRECTOR") of such SPE Component Entity reasonably satisfactory to
Lender each of whom are not at the time of such individual's initial
appointment, and shall not have been at any time during the preceding five (5)
years, and shall not be at any time while serving as a director of such SPE
Component Entity, either (i) a shareholder (or other equity owner) of, or an
officer, director, partner, manager, member (other than as a Special Member in
the case of single member Delaware limited liability companies), employee,
attorney or counsel of, Borrower, such SPE Component Entity or any of their
respective shareholders, partners, members, subsidiaries or affiliates; (ii) a
customer or creditor of, or supplier to, Borrower or any of its respective
shareholders, partners, members, subsidiaries or affiliates who derives any of
its purchases or revenue from its activities with Borrower or such SPE Component
Entity or any Affiliate of any of them; (iii) a Person who Controls or is under
common Control with any such shareholder, officer, director, partner, manager,
member, employee, supplier, creditor or customer; or (iv) a member of the
immediate family of any such shareholder, officer, director, partner, manager,
member, employee, supplier, creditor or customer.
(b) The organizational documents of each SPE Component Entity (if any)
shall provide that the board of directors of such SPE Component Entity shall not
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
an unanimous vote of the board of directors of such SPE Component Entity of
Borrower unless at the time of such action there shall be at least two members
of the board of directors who are Independent Directors. Such SPE Component
Entity will not, without the unanimous written consent of its board of directors
including each Independent Director, on behalf of itself or Borrower, (i) file
or consent to the filing of any petition, either voluntary or involuntary,
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to take advantage of any applicable Creditors Rights Laws; (ii) seek or consent
to the appointment of a receiver, liquidator or any similar official; (iii) take
any action that might cause such entity to become insolvent; or (iv) make an
assignment for the benefit of creditors.
ARTICLE 7 - NO SALE OR ENCUMBRANCE
Section 7.1 Transfer Definitions
For purposes of this Article 7 an "AFFILIATED MANAGER" shall mean any
managing agent in which Borrower, Borrower Principal, any SPE Component Entity
(if any) or any affiliate of such entities has, directly or indirectly, any
legal, beneficial or economic interest; "CONTROL" shall mean the power to direct
the management and policies of a Restricted Party, directly or indirectly,
whether through the ownership of voting securities or other beneficial
interests, by contract or otherwise; "RESTRICTED PARTY" shall mean Borrower,
Borrower Principal, any SPE Component Entity (if any), any Affiliated Manager,
the Operating Lessee SPE Entities, or any shareholder, partner, member or
non-member manager, or any direct or indirect legal or beneficial owner of
Borrower, Borrower Principal, any SPE Component Entity (if any), any Affiliated
Manager or any non-member manager and a "SALE OR PLEDGE" shall mean a voluntary
or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, grant of any options with respect to, or any other transfer or
disposition of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) of a legal or beneficial interest.
Section 7.2 No Sale/Encumbrance
(a) Borrower shall not cause or permit a Sale or Pledge of any Individual
Property or any part thereof or any legal or beneficial interest therein nor
permit a Sale or Pledge of an interest in any Restricted Party (in each case, a
"PROHIBITED TRANSFER"), other than pursuant to the Operating Lease or other
Leases of space in the Improvements to Tenants in accordance with the provisions
of Section 5.13(e), without the prior written consent of Lender.
(b) A Prohibited Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell an Individual
Property or any part thereof for a price to be paid in installments; (ii) an
agreement by Borrower leasing all or a substantial part of any Individual
Property for other than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower's right, title and interest in and to any Leases or any Rents; (iii) if
a Restricted Party is a corporation, any merger, consolidation or Sale or Pledge
of such corporation's stock or the creation or issuance of new stock in one or a
series of transactions; (iv) if a Restricted Party is a limited or general
partnership or joint venture, any merger or consolidation or the change,
removal, resignation or addition of a general partner or the Sale or Pledge of
the partnership interest of any general or limited partner or any profits or
proceeds relating to such partnership interests or the creation or issuance of
new partnership interests; (v) if a Restricted Party is a limited liability
company, any
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merger or consolidation or the change, removal, resignation or addition of a
managing member or non-member manager (or if no managing member, any member) or
the Sale or Pledge of the membership interest of any member or any profits or
proceeds relating to such membership interest; or (vi) if a Restricted Party is
a trust or nominee trust, any merger, consolidation or the Sale or Pledge of the
legal or beneficial interest in a Restricted Party or the creation or issuance
of new legal or beneficial interests or (vii) the removal or the resignation of
Manager (including, without limitation, an Affiliated Manager) other than in
accordance with Section 5.14.
Section 7.3 Permitted Transfers
Notwithstanding the provisions of Section 7.2, the following transfers
shall not be deemed to be a Prohibited Transfer and shall not require the
consent of Lender and no transfer fee shall be due in connection therewith: (a)
a transfer by devise or descent or by operation of law upon the death of a
member, partner or shareholder of a Restricted Party, (b) [intentionally
omitted], (c) the sale, transfer or issuance of stock in WPC, provided such
stock is listed on the New York Stock Exchange or such other nationally
recognized stock exchange, (d) transfers of shares of stock in Borrower
Principal and (e) the transfers of stock in Borrower among and between CPA: 12,
CPA: 14, CPA: 15, CPA:16, CIP and WPC.
Section 7.4 Lender's Rights
Lender reserves the right to condition the consent to a Prohibited
Transfer requested hereunder upon (a) a modification of the terms hereof and an
assumption of the Note and the other Loan Documents as so modified by the
proposed Prohibited Transfer, (b) receipt of payment of a transfer fee equal to
one-quarter of one percent (0.25%) of the outstanding principal balance of the
Loan and all of Lender's expenses incurred in connection with such Prohibited
Transfer, (c) receipt of written confirmation from the Rating Agencies that the
Prohibited Transfer will not result in a downgrade, withdrawal or qualification
of the initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization, (d) the proposed transferee's
continued compliance with the covenants set forth in this Agreement (including,
without limitation, the covenants in Article 6) and the other Loan Documents,
(e) a new manager for the Properties and a new management agreement satisfactory
to Lender, and (f) the satisfaction of such other conditions and/or legal
opinions as Lender shall determine in its reasonable discretion to be in the
interest of Lender. All expenses incurred by Lender shall be payable by Borrower
whether or not Lender consents to the Prohibited Transfer. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon a Prohibited Transfer made without Lender's consent. This provision
shall apply to each and every Prohibited Transfer, whether or not Lender has
consented to any previous Prohibited Transfer. Notwithstanding anything to the
contrary contained in this Section 7.4, in the event a substantive
non-consolidation opinion was delivered to Lender and the Rating Agencies in
connection with the closing of the Loan, and if any Sale or Pledge permitted
under this Article 7 results in any Person and its Affiliates owning in excess
of
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forty-nine percent (49%) of the ownership interests in a Restricted Party,
Borrower shall, prior to such transfer, and in addition to any other requirement
for Lender consent contained herein, deliver a revised substantive
non-consolidation opinion to Lender reflecting such Prohibited Transfer, which
opinion shall be in form, scope and substance acceptable in all respects to
Lender and the Rating Agencies.
Section 7.5 Assumption of Borrower's Interest.
Notwithstanding the foregoing provisions of this Article 7, following the
date which is six (6) months from the Closing Date, Lender's consent shall not
be required with respect to a transfer of all of the Properties in its entirety
to, and the related assumption of the Loan by, a Qualified Transferee provided
that each of the following terms and conditions are satisfied:
(a) no Default or Event of Default has occurred;
(b) Borrower shall have (i) delivered written notice to Lender of the
terms of such prospective transfer not less than sixty (60) days before the date
on which such transfer is scheduled to close and, concurrently therewith, all
such information concerning the proposed Qualified Transferee as Lender shall
reasonably require and (ii) paid to Lender a non-refundable processing fee in
the amount of $50,000. Lender shall have the right to approve or disapprove the
proposed transfer based on its then current underwriting and credit requirements
for similar loans secured by similar properties which loans are sold in the
secondary market, such approval not to be unreasonably withheld;
(c) Borrower shall have paid to Lender, concurrently with the closing of
such transfer, (i) a non-refundable assumption fee in an amount equal to
one-quarter of one percent (0.25%) of the then outstanding principal balance of
the Note, and (ii) all out-of-pocket costs and expenses, including reasonable
attorneys' fees, incurred by Lender in connection with the transfer;
(d) The Qualified Transferee assumes and agrees to pay the Debt as and
when due subject to the provisions of Article 15 hereof and, prior to or
concurrently with the closing of such transfer, Qualified Transferee and its
constituent partners, members or shareholders as Lender may require, shall
execute, without any cost or expense to Lender, such documents and agreements as
Lender shall reasonably require to evidence and effectuate said assumption;
(e) Borrower and the Qualified Transferee, without any cost to Lender,
shall furnish any information requested by Lender for the preparation of, and
shall authorize Lender to file, new financing statements and financing statement
amendments and other documents to the fullest extent permitted by applicable
law, and shall execute any additional documents reasonably requested by Lender;
(f) Borrower shall have delivered to Lender, without any cost or expense
to Lender, such endorsements to Lender's Title Insurance Policy insuring that
fee simple and/or leasehold title to the Properties, as applicable, is vested in
the Qualified Transferee
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(subject to Permitted Encumbrances), hazard insurance endorsements or
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;
(g) The Qualified Transferee shall have furnished to Lender, if the
Qualified Transferee is a corporation, partnership, limited liability company or
other entity, all appropriate papers evidencing the Qualified Transferee's
organization and good standing, and the qualification of the signers to execute
the assumption of the Debt, which papers shall include certified copies of all
documents relating to the organization and formation of Transferee and of the
entities, if any, which are partners or members of the Qualified Transferee. The
Qualified Transferee and such constituent partners, members or shareholders of
the Qualified Transferee (as the case may be), as Lender shall require, shall
comply with the covenants set forth in Article 6 hereof;
(h) The Qualified Transferee shall assume the obligations of Borrower
under the Operating Lease and such transfer will not cause a default thereunder;
(i) The Qualified Transferee shall furnish an opinion of counsel
satisfactory to Lender and its counsel (A) that the Qualified Transferee's
formation documents provide for the matters described in subparagraph (g) above,
(B) that the assumption of the Debt has been duly authorized, executed and
delivered, and that the Note, the Mortgages, this Agreement, the assumption
agreement and the other Loan Documents are valid, binding and enforceable
against the Qualified Transferee in accordance with their terms, (C) that the
Qualified Transferee and any entity which is a controlling stockholder, member
or general partner of the Qualified Transferee, have been duly organized, and
are in existence and good standing, and (E) with respect to such other matters
as Lender may reasonably request;
(j) if required by Lender, Lender shall have received confirmation in
writing from the Rating Agencies that rate the Securities to the effect that the
transfer will not result in a qualification, downgrade or withdrawal of any
rating initially assigned or to be assigned to the Securities;
(k) Transferee shall assume the obligations of Borrower under any
Management Agreement or provide a new management agreement with a new manager
which meets with the requirements of Section 5.14 hereof and assign to Lender as
additional security such new management agreement;
(l) Borrower's obligations under the contract of sale pursuant to which
the transfer is proposed to occur shall expressly be subject to the satisfaction
of the terms and conditions of this Section 7.5; and
(m) The Qualified Transferee shall, prior to such transfer, deliver a
substantive non-consolidation opinion to Lender, which opinion shall be in form,
scope and substance acceptable in all respects to Lender and the Rating
Agencies.
A consent by Lender with respect to a transfer of the Properties in their
entirety to, and the related assumption of the Loan by, a Qualified Transferee
pursuant to this
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Section 7.5 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent transfer of the Properties or any part thereof.
Provided the Qualified Transferee has assumed all of Borrower's
obligations and liabilities in a manner acceptable to Lender, Borrower shall be
released from its obligations under the Loan and the Loan Documents from and
after the date of sale or transfer. In addition, provided a replacement borrower
principal (which borrower principal shall be approved in writing by Lender)
shall have assumed all of the obligations and liabilities of Borrower Principal
in a manner acceptable to Lender, Borrower Principal shall be released from its
obligations under the Loan and the Loan Documents to which they are a party from
and after the date of sale or transfer.
Section 7.6 Reserved.
ARTICLE 8 - INSURANCE; CASUALTY; CONDEMNATION; RESTORATION
Section 8.1 Insurance
(a) Borrower shall obtain and maintain, or cause to be maintained, at all
times insurance for Borrower and each Individual Property providing at least the
following coverages:
(i) comprehensive "all risk" insurance on the Improvements and the
Personal Property, in each case (A) in an amount equal to one hundred
percent (100%) of the "Full Replacement Cost," which for purposes of this
Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $25,000 for all
such insurance coverage (except with respect to (i) wind storm insurance
for Individual Properties located in Florida for which the deductible on
such insurance shall not be in excess of five percent (5%) of the
replacement cost of such Individual Property and (ii) flood insurance and
earthquake insurance for which the deductible on such insurance shall not
be in excess of $100,000); and (D) if any of the Improvements or the use
of the Individual Property shall at any time constitute legal
non-conforming structures or uses, providing coverage for contingent
liability from Operation of Building Laws, Demolition Costs and Increased
Cost of Construction Endorsements and containing an "Ordinance or Law
Coverage" or "Enforcement" endorsement. In addition, Borrower shall
obtain: (y) if any portion of the Improvements is currently or at any time
in the future located in a "special flood hazard area" designated by the
Federal Emergency Management Agency, flood hazard insurance in an amount
equal to the maximum amount of such insurance available under the National
Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or
the National Flood Insurance Reform Act of 1994, as each may be amended;
and (z) earthquake insurance in amounts and in form and substance
reasonably satisfactory to Lender in the event the Individual Property is
located in
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an area with a high degree of seismic risk, provided that the insurance
pursuant to clauses (y) and (z) hereof shall be on terms consistent with
the comprehensive all risk insurance policy required under this subsection
(i);
(ii) Commercial General Liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon,
in or about the Individual Property, with such insurance (A) to be on the
so-called "occurrence" form with a general aggregate limit of not less
than $2,000,000 and a per occurrence limit of not less than $1,000,000;
(B) to continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economic conditions
making such protection inadequate; and (C) to cover at least the following
hazards: (1) premises and operations; (2) products and completed
operations; (3) independent contractors; and (4) blanket contractual
liability as described in a standard commercial general liability policy
form CG00010798;
(iii) loss of rents insurance or business income insurance, as
applicable, (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i)
above; and (C)(I)(1) in an amount equal to 100% of the projected Business
Income from each Individual Property (on an actual loss sustained basis)
for a period continuing until the Restoration of the Individual Property
is completed and income returns to the same level it was at prior to the
loss (not to exceed eighteen (18) months), based on the greatest of: (x)
Borrower's reasonable estimate of the Business Income from each Individual
Property and (y) the highest Business Income received during the term of
the Note for any full calendar year prior to the date the amount of such
insurance is being determined and (2) which contains an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss
of income will be insured until such income either returns to the same
level it was at prior to the loss, or the expiration of six (6) months
from the date that such Individual Property is repaired or replaced and
operations are resumed, whichever first occurs, and notwithstanding that
the policy may expire prior to the end of such period or (II) pursuant to
a blanket insurance Policy which provides for such coverages set forth in
(C)(I)(1) and (2) above for each Individual Property with per occurrence
limits of not less than the highest amounts attributable to an Individual
Property as calculated pursuant to (C)(I) above; in either case, the
amount of such business income/loss of rents insurance shall be determined
prior to the Closing Date and at least once each year thereafter based on
Borrower's reasonable estimate of the gross income from such Individual
Property for the succeeding period of coverage required above. All
proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan
Documents from time to time due and payable hereunder and under the Note;
provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to pay the obligations secured by the
Loan Documents on the respective dates of payment provided for in the
Note, this Agreement and
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the other Loan Documents except to the extent such amounts are actually
paid out of the proceeds of such loss of rents or business income
insurance, as applicable;
(iv) at all times during which structural construction, substantial
repairs or alterations are being made with respect to the Improvements,
and only if the Individual Property coverage form does not otherwise
apply, (A) owner's contingent or protective liability insurance covering
claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the
insurance provided for in subsection (i) above written in a so-called
Builder's Risk Completed Value form (1) on a non-reporting basis, (2)
against "all risks" insured against pursuant to subsection (i) above, (3)
including permission to occupy the Individual Property, and (4) with an
agreed amount endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of the
State, and employer's liability insurance in respect of any work or
operations on or about the Individual Property, or in connection with such
Individual Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with
the commercial property insurance policy required under subsection (i)
above;
(vii) excess liability insurance in an amount not less than
$25,000,000.00 per occurrence and $50,000,000.00 aggregate on terms
consistent with the commercial general liability insurance required under
subsection (ii) above;
(viii) Customer Goods Liability for amounts of not less than
$250,000; and
(ix) upon sixty (60) days' written notice, such other reasonable
insurance and in such reasonable amounts as Lender from time to time may
reasonably request against such other insurable hazards which at the time
are commonly insured against for property similar to the Individual
Property located in or around the region in which such Individual Property
is located.
With respect to the Policies required to be maintained pursuant to clauses
(i) through (ix) above, Borrower shall use commercially reasonable efforts,
consistent with those of prudent owners of institutional quality commercial real
estate, to maintain insurance coverage against Losses resulting from acts of
terrorism.
(b) All insurance provided for in Section 8.1 (a) shall be obtained under
valid and enforceable policies (collectively, the "POLICIES" or in the singular,
the "POLICY"), and shall be subject to the approval of Lender as to insurance
companies, amounts, deductibles, loss payees and insureds. The Policies shall be
issued by financially sound and responsible insurance companies authorized to do
business in the State and having a claims paying ability rating of "A+" or
better by at least two Rating Agencies, one of
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which must be S&P or such other Rating Agencies approved by Lender, provided,
however, the Policies may be issued by a syndicate of insurers through which (1)
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), shall be with one or more carriers having a claims paying ability
rating of "A+" or better by at least two Rating Agencies, one of which must be
S&P or such other Rating Agencies approved by Lender, (2) subject to the
requirements of subsection (1) above, no more than 15% of the coverage (if there
are 4 or fewer members of the syndicate) or no more than 30% of the coverage (if
there are 5 or more members of the syndicate), shall be with one or more
carriers having a claims paying ability rating of "A" or better by at least two
Rating Agencies, one of which must be S&P or such other Rating Agencies approved
by Lender and (3) the balance of the coverage not to exceed 10% of claims
coverage is with one or more carriers having a general policy rating of "A" or
better and a financial class of "XII" or better by A.M. Best Company, Inc. All
Policies described in Sections 8.1(a)(ii), (v) and (vii) shall be issued by
financially sound and responsible insurance companies having a claims paying
ability rating of "A" or better by at least two Rating Agencies approved by
Lender and a general policy rating of "A-" or better and a financial class of
"VIII" or better by A.M. Best Company, Inc. The Policies described in Section
8.1(a) shall designate Lender and its successors and assigns as additional
insureds, mortgagees and/or loss payee as deemed appropriate by Lender. To the
extent such Policies are not available as of the Closing Date, Borrower shall
deliver certified copies of all Policies to Lender not later than thirty (30)
days after the Closing Date. Not less than ten (10) days prior to the expiration
dates of the Policies theretofore furnished to Lender, renewal Policies
accompanied by evidence satisfactory to Lender of payment of the premiums due
thereunder (the "INSURANCE PREMIUMS") shall be delivered by Borrower to Lender.
(c) Any blanket insurance Policy required pursuant to Section 8.1(a)(i)
hereof, shall specifically allocate to the Individual Property the amount of
coverage from time to time required hereunder and shall otherwise provide the
same protection as would a separate Policy insuring only such Individual
Property in compliance with the provisions of Section 8.1(a).
(d) All Policies provided for or contemplated by Section 8.1(a), except
for the Policy referenced in Section 8.1(a)(v), shall name Borrower as the
insured or the additional insured and Lender as the additional insured, as its
interests may appear, and in the case of property damage, boiler and machinery,
flood and earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.
(e) All Policies provided for in Section 8.1(a) shall contain clauses or
endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for Borrower,
or of any Tenant or other occupant, or failure to comply with the
provisions of any Policy, which might otherwise result in a forfeiture of
the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;
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(ii) the Policies shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least
thirty (30) days' prior written notice to Lender and any other party named
therein as an additional insured;
(iii) the issuers thereof shall give written notice to Lender if the
Policies have not been renewed thirty (30) days prior to its expiration;
and
(iv) Lender shall not be liable for any Insurance Premiums thereon
or subject to any assessments thereunder.
(f) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in any Individual Property, including, without
limitation, obtaining such insurance coverage as Lender in its sole discretion
deems appropriate. All premiums incurred by Lender in connection with such
action or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and, until paid, shall be secured by the
Mortgages and shall bear interest at the Default Rate.
Section 8.2 Casualty
If any Individual Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty (a "CASUALTY"), Borrower (to the extent Borrower
has received notice of such damage or destruction) shall give Lender prompt
notice of such damage and Borrower shall promptly commence and diligently
prosecute the Restoration of such Individual Property in accordance with Section
8.4, whether or not Lender makes any Net Proceeds available pursuant to Section
8.4. Borrower shall pay all costs of such Restoration whether or not such costs
are covered by insurance. Lender may, but shall not be obligated to make proof
of loss if not made promptly by Borrower. Borrower shall adjust all claims for
Insurance Proceeds in consultation with, and approval of, Lender; provided,
however, if an Event of Default has occurred and is continuing, Lender shall
have the exclusive right to participate in the adjustment of all claims for
Insurance Proceeds.
Section 8.3 Condemnation
Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of any Individual Property
of which Borrower has received notice and shall deliver to Lender copies of any
and all papers served in connection with such proceedings. Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them in
the carrying on or defense of any such proceedings. Notwithstanding any taking
by any public or quasi-public authority through Condemnation or otherwise
(including but not limited to any transfer made in lieu of or
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in anticipation of the exercise of such taking), Borrower shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note and
in this Agreement and the Debt shall not be reduced until any Award shall have
been actually received and applied by Lender, after the deduction of expenses of
collection, to the reduction or discharge of the Debt, provided, however, after
payment in full of the Debt, any excess proceeds received by Lender shall be
distributed in accordance with the provisions set forth in the Cash Management
Agreement. Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest
at the rate or rates provided herein or in the Note. If any Individual Property
or any portion thereof is taken by a condemning authority, Borrower shall
promptly commence and diligently prosecute the Restoration of such Individual
Property and otherwise comply with the provisions of Section 8.4, whether or not
Lender makes any Net Proceeds available pursuant to Section 8.4. If an
Individual Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of the Award, Lender shall have the right, whether or not a
deficiency judgment on the Note shall have been sought, recovered or denied, to
receive the Award, or a portion thereof sufficient to pay the Debt.
Section 8.4 Restoration
The following provisions shall apply in connection with the Restoration of
the Properties:
(a) If the Net Proceeds shall be less than $9,000,000.00 (as the same may
be adjusted by increases in CPI in a manner consistent with increases in Base
Rent pursuant to the Operating Lease) and the costs of completing the
Restoration shall be less than $9,000,000.00 (as the same may be adjusted by
increases in CPI in a manner consistent with increases in Base Rent pursuant to
the Operating Lease), the Net Proceeds will be disbursed by Lender to Borrower
upon receipt, provided that all of the conditions set forth in Section 8.4(b)(i)
are met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement.
(b) If the Net Proceeds are equal to or greater than $9,000,000.00 (as the
same may be adjusted by increases in CPI in a manner consistent with increases
in Base Rent pursuant to the Operating Lease) or the costs of completing the
Restoration are equal to or greater than $9,000,000.00 (as the same may be
adjusted by increases in CPI in a manner consistent with increases in Base Rent
pursuant to the Operating Lease), Lender shall make the Net Proceeds available
for the Restoration in accordance with the provisions of this Section 8.4. The
term "NET PROCEEDS" for purposes of this Section 8.4 shall mean: (i) the net
amount of all insurance proceeds received by Lender pursuant to Section
8.1(a)(i), (iv), (vi) and (ix) as a result of a Casualty, after deduction of its
reasonable costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting the same ("INSURANCE PROCEEDS"), or (ii) the net
amount of the Award as a result of a Condemnation, after deduction of its
reasonable costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting the same ("CONDEMNATION PROCEEDS"), whichever the
case may be.
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(i) The Net Proceeds shall be made available to Borrower for
Restoration provided that each of the following conditions are met:
(A) no Event of Default shall have occurred and be continuing;
(B) (1) in the event the Net Proceeds are Insurance Proceeds,
less than twenty percent (20%) of the total aggregate floor area of
the Improvements on the Properties have been damaged, destroyed or
rendered unusable as a result of a Casualty or (2) in the event the
Net Proceeds are Condemnation Proceeds, less than ten percent (10%)
of the land constituting the Properties is taken;
(C) The Operating Leases shall remain in full force and effect
during and after the completion of the Restoration without abatement
of rent beyond the time required for Restoration;
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but, subject to Force Majeure, in no event
later than sixty (60) days after such Casualty or Condemnation,
whichever the case may be, occurs) and shall diligently pursue the
same to satisfactory completion;
(E) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the
Note, which will be incurred with respect to an Individual Property
as a result of the occurrence of any such Casualty or Condemnation,
whichever the case may be, will be covered out of the insurance
coverage referred to in Section 8.1(a)(iii) above;
(F) Lender shall be satisfied that the Restoration will be
completed on or before the earliest to occur of (1) six (6) months
prior to the Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases or material agreements
affecting the Individual Property, (3) such time as may be required
under applicable zoning law, ordinance, rule or regulation, or (4)
the expiration of the insurance coverage referred to in Section
8.1(a)(iii);
(G) the Individual Property and the use thereof after the
Restoration will be in compliance with and permitted under all Legal
Requirements;
(H) the Restoration shall be done and completed by Borrower in
an expeditious and diligent fashion and in compliance with all
applicable Legal Requirements;
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(I) such Casualty or Condemnation, as applicable, does not
result in the loss of access to the Individual Property or the
Improvements;
(J) Borrower shall deliver, or cause to be delivered, to
Lender a signed detailed budget approved in writing by Borrower's
architect or engineer stating the entire cost of completing the
Restoration, which budget shall be acceptable to Lender; and
(K) the Net Proceeds together with any cash or cash equivalent
deposited by Borrower or Operating Lessee with Lender are sufficient
in Lender's reasonable judgment to cover the cost of the
Restoration.
(ii) The Net Proceeds shall be held by Lender until disbursements
commence, and, until disbursed in accordance with the provisions of this
Section 8.4, shall constitute additional security for the Debt and other
obligations under the Loan Documents. The Net Proceeds shall be held in an
interest-bearing business savings account and interest shall be credited
to Borrower, but such interest shall be held in such account. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower from
time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all the conditions precedent to
such advance, including those set forth in Section 8.4(b)(i), have been
satisfied, (B) all materials installed and work and labor performed
(except to the extent that they are to be paid for out of the requested
disbursement) in connection with the related Restoration item have been
paid for in full, and (C) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of intention to file same, or
any other Liens or encumbrances of any nature whatsoever on the Individual
Property which have not either been fully bonded to the satisfaction of
Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance
Policy. Notwithstanding the foregoing, Insurance Proceeds from the
Policies required to be maintained by Borrower pursuant to Section
8.1(a)(iii) shall be controlled by Lender at all times, shall not be
subject to the provisions of this Section 8.4 and shall be used solely for
the payment of the obligations then due and payable under the Loan
Documents and for the payment of Operating Expenses.
(iii) All plans and specifications required in connection with the
Restoration shall be subject to prior review and acceptance in all
respects by Lender and by an independent consulting engineer selected by
Lender (the "RESTORATION CONSULTANT"), which approval shall not be
unreasonably withheld, delayed or conditioned. Lender shall have the use
of the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The identity of
the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts in excess of $50,000 under which
they have been engaged, shall be subject to prior review and acceptance by
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Lender and the Restoration Consultant. All costs and expenses incurred by
Lender in connection with making the Net Proceeds available for the
Restoration, including, without limitation, reasonable counsel fees and
disbursements and the Restoration Consultant's fees, shall be paid by
Borrower.
(iv) In no event shall Lender be obligated to make disbursements of
the Net Proceeds in excess of an amount equal to the costs actually
incurred from time to time for work in place as part of the Restoration,
as certified by the Restoration Consultant, minus the Restoration
Retainage. The term "RESTORATION RETAINAGE" shall mean an amount equal to
ten percent (10%) of the costs actually incurred for work in place as part
of the Restoration, as certified by the Restoration Consultant, until the
Restoration has been completed. The Restoration Retainage shall be reduced
to five percent (5%) of the costs incurred upon receipt by Lender of
satisfactory evidence that fifty percent (50%) of the Restoration has been
completed. The Restoration Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this Section
8.4(b), be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the Restoration.
The Restoration Retainage shall not be released until the Restoration
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 8.4(b) and that all
approvals necessary for the re-occupancy and use of the Individual
Property have been obtained from all appropriate Governmental Authorities,
and Lender receives evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the
Restoration Retainage; provided, however, that Lender will release the
portion of the Restoration Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of
the date upon which the Restoration Consultant certifies to Lender that
the contractor, subcontractor or materialman has satisfactorily completed
all work and has supplied all materials in accordance with the provisions
of the contractor's, subcontractor's or materialman's contract, the
contractor, subcontractor or materialman delivers the Lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or
by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the
continued priority of the Lien of the Mortgages and evidence of payment of
any premium payable for such endorsement. If required by Lender, the
release of any such portion of the Restoration Retainage shall be approved
by the surety company, if any, which has issued a payment or performance
bond with respect to the contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of Lender in consultation
with the Restoration Consultant, be sufficient to pay in full the balance
of the costs which are estimated by the Restoration Consultant to be
incurred in connection with the
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completion of the Restoration, Borrower shall deposit the deficiency (the
"NET PROCEEDS DEFICIENCY") with Lender before any further disbursement of
the Net Proceeds shall be made. The Net Proceeds Deficiency deposited with
Lender shall be held by Lender and shall be disbursed for costs actually
incurred in connection with the Restoration on the same conditions
applicable to the disbursement of the Net Proceeds, and until so disbursed
pursuant to this Section 8.4(b) shall constitute additional security for
the Debt and other obligations under the Loan Documents.
(vii) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender
after the Restoration Consultant certifies to Lender that the Restoration
has been completed in accordance with the provisions of this Section
8.4(b), and the receipt by Lender of evidence satisfactory to Lender that
all costs incurred in connection with the Restoration have been paid in
full, shall be remitted by Lender to Borrower, provided no Event of
Default shall have occurred and shall be continuing under the Note, this
Agreement or any of the other Loan Documents.
(c) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 8.4(b)(vii) may (x) be retained and applied by Lender toward the
payment of the Debt whether or not then due and payable in such order, priority
and proportions as Lender in its sole discretion shall deem proper, or, (y) at
the sole discretion of Lender, the same may be paid, either in whole or in part,
to Borrower for such purposes and upon such conditions as Lender shall
designate.
(d) In the event of foreclosure of any Mortgage, or other transfer of
title to any Individual Property in extinguishment in whole or in part of the
Debt, all right, title and interest of Borrower in and to the Policies then in
force concerning such Individual Property and all proceeds payable thereunder
shall thereupon vest in the purchaser at such foreclosure, Lender or other
transferee in the event of such other transfer of title.
ARTICLE 9 - RESERVE FUNDS
Section 9.1 Required Repairs
(a) Borrower shall make the repairs and improvements to each Individual
Property set forth on Schedule I and as more particularly described in the
applicable Physical Conditions Report prepared in connection with the closing of
the Loan (such repairs hereinafter referred to as "REQUIRED REPAIRS"). Borrower
shall complete the Required Repairs in a good and workmanlike manner on or
before the date that is twelve (12) months from the date hereof or within such
other time frame for completion specifically set forth on Schedule I.
Section 9.2 Replacements
(a) On an ongoing basis throughout the term of the Loan, Borrower shall
make (or cause to be made) capital repairs, replacements and improvements
necessary to
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keep the each Individual Property in good order and repair and in a good
marketable condition or prevent deterioration of the such Individual Property,
including, but not limited to, those repairs, replacements and improvements more
particularly described in (i) the applicable Physical Conditions Report prepared
in connection with the closing of the Loan and (ii) Schedule II attached hereto
and made a part hereof (collectively, the "REPLACEMENTS"). Borrower shall
complete all Replacements in a good and workmanlike manner as soon as
commercially reasonable after commencing to make each such Replacement.
(b) Borrower shall establish on the date hereof an Eligible Account with
Lender or Lender's agent as security for Borrower's obligations to cause
Replacements to be completed (the "REPLACEMENT RESERVE ACCOUNT") into which
Borrower shall deposit on the date hereof $600,000.00. Amounts so deposited
shall hereinafter be referred TO as "REPLACEMENT RESERVE FUNDS".
Section 9.3 Groundwater Monitoring Reserve Funds.
(a) Borrower shall perform all testing, monitoring and other work,
including without limitation, the creation of three (3) monitoring ▇▇▇▇▇ and six
(6) semi-annual reviews of such ▇▇▇▇▇ (the "GROUNDWATER MONITORING EVENTS") in
accordance with the Groundwater Management Plan at the Individual Property
located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇.
(b) Borrower shall establish on the date hereof an Eligible Account with
Lender or Lender's agent (the "GROUNDWATER MONITORING RESERVE ACCOUNT") into
which Borrower shall deposit on the date hereof cash in the amount of
$46,875.00. Amounts contained in the Groundwater Monitoring Reserve Account
shall hereinafter be referred to as the "GROUNDWATER MONITORING RESERVE FUNDS."
(c) Upon (i) written request from Borrower and (ii) receipt by Lender of
(1) a certification from ATC that the Groundwater Management Plan has been fully
implemented and (2) evidence that the cost of all contracted labor or other
services applicable to each Groundwater Monitoring Event have been paid in full,
Lender shall disburse the Groundwater Monitoring Reserve Funds to Borrower.
Lender's disbursement of Groundwater Monitoring Reserve Funds or other
acknowledgment of completion of any Groundwater Monitoring Events shall not be
deemed a certification or warranty by Lender to any Person that the Groundwater
Monitoring Events has been completed in accordance with Legal Requirements.
Section 9.4 Required Work
Borrower shall diligently pursue all Required Repairs and Replacements
(collectively, the "REQUIRED WORK") to completion in accordance with the
following requirements:
(a) Lender reserves the right, at its option, to approve all contracts or
work orders with materialmen, mechanics, suppliers, subcontractors, contractors
or other parties providing labor or materials in connection with the Required
Work to the extent
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such contracts or work orders exceed the Threshold Amount. Upon Lender's
request, Borrower shall assign any contract or subcontract to Lender.
(b) In the event Lender determines in its reasonable discretion that any
Required Work is not being or has not been performed in a workmanlike or timely
manner, Lender shall have the option to proceed under existing contracts or to
contract with third parties to complete such Required Work and to apply the
Replacement Reserve Funds, as applicable, toward the labor and materials
necessary to complete such Required Work, without providing any prior notice to
Borrower and to exercise any and all other remedies available to Lender upon an
Event of Default hereunder.
(c) In order to facilitate Lender's completion of the Required Work,
Borrower grants Lender, subject to the rights of Operating Lessee, the right to
enter onto the Properties and perform any and all work and labor necessary to
complete the Required Work and/or employ watchmen to protect the Properties from
damage. All sums so expended by Lender, to the extent not from the Reserve
Funds, shall be deemed to have been advanced under the Loan to Borrower and
secured by the Mortgages. For this purpose Borrower constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution to
complete or undertake the Required Work in the name of Borrower upon Borrower's
failure to do so in a workmanlike and timely manner. Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be revoked.
Borrower empowers said attorney-in-fact as follows: (i) to use any of the
Reserve Funds for the purpose of making or completing the Required Work; (ii) to
make such additions, changes and corrections to the Required Work as shall be
necessary or desirable to complete the Required Work; (iii) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iv) to pay, settle or compromise all existing bills
and claims which are or may become Liens against any Individual Property, or as
may be necessary or desirable for the completion of the Required Work, or for
clearance of title; (v) to execute all applications and certificates in the name
of Borrower which may be required by any of the contract documents; (vi) to
prosecute and defend all actions or proceedings in connection with the
Properties or the rehabilitation and repair of the Properties; and (vii) to do
any and every act which Borrower might do on its own behalf to fulfill the terms
of this Agreement.
(d) Nothing in this Section 9.4 shall: (i) make Lender responsible for
making or completing the Required Work; (ii) require Lender to expend funds in
addition to the Reserve Funds to make or complete any Required Work; (iii)
obligate Lender to proceed with the Required Work; or (iv) obligate Lender to
demand from Borrower additional sums to make or complete any Required Work.
(e) Borrower shall permit Lender and Lender's agents and representatives
(including, without limitation, Lender's engineer, architect, or inspector) or
third parties performing Required Work pursuant to this Section 9.4 to enter
onto the Properties during normal business hours (subject to the rights of
tenants under their Leases) to inspect the progress of any Required Work and all
materials being used in connection therewith, to examine all plans and shop
drawings relating to such Required Work which are or may be kept at the
Properties, and to complete any Required Work made pursuant
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to this Section 9.4. Borrower shall cause all contractors and subcontractors to
cooperate with Lender and Lender's representatives or such other persons
described above in connection with inspections described in this Section 9.4 or
the completion of Required Work pursuant to this Section 9.4.
(f) Lender may, to the extent any Required Work would reasonably require
an inspection of the Properties, inspect the Properties at Borrower's expense in
order to verify completion of the Required Work for which reimbursement is
sought. Borrower shall pay Lender a reasonable inspection fee not exceeding
$1,000 for each such inspection. Lender may require that such inspection be
conducted by an appropriate independent qualified professional selected by
Lender and/or may require a copy of a certificate of completion by an
independent qualified professional acceptable to Lender. Borrower shall pay the
expense of the inspection as required hereunder, whether such inspection is
conducted by Lender or by an independent qualified professional.
(g) The Required Work and all materials, equipment, fixtures, or any other
item comprising a part of any Required Work shall be constructed, installed or
completed, as applicable, free and clear of all mechanic's, materialman's or
other Liens (except for Permitted Encumbrances).
(h) Intentionally Omitted.
(i) All Required Work shall comply with all Legal Requirements and
applicable insurance requirements including, without limitation, applicable
building codes, special use permits, environmental regulations, and requirements
of insurance underwriters.
(j) Borrower hereby assigns to Lender all rights and claims Borrower may
have against all Persons supplying labor or materials in connection with the
Required Work; provided, however, that Lender may not pursue any such rights or
claims unless an Event of Default has occurred and remains uncured and Lender
grants to Borrower a revocable license with respect to all such Persons
supplying labor or materials in connection with the Required Work.
Section 9.5 Release of Reserve Funds
(a) Borrower shall have no right to receive any disbursements or
reimbursements from the Replacement Reserve Account; provided, however, upon the
payment in full of the Debt, all amounts remaining on deposit, if any, in the
Replacement Reserve Account shall be returned to Borrower or the Person shown on
Lender's records as being the owner of the Properties and no other party shall
have any right or claim thereto.
Section 9.6 Tax and Insurance Reserve Funds
Borrower shall establish on the date hereof an Eligible Account with
Lender or Lender's agent sufficient to discharge Borrower's obligations for the
payment of Taxes and Insurance Premiums pursuant to Section 5.4 and Section 8.1
hereof (the "TAX AND
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INSURANCE RESERVE ACCOUNT") into which Borrower shall deposit on the date hereof
$840,739.17, which amount, when added to the required monthly deposits set forth
in the next sentence, is sufficient to make the payments of Taxes and Insurance
Premiums as required herein. Borrower shall deposit into the Tax and Insurance
Reserve Account on each Scheduled Payment Date (a) one-twelfth of the Taxes that
Lender estimates will be payable during the next ensuing twelve (12) months or
such higher amount necessary to accumulate with Lender sufficient funds to pay
all such Taxes at least thirty (30) days prior to the earlier of (i) the date
that the same will become delinquent and (ii) the date that additional charges
or interest will accrue due to the non-payment thereof, and (b) except to the
extent Lender has waived the insurance escrow because the insurance required
hereunder is maintained under a blanket insurance Policy acceptable to Lender in
accordance with Section 8.1(c), one-twelfth of the Insurance Premiums that
Lender estimates will be payable during the next ensuing twelve (12) months for
the renewal of the coverage afforded by the Policies upon the expiration thereof
or such higher amount necessary to accumulate with Lender sufficient funds to
pay all such Insurance Premiums at least thirty (30) days prior to the
expiration of the Policies (said amounts in (a) and (b) above hereinafter called
the "TAX AND INSURANCE RESERVE FUNDS"). Lender will apply the Tax and Insurance
Reserve Funds to (a) payments of Taxes and Insurance Premiums required to be
made by Borrower pursuant to Section 5.4 and Section 8.1 hereof or (b) upon
delivery to Lender of evidence of the prior payment of such Taxes and/or
Insurance Premiums, to reimburse Borrower (or such other Person designated by
Borrower) for any such payments made by Borrower (or such other Person) from its
own funds. In making any disbursement from the Tax and Insurance Reserve
Account, Lender may do so according to any ▇▇▇▇, statement or estimate procured
from the appropriate public office or tax lien service (with respect to Taxes)
or insurer or agent (with respect to Insurance Premiums), without inquiry into
the accuracy of such ▇▇▇▇, statement or estimate or into the validity of any
tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the
amount of the Tax and Insurance Reserve Funds shall exceed the amounts due for
Taxes and Insurance Premiums pursuant to Section 5.4 and Section 8.1 hereof,
Lender shall, in its sole discretion, return any excess to Borrower or credit
such excess against future payments to be made to the Tax and Insurance Reserve
Account, In allocating any such excess, Lender may deal with the person shown on
Lender's records as being the owner of the Properties. Any amount remaining in
the Tax and Insurance Reserve Account after the Debt has been paid in full shall
be returned to Borrower or the person shown on Lender's records as being the
owner of the Properties and no other party shall have any right or claim
thereto. If at any time Lender reasonably determines that the Tax and Insurance
Reserve Funds are not or will not be sufficient to pay Taxes and Insurance
Premiums by the dates set forth in (a) and (b) above, Lender shall notify
Borrower of such determination and Borrower shall pay to Lender any amount
necessary to make up the deficiency within ten (10) days after notice from
Lender to Borrower requesting payment thereof.
Section 9.7 Required DSCR Reserve.
(a) Borrower shall establish on the date hereof an Eligible Account with
Lender or Lender's agent (the "REQUIRED DSCR RESERVE ACCOUNT") into which
Borrower shall deposit on the date hereof the amount of $30,000,000.00 to be
held in
84
escrow as additional security for the Loan. Amounts so deposited shall
hereinafter be referred to as the "REQUIRED DSCR RESERVE FUNDS".
(b) Provided no Event of Default has occurred and is continuing under this
Agreement and the other Loan Documents, commencing on November 1, 2004, upon
written request from Borrower (not to exceed two (2) times per calendar year),
Lender shall disburse to Borrower any sums from the Required DSCR Reserve
Account which Lender determines are in excess of those amounts (factoring in all
accrued and unpaid interest on the amount prepaid and any additional costs, if
any, as a result of such prepayment ) that if used to prepay the Loan would the
result in a Required DSCR Operations Debt Service Coverage Ratio of not less
than 1.60:1.00 assuming a loan constant equal to nine and one-quarter percent
(9.25%) based on the immediately preceding twelve (12) month period.
Section 9.8 Reserve Account Balances.
(a) Upon payment in full of the Debt, all amounts remaining on deposit, if
any, in the Reserve Accounts shall be remitted by Lender to Borrower and, in
either case, no other party shall have any right or claim thereto.
Section 9.9 Reserve Funds Generally
(a) Other than as provided in Section 9.9(b) below, neither Lender nor any
loan servicer that at any time holds or maintains the Reserve Accounts shall
have any obligation to keep or maintain such Reserve Accounts or any funds
deposited therein in interest-bearing accounts. Other than as provided in
Section 9.9(b) below, if Lender or any such loan servicer elects in its sole and
absolute discretion to keep or maintain any Reserve Account or any funds
deposited therein in an interest-bearing account, (i) such funds shall not be
invested except in Permitted Investments, and (ii) all interest earned or
accrued thereon shall be for the account of and be retained by Lender or such
loan servicer.
(b) Funds deposited in the Replacement Reserve Account and the Required
DSCR Reserve Account shall be held in an interest-bearing business savings
account and interest shall be credited to Borrower, but such interest shall be
held in the applicable Account; provided, however, Borrower and Lender hereby
authorize and direct Agent to distribute on the first Payment Date of each
calendar year all income earned on the Required DSCR Reserve Funds (1) into the
Cash Management Account or (2) as otherwise directed by Borrower in order to
comply with Legal Requirements relating to security deposits; provided, however,
Agent shall not distribute any such income for so long as an Event of Default
exists. In no event shall Lender or any loan servicer that at any time holds or
maintains the Replacement Reserve Account and/or the Required DSCR Reserve
Account be required to select any particular interest-bearing account or the
account that yields the highest rate of interest, provided that selection of the
account shall be consistent with the general standards at the time being
utilized by Lender or the loan servicer, as applicable, in establishing similar
accounts for loans of comparable type. All such interest shall be and become
part of the Replacement Reserve Account or,
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except as provided above, the Required DSCR Reserve Account; provided, however,
that Lender may, at its election, retain any such interest for its own account
during the occurrence and continuance of an Event of Default. Borrower agrees
that it shall include all interest on Replacement Reserve Funds and Required
DSCR Reserve Account as the income of Borrower (and, if Borrower is a
partnership or other pass-through entity, the partners, members or beneficiaries
of Borrower, as the case may be), and shall be the owner of the Replacement
Reserve Funds and Required DSCR Reserve Funds for federal and applicable state
and local tax purposes, except to the extent that Lender retains any interest
for its own account during the occurrence and continuance of an Event of Default
as provided herein.
(c) Borrower grants to Lender a first-priority perfected security interest
in, and assigns and pledges to Lender, each of the Reserve Accounts and any and
all Reserve Funds now or hereafter deposited in the Reserve Accounts as
additional security for payment of the Debt. Until expended or applied in
accordance herewith, the Reserve Accounts and the Reserve Funds shall constitute
additional security for the Debt. The provisions of this Section 9.9 are
intended to give Lender or any subsequent holder of the Loan "control" of the
Reserve Accounts within the meaning of the UCC.
(d) The Reserve Accounts and any and all Reserve Funds now or hereafter
deposited in the Reserve Accounts shall be subject to the exclusive dominion and
control of Lender, which shall hold the Reserve Accounts and any or all Reserve
Funds now or hereafter deposited in the Reserve Accounts subject to the terms
and conditions of this Agreement. Borrower shall have no right of withdrawal
from the Reserve Accounts or any other right or power with respect to the
Reserve Accounts or any or all of the Reserve Funds now or hereafter deposited
in the Reserve Accounts, except as expressly provided in this Agreement.
(e) Lender shall furnish or cause to be furnished to Borrower, without
charge, an annual accounting of each Reserve Account in the normal format of
Lender or its loan servicer, showing credits and debits to such Reserve Account
and the purpose for which each debit to each Reserve Account was made.
(f) As long as no Event of Default has occurred and is continuing, Lender
shall make disbursements from the Reserve Accounts in accordance with this
Agreement. All such disbursements shall be deemed to have been expressly
pre-authorized by Borrower, and shall not be deemed to constitute the exercise
by Lender of any remedies against Borrower unless an Event of Default has
occurred and is continuing and Lender has expressly stated in writing its intent
to proceed to exercise its remedies as a secured party, pledgee or lienholder
with respect to the Reserve Accounts.
(g) If any Event of Default occurs, Borrower shall immediately lose all of
its rights to receive disbursements from the Reserve Accounts until the earlier
to occur of (i) the date on which such Event of Default is cured to Lender's
satisfaction, or (ii) the payment in full of the Debt. Upon the occurrence of
any Event of Default, Lender may exercise any or all of its rights and remedies
as a secured party, pledgee and lienholder with respect to the Reserve Accounts.
Without limitation of the foregoing, upon any
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Event of Default, Lender may use and disburse the Reserve Funds (or any portion
thereof) for any of the following purposes: (A) repayment of the Debt,
including, but not limited to, principal prepayments and the prepayment premium
applicable to such full or partial prepayment (as applicable); (B) reimbursement
of Lender for all losses, fees, costs and expenses (including, without
limitation, reasonable legal fees) suffered or incurred by Lender as a result of
such Event of Default; (C) payment of any amount expended in exercising any or
all rights and remedies available to Lender at law or in equity or under this
Agreement or under any of the other Loan Documents; (D) payment of any item from
any of the Reserve Accounts as required or permitted under this Agreement; or
(E) any other purpose permitted by applicable law; provided, however, that any
such application of funds shall not cure or be deemed to cure any Event of
Default. Without limiting any other provisions hereof, each of the remedial
actions described in the immediately preceding sentence shall be deemed to be a
commercially reasonable exercise of Lender's rights and remedies as a secured
party with respect to the Reserve Funds and shall not in any event be deemed to
constitute a setoff or a foreclosure of a statutory banker's lien. Nothing in
this Agreement shall obligate Lender to apply all or any portion of the Reserve
Funds to effect a cure of any Event of Default, or to pay the Debt, or in any
specific order of priority. The exercise of any or all of Lender's rights and
remedies under this Agreement or under any of the other Loan Documents shall not
in any way prejudice or affect Lender's right to initiate and complete a
foreclosure under the Mortgages.
(h) The Reserve Funds shall not constitute escrow or trust funds and may
be commingled with other monies held by Lender. Notwithstanding anything else
herein to the contrary, Lender may commingle in one or more Eligible Accounts
any and all funds controlled by Lender, including, without limitation, funds
pledged in favor of Lender by other borrowers, whether for the same purposes as
the Reserve Accounts or otherwise. Without limiting any other provisions of this
Agreement or any other Loan Document, the Reserve Accounts may be established
and held in such name or names as Lender or its loan servicer, as agent for
Lender, shall deem appropriate, including, without limitation, in the name of
Lender or such loan servicer as agent for Lender. In the case of any Reserve
Account which is held in a commingled account, Lender or its loan servicer, as
applicable, shall maintain records sufficient to enable it to determine at all
times which portion of such account is related to the Loan. The Reserve Accounts
are solely for the protection of Lender. With respect to the Reserve Accounts,
Lender shall have no responsibility beyond the allowance of due credit for the
sums actually received by Lender or beyond the reimbursement or payment of the
costs and expenses for which such accounts were established in accordance with
their terms. Upon assignment of the Loan by Lender, any Reserve Funds shall be
turned over to the assignee and any responsibility of Lender as assignor shall
terminate. The requirements of this Agreement concerning Reserve Accounts in no
way supersede, limit or waive any other rights or obligations of the parties
under any of the Loan Documents or under applicable law.
(i) Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, assign or grant any security interest in the Reserve
Accounts or the Reserve Funds deposited therein or permit any Lien to attach
thereto, except for the security interest granted in this Section 9.9, or any
levy to be made thereon, or any UCC
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Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.
(j) Borrower will maintain the security interest created by this Section
9.9 as a first priority perfected security interest and will defend the right,
title and interest of Lender in and to the Reserve Accounts and the Reserve
Funds against the claims and demands of all Persons whomsoever. At any time and
from time to time, upon the written request of Lender, and at the sole expense
of Borrower, Borrower will promptly and duly execute and deliver such further
instruments and documents and will take such further actions as Lender
reasonably may request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.
ARTICLE 10 - CASH MANAGEMENT
Section 10.1 Cash Management Agreement
On or prior to the Closing Date, Borrower, Manager, Lender and Agent shall
enter into the Cash Management Agreement for the operation of the Lockbox
Account and the subaccounts for the Reserve Funds.
ARTICLE 11 - EVENTS OF DEFAULT; REMEDIES
Section 11.1 Event of Default
The occurrence of any one or more of the following events shall constitute
an "EVENT OF DEFAULT":
(a) if any portion of the Debt is not paid prior to the date the same is
due or if the entire Debt is not paid on or before the Maturity Date; provided,
however, Borrower shall not be in default so long as there is sufficient money
in the Lockbox Account for payment of all amounts then due and payable
(including any deposits into Reserve Accounts) and Lender's access to such money
has not been constrained or constricted in any manner;
(b) except as otherwise expressly provided in the Loan Documents, if any
of the Taxes or Other Charges are not paid when the same are due and payable,
unless there is sufficient money in the Tax and Insurance Reserve Account for
payment of amounts then due and payable and Lender's access to such money has
not been constrained or restricted in any manner;
(c) if the Policies are not kept in full force and effect, or if certified
copies or certificates of the Policies are not delivered to Lender as provided
in Section 8.1;
(d) if Borrower breaches any covenant with respect to itself or any SPE
Component Entity (if any) contained in Article 6 or any covenant contained in
Article 7 hereof;
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(e) if any representation or warranty of, or with respect to, Borrower,
Borrower Principal, any SPE Component Entity, or any member, general partner,
principal or beneficial owner of any of the foregoing, made herein, in any other
Loan Document, or in any certificate, report, financial statement or other
instrument or document furnished to Lender at the time of the closing of the
Loan or during the term of the Loan shall have been false or misleading in any
material respect when made;
(f) if (i) Borrower, or any managing member or general partner of
Borrower, Borrower Principal or any SPE Component Entity (if any) shall commence
any case, proceeding or other action (A) under any Creditors Rights Laws,
seeking to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or Borrower,
any managing member or general partner of Borrower, Borrower Principal or any
SPE Component Entity (if any) shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against Borrower, any managing
member or general partner of Borrower, Borrower Principal or any SPE Component
Entity (if any), any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (iii) there shall be commenced
against Borrower, any managing member or general partner of Borrower, Borrower
Principal or any SPE Component Entity (if any), any case, proceeding or other
action seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which results
in the entry of any order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within sixty (60) days from the
entry thereof; or (iv) Borrower, any managing member or general partner of
Borrower, Borrower Principal or any SPE Component Entity (if any) shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) Borrower, any managing member or general partner of Borrower, Borrower
Principal or any SPE Component Entity (if any) shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due;
(g) if Borrower shall be in default beyond applicable notice and grace
periods under any other mortgage, deed of trust, deed to secure debt or other
security agreement covering any part of any Individual Property, whether it be
superior or junior in Lien to any Mortgage;
(h) if any Individual Property becomes subject to any mechanic's,
materialman's or other Lien other than a Lien for any Taxes or Other Charges not
then due and payable and the Lien shall remain undischarged of record (by
payment, bonding or otherwise) for a period of thirty (30) days;
(i) if any federal tax lien is filed against Borrower, any member or
general partner of Borrower, Borrower Principal, any SPE Component Entity (if
any), Operating Lessee or Operating Lessee Principal or any Individual Property
and same is not discharged of record within sixty (60) days after same is filed;
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(j) if a final, non-appealable judgment is filed against the Borrower in
excess of $200,000 which is not vacated or discharged within one hundred twenty
(120) days;
(k) if any default occurs under the Subordination Agreement, and such
default continues after the expiration of applicable grace periods, if any,
provided that if Borrower or Operating Lessee shall have commenced to cure such
default and thereafter diligently and expeditiously proceeds to cure the same,
Borrower or Operating Lessee shall have such time as it shall require in the
exercise of Borrower's or Operating Lessee's due diligence to cure such default,
it being agreed that no such extension shall be for a period in excess of one
hundred eighty (180) days (the "SUBORDINATION AGREEMENT INITIAL CURE DATE");
provided further that, after the Subordination Agreement Initial Cure Date, if
Borrower or Operating Lessee has deposited with Lender cash sufficient to pay
Debt Service and all other sums due under the Loan for the immediately
succeeding three (3) month period (beginning on the Subordination Agreement
Initial Cure Date) (the "SUBORDINATION AGREEMENT DEFAULT DEPOSIT") and at all
times maintains the Subordination Agreement Default Deposit with Lender,
Borrower or Operating Lessee shall have such time as it shall require in good
faith to (I) cure such default or (II) enter into a replacement operating lease
and documentation related thereto with a Borrower Qualified Subsidiary or
another operating lessee reasonably acceptable to Lender, which replacement
operating lease and documentation shall be in form, scope and fashion acceptable
to Lender. In the event Lender has extended the Subordination Agreement Initial
Cure Date as provided herein, Lender shall on each Scheduled Payment Date,
withdraw one-third (1/3) of the Subordination Agreement Default Deposit and
apply the same towards Debt Service and such other sums then due under the Loan;
(l) Intentionally Omitted;
(m) Intentionally Omitted;
(n) if Borrower shall permit any event within its control to occur that
would cause any REA to terminate without notice or action by any party thereto
or would entitle any party to terminate any REA and the term thereof by giving
notice to Borrower; or any REA shall be surrendered, terminated or canceled for
any reason or under any circumstance whatsoever except as provided for in such
REA; or any term of any REA shall be modified or supplemented without Lender's
prior written consent; or Borrower shall fail, within ten (10) Business Days
after demand by Lender, to exercise its option to renew or extend the term of
any REA or shall fail or neglect to pursue diligently all actions necessary to
exercise such renewal rights pursuant to such REA except as provided for in such
REA, if Lender determines that such failure would have a material adverse effect
on Borrower's and/or Operating Lessee's financial condition, the value of the
related Individual Property or the Operating Income of the applicable Individual
Property;
(o) there shall occur any default under the Operating Lease, in the
observance or performance of any term, covenant or condition of the Operating
Lease to be observed or performed and said default is not cured following the
expiration of any applicable grace and notice periods therein provided, or if
the leasehold estates created by the
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Operating Lease shall be surrendered or if the Operating Lease shall cease to be
in full force and effect or the Operating Lease shall be terminated or canceled
for any reason or under any circumstances whatsoever, or if any of the terms,
covenants or conditions of the Operating Lease shall in any manner be modified,
changed, supplemented, altered, or amended without the consent of Lender;
provided that if Borrower or Operating Lessee shall have commenced to cure such
default and thereafter diligently and expeditiously proceeds to cure the same,
Borrower and Operating Lessee shall have such time as it shall require in the
exercise of Borrower and Operating Lessee's due diligence to cure such default,
it being agreed that no such extension shall be for a period in excess of one
hundred eighty (180) days (the "INITIAL CURE DATE"); provided that, after the
Initial Cure Date, if Borrower or Operating Lessee has deposited with Lender
cash sufficient to pay Debt Service and all other sums due under the Loan for
the immediately succeeding three (3) month period (beginning on the period
immediately succeeding the Initial Cure Date) (the "OPERATING LEASE DEFAULT
DEPOSIT") and at all times maintains the Operating Lease Default Deposit with
Lender, Borrower or Operating Lessee shall have such time as it shall require in
good faith to (I) cure such default or (II) enter into a replacement operating
lease and documentation related thereto with a Borrower Qualified Subsidiary or
another operating lessee reasonably acceptable to Lender, which replacement
operating lease and documentation shall be in form, scope and fashion acceptable
to Lender. In the event Lender has extended the Initial Cure Date as provided
herein, Lender shall on each Scheduled Payment Date, withdraw one-third (1/3) of
the Operating Lease Default Deposit and apply the same towards Debt Service and
such other sums then due under the Loan; or
(p) if Borrower shall continue to be in default under any other term,
covenant or condition of this Agreement or any of the Loan Documents for more
than ten (10) days after notice from Lender in the case of any default which can
be cured by the payment of a sum of money or for thirty (30) days after notice
from Lender in the case of any other default, provided that if such default
cannot reasonably be cured within such thirty (30) day period and Borrower shall
have commenced to cure such default within such thirty (30) day period and
thereafter diligently and expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for so long as it shall require Borrower in
the exercise of due diligence to cure such default, it being agreed that,
subject to Force Majeure no such extension shall be for a period in excess of
one hundred five (105) days except in the case of any on-going remediation or
monitoring of an Environmental Violation which is being cured in compliance with
Paragraph 10 of the Operating Lease, in which case the applicable cure period
shall not exceed one hundred eighty (180) days.
Section 11.2 Remedies
(a) Upon the occurrence of an Event of Default (other than an Event of
Default described in Section 11.1(f) above) and at any time thereafter Lender
may, in addition to any other rights or remedies available to it pursuant to
this Agreement and the other Loan Documents or at law or in equity, take such
action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrower and in the Properties, 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
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in the Loan Documents against Borrower and the Properties, including, without
limitation, all rights or remedies available at law or in equity; and upon any
Event of Default described in Section 11.1(f) above, the Debt and all other
obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
(b) Upon the occurrence of an Event of Default, all or any one or more of
the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Debt shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Properties. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singularly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan Documents.
ARTICLE 12 - ENVIRONMENTAL PROVISIONS
Section 12.1 Environmental Representations and Warranties
Borrower represents and warrants, except as expressly disclosed in the
Environmental Report of each Individual Property, as applicable, and to the best
of Borrower's knowledge, that: (a) there arc no Hazardous Materials or
underground storage tanks in, on, or under any Individual Property, except those
that are both (i) in compliance with Environmental Laws and with permits issued
pursuant thereto (if such permits are required), if any, and (ii) either (A) in
the case of Hazardous Materials, in amounts not in excess of that necessary to
operate such Individual Property for the purposes set forth herein or (B) fully
disclosed to Lender in writing pursuant to an Environmental Report; (b) there
are no past, present or threatened Releases of Hazardous Materials in violation
of any Environmental Law or which would require remediation by a Governmental
Authority in, on, under or from any Individual Property except as described in
the Environmental Report; (c) Borrower does not have any actual knowledge of,
and has not received, any written or oral notice or other communication from any
Person relating to Hazardous Materials in, on, under or from any Individual
Property; and (d) Borrower has truthfully and fully provided to Lender, in
writing, any and all information relating to environmental conditions in, on,
under or from the Properties known to Borrower or contained in Borrower's files
and records, including but not limited to any reports relating to Hazardous
Materials in, on, under or migrating to or from the Properties and/or to the
environmental condition of the Properties.
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Section 12.2 Environmental Covenants
Borrower covenants and agrees that so long as Borrower owns, manages, is
in possession of, or otherwise controls the operation of any Individual
Property, subject to the rights of Operating Lessee pursuant to the Operating
Lease: (a) all uses and operations on or of the Properties, whether by Borrower
or any other Person, shall be in material compliance with all Environmental Laws
and permits issued pursuant thereto; (b) there shall be no Releases of Hazardous
Materials in, on, under or from the Properties except in full compliance with
Environmental Laws; (c) there shall be no Hazardous Materials in, on, or under
the Properties, except those that are both (i) in compliance with all
Environmental Laws and with permits issued pursuant thereto, if and to the
extent required, and (ii) (A) in amounts not in excess of that necessary to
operate the applicable Individual Property for the purposes set forth herein or
(B) disclosed to Lender in the Environmental Reports; (d) Borrower shall keep
the Properties free and clear of all Environmental Liens; (e) Borrower shall, at
its sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to Section 12.4 below, including but not limited to providing all
relevant information and making knowledgeable persons available for interviews;
(f) Borrower shall, at its sole cost and expense, perform (or cause to be
performed) any environmental site assessment or other investigation of
environmental conditions in connection with the Properties, pursuant to any
reasonable written request of Lender, upon Lender's reasonable belief that an
Individual Property is not in full compliance with all Environmental Laws, and
share with Lender the reports and other results thereof, and Lender and other
Indemnified Parties shall be entitled to rely on such reports and other results
thereof; (g) Borrower shall, at its sole cost and expense, comply with all
reasonable written requests of Lender to (i) reasonably effectuate remediation
of any Hazardous Materials in, on, under or from the Properties, to the extent
the same violates any Environmental Law; and (ii) comply with any Environmental
Law; (h) Borrower shall not allow any tenant or other user of any Individual
Property to violate any Environmental Law; and (i) except as expressly disclosed
in the applicable Environmental Report, Borrower shall promptly notify Lender in
writing after it has become aware of (A) any presence or Release or threatened
Release of Hazardous Materials in, on, under, from or migrating towards the
Properties; (B) any non-compliance with any Environmental Laws related in any
way to the Properties; (C) any actual or potential Environmental Lien against
any Individual Property; (D) any required or proposed remediation of
environmental conditions relating to any Individual Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a Governmental
Authority) relating in any way to Hazardous Materials.
Section 12.3 Lender's Rights
Lender and any other Person designated by Lender, including but not
limited to any representative of a Governmental Authority, and any environmental
consultant, and any receiver appointed by any court of competent jurisdiction,
shall have the right, but not the obligation, to enter upon the Properties at
all reasonable times to assess any and all aspects of the environmental
condition of the Properties and its use, including but not limited to conducting
any environmental assessment or audit (the scope of which shall be
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determined in Lender's sole discretion) and taking samples of soil, groundwater
or other water, air, or building materials, and conducting other invasive
testing. Borrower shall cooperate with and provide reasonable access to Lender
and any such person or entity designated by Lender.
Section 12.4 Operations and Maintenance Programs
Borrower shall comply, or cause Operating Lessee to comply, with the
operations and maintenance programs previously delivered to Lender with respect
to the O&M Properties.
Section 12.5 Environmental Definitions
"ENVIRONMENTAL LAW" means any present and future federal, state and local
laws, statutes, ordinances, rules, regulations, standards, policies and other
government directives or requirements, as well as common law, including but not
limited to the Comprehensive Environmental Response, Compensation and Liability
Act and the Resource Conservation and Recovery Act, that apply to Borrower or
any Individual Property and relate to Hazardous Materials or protection of human
health or the environment. "ENVIRONMENTAL LIENS" means all Liens and other
encumbrances imposed pursuant to any Environmental Law, whether due to any act
or omission of Borrower or any other Person. "ENVIRONMENTAL REPORT" means the
written reports resulting from the environmental site assessments of any
Individual Property delivered to Lender in connection with the Loan. "HAZARDOUS
MATERIALS" shall mean petroleum and petroleum products and compounds containing
them, including gasoline, diesel fuel and oil; explosives, flammable materials;
regulated radioactive materials; polychlorinated biphenyls and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on any Individual Property is prohibited by any
federal, state or local authority; any substance that requires special handling;
and any other material or substance now or in the future defined as a "hazardous
substance," "hazardous material", "hazardous waste", "toxic substance", "toxic
pollutant", "contaminant", or "pollutant" within the meaning of any
Environmental Law. "RELEASE" of any Hazardous Materials includes but is not
limited to any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Materials.
Section 12.6 Indemnification
(a) Borrower and Borrower Principal covenant and agree at their sole cost
and expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (i) any presence
of any Hazardous Materials in, on, above, or under any Individual Property, (ii)
any past, present or threatened Release of Hazardous Materials in, on, above,
under or from any Individual Property; (iii) any
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activity by Borrower, any Person affiliated with Borrower, and any Tenant or
other user of an Individual Property in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
an Individual Property of any Hazardous Materials at any time located in, under,
on or above an Individual Property or any actual or proposed remediation of any
Hazardous Materials at any time located in, under, on or above an Individual
Property, whether or not such remediation is voluntary or pursuant to court or
administrative order, including but not limited to any removal, remedial or
corrective action; (iv) any past, present or threatened non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with any Individual Property or operations
thereon, including but not limited to any failure by Borrower, any person or
entity affiliated with Borrower, and any tenant or other user of any Individual
Property to comply with any order of any Governmental Authority in connection
with any Environmental Laws; (v) the imposition, recording or filing or the
threatened imposition, recording or filing of any Environmental Lien encumbering
any Individual Property; (vi) any acts of Borrower, any person or entity
affiliated with Borrower, and any tenant or other user of any Individual
Property in (A) arranging for disposal or treatment, or arranging with a
transporter for transport for disposal or treatment, of Hazardous Materials at
any facility or incineration vessel containing such or similar Hazardous
Materials or (B) accepting any Hazardous Materials for transport to disposal or
treatment facilities, incineration vessels or sites from which there is a
Release, or a threatened Release of any Hazardous Substance which causes the
incurrence of costs for remediation; and (vii) any misrepresentation or
inaccuracy in any representation or warranty or material breach or failure to
perform any covenants or other obligations pursuant to this Agreement relating
to environmental matters.
(b) Upon written request by any Indemnified Party, Borrower and Borrower
Principal shall defend same (if requested by any Indemnified Party, in the name
of the Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their reasonable discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of any claim or
proceeding. Upon demand, Borrower and Borrower Principal shall pay or, in the
reasonable discretion of the Indemnified Parties, reimburse, the Indemnified
Parties for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.
(c) Notwithstanding the foregoing, Borrower shall have no liability for
any Losses imposed upon or incurred by or asserted against any Indemnified
Parties and described in subsection (a) above to the extent that (i) Borrower
can demonstrate both that such Losses were caused solely by actions, conditions
or events that occurred after the date that Lender (or any purchaser at a
foreclosure sale) actually acquired title to the Properties and that such Losses
were not caused by the direct or indirect actions of Borrower, Borrower
Principal, or any partner, member, principal, officer, director, trustee or
manager of Borrower or Borrower Principal or any employee, agent, contractor or
Affiliate of Borrower or Borrower Principal or (ii) such Losses were the direct
result of
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any Indemnified Party's gross negligence or willful misconduct. The obligations
and liabilities of Borrower and Borrower Principal under this Section 12.6 shall
fully survive indefinitely notwithstanding any termination, satisfaction,
assignment, entry of a judgment of foreclosure, exercise of any power of sale,
or delivery of a deed in lieu of foreclosure of any Mortgage.
ARTICLE 13 - SECONDARY MARKET
Section 13.1 Transfer of Loan
Lender may, at any time, sell, transfer or assign the Loan Documents, or
grant participations therein ("PARTICIPATIONS") or syndicate the Loan
("SYNDICATION") or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement ("SECURITIES") (a Syndication or the issuance of
Participations and/or Securities, a "SECURITIZATION").
Section 13.2 Delegation of Servicing
At the option of Lender, the Loan may be serviced by a servicer/trustee
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to such
servicer/trustee pursuant to a servicing agreement between Lender and such
servicer/trustee.
Section 13.3 Dissemination of Information
Lender may forward to each purchaser, transferee, assignee, or servicer
of, and each participant, or investor in, the Loan, or any Participations and/or
Securities or any of their respective successors (collectively, the "INVESTOR")
or any Rating Agency rating the Loan, or any Participations and/or Securities,
each prospective Investor, and any organization maintaining databases on the
underwriting and performance of commercial mortgage loans, all documents and
information which Lender now has or may hereafter acquire relating to the Debt
and to Borrower, any managing member or general partner thereof, Borrower
Principal, any SPE Component Entity (if any) and the Properties, including
financial statements, whether furnished by Borrower or otherwise, as Lender
determines necessary or desirable. Borrower irrevocably waives any and all
rights it may have under applicable Legal Requirements to prohibit such
disclosure, including but not limited to any right of privacy.
Section 13.4 Cooperation
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 and Borrower
Principal shall use reasonable efforts to provide information not in the
possession of the holder of the Note in order 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, in connection with the issuance of
Securities, the Rating Agencies, in connection with such sales or transfers,
including, without limitation, to:
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(a) provide updated financial, budget and other information with respect
to the Properties, Borrower, Borrower Principal and WPC and provide
modifications and/or updates to the appraisals, market studies, environmental
reviews and reports (Phase I reports and, if appropriate, Phase II reports) and
engineering reports of the Properties obtained in connection with the making of
the Loan (all of the foregoing being referred to as the "PROVIDED INFORMATION"),
together, if customary, with appropriate verification and/or consents of the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating Agencies;
(b) make changes to the organizational documents of Borrower, any SPE
Component Entity and their respective principals;
(c) at Borrower's expense, cause counsel to render or update existing
opinion letters as to enforceability and non-consolidation, and a 10b-5 comfort
letter, which may be relied upon by the holder of the Note, the Rating Agencies
and their respective counsel, which shall be dated as of the closing date of the
Securitization;
(d) permit site inspections, appraisals, market studies and other due
diligence investigations of the Properties, 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;
(e) make the representations and warranties with respect to the
Properties, Borrower, Borrower Principal and the Loan Documents as are made in
the Loan Documents and such other representations and warranties as may be
reasonably requested by the holder of the Note or the Rating Agencies;
(f) execute such amendments to the Loan Documents as may be requested by
the holder of the Note or the Rating Agencies or otherwise to effect the
Securitization including, without limitation, bifurcation of the Loan into two
or more components and/or separate notes and/or creating a senior/subordinate
note structure and/or creating two or more uncross-collateralized loans (which
would, among other things, require the creation of two or more
uncross-collateralized Operating Leases); provided, however, that Borrower shall
not be required to modify or amend any Loan Document if such modification or
amendment would (i) change the interest rate, the stated maturity or the
amortization of principal set forth in the Note, except in connection with a
bifurcation of the Loan which may result in varying fixed interest rates and
amortization schedules, but which shall have the same initial weighted average
coupon of the original Note, or (ii) in the reasonable judgment of Borrower,
modify or amend any other material economic term of the Loan, or (iii) in the
reasonable judgment of Borrower, materially increase Borrower's obligations and
liabilities under the Loan Documents;
(g) deliver to Lender and/or any Rating Agency, (i) one or more
certificates executed by an officer of the Borrower certifying as to the
accuracy, as of the closing date of the Securitization, of all representations
made by Borrower in the Loan Documents as of the Closing Date in all relevant
jurisdictions or, if such representations are no longer accurate, certifying as
to what modifications to the representations would
97
be required to make such representations accurate as of the closing date of the
Securitization, and (ii) certificates of the relevant Governmental Authorities
in all relevant jurisdictions indicating the good standing and qualification of
Borrower as of the date of the closing date of the Securitization;
(h) have reasonably appropriate personnel participate in a bank meeting
and/or presentation for the Rating Agencies or Investors; and
(i) cooperate with and assist Lender in obtaining ratings of the
Securities from two (2) or more of the Rating Agencies.
All actual, out-of-pocket reasonable third party costs and expenses
incurred by Borrower or Lender in connection with Borrower's complying with
requests made under this Section 13.4 (including, without limitation, the fees
and expenses of the Rating Agencies) shall be paid by Borrower.
In the event that Borrower requests any consent or approval hereunder and
the provisions of this Agreement or any Loan Documents require the receipt of
written confirmation from each Rating Agency with respect to the rating on the
Securities, or, in accordance with the terms of the transaction documents
relating to a Securitization, such a rating confirmation is required in order
for the consent of Lender to be given, Borrower shall pay all of the costs and
expenses of Lender, Lender's servicer and each Rating Agency in connection
therewith, and, if applicable, shall pay any fees imposed by any Rating Agency
as a condition to the delivery of such confirmation.
Section 13.5 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, offering
memorandum 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 or the Exchange Act, or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Securitization. In the event
that the Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower and Borrower Principal 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 final offering memorandum or private placement memorandum or
similar document (including any Investor or Rating Agency "term sheets" or
presentations relating to the Properties and/or the Loan) 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 or other document (including any Investor or Rating Agency "term
sheets" or presentations relating to the Properties and/or the Loan), as
applicable, relating to Borrower, Borrower Principal, their
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Affiliates, the Loan, the Loan Documents and the Properties, and any risks or
special considerations relating thereto (the "REVIEWED SECTIONS"), and that, to
the best of Borrower's knowledge, the Reviewed Sections 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 13.5, Lender hereunder shall include its officers and directors)
and the Affiliate of Lender that (i) has filed the registration statement, if
any, relating to the Securitization and/or (ii) which is acting as issuer,
depositor, sponsor and/or a similar capacity with respect to the Securitization
(any Person described in (i) or (ii), an "ISSUER PERSON"), and each director and
officer of any Issuer Person, and each Person or entity who controls any Issuer
Person within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (collectively, the "ISSUER GROUP"), and each Person which is
acting as an underwriter, manager, placement agent, initial purchaser or similar
capacity with respect to the Securitization, each of its directors and officers
and each Person who controls any such Person within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act (collectively, the
"UNDERWRITER GROUP") for any Losses to which Lender, the Issuer Group or the
Underwriter Group may become subject insofar as the Losses arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in the Reviewed Sections (including any Investor or Rating Agency
"term sheets" or presentations relating to the Properties and/or the Loan) or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated in the Reviewed Sections (including any
Investor or Rating Agency "term sheets" or presentations relating to the
Properties and/or the Loan) or necessary in order to make the statements in the
Reviewed Sections (including any Investor or Rating Agency "term sheets" or
presentations relating to the Properties and/or the Loan) or in light of the
circumstances under which they were made, not misleading (collectively the
"SECURITIES LIABILITIES") and (C) agreeing to reimburse Lender, the Issuer Group
and the Underwriter Group for any legal or other expenses reasonably incurred by
Lender and Issuer Group in connection with investigating or defending the
Securities Liabilities; provided, however, that Borrower will be liable in any
such case under clauses (B) or (C) above only to the extent that (i) any such
Securities Liabilities arise 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 or any member of the Issuer Group or Underwriter Group by or
on behalf of Borrower or Borrower Principal in connection with the preparation
of the memorandum or prospectus or other document (including any Investor or
Rating Agency "term sheets" or presentations relating to the Properties and/or
the Loan) or in connection with the underwriting of the Loan, including, without
limitation, financial statements of Borrower or Borrower Principal, operating
statements, rent rolls, environmental site assessment reports and property
condition reports with respect to the Properties and (ii) Lender or such Issuer
Group or Investor Group did not have any actual independent knowledge of such
untrue statement or omission. This indemnity agreement will be in addition to
any liability which Borrower may otherwise have. Moreover, the indemnification
provided for in Clauses (B) and (C) above shall be effective whether or not an
indemnification certificate described in (A) above is provided and shall be
applicable based on information previously provided by Borrower and
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Borrower Principal or their Affiliates if Borrower or Borrower Principal do not
provide the indemnification certificate; provided, however, neither Borrower nor
Borrower Principal shall not be liable to the extent that any such Securities
Liabilities relate solely to errors and omissions which Borrower expressly
identified to Lender and remained uncorrected or with respect to any information
not contained in the Reviewed Sections.
(c) In connection with filings under the Exchange Act or any information
provided to holders of Securities on an ongoing basis, Borrower agrees to
indemnify (i) Lender, the Issuer Group and the Underwriter Group for Losses to
which Lender, the Issuer Group or the Underwriter Group may become subject
insofar as the Securities 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 Issuer Group
or the Underwriter Group for any legal or other expenses reasonably incurred by
Lender, the Issuer Group or the Underwriter Group in connection with defending
or investigating the Securities Liabilities provided, however, Borrower shall
not be liable to the extent that any such Securities Liabilities relate solely
to errors and omissions which Borrower expressly identified to Lender and
remained uncorrected or with respect to any information not contained in the
Reviewed Sections or as to which Lender or such Issuer Group or Investor Group
had actual independent knowledge of such untrue statement, error or omission.
(d) Promptly after receipt by an indemnified party under this Section 13.5
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 13.5, 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 it 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 reasonably satisfactory to such
indemnified party. After notice from the indemnifying party to such indemnified
party under this Section 13.5 the indemnifying party shall be responsible 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 or parties. The indemnifying party shall not be liable for the
expenses of more than one such separate counsel unless an indemnified
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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.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in Section 13.5(c)
or Section 13.5(d) is or are 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 13.5(c) or Section 13.5(d), 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) the indemnified party's, Borrower's and Borrower Principal'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, Borrower and Borrower Principal 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 Borrower and Lender under this
Section 13.5 shall survive the satisfaction of this Agreement and the
satisfaction and discharge of the Debt.
Section 13.6 Rating Surveillance
In the event Lender retains the Rating Agencies to provide rating
surveillance services on any certificates issued in a Securitization, such
rating surveillance will be at the expense of Borrower in an amount determined
by Lender in its reasonable discretion prior to the occurrence of a
Securitization and such expense will be paid at the closing of the
Securitization.
ARTICLE 14 - INDEMNIFICATIONS
Section 14.1 General Indemnification
Borrower shall indemnify, defend and hold harmless the Indemnified Parties
from and against any and all Losses imposed upon or incurred by or asserted
against any Indemnified Parties and directly or indirectly arising out of or in
any way relating to any one or more of the following: (a) any accident, injury
to or death of persons or loss of or damage to property occurring in, on or
about the Properties or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (b) any use,
nonuse or condition (other than environmental matters which are governed by
Article 12 hereof) in, on or about the Properties or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) performance of any labor or services or the furnishing of any
materials or other property
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in respect of the Properties or any part thereof; (d) any failure of the
Properties to be in compliance with any applicable Legal Requirements (other
than environmental matters which are governed by Article 12 hereof); (e) any and
all claims and demands whatsoever which may be asserted against Lender by reason
of any alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants, or agreements contained in any Lease; (f) the
holding or investing of the Reserve Accounts or the performance of the Required
Work, or (g) the payment of any commission, charge or brokerage fee to anyone
which may be payable in connection with the funding of the Loan (collectively,
the "INDEMNIFIED 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 or any other Indemnified Party. To the extent that the
undertaking to indemnify, defend and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.
Section 14.2 Mortgage and Intangible Tax Indemnification
Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all
Losses imposed upon or incurred by or asserted against any Indemnified Parties
and directly or indirectly arising out of or in any way relating to any tax on
the making and/or recording of the Mortgages, the Note or any of the other Loan
Documents, but excluding any income, gains, franchise or other similar taxes
imposed on any Indemnified Party.
Section 14.3 ERISA Indemnification
Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all
Losses (including, without limitation, reasonable attorneys' fees and costs
incurred in the investigation, defense, and settlement of Losses incurred in
correcting any prohibited transaction or in the sale of a prohibited loan, and
in obtaining any individual prohibited transaction exemption under ERISA that
may be required, in Lender's sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under Section 4.8 or Section 5.18 of this
Agreement.
Section 14.4 Survival
The obligations and liabilities of Borrower and Borrower Principal under
this Article 14 shall fully survive indefinitely notwithstanding any
termination, satisfaction, assignment, entry of a judgment of foreclosure,
exercise of any power of sale, or delivery of a deed in lieu of foreclosure of
any Mortgage.
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ARTICLE 15 - EXCULPATION
Section 15.1 Exculpation
(a) Except as otherwise provided herein or in the other Loan Documents,
Lender shall not enforce the liability and obligation of Borrower or Borrower
Principal, as applicable, to perform and observe the obligations contained
herein or in the other Loan Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower or Borrower Principal, except
that Lender may bring a foreclosure action, action for specific performance or
other appropriate action or proceeding to enable Lender to enforce and realize
upon this Agreement, the Note, the Mortgages and the other Loan Documents, and
the interest in the Properties, the Rents and any other collateral given to
Lender created by this Agreement, the Note, the Mortgages and the other Loan
Documents; provided, however, that any judgment in any such action or proceeding
shall be enforceable against Borrower or Borrower Principal, as applicable, only
to the extent of Borrower's or Borrower Principal's interest in the Properties,
in the Rents and in any other collateral given to Lender. Lender, by accepting
this Agreement, the Note, the Mortgages and the other Loan Documents, agrees
that it shall not, except as otherwise provided in this Section 15.1, ▇▇▇ for,
seek or demand any deficiency judgment against Borrower or Borrower Principal in
any such action or proceeding, under or by reason of or under or in connection
with this Agreement, the Note, the Mortgages or the other Loan Documents. The
provisions of this Section 15.1 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Agreement,
the Note, the Mortgages or the other Loan Documents; (ii) impair the right of
Lender to name Borrower or Borrower Principal as a party defendant in any action
or suit for judicial foreclosure and sale under this Agreement and the
Mortgages; (iii) affect the validity or enforceability of any indemnity
(including, without limitation, those contained in Section 12.6, Section 13.5
and Article 14 of this Agreement), guaranty, master lease or similar instrument
made in connection with this Agreement, the Note, the Mortgages and the other
Loan Documents; (iv) impair the right of Lender to obtain the appointment of a
receiver; (v) impair the enforcement of the assignment of leases provisions
contained in the Mortgages; or (vi) impair the right of Lender to obtain a
deficiency judgment or other judgment on the Note against Borrower or Borrower
Principal if necessary to obtain any Insurance Proceeds or Awards to which
Lender would otherwise be entitled under this Agreement; provided however,
Lender shall only enforce such judgment to the extent of the Insurance Proceeds
and/or Awards.
(b) Notwithstanding the provisions of this Section 15.1 to the contrary,
Borrower and Borrower Principal shall be personally liable to Lender on a joint
and several basis for Losses actually sustained as a result of:
(i) fraud or intentional misrepresentation by Borrower, Borrower
Principal or any other Affiliate of Borrower or Borrower Principal in
connection with the execution and the delivery of this Agreement, the
Note, the Mortgages, any of the other Loan Documents, or any certificate,
report, financial statement or other instrument or document prepared by or
on behalf of Borrower, Operating Lessee or any Affiliate of either of them
and furnished to Lender at the time of the
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closing of the Loan or during the term of the Loan; provided, however,
neither Borrower nor Borrower Principal shall have any liability pursuant
to this Section 15.1(b)(i) to the extent any such certificate, report,
financial statement or other instrument or document was prepared by or on
behalf of Operating Lessee or Manager or was prepared by or on behalf of
Borrower in good faith reliance on such information provided by Operating
Lessee or Manager;
(ii) Borrower's misapplication or misappropriation of Rents received
by Borrower after the occurrence of an Event of Default;
(iii) Borrower's misapplication or misappropriation of tenant
security deposits or Rents collected in advance;
(iv) the misapplication or the misappropriation of Insurance
Proceeds or Awards;
(v) Borrower's failure to pay Taxes, Other Charges (except to the
extent that sums sufficient to pay such amounts have been deposited in
escrow with Lender pursuant to the terms hereof and there exists no
impediment to Lender's utilization thereof), charges for labor or
materials or other charges incurred in connection with work performed at
any Individual Property that can create Liens on any Individual Property
beyond any applicable notice and cure periods specified herein, but, in
each case, only to the extent the Properties generated sufficient Net
Operating Income to pay the same when due;
(vi) Intentionally Omitted;
(vii) any act of actual waste or arson by Borrower, any principal,
Affiliate, member or general partner thereof or by Borrower Principal, any
principal, Affiliate, member or general partner thereof;
(viii) a default by Borrower, Borrower Principal or any SPE
Component Entity (if any) of any of the material covenants set forth in
Article 6;
(ix) Borrower's failure during the existence of any Event of Default
and upon the written request of Lender, to deliver (a) all Rents and (b)
all books and records relating to the Properties to the extent the same
are in Borrower's possession and control; or
(x) the filing by any Person within ten (10) days (or on the next
Business Day if the 10th day falls on a day the appropriate Court is
closed) of the entry of an order by the United States Bankruptcy Court
authorizing and approving the sale of the Properties to Borrower of any
notice of appeal from or motion for reconsideration of such order.
(c) Notwithstanding the foregoing, the agreement of Lender not to pursue
recourse liability as set forth in subsection (a) above SHALL BECOME NULL AND
VOID and shall be of no further force and effect and the Debt shall be fully
recourse to
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Borrower and Borrower Principal in the event of (i) a default by Borrower,
Borrower Principal or any SPE Component Entity (if any) of any of the covenants
set forth in Article 7 hereof, or (ii) if the any Individual Property or any
part thereof shall become an asset in (A) a voluntary bankruptcy or insolvency
proceeding of Borrower, or (B) an involuntary bankruptcy or insolvency
proceeding of Borrower (and Borrower or Borrower Principal has joined with,
colluded in or failed to object to any such involuntary bankruptcy proceeding or
insolvency proceeding) which is not dismissed within ninety (90) days of filing.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Mortgages or to require that all collateral shall continue to
secure all of the indebtedness owing to Lender in accordance with this
Agreement, the Note, the Mortgages or the other Loan Documents.
ARTICLE 16- NOTICES
Section 16.1 Notices
All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document shall be given in writing and shall
be effective for all purposes if hand delivered or sent by (a) certified or
registered United States mail, postage prepaid, return receipt requested, (b)
expedited prepaid overnight delivery service, either commercial or United States
Postal Service, with proof of attempted delivery, or by (c) telecopier (with
answer back acknowledged provided an additional notice is given pursuant to
subsection (b) above), addressed as follows (or at such other address and Person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section):
If to Lender: Bank of America, N.A.
Capital Markets Servicing Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, 6th Floor
CA9-706-06-42
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Servicing Manager
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Wood LLP
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Borrower: c/o W. P. ▇▇▇▇▇ & Co. LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Director, Asset Management
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman, Real Estate Department
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower
Principal: c/o W. P. ▇▇▇▇▇ & Co. LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 1 0020
Attention: Director, Asset Management
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman, Real Estate Department
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.
ARTICLE 17 - FURTHER ASSURANCES
Section 17.1 Replacement Documents
Upon receipt of an affidavit of an officer of Lender as to the loss,
theft, destruction or mutilation of the Note or any other Loan Document which is
not of public record, and, in the case of any such mutilation, upon surrender
and cancellation of such Note or other Loan Document, Borrower will issue, in
lieu thereof, a replacement Note or other Loan Document, dated the date of such
lost, stolen, destroyed or mutilated Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.
Section 17.2 Recording of Mortgages, Etc.
Borrower forthwith upon the execution and delivery of the Mortgages and
thereafter, from time to time, will cause the Mortgages and any of the other
Loan Documents creating a Lien or security interest or evidencing the Lien
hereof upon the
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Properties and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present or
future law in order to publish notice of and fully to protect and perfect the
Lien or security interest hereof upon, and the interest of Lender in, the
Properties. Borrower will pay all taxes, filing, registration or recording fees,
and all expenses incident to the preparation, execution, acknowledgment and/or
recording of the Note, the Mortgages, the other Loan Documents, any note, deed
of trust or mortgage supplemental hereto, any security instrument with respect
to the Properties and any instrument of further assurance, and any modification
or amendment of the foregoing documents, and all federal, state, county and
municipal taxes, duties, imposts, assessments and charges arising out of or in
connection with the execution and delivery of the Mortgages, any deed of trust
or mortgage supplemental hereto, any security instrument with respect to the
Properties or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to do.
Section 17.3 Further Acts, Etc.
Borrower will, at the cost of Borrower, and without expense to Lender, do,
execute, acknowledge and deliver all and every further acts, deeds, conveyances,
deeds of trust, mortgages, assignments, security agreements, control agreements,
notices of assignments, transfers and assurances as Lender shall, from time to
time, reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender the property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of the
terms of this Agreement or for filing, registering or recording the Mortgages,
or for complying with all Legal Requirements. Borrower, on demand, will execute
and deliver, and in the event it shall fail to so execute and deliver, hereby
authorizes Lender to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements and financing statement amendments to evidence more effectively,
perfect and maintain the priority of the security interest of Lender in the
Properties. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender at law and in equity, including without
limitation, such rights and remedies available to Lender pursuant to this
Section 17.3.
Section 17.4 Changes in Tax, Debt, Credit and Documentary Stamp Laws
(a) If any law is enacted or adopted or amended after the date of this
Agreement which deducts the Debt from the value of any Individual Property for
the purpose of taxation or which imposes a tax, either directly or indirectly,
on the Debt or Lender's interest in an Individual Property, Borrower will pay
the tax, with interest and penalties thereon, if any. If Lender is advised by
counsel chosen by it that the payment of tax by Borrower would be unlawful or
taxable to Lender or unenforceable or provide the basis for a defense of usury
then Lender shall have the option by written notice of not less
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than one hundred twenty (120) days to declare the Debt immediately due and
payable, without prepayment premium or penalty.
(b) Borrower will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or Other Charges
assessed against an Individual Property, or any part thereof, and no deduction
shall otherwise be made or claimed from the assessed value of an Individual
Property, or any part thereof, for real estate tax purposes by reason of the
Mortgages or the Debt. If such claim, credit or deduction shall be required by
law, Lender shall have the option, by written notice of not less than one
hundred twenty (120) days, to declare the Debt immediately due and payable.
If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, the Mortgages, or any of the other Loan Documents or impose
any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
Section 17.5 Expenses
Borrower covenants and agrees to pay or, if Borrower fails to pay, to
reimburse, Lender upon receipt of written notice from Lender for all reasonable
costs and expenses (including reasonable, actual attorneys' fees and
disbursements) reasonably incurred by Lender in accordance with this Agreement
in connection with (a) the preparation, negotiation, execution and delivery of
this Agreement and the other Loan Documents and the consummation of the
transactions contemplated hereby and thereby and all the costs of furnishing all
opinions by counsel for Borrower (including without limitation any opinions
requested by Lender as to any legal matters arising under this Agreement or the
other Loan Documents with respect to the Properties); (b) Borrower's ongoing
performance of and compliance with Borrower's respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance requirements;
(c) following a request by Borrower, Lender's ongoing performance and compliance
with all agreements and conditions contained in this Agreement and the other
Loan Documents on its part to be performed or complied with after the Closing
Date; (d) the negotiation, preparation, execution, delivery and administration
of any consents, amendments, waivers or other modifications to this Agreement
and the other Loan Documents and any other documents or matters requested by
Lender; (e) securing Borrower's compliance with any requests made pursuant to
the provisions of this Agreement; (f) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Lien in favor of Lender pursuant to this
Agreement and the other Loan Documents; (g) enforcing or preserving any rights,
in response to third party claims or the prosecuting or defending of any action
or proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Properties, or any other
security given for the Loan; and (h) enforcing any obligations of or collecting
any payments due from Borrower under this Agreement, the other Loan
108
Documents or with respect to the Properties or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of
the gross negligence, illegal acts, fraud or willful misconduct of Lender.
ARTICLE 18 - WAIVERS
Section 18.1 Remedies Cumulative; Waivers
The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower or Borrower Principal pursuant to this Agreement or
the other Loan Documents, or existing at law or in equity or otherwise. Lender's
rights, powers and remedies may be pursued singularly, concurrently or
otherwise, at such time and in such order as Lender may determine in Lender's
sole discretion. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy, right or power
may be exercised from time to time and as often as may be deemed expedient. A
waiver of one Default or Event of Default with respect to Borrower shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Borrower or to impair any remedy, right or power consequent thereon.
Section 18.2 Modification, Waiver in Writing
No modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement, or of the Note, or of any other Loan Document,
nor consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
Section 18.3 Delay Not a Waiver
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
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of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.
Section 18.4 Trial by Jury
BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER
PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN
ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER, BORROWER
PRINCIPAL AND LENDER.
Section 18.5 Waiver of Notice
Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by
Lender to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
Section 18.6 Remedies of Borrower
In the event that a claim or adjudication is made that Lender or its
agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages, and Borrower's sole remedies shall be limited to commencing an
action seeking injunctive relief or declaratory judgment. The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment. Lender
agrees that, in such event, it shall cooperate in expediting any action seeking
injunctive relief or declaratory judgment.
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Section 18.7 Cross-Default; Cross-Collateralization; Waiver of Marshalling
of Assets
(a) Borrower acknowledges that Lender has made the Loan to Borrower upon
the security of its collective interest in the Properties and in reliance upon
the aggregate of the Properties taken together being of greater value as
collateral security than the sum of each Individual Property taken separately.
Borrower agrees that the Mortgages are and will be cross collateralized and
cross defaulted with each other so that (i) an Event of Default under any of the
Mortgages shall constitute an Event of Default under each of the other Mortgages
which secure the Note; (ii) an Event of Default under the Note or this Agreement
shall constitute an Event of Default under each Mortgage; (iii) each Mortgage
shall constitute security for the Note as if a single blanket Lien were placed
on all of the Properties as security for the Note; and (iv) such cross
collateralization shall in no event be deemed to constitute a fraudulent
conveyance.
(b) To the fullest extent permitted by law, Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Borrower, Borrower's partners and others with interests in Borrower, and of the
Properties, and agrees not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Lender under the Loan
Documents to a sale of the Properties 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 an Individual Property in
preference to every other claimant whatsoever. In addition, Borrower, for itself
and its successors and assigns, waives in the event of foreclosure of any or all
of the Mortgages, any equitable right otherwise available to Borrower which
would require the separate sale of the Properties or require Lender to exhaust
its remedies against any Individual Property or any combination of the
Properties before proceeding against any other Individual Property or
combination of Properties; and further in the event of such foreclosure Borrower
does hereby expressly consents to and authorizes, at the option of Lender, the
foreclosure and sale either separately or together of any combination of the
Properties.
Section 18.8 Waiver of Statute of Limitations
Borrower hereby expressly waives and releases, to the fullest extent
permitted by law, the pleading of any statute of limitations as a defense to
payment of the Debt or performance of its Other Obligations.
Section 18.9 Waiver of Counterclaim
Borrower hereby waives the right to assert a counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against it by
Lender or its agents.
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ARTICLE 19 - GOVERNING LAW
Section 19.1 Choice of Law
This Agreement shall be deemed to be a contract entered into pursuant to
the laws of the State of New York and shall in all respects be governed,
construed, applied and enforced in accordance with the laws of the State of New
York, provided however, (a) that with respect to the creation, perfection,
priority and enforcement of any Lien created by the Loan Documents, and the
determination of deficiency judgments, the laws of the state where the
applicable Individual Property is located shall apply, and (b) with respect to
the security interest in each of the Reserve Accounts and the Lockbox Account,
the laws of the state where each such account is located shall apply.
Section 19.2 Severability
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
Section 19.3 Preferences
Lender shall have the continuing and exclusive right to apply or reverse
and reapply any and all payments by Borrower to any portion of the obligations
of Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any Creditors Rights
Laws, state or federal law, common law or equitable cause, then, to the extent
of such payment or proceeds received, the obligations hereunder or part thereof
intended to be satisfied shall be revived and continue in full force and effect,
as if such payment or proceeds had not been received by Lender.
ARTICLE 20 - MISCELLANEOUS
Section 20.1 Survival
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as all
or any of the Debt is outstanding and unpaid unless a longer period is expressly
set forth herein or in the other Loan Documents. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.
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Section 20.2 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 20.3 Headings
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 20.4 Cost of Enforcement
In the event (a) that any Mortgage is foreclosed in whole or in part, (b)
of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors, or
(c) Lender exercises any of its other remedies under this Agreement or any of
the other Loan Documents, Borrower shall be chargeable with and agrees to pay
all costs of collection and defense, including reasonable attorneys' fees and
costs, incurred by Lender or Borrower in connection therewith and in connection
with any appellate proceeding or post-judgment action involved therein, together
with all required service or use taxes.
Section 20.5 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 20.6 Offsets, Counterclaims and Defenses
Any assignee of Lender's interest in and to this Agreement, the Note and
the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
Section 20.7 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
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tenancy relationship between Borrower and Lender nor to grant Lender any
interest in the Properties other than that of mortgagee, beneficiary or lender.
(b) This Agreement and the other Loan Documents are solely for the benefit
of Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
an right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Lender will refuse to make the Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.
(c) The general partners, members, principals and (if Borrower is a trust)
beneficial owners of Borrower are experienced in the ownership and operation of
properties similar to the Properties, and Borrower and Lender are relying solely
upon such expertise and business plan in connection with the ownership and
operation of the Properties. Borrower is not relying on Lender's expertise,
business acumen or advice in connection with the Properties.
(d) Notwithstanding anything to the contrary contained herein, Lender is
not undertaking the performance of (i) any obligations under the Leases; or (ii)
any obligations with respect to such agreements, contracts, certificates,
instruments, franchises, permits, trademarks, licenses and other documents.
(e) By accepting or approving anything required to be observed, performed
or fulfilled or to be given to Lender pursuant to this Agreement, the Mortgages,
the Note or the other Loan Documents, including, without limitation, any
officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal, or insurance policy, Lender shall not be
deemed to have warranted, consented to, or affirmed the sufficiency, the
legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
(f) Borrower recognizes and acknowledges that in accepting this Agreement,
the Note, the Mortgages and the other Loan Documents, Lender is expressly and
primarily relying on the truth and accuracy of the representations and
warranties set forth in Article 4 of this Agreement without any obligation to
investigate the Properties and notwithstanding any investigation of the
Properties by Lender; that such reliance existed on the part of Lender prior to
the date hereof, that the warranties and representations are a material
inducement to Lender in making the Loan; and that Lender would not be willing to
make the Loan and accept this Agreement, the Note, the Mortgages and the other
Loan Documents in the absence of the warranties and representations as set forth
in Article 4 of this Agreement.
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Section 20.8 Publicity
All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan,
Lender, Banc of America Securities LLC, or any of their Affiliates shall be
subject to the prior written approval of Lender, not to be unreasonably
withheld. Lender shall be permitted to make any news, releases, publicity or
advertising by Lender or its Affiliates through any media intended to reach the
general public which refers to the Loan, the Properties, Borrower, Borrower
Principal and their respective Affiliates without the approval of Borrower or
any such Persons. Borrower also agrees that Lender may share any information
pertaining to the Loan with Bank of America Corporation, including its bank
subsidiaries, Banc of America Securities LLC and any other Affiliates of the
foregoing, in connection with the sale or transfer of the Loan or any
Participations and/or Securities created.
Section 20.9 Conflict; Construction of Documents; Reliance
In the event of any conflict between the provisions of this Agreement and
any of the other Loan Documents, the provisions of this Agreement shall control.
The parties hereto acknowledge that they were represented by competent counsel
in connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
Section 20.10 Entire Agreement
This Agreement and the other Loan Documents contain the entire agreement
of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties,
whether oral or written between Borrower and Lender are superseded by the terms
of this Agreement and the other Loan Documents.
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EXHIBIT A
Borrower Equity Ownership Structure
[FLOW CHART]
SCHEDULE I
REQUIRED REPAIRS
RESERVES
PROPERTY PROPERTY UNITS UNITS/ IMMEDIATE OVER TERM PSF QC
# PROPERTY NAME CONDITION /PCA SPREADS SQ. FT. ACRES RUL REPAIRS (12) RESERVES COMPLETED COMMENTS
721024 U-Haul Prescott Good 741 741 95,222 3.53 50 $ 0 $ 13,464 $0.01 YES
721025 U-Haul Center - Cave Creek Good 525 530 40,225 2.31 45 $ 0 $ 7,333 $0.02 YES
721034 U-Haul - Anthem RV Good 148 0 45,756 5.19 50 $ 0 $ 16,223 $0.03 YES Only gross
square
footage
721044 U-Haul ▇▇▇▇ and Grand Good 556 564 47,675 2.28 45 $ 0 $ 18,248 $0.03 YES
721045 U-Haul - Anthem Way Good 552 545 60,100 2.5 50 $ 0 $ 6,909 $0.01 YES
721046 U-Haul - I-17 and Deer
Valley Good 701 702 87,360 2.27 47 $ 0 $ 17,433 $0.02 YES
Repair
damaged
exterior
721047 U-Haul - 87th & ▇▇▇▇ Good 507 508 41,600 1.75 45 $ 250 $ 15,439 $0.03 YES concrete
stairs at
the loading
722036 U-Haul Center Chamber Road Good 832 824 62,360 3.47 50 $ 0 $ 10,877 $0.01 YES
724024 U-Haul center and Storage
of Montana Good 530 530 43,400 2.35 45 $ 0 $ 1,308 $0.00 YES
724026 U-Haul Center Rio Rancho Good 319 312 47,661 3.37 35 $1,000 $ 82,292 $0.14 YES Install
Fire
Extingushers
729051 U-Haul Center Apple Valley Good 527 514 52,731 4.57 48 $ 0 $ 18,380 $0.03 YES
734032 U-Haul - Lexena Good 923 917 73,485 4.39 47 $ 500 $266,120 $0.30 YES
736051 U-Haul St. ▇▇▇▇▇▇ Good 652 654 48,355 2.44 50 $ 0 $ 3,605 $0.01 YES
736054 U-Haul - ▇'▇▇▇▇▇▇ Good 646 640 55,049 2.2 48 $ 0 $ 1,890 $0.00 YES
737023 U-Haul Center ▇▇▇▇▇▇▇▇▇
▇▇▇▇ Good 558 558 41,150 4.12 47 $ 0 $ 9,405 $0.02 YES
737028 U-Haul Center Cen-Tex Good 522 500 79,325 4.86 45 $ 0 $ 1,469 $0.00 YES
739050 U-Haul Center of Crystal
Lake Good 758 756 68,100 8.77 20 $ 0 $314,208 $0.38 YES
741025 U-Haul Center of McKinney Good 602 543 59,305 540 48 $ 0 $ 448 $0.00 YES
741027 U-Haul Center Tollwat Good 608 608 46,200 2.61 45 $ 0 $ 7,166 $0.01 YES
741041 U-Haul Center of Lewisville Good 698 698 53,900 5.09 44 $ 0 $ 3,582 $0.01 YES
745057 U-Haul Highway 290 Good 656 656 52,865 3.87 45 $ 0 $ 21,255 $0.03 YES
746028 U-Haul Hwy 6 South Good 1,273 1224 143,673 7.08 25-30 $ 0 $488,942 $0.28 YES
746043 U-Haul Center of League
City Good 652 651 55,775 2.65 43 $ 0 $ 17,410 $0.03 YES
746044 U-Haul center Katy Good 598 597 52,575 2.74 47 $ 0 $ 11,393 $0.02 YES
757026 U-Haul Center of Alsip Good 673 660 46,975 4.12 40 $ 0 $ 58,553 $0.10 YES
757031 U-Haul Center of Fox Valley Good 816 815 57,575 3.03 49 $ o $ 17,377 $0.03 YES
757053 U-Haul Center of Naperville Good 762 702 112,270 9.48 49 $ 0 $ 27,018 $0.02 YES
759051 U-Haul Center Merrillville Good 519 513 58,075 4.32 37 $ 0 $ 83,122 $0.12 YES
772057 U-Haul - Cool Springs Good 640 638 81,700 2.89 50 $ 0 $ 8,897 $0.01 YES
776026 U-Haul Center of Pleasant
Hill Good 640 637 50,500 2.64 45 $ 0 $ 21,202 $0.03 YES
776034 U-Haul Center of Conyers Good 608 608 40,950 2.52 45 $ 0 $ 27,264 $0.06 YES
776055 ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇ Good 507 507 42,100 2.78 47 $4,000 $ 53,735 $0.11 YES
777025 U-Haul Storage Highway 85 Good 658 630 55,547 3.01 43-24 $3,200 $130,390 $0.20 YES
777026 U-Haul Center of Kennesaw Good 781 807 62,800 3 46 $7,550 $ 93,760 $0.12 YES
780022 U-Haul - Gastonia Good 685 688 56,625 3.45 45 $ 0 $ 45,718 $0,07 YES
784052 U-Haul Center Mandarin Good 471 471 37,000 2.57 47 $ 0 $ 29,057 $0.07 YES
785027 ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ 78,540 3.97 45 $ 0 $ 15,772 $0.02 YES
785038 U-Haul Center Hunters Creek Good 759 758 58,500 4.76 50 $ 0 $ 3,621 $0.01 YES
785041 U-Haul Center Ocoee Good 698 698 98,795 3.61 47 $ 0 $ 8,831 $0.01 YES
786042 U-Haul ▇▇▇▇▇ Boulevard Good 994 999 146,752 7.28 25 $1,000 $981,079 $0.56 YES
785038 U-Haul Center Chantilly Good 450 450 35,975 2.45 40 $ 0 $ 15,489 $0.04 YES
795048 U-Haul Center Dumfries Good 505 505 38,800 3 48 $ 0 $ 37,956 $0.08 YES
795051 U-Haul Center of Newington Good 774 788 58,825 2.53 50 $ 0 $ 25,541 $0.04 YES
795065 U-Haul Center Potomac ▇▇▇▇▇ Good-Fair 184 184 22,806 2.33 44 $ 0 $ 68,480 $0.25 YES
796036 U-Haul Center Stoughton Good 571 571 44,835 3.16 49 $ 125 $ 10,099 $0.02 YES
803034 U-Haul ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇ Good-Fair 764 764 42,380 0.63 24 $2,000 $106,117 $0.21 YES
▇▇▇▇▇▇ ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Good 1,095 1,095 77,830 3.4 46 $ 2,500 $ 83,709 $0.09 YES
825025 U-Haul Center of Southpark Good 242 242 37,186 2.2 25 $ 250 $227,553 $0.51 YES Only gross square
footage is
829053 U-Haul Center Orange City Good 528 525 53,610 8.41 50 $ 0 $ 16,642 $0.03 YES
829054 U-Haul Center of Lake ▇▇▇▇ ▇▇▇▇ 816 817 72,625 4.56 42 $ 500 $ 75,069 $0.09 YES
829057 U-Haul Center of Semoran Good 630 623 47,950 5.18 50 $ 0 $ 4,660 $0.01 YES
834025 U-Haul Center ▇▇▇▇▇▇▇ Road Good 598 598 40,875 3.54 45 $ 0 $ 17,847 $0.04 YES
834035 U-Haul Highlands Ranch Good 653 653 47,425 2.54 45 $ 0 $ 8,571 $0.02 YES
836023 U-Haul Center of Grapevine Good 629 629 50,550 3.55 45 $ 0 $ 19,611 $0.03 YES
836026 U-Haul Storage - ▇▇▇▇ ▇. ▇▇▇▇▇ Good 724 724 59,750 4.82 45 $ 0 $ 13,705 $0.02 YES
838023 U-Haul Center ▇▇▇▇ ▇▇▇▇▇ Road Good 744 744 60,300 9.22 45 $ 125 $ 19,550 $0.03 YES
▇▇▇▇▇▇ ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. Good 719 639 51,450 2.07 50 $ 0 $ 21,629 $0.04 YES
838025 U-Haul Center ▇▇▇▇▇▇ Boulevard Good 765 752 58,490 2.94 45 $ 0 $ 7,273 $0.01 YES
838058 U-Haul Center ▇▇▇▇▇▇▇▇▇ Good 735 712 53,975 2.41 50 $ 0 $ 9,808 $0.02 YES
Replace the extension
cord mounted to the
882059 U-Haul - ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Good-Fair 247 247 31,312 1.65 35 $ 1,175 $ 95,914 $0.26 YES south building
883046 U-Haul Storage ▇▇▇▇▇▇ Road Good-Fair 507 506 38,270 2.18 18 $ 8,650 $233,828 $0.51 YES
883064 U-Haul Center ▇▇▇▇▇▇▇▇▇▇ Park Good 348 347 16,840 2.14 30 $ 0 $ 30,222 $0.15 YES
884024 U-Haul Center St. ▇▇▇▇▇▇ Good 156 156 21,220 4.68 30 $ 0 $115,110 $0.45 YES
884056 U-Haul Cenre of DeSoto Fair 269 269 34,849 2.67 45 $ 0 $ 30,122 $0,07 YES
884057 U-Haul - ▇▇▇▇▇▇▇▇▇ Good 288 288 51,500 3.81 28 $ 500 $109,478 $0.18 YES
884066 U-Haul Center at ▇▇▇▇▇▇▇▇ & Jupiter Good 534 526 49,000 1.44 45 $ 0 $ 8,789 $0.01 YES
884067 U-Haul -Stillwater Good 331 331 38,720 5.69 45 $ 0 $ 512 $0.00 YES
884068 U-Haul Storage Rainbow Good 794 727 97,666 3.62 45 $ 0 $ 50,532 $0.04 YES
884069 U-Haul Center of Key Largo Good 417 409 45,450 7.37 30 $ o $ 7,063 $0.01 YES
884073 U-Haul Center of Maitland Good 456 395 73,300 8.95 35 $ 0 $ 17,663 $0.02 YES
884075 U-Haul center Northern Lights Good 369 369 40,950 2.27 45 $ 0 $ 21,342 $0.04 YES
884077 U-Haul Storage Oxford Good-Fair 419 419 50,800 3.35 45 $21,116 $148,302 $0.24 YES
884078 U-Haul Center of Arlington Good 654 654 77,080 4.44 45 $ 0 $ 6,078 $0.01 YES
884080 ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ 77,235 5.69 44 $ 1,000 $105,774 $0.11 YES
▇▇▇▇▇▇ ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Good 134 134 20,540 1.04 47 $ 0 $ 12,634 $0.05 YES
884082 Gatorland U-Haul Storage Good 393 354 54,712 5.12 45 $ 0 $ 16,236 $0.02 YES
Inspect and recharge
the Fire Extinguishers
884083 U-Haul - Fountain Hills Good 686 674 60,850 3.53 50 $ 2,000 $ 21,004 $0.03 YES throughout the
45668 44900 $57,441
NOTE: THE OPERATIONS OF 721034 ARE
SCHEDULE II
REPLACEMENTS
(See Attached)
RESERVES
PROPERTY PROPERTY UNITS UNITS/ IMMEDIATE OVER TERM PSF QC
# PROPERTY NAME CONDITION /PCA SPREADS SQ. FT. ACRES RUL REPAIRS (12) RESERVES COMPLETED COMMENTS
721024 U-Haul Prescott Good 741 741 95,222 3.53 50 $ 0 $ 13,464 $0.01 YES
721025 U-Haul Center - Cave Creek Good 525 530 40,225 2.31 45 $ 0 $ 7,333 $0.02 YES
721034 U-Haul - Anthem RV Good 148 0 45,756 5.19 50 $ 0 $ 16,223 $0.03 YES Only gross
square
footage
721044 U-Haul ▇▇▇▇ and Grand Good 556 564 47.675 2.28 45 $ 0 $ 18,248 $0.03 YES
721045 U-Haul - Anthem Way Good 552 545 60,100 2.5 50 $ 0 $ 6,909 $0.01 YES
721046 U-Haul - I-17 and Deer
Valley Good 701 702 87,360 2.27 47 $ 0 $ 17,433 $0.02 YES
Repair
damaged
exterior
721047 U-Haul - 87th & ▇▇▇▇ Good 507 508 41,600 1.75 45 $ 250 $ 15,439 $0.03 YES concrete
stairs at
the loading
722036 U-Haul Center Chamber Road Good 832 824 62,360 3.47 50 $ 0 $ 10,877 $0.01 YES
724024 U-Haul center and Storage
of Montana Good 530 530 43,400 2.35 45 $ 0 $ 1,308 $0.00 YES
724026 U-Haul Center Rio Rancho Good 319 312 47,661 3.37 35 $1,000 $ 82,292 $0.14 YES Install
Fire
Extingushers
729051 U-Haul Center Apple Valley Good 527 514 52,731 4.57 48 $ 0 $ 18,380 $0.03 YES
734032 U-Haul - Lexena Good 923 917 73,485 4.39 47 $ 500 $266,120 $0.30 YES
736051 U-Haul St. ▇▇▇▇▇▇ Good 652 654 48,355 2.44 50 $ 0 $ 3,605 $0.01 YES
736054 U-Haul - O'Fallon Good 646 640 55,049 2.2 48 $ 0 $ 1,890 $0.00 YES
737023 U-Haul Center ▇▇▇▇▇▇▇▇▇
▇▇▇▇ Good 558 558 41,150 4.12 47 $ 0 $ 9,405 $0.02 YES
737028 U-Haul Center Cen-Tex Good 522 500 79,325 4.86 45 $ 0 $ 1,469 $0.00 YES
739050 U-Haul Center of Crystal
Lake Good 758 756 68,100 8.77 20 $ 0 $314,208 $0.38 YES
741025 U-Haul Center of McKinney Good 602 543 59,305 540 48 $ 0 $ 448 $0.00 YES
741027 U-Haul Center Tollwat Good 608 608 46,200 2.61 45 $ 0 $ 7,166 $0.01 YES
741041 U-Haul Center of Lewisville Good 698 698 53,900 5.09 44 $ 0 $ 3,582 $0.01 YES
745057 U-Haul Highway 290 Good 656 656 52,865 3.87 45 $ 0 $ 21,255 $0.03 YES
746028 U-Haul Hwy 6 South Good 1,273 1224 143,673 7.08 25-30 $ 0 $488,942 $0.28 YES
746043 U-Haul Center of League
City Good 652 651 55,775 2.65 43 $ 0 $ 17,410 $0.03 YES
746044 U-Haul center Katy Good 598 597 52,575 2.74 47 $ 0 $ 11,393 $0.02 YES
757026 U-Haul Center of Alsip Good 673 660 46,975 4.12 40 $ 0 $ 58,553 $0.10 YES
757031 U-Haul Center of Fox Valley Good 816 815 57,575 3.03 49 $ 0 $ 17,377 $0.03 YES
757053 U-Haul Center of Naperville Good 762 702 112,270 9.48 49 $ 0 $ 27,018 $0.02 YES
759051 U-Haul Center Merrillville Good 519 513 58,075 4.32 37 $ 0 $ 83,122 $0.12 YES
772057 U-Haul - Cool Springs Good 640 638 81,700 2.89 50 $ 0 $ 8,897 $0.01 YES
776026 U-Haul Center of Pleasant
Hill Good 640 637 50,500 2.64 45 $ 0 $ 21,202 $0.03 YES
776034 U-Haul Center of Conyers Good 608 608 40,950 2.52 45 $ 0 $ 27,264 $0.06 YES
776055 ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇ Good 507 507 42,100 2.78 47 $4,000 $ 53,735 $0.11 YES
777025 U-Haul Storage Highway 85 Good 658 630 55,547 3.01 43-24 $3,200 $130,390 $0.20 YES
777026 U-Haul Center of Kennesaw Good 781 807 62,800 3 46 $7,550 $ 93,760 $0.12 YES
780022 U-Haul - Gastonia Good 685 688 56,625 3.45 45 $ 0 $ 45,718 $0.07 YES
784052 U-Haul Center Mandarin Good 471 471 37,000 2.57 47 $ 0 $ 29,057 $0.07 YES
785027 ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ 78,540 3.97 45 $ 0 $ 15,772 $0.02 YES
785038 U-Haul Center Hunters Creek Good 759 758 58,500 4.76 50 $ 0 $ 3,621 $0.01 YES
785041 U-Haul Center Ocoee Good 698 698 98,795 3.61 47 $ 0 $ 8,831 $0.01 YES
786042 U-Haul ▇▇▇▇▇ Boulevard Good 994 999 146,752 7.28 25 $1,000 $981,079 $0.56 YES
795038 U-Haul Center Chantilly Good 45O 45O 35,975 2.45 40 $ 0 $ 15,489 $0.04 YES
795048 U-Haul Center Dumfries Good 505 505 38,800 3 48 $ o $ 37,956 $0.08 YES
795051 U-Haul Center of Newington Good 774 788 58,825 2.53 50 $ 0 $ 25,541 $0.04 YES
795065 U-Haul Center Potomac ▇▇▇▇▇ Good-Fair 184 184 22,806 2.33 44 $ 0 $ 68,480 $0.25 YES
796036 U-Haul Center Stoughton Good 571 571 44,835 3.16 49 $ 125 $ 10,099 $0.02 YES
803034 U-Haul ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇ Good-Fair 764 764 42,380 0.63 24 $2,000 $106,117 $0.21 YES
▇▇▇▇▇▇ ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Good 1,095 1,095 77,830 3.4 46 $ 2,500 $ 83,709 $0.09 YES
825025 U-Haul Center of Southpark Good 242 242 37,186 2.2 25 $ 250 $ 227,553 $0.51 YES Only gross square
footage is
829053 U-Haul Center Orange City Good 528 525 53,610 8.41 50 $ 0 $ 16,642 $0.03 YES
829054 U-Haul Center of Lake ▇▇▇▇ ▇▇▇▇ 816 817 72,625 4.56 42 $ 500 $ 75,069 $0.09 YES
829057 U-Haul Center of Semoran Good 630 623 47,950 5.18 50 $ 0 $ 4,660 $0.01 YES
834025 U-Haul Center ▇▇▇▇▇▇▇ Road Good 598 598 40,875 3.54 45 $ 0 $ 17,847 $0.04 YES
834035 U-Haul Highlands Ranch Good 653 653 47,425 2.54 45 $ 0 $ 8,571 $0.02 YES
836023 U-Haul Center of Grapevine Good 629 629 50,550 3.55 45 $ 0 $ 19,611 $0.03 YES
836026 U-Haul Storage - ▇▇▇▇ ▇. ▇▇▇▇▇ Good 724 724 59,750 4.82 45 $ 0 $ 13,705 $0.02 YES
838023 U-Haul Center ▇▇▇▇ ▇▇▇▇▇ Road Good 744 744 60,300 9.22 45 $ 125 $ 19,550 $0.03 YES
▇▇▇▇▇▇ ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. Good 719 639 51,450 2.07 50 $ 0 $ 21,629 $0.04 YES
838025 U-Haul Center ▇▇▇▇▇▇ Boulevard Good 765 752 58,490 2.94 45 $ 0 $ 7,273 $0.01 YES
838058 U-Haul Center ▇▇▇▇▇▇▇▇▇ Good 735 712 53,975 2.41 50 $ 0 $ 9,808 $0.02 YES
Replace the extension
cord mounted to the
882059 U-Haul - ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Good-Fair 247 247 31,312 1.65 35 $ 1,175 $ 95,914 $0.26 YES south building
883046 U-Haul Storage ▇▇▇▇▇▇ Road Good-Fair 507 506 38,270 2.18 18 $ 8,650 $ 233,828 $0.51 YES
883064 U-Haul Center ▇▇▇▇▇▇▇▇▇▇ Park Good 348 347 16,840 2.14 30 $ O $ 30,222 $0.15 YES
884024 U-Haul Center St. ▇▇▇▇▇▇ Good 156 156 21,220 4.68 30 $ 0 $ 115,110 $0.45 YES
884056 U-Haul Cenre of DeSoto Fair 269 269 34,849 2.67 45 $ 0 $ 30,122 $0.07 YES
884057 U-Haul - ▇▇▇▇▇▇▇▇▇ Good 288 288 51,500 3.81 28 $ 500 $ 109,478 $0.18 YES
884066 U-Haul Center at ▇▇▇▇▇▇▇▇ & Jupiter Good 534 526 49,000 1.44 45 $ 0 $ 8,789 $0.01 YES
884067 U-Haul - Stillwater Good 331 331 38,720 5.69 45 $ 0 $ 512 $0.00 YES
884068 U-Haul Storage Rainbow Good 794 727 97,666 3.62 45 $ 0 $ 50,532 $0.04 YES
884069 U-Haul Center of Key Largo Good 417 409 45,450 7.37 30 $ 0 $ 7,063 $0.01 YES
884073 U-Haul Center of Maitland Good 456 395 73,300 8.95 35 $ 0 $ 17,663 $0.02 YES
884075 U-Haul center Northern Lights Good 369 369 40,950 2.27 45 $ 0 $ 21,342 $0.04 YES
884077 U-Haul Storage Oxford Good-Fair 419 419 50,800 3.35 45 $21,116 $ 148,302 $0.24 YES
884078 U-Haul Center of Arlington Good 654 654 77,080 4.44 45 $ 0 $ 6,078 $0.01 YES
884080 ▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ 77,235 5.69 44 $ 1,000 $ 105,774 $0.11 YES
884081 U-Haul Center Government Street Good 134 134 20,540 1.04 47 $ 0 $ 12,634 $0.05 YES
884082 Gatorland U-Haul Storage Good 393 354 54,712 5.12 45 $ 0 $ 16,235 $0.02 YES
Inspect and recharge
the Fire Extinguishers
884083 U-Haul - Fountain Hills Good 686 674 60,850 3.53 50 $ 2,000 $ 21,004 $0.03 YES throughout the
45668 44900 $57,441
NOTE: THE OPERATIONS OF 721034 ARE
SCHEDULE III
ALLOCATED LOAN AMOUNTS
Property Amount
Appreciated Acquisition Acquisition Mortgage
Stabilized Prior Prior Mortgage Amount
City State Value (Excluding for) (Including for) Amount (Rounded)
-------------------------------------- -----------------------------------------------------------
48 MOBILE AL 700,000 0.24% 708,926 738,142 433,048 434,000
47 OXFORD AL 2,000,000 0.67% 2,916,074 2,108,977 1,237,281 1,237,000
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 4,100,000 1.38% 4,128,851 4,323,403 2,536,425 2,536,000
50 PEORIA AZ 1,218,000 1.08% 3,232,588 3,384,909 1,985,836 1,986,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ 1,000,000 0.34% 1,007,037 1,054,489 618,640 619,000
45 PHOENIX WEST AZ 4,200,000 1.42% 4,229,555 4,428,352 2,598,289 2,598,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ 1,900,000 0.64% 1,913,370 2,003,528 1,175,417 1,175,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ 3,618,000 1.29% 3,916,810 4,017,602 2,357,020 2,357,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ 4,000,000 1.35% 4,088,147 4,217,955 2,474,561 2,475,000
46 PRESCOTT AZ 4,200,000 1.42% 4,318,588 4,428,852 2,998,289 2,598,000
▇▇ ▇▇▇▇▇▇▇▇ ▇▇ 4,300,000 1.45% 4,333,258 4,334,301 2,660,153 2,660,000
59 AURORA SOUTH CO 3,258,809 1.10% 3,378,878 3,427,988 2,018,981 2,011,000
40 DENVER NORTH CO 4,390,000 1.47% 4,302,610 4,587,326 2,491,085 2,691,000
38 LITTLETON CO 4,200,000 1.42% 4,239,855 4,828,852 2,598,299 2,598,000
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ 5,000,000 1.69% 5,559,936 5,293,533 3,105,575 3,108,000
57 JACKSONVILLE FL 3,000,000 1.01% 3,887,110 3,169,886 1,855,021 1,856,000
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ 3,410,000 1.15% 3,435,995 3,595,306 2,109,564 2,110,000
35 OCOEE FL 4,500,000 1.52% 4,531,505 4,745,199 2,783,882 2,784,000
33 ORANGE CITY FL 4,280,000 1.42% 4,249,595 4,449,942 2,510,662 2,611,000
62 ORLANDO FL 5,000,000 1.82% 5,437,899 5,694,230 3,560,658 3,341,000
36 ORLANDO FL 5,798,000 1.94% 5,788,442 6,063,310 3,557,182 3,557,000
53 ORLANDO FL 4,306,000 1.43% 4,369,336 4,473,032 2,629,035 2,823,000
59 ORLANDO NORTH FL 1,000,000 1.01% 3,081,150 3,163,466 1,855,921 1,856,000
32 SANFORD FL 4,000,000 1.35% 4,516,147 4,217,055 2,474,561 2,435,000
54 TAMPA FL 4,200,000 1.59% 4,735,873 4,556,097 2,907,610 2,908,000
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ 4,098,000 1.35% 4,588,347 4,337,955 2,476,561 2,475,000
57 CONYERS GA 3,798,000 1.27% 3,776,388 3,956,332 2,318,901 2,320,000
27 KENNESAW GA 4,000,000 1.59% 4,637,369 4,250,648 2,358,216 2,046,000
56 LAWRENCEVILLE GA 3,000,000 1.28% 3,886,340 4,007,057 2,350,833 2,351,000
55 RIVERDALE GA 4,288,000 1.49% 4,500,227 4,513,211 2,667,781 2,688,000
28 SNELLVILE GA 2,200,000 1.08% 3,328,188 3,337,364 1,979,649 1,900,000
26 SMYRNA GA 400,000 0.17% 400,000 536,598 -
25 ALEDO IL 4,004,000 1.48% 4,438,383 2,539,750 2,722,018 2,732,000
24 AURORA IL 5,000,000 1.69% 5,036,184 5,322,443 3,093,302 3,093,000
58 CRYSTAL LAKE IL 5,100,000 1.72% 5,185,884 5,377,892 3,155,056 3,155,000
23 NAPERVILLE IL 6,798,000 2.28% 6,791,498 7,117,798 4,175,822 4,176,000
22 MERRELLVILLE IN 4,000,000 1.45% 4,330,254 4,534,301 2,660,155 2,660,000
21 LIMEXA KS 4,100,000 1.34% 4,230,351 4,323,403 2,530,425 2,536,000
59 BORDER CITY LA 2,000,000 0.74% 2,328,681 2,319,875 1,361,000 1,361,000
61 CHICOPEE MA 1,190,000 0.39% 1,258,002 1,212,662 711,456 711,000
20 STOUGHTON MA 4,000,000 1.38% 4,338,280 4,313,859 2,520,239 2,530,000
60 CAPITAL HEIGHTS MD 10,000,000 3.51% 10,575,183 10,066,882 6,433,360 6,438,000
19 APPLE VALLEY MN 3,000,000 1.01% 3,564,330 3,363,864 1,833,921 1,856,000
16 O'FALLON MO 4,000,000 1.39% 4,667,042 4,267,963 2,434,564 2,475,000
17 LAKE ▇▇▇▇▇▇▇ MO 3,500,000 1.19% 3,534,699 3,650,710 2,163,341 2,165,000
18 HATTIESBURG MS 450,000 0.19% 488,267 434,520 278,368 278,000
66 GASTONIA NC 3,200,000 1.25% 3,786,836 3,901,688 2,286,969 2,280,000
68 PENNSAUKEN NJ 1,700,000 0.57% 1,711,963 1,792,631 1,651,699 1,052,000
▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇ 1,368,000 0.66% 1,963,222 2,056,353 1,206,349 1,204,000
13 HENDERSON NV 4,000,000 1.35% 4,238,347 4,217,955 2,474,561 2,475,000
62 LAS VEGAS NV 4,100,000 1.38% 4,238,381 4,233,103 2,556,625 2,536,000
14 LAS VEGAS NV 4,456,000 1.49% 4,448,532 4,560,295 2,278,204 2,728,000
12 LAS VEGAS NV 6,000,000 2.23% 6,546,663 6,999,625 4,083,026 4,083,000
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ 5,000,000 1.06% 5,538,702 5,799,588 3,402,523 3,403,000
65 BRONX NY 5,000,000 1.91% 5,688,264 5,957,861 3,403,318 3,495,000
11 COLUMBUS OH 1,000,000 0.61% 1,832,646 1,838,080 1,113,553 1,114,000
67 STILLWATER OK 1,300,000 0.46% 1,308,348 1,370,855 804,252 804,000
10 BRENTWOOD TN 4,710,000 1.59% 4,745,263 4,966,641 2,913,796 2,914,000
75 ARLINGTON TX 3,000,000 1.28% 3,826,740 4,007,057 2,350,333 2,351,000
76 AUSTIN TX 4,000,000 1.37% 4,078,499 4,270,670 2,505,403 2,505,000
4 DALLAS TX 2,608,000 0.88% 2,618,296 2,741,670 1,608,465 1,608,000
5 DESOTO TX 1,000,000 0.54% 1,307,837 105,449 618,640 619,000
70 EL PASO TX 5,150,000 1.04% 3,172,186 3,321,639 1,948,717 1,939,000
74 FORT WORTH TX 4,500,000 1.47% 4,300,000 4,597,570 2,607,272 2,797,000
6 GRAPEVINE TX 5,530,000 1.87% 5,563,003 5,831,322 3,421,061 3,421,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 1,000,000 1.15% 3,823,005 3,585,201 2,103,377 2,103,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 5,000,000 1.69% 5,006,184 5,272,443 3,093,382 3,003,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ 3,320,000 1.19% 3,564,260 3,711,800 2,177,644 2,170,000
9 KILLEEN TX 3,190,000 1.00% 3,212,443 3,343,819 1,973,000 1,973,000
7 LEAGUE CITY TX 1,710,000 1.35% 3,716,106 2,912,913 2,295,156 2,295,000
69 LEWISVILLE TX 4,800,000 1.35% 4,038,547 4,217,955 2,474,561 2,750,000
▇ ▇▇ ▇▇▇▇▇▇ ▇▇ 3,500,000 1.28% 3,826,740 4,007,057 2,350,833 2,350,000
68 PLANO TX 4,500,000 1.58% 4,782,803 4,945,552 2,901,403 2,901,000
77 CHANTILLY VA 4,800,000 1.62% 4,833,777 5,061,545 1,969,474 2,969,000
1 COLONIAL HEIGHTS VA 1,120,000 0.38% 1,127,889 1,181,027 692,877 683,000
3 MANASSAS VA 4,360,000 1.44% 4,319,317 4,513,211 2,647,761 2,647,000
2 NEWINGTON VA 7,000,000 2.36% 7,849,258 7,381,420 4,330,482 4,330,000
78 WOODBRIDGE VA 2,360,000 0.97% 2,880,825 3,015,838 1,769,311 1,770,000
296,300,000 100.00% 398,385,850 312,444,983 183,000,000 183,000,000
SCHEDULE IV
EXCEPTIONS TO SECTION 4.13
NONE.
SCHEDULE V
EXCEPTIONS TO SECTION 4.16
NONE
SCHEDULE VI
EXCEPTIONS TO SECTION 4.29
NONE.