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LOAN AGREEMENT
Dated as of October 1, 1997
Between
▇▇▇▇ SUBSIDIARY I LIMITED PARTNERSHIP,
as Borrower
AND
NOMURA ASSET CAPITAL CORPORATION,
as Lender
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TABLE OF CONTENTS
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I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION.............. 1
1.1 Specific Definitions................................. 1
1.2 Index of Other Definitions........................... 8
1.3 Principles of Construction........................... 10
II. GENERAL.............................................. 10
2.1 The Loan............................................. 10
2.2 Interest; Monthly Payments........................... 10
2.2.1 Generally 10
2.2.2 Accrued Interest 11
2.2.3 Property Cash Flow Allocation........................ 11
2.2.4 Default Rate 11
2.3 Loan Repayment and Defeasance........................ 11
2.3.1 Repayment 11
2.3.2 Mandatory Prepayments................................ 12
2.3.3 Voluntary Defeasance of the Note..................... 12
2.4 Release of Property.................................. 14
2.4.1 Release of All of the Properties..................... 14
2.4.2 Release of Individual Properties..................... 14
2.4.3 Release on Payment in Full........................... 15
2.4.4 Release of Portion of Seven Corners Property......... 15
2.5 Payments and Computations............................ 16
2.5.1 Making of Payments................................... 16
2.5.2 Computations 16
2.5.3 Late Payment Charge.................................. 16
III. CASH MANAGEMENT; ESCROWS AND RESERVES................ 16
3.1 Cash Management Arrangements......................... 17
3.2 Required Repairs; Required Repair Funds.............. 17
3.2.1 Required Repairs: Deposits........................... 17
3.2.2 Release of Required Repair Funds..................... 17
3.3 Tax and Insurance Escrow Fund........................ 18
3.3.1 Tax and Insurance Escrow Fund........................ 18
3.3.2 Payment of Insurance Premiums by Borrower............ 18
3.4 Capital Reserve Fund................................. 19
3.4.1 Capital Reserve Fund................................. 19
3.4.2 Payment of Capital Expenses.......................... 19
3.5 Rollover Reserve Fund................................ 19
3.5.1 Rollover Reserve Fund................................ 19
3.5.2 Payment of Leasing Expenses.......................... 20
3.6 Payment of Approved Operating Expenses............... 20
3.7 Security Deposits.................................... 20
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3.8 Grant of Security Interest; Application of Funds..... 21
3.9 Security in Lieu of Deposits......................... 21
IV. REPRESENTATIONS AND WARRANTIES....................... 22
4.1 Borrower Representations............................. 22
4.1.1 Organization; Special Purpose........................ 22
4.1.2 Proceedings; Enforceability.......................... 22
4.1.3 No Conflicts 23
4.1.4 Litigation 23
4.1.5 Agreements 23
4.1.6 Title 23
4.1.7 Survey 23
4.1.8 No Bankruptcy Filing................................. 23
4.1.9 Full and Accurate Disclosure......................... 24
4.1.10 No Plan Assets 24
4.1.11 Compliance 24
4.1.12 Contracts 24
4.1.13 Financial Information................................ 24
4.1.14 Condemnation 25
4.1.15 Federal Reserve Regulations.......................... 25
4.1.16 Utilities and Public Access.......................... 25
4.1.17 Not a Foreign Person................................. 25
4.1.18 Separate Lots 25
4.1.19 Assessments 25
4.1.20 Enforceability 25
4.1.21 Insurance 25
4.1.22 Use of Property; Licenses............................ 25
4.1.23 Flood Zone 26
4.1.24 Physical Condition................................... 26
4.1.25 Encroachments 26
4.1.26 Leases 26
4.1.27 Filing and Recording Taxes........................... 27
4.1.28 Investment Company Act............................... 27
4.1.29 Fraudulent Transfer.................................. 27
4.1.30 Partners 27
4.1.31 Management Agreement................................. 27
4.1.32 Hazardous Substances 28
4.2 Survival of Representations.......................... 28
4.3 Agreement Concerning Subordination, Nondisturbance... 28
V. AFFIRMATIVE COVENANTS................................ 29
5.1 Existence............................................ 29
5.2 Taxes and Other Charges.............................. 29
5.3 Repairs; Maintenance and Compliance.................. 29
5.4 Litigation........................................... 30
5.5 Performance of Other Agreements...................... 31
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5.7 Cooperate in Legal Proceedings....................... 31
5.8 Further Assurances................................... 31
5.9 Financial Reporting.................................. 31
5.9.1 Bookkeeping 31
5.9.2 Annual Reports 32
5.9.3 Monthly Reports 32
5.9.4 Other Reports 32
5.9.5 Annual Budget 32
5.9.6 Breach 33
5.10 Environmental Matters................................ 33
5.10.1 Hazardous Substances................................. 33
5.10.2 Environmental Monitoring............................. 34
5.10.3 Survival. 34
5.11 Title to the Property................................ 35
5.12 Estoppel Statement................................... 35
5.13 Principal Place of Business.......................... 35
5.14 Management Agreement................................. 35
5.15 Special Purpose Bankruptcy Remote Entity............. 35
5.16 Assumptions in Non-Consolidation Opinion............. 37
VI. NEGATIVE COVENANTS................................... 37
6.1 Management Agreement................................. 37
6.2 Liens 37
6.3 Dissolution.......................................... 38
6.4 Change In Business................................... 38
6.5 Debt Cancellation.................................... 38
6.6 Assets 38
6.7 Transfers............................................ 38
6.8 Debt 38
VII. INSURANCE; CASUALTY; AND CONDEMNATION................ 38
7.1 Insurance............................................ 38
7.1.1 Coverage 38
7.1.2 Policies 39
7.2 Casualty............................................. 40
7.2.1 Notice; Restoration.................................. 40
7.2.2 Settlement of Proceeds............................... 40
7.3 Condemnation......................................... 40
7.3.1 Notice; Restoration.................................. 40
7.3.2 Collection of Award.................................. 41
7.4 Application of Proceeds or Award..................... 41
7.4.1 Application to Restoration........................... 41
7.4.2 Application to Debt.................................. 41
7.4.3 Release of Property upon Casualty or Condemnation.... 42
7.4.4 Procedure for Application to Restoration............. 42
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VIII. DEFAULTS............................................. 43
8.1 Events of Default.................................... 43
8.2 Remedies............................................. 45
8.2.1 Acceleration. 45
8.2.2 Remedies Cumulative.................................. 45
8.2.3 Severance. 46
8.2.4 Delay 46
IX. SPECIAL PROVISIONS................................... 46
9.1 Sale of Note and Securitization...................... 46
9.1.1 Cooperation 46
9.1.2 Use of Information................................... 47
9.1.3 Borrower Obligations Regarding Disclosure Documents.. 47
9.1.4 Indemnities Regarding Filings........................ 48
9.1.5 Indemnification Procedure............................ 49
9.1.6 Contribution. 49
9.1.7 Rating Surveillance.................................. 50
9.2 Exculpation.......................................... 50
9.3 Termination of Manager............................... 51
9.4 Retention of Servicer................................ 51
X. MISCELLANEOUS........................................ 51
10.1 Survival............................................. 51
10.2 Lender's Discretion.................................. 52
10.3 Governing Law........................................ 52
10.4 Modification, Waiver in Writing...................... 52
10.5 Delay Not a Waiver................................... 52
10.6 Notices.............................................. 53
10.7 Trial by Jury........................................ 54
10.8 Headings............................................. 54
10.9 Severability......................................... 54
10.10 Preferences.......................................... 54
10.11 Waiver of Notice..................................... 54
10.12 Intentionally Deleted................................ 55
10.13 Expenses; Indemnity.................................. 55
10.14 Prior Agreements..................................... 56
10.15 Offsets, Counterclaims and Defenses.................. 56
10.16 Publicity............................................ 56
10.17 Controlling Agreement................................ 57
10.18 Conflict; Construction of Documents.................. 57
10.19 Brokers and Financial Advisors....................... 57
10.20 No Third Party Beneficiaries......................... 58
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SCHEDULES
Schedule 1 - Allocated Loan Amounts
Schedule 2 - Location of Property
Schedule 3 - Matters Regarding Representations
Schedule 4 - Rent Roll
Schedule 5 - Required Repairs
Schedule 6 - Environmental Recommendations
Schedule 7 - Form of Monthly Operating Statement
Schedule 8 - Form of Leasing Status Report
Schedule 9 - Description of Deeds of Trust
Schedule 10 - Form of Subordination, Non-Disturbance and Attornment
Agreement
Schedule 11 - Legal Description of Released Property (Portion of Seven
Corners)
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LOAN AGREEMENT
LOAN AGREEMENT dated as of October 1, 1997, 1997 between ▇▇▇▇
SUBSIDIARY I LIMITED PARTNERSHIP, a Maryland limited partnership ("▇▇▇▇ SUB I")
("BORROWER") and NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation
(together with its successors and assigns, "LENDER").
I0 DEFINITIONS; PRINCIPLES OF CONSTRUCTION
I.1 SPECIFIC DEFINITIONS . The following terms have the meanings
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set forth below:
"AFFILIATE": 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.
"ALLOCATED LOAN AMOUNT": The principal portion of the Loan
attributable to each Property as set forth on SCHEDULE 1 attached hereto.
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"APPROVED CAPITAL EXPENSES": Capital Expenses incurred by Borrower
which (i) are included in the approved Capital Budget for the Current Month or
(ii) have been approved by Lender.
"APPROVED LEASING EXPENSES": expenses incurred in leasing space at
the Property pursuant to Leases entered into in accordance with the Loan
Documents, including brokerage commissions, tenant improvements and other
inducements, which expenses (i) are (A) specifically approved by Lender in
connection with approving the applicable Lease, (B) incurred in the ordinary
course of business and on market terms and conditions in connection with Leases
which do not require Lender's approval under the Loan Documents, or (C)
otherwise approved by Lender, which approval shall not be unreasonably withheld
or delayed, and (ii) are substantiated by executed Lease documents and brokerage
agreements.
"APPROVED OPERATING EXPENSES": Operating Expenses incurred by
Borrower which (i) are included in the approved Operating Budget for the Current
Month, (ii) are for electric, gas, oil, water, sewer or other utility service to
the Property or (iii) have been approved by Lender.
"BORROWER": Shall have the meaning set forth on the first page of
this Agreement, and shall also mean the permitted successors and assigns of the
entity identified on the first page of this Agreement as the Borrower.
"BUSINESS DAY": any day other than a Saturday, Sunday or any other
day on which national banks in New York are not open for business.
"CAPITAL EXPENSES": expenses that are required under GAAP to be
capitalized.
"CODE": the Internal Revenue Code of 1986, as amended, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"CONTROL": with respect to any Person, either (i) ownership directly
or through other entities of more than 50% of all beneficial equity interest in
such Person, or (ii) the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
through the ownership of voting securities, by contract or otherwise.
"CURRENT MONTH": as of any date of determination, the then current
calendar month.
"DEBT": the unpaid Principal, all interest accrued and unpaid
thereon, the Yield Maintenance Premium and all other sums due to Lender in
respect of the Loan, or under any Loan Document.
"DEBT SERVICE": with respect to any particular period, scheduled
Principal and interest payments under the Note in such period.
"DEBT SERVICE COVERAGE RATIO": as of any date, the ratio of (i) the
Net Operating Income for the 12-month period ending with the most recently
completed calendar month to (ii) the Debt Service for such period.
"DEFAULT": the occurrence of any event under any Loan Document which,
with the giving of notice or passage of time, or both, would be an Event of
Default.
"DEFAULT RATE": a rate per annum equal to the lesser of (a) the
maximum rate permitted by applicable law, or (b) four (4%) percent above the
Interest Rate or the Revised Interest Rate, as applicable.
"DEFEASANCE DEPOSIT": an amount equal to the sum of (i) an amount
sufficient to purchase U.S. Obligations which provide payments that will meet
the Scheduled Defeasance Payments, (ii) any reasonable costs and expenses
incurred or to be incurred in the purchase of such U.S. Obligations and (iii)
any revenue, documentary stamp or intangible taxes or any other tax or charge
due in connection with the transfer of the Note, the creation of the Defeased
Note and the Undefeased Note, if applicable, any transfer of the Defeased Note
or otherwise required to accomplish the agreements of Sections 2.3 and 2.4.
"DEPOSIT ACCOUNT": the account established and maintained pursuant to
the Deposit Account Agreement.
"DEPOSIT BANK": LaSalle National Bank, or such other bank as selected
by Lender from time to time.
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"ELIGIBLE ACCOUNT": (i) an account maintained with a federal or state
chartered depository institution or trust company whose (x) commercial paper,
short-term debt obligations or other short-term deposits are rated at least A-1
by the applicable Rating Agencies if the deposits in such account are to be held
in such account for 30 days or less or (y) long-term unsecured debt obligations
are rated at least AA- by the applicable Rating Agencies if the deposits in such
account are to be held in such account for more than 30 days; or (ii) a
segregated trust account maintained with the trust department of a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity which institution or trust company is subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 C.F.R. (S) 9.10(b); or
(iii) an account otherwise acceptable to the applicable Rating Agencies, as
confirmed in writing that such account would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Security.
"FAIR MARKET VALUE": With respect to a given Property, the fair
market value of such Property as if unencumbered by the Deed of Trust and any
other Loan Documents granting a Lien on such Property in favor of Lender, as
reasonably determined by Lender.
"FISCAL YEAR": each twelve month period commencing on January 1 and
ending on December 31 during each year of the Term.
"GAAP": generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.
"GENERAL PARTNER": ▇▇▇▇ QRS, Inc., a Maryland corporation.
"GOVERNMENTAL AUTHORITY": any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental ▇▇▇▇ (▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or otherwise) now or hereafter in
existence.
"INDEPENDENT DIRECTOR": an individual reasonably satisfactory to
Lender who shall not have been at the time of such individual's appointment as a
director, and may not have been at any time during the preceding five years (i)
a shareholder of, or an officer or employee of, Borrower or any of its
shareholders, subsidiaries or Affiliates (provided, however, that an individual
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holding 500 shares or less of ▇▇▇▇ Centers, Inc. may be an Independent Director
if such individual meets the remaining conditions set forth in this definition),
(ii) a customer of, or supplier to, Borrower or any of its shareholders,
subsidiaries or Affiliates, (iii) a Person Controlling any such shareholder,
supplier or customer, or (iv) a member of the immediate family of any such
shareholder, officer, employee, supplier or customer of any other director of
the General Partner.
"INTEREST RATE": a rate of interest equal to 7.67% per annum.
"LEASE": any lease, or, to the extent of the interest therein of
Borrower, any sublease or sub-sublease, letting, license, concession or other
agreement (whether written or oral and whether now or hereafter in effect)
pursuant to which any person is granted a possessory interest in, or right
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to use or occupy, any space in a given Property, and every modification,
amendment or other agreement relating thereto and every guaranty or other
agreement entered into in connection therewith.
"LEGAL REQUIREMENTS": statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting all or part of the Property or the construction, use, alteration or
operation thereof, whether now or hereafter enacted and in force, and all
permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instrument, either of record or known to Borrower, at any time in force
affecting all or part of the Property, including any that may (i) require
repairs, modifications or alterations in or to all or part of the Property, or
(ii) in any way limit the use and enjoyment thereof.
"LIEN": any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest or any other encumbrance, charge or transfer of,
on or affecting all or part of the Property or any interest therein, or in
Borrower, including any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic's, materialmen's
and other similar liens and encumbrances.
"LOAN DOCUMENTS": this Agreement and all other documents, agreements
and instruments evidencing, securing or delivered to Lender in connection with
the Loan, including the following, each of which is dated as of the date hereof:
(i) Note made by Borrower to Lender in the principal amount of the Loan (the
"NOTE"), (ii) the various deeds of trust made by Borrower for the benefit of
Lender, more particularly described on Schedule 9 hereto (collectively, the
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"DEEDS OF TRUST"), which cover the Properties, (iii) Assignments of Leases and
Rents from Borrower to Lender (collectively, the "ASSIGNMENTS OF LEASES"), (iv)
Assignments of Agreements from Borrower to Lender (collectively, the
"ASSIGNMENTS OF AGREEMENTS"), (v) Deposit Account Agreement among Borrower,
Lender, Manager and LaSalle National Bank (the "DEPOSIT ACCOUNT AGREEMENT"), and
(vi) that certain agreement by and among the Clearing Bank, Borrower and Lender
relating to the Clearing Account (the "CLEARING ACCOUNT AGREEMENT"); as each of
the foregoing may be (and each of the foregoing defined terms shall refer to
such documents as they may be) amended, restated, replaced, supplemented or
otherwise modified from time to time.
"MANAGEMENT AGREEMENT": the management agreement dated July 31, 1994,
between Borrower and Manager, as modified by an amendment of even date herewith,
pursuant to which Manager is to manage the Properties.
"MANAGEMENT FEE": the fee payable to Manager under the Management
Agreement.
"MANAGER": ▇▇▇▇ Holdings Limited Partnership, a Maryland limited
partnership.
"MATURITY DATE": the date on which the final payment of principal of
the Note (or the Defeased Note, if applicable) becomes due and payable as
therein provided, whether at the Stated Maturity Date, by declaration of
acceleration, or otherwise.
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"NACC": Nomura Asset Capital Corporation, a Delaware corporation.
"NET OPERATING INCOME": for any period, all Operating Income during
such period minus all Operating Expenses during such period; determined by audit
or in accordance with other agreed-upon procedures determined by Lender;
provided that Net Operating Income shall not include payments to be received in
respect of U.S. Obligations purchased in connection with a Defeasance.
"OFFICERS' CERTIFICATE": a certificate delivered to Lender by
Borrower which is signed by a senior executive officer of the General Partner.
"OPERATING EXPENSES": for any period, all expenditures by or on
behalf of Borrower as and to the extent required to be expensed or allowed to be
expensed and in fact expensed under GAAP during such period in connection with
the ownership, operation, maintenance, repair or leasing of the Property,
including (i) Management Fees; Insurance Premiums; bank charges; expenses for
accounting, advertising, marketing, architectural services, utilities,
extermination, cleaning, trash removal, window washing, landscaping and
security; and reasonable and necessary legal expenses incurred in connection
with the operation of the Property; (ii) Taxes and Other Charges (excluding
fines, penalties, interest or Taxes or Other Charges payable by reason of
Borrower's failure to pay an imposition timely); (iii) wages, benefits, payroll
taxes, uniforms, insurance costs and all other related expenses for employees of
Borrower or its Affiliate engaged in the repair, operation or maintenance of the
Property; and (iv) the cost of tenant improvements, routine interior and
exterior maintenance, repairs and minor alterations; provided that Operating
Expenses will not include Debt Service, Capital Expenses, non-cash items such as
depreciation and amortization or any extraordinary one-time expenditures not
considered operating expenses under GAAP.
"OPERATING INCOME": for any period, all regular on-going revenues
actually received by Borrower from the operation of the Property during such
period, including (i) Rents and (ii) all other amounts received which in
accordance with GAAP are required to be or are included in Borrower's annual
financial statements as operating income of the Property; provided, that
Operating Income will not include income from non-recurring income sources,
advance Rents or other payments, deposits, escrows, any income otherwise
includable in Operating Income but paid to a Person other than Borrower, or
income from a sale, financing or other capital transaction.
"OPTIONAL PREPAYMENT DATE": October 11, 2012.
"OTHER CHARGES": all ground rents, impositions other than Taxes, and
any other charges now or hereafter levied or assessed or imposed against a
Property or any part thereof, including maintenance charges, vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Property.
"PAYMENT DATE": the 11th day of each calendar month or, if in any
month the 11th day is not a Business Day, then the Payment Date for such month
shall be the first Business Day thereafter.
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"PERMITTED ENCUMBRANCES": (a) the Liens created by the Loan Documents, (b) all
Liens and other matters disclosed in the Title Insurance Policy, (c) Liens, if
any, for Taxes or Other Charges not yet payable or delinquent, (d) such
customary easements for utilities as Borrower may from time to time grant or
enter into, in its reasonable discretion, which easements shall not require
Lender's prior approval, provided that the same do not adversely affect the
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value or marketability of any Property, and (e) such other title and survey
exceptions as Lender approves in writing in Lender's sole discretion.
"PERMITTED TRANSFERS": (i) a Lease entered into in accordance with
the Loan Documents, (ii) a Special Transfer or (iii) a Transfer of a limited
partnership interest in Borrower, a direct or indirect interest in a limited
partner of Borrower or stock in the General Partner if either (A) such Transfer
would not cause the transferee to increase its direct or indirect interest in
Borrower or its stock in the General Partner to an amount which equals or
exceeds 49%, or (B) Borrower shall have delivered (or caused to be delivered)
(1) to Lender, written confirmation from the applicable Rating Agencies that
such Transfer will not cause a qualification, withdrawal or downgrading of the
ratings in effect immediately prior to such Transfer for the Securities then
outstanding and (2) to Lender and the applicable Rating Agencies, a substantive
non-consolidation opinion with respect to Borrower in form and substance
satisfactory to Lender and the applicable Rating Agencies.
"PERSON": any individual, corporation, partnership, joint venture,
estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"POOLING AND SERVICING AGREEMENT": the Servicing Agreement entered
into with the Servicer in connection with any Securitization.
"PROPERTIES": shall mean, collectively, the parcels of real property
and improvements thereon owned by Borrower and encumbered by a Deed of Trust,
together with all rights pertaining to the property and improvements, as more
particularly described in the Granting Clauses of the Deeds of Trust and
referred to therein as the "Property" or the "Trust Property," as the case may
be. A list of the Properties and their respective locations is set forth in
SCHEDULE 2.
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"RATING AGENCY": each of Standard & Poor's Ratings Group, a division
of ▇▇▇▇▇▇-▇▇▇▇, Inc., ▇▇▇▇▇'▇ Investors Service, Inc., Duff & ▇▇▇▇▇▇ Credit
Rating Co. and Fitch Investors Service, Inc. or any other nationally-recognized
statistical rating agency which has been approved by Lender.
"RELEASE AMOUNT": with respect to (i) a given Property, other than
the Seven Corners Property, for which Borrower is seeking a release of Lien
pursuant to Section 2.4.2 hereof, one hundred ten percent (110%) of the
Allocated Loan Amount for such Property and (ii) the Seven Corners Property, if
Borrower is seeking a release of Lien for the same pursuant to Section 2.4.2
hereof, one hundred twenty percent (120%) of the Allocated Loan Agreement for
such Property;
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provided, however, that notwithstanding clause (i) of this paragraph, at such
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time as no more than four (4) of the Properties remain encumbered by the Liens
of the respective Deeds of Trust, the Release Amounts for each of the Properties
which have not yet been so released shall equal one hundred twenty percent
(120%) of the Allocated Loan Amount for such Property and provided further that,
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in the case of any Property for which Borrower is seeking a release of Lien
pursuant to Section 7.4.3 hereof, the Release Amount shall be one hundred
percent (100%) of the Allocated Loan Amount for such Property. In no event shall
the Release Amount for any Property or Properties exceed the outstanding balance
of the Note or the Undefeased Note, as the case may be.
"RELEASE DATE": the earlier of (i) three years after the date hereof
and (b) two years from the "start-up day" (within the meaning of Section
860G(a)(9) of the Code) of the REMIC Trust.
"REMIC": a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC TRUST": a REMIC that holds the Note.
"RENTS": all rents, rent equivalents, moneys payable as damages or in
lieu of rent or rent equivalents, royalties (including oil and gas or other
mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Borrower or its agents or employees from any and all sources arising from or
attributable to the Property, including all receivables, customer obligations,
installment payment obligations and other obligations now existing or hereafter
arising or created out of the sale of the Property or any Lease, and proceeds,
if any, from business interruption or other loss of income insurance.
"REVISED INTEREST RATE": the per annum rate of interest that is the
greater of (i) the Interest Rate plus 5% and (ii) the Treasury Rate on the
Optional Prepayment Date plus 5%.
"SECURITY DEPOSIT ACCOUNT": that certain account established and
maintained by Lender at the Deposit Bank for the purpose of holding all security
deposits of lessees under Leases.
"SERVICER": the entity appointed by Lender to service the Loan or its
successor in interest, or if any successor servicer is appointed pursuant to the
Pooling and Servicing Agreement, such successor servicer.
"SEVEN CORNERS PROPERTY": the real property and improvements,
together with all rights pertaining thereto, owned by Borrower and located in
Falls Church, Virginia.
"SPECIAL TRANSFER": the sale by the original Borrower of all of the
Properties to one purchaser of all of the obligations of Borrower under the Loan
Documents; provided Lender shall have received (i) evidence in writing from the
applicable Rating Agencies to the effect that such a sale and assumption will
not result in a qualification, withdrawal or downgrading of the ratings in
effect
7
immediately prior to such sale for the Securities then outstanding. and
(ii) all reasonable out-of-pocket expenses incurred by Lender in connection with
such assumption.
"STATE": the state in which a given Property is located.
"STATED MATURITY DATE": October 11, 2022.
"TAXES": all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against all or part of the Property.
"TERM": the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrower pursuant to the Loan Documents.
"TITLE INSURANCE POLICIES": collectively, the mortgagee title
insurance policies, in form acceptable to Lender, issued with respect to the
Properties and insuring the liens of the Deeds of Trust.
"TRANSFER": any sale, conveyance, transfer, Lease (including any
amendment, extension, modification, waiver or renewal thereof), assignment,
mortgage, pledge, grant of a security interest or hypothecation, whether by law
or otherwise, of or in (i) all or part of the Property (including any legal or
beneficial direct or indirect interest therein), (ii) any direct or indirect
interest in Borrower, or (iii) any stock in the General Partner.
"TREASURY RATE": as of the Optional Prepayment Date, the linear
interpolation of the bond equivalent yields as reported in Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading "U.S.
Government Securities/Treasury Constant Maturities" (or such other recognized
source of financial market information as lender shall select) for the week
ending prior to the Optional Prepayment Date of U.S. Treasury constant
maturities with maturity dates (one longer and one shorter) most nearly
approximating the remaining term of the Note as of the Optional Prepayment Date.
"UCC": with respect to any given Property, the Uniform Commercial
Code as in effect in its State.
"U.S. OBLIGATION": direct non-callable obligations of the United
States of America.
"YIELD MAINTENANCE PREMIUM": the amount (if any) which, when added to
the unpaid Principal or the principal amount of the Defeased Note, as
applicable, will be sufficient to purchase U.S. Obligations providing the
required Scheduled Defeasance Payments.
I.2 INDEX OF OTHER DEFINITIONS . The following terms are defined in
--------------------------
the sections or Loan Documents indicated below:
"Accrued Interest" - 2.2.2
8
"Annual Budget" - 5.9.5
"Award" - 7.3.2
"Capital Budget" - 5.9.5
"Capital Reserve Fund" - 3.4.1
"Capital Reserve Subaccount" - Deposit Account Agreement
"Casualty" - 7.1.3
"Casualty/Condemnation Prepayment" - 2.3.2
"Casualty/Condemnation Subaccount" - Deposit Account Agreement
"Clearing Account" - 3.1
"Clearing Bank" - 3.1
"Condemnation" - 7.3.1
"Defeasance" - 2.3.3
"Defeasance Date" - 2.3.3
"Defeased Note" - 2.3.3
"Disclosure Document" - 9.1.2
"Environmental Laws" - 4.1.32
"Equipment" - Deeds of Trust
"Event of Default" - 8.1
"Exchange Act" - 9.1.2
"Funds" - 3.8
"Hazardous Substances" - 4.1.32
"Improvements" - Deeds of Trust
"Insurance Premiums" - 7.1.2
"Insured Casualty" - 7.2.2
"Lender's Consultant" - 5.10.1
"Liabilities" - 9.1.3
"Licenses" - 4.1.22
"Loan" - 2.1
"Lockbox Event" - 3.1
"Lockbox Termination" - 3.1
"Monthly Debt Service Payment Amount"- 2.2.1
"Nomura" - 9.1.2
"Nomura Group" - 9.1.2
"Operating Budget" - 5.9.5
"Operating Expense Subaccount" - Deposit Account Agreement
"Permitted Investments" - Deposit Account Agreement
"Policies" - 7.1.2
"Principal" - 2.1
"Provided Information" - 9.1
"Registration Statement" - 9.1.3
"Remedial Work" - 5.10.2
"Required Records" - 5.9.6
"Required Repair Fund" - 3.2.1
"Required Repairs" - 3.2.1
"Restoration" - 7.4.1
9
"Rollover Letter of Credit" - 3.9
"Rollover Reserve Fund" - 3.5.1
"Rollover Reserve Subaccount" - Deposit Account Agreement
"Scheduled Defeasance Payments" - 2.3.3
"Securities" - 9.1
"Securities Act" - 9.1.2
"Securitization" - 9.1
"Security Agreement" - 2.3.3
"Special Purpose Bankruptcy Remote Entity" - 5.15
"Subaccounts" - Deposit Account Agreement
"Successor Borrower" - 2.3.3
"Tax and Insurance Escrow Fund" - 3.3.1
"Tax and Insurance Escrow Subaccount" - Deposit Account Agreement
"Undefeased Note" - 2.3.3
"Underwriter Group" - 9.1.2
I.3 PRINCIPLES OF CONSTRUCTION . Unless otherwise specified, (i)
--------------------------
all references to sections and schedules are to those in this Agreement, (ii)
the words "hereof," "herein" and "hereunder" and words of similar import refer
to this Agreement as a whole and not to any particular provision, (iii) all
definitions are equally applicable to the singular and plural forms of the terms
defined, (iv) the word "including" means "including but not limited to," and (v)
accounting terms not specifically defined herein shall be construed in
accordance with GAAP.
II. GENERAL
-------
II.1 THE LOAN . Lender is making a loan (the "LOAN") to Borrower on
--------
the date hereof, in the aggregate original principal amount (the "PRINCIPAL") of
$147,000,000.00, which shall mature on the Stated Maturity Date. Borrower
acknowledges receipt of the Loan, the proceeds of which are being and shall be
used solely to (i) repay and discharge any existing loans relating to the
Properties, (ii) fund the Tax and Insurance Escrow Fund and the Required Repair
Fund, and (iii) pay approved costs and expenses incurred in connection with the
Loan. No amount repaid in respect of the Loan may be reborrowed.
II.2 INTEREST; MONTHLY PAYMENTS .
--------------------------
II.2.1 GENERALLY . (a) From the date hereof to but not including
---------
the Optional Prepayment Date, Borrower shall pay interest on the unpaid
Principal at the Interest Rate. From and after the Optional Prepayment Date,
interest on the unpaid Principal shall accrue at the Revised Interest Rate and
be payable as provided in Sections 2.2.2 and 2.2.3(b).
(b On the date hereof, Borrower shall pay interest on the unpaid
Principal from the date hereof through October 10, 1997. On November 11, 1997
and each Payment Date thereafter through and including the Maturity Date, the
Principal and interest thereon at the Interest Rate shall be payable in equal
monthly installments of $1,102,623.87 (the "MONTHLY DEBT SERVICE PAYMENT
10
AMOUNT"); which is based on the Interest Rate and a 300-month amortization
schedule. The Monthly Debt Service Payment Amount due on any Payment Date shall
first be applied to the payment of interest accrued from the 11th day of the
month preceding the Payment Date through the 10th day of the month in which the
Payment Date occurs, notwithstanding that the Payment Date may not have been the
11th day of such month because the 11th day of such month is not a Business Day.
The remainder of such Monthly Debt Service Payment Amount shall be applied to
the reduction of the unpaid Principal.
II.2.2 ACCRUED INTEREST . From and after the Optional Prepayment
----------------
Date, all interest accruing in respect of the unpaid Principal in excess of the
Interest Rate ("ACCRUED INTEREST") shall, to the extent not paid, be deferred,
be added to the Debt and, to the extent permitted by applicable law, accrue
interest at the Revised Interest Rate, compounded monthly. All Accrued Interest
shall be due and payable on the Maturity Date.
II.2.3 PROPERTY CASH FLOW ALLOCATION (a On each Payment Date
-----------------------------
during every period commencing on the occurrence of a Lockbox Event and ending
on the date of the Lockbox Termination relating to such Lockbox Event, any Rents
deposited into the Deposit Account during the immediately preceding calendar
month shall, subject to Section 3.8 hereof, be applied as follows in the
following order of priority: (i) First, to make required payments to the Tax
and Insurance Escrow Fund for each of the Properties; (ii) Second, to Lender to
pay the Monthly Debt Service Payment Amount (plus, if applicable, interest at
the Default Rate); (iii) Third, to make required payments to the Capital Reserve
Fund for each of the Properties; (iv) Fourth, to make required payments to the
Rollover Reserve Fund for each of the Properties; (v) Fifth, payments for
Approved Operating Expenses for each of the Properties; and (vi) Lastly, payment
to Borrower of any excess amounts.
(b Commencing on the first Payment Date after the Optional
Prepayment Date and continuing on each Payment Date thereafter until the entire
Debt has been paid in full, and at any time during the continuance of an Event
of Default (subject to the right of Lender, to apply Rents to the Debt following
an Event of Default, as provided in Section 10(a)(viii) of the Deeds of Trust),
any Rents deposited into the Deposit Account (or otherwise received by Borrower)
during the immediately preceding calendar month shall be applied by Lender as
follows in the following order of priority: (i) First, to make required
payments to the Tax and Insurance Escrow Fund for each of the Properties; (ii)
Second, to Lender to pay the Monthly Debt Service Payment Amount (plus, if
applicable, interest at the Default Rate); (iii) Third, payments for Approved
Operating Expenses for each of the Properties; (iv) Fourth, to make required
payments to the Capital Reserve Fund for each of the Properties; (v) Fifth, to
make required payments to the Rollover Reserve Fund for each of the Properties;
(vi) Sixth, payments to Lender to prepay the unpaid Principal until paid in
full; (vii Seventh, payments to Lender to be applied against Accrued Interest
and interest accrued thereon; and (viii) Lastly, payment to Borrower of any
excess amounts.
II.2.4 DEFAULT RATE. After the occurrence and during the
------------
continuance of an Event of Default, the entire unpaid Principal shall bear
interest at the Default Rate, and shall be payable upon demand from time to
time, to the extent permitted by applicable law. Payment or acceptance
11
of interest at the Default Rate is not a permitted alternative to timely payment
and shall not constitute a waiver of any Default or Event of Default or an
amendment to this Agreement or any other Loan Document and shall not otherwise
prejudice or limit any rights or remedies of Lender.
II.3 LOAN REPAYMENT AND DEFEASANCE.
-----------------------------
II.3.1 REPAYMENT. Borrower shall repay any unpaid Principal in
---------
full on the Maturity Date, together with interest thereon to (but excluding) the
date of repayment. Other than as set forth in Sections 2.3.2, 2.3.3 and 7.4.3
below, Borrower shall have no right to prepay all or any portion of the
Principal before the sixth Payment Date immediately preceding the Optional
Prepayment Date. From and after the sixth Payment Date immediately preceding
the Optional Prepayment Date, the Principal may be prepaid in whole or in part
without penalty or premium.
II.3.2 MANDATORY PREPAYMENTS. The Loan is subject to mandatory
---------------------
prepayment, without premium or penalty (other than in connection with such a
prepayment while an Event of Default exists), in certain instances of Insured
Casualty or Condemnation (each a "CASUALTY/CONDEMNATION PREPAYMENT"), in the
manner and to the extent set forth in Section 7.4.2. Each Casualty/Condemnation
Prepayment shall be made on a Payment Date and include all accrued and unpaid
interest on the Principal prepaid up to but not including such Payment Date or,
if not paid on a Payment Date, include interest that would have accrued on the
Principal prepaid to but not including the next Payment Date.
II.3.3 VOLUNTARY DEFEASANCE OF THE NOTE. (a) Subject to the terms
--------------------------------
and conditions set forth in this Section 2.3.3, Borrower may defease all or any
portion of the Principal (hereinafter, a "DEFEASANCE"); provided, that no such
Defeasance may occur prior to the Release Date. Each Defeasance shall be
subject, in each case, to the satisfaction of the following conditions
precedent:
(i Borrower shall provide not less than thirty (30) days' prior
written notice to Lender specifying a Payment Date (the "DEFEASANCE DATE")
on which the Defeasance is to occur. Such notice shall indicate the amount
of Principal to be defeased (and, if such Defeasance involves the release
of any Property pursuant to Section 2.4.2 hereof, such notice shall also
identify such Property or Properties).
(ii Borrower shall pay to Lender (A) all accrued and unpaid
interest on the unpaid Principal to but not including the Defeasance Date,
(B) all other sums, not including scheduled interest or Principal payments,
then due under the Loan Documents, (C) the required Defeasance Deposit for
such Defeasance, and (D) all reasonable costs and expenses of Lender
incurred in the Defeasance, including any costs and expenses associated
with a release of Lien as provided in Section 2.4 and reasonable attorney's
fees and expenses. If for any reason the Defeasance Date is not a Payment
Date, Borrower shall also pay interest that would have accrued on the Note
to but not including the next Payment Date.
12
(iii Except in the case of a Defeasance of the entire
outstanding Principal balance of the Note, no Event of Default shall exist
(unless such Event of Default relates solely to the Property or Properties
to be released in connection with a partial Defeasance).
(iv If only a portion of the unpaid Principal is the subject of
the Defeasance, Borrower shall execute and deliver all necessary documents
to amend and restate the Note and issue two substitute notes: one having a
principal balance equal to the defeased portion of the original Note (the
"DEFEASED NOTE") and the other having a principal balance equal to the
undefeased portion of the original Note (the "UNDEFEASED NOTE"). The
Defeased Note and Undefeased Note shall have terms identical to the terms
of the Note, except for the principal balance. A Defeased Note cannot be
the subject of any further Defeasance.
(v Borrower shall execute and deliver a security agreement, in
form and substance satisfactory to Lender, creating a first priority lien
on the Defeasance Deposit and the U.S. Obligations purchased with the
Defeasance Deposit in accordance with this Section 2.3.3 (the "SECURITY
AGREEMENT").
(vi Borrower shall deliver (A) an opinion of counsel for
Borrower in form satisfactory to Lender in its sole discretion stating,
among other things, that (1) Lender has a perfected first priority security
interest in the Defeasance Deposit and the U.S. Obligations delivered by
Borrower and (2) such U.S. Obligations have been validly assigned to the
REMIC Trust, (B) if required by the applicable Rating Agencies, a non-
consolidation opinion with respect to the Successor Borrower in form and
substance satisfactory to Lender and the applicable Rating Agencies, (C) an
Officer's Certificate certifying that the requirements set forth in this
Section 2.3.3(a) have been satisfied, (D) a certificate from an independent
certified public accountant certifying that the amounts of the U.S.
Obligations comply with all of the requirements of this Agreement, and (E)
such other certificates, documents or instruments as Lender may reasonably
request.
.
(vii Lender shall receive evidence in writing from the
applicable Rating Agencies to the effect that such Defeasance will not
result in a qualification, withdrawal or downgrading of the ratings in
effect immediately prior to such Defeasance for the Securities then
outstanding.
(b In connection with each Defeasance, Borrower hereby appoints
Lender as its agent and attorney-in-fact for the purpose of using the Defeasance
Deposit to purchase U.S. Obligations (which purchases, if made by Lender, shall
be made by Lender on an arms-length basis at then prevailing market rates) which
provide payments on or prior to, but as close as possible to, all successive
Payment Dates after the Defeasance Date through and including the Optional
Prepayment Date, for the entire unpaid Principal in the case of a Defeasance, or
for the principal amount of the Defeased Note, in the case of a Defeasance for
only a portion of the unpaid Principal (including, on the Optional Prepayment
Date, the unpaid Principal of either the Note or the Defeased Note), and in
amounts equal to the scheduled payments due on such dates under the Note or the
Defeased Note, as applicable (the "SCHEDULED DEFEASANCE PAYMENTS"). Borrower,
pursuant to the
13
Security Agreement or other appropriate document, shall irrevocably authorize
and direct that the payments received from the U.S. Obligations be made directly
to Lender and applied to satisfy the obligations of Borrower under the Note or
the Defeased Note, as applicable. Any portion of the Defeasance Deposit in
excess of the amount necessary to purchase the U.S. Obligations required by this
Section 2.3.3(b) and satisfy Borrower's obligations under Section 2.3 or 2.4
shall be remitted to Borrower. Any amounts received in respect of the U.S.
Obligations in excess of the amounts necessary to make monthly payments pursuant
to Section 2.2 shall be retained by Lender until payment in full of the Debt.
Semi-annual payments in respect of U.S. Obligations shall be applied to payments
under the Note or the Defeased Note, as applicable, as the same become due
thereunder.
(c If requested by Borrower in connection with any Defeasance under
this Section 2.3.3, NACC shall establish or designate a successor entity (the
"SUCCESSOR BORROWER") and Borrower shall transfer and assign all obligations,
rights and duties under and to the Note or the Defeased Note, as applicable,
together with the pledged U.S. Obligations, to such Successor Borrower. The
obligation of NACC to establish or designate a Successor Borrower shall be
retained by NACC notwithstanding the sale or transfer of this Agreement unless
such obligation is specifically assumed by the transferee. Such Successor
Borrower shall assume the obligations under the Note or the Defeased Note, as
applicable, and the Security Agreement, and Borrower shall be relieved of its
obligations thereunder. Borrower shall pay $1,000 to any such Successor
Borrower as consideration for assuming the obligations under the Note or the
Defeased Note, as applicable, and the Security Agreement. Notwithstanding
anything in this Agreement to the contrary, no other assumption fee shall be
payable upon a transfer of the Note or the Defeased Note in accordance with this
Section 2.3.3, but Borrower shall pay all reasonable out-of-pocket costs and
expenses incurred by Lender, including Lender's reasonable attorneys' fees and
expenses, incurred in connection therewith. For purposes of this Section
2.3.3(c), the term "NACC" shall include NACC and its successors and assigns.
II.4 RELEASE OF PROPERTY. Except as set forth in this Section
-------------------
2.4, no repayment, prepayment or defeasance of all or any portion of the Note
shall cause, give rise to a right to require, or otherwise result in, the
release of the Lien of the Deed of Trust on any Property.
II.4.1 RELEASE OF ALL OF THE PROPERTIES. (a) If Borrower has
--------------------------------
elected to defease the Note in its entirety, and the requirements of Section 2.3
have been satisfied, the Properties shall be released from the Lien of the Deeds
of Trust, and the U.S. Obligations, pledged pursuant to the Security Agreement,
shall be the sole source of collateral securing the Note.
(b In connection with the releases of the Lien, Borrower shall
submit to Lender, not less than ten (10) days prior to the Defeasance Date, a
form of release for execution by Lender appropriate in the States in which the
Properties are located and satisfactory to Lender in its reasonable discretion
and all other documentation Lender requires to be delivered by Borrower,
together with an Officer's Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, and (ii) will effect such release in
accordance with the terms of this Agreement.
14
II.4.2 RELEASE OF INDIVIDUAL PROPERTIES. Borrower on one or more
--------------------------------
occasions may obtain (i) the release of an individual Property from the Lien of
the Deed of Trust thereon (and related Loan Documents) and (ii) the release of
Borrower's obligations under the Loan Documents with respect to such Property
(other than those expressly stated to survive), upon payment of the applicable
Release Amount and satisfaction of each of the following conditions:
(a In connection with a Defeasance of the Note under Section 2.3.3,
the principal balance of the Defeased Note shall equal or exceed the Release
Amount and the requirements of Section 2.3.3, shall have been satisfied.
(b Borrower shall submit to Lender, not less than ten (10) days
prior to the date of such release, a release of Lien (and related Loan
Documents) for such Property (for execution by Lender) in a form appropriate in
each jurisdiction in which the Property is located satisfactory to Lender in its
reasonable discretion and all other documentation Lender requires to be
delivered by Borrower in connection with such release, together with an
Officer's Certificate certifying that such documentation (i) is in compliance
with all Legal Requirements, (ii) will effect such release in accordance with
the terms of this Agreement, and (iii) 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).
(c With respect to any release of an individual Property, after
giving effect to such release, the Debt Service Coverage Ratio for all of the
Properties then remaining subject to the Liens of the Deeds of Trust shall be
equal to the greater of (i) the Debt Service Coverage Ratio on the Closing Date
and (ii) the Debt Service Coverage Ratio on the date of the release of such
Property.
II.4.3 RELEASE ON PAYMENT IN FULL. Lender shall, upon the written
--------------------------
request and at the expense of Borrower, upon payment in full of the Debt in
accordance herewith, release the Liens of the Deeds of Trust if not theretofore
released.
II.4.4 RELEASE OF PORTION OF SEVEN CORNERS PROPERTY. (a) Lender
--------------------------------------------
agrees that it will release the portion of the Seven Corners Property described
in Schedule 11 annexed hereto (the "Released Property") from the lien of the
-----------
applicable Deed of Trust for development as a hotel project, with up to 30,000
square feet of compatible retail space, substantially in accordance with the
existing Agreement dated December 11, 1995, between Borrower and the Board of
Supervisors of Fairfax County, Virginia, recorded in Deed Book 9612, Page 1848
in the office of the Fairfax County Clerk (it being understood and agreed that
any such development which deviates materially from the terms and provisions of
such Agreement shall be subject to Lender's prior consent (not to be
unreasonably withheld or delayed)) at Borrower's request and without the
requirement of the payment of the applicable Release Amount (or any portion
thereof), on the following terms and conditions: (i) no Default or Event of
Default shall have occurred and be continuing, (ii) the Released Property and
the portion of the Seven Corners Property remaining encumbered by the Deed of
Trust (the "Remaining Property") shall constitute separate tax lots, (iii) the
Released Property and the Remaining Property
15
shall, subject to the provisions of Section 2.4.4(b) below, be legally
subdivided, (iv) Borrower shall deliver to Lender an updated survey showing the
Released Property and the Remaining Property, (v) the Released Property shall be
transferred to and developed by an Affiliate of Borrower, (vi) the transferee of
the Released Property and Borrower shall enter into a reciprocal easement
agreement, satisfactory in all respects to Lender, which shall provide for
pedestrian and vehicular access to and from the Remaining Property, easements
for all utility services provided to the Remaining Property over or across the
Released Property, easements benefitting the Remaining Property for parking on
the Released Property and the completion by the transferee of all improvements
on the Released Property required for the continued compliance of the Remaining
Property with all applicable Legal Requirements, (vii) Borrower shall provide
Lender with an endorsement to the Title Insurance Policy relating to the Seven
Corners Property confirming the matters described in clauses (ii) and (iii)
above, insuring that the lien of the Deed of Trust on the Remaining Property is
unaffected by the release of the Released Property therefrom and insuring
Lender's lien on Borrower's interest in the foregoing reciprocal easement
agreement, (viii) Borrower shall furnish Lender with evidence reasonably
satisfactory to Lender that the Improvements located on the Remaining Property
shall continue to be in compliance with applicable Legal Requirements
notwithstanding such subdivision, the failure (if any) of the transferee to
complete the planned improvements thereon, and any violations of Legal
Requirements on or by the Released Property, and (ix) Borrower shall deliver to
Lender such documents or instruments as Lender may reasonably require and shall
pay the reasonable out of pocket costs incurred by Lender in connection with
such release.
(b) Notwithstanding anything to the contrary contained in Section
2.2.4(a) above, if Borrower reasonably determines that it is unable to cause the
Released Property to be legally subdivided from the Remaining Property, then
Borrower shall have the right, upon notice to Lender, prior to development of
the Released Property as provided herein, to enter into a long-term ground lease
of the Released Property on the terms and conditions set forth in this Section
2.2.4(b). Such ground lease shall be a "triple-net" lease with an Affiliate of
Borrower and shall be otherwise in form and substance reasonably satisfactory to
Lender. In connection with any such ground lease and as a condition precedent
to the release of the Released Property, Borrower shall deliver to Lender (i) a
currently dated substantive non-consolidation opinion of Borrower's counsel,
covering (inter alia) Borrower, the General Partner and the ground lessee, and
otherwise in form and substance reasonably satisfactory to Lender and (ii)
written confirmation, reasonably satisfactory to Lender, from the appropriate
rating agency or agencies, that the rating(s) of Securities issued in the
Securitization (if any) will not be downgraded as a result of the proposed
ground lease and release of the Released Property from the lien of the
applicable Deed of Trust. Upon satisfaction of all of the conditions set forth
herein and in Section 2.2.4(a) above (other than subdivision as provided clause
(iii) thereof and the other conditions therein that are applicable only in the
case of a subdivision), Lender shall release the Released Property from the lien
of the applicable Deed of Trust.
II.5 PAYMENTS AND COMPUTATIONS.
-------------------------
II.5.1 MAKING OF PAYMENTS. Each payment by Borrower hereunder or
------------------
under the Note shall be made in funds settled through the New York Clearing
House Interbank Payments System or other funds immediately available to Lender
by 11:00 a.m., New York City time, on the
16
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 that is not a Business Day, such
payment shall be made on the first Business Day thereafter.
II.5.2 COMPUTATIONS. Interest payable hereunder or under the Note
------------
shall be computed on the basis of the actual number of days elapsed and a 360-
day year.
II.5.3 LATE PAYMENT CHARGE. If any Principal, interest or other
-------------------
sum due under any Loan Document is not paid by Borrower on the date on which it
is due, Borrower shall pay to Lender upon demand an amount equal to the lesser
of four (4%) percent 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. Such amount shall be secured by the Loan
Documents.
III. CASH MANAGEMENT; ESCROWS AND RESERVES
-------------------------------------
III.1 CASH MANAGEMENT ARRANGEMENTS. All Rents shall be transmitted
----------------------------
directly by tenants of each of the Properties into an account of Borrower (the
"CLEARING ACCOUNT") maintained by Borrower at a local bank selected by Borrower
(the "CLEARING BANK"). All Rents received by Borrower or Manager shall be
deposited into the Clearing Account within one (1) Business Day of receipt.
Borrower may, in its sole discretion, withdraw and dispose of any and all
amounts on deposit from time to time in the Clearing Account, until (x) the
Optional Prepayment Date occurs or (y) if earlier, a Lockbox Event occurs, and
Lender has given notice to the Clearing Bank of such event as required by the
provisions of the Clearing Account Agreement. Subject to the provisions of this
Section 3.1, (a) from and after the occurrence of a Lockbox Event, and until the
Lockbox Termination (if any) in respect of such Lockbox Event, and (b) in any
case, from and after the Optional Prepayment Date, all funds on deposit in the
Clearing Account shall be swept by the Clearing Bank on a daily basis into the
Deposit Account and applied and disbursed in accordance with this Agreement and
the Deposit Account Agreement. The Deposit Account and all Subaccounts shall at
all times be Eligible Accounts. A "LOCKBOX EVENT" shall mean (i) either (A) the
failure by Borrower to pay any Monthly Debt Service Payment Amount, or any
payment into any Fund, within five (5) days after the due date thereof, or (B)
an Event of Default other than the failure by Borrower to pay when due any
Monthly Debt Service Payment Amount or payment into any Fund, and (ii) the
giving by Lender to the Clearing Bank of notice of such failure or Event of
Default, in accordance with the terms and provisions of the Clearing Account
Agreement. "LOCKBOX TERMINATION" shall mean the giving by Lender to the
Clearing Bank, in accordance with the terms and provisions of the Clearing
Account Agreement, of a notice and direction to terminate such sweeping of funds
into the Deposit Account. Lender shall be required to give a Lockbox
Termination notice to the Clearing Bank if and only if, for one year after the
occurrence of a Lockbox Event, no Event of Default shall have occurred and, as
of the end of such one-year period, the Debt Service Coverage Ratio shall be at
least equal to the Debt Service Coverage Ratio immediately prior to such Lockbox
Event. Upon a Lockbox Termination, the sweep of funds from the Clearing Account
to the Deposit Account shall cease until the earlier of the occurrence of
another Lockbox Event or the Optional Prepayment Date.
17
III.2 REQUIRED REPAIRS; REQUIRED REPAIR FUNDS.
---------------------------------------
III.2.1 REQUIRED REPAIRS: DEPOSITS. Borrower shall perform and
--------------------------
complete each item of the repairs at the Properties described on SCHEDULE 5 (the
----------
"REQUIRED REPAIRS") on or before the deadline for such item set forth on
SCHEDULE 5. On the date hereof, Borrower shall deposit with Lender the amount
----------
set forth on SCHEDULE 5 (the "REQUIRED REPAIR FUND").
----------
III.2.2 RELEASE OF REQUIRED REPAIR FUNDS. Lender shall disburse
--------------------------------
the Required Repair Fund to Borrower within thirty (30) days after the delivery
by Borrower to Lender of a request therefor, accompanied by the following items,
provided that on the date such payment is to be made, no Default or Event of
Default shall have occurred and be continuing: (i) an Officer's Certificate (A)
certifying that all Required Repairs have been completed in a good and
workmanlike manner and in accordance with all applicable Legal Requirements, (B)
identifying each Person that supplied materials or labor in connection with the
Required Repairs and (C) stating that each such Person has been or, upon receipt
of the requested disbursement, will be paid in full, (ii) copies of appropriate
Lien waivers or other evidence of payment satisfactory to Lender, (iii) at
Lender's option, a title search for the Property indicating that it is free from
all Liens not previously approved by Lender (other than Permitted Encumbrances
as to which this Agreement expressly provides that Lender's prior approval is
not required), (iv) a copy of each License required by applicable law in
connection with such Required Repairs in question, and (v) such other evidence
as Lender shall reasonably request that the Required Repairs have been completed
and paid for.
III.3 TAX AND INSURANCE ESCROW FUND.
-----------------------------
III.3.1 TAX AND INSURANCE ESCROW FUND. Subject to Sections 3.3.2
-----------------------------
and 3.9 hereof, Borrower shall pay to Lender on each Payment Date (i) one-
twelfth of the Taxes that Lender estimates will be payable during the next
twelve (12) months in order to accumulate with Lender sufficient funds to pay
all such Taxes at least thirty (30) days prior to their respective due dates,
and (ii) one-twelfth of the Insurance Premiums that Lender estimates will be
payable for the renewal of the coverage afforded by the Policies upon the
expiration thereof in order to accumulate with Lender sufficient funds to pay
all such Insurance Premiums at least thirty (30) days prior to the expiration of
the Policies (the amounts in the foregoing clauses (i) and (ii) being called the
"TAX AND INSURANCE ESCROW FUND"). Lender will apply the Tax and Insurance
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by
Borrower pursuant to Sections 5.2 and 7.1, or to reimburse Borrower for such
amounts upon presentation of evidence of payment and an Officer's Certificate in
form and substance satisfactory to Lender; subject, however, to Borrower's right
to contest Taxes in accordance with Section 5.2 In making any payment relating
to the Tax and Insurance Escrow Fund, Lender may do so according to any ▇▇▇▇,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such ▇▇▇▇, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof. If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts due for Taxes and Insurance Premiums pursuant to Sections 5.2 and 7.1.
Lender shall, in its sole discretion, return any excess to Borrower or credit
such excess against future payments to be made to the Tax and Insurance Escrow
Fund. If at any
18
time Lender determines that the Tax and Insurance Escrow Fund
is not or will not be sufficient to pay the Taxes or Insurance Premiums next
coming due, Lender shall notify Borrower of such determination and Borrower
shall increase its monthly payments to Lender by the amount that Lender
estimates is sufficient to make up the deficiency at least thirty (30) days
prior to delinquency of the Taxes and/or expiration of the Policies, as the case
may be.
III.3.2 PAYMENT OF INSURANCE PREMIUMS BY BORROWER. Notwithstanding
-----------------------------------------
any provisions to the contrary contained in Section 3.3.1 above or elsewhere in
this Agreement, for so long as (i) Borrower shall pay all Insurance Premiums on
a monthly basis when due, (ii) Borrower shall submit to Lender, promptly
thereafter, evidence satisfactory to Lender of each such monthly payment, and
(iii) no Event of Default shall exist, Borrower shall be required to maintain on
deposit with Lender only an amount equal to one-twelfth of the annual Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof, and shall not be required
pay to Lender the additional monthly deposits for Insurance Premiums described
in clause (ii) of Section 3.3.1 above. If any of the conditions described in
clauses (i) through (iii) of this Section 3.3.2 shall cease at any time to be
met, Borrower shall, commencing with the first Payment Date occurring after the
failure of such condition and on each Payment Date thereafter, deposit with
Lender the amounts described in Section 3.3.1 above in respect of Insurance
Premiums (in addition to the amounts required to be deposited in respect of
Taxes), subject to and in accordance with the provisions thereof.
III.4 CAPITAL RESERVE FUND.
--------------------
III.4.1 CAPITAL RESERVE FUND. Borrower shall pay to Lender on each
--------------------
Payment Date (in addition to other payments required hereunder) a monthly
installment of $24,435, as such monthly installment may be proportionately
reduced from time to time by Lender, in connection with the release of one or
more Properties as provided in Sections 2.4.2 and 7.4.3, to the extent
applicable (the "CAPITAL RESERVE FUND"). If the amount of the Capital Reserve
Fund shall exceed the amounts due for Approved Capital Expenses pursuant to the
terms hereof, Lender shall, in its discretion, return any excess to Borrower or,
if future Capital Reserve Fund payments are then required, credit such excess
against such future payments.
III.4.2 PAYMENT OF CAPITAL EXPENSES. From time to time (but not
---------------------------
more often than once per month), Lender shall disburse funds held in the Capital
Reserve Fund to Borrower, within fifteen (15) days after the delivery by
Borrower to Lender of a request therefor, provided (i) no Event of Default
shall have occurred and be continuing; (ii) such disbursement is for a Capital
Expense; and (iii) the request for disbursement is accompanied by (A) an
Officer's Certificate from the appropriate Borrower certifying (v) the amount
of funds to be disbursed, (w) that such funds will be used to pay Capital
Expenses and a description thereof, (x) that all outstanding trade payables
(other than those to be paid from the requested disbursement or those otherwise
permitted to be outstanding under Section 6.8) have been paid in full, (y) that
the same has not been the subject of a previous disbursement, and (z) that all
previous disbursements have been used to pay the previously
19
identified Capital Expenses, and (B) reasonably detailed documentation as to the
amount, necessity and purpose therefor.
III.5 ROLLOVER RESERVE FUND.
---------------------
III.5.1 ROLLOVER RESERVE FUND. Subject to Section 3.9 hereof,
---------------------
Borrower shall pay to Lender $67,500 on each Payment Date (in addition to other
payments required hereunder). Lender will apply such payments (the "ROLLOVER
RESERVE FUND") to payment of Approved Leasing Expenses pursuant to the terms
hereof. If the amount of the Rollover Reserve Fund shall exceed the amounts due
for Approved Leasing Expenses pursuant to the terms hereof, Lender shall, in its
discretion, return any excess to Borrower, credit such excess against future
payments to the Rollover Reserve Fund or allocate such excess to other
Subaccounts. If Lender determines in its reasonable judgment that the amount of
the Rollover Reserve Fund will be insufficient to pay the amounts due or to
become due for Approved Leasing Expenses, Lender may, in its reasonable
discretion, adjust the monthly amounts required to be deposited into the
Rollover Reserve Fund upon thirty (30) days' notice to Borrower. Alternatively,
Lender may in its reasonable discretion determine that the amount of the
Rollover Reserve Fund will exceed the amounts due or to become due for Approved
Leasing Expenses, in which case Lender shall reduce the monthly amounts to be
deposited therein.
III.5.2 PAYMENT OF LEASING EXPENSES. From time to time (but not
---------------------------
more than once per month) Lender shall disburse funds held in the Rollover
Reserve Fund to Borrower, within fifteen (15) days after the delivery by
Borrower to Lender of a request therefor, provided (i) no Event of Default shall
have occurred and be continuing; (ii) such disbursement is for an Approved
Leasing Expense; and (iii) the request for disbursement is accompanied by (A) an
Officer's Certificate from the appropriate Borrower certifying (v) the amount of
funds to be disbursed, (w) that such funds will be used only to pay (or
reimburse such Borrower for) Approved Leasing Expenses and a description
thereof, (x) that all outstanding trade payables (other than those to be paid
from the requested disbursement or those otherwise permitted to be outstanding
under Section 6.8) have been paid in full, (y) that the same has not been the
subject of a previous disbursement, and (z) that all previous disbursements have
been used only to pay (or reimburse such Borrower for) the previously identified
Approved Leasing Expenses, and (B) reasonably detailed supporting documentation
as to the amount, necessity and purpose therefor.
III.6 PAYMENT OF APPROVED OPERATING EXPENSES. From time to time
--------------------------------------
(1) after the occurrence of a Lockbox Event and prior to a Lockbox Termination
and (2) after the Optional Prepayment Date (but in any event not more than once
per month), Lender shall disburse funds held in the Operating Expense Subaccount
to Borrower, provided (i) no Event of Default shall have occurred and be
continuing; (ii) such disbursement is for an Approved Operating Expense; and
(iii) such disbursement is requested by Borrower in writing, accompanied by (A)
an Officer's Certificate certifying (v) the amount of funds to be disbursed, (w)
that such funds will be used to pay Approved Operating Expenses and a
description thereof, (x) that all outstanding trade payables (other than those
to be paid from the requested disbursement or those otherwise permitted to be
outstanding under Section 6.8) have been paid in full, (y) that the same has not
been the subject of a previous disbursement, and (z) that all previous
disbursements have been or will be used to pay the previously identified
Approved Operating Expenses, and (B) reasonably detailed documentation as to the
20
amount, necessity and purpose therefor. Subject to satisfaction of the
preceding conditions, if Lender receives from Borrower a valid request for a
disbursement for payment of Approved Operating Expenses for the then Current
Month at least five Business Days prior to the Payment Date occurring in such
Current Month, then the disbursement in respect of such Approved Operating
Expenses shall be made to Borrower on such Payment Date. If Borrower shall fail
to validly request a disbursement for payment of Approved Operating Expenses for
the then Current Month at least five (5) Business Days prior to the Payment Date
in such Current Month, then Lender shall retain in the Operating Expense
Subaccount an amount equal to the anticipated Operating Expenses for the then
Current Month as set forth in the approved Operating Budget for such month, and
Lender shall, subject to satisfaction of the preceding conditions, disburse the
same to Borrower five (5) Business Days after Lender receives a valid request
therefor.
III.7 SECURITY DEPOSITS. During the continuance of any Event of
-----------------
Default, Borrower shall, upon Lender's request, if permitted by applicable Legal
Requirements, turn over to Lender the security deposits (and any interest
theretofore earned thereon) under Leases, to be held by Lender subject to the
terms of the Leases. Any letter of credit or other instrument that Borrower
receives in lieu of a cash security deposit shall (i) be maintained in full
force and effect in the full amount unless replaced by a cash deposit as
hereinabove described, (ii) be issued by an institution reasonably satisfactory
to Lender, (iii) if permitted pursuant to any Legal Requirements, name Lender as
payee or mortgagee thereunder (or at Lender's option, be fully assignable to
Lender) and (iv) in all respects, comply with any applicable Legal Requirements
and otherwise be reasonably satisfactory to Lender. Borrower shall, upon
request, provide Lender with evidence reasonably satisfactory to Lender of
Borrower's compliance with the foregoing.
III.8 GRANT OF SECURITY INTEREST; APPLICATION OF FUNDS. As
------------------------------------------------
security for payment of the Debt and the performance by Borrower of all other
terms, conditions and provisions of the Loan Documents, Borrower hereby pledges
and assigns to Lender, and grants to Lender a security interest in, all of
Borrower's right, title and interest in and to the Required Repair Fund, the Tax
and Insurance Escrow Fund, the Capital Reserve Fund and the Rollover Reserve
Fund (collectively, the "FUNDS"). Borrower shall not, without obtaining the
prior written consent of Lender, further pledge, assign or grant any security
interest in any Fund, or permit any Lien to attach thereto, or any levy to be
made thereon, or any UCC-l Financing Statements, except those naming Lender as
the secured party, to be filed with respect thereto. This Agreement is, among
other things, intended by the parties to be a security agreement for purposes of
the UCC. Upon the occurrence and during the continuance of an Event of Default,
Lender may apply any sums in any Fund to the payment of the Debt and/or to the
payment of Required Repairs, Taxes, Insurance Premiums, Capital Expenses,
Approved Leasing Expenses and/or Operating Expenses, in any order in its sole
discretion. No Fund shall constitute a trust fund and may be commingled with
other monies held by Lender. Sums in each Fund shall be held by Lender in a
Subaccount and invested in Permitted Investments. Earnings or interest, if any,
on each Fund shall become part of such Fund and shall be disbursed as provided
herein for such Fund. Lender shall not be liable for any loss sustained on the
investment of any funds constituting any Fund. Amounts disbursed to Borrower
under Sections 3.2 through 3.7 shall be used by Borrower solely to pay the
expenses for which such disbursement is requested.
21
III.9 SECURITY IN LIEU OF DEPOSITS. Provided no Default or Event
----------------------------
of Default shall have occurred and be continuing hereunder, Borrower shall have
the right, in lieu of making the payments required pursuant to Section 3.3
and/or Section 3.5 hereof, to deliver to Lender (i) a single letter of credit in
form, substance and amount acceptable to Lender, and issued by a bank acceptable
to Lender or (ii) other security for such obligations as shall be acceptable to
Lender. In the event that Borrower posts a letter of credit in lieu of making
any payments under any or all of the foregoing provisions, such letter of credit
shall be for a term of at least one (1) year and shall itself provide for
automatic, successive renewal terms of at least one (1) year each through the
term of the Loan. Notwithstanding such provision for automatic renewal, in the
event that Borrower or Lender receives notice that the letters of credit will
not be renewed, Borrower shall provide Lender with a replacement letter of
credit in form, substance and amount acceptable to Lender, and issued by a bank
acceptable to Lender, no later than thirty (30) days prior to the expiration
date of the original letter of credit. If Borrower should fail to timely
provide Lender with such replacement letter of credit, Lender shall be entitled
to draw upon the original letter of credit and apply the proceeds thereof to
Borrower's obligations under the foregoing sections by depositing the required
amounts in the Tax and Insurance Escrow Fund and/or the Rollover Reserve Fund,
as appropriate. Such letter of credit or other collateral shall constitute
security for the Loan, and upon the occurrence and continuance of an Event of
Default, Lender may draw upon such letter of credit or other security and apply
the proceeds thereof to the payment of the Debt and/or to the payment of
Required Repairs, Taxes, Insurance Premiums, Approved Leasing Expenses and/or
Operating Expenses, in any such order and priority as Lender shall determine in
its sole discretion. In addition, in the case of a letter of credit (a
"Rollover Letter of Credit") delivered to Lender in lieu of making the payments
required by Section 3.5 of this Agreement, Lender shall have the right,
semiannually on the first day of the fifth month and the eleventh month
(respectively occurring after the month in which the Rollover Letter of Credit
is posted) and on each anniversary of each such date for so long as a Rollover
Letter of Credit is being maintained pursuant to the provisions of this
Section,, to review the amounts anticipated to become due for Approved Leasing
Expenses during the 12-month period immediately following such determination and
the then available amount of the Rollover Letter of Credit. If Lender
determines, in its reasonable discretion, that an amount greater than the
available amount of the existing Rollover Letter of Credit will be required to
pay the amounts to become due for Approved Leasing Expenses during such 12-month
period, then Lender shall notify Borrower, in writing, of the additional amount
required to pay such Approved Leasing Expenses. Thereupon, Borrower shall
furnish to Lender an amendment increasing the amount of the existing Rollover
Letter of Credit to the amount specified by Lender in such notice, or a
substitute Rollover Letter of Credit in such specified amount. If Borrower
shall fail to furnish Lender with such amendment to or substitution for the
existing Rollover Letter of Credit within 30 days after receipt of request by
Lender therefor, then Borrower shall deposit with Lender, in cash, the
difference between the amount of such existing Rollover Letter of Credit and the
amount specified by Lender in such notice as required, in Lender's reasonable
determination, to pay the Approved Leasing Expenses due or to become due during
the ensuing 12-month period. Alternatively, Lender may in its reasonable
discretion determine that the amount of the existing Rollover Letter of Credit
exceeds the amounts necessary to pay the Approved Leasing Expenses due or to
become due during such 12-month period, in which case Lender shall notify
Borrower, in writing, of such determination. Borrower may thereupon reduce the
amount of the existing Rollover Letter of Credit or obtain a substitute Rollover
Letter of Credit in the amount specified by Lender in such notice.
22
IV. REPRESENTATIONS AND WARRANTIES
------------------------------
IV.1 BORROWER REPRESENTATIONS. Borrower hereby represents and
------------------------
warrants as of the date hereof that, except to the extent (if any) disclosed on
SCHEDULE 3 with reference to a specific subsection of this Section 4.1:
----------
IV.1.1 ORGANIZATION; SPECIAL PURPOSE. Borrower has been duly
-----------------------------
organized and is validly existing and in good standing, with requisite power and
authority, and all rights, licenses, permits and authorizations, governmental or
otherwise, necessary to own its properties and to transact the business in which
it is now engaged. Borrower is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, business and operations. Each of ▇▇▇▇ Sub I and
the ▇▇▇▇ Sub I General Partner is a Special Purpose Bankruptcy Remote Entity,
and the sole business of Borrower is the ownership, management and operation of
the Properties.
IV.1.2 PROCEEDINGS; ENFORCEABILITY. Borrower has taken all
---------------------------
necessary action to authorize the execution, delivery and performance of the
Loan Documents. The Loan Documents have been duly executed and delivered by
Borrower and constitute legal, valid and binding obligations of Borrower,
enforceable, to the best of Borrower's knowledge, against Borrower in accordance
with their respective terms, subject to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and general principles of
equity.
IV.1.3 NO CONFLICTS. The execution, delivery and performance of
------------
the Loan Documents by Borrower will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any Lien (other than pursuant to the Loan
Documents) upon any of the property of Borrower pursuant to the terms of, any
agreement or instrument to which such Borrower is a party or by which its
property is subject, nor will such action result in any violation of the
provisions of any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or any of its properties; and any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower of the Loan Documents has been obtained and is in full
force and effect.
IV.1.4 LITIGATION. There are no actions, suits or proceedings at
----------
law or in equity by or before any Governmental Authority now pending or, to
Borrower's knowledge, threatened against or affecting Borrower or any Property,
which, if determined against Borrower or such Property, might materially
adversely affect the condition (financial or otherwise) or business of such
Borrower or the condition or ownership of such Property.
IV.1.5 AGREEMENTS. Borrower is not a party to any agreement or
----------
instrument or subject to any restriction which might adversely affect Borrower
or any Property, or Borrower's business, properties, operations or condition,
financial or otherwise. Borrower is not in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or
23
conditions contained in any Permitted Encumbrance or any other agreement or
instrument to which it is a party or by which it or any Property is bound.
IV.1.6 TITLE. Borrower has good and indefeasible title in fee to
-----
the real property comprising part of each Property and good title to the balance
of each such Property, free and clear of all Liens except the Permitted
Encumbrances. The Deeds of Trust when properly recorded in the appropriate
records, together with any UCC financing statements required to be filed in
connection therewith, will create (i) a valid, perfected first priority-lien on
each Property and (ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty included in such Property (including
the Leases affecting such Property), all in accordance with the terms thereof,
in each case subject only to any applicable Permitted Encumbrances. The
Permitted Encumbrances do not materially adversely affect the value or use of
any Property, or Borrower's ability to repay the Loan. There are no claims for
payment for work, labor or materials affecting any Property which are or may
become a Lien prior to, or of equal priority with, the Liens created by the Loan
Documents.
IV.1.7 SURVEY. The surveys for the Properties delivered to Lender
------
do not fail to reflect any material matter affecting the Properties or the title
thereto.
IV.1.8 NO BANKRUPTCY FILING. Borrower is not contemplating either
--------------------
the filing of a petition by it under any state or federal bankruptcy or
insolvency law or the liquidation of all or a major portion of its property, and
Borrower has no knowledge of any Person contemplating the filing of any such
petition against it.
IV.1.9 FULL AND ACCURATE DISCLOSURE. No statement of fact made by
----------------------------
Borrower in any Loan Documents contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
therein not misleading in any material respect. There is no material fact
presently known to Borrower that has not been disclosed to Lender which
adversely affects, or, as far as Borrower can reasonably foresee, might
adversely affect, in any material respect, the Properties or the business,
operations or condition (financial or otherwise) of Borrower.
IV.1.10 NO PLAN ASSETS. Borrower is not an "employee benefit
--------------
plan," as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and
none of the assets of Borrower constitutes or will constitute "plan assets" of
one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101.
IV.1.11 COMPLIANCE. Borrower and each Property and the use thereof
----------
comply in all material respects with all applicable Legal Requirements. To the
best of Borrower's knowledge, Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which might materially adversely affect the condition (financial or
otherwise) or business of Borrower. There has not been and shall never be
committed by Borrower or, to the best of Borrower's knowledge, any other Person
in occupancy of or involved with the operation or use of any Property, any act
or omission affording any Governmental Authority the right of forfeiture as
against any Property or any part thereof or any monies paid in performance of
Borrower's obligations under any Loan Document.
24
IV.1.12 CONTRACTS. There are no service, maintenance or repair
---------
contracts affecting any Property that are not terminable on one (1) month's
notice or less without cause and without penalty or premium. All service,
maintenance or repair contracts affecting the Properties have been entered into
at arms-length in the ordinary course of the applicable Borrower's business and
provide for the payment of fees in amounts and upon terms comparable to existing
market rates.
IV.1.13 FINANCIAL INFORMATION. All financial data, including the
---------------------
statements of cash flow and income and operating expense, that have been
delivered to Lender in respect of the Properties (i) are true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of the Properties as of the date of such reports, and (iii) to the
extent prepared by an independent certified public accounting firm, have been
prepared in accordance with GAAP consistently applied throughout the periods
covered, except as disclosed therein. Borrower has no contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to such
Borrower and reasonably likely to have a materially adverse effect on any
Property or the operation thereof, except as referred to or reflected in such
financial statements. Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.
IV.1.14 CONDEMNATION. No Condemnation or other proceeding has been
------------
commenced or, to Borrower's best knowledge, is contemplated with respect to all
or part of any Property or for the relocation of roadways providing access to
any Property.
IV.1.15 FEDERAL RESERVE REGULATIONS. No part of the proceeds of
---------------------------
the Loan will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System or for any other purpose that would be inconsistent with
such Regulation U or any other Regulation of such Board of Governors, or for any
purpose prohibited by Legal Requirements or any Loan Document.
IV.1.16 UTILITIES AND PUBLIC ACCESS. Each Property has rights of
---------------------------
access to public ways and is served by water, sewer, sanitary sewer and storm
drain facilities adequate to service it for its intended uses. All public
utilities necessary or convenient to the full use and enjoyment of each
Property are located in the public right-of-way abutting such Property, and all
such utilities are connected thereto so as to serve such Property. All roads
necessary for the use of each Property for its current purpose have been
completed and dedicated to public use and accepted by all Governmental
Authorities.
IV.1.17 NOT A FOREIGN PERSON. Borrower is not a "foreign person"
--------------------
within the meaning of (S) 1445(f)(3) of the Code.
IV.1.18 SEPARATE LOTS. Each Property is one or more separate tax
-------------
lots and is not a portion of any other tax lot that is not a part of such
Property.
25
IV.1.19 ASSESSMENTS. There are no pending or proposed special or
-----------
other assessments for public improvements or otherwise affecting any Property,
or any contemplated improvements to any Property that may result in such special
or other assessments.
IV.1.20 ENFORCEABILITY. The Loan Documents are not subject to, and
--------------
Borrower has not asserted, any right of rescission, set-off, counterclaim or
defense, including the defense of usury. To the best of Borrower's knowledge,
no exercise of any of the terms of the Loan Documents, or any right thereunder,
will render any Loan Document unenforceable as a whole or impair the principal
protections available to Lender thereunder.
IV.1.21 INSURANCE. Borrower has obtained and have delivered to
---------
Lender insurance policies reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement.
IV.1.22 USE OF PROPERTY; LICENSES. Each Property is used
-------------------------
exclusively for retail and other appurtenant and related uses. All
certifications, permits, licenses and approvals, including certificates of
completion and occupancy permits and any applicable liquor licenses required for
the legal use, occupancy and operation of each Property (collectively, the
"LICENSES"), have been obtained and are in full force and effect. The use being
made of each Property is in conformity with the certificate of occupancy issued
for such Property. The representations set forth in the preceding two sentences
are to the best of Borrower's knowledge to the extent that such representations
relate to Licenses maintained by tenants of the Property and use of the Property
by tenants.
IV.1.23 FLOOD ZONE. To the best of Borrower's knowledge, none of
----------
the Improvements is located in an area as identified by the Federal Emergency
Management Agency as an area having special flood hazards.
IV.1.24 PHYSICAL CONDITION. Except for the Required Repairs set
------------------
forth on SCHEDULE 5 hereto and the matters disclosed in the engineering reports
----------
concerning the Properties which reports have been obtained by Lender in
connection with the closing of the Loan, each Property, including all
Improvements, parking facilities, systems, Equipment and landscaping pertaining
thereto, is in good condition, order and repair in all material respects; and,
to the best of Borrower's knowledge, there exists no structural or other
material defect or damages to any Property, whether latent or otherwise.
Borrower has received no notice from any insurance company or bonding company of
any defect or inadequacy in any Property, or any part thereof, which would
adversely affect its insurability or cause the imposition of extraordinary
premiums or charges thereon or any termination of any policy of insurance or
bond.
IV.1.25 ENCROACHMENTS. All of the improvements included in
-------------
determining the appraised value of any Property lie wholly within the boundaries
and building restriction lines of such Property, and, except as shown on the
surveys of the Properties delivered by Borrower to Lender in connection with the
closing of the Loan, no improvement on an adjoining property encroaches upon any
Property, and no easement or other encumbrance upon any Property encroaches upon
any of the Improvements, so as to materially adversely affect the value or
marketability of any Property, except those insured against by the Title
Insurance Policy.
26
IV.1.26 LEASES. Attached hereto as SCHEDULE 4 is a true, correct
------ ----------
and complete rent roll for each Property (the "RENT ROLL"), which includes all
Leases affecting such Property. Except as set forth in SCHEDULE 4, with respect
----------
to the Rent Roll applicable to a given Property: (i) each Lease is in full
force and effect; (ii) the tenants under the Leases have accepted possession of
and are in occupancy of all of their respective demised premises, have commenced
the payment of rent under such Leases, and, to the best of Borrower's knowledge,
there are no offsets, claims or defenses to the enforcement thereof; (iii) all
rents due and payable under the Leases have been paid and no portion thereof has
been paid for any period more than thirty (30) days in advance; (iv) the rent
payable under each Lease is the amount of fixed rent set forth in the Rent Roll,
and Borrower has not received written notice from any tenant of any claim or
basis for a claim by the tenant thereunder for an adjustment to the rent; (v)
Borrower has received no notice of default from any tenant under any of the
Leases which which default remains uncured; to the best of Borrower's knowledge,
there are no defaults on the part of the landlord under any Lease; and no event
has occurred which, with the giving of notice or passage of time, or both, would
constitute such a default; (vi) to Borrower's best knowledge, there is no
present material default by the tenant under any Lease; (vii) Borrower does not
hold any security deposits under the Leases; and (viii) none of the Leases
contains any option to purchase or right of first refusal to purchase any
Property or any part thereof. Neither the Leases nor the Rents have been
assigned or pledged except to Lender, and no other Person has any interest
therein except the tenants thereunder.
IV.1.27 FILING AND RECORDING TAXES. All transfer taxes, deed
--------------------------
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid by any Person under applicable Legal Requirements in
connection with the transfer of any Property to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar taxes required
to be paid by any Person under applicable Legal Requirements in connection with
the execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents have been paid.
IV.1.28 INVESTMENT COMPANY ACT. Borrower is not (i) an "investment
----------------------
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended; (ii) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended; or (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
IV.1.29 FRAUDULENT TRANSFER. Borrower has not entered into the
-------------------
Loan or any Loan Document with the actual intent to hinder, delay, or defraud
any creditor, and Borrower has received reasonably equivalent value in exchange
for its obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities. The fair saleable value of
Borrower's assets is and will, immediately following the execution and delivery
of the Loan Documents, be greater than Borrower's probable liabilities,
including the maximum amount of its contingent liabilities or its debts as such
debts become absolute
27
and matured. Borrower's assets, now or immediately following the execution and
delivery of the Loan Documents, do not and will not constitute unreasonably
small capital to carry out its business as conducted or as proposed to be
conducted. Borrower does not intend to, and does not believe that it will, incur
debts and liabilities (including contingent liabilities and other commitments)
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of Borrower).
IV.1.30 PARTNERS. The sole general partner of ▇▇▇▇ Sub I is the
--------
▇▇▇▇ Sub I General Partner. ▇▇▇▇ Centers, Inc., a Maryland corporation, is the
owner of all of the issued and outstanding capital stock of the ▇▇▇▇ Sub I
General Partner, all of which capital stock has been validly issued and fully
paid and is nonassessable. The only limited partner of Borrower is ▇▇▇▇
Holdings Limited Partnership, a Maryland limited partnership. The stock of the
▇▇▇▇ Sub I General Partner and the limited partnership interests in Borrower are
owned free and clear of all liens, warrants, options and rights to purchase.
Borrower has no obligation to any Person to purchase, repurchase or issue any
ownership interest in it.
IV.1.31 MANAGEMENT AGREEMENT. The Management Agreement is in full
--------------------
force and effect. There is no default, breach or violation existing thereunder,
and no event has occurred (other than payments due but not yet delinquent) that,
with the passage of time or the giving of notice, or both, would constitute a
default, breach or violation thereunder, by either party thereto. Borrower's
rights under the Management Agreement will not be adversely affected by the
execution and delivery of the Loan Documents, Borrower's performance thereunder,
the recordation of the Deeds of Trust, or the exercise of any remedies by
Lender.
IV.1.32 HAZARDOUS SUBSTANCES. To the best of Borrower's knowledge
--------------------
and except as set forth in the environmental reports delivered to Lender in
connection with the closing of the Loan, (i) no Property is in violation of any
Legal Requirement pertaining to or imposing liability or standards of conduct
concerning environmental regulation, contamination or clean-up, including the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Emergency Planning and Community
Right-to-Know Act of 1986, the Hazardous Substances Transportation Act, the
Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Toxic
Substance Control Act, the Safe Drinking Water Act, the Occupational Safety and
Health Act, any state super-lien and environmental clean-up statutes and all
amendments to and regulations in respect of the foregoing laws (collectively,
"ENVIRONMENTAL LAWS"); (ii) no Property is subject to any private or
governmental Lien or judicial or administrative notice or action or inquiry,
investigation or claim relating to hazardous, toxic, dangerous and/or regulated
substances, wastes, materials, raw materials which include hazardous
constituents, pollutants or contaminants, including asbestos, asbestos
containing materials, petroleum, tremolite, anthlophylite, actinolite,
polychlorinated biphenyls and any other substances or materials which are
included under or regulated by Environmental Laws or which are considered by
scientific opinion to be otherwise dangerous in terms of the health, safety and
welfare of humans (collectively, "HAZARDOUS SUBSTANCES"); (iii) no Hazardous
Substances are or have been (including the period prior to the applicable
Borrower's acquisition of any Property), discharged, generated, treated,
disposed of or stored on, incorporated in, or removed or transported from such
Property other than in compliance with all Environmental Laws; (iv) no Hazardous
Substances are present in, on or under
28
any nearby real property which could migrate to or otherwise affect any
Property; and (v) no underground storage tanks exist on any Property.
IV.2 SURVIVAL OF REPRESENTATIONS. All of the representations and
---------------------------
warranties in Section 4.1 and elsewhere in the Loan Documents by Borrower (i)
shall survive for so long as any portion of the Debt remains owing to Lender and
(ii) shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
IV.3 AGREEMENT CONCERNING SUBORDINATION, NONDISTURBANCE. Lender hereby
--------------------------------------------------
agrees that if the tenant under any Lease requiring approval by Lender pursuant
to the provisions of the Deed of Trust requests, as a condition to subordinating
to the Debt and the lien of the applicable Deed of Trust such tenant's interests
in the applicable Property under such Lease, that Lender enter into a
subordination, nondisturbance and attornment agreement, Lender shall, in
connection with such approved Lease, execute and deliver to such tenant a
subordination, nondisturbance and attornment agreement substantially in the form
of SCHEDULE 10 attached hereto, with such changes thereto as may be reasonably
acceptable to Lender.
V. AFFIRMATIVE COVENANTS
---------------------
Until the end of the Term or the Defeasance of the entire unpaid
Principal, Borrower hereby covenants and agrees with Lender that:
V.1 EXISTENCE. Borrower shall (i) do or cause to be done all
---------
things necessary to preserve, renew and keep in full force and effect its
existence, rights, and franchises, (ii) continue to engage in the business
presently conducted by it, (iii) obtain and maintain all Licenses, and (iv)
qualify to do business and remain in good standing under the laws of each
jurisdiction, in each case as and to the extent required for the ownership,
maintenance, management and operation of the Properties.
V.2 TAXES AND OTHER CHARGES. Borrower shall pay all Taxes and
-----------------------
Other Charges as the same become due and payable (except to the extent that
Taxes are payable by Lender pursuant to Section 3.3.1 hereof, subject, however,
to Lender's right to apply sums in any Fund to the payment of the Debt after an
Event of Default, as provided in Section 3.8). Borrower shall deliver to Lender
receipts for payment, to the extent available, or other evidence reasonably
satisfactory to Lender that the Taxes and Other Charges have been so paid no
later than ten (10) days before they would be delinquent if not paid (provided,
however, that Borrower need not furnish such receipts for payment of Taxes paid
by Lender pursuant to Section 3.3.1). Borrower shall not suffer and shall
promptly cause to be paid and discharged any Lien (other than a Permitted
Encumbrance) against any Property, and shall promptly pay for all utility
services provided to any Property. After prior notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the amount or validity or
application of any Taxes or Other Charges, provided that (i) no Default or Event
of Default has occurred and remains uncured, (ii) such proceeding shall suspend
the collection of the Taxes or Other Charges, (iii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default
thereunder, (iv) no part of or interest in any Property will be in danger of
being sold, forfeited, terminated, canceled or lost, (v) Borrower
29
shall have furnished such security as may be required in the proceeding, or as
may be requested by Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon, and (vi) Borrower
shall promptly upon final determination thereof pay the amount of such Taxes or
Other Charges, together with all costs, interest and penalties. Lender will pay
over any such cash deposit or part thereof held by Lender to the claimant
entitled thereto or to Borrower, at any time when, in the judgment of Lender,
the entitlement of Borrower or such claimant is established and provided, in the
--------
case of Borrower, that no Event of Default exists. Notwithstanding the
foregoing, Borrower may freely contest the amount, validity or application of
Taxes or Other Charges as permitted by applicable law, if Borrower has paid the
contested Taxes or Other Charges in full.
V.3 REPAIRS; MAINTENANCE AND COMPLIANCE. (a) Borrower shall cause
-----------------------------------
the Properties to be maintained in a good and safe condition and repair and
shall not remove, demolish or materially alter the Improvements or Equipment
(except for normal replacement of the Equipment). Notwithstanding the
foregoing, it shall not be a Default for Borrower to perform (i) tenant
improvements required by the terms of the Leases to be performed by Borrower (or
for tenants to perform tenant improvements permitted by the terms of the Leases
to be performed by the tenants thereunder), (ii) capital expenditures made in
the ordinary course of Borrower's business, including without limitation facade
renovations, (iii) pad development under Leases approved by Lender, (iv)
Restoration in accordance with the terms, conditions and provisions of Sections
7.2, 7.3 and 7.4 of this Agreement, and (v) nonstructural alterations (except as
expressly provided in the foregoing clause (iii)) not affecting building
systems, changing the amount of gross leasable area of any Property or any of
the common areas constituting a part thereof, or changing the use of the
Property from retail and other ancillary and related uses. Borrower shall
promptly comply with all Legal Requirements, subject to Borrower's right to
contest Legal Requirements as provided below in this Section. In connection
with any and all repairs, improvements or alterations carried out at the
Properties (or any of them) the cost of which for any one project exceeds the
sum of $300,000, Borrower shall deliver to Lender an Officer's Certificate (A)
certifying that all such work has been completed in a good and workmanlike
manner and in accordance with all applicable Legal Requirements, (B) identifying
each Person that supplied materials or labor in connection with such work and
(C) stating that each such Person has been or will be paid in full and, at
Lender's option and promptly upon request by Lender, any or all of the
following: (i) copies of appropriate Lien waivers or other evidence of payment
satisfactory to Lender, (ii) a title search for the Property in question,
indicating that it is free of all Liens not previously approved by Lender (other
than Permitted Encumbrances as to which this Agreement expressly provides that
Lender's prior approval is not required), (iii) copies of all Licenses required
by applicable law in connection with such work and (v) such other evidence as
Lender shall reasonably request that the work has been completed and paid for.
Notwithstanding any provision to the contrary contained in this Section, any
work constituting Required Repairs shall be subject to the provisions of Section
3.2, and any work constituting Restoration shall be subject to the provisions of
Section 7.4.4.
(b) Borrower shall promptly repair, replace or rebuild any part of any
Property that becomes damaged, worn or dilapidated and shall complete and pay
for any Improvements at any time in the process of construction or repair.
After prior notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and
with due diligence, the validity or application of any Legal Requirements,
provided that (i) no
30
Default or Event of Default has occurred and remains uncured, (ii) such
proceeding shall suspend the enforcement of such Legal Requirements, (iii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder, (iv) no part of or interest in any Property
will be in danger of being sold, forfeited, terminated, canceled or lost, (v)
Borrower shall have furnished such security as may be required in the
proceeding, or as may be requested by Lender, to insure the payment or
performance (as the case may be) of any such Legal Requirements (including all
interest and penalties), and (vi) Borrower shall promptly upon final
determination thereof pay in full or perform such Legal Requirements (as the
case may be), together with all costs, interest and penalties; and 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.
V.4 LITIGATION. Borrower shall give prompt written notice to
----------
Lender of any litigation or governmental proceedings pending or threatened
against Borrower which might materially adversely affect such Borrower's
condition (financial or otherwise) or business or any Property.
V.5 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
-------------------------------
perform each and every term to be observed or performed by it pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to any
Property.
V.6 NOTICE OF DEFAULT. Borrower shall promptly advise Lender of any
-----------------
material adverse change in its condition, financial or otherwise, or of the
occurrence of any Default or Event of Default of which it has knowledge.
V.7 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall cooperate fully
------------------------------
with Lender with respect to, and permit Lender, at its option, to participate
in, any proceedings before any Governmental Authority which may in any way
affect the rights of Lender under any Loan Document. All costs and expenses of
Lender's optional participation in any such proceedings shall be borne by Lender
(except for costs and expenses relating to proceedings in connection with
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 the Loan Documents or any other security
given for the Loan and enforcing any obligations of or collecting any payments
due from Borrower under any Loan Document or with respect to the Properties or
in connection with any refinancing or restructuring of the Loan in the nature of
a "work-out", or any insolvency or bankruptcy proceedings, provided that such
--------
costs and expenses have not arisen by reason of the gross negligence, illegal
acts, fraud or willful misconduct of Lender).
V.8 FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost
------------------
and expense, (i) furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, reasonably
requested by Lender; (ii) execute and deliver to Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary or desirable, to evidence, preserve and/or protect the collateral
at any time securing or intended to secure the Debt, as Lender may reasonably
require; and (iii) do and execute all and such further lawful and reasonable
31
acts, conveyances and assurances for the better and more effective carrying out
of the intents and purposes of the Loan Documents, as Lender shall reasonably
require from time to time.
V.9 FINANCIAL REPORTING.
-------------------
V.9.1 BOOKKEEPING. Borrower shall keep on a Fiscal Year basis, in
-----------
accordance with GAAP, proper and accurate books, records and accounts reflecting
all of the financial affairs of Borrower and all items of income and expense and
any services, equipment or furnishings provided in connection with the operation
of each of the Properties, whether such income or expense is realized by
Borrower or by any other Person, except lessees under Leases who are not
Affiliates of Borrower. Lender shall have the right from time to time during
normal business hours upon reasonable notice to examine such books, records and
accounts at the office of Borrower or other Person maintaining them, and to make
such copies or extracts thereof as Lender shall desire. After an Event of
Default, Borrower shall pay any reasonable costs incurred by Lender to examine
its accounting records, as Lender shall determine to be necessary or appropriate
in the protection of Lender's interest.
V.9.2 ANNUAL REPORTS. Borrower shall furnish to Lender annually,
--------------
(i) within forty-five (45) days after each Fiscal Year, an unaudited operating
statement with respect to each of the Properties; (ii) within 100 days after
each Fiscal Year, a complete copy of the annual consolidated financial
statements of ▇▇▇▇ Centers, Inc., audited by a "big five" accounting firm or
another independent certified public accountant reasonably acceptable to Lender,
in accordance with GAAP; and (iii) within 100 days after each Fiscal Year, a
consolidating schedule of operating statements distinguishing the respective
operating statements of each of the Properties and the operating statements of
all other properties of ▇▇▇▇ Centers, Inc., certified by such "big five"
accounting firm or independent certified public accountant. Each of the
operating statements with respect to the Properties as described in clause (i)
above (x) shall set forth the income and expenses for the subject Property for
the immediately preceding calendar year, including a statement of annual Net
Operating Income, and (y) shall be accompanied by an Officer's Certificate from
Borrower certifying (1) that such statement presents fairly the financial
condition of such Property and has been prepared in accordance with GAAP and (2)
whether there exists a Default or Event of Default, and if so, the nature
thereof, the period of time it has existed and the action then being taken to
remedy it.
V.9.3 MONTHLY REPORTS. Borrower shall furnish to Lender within
---------------
thirty (30) days after the end of each calendar month the following items,
accompanied by an Officer's Certificate certifying 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 in accordance with GAAP
(subject to normal year-end adjustments) as applicable: (i) monthly and year-to-
date operating statements, noting Net Operating Income and other information
necessary and sufficient under GAAP to fairly represent the financial position
and results of operation of each of the Properties during such calendar month,
each in substantially the form attached hereto as SCHEDULE 7; (ii) with respect
----------
to the first month in each calendar quarter, a statement of the actual Capital
Expenses made by each Borrower during the prior calendar quarter as of the last
day of such prior calendar quarter; (iii) a calculation reflecting the annual
Debt Service Coverage Ratio as of the last day of such calendar month; (iv) a
statement by Borrower that it has not incurred any indebtedness other than
Permitted Indebtedness; and (v) occupancy rates, rent rolls and leasing status
reports substantially in the form
32
attached hereto as SCHEDULE 8 (identifying the leased premises, names of all
----------
tenants, units leased, monthly rental and all other charges payable under each
Lease, Lease commencement dates and Lease expiration dates, and listing
delinquencies of over thirty (30) days for each Property).
V.9.4 OTHER REPORTS. Borrower shall furnish to Lender, within ten
-------------
(10) Business Days after request, such further detailed information with respect
to the operation of the Properties and the financial affairs of Borrower as may
be reasonably requested by Lender or any applicable Rating Agency.
V.9.5 ANNUAL BUDGET. During each period commencing on a Lockbox
-------------
Event and ending on the date of the Lockbox Termination (if any) with respect to
such Lockbox Event and in any case after the Optional Prepayment Date, Borrower
shall prepare and submit (or shall cause Manager to prepare and submit) to
Lender by November 15 of each year during the Term, for approval by Lender,
which approval shall not be unreasonably withheld or delayed, a proposed pro
forma budget for each of the Properties for the succeeding Fiscal Year (the
"ANNUAL BUDGET"), and, promptly after preparation thereof, any revisions to such
Annual Budget. Lender's failure to approve or disapprove any Annual Budget
within thirty (30) days after Lender's receipt thereof shall be deemed to
constitute Lender's approval thereof. Each Annual Budget shall consist of (i)
an operating expense budget (the "OPERATING BUDGET") showing, on a month-by-
month basis, in reasonable detail, each line item of the Borrower's anticipated
Operating Income and Operating Expenses (on a cash and accrual basis), including
amounts required to establish, maintain and/or increase reserves, and (ii) a
Capital Expense budget (the "CAPITAL BUDGET") showing, on a month-by-month
basis, in reasonable detail, each line item of anticipated Capital Expenses.
The approved Annual Budgets for the period commencing on the date hereof and
ending on December 31, 1997 has been submitted to and approved by Lender.
V.9.6 BREACH. If Borrower fails to provide to Lender or its
------
designee any of the financial statements, certificates, reports or information
(the "REQUIRED RECORDS") required by this Section 5.9 within thirty (30) days
after the date upon which such Required Record is due, Borrower shall pay to
Lender, at Lender's option and in its sole discretion, an amount equal to $5,000
for each Required Record that is not delivered; provided Lender has given
--------
Borrower at least fifteen (15) days prior written notice of such failure, and
provided further that Lender shall not require any such payment after a
-------- -------
Securitization as contemplated by Section 9.1 of this Agreement.
V.10 ENVIRONMENTAL MATTERS.
---------------------
V.10.1 HAZARDOUS SUBSTANCES. So long as Borrower owns or is in
--------------------
possession of the Properties, Borrower (i) shall keep the Properties free from
Hazardous Substances unrelated to the operation of the Property in question by
Borrower or any tenant thereof and in compliance with all Environmental Laws and
provided that Borrower shall not generate, store, handle, process, dispose of or
--------
otherwise use Hazardous Substances (or knowingly permit tenants under any Leases
to do any of the foregoing) at, in, on, under or about any of the Properties in
a manner that could reasonably foreseeably lead to the imposition on Borrower,
Lender, or any Property of any liability or lien of any nature whatsoever under
any Environmental Laws, (ii) shall promptly notify Lender if (A) Borrower shall
become aware that any Hazardous Substance is on or near the Properties in
violation of any
33
Environmental Laws, (B) Borrower shall become aware that any Property is in
violation of any Environmental Laws or (C) Borrower or Manager shall have
received notice from any Governmental Authority regarding any condition on or
near any Property which condition could pose a threat to the health, safety or
welfare of humans, (iii) shall remove such Hazardous Substances and/or cure such
violations and/or remove such threats, as applicable, as required by law (or as
shall be required by Lender in the case of removal which is not required by law
but is recommended by a licensed hydrogeologist, licensed environmental engineer
or other qualified consultant engaged by Lender and which, if not cured or
removed could have a material adverse effect on the value or operation of any
Property), promptly after Borrower becomes aware of same, at Borrower's sole
expense and (iv) shall comply with all of the environmental consultants'
recommendations described on SCHEDULE 6 attached hereto. Nothing herein shall
----------
prevent Borrower from recovering expenses from any other party that may be
liable for such removal or cure.
V.10.2 ENVIRONMENTAL MONITORING. Borrower shall give prompt
------------------------
written notices to Lender of (i) any proceeding or inquiry by any party with
respect to the presence of any Hazardous Substance on, under, from or about any
Property, (ii) all claims made or threatened by any third party against
Borrower or any Property relating to any loss or injury resulting from any
Hazardous Substance, and (iii) Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of any Property that
could cause such Property to be subject to any investigation or cleanup pursuant
to any Environmental Law. Borrower shall permit Lender to join and participate
in, as a party if it so elects, any legal proceedings or actions initiated with
respect to the Properties in connection with any Environmental Law or Hazardous
Substance, and Borrower shall be responsible to pay all reasonable attorneys'
fees and disbursements incurred by Lender in connection therewith. Upon
Lender's request, at any time and from time to time, Borrower shall provide an
inspection or audit of the Properties prepared by a licensed hydrogeologist,
licensed environmental engineer or qualified environmental consulting firm
approved by Lender indicating the presence or absence of Hazardous Substances
on, in or near any Property. The cost and expense of such audit or inspection
shall be paid by Borrower not more frequently than once every five (5) calendar
years after the occurrence of a Securization, unless Lender, in its good faith
judgment, determines that reasonable cause exists for the performance of an
environmental inspection or audit of any Property, in which case such
inspections or audits shall be at Borrower's sole expense. If Borrower fails
to provide any such inspection or audit within thirty (30) days after such
request (provided that such 30-day period shall, upon Borrower's request, be
--------
extended for such additional period as may be reasonably necessary to complete
such inspection or audit, but in no event more than an additional 30 days),
Lender may order same, and Borrower hereby grants to Lender and its employees
and agents access to such Property and a license to undertake such inspection or
audit (subject to the rights of tenants of the Property). The cost of such
inspection or audit may be added to the Debt and shall bear interest thereafter
at the Default Rate until paid. If any environmental site assessment report
prepared in connection with such inspection or audit recommends that an
operations and maintenance plan be implemented for any Hazardous Substance,
Borrower shall cause such operations and maintenance plan to be prepared and
implemented at its expense upon request of Lender. In the event that any
investigation, site monitoring, containment, cleanup, removal, restoration or
other work of any kind is reasonably necessary or desirable under an applicable
Environmental Law ("REMEDIAL WORK"), Borrower shall commence and thereafter
diligently prosecute to completion all such Remedial Work within thirty (30)
days after written demand by
34
Lender for performance thereof (or such shorter period of time as may be
required under applicable law). All Remedial Work shall be performed by
contractors approved in advance by Lender, and under the supervision of a
consulting engineer approved by Lender. All costs of such Remedial Work shall be
paid by Borrower, including Lender's reasonable attorneys' fees and
disbursements incurred in connection with the monitoring or review of such
Remedial Work. Borrower shall not install or permit to be installed on any
Property any underground storage tank, unless such tank installation is required
by a tenant under the provisions of a Lease approved by Lender or permitted
under the provisions of such Lease to be performed by the tenant thereunder, and
provided that such tank shall be installed and maintained in compliance with
--------
applicable Environmental Laws.
V.10.3 SURVIVAL. The obligations and liabilities of Borrower under
--------
this Section 5.10 shall survive the Term and the exercise by Lender of any of
its rights or remedies under the Loan Documents, including the acquisition of
Properties by foreclosure or a conveyance in lieu of foreclosure.
V.11 TITLE TO THE PROPERTY. Borrower will warrant and defend the
---------------------
title to each Property, and the validity and priority of the Lien of the
applicable Deed of Trust, subject only to Permitted Encumbrances, against the
claims of all Persons.
V.12 ESTOPPEL STATEMENT. After request by Lender, Borrower shall
------------------
within ten (10) days furnish Lender with a statement, duly acknowledged and
certified, setting forth (i) the unpaid Principal, (ii) the Interest Rate, (iii)
the date installments of interest and/or Principal were last paid, (iv) any
offsets or defenses to the payment of the Debt, and (v) that the Loan Documents
are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification. Within ten (10) days after
request by Lender (but no more frequently than twice in any year), Borrower
shall furnish to Lender a certificate reaffirming all representations and
warranties of Borrower set forth in the Loan Documents as of the date requested
by Lender or, to the extent of any changes to any such representations and
warranties, so stating such changes; and Borrower shall use diligent, good faith
efforts to furnish to Lender, within thirty (30) days after request by Lender
(but no more frequently than once a year), tenant estoppel certificates from
each tenant at the Properties, which certificates shall be in form and substance
reasonably satisfactory to Lender.
V.13 PRINCIPAL PLACE OF BUSINESS. Borrower shall not change its
---------------------------
principal place of business without first giving Lender thirty (30) days' prior
notice.
V.14 MANAGEMENT AGREEMENT. Borrower shall (i) cause the Properties
--------------------
to be operated pursuant to the Management Agreement; (ii) 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; (iii) promptly notify Lender of any
default under the Management Agreement of which it is aware; (iv) if and only if
Manager is not an Affiliate of Borrower, promptly deliver to Lender a copy of
each financial statement, business plan, capital expenditure plan, and property
improvement plan and any other material notice, report and estimate received by
Borrower under the Management Agreement; and
35
(v) promptly enforce the
performance and observance of all of the covenants and agreements required to be
performed and observed by Manager under the Management Agreement.
V.15 SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY. Borrower shall
----------------------------------------
continue to be a Special Purpose Bankruptcy Remote Entity. A "SPECIAL PURPOSE
BANKRUPTCY REMOTE ENTITY" means a corporation, limited partnership or limited
liability company which (i) is organized solely for the purpose of (A) owning
its Property or Properties or (B) acting as a general partner of the limited
partnership that owns its Property or Properties or member of the limited
liability company that owns its Property or Properties, (ii) will not engage in
any business unrelated to (A) the ownership of its Property or Properties, (B)
acting as general partner of the limited partnership that owns its Property or
Properties or (C) acting as a member of the limited liability company that owns
its Property or Properties, as applicable, (iii) will not have any assets other
than those related to its Property or Properties or its partnership or member
interest in the limited partnership or limited liability company that owns its
Property or Properties, as applicable, (iv) will not engage in, seek or consent
to any dissolution, winding up, liquidation, consolidation, merger, asset sale,
transfer of partnership or membership interests other than Permitted Transfers
(if such entity is a general partner in a limited partnership or a member in a
limited liability company), or amendment of its limited partnership agreement,
articles of incorporation, articles of organization, certificate of formation or
operating agreement (as applicable), unless such amendment does not otherwise
contravene any term, provision or condition of any of the Loan Documents and
would not result in Borrower's or the General Partner's failure to be a Special
Purpose Bankruptcy Remote Entity, and provided that Borrower shall promptly
--------
furnish Lender with copies of any and all such amendments (regardless of whether
Lender's consent to the same is required hereunder), (v) if such entity is a
limited partnership, has, as its only general partners, Special Purpose
Bankruptcy Remote Entities that are corporations, (vi) if such entity is a
corporation, has at least one (1) Independent Director, and has not caused or
allowed and will not cause or allow the board of directors of such entity to
take any action requiring the unanimous affirmative vote of one hundred percent
(100%) of the members of its board of directors unless an Independent Director
shall have participated in such vote, (vii) if such entity is a limited
liability company, has at least one member that is a Special Purpose Bankruptcy
Remote Entity that is a corporation and such corporation is the managing member
of such limited liability company, (viii) if such entity is a limited liability
company, has articles of organization, a certificate of formation and/or an
operating agreement, as applicable, providing that (A) such entity will dissolve
only upon the bankruptcy of the managing member, (B) the vote of a majority-in-
interest of the remaining members is sufficient to continue the life of the
limited liability company in the event of such bankruptcy of the managing member
and (C) if the vote of a majority-in-interest of the remaining members to
continue the life of the limited liability company following the bankruptcy of
the managing member is not obtained, the limited liability company may not
liquidate its Property or Properties without the consent of the applicable
Rating Agencies for as long as the Loan is outstanding, (ix) without the
unanimous consent of all of its partners, directors or members, as applicable,
shall not (A) file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in which it
has a direct or indirect legal or beneficial ownership interest, (B) dissolve,
liquidate, consolidate, merge, or sell all or substantially all of its assets or
the assets of any other entity in which it has a direct or indirect legal or
beneficial ownership interest, (C) engage in any other business activity, or
amend its organizational documents,
36
(x) is and will remain solvent and is maintaining and will maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations, (xi)
has not and will not fail to correct any known misunderstanding regarding the
separate identity of such entity, (xii) has maintained and will maintain its
accounts, books and records separate from any other person or entity and will
file its own tax returns, as applicable, (xiii) has maintained and will maintain
its books, records, resolutions and agreements as official records, (xiv) has
not and will not commingle its funds or assets with those of any other Person,
(xv) has held and will hold its assets in its own name, (xvi) has conducted and
will conduct its business in its name, (xvii) has maintained and will maintain
its financial statements, accounting records and other entity documents separate
from any other Person, provided, however, that financial statements for such
--------
entity may be prepared on a consolidated basis with other Persons if such entity
is identified therein as a separate entity, (xviii) has paid (directly or
indirectly through reimbursement) and will pay directly its own liabilities,
including the salaries of its own employees, if any, out of its own funds and
assets, (xix) has observed and will observe all partnership, corporate or
limited liability company formalities, as applicable, (xx) has no indebtedness
other than the Loan and liabilities in the ordinary course of business relating
to the ownership and operation of its Property or Properties; (xxi) will not
assume or guarantee or become obligated for the debts of any other Person or
hold out its credit as being available to satisfy the obligations of any other
Person except for the Loan and the liabilities permitted pursuant to this
Agreement, (xxii) will not acquire obligations or securities of its partners,
members or shareholders, (xxiii) has allocated and will allocate fairly and
reasonably any overhead for shared office space and uses separate stationery,
invoices and checks, (xxiv) except in connection with the Loan will not pledge
its assets for the benefit of any other Person, (xxv) has held itself out and
identified itself and will hold itself out and identify itself as a separate and
distinct entity under its own name and not as a division or part of any other
Person, other than common advertising, (xxvi) has maintained and will maintain
its assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from those of any other
Person, (xxvii) will not make loans to any Person, and (xxviii) will not enter
into or be a party to, any transaction with its partners, members, shareholders
or Affiliates except in the ordinary course of its business and on terms which
are intrinsically fair and are no less favorable to it than would be obtained in
a comparable arm's-length transaction with an unrelated third party.
V.16 ASSUMPTIONS IN NON-CONSOLIDATION OPINION. Borrower shall
----------------------------------------
conduct its business so that the assumptions made in that certain substantive
non-consolidation opinion, dated as of the date hereof, delivered by Borrower's
counsel in connection with the Loan, shall be true and correct in all respects.
VI. NEGATIVE COVENANTS
------------------
Until the end of the Term or the Defeasance of the entire unpaid
Principal, Borrower covenants and agrees with Lender that it will not, directly
or indirectly:
VI.1 MANAGEMENT AGREEMENT. Without Lender's prior consent: (i)
--------------------
surrender, terminate or cancel the Management Agreement or otherwise replace the
Manager or enter into any other management agreement (except pursuant to Section
9.3); (ii) reduce or consent to the reduction
37
of the term of the Management Agreement; (iii) increase or consent to the
increase of the amount of any charges under the Management Agreement, provided,
--------
however, that Borrower may without Lender's prior consent increase the incentive
portion of the Manager's fee by an amount not to exceed one (1%) percent, so
long as such increase is consistent with market conditions concerning comparable
management contracts; or (iv) otherwise modify, change, supplement, alter or
amend in any material respect, or waive or release any of its rights and
remedies under, the Management Agreement; provided, however, that Borrower shall
--------
be permitted to make immaterial changes, modifications, or amendments to the
Management Agreement without Lender's prior approval, it being understood and
agreed that no change, modification or amendment to the Management Agreement
which affects the financial rights or obligations of Borrower, Lender or Manager
shall be deemed an "immaterial change".
VI.2 LIENS. Without Lender's prior consent, create, incur, assume,
-----
permit or suffer to exist any Lien on any portion any of the Properties or legal
or beneficial ownership interest in such Borrower, except Permitted
Encumbrances;
VI.3 DISSOLUTION. Dissolve, terminate, liquidate, merge with or
-----------
consolidate into another Person;
VI.4 CHANGE IN BUSINESS. Enter into any line of business other
------------------
than the ownership and operation of the Properties, or make any material change
in the scope or nature of its business objectives, purposes or operations, or
undertake or participate in activities other than the continuance of its present
business;
VI.5 DEBT CANCELLATION. Cancel or otherwise forgive or release any
-----------------
claim or debt owed to any Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business in its
reasonable judgment;
VI.6 ASSETS. Purchase or own any property other than the
------
Properties owned by Borrower on the date hereof and personal property related to
the ownership and operation of the Properties;
VI.7 TRANSFERS. Make, suffer or permit the occurrence of any
---------
Transfer other than a Permitted Transfer; or
VI.8 DEBT. Create, incur or assume any indebtedness other than the
----
Debt and unsecured trade debt customarily payable within sixty (60) days.
VII. INSURANCE; CASUALTY; AND CONDEMNATION
-------------------------------------
VII.1 INSURANCE .
---------
VII.1.1 COVERAGE. Borrower, at its sole cost, for the mutual benefit
---------
of Borrower and Lender, shall obtain and maintain during the Term the following
policies of insurance:
38
(a) Property insurance insuring against loss or damage by
standard, "all-risk" perils, which shall (i) be in an amount equal to the
greatest of (A) the then full replacement cost of the Properties without
deduction for physical depreciation, (B) the unpaid Principal, and (C) such
amount as is necessary so that the insurer would not deem Borrower a co-
insurer under such policies, (ii) have a deductible for each Property in an
amount no greater than five (5%) percent of the full replacement cost of
such Property, (iii) be paid annually in advance or monthly in accordance
with the provisions of Section 3.3 of this Agreement, and (iv) contain a
"Replacement Cost Endorsement" with a waiver of depreciation.
(b) Flood insurance if any part of any Property is located in an
area identified by the Federal Emergency Management Agency as an area
having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Program, in an amount at least
equal to the unpaid Principal or the maximum limit of coverage available
with respect to such Property under such program, whichever is less.
(c) Comprehensive public liability insurance, including broad
form property damage, blanket contractual and personal injuries (including
death resulting therefrom) coverages and containing minimum limits per
occurrence of $1,000,000 and $ 2,000,000 in the aggregate for any policy
year; together with at least $ 20,000,000 excess and/or umbrella liability
insurance for any and all claims, including all legal liability imposed
upon such Borrower and all court costs and attorneys' fees incurred in
connection with the ownership, operation and maintenance of the Properties.
(d) Rental loss and/or business interruption insurance in an
amount equal to the greater of (i) the estimated Rents for the next
succeeding twelve (12) month period or (ii) the projected Operating
Expenses and Debt Service for such period. The amount of such insurance
shall be increased from time to time during the Term as and when the
estimated or actual Rents increase.
(e) Insurance against loss or damage from (i) leakage of
sprinkler systems and (ii) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure vessels
or similar apparatus now or hereafter installed in any of the Improvements
(without exclusion for explosions), in an amount at least equal to
$25,000,000.
(f) Worker's compensation insurance with respect to any employees
of Borrower, as required by any Legal Requirement.
(g) During any period of repair or restoration, builder's "all-
risk" insurance in an amount equal to not less than the full insurable
value of the applicable Property, against such risks (including fire and
extended coverage and collapse of the Improvements to agreed limits) as
Lender may request, in form and substance reasonably acceptable to Lender.
39
(h) Coverage to compensate for the cost of demolition and the
increased cost of construction for each Property in an amount reasonably
satisfactory to Lender.
(i) Such other insurance (including earthquake insurance and
hurricane insurance) as may from time to time be reasonably required by
Lender in order to protect its interests.
VII.1.2 POLICIES. All policies of insurance (the "POLICIES")
--------
required pursuant to Section 7.1.1 shall (i) be issued by companies approved by
Lender and licensed to do business in the State, with a claims paying ability
rating of "AA" or better by Standard & Poor's Ratings Group; (ii) name Lender
and its successors and/or assigns as their interest may appear as the mortgagee;
(iii) contain a Non-Contributory Standard Lender Clause and a Lender's Loss
Payable Endorsement, or their equivalents, naming Lender as the person to which
all payments made by such insurance company in excess of $150,000 shall be paid;
(iv) contain a waiver of subrogation against Lender; (v) be assigned (to the
full extent of Borrower's interest therein and to the full extent assignable
under the terms thereof and under applicable law) and the originals or certified
copies thereof delivered to Lender; (vi) contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest, including
endorsements providing that neither Borrower nor Lender nor any other party
shall be a co-insurer under the Policies and that Lender shall receive at least
thirty (30) days' prior written notice of any modification, reduction or
cancellation of any of the Policies; and (vii) be satisfactory in form and
substance to Lender and approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. Borrower shall pay the premiums for its
Policies (the "INSURANCE PREMIUMS") as the same become due and payable and
furnish to Lender evidence of the renewal of each of the Policies together with
(unless such Insurance Premiums have been paid by Lender pursuant to Section
3.3) receipts for or other evidence of the payment of the Insurance Premiums
reasonably satisfactory to Lender. If Borrower does not furnish such evidence
and receipts at least twenty (20) days prior to the expiration of any expiring
Policy, then Lender may, but shall not be obligated to, procure such insurance
and pay the Insurance Premiums therefor, and Borrower agrees to reimburse Lender
for the cost of such Insurance Premiums promptly on demand. Within thirty (30)
days after request by Lender, Borrower shall obtain such increases in the
amounts of coverage required hereunder as may be reasonably requested by Lender,
taking into consideration changes in the value of money over time, changes in
liability laws, changes in prudent customs and practices, and the like.
VII.2 CASUALTY.
--------
VII.2.1 NOTICE; RESTORATION. If any Property is damaged or
-------------------
destroyed, in whole or in part, by fire or other casualty (a "CASUALTY"),
Borrower shall give prompt notice thereof to Lender. Following the occurrence
of a Casualty, Borrower, regardless of whether insurance proceeds are available
but subject to the provisions of Section 7.4.3, shall promptly proceed to
restore, repair, replace or rebuild the affected Property in accordance with
Legal Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction.
VII.2.2 SETTLEMENT OF PROCEEDS. In the event of a Casualty covered
----------------------
by any of the Policies (an "INSURED CASUALTY") where the loss does not exceed
$300,000, Borrower may
40
settle and adjust any claim without the consent of Lender; provided such
adjustment is carried out in a competent and timely manner; and Borrower is
hereby authorized to collect and receipt for any such insurance proceeds. In the
event of an Insured Casualty where the loss equals or exceeds$300,000, Borrower
may, with Lender's consent (which consent shall not be unreasonably withheld or
delayed), settle and adjust of any claim and agree with the insurer(s) to be
paid on the loss, and the proceeds of any such Policy shall be due and payable
solely to Lender and held by Lender in the Casualty/Condemnation Subaccount and
disbursed in accordance herewith. The expenses incurred by Lender (in the
adjustment and collection of insurance proceeds shall become part of the Debt
and be secured hereby and shall be reimbursed by Borrower to Lender upon demand.
VII.3 CONDEMNATION.
------------
VII.3.1 NOTICE; RESTORATION. Borrower shall promptly give Lender
-------------------
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding affecting Property (a "CONDEMNATION") and shall deliver to
Lender copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Borrower, regardless of whether an
Award is available but subject to the provisions of Section 7.4.3, shall
promptly proceed to restore, repair, replace or rebuild the affected Property in
accordance with Legal Requirements to the extent practicable to be of at least
equal value and of substantially the same character as prior to such
Condemnation.
VII.3.2 COLLECTION OF AWARD. Lender is hereby irrevocably
-------------------
appointed as Borrower's attorney-in-fact, coupled with an interest, with
exclusive power to collect, receive and retain any award or payment in respect
of a Condemnation (an "AWARD") and to make any compromise or settlement in
connection with such Condemnation, which power of attorney shall be effective
upon the occurrence and during the continuance of an Event of Default.
Notwithstanding any Condemnation (or any transfer made in lieu of or in
anticipation of such a Condemnation), Borrower shall continue to pay the Debt
at the time and in the manner provided for in the Loan Documents, and the Debt
shall not be reduced unless and until any Award shall have been actually
received and applied by Lender to expenses of collecting the Award and to
discharge of the Debt. Lender shall not be limited to the interest paid on the
Award by the condemning authority but shall be entitled to receive out of the
Award interest at the rate or rates provided in the Note. If any Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of such
Award, Lender shall have the right, whether or not a deficiency judgment on the
Note shall be recoverable or shall have been sought, recovered or denied, to
receive all or a portion of the Award sufficient to pay the Debt. Borrower
shall cause any Award that is payable to Borrower to be paid directly to Lender.
Lender shall hold such Award in the Casualty/Condemnation Subaccount and
disburse such Award in accordance with the terms hereof.
VII.4 APPLICATION OF PROCEEDS OR AWARD.
--------------------------------
VII.4.1 APPLICATION TO RESTORATION. In the event of an Insured
--------------------------
Casualty or Condemnation where (i) the loss is in an aggregate amount less than
twenty percent (20%) of the Fair Market Value of the affected Property
immediately prior to such Insured Casualty or Condemnation, (ii) in the
reasonable judgment of Lender, such Property can be restored within six (6)
months, and
41
prior to the Scheduled Maturity Date and the expiration of the
business interruption insurance with respect thereto, to an economic unit not
less valuable and not less useful than the same was prior to the Insured
Casualty or Condemnation, and after such restoration will adequately secure the
unpaid Principal, and (iii) no Default or Event of Default shall have occurred
and be then continuing, then the proceeds of insurance or the Award, as the case
may be (after reimbursement of any expenses incurred by Lender), shall be
disbursed to Borrower for application to the cost of restoring, repairing,
replacing or rebuilding such Property (the "RESTORATION"), in the manner set
forth herein. Borrower shall commence and diligently prosecute such
Restoration; provided that (i) Borrower shall pay (and if required by Lender,
Borrower shall deposit with Lender in advance) all costs of such Restoration in
excess of the net proceeds of insurance or the Award made available pursuant to
the terms hereof; and (ii) Lender shall have received evidence reasonably
satisfactory to it that, during the period of the Restoration, the Rents for the
affected Property will be at least equal to the sum of the Operating Expenses
and Debt Service for such Property, as reasonably determined by Lender.
VII.4.2 APPLICATION TO DEBT. Except as provided in Sections 7.4.1
-------------------
(and subject to the provisions of Section 7.4.3), the proceeds of insurance
collected upon any Insured Casualty, and any Award, may, at the option of
Lender in its sole discretion, be applied to the payment of the Debt or applied
to reimburse the Borrower for the cost of any Restoration, in the manner set
forth in Section 7.4.4. Any such application to the Debt shall be without any
prepayment consideration, unless an Event of Default has occurred and is
continuing at the time the insurance proceeds are received from the insurance
company or the Award is received from the condemning authority, as the case may
be, in which event Borrower shall pay to Lender an additional amount equal to
the Yield Maintenance Premium, if any, that would be required under Section
2.3.3 if a Defeasance Deposit were to be made by Borrower with respect to a
Defeased Note in the amount of the insurance proceeds or Award applied to the
Debt. Any such application to the Debt shall be subject to the provisions of
Section 2.3.2 of this Agreement. After any such application to the Debt, the
unpaid Principal shall be reamortized over the remaining term thereof.
VII.4.3 RELEASE OF PROPERTY UPON CASUALTY OR CONDEMNATION.
-------------------------------------------------
Notwithstanding the provisions of Section 7.4.2, if all of the conditions to
release of the proceeds of insurance relating to a Casualty or of an Award (as
the case may be) set forth in Section 7.4.1 are not met, then Borrower may
elect, at its option, to obtain the release of the Property affected by the
Casualty or Condemnation in question, as provided in this Section. Borrower may
obtain the release of such Property from the Lien of the Deed of Trust thereon
(and related Loan Documents) and the release of Borrower's obligations under the
Loan Documents with respect to such Property (other than those expressly stated
to survive), upon payment of the applicable Release Amount and satisfaction of
the other conditions set forth in Sections 2.4.2(b) and (c). Borrower shall
receive a credit against the applicable Release Amount in the amount of the
insurance proceeds or Award collected upon such Casualty or Condemnation (as the
case may be). The Release Amount so paid by Borrower shall be applied by Lender
first, to Lender's reasonable costs and expenses in connection with such release
-----
(including reasonable attorneys' fees and expenses) and second to the Debt, in
------
such order, proportion and priority as Lender may designate in its sole and
absolute discretion. After any such application to the Debt, the unpaid
Principal shall be reamortized over the remaining term thereof.
42
VII.4.4 PROCEDURE FOR APPLICATION TO RESTORATION. If Borrower is
----------------------------------------
entitled to reimbursement out of insurance proceeds or an Award held by Lender,
such proceeds or Award shall be disbursed from time to time from the
Casualty/Condemnation Subaccount upon Lender being furnished with (i) evidence
satisfactory to it of the estimated cost of completion of the Restoration, (ii)
funds or, at Lender's option, assurances satisfactory to Lender that such funds
are available, sufficient in addition to the proceeds of insurance or Award to
complete the proposed Restoration, (iii) such architect's certificates, waivers
of lien, contractor's sworn statements, title insurance endorsements, bonds,
plats of survey and such other evidences of cost, payment and performance as
Lender may reasonably require and approve, and (iv) all plans and specifications
for such Restoration, such plans and specifications to be approved by Lender
prior to commencement of any work. No payment made prior to the final
completion of the Restoration shall exceed ninety (90%) of the value of the work
performed from time to time; funds other than the proceeds of insurance or Award
shall be disbursed prior to disbursement of such proceeds or Award; and at all
times, the undisbursed balance of such proceeds or Award remaining in the hands
of Lender, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Lender by or on behalf of such Borrower for
that purpose, shall be at least sufficient in the reasonable judgment of Lender
to pay for the cost of completion of the Restoration, free and clear of all
Liens or claims for Lien. Any surplus that remains out of the insurance
proceeds held by Lender after payment of such costs of Restoration shall be paid
to Borrower. Any surplus that remains out of the Award received by Lender after
payment of such costs of Restoration shall, in the sole and absolute discretion
of Lender, be retained by Lender and applied to payment of the Debt or returned
to Borrower.
VIII. DEFAULTS
VIII.1 EVENTS OF DEFAULT. Each of the following events shall
-----------------
constitute an "EVENT OF DEFAULT":
(a) on any Payment Date, the Monthly Debt Service Payment Amount,
or any required payment to the Tax and Insurance Escrow Fund, the Capital
Reserve Fund or the Rollover Reserve Fund for any Property, is not paid in
full;
(b) any portion of the Debt, other than the regularly scheduled
payments described in the foregoing clause (a), is not paid within five (5)
days after Lender notifies Borrower in writing that the same is due and
payable;
(c) any of the Taxes or Other Charges are not paid when due,
subject to Borrower's right to contest Taxes in accordance with Section
5.2;
(d) the Policies are not kept in full force and effect, or if
originals or certified copies thereof are not delivered to Lender within
ten (10) days after written request;
(e) a Transfer other than a Permitted Transfer occurs;
(f) any representation or warranty made by Borrower herein or in
any Loan Document, or in any report, certificate, financial statement or
other instrument,
43
agreement or document furnished by or on behalf of Borrower in connection
with any Loan Document, shall be false or misleading in any material
respect as of the date the representation or warranty was made, and the
default described above in this clause (f) is not cured by Borrower within
30 days after written notice by Lender;
(g) Borrower shall make an assignment for the benefit of
creditors, or shall generally not be paying its debts as they become due;
(h) a receiver, liquidator or trustee shall be appointed for
Borrower; or Borrower shall be adjudicated a bankrupt or insolvent; or any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower; or any proceeding for
the dissolution or liquidation of Borrower shall be instituted; provided,
however, if such appointment, adjudication, petition or proceeding was
involuntary and not consented to by such Borrower, only upon the same not
being discharged, stayed or dismissed within sixty (60) days;
(i) Borrower shall assign or attempt to assign its rights or
interest under any Loan Document in contravention of any Loan Document;
(j) Borrower shall breach any negative covenant contained in
Section 6 or any covenant contained in Section 5.15 and with respect to
Section 5.15 such breach is not cured by Borrower within fifteen (15) days
after written notice by Lender;
(k) Borrower shall be in default under any other mortgage, deed
of trust or security agreement covering any part of any Property whether it
be superior or junior in Lien to the Deed of Trust;
(l) any Property becomes subject to any mechanic's, materialman's
or other Lien and such Lien is not bonded or discharged within thirty (30)
days after Borrower first receives notice in writing of such Lien, except a
Lien for Taxes not then due or other Permitted Encumbrance;
(m) Borrower shall fail to cure properly any violation of a Legal
Requirement within thirty (30) days after such Borrower first receives
written notice of such violation, provided that, if such violation cannot
--------
reasonably be cured within such thirty (30) day period, and Borrower shall
have commenced to cure such violation within such thirty (30) day period
and thereafter diligently and expeditiously proceeds to cure the same, then
such thirty (30) day period shall be extended for an additional period of
time as is reasonably necessary for Borrower in the exercise of due
diligence to cure such violation, such additional period not to exceed 90
days;
(n) except as expressly permitted by the provisions of this
Agreement, the alteration, improvement, demolition or removal of any of
the Improvements without the prior consent of Lender;
44
(o) without Lender's prior consent, (i) the Manager under the
Management Agreement (or any successor management agreement) resigns or is
removed, or (ii) the ownership, management or control of the Manager is
transferred to a person or entity other than an Affiliate of Borrower, or
(iii) there is any material change in the Management Agreement (or any
successor management agreement);
(p) a default has occurred and continues beyond any applicable
cure period under the Management Agreement (or any successor management
agreement) if such default permits the Manager to terminate the Management
Agreement (or such successor management agreement);
(q) Borrower shall cease to operate any Property for retail,
office and ancillary uses (other than temporary cessation in connection
with renovations to such Property or as a result of a Casualty or
Condemnation);
(r) an Event of Default as defined or described in any other Loan
Document occurs; or any other event shall occur or condition shall exist,
if the effect of such event or condition is to accelerate the maturity of
any portion of the Debt;
(s) Borrower shall fail to pay when due any deposit into any
Fund;
(t) any of the assumptions contained in any substantive non-
consolidation opinion, delivered to Lender by Borrower's counsel in
connection with the Loan or otherwise hereunder, were not true and correct
as of the date of such opinion or thereafter became untrue or incorrect,
and the default described above in this clause (t) is not cured by Borrower
within 15 days after written notice by Lender; or
(u) Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (a) through (t) above, for ten (10) days after notice to such
Borrower from Lender, in the case of any Default which can be cured by the
payment of a sum of money, or for thirty (30) days after notice from Lender
in the case of any other Default; provided, however, that if such non-
monetary Default is susceptible of cure but cannot reasonably be cured
within such thirty (30)-day period, and such 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 an additional period of time as is
reasonably necessary for such Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed ninety (90) days.
VIII.2 REMEDIES.
--------
VIII.2.1 ACCELERATION. Upon the occurrence of an Event of Default
------------
(other than an Event of Default described in paragraph (f), (g) or (h) of
Section 8.1) and at any time thereafter, in addition to any other rights or
remedies available to it pursuant to the Loan Documents or at law
45
or in equity, Lender may take such action, without notice or demand, that Lender
deems advisable to protect and enforce its rights against Borrower and in and to
any Property, including declaring the Debt to be immediately due and payable;
and upon any Event of Default described in paragraph (f), (g) or (h) of Section
8.1, the Debt shall immediately and automatically become due and payable,
without notice or demand, and Borrower hereby expressly waives any such notice
or demand, anything contained in any Loan Document to the contrary
notwithstanding.
VIII.2.2 REMEDIES CUMULATIVE. 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 the Loan Documents 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. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth in the Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is continuing, (i) to the
extent permitted by applicable law, Lender is not subject to any "one action" or
"election of remedies" law or rule, and (ii) all liens and other rights,
remedies or privileges provided to Lender shall remain in full force and effect
until Lender has exhausted all of its remedies against all of the Properties,
each of the Deeds of Trust have been foreclosed, all of the Properties have been
sold and/or otherwise realized upon in satisfaction of the Debt or the Debt has
been paid in full. To the extent permitted by applicable law, nothing contained
in any Loan Document shall be construed as requiring Lender to resort to any
portion of any Property for the satisfaction of any of the Debt in preference or
priority to any other portion, and Lender may seek satisfaction out of the
entirety of all of the Properties or any part of any Property in its absolute
discretion.
VIII.2.3 SEVERANCE. Lender shall have the right from time to time
---------
to sever the Note and the other Loan Documents into one or more separate notes,
deeds of trust and other security documents in such denominations as Lender
shall determine in its sole discretion for purposes of evidencing and enforcing
its rights and remedies, provided that no such severance will adversely affect
--------
or diminish the rights of Borrower as presently set forth in this Agreement or
any of the other Loan Documents or increase the obligations of Borrower above
those presently set forth in this Agreement and the other Loan Documents.
Borrower shall execute and deliver to Lender from time to time, promptly after
the request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender.
VIII.2.4 DELAY. 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 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 shall not be construed
to be a waiver of any subsequent Default or Event of Default or to impair any
remedy, right or power consequent thereon.
46
IX. SPECIAL PROVISIONS
------------------
IX.1 SALE OF NOTE AND SECURITIZATION.
-------------------------------
IX.1.1 COOPERATION. At Lender's request (to the extent not already
-----------
required to be provided by Borrower under this Agreement), Borrower shall use
reasonable efforts to satisfy the market standards to which Lender customarily
adheres or which may be reasonably required in the marketplace or by the Rating
Agencies in connection with the sale of the Note or participation therein or the
first successful securitization (such sale and/or securitization, the
"SECURITIZATION") of rated single or multi-class securities (the "SECURITIES")
secured by or evidencing ownership interests in the Note and the Deeds of Trust.
Without limiting the generality of the foregoing, Borrower shall:
(a) at no cost to Borrower other than for the expenses of Provided
Information being delivered by Borrower or Manager in connection with the
closing of the Loan, (i) provide such financial and other information with
respect to the Properties, Borrower and its Affiliates, Manager and any tenants
of the Properties, (ii) provide business plans and budgets relating to the
Properties and (iii) perform or permit or cause to be performed or permitted
such site inspection, appraisals, market studies, environmental reviews and
reports (Phase I's and, if appropriate, Phase II's), engineering reports and
other due diligence investigations of the Properties, as may be reasonably
requested by Lender or the Rating Agencies or as may be necessary or appropriate
in connection with the Securitization (the items provided to Lender pursuant to
this paragraph (a) being called the "PROVIDED INFORMATION"), together, if
customary, with appropriate verification of and/or consents to the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to Lender and the Rating Agencies;
(b) at Borrower's expense, cause counsel to render opinions as to non-
consolidation, fraudulent conveyance, true sale and true contribution and any
other opinion customary in securitization transactions with respect to the
Properties and Borrower and its Affiliates, which counsel and opinions shall be
reasonably satisfactory to Lender and the Rating Agencies;
(c) make such representations and warranties as of the closing date of
the Securitization with respect to the Properties, Borrower and the Loan
Documents as are customarily provided in securitization transactions and as may
be reasonably requested by Lender or the Rating Agencies and consistent with the
facts covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents;
(d) provide current certificates of good standing and qualification
with respect to Borrower from appropriate Governmental Authorities; and
(e) execute such amendments to the Loan Documents and Borrower's
organizational documents, and establish and fund such reserve funds (including
reserve funds for deferred maintenance and capital improvements) as may be
requested by Lender or the Rating Agencies or otherwise to effect the
Securitization, provided that nothing contained in this subsection (e) shall
result in a material economic change in the transaction.
47
IX.1.2 USE OF INFORMATION. Borrower understands that certain of
------------------
the Provided Information and the Required Records may be included in disclosure
documents in connection with the Securitization, including a prospectus or
private placement memorandum (each, a "DISCLOSURE DOCUMENT") and may also be
included in filings with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or the Securities and
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Securitization. In the event
that the Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower shall cooperate with Lender in updating the Provided
Information or Required Records for inclusion or summary in the Disclosure
Document by providing all current information pertaining to Borrower and the
Properties necessary to keep the Disclosure Document accurate and complete in
all material respects with respect to such matters.
IX.1.3 BORROWER OBLIGATIONS REGARDING DISCLOSURE DOCUMENTS. In
---------------------------------------------------
connection with a preliminary and a final private placement or prospectus, as
applicable, Borrower agrees:
(a) if requested by Lender, to certify in writing that such Borrower
has carefully examined those portions of such memorandum or prospectus, as
applicable, pertaining to Borrower, the Properties and the Loan, including
applicable portions of the sections entitled "Special Considerations",
"Description of the Deeds of Trust", "Description of the Deeds of Trust Loans
and Trust Property", "The Manager", "The Borrower" and "Certain Legal Aspects of
the Deeds of Trust Loan", and such sections (and any other sections reasonably
requested and pertaining to Borrower, the Properties or the Loan) 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) to indemnify Lender and the Affiliates of Nomura Securities
International, Inc. ("NOMURA"), that have filed the registration statement
relating to the Securitization (the "REGISTRATION STATEMENT"), each of its
directors, each of its officers who have signed the Registration Statement and
each person or entity who controls Nomura within the meaning of Section 15 of
the Securities Act or Section 30 of the Exchange Act of 1933, as amended
(collectively, the "NOMURA GROUP"), and Nomura, each of its directors and each
person who controls Nomura, within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act (collectively, the "UNDERWRITER GROUP")
for any losses, claims, damages or liabilities (the "LIABILITIES") to which
Lender, the Nomura Group or the Underwriter Group may become subject insofar as
the Liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the applicable portions of
such sections applicable to, Borrower, the Properties 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 applicable portions of such sections
or necessary in order to make the statements in the applicable portions of such
sections or in light of the circumstances under which they were made, not
misleading; and
(c) to reimburse Lender and Nomura for any legal or other expenses
reasonably incurred by Lender and Nomura in connection with investigating or
defending the Liabilities.
48
Borrower's respective Liabilities under clause (a) or (b) above shall be limited
to Liabilities arising out of or based upon any such untrue statement or
omission made therein in reliance upon and in conformity with information
furnished to Lender by or on behalf of Borrower in connection with the
preparation of those portions of the Disclosure Document pertaining to Borrower,
the Properties or the Loan or in connection with the underwriting of the debt,
including financial statements of Borrower, operating statements, rent rolls,
environmental site assessment reports and property condition reports with
respect to the Properties. The foregoing indemnity will be in addition to any
liability which Borrower may otherwise have.
IX.1.4 INDEMNITIES REGARDING FILINGS. (a) In connection with
-----------------------------
filings under the Exchange Act, Borrower agrees to (i) indemnify Lender, the
Nomura Group and the Underwriter Group for any Liabilities to which Lender, the
Nomura Group or the Underwriter Group may become subject insofar as the
Liabilities arise out of or are based upon the omission or alleged omission to
state in the Provided Information or Required Records a material fact required
to be stated in the Provided Information or Required Records in order to make
the statements in the Provided Information or Required Records, in light of the
circumstances under which they were made not misleading and (ii) reimburse
Lender or Nomura for any legal or other expenses reasonably incurred by Lender
and Nomura in connection with defending or investigating the Liabilities.
(b) NACC agrees (i) to indemnify Borrower for any Liabilities to
which Borrower may become subject insofar as the Liabilities arise out of or are
based on any violations by NACC of the Securities Act, the Exchange Act or other
applicable law in connection with a Securitization, other than Liabilities
arising out of or based upon the acts or omissions, or alleged acts or
omissions, of Borrower giving rise to Borrower's obligations to indemnify the
Nomura Group and the Underwriter Group as provided in this Section 9.1.
IX.1.5 INDEMNIFICATION PROCEDURE. Promptly after receipt by an
-------------------------
indemnified party under Section 9.1.3 or 9.1.4 of notice of the commencement of
any action for which a claim for indemnification is to be made against Borrower
or NACC, as the case may be, such indemnified party shall notify the indemnitor
in writing of such commencement, but the omission to so notify the indemnitor
will not relieve Borrower or NACC, as the case may be, from any liability that
such indemnitor may have to any indemnified party hereunder except to the extent
that failure to notify causes prejudice to the indemnitor. In the event that
any action is brought against any indemnified party, and such party notifies the
indemnitor of the commencement thereof, the indemnitor 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 of commencement, to assume the
defense thereof with counsel satisfactory to such indemnified party. After
notice from Borrower to such indemnified party under this Section 9.1.5, the
indemnitor shall not 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 indemnitor and the indemnifying party, and the
indemnitor 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 indemnitor, then the indemnified party or
parties shall have the right to select separate
49
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
indemnitor shall not be liable to any indemnified party for the expenses of more
than one separate counsel unless there are legal defenses available to it that
are different from or additional to those available to another indemnified
party.
IX.1.6 CONTRIBUTION. In order to provide for just and equitable
------------
contribution in circumstances in which the indemnity agreement provided for in
Section 9.1.3 or 9.1.4 is for any reason held to be unenforceable by an
indemnified party in respect of any Liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under Section 9.1.3
or 9.1.4, Borrower shall contribute to the amount paid or payable by the
indemnified party as a result of such 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 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 Nomura Group's and Borrower's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; and (iii) any
other equitable considerations appropriate in the circumstances. Lender and
Borrower hereby agrees that it may not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.
IX.1.7 RATING SURVEILLANCE. Lender will retain the Rating Agencies
-------------------
to provide rating surveillance services on Securities, at the sole expense of
Lender.
50
IX.2 EXCULPATION. Subject to the qualifications below, Lender
-----------
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Borrower, except
that Lender may bring a foreclosure action, an action for specific performance
or any other appropriate action or proceeding to enable Lender to enforce and
realize upon its interest under the Loan Documents, or in the Properties, the
Rents or any other collateral given to Lender pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Property, in the Rents and in any other
collateral given to Lender, and Lender agrees that it shall not ▇▇▇ for, seek or
demand any deficiency judgment against Borrower in any such action or proceeding
under or by reason of or under or in connection with any Loan Document. The
provisions of this section shall not, however, (i) constitute a waiver, release
or impairment of any obligation evidenced or secured by any Loan Document; (ii)
impair the right of Lender to name Borrower as a party defendant in any action
or suit for foreclosure and sale under any Deed of Trust to which it is a party;
(iii) affect the validity or enforceability of any guaranty made in connection
with the Loan or any of the rights and remedies of Lender thereunder; (iv)
impair the right of Lender to obtain the appointment of a receiver; (v) impair
the enforcement of any of the Assignments of Leases; (vi) constitute a
prohibition against Lender to commence any other appropriate action or
proceeding in order for Lender to fully realize the security granted by the
Deeds of Trust or to exercise its remedies against the Properties; or (vii)
constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, to the extent of any
loss, damage, cost, expense, liability, claim or other obligation incurred by
Lender (including reasonable attorneys' fees and costs reasonably incurred)
arising out of or in connection with the following:
(a) fraud or intentional misrepresentation by Borrower or any
guarantor in connection with the Loan;
(b) the gross negligence or willful misconduct of Borrower;
(c) the breach of any representation, warranty, covenant or
indemnification in any Loan Document concerning Environmental Laws or
Hazardous Substances, including Sections 4.1.32 and 5.10, and clauses
(viii) through (xi) of Section 10.13(b);
(d) the removal or disposal of any portion of any Property after
an Event of Default;
(e) the misapplication or conversion by Borrower of (x) any
insurance proceeds paid by reason of any Insured Casualty, (y) any Award
received in connection with a Condemnation, or (z) any Rents received by
Borrower or Manager following an Event of Default;
51
(f) failure to pay charges for labor or materials or other
charges payable by Borrower that can create Liens on any portion of any
Property unless such charges are the subject of a bona fide dispute in
which Borrower is contesting the amount or validity thereof;
(g) any security deposits collected with respect to the
Properties which are not delivered to Lender upon a foreclosure of or
action in lieu thereof, except to the extent any such security deposits
were applied in accordance with the terms and conditions of any of the
Leases prior to such foreclosure or action in lieu thereof; and
(h) Borrower's indemnifications of Lender set forth in Sections
9.1.3 and 9.1.4.
Notwithstanding anything to the contrary in this Agreement or any of the Loan
Documents, Lender shall not be deemed to have waived any right which Lender may
have under Section 506(a), 506(b), 1111(b) or any other provisions of the U.S.
Bankruptcy Code to file a claim for the full amount of the Debt or to require
that all collateral shall continue to secure all of the Debt in accordance with
the Loan Documents.
IX.3 TERMINATION OF MANAGER. If an Event of Default shall be
----------------------
continuing, Borrower shall, at the request of Lender, terminate the Management
Agreement and replace the Manager with a manager approved by Lender and any
applicable Rating Agency, at then market rate management fees and otherwise on
terms and conditions satisfactory to Lender.
IX.4 RETENTION OF SERVICER. Lender reserves the right to retain
---------------------
the Servicer to act as its agent hereunder with such powers as are specifically
delegated to the Servicer by Lender, whether pursuant to the terms of this
Agreement, the Pooling and Servicing Agreement, the Deposit Account Agreement or
otherwise, together with such other powers as are reasonably incidental thereto.
Borrower shall pay any reasonable fees and expenses of the Servicer in
connection with a Defeasance, release of Property, assumption or modification of
the Loan or enforcement of the Loan Documents, but in no event shall Borrower be
responsible for the Servicer's fees in connection with ordinary, ongoing
administration of the Loan.
X. MISCELLANEOUS
-------------
X.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 unpaid. All Borrower's covenants and
agreements in this Agreement shall inure to the benefit of the respective legal
representatives, successors and assigns of Lender.
X.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.
52
X.3 GOVERNING LAW. PARTIES AGREE THAT THE STATE OF MARYLAND HAS A
-------------
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
MARYLAND APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS CREATED
PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAW OF THE STATE IN WHICH THE APPLICABLE PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF MARYLAND SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT
THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MARYLAND.
X.4 MODIFICATION, WAIVER IN WRITING. No modification, amendment,
-------------------------------
extension, discharge, termination or waiver of any provision of this Agreement
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.
X.5 DELAY NOT A WAIVER. Neither any failure nor any delay on the
------------------
part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under any other Loan Document, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under any Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when due
of all other amounts due under the Loan Documents, or to declare a Default for
failure to effect prompt payment of any such other amount.
X.6 NOTICES. All notices, consents, approvals and requests
-------
required or permitted hereunder or under any other Loan Document (a "NOTICE")
shall be given in writing and shall be effective for all purposes if hand
delivered or sent (i) by certified or registered United States mail, postage
prepaid, or (ii) by (A) expedited prepaid delivery service, either commercial or
United States Postal Service, with proof of attempted delivery, and (B)
telecopier (with answer back
53
acknowledged), in any case addressed as follows (or to such other address or
Person as a party shall designate from time to time by notice to the other
party):
If to Lender:
Nomura Asset Capital Corporation
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
with copies to:
Nomura Asset Capital Corporation
Two World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
Telecopier: 212-667-1567
and
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
If to Borrower:
c/o Saul Centers, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
54
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.
X.7 TRIAL BY JURY. BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY
-------------
JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY Borrower, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY Borrower.
X.8 HEADINGS. The Section headings and Table of Contents in this
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Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
X.9 SEVERABILITY. Wherever possible, each provision of this
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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.
X.10 PREFERENCES. Lender shall have the continuing and exclusive
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right to apply or reverse and reapply any and all payments by Borrower to any
portion of the Debt. To the extent Borrower makes a payment to Lender, or
Lender receives proceeds of any collateral, which is in whole or part
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Debt 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.
X.11 WAIVER OF NOTICE. Borrower shall not be entitled to any
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notices of any nature whatsoever from Lender except with respect to matters for
which this Agreement or any other Loan Document specifically and expressly
provides 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 no
Loan Document specifically and expressly provides for the giving of notice by
Lender to Borrower.
X.12 INTENTIONALLY DELETED.
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X.13 EXPENSES; INDEMNITY. (a) Borrower shall reimburse Lender upon
-------------------
receipt of notice for all reasonable costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by Lender in connection with (i) the
preparation, negotiation, execution and delivery of the Loan Documents and the
consummation of the transactions contemplated thereby and all the costs of
furnishing all opinions by counsel for Borrower; (ii) Borrower's and Lender's
ongoing performance under and compliance with the Loan Documents, including
confirming compliance with environmental and insurance requirements; (iii) the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications of or under any Loan
Document and any other documents or matters requested by Lender; (iv) filing and
recording of any Loan Documents; (v) title insurance, surveys, inspections and
appraisals; (vi) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, the Loan
Documents, the Properties or any other security given for the Loan; and (vii)
enforcing any obligations of or collecting any payments due from Borrower under
any Loan Document or with respect to the Properties or in connection with any
refinancing or restructuring of the Loan in the nature of a "work-out", or any
insolvency or bankruptcy proceedings; provided, however, that Borrower shall not
be liable for the payment of any such costs and expenses to the extent the same
arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender. It is understood and agreed by Lender and Borrower,
however, that Borrower shall not be responsible for the payment of costs and
expenses in connection with the ordinary and ongoing administration of the Loan
(including, without limitation, the Servicer's fees and expenses except as
expressly stated to the contrary in Section 9.4). Any costs and expenses due
and payable to Lender hereunder which are not paid by Borrower within ten (10)
days after demand may be paid from any amounts in the Deposit Account, with
notice thereof to Borrower.
(b) Borrower shall indemnify and hold harmless Lender from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the reasonable fees and disbursements of counsel
for Lender in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not Lender shall be designated a
party thereto), that may be imposed on, incurred by, or asserted against Lender
(collectively, the "INDEMNIFIED LIABILITIES") in any manner, relating to or
arising out of or by reason of (i) any breach by Borrower of their obligations
under, or any material misrepresentation by Borrower contained in, any Loan
Document; (ii) the use or intended use of the proceeds of the Loan; (iii) any
information provided by or on behalf of Borrower, or contained in any
documentation approved by Borrower; (iv) ownership of any Deed of Trust, the
Properties or any interest therein, or receipt of any Rents; (v) any accident,
injury to or death of persons or loss of or damage to property occurring in, on
or about any Property or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vi) any use, nonuse or condition in,
on or about any Property or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vii) performance of any labor or
services or the furnishing of any materials or other property in respect of any
Property; (viii) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release of any Hazardous Substance
on, from or affecting any Property; (ix) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to such
Hazardous Substance; (x) any lawsuit brought or threatened, settlement reached,
or government
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order relating to such Hazardous Substance; (xi) any violation of the
Environmental Laws, which is based upon or in any way related to such Hazardous
Substance, including, without limitation, the costs and expenses of any Remedial
Work, attorney and consultant fees and disbursements, investigation and
laboratory fees, court costs, and litigation expenses; (xii) any failure of any
Property to comply with any Legal Requirement; (xiii) any claim by brokers,
finders or similar persons claiming to be entitled to a commission in connection
with any Lease or other transaction involving any Property or any part thereof
under any Legal Requirement, or any liability asserted against Lender with
respect thereto; and (xiv) the claims of any lessee of any portion of any
Property or any person acting through or under any lessee or otherwise arising
under or as a consequence of any Lease; provided, however, that Borrower shall
not have any obligation to Lender hereunder to the extent that such Indemnified
Liabilities arise from the gross negligence, illegal acts, fraud or willful
misconduct of Lender. To the extent that the undertaking to indemnify and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall contribute 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. Any amounts
payable to Lender by reason of the application of this paragraph shall become
immediately due and payable and shall bear interest at the Default Rate from the
date loss or damage is sustained by Lender until paid. The obligations and
liabilities of Borrower under this Section 10.13 shall survive the Term and the
exercise by Lender of any of its rights or remedies under the Loan Documents,
including the acquisition of any Property by foreclosure or a conveyance in lieu
of foreclosure.
X.14 PRIOR AGREEMENTS. This Agreement and the other Loan Documents
----------------
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents.
X.15 OFFSETS, COUNTERCLAIMS AND DEFENSES. 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, including
Servicer. Any assignee of Lender's interest in and to the Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses that are
unrelated to the Loan Documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated offset, 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.
X.16 PUBLICITY. All news releases, publicity or advertising by
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Borrower or its Affiliates through any media intended to reach the general
public, which refers to the Loan Documents, the Loan, Lender, Nomura, the Loan
purchaser, the Servicer or the trustee in a Securitization (except for notices
required by applicable law), shall be subject to the prior written approval of
Lender, and all such news releases, publicity or advertising by Lender or its
Affiliates referring to Borrower or the Properties (except for notices required
by applicable law and customary "tombstone"-type advertisements) shall be
subject to the prior written approval of Borrower.
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X.17 CONTROLLING AGREEMENT. Borrower and Lender intend at all times
---------------------
to comply with applicable state law or applicable United States federal law (to
the extent that it permits Lender to contract for, charge, take, reserve or
receive a greater amount of interest than under state law) and that this Section
10.17 shall control every other agreement in the Loan Documents. If the
applicable law (state or federal) is ever judicially interpreted so as to render
usurious any amount called for under the Note or any other Loan Document, or
contracted for, charged, taken, reserved or received with respect to the Debt,
or if Lender's exercise of the option to accelerate the maturity of the Loan of
any prepayment by Borrower results in Borrower having paid any interest in
excess of that permitted by applicable law, then it is Borrower's and Lender's
express intent that all excess amounts theretofore collected by Lender shall be
credited against the unpaid Principal and all other Debt (or, if the Debt has
been or would thereby be paid in full, refunded to Borrower), and the provisions
of the Loan Documents immediately be deemed reformed and the amounts thereafter
collectible thereunder reduced, without the necessity of the execution of any
new document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for thereunder. All sums paid
or agreed to be paid to Lender for the use, forbearance or detention of the Loan
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Loan until payment
in full so that the rate or amount of interest on account of the Debt does not
exceed the maximum lawful rate from time to time in effect and applicable to the
Debt for so loan as the Debt is outstanding. Notwithstanding anything to the
contrary contained in any Loan Document, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
X.18 CONFLICT; CONSTRUCTION OF DOCUMENTS. 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 counsel in connection with the
negotiation and drafting of the Loan Documents and that the Loan Documents shall
not be subject to the principle of construing their meaning against the party
that drafted them.
X.19 BROKERS AND FINANCIAL ADVISORS. Borrower hereby represents
------------------------------
that it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the Loan other than ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, whose fee shall be paid by Borrower pursuant to a separate agreement.
Borrower and Lender hereby agree to indemnify and hold the other harmless from
and against any and all claims, liabilities, costs and expenses of any kind in
any way relating to or arising from a claim by any Person that such Person acted
on behalf of the indemnifying party in connection with the transactions
contemplated herein. The provisions of this Section 10.19 shall survive the
expiration and termination of this Agreement and the repayment of the Debt.
X.20 NO THIRD PARTY BENEFICIARIES. The Loan Documents are solely
----------------------------
for the benefit of Lender and Borrower and nothing contained in any Loan
Document shall be deemed to confer upon anyone other than the Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained therein.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed by their duly authorized representatives, all as of the day
and year first above written.
▇▇▇▇ SUBSIDIARY I LIMITED PARTNERSHIP, a Maryland
limited partnership
By: ▇▇▇▇ QRS, Inc., a Maryland corporation, its sole
general partner
By:
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Name:
Title:
NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation
By:
---------------------------------------------
Name:
Title:
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