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EXHIBIT 10.4
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LOAN AGREEMENT
Dated as of January 30, 1998
between
UNITED INVESTORS REALTY TRUST,
a Texas Real Estate Investment Trust,
as Borrower
and
NOMURA ASSET CAPITAL CORPORATION,
as Lender
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TABLE OF CONTENTS
Page
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Specific Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Index of Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 Principles of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
II. GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.1 Maximum Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.2 Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.3 Second Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.4 Advance of Balance of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.5 No Reborrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Interest; Monthly Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2.2 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Loan Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.1 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.2 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.3 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Release of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Payments and Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5.1 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5.2 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5.3 Late Payment Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6.1 Structuring Fee on Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6.2 Payment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 Conditions to Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7.1 Conditions to Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7.2 Conditions to Second Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.7.3 Conditions to Final Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
III. TAX AND INSURANCE ESCROW FUND; CASH MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 Tax and Insurance Escrow Fund Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Use of Tax and Insurance Escrow Fund after Default . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.3 Cash Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.4 Grant of Security Interest; Application of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 16
IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1 Borrower Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1.1 Organization; Sole Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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4.1.2 Proceedings; Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1.3 No Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.5 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.6 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.7 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.8 No Bankruptcy Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1.9 Full and Accurate Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.10 No Plan Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.11 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.13 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.14 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.15 Federal Reserve Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.16 Utilities and Public Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.17 Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.18 Separate Lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.19 Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.20 Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.22 Use of Property; Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.23 Flood Zone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.24 Physical Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.25 Encroachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.26 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.27 Filing and Recording Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.28 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.29 Fraudulent Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.30 Management Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.31 Advisory Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1.32 Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2 Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.3 Borrower's Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
V. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Taxes and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Repairs; Maintenance and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Performance of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.7 Cooperate in Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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5.9 Financial Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.9.1 Bookkeeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.9.2 Monthly Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.9.3 Reports Relating to Other Properties . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.9.4 Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10.1 Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.10.2 Environmental Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.10.3 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11 Title to the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12 Estoppel Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.13 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.14 Management Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.15 Advisory Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.16 Independent Trust Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Management Agreements; Advisory Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Change In Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 Debt Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.7 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.8 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
VII. INSURANCE; CASUALTY; AND CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.1 Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.1.2 Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.2 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.1 Notice; Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2.2 Collection of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3 Application of Proceeds or Award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3.1 Application to Restoration or Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.3.2 Procedure for Application to Restoration . . . . . . . . . . . . . . . . . . . . . . . 32
VIII. DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2.1 Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2.2 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.2.3 Severance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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8.2.4 Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
IX. SPECIAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 Permanent Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Retention of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
X. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Lender's Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.4 Modification, Waiver in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.5 Delay Not a Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.7 Trial by Jury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.10 Preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.11 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.12 Remedies of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.13 Expenses; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.14 Prior Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.15 Offsets, Counterclaims and Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.16 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.17 Controlling Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.18 Conflict; Construction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.19 Brokers and Financial Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.20 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.21 Individuals Not Liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.22 Cross-Default; Cross Collateralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.23 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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SCHEDULES
Schedule 1 - List of Mortgaged Properties
Schedule 2 - List of Other Properties
Schedule 3 - Management Agreements
Schedule 4 - Allocation of Principal to Mortgaged Properties
Schedule 5 - Matters Regarding Representations
Schedule 6 - List of Major Leases
Schedule 7 - List of Environmental Reports
EXHIBITS
Exhibit I - Definitions of "Special Purpose Bankruptcy Remote Entity"
and "Independent Director"
Exhibit II - Terms of Mandatory Permanent Loan
Exhibit III - Terms of Preferred Equity Interest
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LOAN AGREEMENT
LOAN AGREEMENT dated as of January 30, 1998 between UNITED
INVESTORS REALTY TRUST, a Texas real estate investment trust (together with its
permitted successors and assigns, "BORROWER"), having an address at 0000 Xxx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, and NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation (together with its successors and assigns, "LENDER"),
having an address at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx
00000.
I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1 SPECIFIC DEFINITIONS. The following terms have the
meanings set forth below:
"ADVISOR": FCA Corp., a Texas corporation.
"ADVISORY AGREEMENT": that certain First Amended and Restated
Advisory Agreement by and between United Investors Realty Trust and FCA Corp.
dated as of June 9, 1997.
"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.
"AFFILIATE OWNERS": Affiliates of Borrower through which
Borrower has indirect ownership in fee of the Other Properties.
"ASSIGNMENT OF LEASES": those certain Assignments of Leases
and Rents, each entered into as of the date hereof or as of the date of the
Second Advance, by Borrower for the benefit of Lender, with respect to a
Mortgaged Property.
"AUTOBAHN SUBORDINATE MORTGAGE": with respect to the
Mortgaged Property known as the Autobahn Shopping Center located in San
Antonio, Texas, a second mortgage lien securing a loan of not more than
$2,000,000 provided that the holder of such mortgage lien enters into a
subordination and intercreditor agreement with Lender satisfactory to Lender.
"BASE RATE": LIBOR plus 2.50% per annum.
"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.
"BYLAWS": the First Amended and Restated Bylaws of United
Investors Realty Trust adopted as of June 1, 1997.
"CAPITAL EXPENSES": expenses that are required under GAAP to
be capitalized.
8
"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, 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,
interest payments under the Note in such period.
"DECLARATION OF TRUST": the Declaration of Trust of United
Investors Realty Trust adopted July 17, 1990.
"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 (i)
the Maximum Rate, or (ii) 5% above the Interest Rate.
"DETERMINATION DATE": with respect to any Interest Period,
the date which is two Eurodollar Business Days prior to the commencement of
such Interest Period.
"ENVIRONMENTAL INDEMNITIES": those certain Environmental
Indemnities, each entered into as of the date hereof or as of the date of the
Second Advance, by Borrower for the benefit of Lender, with respect to a
Mortgaged Property.
"ENVIRONMENTAL REPORTS": the environmental reports for the
Mortgaged Properties delivered by Borrower to Lender prior to the date hereof,
which Environmental Reports are listed on Schedule 7 hereto.
"EURODOLLAR BUSINESS DAY": a Business Day on which banks in
the City of London, England are open for interbank or foreign exchange
transactions.
"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 as in effect
in the United States of America as of the date of the applicable financial
report, applied on a consistent basis.
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"GOVERNMENTAL AUTHORITY": any court, board, agency,
commission, office or authority of any nature whatsoever for any governmental
xxxx (xxxxxxx, xxxxx, xxxxxx, xxxxxxxx, xxxxxxxxx, xxxx or otherwise) now or
hereafter in existence.
"INTEREST PERIOD": (i) the period from the date hereof
through February 10, 1998 and (ii) each period thereafter from an Interest
Period Commencement Date through an Interest Period Termination Date; except
that the Interest Period, if any, that would otherwise commence before and end
after the Maturity Date shall end on the Maturity Date.
"INTEREST PERIOD COMMENCEMENT DATE": the 11th day of each
calendar month (or such different day of each calendar month that Lender may
designate in its sole discretion by notice to Borrower given at least ten days
before such change is to take effect).
"INTEREST PERIOD TERMINATION DATE": the 10th day of each
calendar month (notwithstanding that the succeeding Payment Date may not be an
Interest Period Commencement Date because the day after such Interest Period
Termination Date is not a Business Day); provided, however, for the Interest
Period immediately prior to, and each Interest Period beginning after, the
effectiveness of a change in the day of the month that is to be the Interest
Period Commencement Date, the Interest Period Termination Date will be one day
earlier in the month than the day for the new Interest Period Commencement
Date.
"INTEREST RATE": a rate of interest equal to the lesser of
(i) the Maximum Rate or (ii) the Base Rate (or, when applicable pursuant to any
Loan Document, the Default Rate) from time to time in effect.
"IPO": the initial public offering of shares of Borrower as
registered with and approved by the United States Securities and Exchange
Commission.
"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 to use or occupy, any space in a Property, and every modification,
amendment or other agreement relating to and every guaranty or other agreement
entered into in connection with any such Lease.
"LEGAL REQUIREMENTS": (a) statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting all or part of any of the Properties 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 (b) all covenants, operating or other agreements, restrictions,
easements and encumbrances contained in any instrument, either of record or
known to Borrower, at any time in force affecting all or part of a Property,
including any that may (i) require repairs, modifications or alterations in or
to all or part of a Property, or (ii) in any way limit or condition the use and
enjoyment thereof, or (iii) require payments with respect thereto.
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"LETTER AGREEMENT": the letter agreement with summary of
terms dated December 19, 1997, between Lender and Borrower.
"LIBOR": with respect to any Interest Period, the rate per
annum which is equal to the London Interbank Offered Rate reported from time to
time by Telerate News Service (page 3750), at which foreign branches of major
United States banks offer United States dollar deposits to other banks for a
one-month period in the London interbank market at approximately 11:00 a.m.,
London time, on the related Determination Date. If such interest rate shall
cease to be available from Telerate News Service, LIBOR shall be determined
from such financial reporting service as Lender shall reasonably determine and
use with respect to its other loan facilities on which interest is determined
based on LIBOR. If two or more such rates appear on Telerate page 3750 or
associated pages, the rate in respect of such Interest Period will be the
arithmetic mean of such offered rates, absent manifest error.
"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 a 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: (i) the Note, (ii) the
Mortgages, (iii) the Assignments of Leases, and (iv) the Environmental
Indemnities; as each of the Loan Documents may be (and references to any Loan
Document shall mean such document as it may be) amended, restated, replaced,
supplemented or otherwise modified from time to time.
"MAJOR LEASES": the Leases listed on Schedule 6 hereto.
"MANAGEMENT AGREEMENTS": the management agreements listed on
Schedule 3 hereto pursuant to which certain of the Mortgaged Properties are
managed.
"MANAGERS": the managers under the Management Agreements.
"MATURITY DATE": the date on which the final payment of
principal of the Note becomes due and payable as therein provided, whether at
the Stated Maturity Date or such earlier date pursuant to Lender's declaration
of acceleration in accordance with this Agreement or any other Loan Document,
Borrower's notice of prepayment in accordance with this Agreement, or
otherwise.
"MAXIMUM RATE": the maximum interest rate allowed by
applicable law in effect with respect to the Loan on the date for which a
determination of interest accrued hereunder is made, after taking into account
all fees, payments and other charges that are, under applicable law,
characterized as interest.
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"MORTGAGES": those certain Deeds of Trust, Assignments of
Leases and Rents, Security Agreements and Fixture Filings, each entered into as
of the date hereof or as of the date of the Second Advance, by Borrower for the
benefit of Lender, each encumbering with a first lien a shopping center
property which is security and collateral for the Loan.
"MORTGAGED PROPERTIES": the shopping center properties which
are or shall be subject to Mortgages, as listed on Schedule 1 hereto, which are
owned in fee by Borrower, directly or indirectly.
"NOTE": that certain Promissory Note in the amount of the
Loan, made by Borrower to Lender as of the date hereof to evidence the Loan.
"OFFICER'S CERTIFICATE": a certificate delivered to Lender by
Borrower which is signed by a senior executive or financial officer of
Borrower.
"OTHER CHARGES": with respect to a Mortgaged Property, all
ground rents, maintenance charges, impositions other than Taxes, and any other
charges, including vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Property, now or hereafter levied or assessed
or imposed against the Property or any part thereof.
"OTHER MORTGAGORS": the Affiliates of Borrower who have joined
in executing and delivering certain of the Mortgages.
"OTHER PROPERTIES": the shopping center properties listed on
Schedule 2 hereto which are owned in fee, or to be owned in fee pursuant to
existing purchase agreements, by Borrower directly or indirectly, on which
Lender shall not hold Mortgages.
"PAYMENT DATE": February 11, 1998, the first Business Day
after each Interest Period ending thereafter, and the Maturity Date.
"PERMITTED ENCUMBRANCES": with respect to the Mortgaged
Properties, (a) the Liens created by the Loan Documents, (b) Liens, if any, for
Taxes or Other Charges not yet payable or delinquent, (c) such other title and
survey exceptions as Lender approves in writing in Lender's sole discretion,
and (d) the Autobahn Subordinate Mortgage.
"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.
"POST-CLOSING OBLIGATIONS LETTER": that certain letter
agreement dated the date hereof between Borrower and Lender pursuant to which
Borrower covenants to deliver to Lender certain Surveys and third-party
estoppels as listed therein.
"PROPERTY": any of the Mortgaged Properties or the Other
Properties.
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"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 a Mortgaged Property, including all receivables,
customer obligations, installment payment obligations and other obligations now
existing or hereafter arising or created out of the sale of a Mortgaged
Property or any Lease, and proceeds, if any, from business interruption or
other loss of income insurance.
"RESERVE FUNDS": the Tax and Insurance Escrow Fund and all
other reserves, if any, required hereunder.
"SERVICER": any entity appointed by Lender to service the
Loan, or its successor in interest.
"STATE": the state in which the particular Real Estate
Property is located.
"STATED MATURITY DATE": August 11, 1998.
"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 each Mortgaged 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.
"TRANSFER": any sale, conveyance, transfer (other than a
Lease), assignment, mortgage or deed of trust (or any refinancing, restatement,
modification or extension thereof), pledge or grant of a security interest or
hypothecation (or any refinancing, restatement, modification or extension
thereof), whether voluntary or by operation of law or otherwise, of or in (i)
all or part of any of the Properties (including any legal or beneficial direct
or indirect interest therein), or (ii) any shares of Borrower by an Affiliate
of Borrower.
"TRUST MANAGERS": the individuals who are designated as the
Trust Managers of Borrower pursuant to Borrower's Declaration of Trust and
By-Laws and the Texas Real Estate Investment Trust Act.
"UCC": the Uniform Commercial Code as in effect in the State.
1.2 INDEX OF OTHER DEFINITIONS. The following terms are
defined in the sections or Loan Documents indicated below:
"Award" - 7.3.2
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"Casualty" - 7.1.3
"Casualty/Condemnation Prepayment" - 2.3.2
"Condemnation" - 7.3.1
"Environmental Laws" - 4.1.32
"Equipment" - Mortgages
"Event of Default" - 8.1
"Final Advance - 2.1.4
"Hazardous Substances" - 4.1.32
"Hedwig Property" - 2.3.1
"Improvements" - Mortgages
"Initial Advance" - 2.1.2
"Insurance Premiums" - 7.1.2
"Insured Casualty" - 7.2.2
"Lender's Consultant" - 5.10.1
"Licenses" - 4.1.24
"Loan" - 2.1
"Mandatory Permanent Loan" - 2.3.1
"NACC Permanent Loan" - 2.6.3(a)
"OCBA" - 5.9.1
"Payment Fee" - 2.3.2
"Policies" - 7.1.2
"Principal" - 2.1.1
"Remedial Work" - 5.10.2
"Required Records" - 5.9.6
"Restoration" - 7.4.1
"Second Advance" - 2.1.3
"Survey" - 2.7.1B(c)(viii)
"Tax and Insurance Escrow Fund" - 3.1
"Title Continuation" - 2.7.2C
"Title Insurer" - 2.7.1B(c)(vi)
"Title Policy" - 2.7.1B(c)(vi)
1.3 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
2.1 THE LOAN.
2.1.1 MAXIMUM LOAN. Subject to the terms of this
Agreement, Lender shall make a loan (the "LOAN") to Borrower, in the aggregate
maximum principal amount (the "PRINCIPAL") of
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up to $56,800,000 which shall mature on the Stated Maturity Date. The Loan
shall be evidenced by the Note and secured by the Mortgaged Properties, and
shall be recourse to Borrower.
2.1.2 INITIAL ADVANCE. Provided that Borrower has
satisfied the conditions set forth in Section 2.7.1, Lender shall make an
advance of the Loan on the date hereof to Borrower in the amount of $52,217,712
(the "INITIAL ADVANCE"). The proceeds of the Initial Advance shall be used
solely for (i) payment of the purchase money due to acquire the Mortgaged
Properties known as Southwest-Walgreens, Xxxxx Park Center and Market at First
Colony, as listed on Schedule 1, (ii) payment of costs and expenses approved by
Lender incurred in connection with such acquisitions and the Loan, (iii)
payment and release of existing mortgage liens on the Mortgaged Properties
known as Twin Lakes, Autobahn, Bandera, El Campo and Centennial, as listed on
Schedule 1, and (iv) such other purposes approved by Lender.
2.1.3 SECOND ADVANCE. Within twenty-five (25) days
following the date of the Initial Advance, Lender shall make an advance of the
Loan to Borrower in the amount of $3,424,688 (the "SECOND ADVANCE"), provided
that Borrower has satisfied the conditions to such Second Advance set forth in
Section 2.7.2. The proceeds of the Second Advance shall be used solely for (i)
payment of the cash portion of the purchase price due to acquire the Other
Properties known as Hedwig Shopping Centers and Benchmark Crossing, as listed
on Schedule 2, and (iii) such other purposes approved by Lender.
2.1.4 ADVANCE OF BALANCE OF LOAN. Not later than March
10, 1998, Lender shall advance the balance of the Loan to Borrower in the
amount of $1,157,600 (the "FINAL ADVANCE"), provided that Borrower has
satisfied the conditions to such Final Advance, set forth in Section 2.7.3.
The proceeds of the Final Advance shall be used solely for (i) payment of the
cash portion of the purchase price due to acquire the Other Property known as
Rosemeade Shopping Center, as listed on Schedule 2, and (ii) such other
purposes approved by Lender.
2.1.5 NO REBORROWING. No amount repaid in respect of the
Loan may be reborrowed, except as otherwise expressly provided in the Mortgage.
2.2 INTEREST; MONTHLY PAYMENTS.
2.2.1 GENERALLY. From the date each Advance is made to but
not including the date of payment in full of the outstanding Principal,
Borrower shall pay interest on the outstanding Principal at the Interest Rate
on each Payment Date.
2.2.2 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 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.
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2.3 LOAN REPAYMENT.
2.3.1 REPAYMENT. Borrower shall repay the unpaid
Principal in full on the Maturity Date, together with (i) interest thereon to
(but excluding) the date of repayment, and (ii) the Payment Fee if applicable
pursuant to Section 2.6.3. Borrower shall have the right to prepay all, but
not a portion, of the Principal as set forth in Section 2.3.2 below. If the
Loan is not repaid on or prior to the Maturity Date, then, as set forth in the
Letter Agreement and subject to Section 9.1, Lender may require that the Loan
be repaid from the proceeds of (a) a permanent financing from Lender (a
"MANDATORY PERMANENT LOAN") secured by the Mortgaged Properties and the Other
Property known as the Hedwig Shopping Centers, as listed on Schedule 2, which
Other Property Borrower shall thereupon mortgage to Lender free and clear of
the existing mortgage lien thereon, and (b) Borrower's interest in the proceeds
of the sale, which Borrower shall cause, of the Other Property known as
University Mall, as listed on Schedule 2. Any Mandatory Permanent Loan shall
be on the terms and conditions set forth in Exhibit II hereto, and in
connection therewith Borrower shall transfer each Mortgaged Property, including
the Hedwig Property, to a Special Purpose Bankruptcy Remote Entity controlled
by Borrower, that shall become the borrower under the Mandatory Permanent Loan.
If the proceeds under clauses (a) and (b) are insufficient to repay the Loan in
full, Lender shall convert such unpaid portion to a preferred equity interest
in such permanent loan borrower and in Borrower on the terms and conditions set
forth on Exhibit III.
2.3.2 PREPAYMENTS. Borrower shall have the right to prepay
all (but not a part) of the Loan, upon at least fifteen (15) days' prior notice
to Lender. Notwithstanding the foregoing, the Loan is subject to mandatory
prepayment 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. A voluntary prepayment and each Casualty/Condemnation
Prepayment (i) shall be made on a Payment Date, (ii) shall 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, and (iii) shall include the Payment Fee if payable with respect to such
Principal pursuant to Section 2.6.2.
2.3.3 MANDATORY PREPAYMENTS. Borrower shall apply the
proceeds of any sales of new or additional issues of shares of Borrower,
whether sold in an IPO or otherwise, to prepay the Loan ("MANDATORY
PREPAYMENTS"). Borrower shall make such Mandatory Prepayments until the entire
outstanding Principal of the Loan is paid in full, unless Borrower elects by
notice to Lender to exclude from such Mandatory Prepayments the portion of the
Loan that Lender has theretofore agreed in writing with Borrower to convert to
a permanent loan. Each Mandatory Prepayment (i) shall be made on the Payment
Date next following the date of the sale of shares, (ii) shall include all
accrued and unpaid interest on the Principal prepaid up to but not including
such Payment Date, and (iii) shall include the Payment Fee pursuant to Section
2.6.2.
2.4 RELEASE OF PROPERTY. 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 Mortgages if not theretofore
released. No repayment or prepayment of less than all of the Debt shall cause,
give rise to a right to require, or otherwise result in, the release of the
Liens of the Mortgages.
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2.5 PAYMENTS AND COMPUTATIONS.
2.5.1 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 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.
2.5.2 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.
2.5.3 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 5% of such unpaid sum or the maximum amount permitted by
applicable law, in order to defray the expense incurred by Lender in handling
and processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment. Such amount shall be secured by the Loan
Documents.
2.6 FEES.
2.6.1 STRUCTURING FEE ON INITIAL ADVANCE. On the date
hereof, Borrower shall pay to Lender a structuring fee equal to one percent
(1%) of the amount of the Principal.
2.6.2 PAYMENT FEES. On the date of each payment or
prepayment of Principal (whether before, on or after the Maturity Date),
Borrower shall pay to Lender a payment fee (the "PAYMENT FEE") if applicable as
follows:
A. No Payment Fee or other fee or premium will be
payable with respect to any portion of the Loan paid or prepaid from the
proceeds of (i) a Mandatory Permanent Loan or any other permanent financing
provided by Lender (collectively, "NACC PERMANENT FINANCING"), or (ii) a
Casualty/Condemnation Prepayment.
B. To the extent the Loan is paid or prepaid from a
source that is not a NACC Permanent Financing or a Casualty/Condemnation
Prepayment, Borrower shall pay a Payment Fee equal to (i) 1.75% of the amount
of the Loan paid or prepaid from such other source if such payment or
prepayment occurs within one hundred twenty (120) days after the date hereof,
and (ii) 2% of the amount of the Loan paid or prepaid from such other source if
such payment or prepayment occurs after the expiration of such one hundred
twenty (120) days.
2.7 CONDITIONS TO ADVANCES.
2.7.1 CONDITIONS TO INITIAL ADVANCE. Lender shall not be
obligated to make the Initial Advance hereunder unless the following conditions
shall have been satisfied or waived, in the sole and absolute discretion of
Lender:
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A. REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by Borrower in Article IV and the representations and
warranties made by Borrower in any other Loan Documents shall be true and
correct in all material respects.
B. RECEIPT OF ITEMS AND DOCUMENTS BY LENDER. Lender
shall have received and approved the following items and documents, duly
executed and in recordable form where applicable, in each case in form and
substance satisfactory to Lender:
(a) this Loan Agreement;
(b) the Note;
(c) with respect to each Mortgaged Property:
(i) the Mortgage;
(ii) the Environmental Indemnity;
(iii) the Assignment of Leases;
(iv) the Assignment of Agreements;
(v) such UCC-1 Financing Statements as Lender
shall deem necessary;
(vi) a mortgagee title insurance policy (a "TITLE
POLICY") marked paid in full, issued by a national title
insurance company licensed to do business in the State and
approved by Lender (a "TITLE INSURER") in the amount of the
Loan amount allocated to such Mortgaged Property as set forth
on Schedule 4 hereto, insuring Lender that the Mortgage is a
valid first lien on such Mortgaged Property, containing no
exceptions to coverage other than Permitted Encumbrances, and
which Title Policy is otherwise satisfactory to Lender;
(vii) an original current as-built survey prepared
by a surveyor licensed by the State and certified to Lender
and the Title Insurer and otherwise satisfactory to Lender and
the Title Insurer (a "SURVEY");
(viii) a certificate from a licensed surveyor or an
insurance broker that the Real Estate Property is not located
in a flood hazard plain as indicated on the Maps of the
Federal Emergency Management Agency;
(ix) an environmental report satisfactory to
Lender; and
(x) an engineering report satisfactory to Lender;
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(d) copies of (i) resolutions of the Trust Managers of
Borrower authorizing the transactions contemplated herein and the
execution by Borrower of this Agreement and the other Loan Documents
to which Borrower is a party, certified as true, correct and complete
by the Secretary of Borrower, (ii) incumbency certificates of the
officers of Borrower executing Loan Documents on behalf of Borrower,
(iii) the Declaration of Trust of Borrower, which shall be certified
as being true, correct and complete by the County Clerk of Xxxxxx
County, Texas and the Secretary of Borrower, (iv) the Bylaws, which
shall be certified as true, correct and complete by the Secretary of
Borrower, (v) a doing business certificate for each State in which
Borrower does business, each certified as being true, correct and
complete by the Secretary of State of such State, and (vi) good
standing certificates for Borrower issued by the Secretaries of State
of the States (other than Texas) in which Borrower does business;
(e) opinions of Texas counsel for Borrower and Arizona
and Tennessee counsel for Lender in form and substance satisfactory to
Lender;
(f) payment of Lender's counsel fees, and all other
Lender's expenses relating to the Loan then due and payable;
(g) payment in full of the Structuring Fee for the Loan;
(h) financial statements for Borrower satisfactory to
Lender;
(i) evidence that Borrower is able to pay its debts and
other obligations when due and has a positive net worth, determined in
a manner consistent with the most recent financial statements
delivered to Lender;
(j) the Insurance Policies for Borrower and each
Mortgaged Property then required to be in effect and delivered
pursuant to this Agreement and the Mortgages, together with evidence
that:
(i) all such Insurance Policies then have an
unexpired term of at least one (1) year;
(ii) the premiums for such unexpired term have
been paid in full; and
(iii) such Insurance Policies are in full force and
effect;
(k) a letter or report of Lender's insurance consultant
confirming that the Insurance Policies adequately protect Lender;
(l) a copy of each Management Agreement, certified as
true, correct and complete by Borrower;
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(m) copies of the Leases identified in Schedule 3, each
certified as true, correct and complete by Borrower, and estoppel
certificates from the tenants under such Leases;
(n) an appraisal of each Mortgaged Property satisfactory
in form and substance to Lender from an appraiser satisfactory to
Lender;
(o) an agreement executed by each Manager in form and
substance satisfactory to Lender pursuant to which the Manager agrees
(i) that Lender may terminate the Management Agreement at any time
during the continuation of an Event of Default, (ii) that Manager
will, at Lender's option following a foreclosure or transfer by
deed-in-lieu of foreclosure, recognize and attorn to Lender or its
designee as the successor owner under the Management Agreement, but
without any liability on the part of Lender or such designee for acts
or omissions of Borrower prior to the date of such foreclosure or
transfer and (iii) that the Manager's rights under the Management
Agreement are subject and subordinate to the Loan Documents; and
(p) such other documents, instruments, opinions and
approvals as Lender shall have reasonably requested.
C. NO CONDEMNATION. No part of any Mortgaged Property
shall have been condemned, or threatened with condemnation.
2.7.2 CONDITIONS TO SECOND ADVANCE. Lender shall not be
obligated to make the Second Advance unless the following conditions are
satisfied in the sole and absolute discretion of Lender, except to the extent
that Lender may elect (which election may be made without written or express
notice of such election) to waive any such conditions:
A. CONDITIONS TO FIRST ADVANCE. All conditions set
forth in Section 2.7.1 shall have been satisfied or waived in writing by
Lender.
B. REPRESENTATIONS AND WARRANTIES. On the date of the
Second Advance, the representations and warranties made by Borrower in Article
IV and the representations and warranties made by Borrower in any other Loan
Documents shall be true and correct on and as of the date of such Second
Advance with the same effect as if made on such date.
C. RECEIPT OF TITLE CONTINUATION. Lender shall have
received, in each case in form and substance satisfactory to Lender, an
endorsement to each Title Policy indicating that, since the Initial Advance,
there has been no change to the state of title to the Mortgaged Property that
is covered by such Title Policy and there are no Liens or exceptions not
theretofore approved by Lender as provided herein, which endorsement has the
effect of continuing such Title Policy to the date of the Second Advance (a
"TITLE CONTINUATION").
D. RECEIPT OF ESTOPPELS. Lender shall have received the
third party estoppels listed in the Post- Closing Obligation Letter.
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E. NO DEFAULT. On the date of such Second Advance, no
Default or Event of Default hereunder shall have occurred and be continuing and
no default of any of Borrower's obligations under any of the other Loan
Documents shall have occurred and be continuing.
2.7.3 CONDITIONS TO FINAL ADVANCE. Lender shall not be
obligated to make the Final Advance unless the following conditions are
satisfied in the sole and absolute discretion of Lender, except to the extent
that Lender may elect (which election may be made without written or express
notice of such election) to waive any such conditions:
A. CONDITIONS TO FIRST AND SECOND ADVANCES. All
conditions set forth in Section 2.7.1 and Section 2.7.2 shall have been
satisfied or waived in writing by Lender.
B. REPRESENTATIONS AND WARRANTIES. On the date of the
Final Advance, the representations and warranties made by Borrower in Article
IV and the representations and warranties made by Borrower in any other Loan
Documents shall be true and correct on and as of the date of such Second
Advance with the same effect as if made on such date.
C. RECEIPT OF TITLE CONTINUATIONS. Lender shall have
received, in each case in form and substance satisfactory to Lender, a Title
Continuation to each Title Policy continuing such Title Policy to the date of
the Final Advance.
D. RECEIPT OF SURVEYS. Lender shall have received the
Surveys listed in the Post-Closing Obligation Letter.
E. NO DEFAULT. On the date of such Final Advance, no
Default or Event of Default hereunder shall have occurred and be continuing and
no default of any of Borrower's obligations under any of the other Loan
Documents shall have occurred and be continuing.
III. TAX AND INSURANCE ESCROW FUND; CASH MANAGEMENT
3.1 TAX AND INSURANCE ESCROW FUND DEPOSITS. Borrower
shall pay to Lender on each Payment Date (i) one-twelfth (1/12) 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 for all
Mortgaged Properties at least thirty (30) days prior to their respective due
dates, and (ii) one-twelfth (1/12) 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 for all Mortgaged
Properties 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 xxxx,
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 xxxx,
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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 return any excess to
Borrower. If at any 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 reasonably 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.
3.2 USE OF TAX AND INSURANCE ESCROW FUND AFTER DEFAULT.
Upon the occurrence and during the continuance of an Event of Default, Lender
may apply any sums in the Tax and Insurance Escrow Fund to the payment of the
Debt and/or to the payment of Taxes, Insurance Premiums, Capital Expenses,
leasing expenses approved by Lender and operating expenses approved by Lender,
in any order in its sole discretion. The Tax and Insurance Escrow Fund shall
not constitute a trust fund and may be commingled with other monies held by
Lender. Sums in the Tax and Insurance Escrow Fund shall be held by Lender in
an interest-bearing account at an institution selected by Lender. Earnings or
interest, if any, on the Tax and Insurance Escrow Fund shall become part of the
Tax and Insurance Escrow Fund and shall be disbursed as provided in this
Section 3. Lender shall not be liable for any loss sustained on the investment
of any funds constituting the Tax and Insurance Escrow Fund.
3.3 CASH MANAGEMENT. From and after the occurrence of an
Event of Default, upon the request of Lender, all Rents from each Mortgaged
Property shall be deposited by Borrower, within one Business Day after receipt,
into one or more accounts under the sole control of Lender at one or more banks
selected by Lender ("DEPOSIT ACCOUNTS"), and Borrower shall cause (where
practicable) all Rents to be transmitted directly by tenants to such Deposit
Accounts. Lender may apply any amounts in the Deposit Accounts to, in any
order in its sole discretion, the Debt and/or the payment of Taxes, Insurance
Premiums, Capital Expenses, leasing expenses approved by Lender and operating
expenses approved by Lender for the Mortgaged Properties or any of them.
3.4 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
Borrower's right, title and interest in and to the Tax and Insurance Escrow
Fund and the Deposit Accounts, if any, and Rents held therein. Borrower shall
not, without obtaining the prior written consent of Lender, further pledge,
assign or grant any security interest in the Tax and Insurance Escrow Fund, and
the Deposit Accounts, if any, and Rents held therein, 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.
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IV. REPRESENTATIONS AND WARRANTIES
4.1 BORROWER REPRESENTATIONS. Borrower represents and
warrants as of the date hereof that, except to the extent (if any) disclosed on
Schedule 5 with reference to a specific subsection of this Section 4.1:
4.1.1 ORGANIZATION; SOLE PURPOSE. Borrower has been duly
organized as a Texas real estate investment trust and is validly existing, 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. The primary business of Borrower is the ownership (directly or
indirectly) and the management, improvement, financing, leasing and operation
of the Mortgaged Properties and the Other Properties.
4.1.2 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 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. The Other Mortgagors
have taken all necessary action to authorize the execution and delivery of the
Mortgages to which they are parties, and such Mortgages constitute legal, valid
and binding obligations of the Other Mortgagors enforceable against the Other
Mortgagors in accordance with their respective terms, subject to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors
generally, and general principles of equity.
4.1.3 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 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 any Borrower of the Loan Documents has been obtained and is in
full force and effect.
4.1.4 LITIGATION. There are no actions, suits or
proceedings at law or in equity by or before any Governmental Authority now
pending or threatened against or affecting Borrower, any Other Mortgagor or
Affiliate Owner or any of the Properties, which, if determined against
Borrower, such Other Mortgagor or Affiliate Owner or the Property, might
materially adversely affect the condition (financial or otherwise) or business
of Borrower or the condition or ownership of any of the Properties.
4.1.5 AGREEMENTS. Borrower is not a party to any agreement
or instrument or subject to any restriction which might adversely affect
Borrower or any of the Properties, or Borrower's business, properties,
operations or condition, financial or otherwise. Borrower is not,
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and the Other Mortgagors and Affiliate Owners are not, in default in any
material respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Permitted Encumbrance or
any other agreement or instrument to which it is a party or by which it or any
of the Properties is bound.
4.1.6 TITLE. Upon the disbursement to Borrower of the
Initial Advance, Borrower and the Other Mortgagors (as applicable) shall have
good and indefeasible title in fee to all of the Mortgaged Properties, free and
clear of all Liens except the Permitted Encumbrances, and Borrower and the
Affiliate Owners (as applicable) have good and indefeasible title in fee to the
Other Properties. The Mortgages, 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 such Mortgaged Property and (ii) perfected security interests in and to,
and perfected collateral assignments of, all personalty included in each
Mortgaged Property (including the Leases), all in accordance with the terms
thereof, in each case subject only to any applicable Permitted Encumbrances.
To the best of Borrower's knowledge, the Permitted Encumbrances do not
materially adversely affect the value or use of the Properties, or Borrower's
ability to repay the Loan. To the best of Borrower's knowledge, there are no
claims for payment for work, labor or materials affecting any Mortgaged
Property which are or may become a Lien prior to, or of equal priority with,
the Liens created by the Loan Documents.
4.1.7 SURVEY. To the best of Borrower's knowledge, the
Surveys delivered to Lender reflect all material matters affecting the
Mortgaged Properties or the title thereto.
4.1.8 NO BANKRUPTCY FILING. Neither Borrower nor any of
the Other Mortgagors or Affiliate Owners is 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, any Other Mortgagor or Affiliate Owner.
4.1.9 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. 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 foresee, might adversely affect, the Properties or the
business, operations or condition (financial or otherwise) of Borrower.
4.1.10 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.
4.1.11 COMPLIANCE. As of the disbursement to Borrower of
the Initial Advance and the Final Advance, Borrower and the Properties and the
use thereof comply and will 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
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Governmental Authority, the violation of which might materially adversely
affect the condition (financial or otherwise) or business of Borrower. To the
best of Borrower's knowledge, there has not been and shall never be committed
by Borrower or any other Person in occupancy of or involved with the ownership,
operation or use of any of the Properties any act or omission affording any
Governmental Authority the right of forfeiture as against the Property or any
part thereof or any monies paid in performance of Borrower's obligations under
any Loan Document.
4.1.12 CONTRACTS. To the best of Borrower's knowledge,
there are no service, maintenance or repair contracts affecting the Mortgaged
Properties that are not terminable on one month's notice or less without cause
and without penalty or premium. All service, maintenance or repair contracts
affecting the Mortgaged Properties have been entered into at arms-length in the
ordinary course of Borrower's (or to Borrower's knowledge, its predecessor's)
business and, to the best of Borrower's knowledge, provide for the payment of
fees in amounts and upon terms comparable to existing market rates.
4.1.13 FINANCIAL INFORMATION. To the best of Borrower's
knowledge, 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)
fairly represent the financial condition of Borrower on a consolidated basis
and of each 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
Borrower and reasonably likely to have a materially adverse effect on Borrower
or any of the Properties 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 or any of the Properties from
that set forth in said financial statements.
4.1.14 CONDEMNATION. To the best of Borrower's knowledge,
no Condemnation or other proceeding has been commenced or, to Borrower's best
knowledge, is contemplated with respect to all or part of any of the Mortgaged
Properties or for the relocation of roadways providing access to any of the
Mortgaged Properties.
4.1.15 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.
4.1.16 UTILITIES AND PUBLIC ACCESS. Each Mortgaged 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
such Mortgaged Property are located in the public right-of-way abutting such
Mortgaged Property, and all such utilities are connected so as to serve such
Mortgaged Property
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without passing over other property. All roads necessary for the use of such
Mortgaged Property for its current purpose have been completed and dedicated to
public use and accepted by all Governmental Authorities.
4.1.17 NOT A FOREIGN PERSON. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
4.1.18 SEPARATE LOTS. Each parcel comprising each Mortgaged
Property is a separate tax lot and is not a portion of any other tax lot that
is not a part of such Mortgaged Property.
4.1.19 ASSESSMENTS. To the best of Borrower's knowledge,
there are no pending or proposed special or other assessments for public
improvements or otherwise affecting any Mortgaged Property, or any contemplated
improvements to any Mortgaged Property that may result in such special or other
assessments.
4.1.20 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. No exercise of any of
the terms of the Loan Documents, or any right thereunder, will render any Loan
Document unenforceable.
4.1.21 INSURANCE. Borrower has obtained and has delivered
to Lender insurance policies reflecting the insurance coverages, amounts and
other requirements set forth in this Agreement and the Mortgages.
4.1.22 USE OF PROPERTY; LICENSES. The Mortgaged Properties
are used exclusively as retail shopping centers, with 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 the Mortgaged
Properties (collectively, the "LICENSES"), have been obtained and are in full
force and effect. The use being made of each Mortgaged Property is in
conformity with the certificate of occupancy issued for such Mortgaged Property
and with all other Legal Requirements.
4.1.23 FLOOD ZONE. None of the Improvements is located in
an area as identified by the Federal Emergency Management Agency as an area
having special flood hazards.
4.1.24 PHYSICAL CONDITION. To the best of Borrower's
knowledge, the Mortgaged Properties, including all Improvements, parking
facilities, systems, Equipment and landscaping, are in good condition, order
and repair in all material respects and there exists no structural or other
material defect or damages to any of the Mortgaged Properties, whether latent
or otherwise. Borrower has not received notice from any insurance company or
bonding company of any defect or inadequacy in any of the Mortgaged Properties,
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.
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4.1.25 ENCROACHMENTS. All of the Improvements included in
determining the appraised value of each Mortgaged Property lie wholly within
the boundaries and building restriction lines of such Mortgaged Property, and
no improvement on an adjoining property encroaches upon such Mortgaged
Property, and no easement or other encumbrance upon such Mortgaged Property
encroaches upon any of the Improvements, so as to affect the value or
marketability of such Mortgaged Property, except those disclosed by the
applicable Title Insurance Policy.
4.1.26 LEASES. (a) To the best of Borrower's knowledge:
(i) each Major Lease is in full force and effect; (ii) the tenants under the
Major 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 Borrower has received no notice of and is not aware of any offsets,
claims or defenses to the enforcement thereof; (iii) all rents due and payable
under the Major 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 Major Lease is the amount of fixed rent set forth in the applicable Lease,
and there is no claim or basis for a claim by the tenant thereunder for an
adjustment to the rent; (v) to Borrower's best knowledge, no tenant has made
any claim against the landlord under the Major Leases which remains
outstanding, there are no defaults on the part of the landlord under any Major
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 Major
Lease; and (vii) Borrower does not hold any security deposits under the Major
Leases.
(b) None of the Leases contains any option to purchase or
right of first refusal to purchase a Mortgaged Property or any part thereof.
Neither the Leases nor the Rents relating to any Mortgaged Property have been
assigned or pledged except to Lender, and no other Person has any interest
therein except the tenants thereunder.
4.1.27 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 of the Properties to Borrower have been
paid (or will be paid as of the receipt by Borrower of the Initial Advance).
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.
4.1.28 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.
4.1.29 FRAUDULENT TRANSFER. Borrower and the Other
Mortgagors have not entered into the Loan or any Loan Document with the actual
intent to hinder, delay, or defraud any creditor,
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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 and matured. Borrower's
assets do not and, immediately following the execution and delivery of the Loan
Documents 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).
4.1.30 MANAGEMENT AGREEMENTS. Each 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 (or the Other Mortgagor's, if applicable) rights under
such Management Agreement will not be adversely affected by the execution and
delivery of the Loan Documents, Borrower's (or the Other Mortgagor's, if
applicable) performance thereunder, the recordation of the Mortgage, or the
exercise of any remedies by Lender.
4.1.31 ADVISORY AGREEMENT. The Advisory 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 Advisory Agreement will not be adversely
affected by the execution and delivery of the Loan Documents, Borrower's
performance thereunder, or the exercise of any remedies by Lender.
4.1.32 HAZARDOUS SUBSTANCES. To the best of Borrower's
knowledge, except as set forth in the Environmental Reports, (i) no Mortgaged
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
Mortgaged 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
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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 Borrower's acquisition of each
Mortgaged Property) discharged, generated, treated, disposed of or stored on,
incorporated in, or removed or transported from any Mortgaged Property other
than in compliance with all Environmental Laws; (iv) no Hazardous Substances
are present in, on or under any nearby real property which could migrate to or
otherwise affect a Mortgaged Property; and (v) no underground storage tanks
exist on any Mortgaged Property.
4.2 SURVIVAL OF REPRESENTATIONS. All of the
representations and warranties in Section 4.1 and elsewhere in the Loan
Documents (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.
4.3 BORROWER'S KNOWLEDGE. For purposes of all
representations and warranties made to Borrower's knowledge, such Borrower's
knowledge shall include the knowledge of the Other Mortgagors and Affiliate
Owners (as applicable).
V. AFFIRMATIVE COVENANTS
Until the end of the Term, Borrower hereby covenants and
agrees with Lender that:
5.1 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.
5.2 TAXES AND OTHER CHARGES. Subject to Lender's
obligations under Section 3.1, Borrower shall pay all Taxes and Other Charges
as the same become due and payable, and deliver to Lender receipts for payment
or other evidence satisfactory to Lender that the Taxes and Other Charges have
been so paid no later than thirty (30) 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 3.1). Borrower shall not
suffer and shall promptly cause to be paid and discharged any Lien against any
Mortgaged Property, and shall promptly pay for all utility services provided to
the Mortgaged Properties. 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 (and the non-payment of such Taxes or
Other Charges will not constitute a Default), 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 such Mortgaged Property will
be in danger of being sold, forfeited, terminated, canceled or lost, (v)
Borrower shall have
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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 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.
5.3 REPAIRS; MAINTENANCE AND COMPLIANCE. Borrower shall
cause each Mortgaged Property to be maintained in a good and safe condition and
repair and shall not, without Lender's prior consent, which Lender shall not
unreasonably withhold, remove, demolish or materially alter the Improvements or
Equipment (except for normal replacement of the Equipment). Borrower shall
promptly comply with all Legal Requirements. Borrower shall promptly repair,
replace or rebuild any part of a Mortgaged 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. Borrower shall continue to operate each
Property or cause each Property to be operated in the manner and at least to
the standard in effect on the date hereof.
5.4 LITIGATION. Borrower shall give prompt written
notice to Lender of any litigation or governmental proceedings pending or
threatened against Borrower, any Other Mortgagor or any Affiliate Owner which
might materially adversely affect Borrower's condition (financial or otherwise)
or business or any of the Properties.
5.5 PERFORMANCE OF OTHER AGREEMENTS. With respect to
each Property, Borrower shall observe and perform or cause to be observed and
performed each and every term to be observed or performed by it (or an Other
Mortgagor or Affiliate Owner, as applicable) pursuant to the terms of any
agreement or recorded instrument affecting or pertaining to such Property.
5.6 NOTICE OF DEFAULT. Borrower shall promptly
advise Lender of any material adverse change in Borrower's condition, financial
or otherwise, or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.
5.7 COOPERATE IN LEGAL PROCEEDINGS. Borrower shall, and
shall cause the Other Mortgagors and Affiliate Owners (as applicable) to,
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.
5.8 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 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.
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5.9 FINANCIAL REPORTING.
5.9.1 BOOKKEEPING. Borrower shall keep on a Fiscal Year
basis, in accordance with GAAP or Other Comprehensive Basis of Accounting
approved by Lender ("OCBA"), proper and accurate books, records and accounts
reflecting all of the financial affairs of Borrower (on a consolidated basis)
and each Property, including all items of income and expense 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 costs incurred
by Lender to examine Borrower's accounting records, as Lender shall determine
to be reasonably necessary or appropriate in the protection of Lender's
interest.
5.9.2 MONTHLY REPORTS. Borrower shall furnish to Lender
within twenty-five (25) 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 each Property in
accordance with GAAP or OCBA (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 or
OCBA to fairly represent the financial position and results of operation of
Borrower and each Property during such calendar month, all in form satisfactory
to Lender; (ii) a balance sheet for each such month; (iii) a comparison of the
budgeted income and expenses and the actual income and expenses for each month
and year-to-date for Borrower and each Property, together with a detailed
explanation of any variances of 10% or more between budgeted and actual amounts
for such period and year-to-date; (iv) a statement of the actual Capital
Expenses made by Borrower during each calendar quarter as of the last day of
such calendar quarter; (v) a statement that Borrower has not incurred any
indebtedness other than as permitted under Section 6.8; and (vi) for each
Mortgaged Property occupancy rates, rent rolls (identifying the leased
premises, names of all tenants, units leased, monthly rental and all other
charges payable under each Lease, date to which paid, term of Lease, date of
occupancy, date of expiration, and material special provisions, concessions or
inducements granted to tenants) and a delinquency report for such Mortgaged
Property.
5.9.3 REPORTS RELATING TO OTHER PROPERTIES. To the extent
not delivered pursuant to Section 5.9.2, promptly after Borrower receives the
same, copies of all financial statements, income and expense statements,
operating reports and all other reports and statements which are furnished or
provided to Borrower by each Affiliated Owner.
5.9.4 OTHER REPORTS. Borrower shall furnish to Lender,
within ten (10) Business Days after written request, such further detailed
information with respect to the operation of each Property and the financial
affairs of Borrower as may be reasonably requested by Lender.
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5.10 ENVIRONMENTAL MATTERS.
5.10.1 HAZARDOUS SUBSTANCES. With respect to each Mortgaged
Property, so long as Borrower (or an Other Mortgagor) owns or is in possession
of the Property, Borrower shall (or shall cause the Other Mortgagor to) (i)
keep such Mortgaged Property free from Hazardous Substances and in compliance
with all Environmental Laws, (ii) promptly notify Lender if Borrower shall
become aware that (A) any Hazardous Substance is on or near such Mortgaged
Property, (B) such Mortgaged Property is in direct or indirect violation of any
Environmental Laws or (C) any condition on or near such Mortgaged Property
shall pose a threat to the health, safety or welfare of humans, (iii) 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 in response to the
opinion of a licensed hydrogeologist, licensed environmental engineer or other
qualified consultant engaged by Lender ("LENDER'S CONSULTANT")), promptly after
Borrower becomes aware of same, at Borrower's sole expense and (iv) comply with
all of the recommendations contained in the environmental report delivered to
Lender in connection with the origination of the Loan. Nothing herein shall
prevent Borrower from recovering such expenses from any other party that may be
liable for such removal or cure.
5.10.2 ENVIRONMENTAL MONITORING. With respect to each
Mortgaged Property, Borrower shall (or shall cause an Other Mortgagor which
owns or is in possession of such Property to) 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 the Property, (ii)
all claims made or threatened by any third party against Borrower or the
Property relating to any loss or injury resulting from any Hazardous Substance,
and (iii) Borrower's (or such Other Mortgagor's) discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Property
that could cause the 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 Property in connection with any Environmental Law
or Hazardous Substance, and Borrower shall 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 Property 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 the Property. The cost and expense of such audit or inspection
shall be paid by Borrower not more frequently than once during the Term, unless
Lender, in its reasonable good faith judgment, determines that reasonable cause
exists for the performance of an environmental inspection or audit of the
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, Lender may order same, and Borrower (for
itself and the Other Mortgagor, if applicable) hereby grants to Lender and its
employees and agents access to the Property and a license to undertake such
inspection or audit. 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
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Environmental Law ("REMEDIAL WORK"), Borrower shall (or shall cause the Other
Mortgagor, if applicable, to) commence and thereafter diligently prosecute to
completion all such Remedial Work within thirty (30) days after written demand
by Lender for performance thereof or such longer period as shall be reasonably
necessary, with the exercise of diligent efforts, to achieve such completion
(and, in any event, within such 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 will
not install or permit to be installed on the Property any underground storage
tank.
5.10.3 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 the Mortgaged Properties or any of them by foreclosure or a
conveyance in lieu of foreclosure.
5.11 TITLE TO THE PROPERTY. Borrower will warrant and
defend the title to each Mortgaged Property and the validity and priority of
the Lien of the Mortgage, subject only to Permitted Encumbrances, against the
claims of all Persons.
5.12 ESTOPPEL STATEMENT. After request by Lender,
Borrower shall within ten (10) Business Days after request furnish Lender with
a statement, duly acknowledged and certified, setting forth (i) the unpaid
Principal, (ii) the Interest Rate, (iii) the date interest was 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. After request by
Lender (but no more frequently than once during the term of the Loan), Borrower
shall furnish to Lender (x) within ten (10) days, 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 (y) within thirty
(30) days, tenant estoppel certificates from each tenant under a Major Lease
(or any of them) in form and substance reasonably satisfactory to Lender,
subject to the terms of such tenant's lease.
5.13 PRINCIPAL PLACE OF BUSINESS. Subject to applicable
laws, Borrower shall not change its principal place of business without first
giving Lender thirty (30) days' prior notice.
5.14 MANAGEMENT AGREEMENTS. (a) Borrower shall (i) cause
each Mortgaged Property to be operated pursuant to the relevant 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; and (iv) 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.
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(b) If an Event of Default shall be continuing, Borrower
shall, at the request of Lender, terminate all or any of the Management
Agreements and replace the respective Managers thereunder with managers
approved by Lender on terms and conditions satisfactory to Lender.
5.15 ADVISORY AGREEMENT. (a) Borrower shall (i) promptly
perform and observe all of the covenants required to be performed and observed
by it under the Advisory Agreement and do all things necessary to preserve and
to keep unimpaired its material rights thereunder; (ii) promptly notify Lender
of any default under the Advisory Agreement of which it is aware; and (iii)
promptly enforce the performance and observance of all of the covenants and
agreements required to be performed and observed by the Advisor under the
Advisory Agreement.
(b) If an Event of Default shall be continuing, Borrower
shall, at the request of Lender, terminate all of the responsibilities of the
Advisor with respect to the management and supervision of the Properties and
replace the Advisor as to such responsibilities with a supervising manager
approved by Lender on terms and conditions satisfactory to Lender.
5.16 INDEPENDENT TRUST MANAGER. If an Event of Default
shall be continuing, upon the request of Lender Borrower shall cause to be
designated an independent Trust Manager satisfactory to Lender who shall
satisfy the definition of "Independent Director" set forth in Exhibit I hereto
and whose affirmative vote shall be required to allow Borrower to take any
action of the kind requiring the vote of an "Independent Director" under the
definition of "Special Purpose Bankruptcy Remote Entity" set forth in Exhibit I
hereto.
VI. NEGATIVE COVENANTS
Until the end of the Term, Borrower covenants and agrees with
Lender that it will not, directly or indirectly:
6.1 MANAGEMENT AGREEMENTS; ADVISORY AGREEMENT. (a)
Without Lender's prior consent, not to be unreasonably withheld, and except as
set forth in Schedule 8 hereto: (i) surrender, terminate or cancel any
Management Agreement or otherwise replace any Manager (except pursuant to
Section 5.14(b)) or enter into any other management agreement in replacement of
or in addition to a Management Agreement or with respect to a Mortgaged
Property currently managed directly by Borrower; (ii) reduce or consent to the
reduction of the term of any Management Agreement; (iii) increase or consent to
the increase of the amount of any fees and charges under any Management
Agreement; or (iv) otherwise modify, change, supplement, alter or amend in any
material respect, or waive or release any of its rights and remedies under, any
Management Agreement;
(b) Without Lender's prior consent: (i) surrender,
terminate or cancel the Advisory Agreement or otherwise replace the Advisor or
enter into any other advisory agreement (except pursuant to Section 5.15(b));
(ii) reduce or consent to the reduction of the term of the Advisory Agreement;
(iii) increase or consent to the increase of the amount of any fees and charges
under the Advisory Agreement; 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 Advisory Agreement;
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6.2 LIENS. Without Lender's prior consent, create,
incur, assume, permit or suffer to exist any Lien on any portion of any of the
Properties, or the legal or beneficial ownership interests in Borrower, except
Permitted Encumbrances;
6.3 DISSOLUTION. Dissolve, terminate, liquidate, merge
with or consolidate into another Person;
6.4 CHANGE IN BUSINESS. Enter into any line of business
other than the ownership and operation of the Properties and, subject to
Lender's consent, which shall not be unreasonably withheld, other similar
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;
6.5 DEBT CANCELLATION. Cancel or otherwise forgive or
release any claim or debt owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business in its
reasonable judgment;
6.6 ASSETS. Purchase or own (directly or indirectly) any
property other than the Properties;
6.7 TRANSFERS. Without Lender's prior consent, make,
suffer or permit the occurrence of any Transfer, other than (i) the IPO,
subject to Section 2.3.3, and (ii) the transfer of the Centennial Shopping
Center in Austin, Texas from its present fee owner, which is an Affiliate of
Borrower, to Borrower; or
6.8 DEBT. Create, incur or assume or permit to be
created, incurred or assumed any indebtedness of any kind with respect to
Borrower, any Other Mortgagor, any Affiliate Owner, any Mortgaged Property or
any Other Property other than (i) the Debt, (ii) the assumption of first
mortgage debt in existence on the date hereof with respect to Other Properties,
(iii) the Autobahn Subordinate Mortgage, and (v) unsecured trade debt payable
within thirty (30) days. Without limitation of the foregoing, "indebtedness"
shall include preferred stock and contingent liabilities.
VII. INSURANCE; CASUALTY; AND CONDEMNATION
7.1 INSURANCE.
7.1.1 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 for each Mortgaged Property and, in the case of
(c), (d) and (f), also for Borrower:
(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
Property without deduction for physical depreciation and (B) such
amount as is necessary so that the insurer would not deem Borrower a
co-insurer under such
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policies, (ii) have deductibles no greater than $10,000, (iii) be paid
annually in advance and (iv) contain a "Replacement Cost Endorsement"
with a waiver of depreciation.
(b) Flood insurance if any part of the Mortgaged
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 the
Mortgaged 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
$10,000,000 excess and/or umbrella liability insurance for any and all
claims, including all legal liability imposed upon Borrower and all
court costs and attorneys' fees incurred in connection with the
ownership, operation and maintenance of the Mortgaged Property.
(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 (if
applicable) 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 $2,000,000.
(f) Worker's compensation insurance with respect
to any employees of Borrower, as required by any Legal Requirement.
(g) During any period of repair, renovation or
restoration, builder's "all-risk" insurance in an amount equal to not
less than the full insurable value of the Mortgaged 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 acceptable to Lender.
(h) Coverage to compensate for the cost of
demolition and the increased cost of construction for each Mortgaged
Property in an amount 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.
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7.1.2 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 shall be paid; (iv)
contain a waiver of subrogation against Lender; (v) be assigned and the
originals 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, 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
such 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
3.1) 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 thirty (30) 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.
7.2 CONDEMNATION.
7.2.1 NOTICE; RESTORATION. With respect to each Mortgaged
Property, Borrower shall promptly give Lender notice of the actual or
threatened commencement of any condemnation or eminent domain proceeding
affecting the 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, shall promptly proceed to restore, repair, replace or rebuild the
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.
7.2.2 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. 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
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Award interest at the rate or rates provided in the Note. Subject to
applicable law, if the Mortgaged 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 an interest-bearing account and disburse such Award in accordance with
the terms hereof.
7.3 APPLICATION OF PROCEEDS OR AWARD.
7.3.1 APPLICATION TO RESTORATION OR DEBT. Subject to
applicable law, in the event of an Insured Casualty or Condemnation affecting a
Mortgaged Property, the proceeds of insurance or the Award, as the case may be
(after reimbursement of any expenses incurred by Lender), may, at the option of
Lender in Lender's sole discretion, be applied either (i) to reimburse Borrower
for the cost of restoring, repairing, replacing or rebuilding the Property (the
"RESTORATION"), in the manner set forth in Section 7.3.2, or (ii) to the
payment of the Debt. In any case, Borrower shall commence and diligently
prosecute the Restoration of such Mortgaged Property, and 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.
7.3.2 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 by
Lender 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 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 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.
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VIII. DEFAULTS
8.1 EVENTS OF DEFAULT. Each of the following events
shall constitute an "EVENT OF DEFAULT":
(a) any portion of the Debt is not paid when due;
(b) 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;
(c) the Policies are not kept in full force and
effect, or are not delivered to Lender upon request;
(d) a Transfer occurs in violation of Section 6.7
or Borrower breaches or permits the breach of any other negative
covenant contained in Section 6;
(e) any representation or warranty made by
Borrower herein or in any other Loan Document, or in any report,
certificate, financial statement or other instrument, agreement or
document furnished by Borrower in connection with the Loan or any Loan
Document, shall be false or misleading in any material respect as of
the date the representation or warranty was made;
(f) Borrower or an Other Mortgagor or an
Affiliate Owner shall make an assignment for the benefit of creditors,
or shall generally not be paying its debts as they become due;
(g) a receiver, liquidator or trustee shall be
appointed for Borrower, an Other Mortgagor or an Affiliate Owner; 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, an Other
Mortgagor or an Affiliate Owner; or any proceeding for the dissolution
or liquidation of Borrower, an Other Mortgagor or an Affiliate Owner
shall be instituted; provided, however, if such appointment,
adjudication, petition or proceeding was involuntary and not consented
to by Borrower or such Other Mortgagor Affiliate Owner (as the case
may be), only upon the same not being discharged, stayed or dismissed
within ninety (90) days;
(h) Borrower attempts to assign its respective
rights or interest under any Loan Document in contravention of any
Loan Document; provided that such an attempt shall not be an Event of
Default if the assignment is conditional upon obtaining Lender's
consent or is a Permitted Transfer;
(i) Borrower shall be in material default under
any other mortgage or security agreement covering any part of a
Property whether, in the case of the Mortgaged Properties, it be
superior or junior in Lien to the applicable Mortgage;
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(j) a Mortgaged 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 of such Lien, except a Lien for Taxes not then due;
(k) except as permitted hereunder, the actual or
threatened alteration, improvement, demolition or removal of any of
the Improvements without the prior consent of Lender which consent
shall not be unreasonably withheld;
(l) without Lender's prior consent, (i) the
Advisor resigns or is removed, or (ii) the ownership, management or
control of the Advisor is transferred to a person or entity that is
not an Affiliate of Borrower, or (iii) there is any material change in
the Advisory Agreement, or (iv) the Advisory Agreement is terminated.
(m) without Lender's prior consent, (i) the
Manager under a Management Agreement (or any successor management
agreement) resigns or is removed, or (ii) the ownership, management or
control of a Manager is transferred, other than to a person or entity
that is an Affiliate of Borrower, or (iii) there is any material
change in a Management Agreement (or any successor management
agreement);
(n) 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);
(o) Borrower (and the Other Mortgagors or
Affiliate Owners, as applicable) cease to operate any Property as a
retail shopping center or terminates such business for any reason
whatsoever;
(p) an Event of Default as defined or described
in any other Loan Document occurs; or any other event shall occur or
condition shall exist following the expiration of all applicable cure
periods, if the effect of such event or condition is to accelerate or
to permit Lender to accelerate the maturity of any portion of the
Debt;
(q) Borrower shall fail to pay when due any
deposit into the Tax and Insurance Escrow Fund;
(r) Borrower shall be in default under any term,
covenant or provision set forth herein which specifically contains a
notice requirement or grace period and such notice has been given and
such grace period has expired; or
(s) 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 (r) above, for ten
(10) days after notice to Borrower from Lender, in the case of any
Default which can be cured by the payment of a sum of money, or for
thirty (30) days after notice from Lender in the case of any other
Default; provided, however, that if such non-monetary Default is
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susceptible of cure but cannot reasonably be cured within such thirty
(30)-day period, and Borrower shall have commenced to cure such
Default within such thirty (30)-day period and thereafter diligently
and expeditiously proceeds to cure the same, such thirty (30)-day
period shall be extended for an additional period of time as is
reasonably necessary for Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed ninety (90)
days.
8.2 REMEDIES.
8.2.1 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 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 the
Mortgaged Properties, 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.
8.2.2 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 and privileges provided to Lender shall remain
in full force and effect until (x) Lender has exhausted all of its remedies
against Borrower and the Mortgaged Properties and the Mortgaged Properties have
been sold and/or otherwise realized upon in satisfaction of the Debt, or (y)
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 the collateral for the satisfaction of any of the
Debt in preference or priority to any other portion, and Lender may seek
satisfaction out of all of the Mortgaged Properties or any portion thereof,
and/or otherwise against Borrower, in its sole and absolute discretion.
8.2.3 SEVERANCE. Subject to applicable law, Lender shall
have the right from time to time to sever the Note and the other Loan Documents
into one or more separate notes, mortgages and other security documents in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies. Borrower shall execute and
deliver
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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. Borrower hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in
its name and stead to make and execute all documents necessary or desirable to
effect such severance, Borrower ratifying all that such attorney shall do by
virtue thereof.
8.2.4 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.
IX. SPECIAL PROVISIONS
9.1 PERMANENT LOAN. If the Debt is not paid in full
prior to the Maturity Date, then Lender shall have the right, at its sole
option (but shall have no obligation), to either (i) make the Mandatory
Permanent Loan to Borrower, to be applied to repay the Debt, or (ii) convert
the Loan into a permanent loan, which permanent loan (in either case) shall be
secured by all of the Mortgaged Properties and the Hedwig Property, as provided
in Section 2.3.1, and shall be on the terms set forth in Exhibit II. Borrower
shall, at its expense, execute and/or deliver such agreements (including
replacements or restatements of, or amendments to, one or more Loan Documents),
instruments, certificates, legal opinions, title insurance endorsements and
other documents, and shall take such other actions, as Lender shall reasonably
require in order to effectuate such permanent loan.
9.2 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, 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 release of the Property,
assumption or modification of the Loan or enforcement of the Loan Documents.
X. MISCELLANEOUS
10.1 SURVIVAL. This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the Loan and
the execution and delivery to Lender of the Note, and shall continue in full
force and effect so long as all or any of the Debt is 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.
10.2 LENDER'S DISCRETION. Whenever pursuant to this
Agreement, Lender exercises any right given to it to consent or withhold
consent or approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to consent or withhold consent
or approve or disapprove or to decide whether arrangements or terms are
satisfactory or not
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satisfactory shall (except as is otherwise specifically herein provided) be in
the sole and absolute discretion of Lender (whether or not expressly so stated)
and shall be final and conclusive. Without limitation of the foregoing,
Borrower expressly agrees that a "reasonable" standard for Lender shall not be
implied but must be expressly stated in order for such standard to be
applicable.
10.3 GOVERNING LAW. (a) THIS AGREEMENT WAS NEGOTIATED IN
THE STATE OF NEW YORK, AND MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE
OF NEW YORK, AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE 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 NEW YORK 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 NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER
OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, PURSUANT TO SECTION 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. BORROWER
DOES HEREBY DESIGNATE AND APPOINT NATIONAL REGISTERED AGENTS, INC., 000 0XX
XXXXXX, 0XX XXXXX, XXX XXXX, XXX XXXX 00000 (ATTN: XXXXXXXX XXXXXXX), AS ITS
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL
PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF
BORROWER MAILED OR DELIVERED TO
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BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT
EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT
ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE
IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR.
10.4 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.
10.5 DELAY NOT A WAIVER. Neither any failure nor any
delay on the part of Lender in insisting upon strict performance of any term,
condition, covenant or agreement, or exercising any right, power, remedy or
privilege hereunder, or under 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.
10.6 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 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
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Telecopier: 000-000-0000
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with copies to:
Nomura Asset Capital Corporation
Two World Xxxxxxxxx Xxxxxx
Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx and Xxxxxx XxXxxx
Telecopier: 212-667-1567
and
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Esq.
Telecopier: 212-836-7156
If to Borrower:
United Investors Realty Trust
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telecopier: 000-000-0000
with copies to:
United Investors Realty Trust
Suite 500
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier: 000-000-0000
and:
Xxxxx, Xxxxxxx & Haughland, P.C.
8th Floor
000 X. Xxxx Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopier: 915-541-6440
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
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Business Day; or in the case of expedited prepaid delivery and telecopy, upon
the first attempted delivery on a Business Day.
10.7 TRIAL BY JURY. BORROWER HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY
IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
BORROWER.
10.8 HEADINGS. The Section headings and Table of Contents
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
10.9 SEVERABILITY. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
10.10 PREFERENCES. 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.
10.11 WAIVER OF NOTICE. Subject to applicable law,
Borrower shall not be entitled to any 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.
10.12 REMEDIES OF BORROWER. Subject to applicable law, in
the event that a claim or adjudication is made that Lender or its agent,
including Servicer, has acted unreasonably or unreasonably delayed acting in
any case where by law or under any Loan Document, Lender or such agent, as the
case may be, has an obligation to act reasonably or promptly, Borrower agrees
that neither Lender nor its agents, including Servicer, shall be liable for any
monetary damages, and
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Borrower's sole remedy shall be to commence an action seeking injunctive relief
or declaratory judgment. Any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment.
10.13 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 Property, 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 any of the Mortgaged 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.
(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 its obligations under any Loan Document; (ii) any material
misrepresentation by Borrower contained in any Loan Document; (iii) the use or
intended use of the proceeds of the Loan; (iv) any information provided by or
on behalf of Borrower, or contained in any documentation approved by Borrower;
(v) any accident, injury to or death of persons or loss of or damage to
property occurring in, on or about any of the Properties 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 of the Properties 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 of the Properties; (viii)
the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release, or threatened release of any Hazardous Substance on, from or
affecting any of the Properties; (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 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
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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 of the Properties to comply with any Legal Requirement; and (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 of
the Properties 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 of the Properties 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 Mortgaged Property by foreclosure or a conveyance in lieu of
foreclosure.
10.14 PRIOR AGREEMENTS. This Agreement, the other Loan
Documents and the Letter Agreement 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.
10.15 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.
10.16 PUBLICITY. All news releases, publicity or
advertising by Borrower or its Affiliates through any media intended to reach
the general public, which refers to the Loan Documents, the Loan, Lender, or
the Servicer shall be subject to the prior written approval of Lender.
10.17 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
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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 or any prepayment penalty or
premium, or to prevent any prepayment, at the time of such acceleration.
10.18 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.
10.19 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. 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.
10.20 NO THIRD PARTY BENEFICIARIES. The Loan Documents are
solely for the benefit of Lender and the Borrower and nothing contained in any
Loan Document shall be deemed to confer upon anyone other than the Lender and
the Borrower any right to insist upon or to enforce the performance or
observance of any of the obligations contained therein.
10.21 INDIVIDUALS NOT LIABLE. No individual who from time
to time owns, directly or indirectly, any shares of beneficial interest in
Borrower, and no officers or employees of Borrower, Trust Managers,
shareholders of the Advisor or the Managers, or their officers and directors,
shall have any personal liability for payment of the Debt or performance of any
obligations of Borrower under the Loan Documents, whether on the basis of the
principles of "piercing the corporate veil" or otherwise (except in the event
and to the extent of fraud or the misappropriation or conversion of
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Borrower's funds or other property by such individual or other Person). The
foregoing shall not be construed to relieve Borrower of any personal liability
for payment of the Debt and performance of any obligations of Borrower under
the Loan Documents.
10.22 CROSS-DEFAULT; CROSS COLLATERALIZATION. Borrower
acknowledges that Lender has made the Loan to Borrower upon the security of its
collective interest in the Mortgaged Properties and in reliance upon the
aggregate of the Mortgaged Properties taken together being of greater value as
collateral security than the sum of the Mortgaged Properties taken separately.
Borrower agrees that the Mortgages are and will be cross-collateralized and
cross- defaulted with each other so that (i) an Event of Default under any of
the Mortgages shall constitute an Event of Default under each of the other
Mortgages which secure the Note; (ii) an Event of Default under the Note or
this Agreement shall constitute an Event of Default under each Mortgage; and
(iii) each Mortgage shall constitute security for the Note as if a single
blanket lien were placed on all of the Mortgaged Properties as security for the
Note.
10.23 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
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.
UNITED INVESTORS REALTY TRUST,
a Texas real estate investment trust
By: /s/ XXXXX X. XXXXXXX
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
NOMURA ASSET CAPITAL CORPORATION
By: /s/ XXXX X. XXXXX
------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
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