EXHIBIT 10.2
PROJECT LOAN AGREEMENT
PROJECT LOAN AGREEMENT, dated as of April 30, 2002 (this "Agreement"),
between ROYAL INDEMNITY COMPANY, having an office at c/o Royal Investment
Management Company, 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(together with its successors and assigns, the "Lender"), and XXXXXXXX STORE
NO. 203 L.L.C., a Delaware limited liability company, having its principal
office at 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
(together with its permitted successors and assigns, the "Borrower").
Capitalized terms used in this Agreement and not otherwise defined shall have
the respective meanings as specified in Section 1 hereof.
Preliminary Statement
The Borrower is the owner of a leasehold interest in the land located
in the City of Xxxxxxxx, Xxxxxxx county, Kansas and more particularly
described on Schedule 1 (the "Land"). In order to obtain permanent financing
for the Land and the Improvements thereon, the Borrower has requested the
Lender to provide to the Borrower a loan in the principal amount of
$3,181,669.92 (the "Project Loan"). The Lender desires to make the Project
Loan to the Borrower, which Project Loan is evidenced by the Project Loan Note
of even date herewith and which Project Loan Note is secured by a Mortgage and
an Assignment of Leases and Rents, each of even date herewith, from the
Borrower to Lender.
Subject to the terms and conditions of this Agreement, the Lender has
agreed to make the Project Loan to the Borrower.
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. For the purposes of this Agreement the
following terms shall have the meaning given to such term below:
"Access Laws" shall mean the Fair Housing Amendments Act of 1988 and
the Americans with Disabilities Act of 1990, as such may be amended from time
to time, and any other Federal, State or local statute, law, ordinance, code,
rule, regulation, order, or decree regulating, relating to or imposing
liability or standards of conduct relating to barrier-free access or access of
the handicapped or disabled to the Property, including, without limitation,
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities.
"Account(s)" shall have the meaning specified in Section 9.1.
"Affiliate" with respect to any Person, any other Person (i) which
directly or indirectly controls, is controlled by, or is under common control
with such Person, (ii) which beneficially owns or holds 5% or more of any
class of the voting or other equity interests of such Person, or (iii) 5% or
more of any class of voting interests or other equity interests of which is
beneficially owned or held, directly or indirectly, by such Person. Control,
as used in this definition, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise, including the power to elect a majority of the directors or
trustees of a corporation or trust, as the case may be.
"Agreement" shall mean this Project Loan Agreement, as it may be
amended, supplemented or otherwise modified from time to time.
"Assignment of Lease" shall mean the Assignment of Leases and Rents,
of even date herewith, made by the Borrower in favor of the Lender.
"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now or hereafter in effect, or any successor
thereto.
"Basic Rent" shall be equal to Project Loan Debt Service during the
Basic Term and as set forth on Schedule II to the Lease during the Renewal
Terms.
"Beneficial Owner" shall have the meaning specified in Section 5.4(b).
"Borrower" shall have the meaning specified in the introductory
paragraph hereof.
"Borrower's Certificate" shall mean the certification by Borrower of
certain representations with respect to Borrower delivered by Borrower in
connection with the closing of the Project Loan.
"Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be
closed for business in New York, New York.
"Called Principal" shall mean with respect to the Project Loan Note,
the principal of the Project Loan Note that is to be prepaid pursuant to
Section 3.2 or has become or is declared to be immediately due and payable
pursuant to Section 10, as the context requires.
"Closing Date" shall mean April 30, 2002.
"Code" shall have the meaning assigned to such term in Section 4.18.
"Collateral" shall mean all assets of the Borrower, now owned or
hereafter acquired, upon which a Lien is purported to be created by the
Security Documents.
2
"Consent to Assignment" shall mean the consent to the direct
assignment of the Rents under the Lease of even date herewith executed by
Lessee and Guarantor in favor of Lender;
"Contingent Obligation" shall mean as to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other monetary obligations ("primary obligations") of any other
Person (the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d) otherwise to
assure or hold harmless the owner of such primary obligation against loss in
respect thereof; provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Contractual Obligation" shall mean as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Default" shall mean any of the events specified in the "Events of
Default" subsection, whether or not any requirement for the giving of notice,
the lapse of time, or both, or any other condition has been satisfied.
"Default Payment" shall have the meaning assigned to such term in
section 10.1.
"Developer Equity" shall mean, as of the date hereof, the amount of
$167,456.31, as such amount is increased, dollar for dollar, as a result of
the application of principal payments to the Project Loan which reduce the
principal balance of the Project Loan.
"Developer Yield" shall mean the sum of $1,674.56 per month, payable
as Supplemental Rent under the Lease.
"Discounted Value" shall mean with respect to the Called Principal of
the Project Loan Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a discount
3
factor (applied on the same periodic basis as that on which interest on the
Project Loan Note is payable) equal to the Reinvestment Yield with respect to
such Called Principal.
"Dollar, Dollars, U.S. Dollars" and the symbol "$" shall mean lawful
money of the United States of America.
"Environmental Indemnity" shall mean the indemnity as to environmental
matters of even date herewith executed by Lessee and Guarantor in favor of
Lender.
"Environmental Laws" shall mean all federal, state, local and foreign
Laws and regulations, including permits, licenses, authorizations, bonds,
orders, judgments, consent decrees issued, or entered into, pursuant thereto,
relating to pollution or protection of human health or the environment or
employee safety in the work place.
"ERISA" shall have the meaning assigned to such term in Section
4.18(b).
"Event of Default" shall mean any of the events specified in the
"Events of Default" subsection, provided that any requirement for the giving
of notice, the lapse of time, or both, or any other condition, has been
satisfied.
"Exculpated Persons" shall have the meaning assigned to such term in
Section 11.8.
"GAAP" shall mean generally accepted accounting principles as are in
effect from time to time.
"Governmental Authority" shall mean the United States of America, any
state and any municipality, local government or other political subdivision
thereof and any agency, department, bureau, board, commission or other
instrumentality or any of them, now existing or subsequently created.
"Ground Lease" shall mean that certain Ground Lease between Winter,
Inc., a Kansas corporation, as ground lessor, and Borrower, as ground lessee,
dated as of April 23, 1997.
"Guarantor" shall mean Borders Group, Inc., a Michigan corporation,
its successors and assigns.
"Guaranty" shall mean the Guaranty Agreement of even date herewith
entered into by Guarantor for the benefit of Lessor with respect to the
obligations of Lessee under the Lease.
"Hazardous Substance" shall mean any of the following: (i) any
petroleum or petroleum product, explosives, radioactive materials, asbestos,
formaldehyde, polychlorinated biphenyls, lead and radon gas; (ii) any
substance, material, product, derivative, compound or mixture, mineral,
chemical, waste, gas, medical waste, or pollutant, in each case whether
naturally occurring, man-made or the by-product of any process, that is toxic,
harmful or hazardous to the environment or human health or safety; or (iii)
any substance, material, product, derivative,
4
compound or mixture, mineral, chemical, waste, gas, medical waste or pollutant
that would support the assertion of any claim under any Environmental Law,
whether or not defined as hazardous as such under any Environmental Law.
"Improvements" shall mean the improvements now or hereafter to be
constructed on the Land.
"Indebtedness" shall mean as to any Person at a particular time, (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise and (b) obligations under leases
which shall have been or should be, in accordance with GAAP, recorded as
capital leases in respect of which obligations such Person is liable,
contingently or otherwise, or in respect of which obligations such Person
assures a creditor against loss.
"Insurance Requirements" shall mean all terms and conditions of any
insurance policy required by the Mortgage to be maintained by the Borrower and
all requirements of the issuer of any such policy.
"Land" shall have the meaning specified in the Preliminary Statement.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
"Lease" shall mean the Sublease, dated as of the date hereof, between
the Lessee and the Borrower with respect to the Property.
"Lease Event of Default" shall have the meaning given to such term in
Section 18.1 of the Lease.
"Legal Requirements" shall have the meaning given to such term in the
Appendix to the Lease.
"Lender" shall have the meaning assigned to such term in the
introductory paragraph hereto.
"Lender's Rights" shall have the meaning assigned to such term in
Section 11.3.
"Lessee" shall mean Borders, Inc., a Colorado corporation, its
permitted successors and assigns.
"Lessor" shall have the meaning given to such term in the Appendix to
the Lease.
"Lessor Liens" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the Lessor,
(b) any act or omission of the Lessor which is not
5
required by the Project Loan Documents or is in violation of any of the terms
of the Project Loan Documents, (c) any claim against the Lessor with respect
to the Property against which Lessee is not required to indemnify Lessor or
(d) any claim against the Lessor arising out of any transfer by the Lessor of
all or any portion of the interest of the Lessor in the Property, other than
the transfer of title to or possession of the Property by Lessor pursuant to
and in accordance with the Lease or the Project Loan Agreement or pursuant to
the exercise of the remedies set forth in Article XVIII of the Lease.
"Lien" shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security.
"Maturity Date" shall mean the maturity date set forth in the Project
Loan Note.
"Mortgage" shall mean the Mortgage or Deed of Trust, as applicable,
dated as of the date hereof, made by the Borrower in favor of the Lender.
"Note Rate" shall mean seven and one-half percent (7.50%) per annum.
"Obligation" shall mean any obligation or liability of the Borrower to
the Lender, however created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due,
under or in connection with this Agreement or any other Project Loan Document.
"Obligations" shall have the meaning specified in the Mortgage.
"Official Body" shall mean any national, federal, state, local or
other government or political subdivision or any agency, authority, bureau,
central bank, commission, department or instrumentality of either, or any
court, tribunal, grand jury or arbitrator, in each case whether foreign or
domestic.
"Overdue Rate" shall mean an amount equal to the greater of (i) two
percent (2%) per annum over the then current prime rate of interest published
by the Wall Street Journal, or its successor, from time to time and (ii) two
percent (2%) per annum over the Note Rate.
"Permits" shall mean all consents, licenses and building permits
required for construction, completion, occupancy and operation of the
Improvements in accordance with all Legal Requirements affecting the Property.
"Permitted Exceptions" shall mean those exceptions to title of the
Property set forth on Schedule 2 to this Agreement and approved by the Lender.
6
"Person" shall mean an individual, partnership, corporation, business
trust, joint stock company, limited liability company, limited liability
partnership, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"Prepayment Premium" shall mean with respect to the Project Loan Note,
an amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of the
Project Loan Note over the amount of such called Principal, provided that the
Prepayment Premium may in no event be less than zero.
"Project Loan" shall have the meaning set forth in the Preliminary
Statement.
"Project Loan Debt Service" shall mean the debt service payable
pursuant to the Project Loan Note as set forth on Schedule I to the Project
Loan Note.
"Project Loan Documents" shall mean the collective reference to this
Agreement, the Project Loan Note, the Ground Lease, the Security Documents,
the Lease, the Guaranty, the Consent to Assignment, the Environmental
Indemnity, and all other documents and instruments from time to time
evidencing or securing the Project Loan.
"Project Loan Note" shall have the meaning specified in Section 2.2.
"Property" shall mean the collective reference to the Land and the
Improvements.
"REA" shall have the meaning specified in Section 11.2 of the Lease.
"Regulated Substances" shall mean any substance, including any solid,
liquid, semisolid, gaseous, thermal, thoriated or radioactive material,
refuse, garbage, wastes, chemicals, petroleum products, by-products, co
products, impurities, dust, scrap, heavy metals, any substance defined as a
"hazardous substance," "pollutant," "pollution," "contaminant," "hazardous or
toxic substance," "extremely hazardous substance," "toxic chemical," "toxic
waste," "hazardous waste," "industrial waste," "residual waste," "solid
waste," "municipal waste," "mixed waste," "infectious waste,"
"chemotherapeutic waste," "medical waste," "regulated substance" or any
related materials, substances or wastes as now or hereafter defined pursuant
to any Environmental Laws, the generation, manufacture, extraction,
processing, distribution, treatment, storage, disposal, transport, recycling,
reclamation, use, reuse, spilling, leaking, dumping, injection, pumping,
leaching, emptying, discharge, escape, release or other management or
mismanagement of which is regulated by the Environmental Laws.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of the Project Loan Note, .50% over the yield to maturity implied by (i) the
yields reported as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called Principal, on
the display designated as Screen USD on the Bloomberg Financial Markets
Services Screen (or such other display as may replace Screen USD on Bloomberg
Financial Markets Screen) for actively traded U.S. Treasury securities having
a maturity equal to the Remaining Average Life of such Called Principal as of
such Settlement date, or (ii) if such yields
7
are not reported as of such time or the yields reported as of such time are
not ascertainable, the Treasury Constant Maturity Series Yields reported, for
the latest day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury securities
having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be determined,
if necessary, by (a) converting U.S. Treasury xxxx quotations to
bond-equivalent yields in accordance with accepted financial practice and (b)
interpolating linearly between (1) the actively traded U.S. Treasury security
with the maturity closest to and greater than the Remaining Average Life and
(2) the actively traded U.S. Treasury security with the maturity closest to
and less than the Remaining Average Life.
"Remaining Average Life" shall mean, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the
products obtained by multiplying (a) the principal component of each remaining
Scheduled Payment with respect to such Called Principal by (b) the number of
years (calculated to the nearest one-twelfth year) that will elapse between
the Settlement Date with respect to such Called Principal and the scheduled
due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payment" shall mean, with respect to the Called
Principal of the Project Loan Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with respect to
such Called Principal if no payment or purchase of such Called Principal were
made prior to its scheduled due date, provided that if such Settlement Date is
not a date on which interest payments are due to be made under the terms of
the Project Loan Note, then the amount of the next succeeding scheduled
interest payment will be reduced by the amount of interest accrued to such
Settlement Date and required to be paid on such Settlement Date pursuant to
Section 3.2 or Section 10.
"Renewal Terms" shall have the meaning assigned to such term in
Section 2.2(b) of the Lease.
"Rent" shall have the meaning assigned to such term in Section 3.4 of
the Lease.
"Responsible Officer" shall mean an individual holding the office of
vice president or higher or manager, as applicable.
"Scheduled Payment Dates" shall mean the dates upon which payments of
interest on and principal of the Project Loan are due and payable pursuant to
the Project Loan Note.
"Security Documents" shall mean the collective reference to the
Mortgage, the Assignment of Lease and consent thereto, and all other documents
from time to time securing the indebtedness evidenced by the Project Loan
Note.
8
"Settlement Date" shall mean, with respect to the Called Principal of
the Project Loan Note, the date on which such Called Principal is to be
prepaid pursuant to Section 3.2 or has become or is declared to be immediately
due and payable pursuant to Section 10, as the context requires.
"SPC Member" shall have the meaning assigned thereto in Section
5.4(k).
"Standstill Period" shall mean, for the purposes of Section 10.1, a
period commencing either (i) upon the occurrence of an Event of Default under
Sections 10.1(j) or (k) hereof (except for a default under section 18.1(a) of
the Lease as a result of Lessee's failure to pay Basic Rent) or (ii) on the
date that Lender delivers to Borrower written notice that an Event of Default
has occurred under Section 10.1(k) hereof as a result of the failure of Lessee
to pay Basic Rent, and in each such case terminating ninety (90) days
thereafter, provided, however, that if a Lease Event of Default described in
Section 18.1(g) of the Lease shall have occurred and is then continuing, such
period shall terminate on the earlier to occur of (x) the final date under the
Bankruptcy Code that Lessee or a bankruptcy trustee may elect to assume or
reject the Lease and (y) ninety (90) days after the Lease Event of Default
under Section 18(g) of the Lease.
"Subsidiary" of any Person shall mean any corporation, partnership,
joint venture, trust or estate of which (or in which) more than 50% of:
(i) the outstanding capital stock having Voting Power to
elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class
or classes of such corporation shall or might having Voting Power upon
the occurrence of any contingency),
(ii) the interest in the capital or profits of such
partnership or joint venture, or
(iii) the beneficial interest of such trust or estate,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"Supplemental Rent" shall mean all amounts, liabilities and
obligations (other than Basic Rent) which Lessee assumes or agrees to pay to
Lessor or any other Person under the Lease or under any of the Project Loan
Documents, including, without limitation, fees, costs and expenses payable to
Lender or other Persons pursuant to Sections 5.3(a) and 7.4 of the Project
Loan Agreement, or otherwise, any rent or other amounts payable under the
Ground Lease, any payments required to be made by Lessor under the REA and
Termination Value.
"Termination Value" shall mean an amount equal to the sum of the
outstanding principal amount of the Project Loan Note, together with accrued
and unpaid interest and any Prepayment Premium and any other amounts due and
owing by Lessee or Lessor to Lender or any other Person under the Project Loan
Documents, all calculated as of the Termination Date or the Prepayment Date,
as the case may be.
9
"Title Company" shall mean First American Title Insurance Company,
together with such reinsurers or coinsurers of such title company or
companies, or such other title companies as may be approved by the Lender.
1.2 Construction. Unless the context of this Agreement otherwise
clearly requires, the following rules of construction shall apply to this
Agreement and each of the other Project Loan Documents:
(a) references to the plural include the singular, the
plural, the part and the whole; "or" has the inclusive meaning represented by
the phrase "and/or," and "including" has the meaning represented by the phrase
"including without limitation";
(b) references to "determination" of or by the Lender shall
be deemed to include good faith estimates by the Lender (in the case of
quantitative determinations) and good faith beliefs by the Lender (in the case
of qualitative determinations) and such determination shall be conclusive
absent manifest error;
(c) whenever the Lender is granted the right herein to act
in its sole discretion or to grant or withhold consent such right shall be
exercised in good faith;
(d) the words "hereof," "herein," "hereunder," "hereto" and
similar terms in this Agreement or any other Project Loan Document refers to
this Agreement or such other Project Loan Document as a whole and not to any
particular provision of this Agreement or such other Project Loan Document;
(e) the section and other headings contained in this
Agreement or such other Project Loan Document and the Table of Contents
preceding this Agreement or such other Project Loan Document are for reference
purposes only and shall not control or affect the construction of this
Agreement or such other Project Loan Document or the interpretation thereof in
any respect;
(f) article, section, subsection, clause, schedule and
exhibit references are to this Agreement or other Project Loan Document, as
the case may be, unless otherwise specified;
(g) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and assigns
are permitted by this Agreement or other Project Loan Document, as the case
may be, and reference to a Person in a particular capacity excludes such
Person in any other capacity;
(h) reference to any agreement (including this Agreement and
any other Project Loan Document together with the schedules and exhibits
hereto or thereto), document or instrument means such agreement, document or
instrument as amended, modified, replaced, substituted for, superseded or
restated;
10
(i) relative to the determination of any period of time,
"from" means "from and including," "to" means "to but excluding" and "through"
means "through and including"; and
(j) references to "shall" and "will" are intended to have
the same meaning.
SECTION 2. THE PROJECT LOAN
2.1 Project Loan Commitment. Subject to the terms and conditions of
this Agreement and relying upon the representations and warranties herein set
forth, the Lender agrees to make the Project Loan to the Borrower on the
Closing Date.
2.2 Note. The Project Loan shall be evidenced by a promissory note
of the Borrower, substantially in the form of Exhibit A (the "Project Loan
Note"), in the principal amount of $3,181,669.92.
2.3 Maximum Interest Rate. If at any time the designated rate
applicable to the Project Loan made by the Lender exceeds the highest lawful
rate, the rate of interest on the Project Loan shall be limited to the
Lender's highest lawful rate.
2.4 Use of Proceeds. The proceeds of the Project Loan shall be used
by the Borrower only for the payment in full of all indebtedness outstanding
on the Closing Date which is secured by a lien upon the Property.
SECTION 3. PAYMENTS
3.1 Payments. All payments and prepayments to be made in respect of
principal, interest, fees or other amounts due from the Borrower hereunder
shall be payable prior to 11:00 A.M. (New York City time) on the Scheduled
Payment Dates set forth in the Project Loan Note without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrower, and without setoff, counterclaim or other deduction of any nature,
and an action therefor shall immediately accrue. Such payments shall be made
to the Lender at the Principal Office in U.S. Dollars or at such other
location as directed by Lender in writing, and in immediately available funds.
If any payment is required hereunder on a day that is not a Business Day, then
such payment shall be due on the next succeeding Business Day.
3.2 Prepayments.
(a) Optional Prepayments; Acceleration. Borrower may, upon
sixty (60) days prior written notice to Lender, pay the indebtedness evidenced
by the Project Loan Note in full (but not in part) on a Scheduled Payment
Date, provided, however, that (i) no prepayment shall be permitted prior to
the date that is one (1) year from the first Scheduled Payment Date, and (ii)
at the time of making such prepayment, the Prepayment Premium shall be paid to
Lender. The Prepayment Premium shall also be payable if the prepayment is as a
result of the acceleration by
11
Lender of the indebtedness evidenced by the Project Loan Note as permitted
under this Agreement or the other Loan Documents. The Prepayment Premium is
intended to compensate Lender for the loss of interest that Lender may incur
upon reinvestment of the principal amount prepaid for the remaining term of
the Project Loan Note, and is not intended as a penalty.
(b) Mandatory Prepayments. On any date on which the Lessee
is obligated to pay the Lessor an amount equal to the Termination Value in
connection with the delivery of a Termination Notice, the Borrower shall
prepay the Project Loan in full on such date in accordance with Section
9.1(b)(ii).
3.3 Indemnity. In addition to any other indemnifications provided
herein or in the other Project Loan Documents, the Borrower covenants and
agrees at its sole cost and expense to protect, defend, indemnify and save
harmless the Lender and any and all of its successors and assigns hereunder
from and against all liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against the Lender and any and all respective
successors and assigns hereunder (except to the extent caused by the gross
negligence or willful misconduct of the indemnified party) by reason of any of
the following for which the cause of action or liability accrued prior to a
foreclosure or deed in lieu of foreclosure or other transfer of the Property
pursuant to the Lender's exercise of its remedies hereunder: (a) any accident,
injury to or death of persons or loss of or damage to property occurring in,
on or about the Property or any part thereof or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways; (b) any
use, non-use or condition in, on or about the Property or any part thereof or
on adjoining sidewalks, curbs, adjacent property or adjacent parking areas,
streets or ways; (c) any failure on the part of the Borrower to perform or
comply with any of the terms of this Agreement; (d) performance of any labor
or services or the furnishing of any materials or other property in respect of
the Property or any part thereof; (e) the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission or release of any Hazardous Substance
or asbestos on, from, or affecting the Property or any property contiguous
therewith; (f) to the extent not covered by insurance, any personal injury
(including wrongful death) or property damage (real or personal) arising out
of or related to any Hazardous Substance or asbestos and any lawsuit brought
or threatened, settlement reached, or government order relating to such
Hazardous Substance or asbestos; (g) any violation of the Environmental Laws
which are based upon or in any way related to such Hazardous Substance or
asbestos including, without limitation, the costs and expenses of any remedial
action, reasonable attorney and consultant fees, investigation and laboratory
fees, court costs, and litigation expenses; (h) any failure of the Property to
comply with any Access Laws; (i) the occupation, condition, operation,
service, design, maintenance or management of the Property and (j) ownership
of the Mortgage, ownership of the Property by the Borrower or the ownership by
Borrower of any interest therein, or receipt of any Rents pursuant to the
Assignment of Leases and Rents or the Mortgage. Any amounts payable to Lender
and any and all of its respective successors and assigns hereunder by reason
of the application of this Section 3.3 shall be secured by the Mortgage and
shall become immediately due and payable and shall bear interest at the
Overdue Rate from the date loss or damage is sustained by the Lender and any
or all of its respective successors and assigns hereunder until paid. The
obligations and liabilities of the Borrower under this Section 3.3 shall
12
survive any termination, satisfaction or assignment of the Mortgage and the
exercise by the Lender of any of its rights or remedies hereunder including,
but not limited to, the acquisition of the Property by foreclosure or a
conveyance in lieu of foreclosure. Nothing herein contained, however, shall be
deemed to impose personal liability on Borrower or the Exculpated Persons for
repayment of the Project Loan.
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement, and in
order to induce the Lender to make the Project Loan to the Borrower, the
Borrower represents and warrants to the Lender as follows:
4.1 Existence; Compliance with Law. The Borrower (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the
legal right, to own and operate its property and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign limited
liability company and in good standing under the law of the jurisdiction in
which the Property is located and (d) is in compliance with all material Legal
Requirements.
4.2 Power; Authorization; Enforceable Obligations. The Borrower has
the power and authority, and the legal right, to make, deliver and perform the
Project Loan Documents to which it is a party and to borrow hereunder and has
taken all necessary action to authorize the borrowings on the terms and
conditions of this Agreement and the Project Loan Note and to authorize the
execution, delivery and performance of the Project Loan Documents to which it
is a party. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of the Project Loan
Documents to which the Borrower is a party. This Agreement has been, and each
other Project Loan Document to which it is a party will be, duly executed and
delivered on behalf of the Borrower. This Agreement constitutes, and each
other Project Loan Document to which it is a party when executed and delivered
will constitute, a legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
4.3 No Litigation. There is no action, suit or proceeding pending,
or to the best of the Borrower's knowledge threatened, against or affecting
the Borrower or the Property or that might have a materially adverse affect on
the Borrower or the Property in any court, or before or by any Governmental
Authority, whether federal, state, county or municipal.
4.4 Consents, Approvals, Authorizations, Etc. No consent, approval,
order or authorization of or registration, declaration or filing with any
Governmental Authority is required
13
in connection with the valid execution and delivery of the Project Loan
Documents or the carrying out or performance of any of the transactions
required or contemplated by the Project Loan Documents or, if required, such
consent, approval, order or authorization has been obtained or such
registration, declaration or filing has been accomplished.
4.5 No Legal Bar. The execution, delivery and performance of the
Project Loan Documents, the borrowing under this Agreement and the use of the
proceeds of the Project Loan will not violate any Legal Requirement or any
Contractual Obligation of the Borrower and will not result in, or require, the
creation or imposition of any Lien on any of the Borrower's properties or
revenues pursuant to any Legal Requirement or Contractual Obligation, except
for the Lien of the Security Documents.
4.6 Compliance with Building Codes, Zoning Laws, Etc. The Borrower
has no knowledge of any existing, probable or potential violations of any
Legal Requirement affecting the Land or present use or occupancy of the
Improvements.
4.7 Ownership of Property; Liens. The Borrower has good record and
marketable title in fee simple to, or a valid leasehold interest in, the
Property, and good title to, or a valid leasehold interest in, all its other
property, and none of such property is subject to any Lien, other than a
Permitted Exception.
4.8 No Default. The Borrower is not in default under or with
respect to any Contractual Obligation in any respect which could be materially
adverse to the business, operations, property or financial or other condition
of the Borrower, or which could materially adversely affect the ability of the
Borrower to perform its obligations under the Project Loan Documents. The
Borrower has no knowledge of any default of Borrower or the Ground Lessor
under the Ground Lease.
4.9 Taxes. The Borrower has filed or caused to be filed all tax
returns that are required to be filed, and has paid all taxes shown to be due
and payable on such returns or on any assessments made against the Borrower or
the Property and all other taxes, fees or other charges imposed on the
Borrower or the Property by any Governmental Authority (other than those
taxes, the amount or validity of which is being contested in good faith by
appropriate proceedings diligently prosecuted and with respect to which prior
notice has been given to the Lender and reserves satisfactory to the Lender
have been provided or a bond satisfactory to the Lender has been posted); and
no tax Liens have been filed and no claims are being asserted with respect to
any such taxes, fees or other charges. The tax identification number of
Borrower is 00-0000000.
4.10 Availability of Utilities. All utility services and facilities
necessary for the operation of the Improvements for their intended use without
impediment or delay (including, without limitation, gas, electrical, water and
sewage services and facilities) are available at the boundaries of the Land.
4.11 Permits, Etc. All Permits for the Improvements required to the
date that this representation is being made have been obtained and are in full
force and effect.
14
4.12 Financial Statements. Any and all financial statements
delivered to the Lender by or on behalf of the Borrower are true and correct
in all material respects and fairly present the financial conditions of their
subjects as of their respective dates, no material adverse change has occurred
in the financial conditions reflected since their respective dates and no
additional Indebtedness has been incurred by their subjects since the
respective dates of the latest statements, other than the borrowings
contemplated by this Agreement or other Indebtedness which has been approved
by the Lender in writing. No such financial statement or any certificate or
statement furnished to the Lender by or on behalf of the Borrower in
connection with the transactions contemplated by this Agreement, and no
representation or warranty in this Agreement, contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make
the statements contained in such financial statements, certificates or other
statements or this Agreement not misleading. The Borrower is not a debtor
under any state or federal bankruptcy or insolvency proceeding. The Borrower
is not contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency laws or the liquidation of all or a major
portion of Borrower's assets or property, and Borrower has no knowledge of any
Person contemplating the filing of any such petition against it. The
Borrower's assets do not and, immediately following the incurrence of the
Project Loan, will not constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. Borrower does not intend
to, and does not believe that it will, include the Project Loan and its
liabilities beyond its abilities to pay such Project Loan as it matures
(taking into account the timing and amounts of cash scheduled to be received
by Borrower pursuant to the Lease).
4.13 Federal Regulations. No part of the proceeds of the Project
Loan will be used for "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation T, U or V of
the Board of Governors of the Federal Reserve System as now and from time to
time hereafter in effect. If requested by the Lender, the Borrower will
furnish to the Lender a statement to the foregoing effect in conformity with
the requirements of FR Form U-1 referred to in said Regulation U.
4.14 Investment Company Act; Other Regulations. The Borrower is not
an "investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation (other than Regulation X of the Board of Governors of the Federal
Reserve System) which limits its ability to incur Indebtedness.
4.15 Environmental Matters. To the best of Borrower's knowledge and
except as set forth in the Phase I Environmental Site Assessment of Borders
Books-Xxxxxxxx dated April 18, 2002 prepared by EMG:
(a) The Property does not contain any Regulated Substances
in amounts or concentrations which (i) constitute or constituted a violation
of, or (ii) could give rise to liability under, any Environmental Law.
15
(b) The Property and all operations at the Property are in
compliance with all applicable Environmental Laws, and there is no
contamination at, under or about the Property or violation of any
Environmental Law with respect to the Property.
(c) The Borrower has not received any notice of violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to the
Property and the Borrower does not have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) Regulated Substances have not been transported or
disposed of from the Property in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law, nor have any Regulated Substances been generated, treated,
stored or disposed of at, on or under the Property in violation of, or in a
manner that could reasonably be expected to give rise to liability under, any
applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower is or will be named as a party with
respect to the Property nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect
to the Property.
(f) There has been no release or threat of release of
Regulated Substances at or from the Property, or arising from or related to
the operations of the Borrower in connection with the Property, in violation
of or in amounts or in a manner that could give rise to liability under any
Environmental Laws.
4.16 Regulation H. The Mortgage does not encumber improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and
in which flood insurance has been made available under the National Flood
Insurance Act of 1968.
4.17 No Other Assets, Indebtedness.
(a) Borrower does not own and will not own any asset or
property other than the Property and incidental property necessary for the
ownership or operation of the Property.
(b) Borrower has not made and will not make any loans or
advances to any third party (including any affiliate or constituent party, any
Beneficial Owner or any affiliate of any constituent party of Beneficial
Owner), and shall not acquire obligations or securities of its affiliates.
16
(c) Borrower is and will remain solvent and Borrower will
pay its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) from its assets as the same shall become due.
4.18 ERISA.
(a) The Borrower represents and warrants that the Borrower
is not a "foreign person" within the meaning of Section 1445(f)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the related
Treasury Department regulations, including temporary regulations.
(b) The Borrower represents and warrants that, as of the
date of this Agreement and throughout the term of the Project Loan, (i) the
Borrower is not an "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which
is subject to Title I of ERISA, and (ii) the assets of the Borrower do not
constitute "plan assets" of one or more such plans within the meaning of 29
CFR Section 2510.3-101.
(c) The Borrower represents and warrants to the Lender that,
as of the date of this Agreement and throughout the term of the Project Loan
(i) the Borrower is not and will not be a "governmental plan" within the
meaning of Section 3(32) of ERISA, and (ii) transactions by or with the
Borrower or any Affiliates of the Borrower are not subject to state statutes
regulating investments of and fiduciary obligations with respect to
governmental plans.
(d) The Borrower covenants and agrees to deliver to the
Lender such certifications or other evidence from time to time throughout the
term of the Project Loan, as reasonably requested by the Lender in its sole
discretion, that (i) the Borrower is not an "employee benefit plan" or a
"governmental plan"; (ii) the Borrower is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (iii) one or more of the following circumstances is true:
(1) Equity interests in the Borrower are publicly
offered securities, within the meaning of 29 CFR Section
2510.3-101(b)(2);
(2) Less than 25 percent of all equity interests in
such the Borrower are held by "benefit plan investors" within
the meaning of 29 CFR Section 2510.3-101(f)(2); or
(3) the Borrower qualifies as an "operating company"
or a "real estate operating company" within the meaning of 29
CFR Section 2510.3.101(c) or (e) or an investment company
registered under the Investment Company Act of 1940.
(e) The execution and delivery of this Agreement and the
issuance of the Project Loan Note hereunder will not involve any transaction
that is subject to the prohibitions of section 406 of ERISA or in connection
with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the
Code.
17
The Borrower shall indemnify the Lender and defend and hold the Lender
and any and all of its successors and assigns hereunder harmless from and
against all civil penalties, excise taxes, or other loss, cost, damage and
expense (including, without limitation, reasonable attorneys' fees and
disbursements and costs incurred in the investigation, defense and settlement
of claims and losses incurred in correcting any prohibited transaction or in
the transfer of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in the Lender's sole
discretion) that the Lender and any and all of its successors and assigns
hereunder may incur, directly or indirectly, as a result of a default under
this Section 4.18. This indemnity shall survive any termination, satisfaction
or foreclosure of this Agreement or the Mortgage. Nothing herein contained,
however, shall be deemed to impose personal liability on the Borrower or the
Exculpated Persons for repayment of the Project Loan.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower agrees, unless otherwise consented to in writing by the
Lender, that, so long as the Project Loan Note remains outstanding and unpaid,
the Borrower shall:
5.1 Certain Notices. Give notice to the Lender promptly upon the
occurrence of:
(a) the receipt by the Borrower of any notice given to the
Borrower that a default by the Borrower has occurred under the Lease or under
the Ground Lease;
(b) the giving by the Borrower of any notice alleging that a
default has occurred under the Lease or the Ground Lease;
(c) any Default or Event of Default;
(d) any (i) default or event of default under any
Contractual Obligation of the Borrower or (ii) litigation, investigation or
proceeding which may exist at any time between the Borrower and any
Governmental Authority; and
(e) any litigation or proceeding affecting the Borrower in
which the amount involved is $100,000 or more and not covered by insurance or
in which injunctive or similar relief is sought.
Each notice pursuant to this subsection shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to in such notice and stating what action the Borrower proposes to
take with respect to such occurrence.
5.2 Indemnification. Indemnify the Lender against any claims for
brokerage fees or commissions asserted in connection with the Project Loan and
to pay all expenses incurred by the Lender in connection with the defense of
any action or proceeding brought to collect any such brokerage fees or
commissions.
18
5.3 Expenses. (a) Pay or reimburse the Lender for all expenses
incurred by the Lender before and after the date of this Agreement with
respect to any and all transactions contemplated by this Agreement including,
without limitation, the preparation of any document reasonably required by the
Lender and the enforcement of any of the Lender's rights under this Agreement
and the other Project Loan Documents, and all costs and expenses (including
reasonable attorneys' fees of special counsel and, if reasonably required,
local or other counsel) incurred by Lender in connection with any amendments,
waivers or consents under or in respect of this Agreement or the other Project
Loan Documents, including, without limitation (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce
or defend) any rights under this Agreement or the other Project Loan Documents
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the other
Project Loan Documents, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or bankruptcy of
the Borrower or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the other Project Loan Documents.
(b) If any action or proceeding is commenced by the Lender,
including, without limitation, any action to foreclose the lien of the
Mortgage or to collect the Project Loan or to which the Lender is made a
party, or in which it becomes necessary to defend or uphold the lien of the
Mortgage, or in which the Lender is served with any legal process, discovery
notice or subpoena relating to the Lender's lending to the Borrower, the
Borrower will reimburse the Lender for all expenses which have been or may be
incurred by the Lender arising from or in connection with such action or
proceeding.
5.4 Single Purpose Entity; Separateness.
(a) Borrower will not engage in any business other than the
ownership, management, leasing and operation of the Property and Borrower will
conduct and operate its business as presently conducted and operated.
(b) Borrower will not enter into any contract or agreement
with any affiliate of Borrower, any constituent party of Borrower, the holder
of any partnership or membership interest, any manager or the owner of any
beneficial interest in Borrower (each, a "Beneficial Owner") or any affiliate
of any constituent party or Beneficial Owner, except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any such
party.
(c) Borrower has done or caused to be done and will do all
things necessary to observe organizational formalities and preserve its
existence including, without limitation, the holding of such annual and other
meetings as are required by the Borrower's organizational documents, and
Borrower will not, nor will Borrower permit any constituent party or
Beneficial Owner to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and bylaws,
trust certificate and agreement or other organizational documents of Borrower
or such constituent party or Beneficial Owner, if such amendments would
violate any provision of the Project Loan Documents, without the prior written
consent of
19
Lender, which consent shall not be unreasonably withheld, nor will Borrower
permit any constituent party or Beneficial Owner to amend, modify or otherwise
change the partnership certificate, partnership agreement, articles of
incorporation and bylaws, trust certificate and agreement or other
organizational documents of such constituent party or Beneficial Owner, if
such amendment, modification or change (i) would adversely affect the
bankruptcy remote nature of Borrower; or (ii) would adversely affect Lender's
interest in the Project Loan. The Borrower shall deliver copies of minutes of
annual meetings of the Borrower to the Lender within thirty (30) days of its
receipt of written request therefor.
(d) Borrower will maintain books, records, financial
statements and bank accounts separate from those of its affiliates and any
constituent party and Borrower will file its own tax returns where required by
applicable code or regulation. Borrower shall maintain its books, records,
resolutions and agreements as official records.
(e) Borrower will be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate of Borrower, any constituent party of Borrower, any
Beneficial Owner or any Affiliate of any constituent party), and shall conduct
business in its own name and shall maintain and utilize separate stationery,
invoices and checks. Borrower shall correct any known or unknown
misunderstanding regarding its status as a separate entity and shall not
identify itself as a division or part of its Affiliates or any of its
Affiliates as a division or part of Borrower.
(f) Borrower will maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations.
(g) Neither Borrower nor any constituent party will seek or
effect the liquidation, dissolution, winding up, consolidation or merger, in
whole or in part, of Borrower or the sale of all or substantially all of
Borrower's or any constituent party's assets.
(h) Borrower will not commingle the funds and other assets
of Borrower with those of any affiliate or constituent party, any Beneficial
Owner, or any affiliate of any constituent party or Beneficial Owner, or any
other Person.
(i) Borrower has and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or constituent
party, any Beneficial Owner, or any affiliate of any constituent party or
Beneficial Owner, or any other Person.
(j) Borrower does not and will not hold itself out to be
responsible for the debts or obligations of any other Person.
(k) If Borrower is a (i) limited liability company,
partnership or business trust, at least one manager, managing partner, general
partner or trustee (the "SPC Member") of Borrower shall itself be a limited
liability company or corporation the sole asset of which is its
20
interest in Borrower, and the SPC Member will at all times comply with each of
the representations, warranties, and covenants contained in this Section 5.4
as if such representation, warranty or covenant were made, mutatis mutandis,
directly by such SPC Member. The SPC Member shall cause the Borrower at all
times to comply with each of the representations, warranties, and covenants
contained in this Section 5.4.
(l) The Borrower has not incurred and will not incur any
indebtedness, secured or unsecured, direct or indirect, absolute or contingent
(including guaranteeing any obligation), other than (i) the Project Loan or
(ii) unsecured trade debt customarily payable within thirty (30) days;
The Borrower shall deliver a certificate to the Lender within 30 days
upon written request from the Lender but not more frequently than on an annual
basis except for good cause shown, certifying as to its compliance with each
of the provisions of this Section 5.4.
5.5 Inspection of Property; Discussions. Borrower shall permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Borrower with
officers and employees of the Borrower and with its independent certified
public accountants.
5.6 Compliance with Project Loan Documents. The Borrower shall at
all times (a) observe and perform all of the covenants, conditions and
obligations required to be performed by it (whether in its capacity as Lessor
or otherwise) under each Project Loan to which it is a party and (b) observe
and perform, or cause to be observed and performed, all of the covenants,
conditions and obligations of the Lessor under the Lease, even in the event
that the Lease is terminated at stated expiration, following a Lease Event of
Default or otherwise.
5.7 Further Assurances. At any time and from time to time, upon the
written request of the Lender, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver such further instruments
and documents and take such further action as the Lender may reasonably
request for the purpose of obtaining or preserving the full benefits of this
Agreement and the other Project Loan Documents and of the rights and powers
herein or therein granted.
5.8 Books and Records. The Borrower shall keep adequate books and
records of account and furnish to Lender copies of all tax returns filed by
the Borrower within twenty (20) days after the filing thereof together with
certified rent roll in the form attached hereto as Exhibit B.
21
SECTION 6. NEGATIVE COVENANTS
The Borrower agrees that, so long as the Project Loan Note remains
outstanding and unpaid, the Borrower shall not:
6.1 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon the Property except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings, provided that adequate reserves with
respect to such taxes and any penalties and interest which may reasonably be
anticipated to accrue thereon are maintained on the books of the Borrower;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than sixty (60) days or which are
being contested in good faith by appropriate proceedings;
(c) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case detract
from the value of the Property or interfere with the ordinary conduct of the
business of the Borrower;
(d) Liens created pursuant to the Project Loan Documents;
and
(e) Permitted Exceptions.
6.2 Limitation on Contingent Obligations. Create, incur, assume or
suffer to exist any Contingent Obligations.
6.3 Discharge of Liens. Create or permit to exist at any time, and
will, at its own expense, promptly take such action as may be necessary duly
to discharge, or cause to be discharged, all Lessor Liens attributable to it,
provided, that the Borrower shall not be required to discharge any Lessor Lien
while the same is being contested in good faith by appropriate proceedings
diligently prosecuted so long as such proceedings shall not involve any
material danger of impairment of any of the Liens contemplated by the Security
Documents or of the sale, forfeiture or loss of, and shall not materially
interfere with the disposition of, the Property or title thereto or any
interest therein or the payment of Rent.
6.4 Transfer or Encumbrance of the Property. (a) Except as
otherwise provided in Sections 6.4(b) and (c) hereof, so long as the Project
Loan is outstanding the Borrower shall not, without the prior written consent
of the Lender, which consent may be withheld by Lender in its sole discretion,
transfer the Property or any part thereof or any interest therein, or permit
the Property or any part thereof or any interest therein to be transferred.
22
(b) The Borrower and the Lender agree that a Beneficial
Owner may transfer its interest in the Borrower upon the satisfaction of each
of the following terms and conditions:
(i) no Event of Default shall have occurred and be
continuing under the Project Loan Documents at the time of such
transfer;
(ii) such transfer is permitted under the documents
governing the Borrower and such Beneficial Owner;
(iii) the transferee provides the Lender with such
certificates, assumption agreements, documents, showings and
legal opinions as may be reasonably requested by the Lender in
connection with such transfer, all substantially in the same
form and content as those showings delivered in connection with
the closing of the Project Loan on the Closing Date;
(iv) each of the provisions of Section 5.4 hereof are
satisfied following such transfer;
(v) the Borrower pays the Lender, concurrently with
the closing of such transfer, all of the Lender's costs and
expenses incurred in connection with such transfer described in
Section 6.4(f) hereof and a non-refundable assumption fee in
the amount of $7,500 for the first such transfer and in the
amount of $10,000 for each such transfer thereafter; and
(vi) the Lessee and the Guarantor have consented to
such transfer, provided, however, that Lessee and Guarantor
shall be deemed to have consented to such transfer if Borrower
and the transferee have complied with the provisions of this
Section 6.4(b) to the satisfaction of Lender.
Notwithstanding the foregoing, however, (1) limited partnership
interests in any limited partnership or in any general partner or in any
Beneficial Owner or in any trustee or manager of the Borrower, or membership
interests in the Borrower (other than the transfer of interests in or of the
SPC Member), or any ownership interest, direct or indirect, in any trustee,
member or manager or in any Beneficial Owner of the Borrower shall be freely
transferable without compliance with the terms of this Section 6.4(b) and the
removal and replacement of any trustee or manager of the Borrower may be
accomplished, without compliance with the terms of this Section 6.4(b) and (2)
any involuntary transfer caused by the death of any general partner,
shareholder, joint venturer, member, manager or other Beneficial Owner of
Borrower or any Person holding any interest in the Borrower, any Beneficial
Owner of the Borrower or any trustee or manager of the Borrower, or if the
Borrower is a partnership, any limited partner thereof, shall not require
compliance with the terms of this Section 6.4 so long as the Borrower is
reconstituted, if required, following such death.
(c) The Borrower and the Lender agree that the Property may
be transferred to a transferee upon the satisfaction of each of the following
terms and conditions:
23
(i) no Event of Default shall have occurred and be
continuing under the Project Loan Documents at the time of such
transfer;
(ii) the Borrower pays the Lender, concurrently with
the closing of such transfer, a non-refundable assumption fee
in the amount of $7,500 for the first such transfer and in the
amount of $10,000 for each such transfer thereafter, together
with all of the Lender's costs and expenses incurred in
connection with such transfer described in Section 6.4(f)
hereof;
(iii) the transferee assumes and agrees to pay (subject
to the non-recourse provisions of Section 11.8 hereof) the
indebtedness secured by the Mortgage and to perform all
obligations under Project Loan Documents and prior to or
concurrently with the closing of such transfer, the transferee
executes, without any cost or expense to the Lender, such
documents and agreements as the Lender shall reasonably require
to evidence and effectuate said assumption and delivers such
legal opinions as the Lender may reasonably require;
(iv) the transferor and the transferee execute,
without any cost or expense to the Lender, new financing
statements or financing statement amendments and any additional
documents reasonably requested by the Lender;
(v) the Lessee and the transferee have executed a
Lease assignment and assumption agreement reasonably acceptable
to the Lender;
(vi) Lessee and Guarantor shall have consented to
such transfer, provided, however, that Lessee and Guarantor
shall be deemed to have consented to such transfer if Borrower
and the transferee have complied with the condition of this
Section 6.4(c) to the satisfaction of Lender;
(vii) the transferor or the transferee shall cause to
be delivered to the Lender, without any cost or expense to the
Lender, such endorsements to the Lender's title insurance
policy, hazard insurance endorsements or certificates and other
similar materials as the Lender may deem necessary at the time
of the transfer, all in form and substance reasonably
satisfactory to the Lender, including, without limitation, an
endorsement or endorsements to the Lender's title insurance
policy insuring the lien of the Mortgage, extending the
effective date of such policy to the date of execution and
delivery (or, if later, of recording) of the assumption
agreement referenced above in Section 6.4(c)(iii) with no
additional exceptions added to such policy and insuring that
fee simple title to or a valid leasehold interest in the
Property is vested in the transferee, or, in lieu thereof, such
other documents or evidence as the Lender may reasonably
require in order to confirm that such policy is unaffected by
the transfer;
(viii) such transfer is not construed so as to relieve
Lessee or Guarantor of their respective obligations under any
guaranty or indemnity agreement executed by them in connection
with the Project Loan and Lessee and Guarantor
24
execute, without any cost or expense to the Lender, such
documents and agreements as the Lender shall reasonably require
to evidence and effectuate the ratification of each such
guaranty and indemnity;
(ix) the Lender shall have received such legal
opinions as may be reasonably requested by the Lender in
connection with such transfer in substantially the same form
and content as those opinions delivered in connection with the
closing of the Project Loan on the Closing Date;
(x) such transfer is not construed so as to relieve
any current guarantor or indemnitor of its obligations under
any guaranty or indemnity agreement executed in connection with
the Project Loan secured by the Project Loan Documents and each
such current guarantor and indemnitor executes, without any
cost or expense to the Lender, such documents and agreements as
the Lender shall reasonably require to evidence and effectuate
the ratification of each such guaranty and indemnity agreement,
provided that if the transferee or a party associated with the
transferee approved by the Lender in its sole discretion
assumes the obligations of the current guarantor or indemnitor
under its guaranty or indemnity agreement and the transferee or
such party associated with the transferee, as applicable,
executes, without any cost or expense to the Lender, a new
guaranty or indemnity agreement in form and substance
reasonably satisfactory to the Lender, then the Lender shall
execute and deliver to transferor, concurrently with such
transaction, a release of the current guarantor or indemnitor
from all obligations arising under its guaranty or indemnity
agreement from and after the closing of such transfer;
(xi) the transferor executes and delivers to Lender,
without any cost or expense to Lender, a release of Lender, its
officers, directors, employees and agents, from all claims and
liability relating to the transactions evidenced by the Project
Loan Documents through and including the date of the transfer,
which agreement shall be in form and substance satisfactory to
Lender and binding upon the transferee; and
(xii) the transferee delivers certified financial
statements acceptable to Lender, certified true and correct by
the transferee.
Upon compliance with each of the terms and conditions described above,
the Lender shall release the transferor from and after the date of such
transfer of its obligations as Borrower and shall deliver a certificate of
compliance and release; provided that in no event shall any such transfer
waive or release such transferor for any liability on account of any breach of
any representation, warranty, covenant or obligation with respect to the
transferor set forth in the Project Loan Documents or for any fraudulent or
willful misconduct of the transferor.
(d) The Lender shall not be required to demonstrate any
actual impairment of its security or any increased risk of default hereunder
in order to declare the Project Loan immediately due and payable upon any
transfer of the Property without the Lender's consent as
25
set forth herein. This provision shall apply to every transfer of the Property
in violation of this Section 6.4 regardless of whether voluntary or not.
(e) The Lender's consent to a transfer of an interest of a
Beneficial Owner or the Property shall not be deemed to be a waiver of the
Lender's right to require such consent to any future transfer of an interest
of a Beneficial Owner or the Property. Any transfer of an interest of a
Beneficial Owner or the Property made in contravention of this Section 6.4
shall be null and void and of no force and effect.
(f) The Borrower agrees to bear and shall pay or reimburse
the Lender on demand for all reasonable expenses (including, without
limitation, reasonable attorneys' fees and disbursements, title search costs
and title insurance endorsement premiums) incurred by the Lender in connection
with the review, approval and documentation of each transfer of the Property
or ownership interest in the Borrower.
SECTION 7. CONDITIONS PRECEDENT TO FUNDING
The Lender shall not be obligated to fund the Project Loan until all
of the conditions set forth in this Section 7 shall have been satisfied.
7.1 Closing Documents. The Lender shall have received all the
items set forth in this subsection, in each case in form and substance
satisfactory to the Lender.
(a) Taxes. Evidence that all past and current (if then due
and payable) taxes and assessments applicable to the Property or payable by
the Borrower have been paid.
(b) Title Insurance Policy. A mortgagee's policy of title
insurance or satisfactory evidence of the Title Company's unconditional
obligation to issue such a policy, dated as the date of the recording of the
Mortgage. Such policy shall (i) be in the amount of the Project Loan (or the
maximum amount that the title insurance company is permitted by law to insure,
whichever is lower); (ii) insure the Lender that the Mortgage creates a valid
first Lien on the Borrower's leasehold interest in the Property, free and
clear of all defects and encumbrances, except for the Permitted Exceptions;
(iii) provide full coverage against mechanics' liens and against survey
exceptions not specified as Permitted Exceptions; and (iv) contain such other
endorsements and affirmative coverage as the Lender may reasonably request.
The Lender shall be furnished with copies of all documents that appear as
exceptions in such policy or commitment.
(c) Survey. A survey of the Land, certified to the Lender
and the Title Company by an independent professional licensed land surveyor
satisfactory to the Lender, which survey shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992. Without limiting the
generality of the foregoing, there shall be surveyed and shown on such survey
the following: (i) the locations of all buildings and other structures, if
any, on the Land and the established building setback
26
lines; (ii) the lines and the width of streets abutting the Land; (iii) all
access and other easements appurtenant to or necessary or desirable to the use
of the Land; (iv) all roadways, paths, driveways, easements, encroachments and
overhanging projections and similar encumbrances affecting the Land, whether
recorded, apparent from a physical inspection of the Land or otherwise known
to the surveyor; (v) any party walls with structures on adjoining property any
encroachments on any adjoining property by the building structures and
improvements on the Land; (vi) if the Land is described by reference to a
filed map, a legend relating the survey to such map; and (vii) the location of
all utility lines and sanitary and storm sewer lines on the Property and their
connection to a public right of way or beneficial easement.
(d) Borrower's Certificate. The Borrower's Certificate.
(e) Hazard Insurance. Policies or certificates of insurance
required by the Lease, accompanied by evidence of the payment of the premiums
for such policies, with mortgagee loss payable endorsements naming the Lender
as sole loss payee.
(f) Flood Insurance. If requested by the Lender, a policy of
flood insurance in an amount equal to the lesser of (i) the maximum limit of
coverage available under the National Flood Insurance Act of 1968, as amended,
and (ii) the amount of the Project Loan.
(g) Permits. All Permits issued prior to the Closing Date.
(h) Soil and Geological Report. If requested by the Lender,
a soil and geological report, including a summary of soil test borings issued
by a professional engineer satisfactory to the Lender.
(i) Opinions of Counsel. An opinion of counsel for the
Borrower and Lessee in form and substance satisfactory to the Lender.
(j) Project Loan Documents. Duly executed copies of all
Project Loan Documents and the original counterpart No. 1 of the Lease.
(k) Organizational Documentation. If the Borrower is a
limited partnership, limited liability partnership or a limited liability
company, with respect to such entity:
(1) the partnership agreement or limited liability
company agreement, including all amendments and attachments,
certified by a general partner or member;
(2) the partnership certificate or certificate of
formation, including all amendments, certified by an official
in whose office it is filed or recorded, together with a
certificate of good standing from such office and from the
state in which the Property is located, if applicable;
27
(3) any certificates filed or recorded or required to
be filed or recorded by such partnership or limited liability
company in the state of its formation and the state where the
Land is located in order for it to do business in those states;
(4) any consents by other partners or members
required for the borrowing contemplated by this Agreement and
the execution, delivery and performance of the Project Loan
Documents and appropriate resolutions and certificates
authorizing the execution, delivery and performance by Borrower
of its obligations hereunder and designating those individuals
authorized to enter into this Agreement and the other Project
Loan Documents; and
(5) if requested by the Lender, an acknowledgment by
each of the partners or members of his or its continued
membership in the Borrower.
7.2 Additional Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Lender and its counsel.
7.3 Environmental Audit. The Lender shall have received an
environmental audit performed by an environmental engineering firm acceptable
to Lender, in form and substance acceptable to the Lender.
7.4 Commitment Fees. The fees and expenses of Lender set forth in
the commitment for the Project Loan issued by Lender on December 18, 2001
shall be paid on or before the Closing Date.
7.5 Appraisal. The Lender shall have received an MAI appraisal of
the Property and Improvements, performed by a firm acceptable to Lender, in
form and substance acceptable to Lender.
7.6 Subordination and Estoppel. The Lender shall have received a
subordination, non-disturbance and attornment agreement and estoppel
certificate duly executed by Lessee, and an estoppel certificate from the
Ground Lease lessors, in each case in form and substance acceptable to Lender.
SECTION 8. INTENTIONALLY DELETED
28
SECTION 9. MATTERS RELATING TO PAYMENTS AND COLLATERAL
9.1 The Account. (a) The Lender shall establish (or cause its
servicer to establish) one or more accounts (the "Account(s)") into which all
payments, receipts and other consideration of any kind whatsoever received
pursuant to the Project Loan Note and the Project Loan Documents shall be
deposited.
(b) Except as otherwise provided in Section 9.2, payments
deposited from time to time in the Account(s) shall be paid out as follows:
(i) An amount equal to Project Loan Debt Service due
and owing on the next Scheduled Payment Date as set forth on
Schedule I to the Project Loan Note shall be applied to the
payment of principal and interest then due and payable on the
Project Loan until such amounts are paid in full.
(ii) An amount equal to the portion of any such
payment identified by the Lessee as a payment in respect of the
Purchase Price equal to the Termination Value pursuant to
Section 17.1 of the Lease shall be applied on the date
deposited in the Account, first, to the payment of the
outstanding of principal of, accrued interest and premium, if
any, and all other amounts due and payable on the Project Loan
or the Project Loan Documents until such amounts are paid in
full, and second, the remainder, if any, shall be paid to such
Person or Persons as the Borrower may designate.
(iii) Any other amount then due and owing to the Lender
pursuant to the Loan Documents.
(iv) An amount equal to any such payments identified
by the Lessee as Supplemental Rent shall be paid out of the
Account by the Lender promptly after receipt, and shall be
applied on the date deposited in the Account to the payment of
any amounts then owing to the parties entitled to receipt of
such Supplemental Rent.
If the Lender receives any payment in lieu of Project Loan Debt Service in any
case or proceeding arising under the Bankruptcy Code, then such payment shall
be deemed to be a payment on account of Project Loan Debt Service for the
purpose of this Section 9.1. In the event that the Lessee shall fail to
identify the nature of any payment deposited by it in the Account, the nature
of such payment shall instead be identified by the Lender in its reasonable
judgment and applied in the manner specified above.
(c) Upon payment in full of the Project Loan and all other
amounts owing by the Borrower hereunder or under any other Project Loan
Document, any moneys remaining in the Account shall be paid to the Borrower or
such other Person or Persons as the Borrower may designate.
29
9.2 Proceeds of Collateral; Proceeds Remaining in Account. (a) All
moneys collected by Lender upon any sale or other disposition of the Property
(including all moneys realized from the exercise of remedies under the
Mortgage), together with all other moneys received by Lender in connection
therewith (except as otherwise specified in Section 9.1) and (b) all moneys
contained in the Account after an Event of Default or on the Maturity Date (if
the Project Loan has not then been repaid in full), or deposited in the
Account thereafter (except as otherwise specified in Section 9.1(c)), shall be
applied as follows:
First, to the payment of (x) any and all sums advanced by
Lender in order to preserve the Collateral or preserve its security
interest therein and (y) the expenses of retaking, holding, preparing
for sale or lease, selling or otherwise disposing or realizing on the
Collateral, or of any exercise by Lender of its rights under the
Project Loan Documents, together with attorneys' fees and court costs;
Second, to the payment of the amounts then due and unpaid for
principal of, interest on, premium, if any, and any other amounts then
due and unpaid in respect of the Project Loan or under any other
Project Loan Documents;
Third, to the extent moneys remain after application pursuant
to clauses First through Second above, to the Borrower or to whomever
may be lawfully entitled to receive such surplus.
9.3 Certain Remedial Matters. Notwithstanding any other provision
of this Agreement or any other Project Loan Document, except following the
occurrence and during the continuance of an Event of Default, the Borrower
shall at all times retain the right, but not to the exclusion of the Lender,
(A) to receive from the Lessee all notices, certificates and other documents
and all information that the Lessee is permitted or required to give or
furnish to the "Borrower" or the "Lessor" pursuant to the Lease or any other
Project Loan Document, (B) to inspect the Property, (C) to retain all rights
with respect to insurance that Article XVI of the Lease specifically confers
upon the "Lessor", in its individual capacity, (D) subject to the provisions
of the Security Documents, to institute proceedings for specific performance
by the Lessee with the provisions of the Lease, and (E) subject to the other
applicable provisions of this Agreement, to perform for the Lessee under
Article XIX of the Lease.
9.4 Release of the Property, etc. (a) If the Lessee shall at any
time purchase the Property pursuant to Section 17.2 of the Lease, then, upon
satisfaction by the Borrower of its obligation to prepay the Project Loan
pursuant to Section 3.2(b) and to pay accrued interest and Prepayment Premium,
if any, on the Project Loan so prepaid pursuant to Section 3.2, the Property
shall be released from the Liens created by the Security Documents, all
without delivery of any instrument or performance of any act by any party. In
addition, upon payment in full of the Project Loan and all other amounts owing
by the Borrower hereunder or under any other Project Loan Document by the
Borrower, the Property shall be released from the Liens created by the
Security Documents, all without delivery of any instrument or performance of
any act by any party. Upon request of the Borrower following any such release,
the Lender shall, at the sole cost
30
and expense of the Borrower, execute and deliver to the Borrower or the Lessee
such documents as the Borrower shall reasonably request to evidence such
release.
(b) Notwithstanding anything to the contrary herein, upon
the payment in full of the Project Loan and all other amounts owing by the
Borrower hereunder or under any other Project Loan Document, all remaining
moneys in the Account shall be paid out to the Borrower.
SECTION 10. EVENTS OF DEFAULT
10.1 Events of Default. The occurrence of any of the events set
forth in this subsection shall constitute an "Event of Default":
(a) The Borrower shall fail to make any Scheduled Payment
pursuant to the Project Loan Note, which failure continues unremedied for a
period of three (3) Business Days; or
(b) Any transfer of the interest of a Beneficial Owner or any
transfer of all or any part of the Property in violation of Section 6.4 hereof;
or
(c) The Borrower shall fail to comply with the provisions of
Section 5.4 hereof and such failure shall continue unremedied for a period of
thirty (30 ) days; or
(d) The Borrower shall fail to comply with the provisions of
Sections 6.1, 6.2 or 6.3 hereof or shall fail to provide (or cause the Lessee
to provide) the insurance required under the Lease; or
(e) Any representation or warranty made by the Borrower
herein, in the Mortgage or in any other Project Loan Document or which is
contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
other Project Loan Document shall prove to have been incorrect in any material
respect on or as of the date made; or
(f) The Borrower shall default in the observance or
performance of any other agreement contained in this Agreement, the Mortgage
or any other Project Loan Document and such failure shall continue unremedied
for a period of sixty (60) days after either actual knowledge thereof by the
Borrower or written notice thereof has been given to the Borrower by the
Lender; or
(g) (i) The Borrower shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the
Borrower shall
31
make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Borrower any case, proceeding or other action
of a nature referred to in clause (i) above which (A) results in the entry of
an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or
(iii) there shall be commenced against the Borrower any case, proceeding or
other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within sixty (60) days
from the entry thereof; or (iv) the Borrower shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above (without regard
to the grace periods contained in said clauses); or (v) the Borrower shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(h) One or more judgments or decrees shall be entered
against the Borrower involving in the aggregate a liability (not paid or fully
covered by insurance) of $100,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal
within sixty (60) days from the entry thereof; or
(i) (i) Any of the Project Loan Documents shall cease, for
any reason, to be in full force and effect, or the Borrower shall so assert,
or (ii) the Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) The Lease shall cease, for any reason, to be in full
force and effect or the Lessee shall so assert; or
(k) A Lease Event of Default shall have occurred and be
continuing; or
(l) The Lease, the Guaranty or the Ground Lease shall be
amended, modified or terminated without the written consent of Lender; or
(m) A default by Borrower under the Ground Lease shall have
occurred and be continuing without cure beyond any grace period provided with
respect thereto in the Ground Lease;
then, and in any such event, (A) if such event is an Event of Default
specified in paragraph (g) of this Section, automatically the Project Loan
(with accrued interest thereon and Prepayment Premium) and all other amounts
owing under this Agreement and the other Project Loan Documents shall
immediately become due and payable, whereupon Lender shall be entitled to
exercise all remedies provided for in the Security Documents and pursue such
other rights or remedies as may be available at law or in equity; (B) if such
event is an Event of Default specified in paragraphs (a), (b), (c), (d), (e),
(f), (h), (i), (l) or (m) of this Section, any or all of the following actions
may be taken: the Lender may by notice to the Borrower, declare the Project
Loan (with accrued interest thereon) and all other amounts owing under this
Agreement and the
32
other Project Loan Documents together with the Prepayment Premium, if any, to
be due and payable forthwith, whereupon the same shall immediately become due
and payable and Lender may exercise all remedies provided for in the Security
Documents and pursue such other rights or remedies as may be available at law
or in equity, and (C) if such an event is an Event of Default specified in
clauses (j) or (k) of this Section with respect to which Lender is entitled to
exercise its remedies and will exercise its remedies provided, however, that a
Standstill Period exists, so long as no other Event of Default has occurred
and is continuing hereunder (other than an Event of Default under Section
10.1(a) hereof), Borrower may elect to pay to Lender during the Standstill
Period the entire outstanding principal balance of the Project Loan Note and
accrued and unpaid interest thereon and all other amounts owing under the
other Project Loan Documents, together with the Prepayment Premium, if any
(collectively the "Default Payment"), in full satisfaction of the obligations
of the Borrower thereunder. Upon the failure of Borrower to make the Default
Payment within the Standstill Period following an Event of Default under
paragraphs (j) or (k) of this Section, the Lender may by written notice to
Borrower declare the Project Loan (with accrued interest thereon) and
Prepayment Premium, and all other amounts owing under this Agreement and the
other Project Loan Documents to be due and payable forthwith and the same
shall be immediately due and payable, whereupon Lender shall be entitled to
exercise all remedies provided for in the Security Documents and pursue such
other rights or remedies as may be available at law or in equity. Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.
Upon the occurrence of any Event of Default, the Borrower shall pay
interest on the unpaid principal balance of the Project Loan Note at a rate
equal to the Overdue Rate. The Overdue Rate shall be computed from the
occurrence of the Event of Default until the earlier of the cure of such
default, the waiver of such default by Lender or the actual receipt and
collection of all amounts due under this Agreement and under the Project Loan
Note. This charge shall be added to the Obligations, and shall be deemed
secured by the Mortgage. This clause, however, shall not be construed as an
agreement or privilege to extend the date of the payment of the Obligations,
nor as a waiver of any other right or remedy accruing to the Lender by reason
of the occurrence of any Event of Default. If the Overdue Rate is above the
maximum rate permitted by applicable law, the Overdue Rate shall be the
maximum rate permitted by applicable law.
10.2 Intentionally Deleted.
10.3 Intentionally Deleted.
10.4 Power of Attorney. For the purpose of carrying out the
provisions and exercising the rights, powers and privileges granted in this
subsection, the Borrower hereby irrevocably constitutes and appoints the
Lender its true and lawful attorney-in-fact to execute, acknowledge and
deliver any instruments and do and perform any acts such as are referred to in
this subsection in the name and on behalf of the Borrower. This power of
attorney is a power coupled with an interest and cannot be revoked.
33
SECTION 11. MISCELLANEOUS
11.1 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission) and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) in the case of delivery by hand,
when delivered, (b) in the case of delivery by mail, three (3) days after
being deposited in the mails, postage prepaid, (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, or (d) in
the case of delivery by a nationwide reputable overnight courier service, when
sent and receipt has been confirmed, addressed as follows, or to such other
address as may be hereafter notified by the respective parties hereto:
The Borrower: XXXXXXXX STORE NO. 203 L.L.C.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Fax:
The Lender: Royal Indemnity Company
c/o Royal Investment Management Company
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Fax: 000-000-0000
The Lessee: Borders, Inc.
000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Vice President - Development
Fax: 000-000-0000
provided that any notice, request or demand to or upon the Lender shall not be
effective until received.
11.2 Modifications. Any provision of this Agreement may be changed,
waived or terminated only by an instrument in writing signed by the party
against whom enforcement of the change, waiver or termination is sought.
11.3 Rights Cumulative. All rights, powers and remedies given to the
Lender under this Agreement are cumulative and not alternative, and are in
addition to all rights, powers and remedies otherwise afforded the Lender (all
rights, powers and remedies of the Lender collectively, the "Lender's
Rights"); any forbearance or delay by the Lender in exercising any of the
Lender's Rights shall not be deemed to be a waiver, and the exercise or
partial exercise of any of the Lender's Rights shall not preclude the further
exercise of any of the Lender's Rights which shall continue in full force and
effect until specifically waived by an instrument in writing
34
executed by the Lender. All representations, warranties and covenants
contained in any of the Project Loan Documents shall survive the making of the
advances of the Project Loan.
11.4 Schedules. The Schedules attached to this Agreement are
essential to and are made a part of this Agreement.
11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
MICHIGAN, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
11.6 Waiver of Jury Trial, Submission to Jurisdiction. THE BORROWER
IRREVOCABLY WAIVES TRIAL BY JURY AND ANY OBJECTIONS, INCLUDING WITHOUT
LIMITATION ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS, WHICH IT MAY NOW OR IN THE FUTURE HAVE TO THE BRINGING
OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH JURISDICTION. All judicial
actions, suits or proceedings brought against the Borrower and its property
with respect to its obligations, liabilities or any other matter under or
arising out of or in connection with this Agreement or any other Project Loan
Document or for recognition or enforcement of any judgment rendered in any
such proceedings may be brought in any trial or appellate state or federal
court of competent jurisdiction in the state in which the Property is located.
By execution and delivery of this Agreement, the Borrower accepts, generally
and unconditionally, the non-exclusive jurisdiction of such courts and
irrevocably waives, and agrees not to plead or claim, any objection that it
may ever have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court. The
Borrower irrevocably agrees that all process in any proceeding or any court
arising out of or in connection with this Agreement or any of the other
Project Loan Documents, may be effected by mailing to the Borrower a copy by
registered or certified mail or any substantially similar form of mail,
postage prepaid, to the Borrower at its address set forth in subsection 11.1
or at such other address of which the Lender shall have been notified in
accordance with the terms of such subsection. Such service shall be effective
five (5) days after such mailing. Such service will be effective and binding
service in every respect. The Borrower shall not assert that such service did
not constitute effective and binding service within the meaning of any
applicable state or federal law, rule, regulation or the like. Nothing in this
Agreement shall affect the right to effect service of process in any other
manner permitted by law or shall limit the right to xxx in any other
jurisdiction.
11.7 Captions. The captions in this Agreement are for convenience of
reference only, and in no way limit or amplify the provisions of this
Agreement.
11.8 Obligations Non-Recourse. Anything to the contrary contained in
this Project Loan Agreement, the Project Loan Note or in any other Project
Loan Document notwithstanding, neither the Borrower nor any member or partner
of the Borrower, nor any member, partner, officer, director or shareholder
thereof, nor any of their respective successors or assigns (all such Persons
being hereinafter referred to collectively as the "Exculpated Persons"), shall
be
35
personally liable in any respect for any representation, warranty, liability,
indemnities or obligation hereunder or in any other Project Loan Document
including the payment of the principal of, interest on or Prepayment Premium
with respect to the Project Loan Note, or for monetary damages for the breach
of performance of any of the covenants contained in the Project Loan
Agreement, the Project Loan Note, the Mortgage or any other Project Loan
Document. The Lender agrees that, in the event it pursues any remedies
available to it under this Project Loan Agreement, the Project Loan Note, the
Assignment of Lease, the Mortgage or under any other Project Loan Document,
the Lender shall have no recourse against the Borrower nor any Exculpated
Person, for any deficiency, loss or claim for monetary damages or otherwise
resulting therefrom and recourse shall be had solely and exclusively only
against the Property; but nothing contained herein shall be taken to prevent
recourse against or the enforcement of remedies against the Property in
respect of any and all liabilities, obligations and undertakings contained in
the Mortgage, this Project Loan Agreement, the Project Loan Note, the
Assignment of Lease or in any other Project Loan Document. Notwithstanding the
provisions of this paragraph, nothing in the Mortgage, the Assignment of
Lease, this Project Loan Agreement, the Project Loan Note or any other Project
Loan Document shall: (a) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by the Project Loan Note or arising under
the Mortgage or the Project Loan Agreement or secured by the Mortgage, but the
same shall continue until paid or discharged; (b) relieve the Borrower from
liability and responsibility for the following, Borrower acknowledging its
personal liability therefor in each case (but only to the extent of the
damages arising by reason of ): (i) active waste knowingly committed by the
Borrower with respect to the Property (ii) any fraud or misrepresentation on
the part of the Borrower or any such Exculpated Person; (iii) any
environmental matter affecting the Property which is introduced or caused by
Borrower or a Beneficial Owner; (iv) the failure of Borrower to maintain its
existence as a special purpose, "bankruptcy remote" entity in good standing,
subject to the cure rights set forth in Section 10.1(c); (v) the failure of
Borrower or any Beneficial Owner to comply with the provisions of Section 6
hereof; (vi) misappropriation or misapplication by the Borrower (i.e.,
application in a manner contrary to any of the Project Loan Documents) of any
insurance proceeds or condemnation award paid or delivered to the Borrower by
any Person other than the Lender; or (vii) any rents or other income received
by the Borrower from the Lessee that are not turned over to the Lender in
accordance with the Assignment of Lease; or (c) affect or in any way limit the
Lender's rights and remedies hereunder with respect to the rights and powers
assigned under the Assignment of Lease or to obtain a judgment against the
Borrower (provided that no deficiency judgment or other money judgment shall
be enforced against the Borrower except to the extent of the Borrower's
interest in the Property or to the extent the Borrower may be liable as
otherwise contemplated in clause (b) of this Section).
11.9 Attorneys' Fees. If the Lender retains the services of an
attorney or any other consultants in order to enforce this Agreement, or any
portion thereof, the Borrower agrees to pay to Lender all costs and expenses,
including, without limitation, reasonable attorneys' fees, incurred by them as
a result thereof and such costs, fees and expenses shall be included in the
indebtedness secured by the Mortgage.
11.10 Successive Actions. A separate right of action hereunder shall
arise each time the Lender acquires knowledge of any matter indemnified by the
Borrower under this Agreement.
36
Separate and successive actions may be brought hereunder to enforce any of the
provisions hereof at any time and from time to time. No action hereunder shall
preclude any subsequent action, and the Borrower hereby waives and covenants
not to assert any defense in the nature of splitting of causes of action or
merger of judgments.
11.11 No Waiver; Time of Essence. The failure of any party hereto to
enforce any right or remedy hereunder, or to promptly enforce any such right
or remedy, shall not constitute a waiver thereof nor give rise to any estoppel
against such party nor excuse any of the parties hereto from their respective
obligations hereunder. Any waiver of such right or remedy must be in writing
and signed by the party to be bound. This Agreement is subject to enforcement
at law or in equity, including actions for damages or specific performance.
Time is of the essence of this Agreement.
11.12 Binding Effect; Term; Assignability. This Agreement shall be
binding upon the parties hereto and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
11.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and
thereafter shall be deemed an original, and all of which shall be taken to be
one and the same instrument, for the same effect as if all parties hereto had
signed the same signature page. Any signature page of this Agreement may be
detached from any counterpart of this Agreement without impairing the legal
effect of any signatures thereon and may be attached to another counterpart of
this Agreement identical in form hereto but having attached to it one or more
additional signature pages.
11.14 Severability. Should any part of this Agreement for any reason
be declared invalid, such decision shall not affect the validity of any
remaining portion, which remaining portion shall remain in full force and
effect as if this Agreement had been executed with the invalid portion thereof
eliminated and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Agreement without
including therein any such part, parts or portion which may, for any reason,
be hereafter declared invalid.
11.15 Survival. This Project Loan Agreement shall be deemed to be
continuing in nature and shall remain in full force and effect and the
liability of Borrower under Section 11.8(b) shall survive payment of the
indebtedness secured by the Project Loan Documents and the exercise by Lender
of any remedy under the Mortgage or any of the other Project Loan Documents,
including, without limitation, any foreclosure or deed in lieu thereof, even
if, as a part of such remedy, the Project Loan is paid or satisfied in full.
37
11.16 Limitation by Law. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of
this Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they shall not render this Agreement invalid, unenforceable,
in whole or in part, or not entitled to be recorded, registered or filed under
the provisions of any applicable law.
[remainder of this page intentionally left blank]
38
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Lender and the Borrower as of the date first written above.
ROYAL INDEMNITY COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
XXXXXXXX STORE NO. 203 L.L.C.,
a Delaware limited liability company
By: Agree Limited Partnership, a
Delaware limited partnership
Its: Authorized Member
By: Agree Realty Corporation,
a Maryland corporation
Its: General Partner
By: /s/ Xxxxxxx Agree
--------------------------------
Xxxxxxx Agree
Its: President
39
NOTICE TO BORROWER
THIS IS THE FINAL EXPRESSION OF THE LOAN AGREEMENT BETWEEN BORROWER AND THE
LENDER. THIS LOAN AGREEMENT CANNOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR
ORAL LOAN/CREDIT AGREEMENT OR OF A CONTEMPORANEOUS ORAL LOAN/CREDIT AGREEMENT
BETWEEN BORROWER AND THE LENDER.
OTHER TERMS
Any other terms related to the credit or related to any other credit
agreement between Borrower and the Lender must be inserted here to be
enforceable: None.
AFFIRMATION OF NO OTHER CREDIT AGREEMENT
Borrower and the Lender affirm they have no unwritten oral credit
agreement between themselves.
LENDER: BORROWER:
ROYAL INDEMNITY COMPANY XXXXXXXX STORE NO. 203 L.L.C.,
a Delaware limited liability company
By: /s/ Xxxxxxx X. Xxxxxx By: Agree Limited Partnership, a Delaware
-------------------------------- limited partnership
Name: Xxxxxxx X. Xxxxxx Its: Authorized Member
Title: Vice President
By: Agree Realty Corporation,
a Maryland corporation
Its: General Partner
By: /s/ Xxxxxxx Agree
---------------------------------
Xxxxxxx Agree
Its: President
40
EXHIBIT A TO PROJECT LOAN AGREEMENT
PROJECT LOAN NOTE
$3,181,669.92 Bloomfield Hills, Michigan
April 30, 2002
FOR VALUE RECEIVED, the undersigned, XXXXXXXX STORE NO. 203 L.L.C., a
Delaware limited liability company (the "Borrower"), hereby unconditionally
promises to pay to the order of ROYAL INDEMNITY COMPANY (together with its
successors and assigns, the "Lender") at its office located at c/o Royal
Investment Management Company, 0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000, or at such other place as may be designated in writing to the
undersigned from time to time, in lawful money of the United States of America
and in immediately available funds, the principal sum of Three Million One
Hundred Eighty-One Thousand Six Hundred Sixty-Nine and 92/100 Dollars
($3,181,669.92), with interest on unpaid principal from the date hereof, prior
to default, at the rate of seven and one-half percent (7.50%) per annum, until
May 15, 2022 ("the Maturity Date") on the fifteenth day of each month (the
"Scheduled Payment Date") in equal monthly installments in the amounts
specified in Schedule I attached hereto, provided however that the first such
monthly installment due on May 15, 2002 shall be in the amount of accrued
interest only on the outstanding principal balance.
Interest on the principal sum of this Project Loan Note shall be
calculated on the basis of a three hundred sixty (360) day year composed of
twelve (12) months of thirty (30) days each except that interest due and
payable for a period less than a full month shall be calculated by multiplying
the actual number of days elapsed in such period by a daily rate based on the
actual number of days in such year. The Borrower does hereby agree that upon
the occurrence and during the continuation of an Event of Default or upon the
failure of the Borrower to pay the Project Loan Note in full on the Maturity
Date, the Lender shall be entitled to receive and the Borrower shall pay
interest on the entire unpaid principal sum and any other amounts due at a
rate (the "Overdue Rate") equal to the greater of (i) two percent (2%) per
annum over the then current prime rate of interest published by the Wall
Street Journal or its successor from time to time and (ii) nine and one-half
percent (9.50%) per annum. The Overdue Rate shall be computed from the
occurrence of the Event of Default until such Event of Default is cured or the
actual receipt and collection of the amounts due under this Project Loan Note.
This charge shall be added to the Obligations, and shall be deemed secured by
the Mortgage. This paragraph, however, shall not be construed as an agreement
or privilege to extend the date of the payment of the Obligations, nor as a
waiver of any other right or remedy accruing to the Lender by reason of the
occurrence of any Event of Default. In the event the Overdue Rate is above the
maximum rate permitted by applicable law, the Overdue Rate shall be the
maximum rate permitted by applicable law.
This Note (a) is the Project Loan Note referred to in the Project Loan
Agreement dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the
Lawrence, KS
No. 0203
"Project Loan Agreement"), between the Borrower and the Lender, (b) is subject
to the provisions of the Project Loan Agreement, and (c) is subject to
optional and mandatory prepayment, in whole but not in part, as provided in
the Project Loan Agreement. This Project Loan Note is secured as provided in
the Project Loan Documents, and by its acceptance hereof, each holder of this
Project Loan Note agrees to be bound by all of the provisions of the Project
Loan Agreement. Reference is hereby made to the Project Loan Documents for a
description of the property and assets in which a security interest has been
granted, the nature and extent of the security and the guarantees, the terms
and conditions upon which the security interests were granted and the rights
of the holder of this Project Loan Note in respect thereof.
In the event that any installment of principal or interest due
hereunder shall not be paid within ten (10) days after the date such
installment is due, the Borrower shall pay to Lender a "late charge" of four
(4) cents for each dollar so overdue to defray part of the cost of collection.
No notice of default shall be necessary as a precondition to the Borrower's
obligation to pay such late charge and the collection of the late charge shall
not waive the requirement of timely payment.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Project Loan Note shall become, or may
be declared to be, immediately due and payable, all as provided in the Project
Loan Agreement.
All parties now and hereafter liable with respect to this Project Loan
Note, whether maker, principal, surety, guarantor, endorser or otherwise,
hereby waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Project Loan
Agreement and used herein shall have the meanings given to them in the Project
Loan Agreement.
Anything to the contrary contained herein, in the Project Loan
Agreement or in any other Project Loan Document notwithstanding, neither the
Borrower, nor any member or partner of the Borrower, nor any member, partner,
officer, director or shareholder thereof, nor any of their respective
successors or assigns (all such Persons being hereinafter referred to
collectively as the "Exculpated Persons"), shall be personally liable in any
respect for any representation, warranty, liability or obligation hereunder or
in any other Project Loan Document including the payment of the principal of,
interest on, or Prepayment Premium due with respect to this Note, or for
monetary damages for the breach of performance of any of the covenants
contained in this Note, the Project Loan Agreement, the Mortgage or any other
Project Loan Document. The Lender agrees that, in the event it pursues any
remedies available to it under this Note, the Project Loan Agreement, the
Assignment of Lease, the Mortgage or under any other Project Loan Document,
the Lender shall have no recourse against the Borrower nor any Exculpated
Person, for any deficiency, loss or claim for monetary damages or otherwise
resulting therefrom and recourse shall be had solely and exclusively only
against the Property; but nothing contained herein shall be taken to prevent
recourse against or the enforcement of remedies against the Property in
respect of any and all liabilities, obligations and undertakings contained in
this Project Loan Note, the Mortgage, the Project Loan Agreement, the
Assignment of Lease or in any other
Lawrence, KS
No. 0203
Project Loan Document. Notwithstanding the provisions of this paragraph,
nothing in this Project Loan Note, the Mortgage, the Assignment of Lease, the
Project Loan Agreement, or any other Project Loan Document shall: (a)
constitute a waiver, release or discharge of any indebtedness or obligation
evidenced by this Project Loan Note or arising under the Mortgage or the
Project Loan Agreement or secured by the Mortgage, but the same shall continue
until paid or discharged; (b) relieve the Borrower from liability and
responsibility for the following, Borrower hereby acknowledging its personal
liability therefor (but only to the extent of the damages arising by reason
of): (i) active waste knowingly committed by the Borrower with respect to the
Property; (ii) any fraud or misrepresentation on the part of the Borrower or
any such Exculpated Person; (iii) any environmental matter affecting the
Property which is introduced or caused by Borrower or a Beneficial Owner; (iv)
the failure of Borrower to maintain its existence as a special purpose,
"bankruptcy remote" entity in good standing, subject to the cure rights set
forth in the Project Loan Agreement; (v) the failure of Borrower or any
Beneficial Owner to comply with the provisions of Section 6 of the Project
Loan Agreement; (vi) misappropriation or misapplication by the Borrower (i.e.,
application in a manner contrary to any of the Project Loan Documents) of any
insurance proceeds or condemnation award paid or delivered to the Borrower by
any Person other than the Lender; or (vii) any rents or other income received
by the Borrower from the Lessee that are not turned over to the Lender in
accordance with the Assignment of Lease; or (c) affect or in any way limit the
Lender's rights and remedies hereunder with respect to the rights and powers
assigned under the Assignment of Lease or to obtain a judgment against the
Borrower (provided that no deficiency judgment or other money judgment shall
be enforced against the Borrower except to the extent of the Borrower's
interest in the Property or to the extent the Borrower may be liable as
otherwise contemplated in clause (b) of this Section).
(remainder of page intentionally left blank)
Lawrence, KS
No. 0203
THIS PROJECT LOAN NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN.
XXXXXXXX STORE NO. 203 L.L.C.,
a Delaware limited liability company
By: Agree Limited Partnership, a
Delaware limited partnership
Its: Authorized Member
By: Agree Realty Corporation,
a Maryland corporation
Its: General Partner
By: /s/ Xxxxxxx Agree
---------------------------
Xxxxxxx Agree
Its: President
NOTE
LAWRENCE, KS
NO. 0203
Schedule 1
Land
Lot 1, in The Winter Block Addition, in the City of Xxxxxxxx, Xxxxxxx County,
Kansas; together with easements set forth in the Operation and Easement
Agreement recorded in Book 577, Page 243.
Lawrence, KS
No. 0203
Schedule 2
Permitted Exceptions
1. Subject to the Master Street Tree Plan, recorded April 28, 1997, in
the records of Xxxxxxx County, at Book 577, Page 231.
2. Subject to an Agreement, between Agree Limited Partnership, a Delaware
limited partnership and Winter, Inc., a Kansas corporation, and the
City of Lawrence, Kansas, a municipal corporation, recorded April 28,
1997, in the records of Xxxxxxx County, Kansas, at Book 577, Page 233.
3. Subject to an Assignment and Assumption of Parking Agreement, by and
between Agree Limited Partnership, a Delaware limited partnership and
Lawrence Store No. 203, L.L.C., a Delaware limited liability company,
recorded April 28, 1997, in the records of Xxxxxxx County, Kansas, at
Book 577, Page 239.
4. Subject to an Operation and Easement Agreement, recorded April 28,
1997, in the records of Xxxxxxx County, Kansas, at Book 577, Page 243.
5. Subject to a Memorandum of Ground Lease, between Winter, Inc., a
Kansas corporation and Lawrence Store No. 203, L.L.C., a Delaware
limited liability company, recorded April 28, 1997, in the records of
Xxxxxxx County, Kansas, at Book 577, Page 267, including the Option to
Purchase referenced therein which is granted to Agree Limited
Partnership pursuant to Exhibit E of the Ground Lease, as amended and
affected by that certain Estoppel Certificate and Agreement among
Winter, Inc., Xxxxxxxx Store No. 203, L.L.C. and Royal Indemnity
Company.
6. Subject to a 25 foot utility easement across the center portion of
subject property as per plat, at Plat Book 15, Page 867.
7. Subject to a 10 foot utility easement across the north side of subject
property as per plat, at Plat Book 15, Page 867.
8. Subject to easements, restrictions and setback lines as per plat, at
Plat Book 15, Page 867.
Lawrence, KS
No. 0203
PROJECT LOAN AGREEMENT
between
ROYAL INDEMNITY COMPANY,
as Lender
and
LAWRENCE STORE NO. 203 L.L.C., a Delaware limited liability company
as Borrower
Dated as of April 30, 2002
Lawrence, KS
No. 0203
Lawrence, KS
No. 0203
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS......................................................................1
1.1 Defined Terms........................................................................1
1.2 Construction........................................................................10
SECTION 2. THE PROJECT LOAN................................................................11
2.1 Project Loan Commitment.............................................................11
2.2 Note................................................................................11
2.3 Maximum Interest Rate...............................................................11
2.4 Use of Proceeds.....................................................................11
SECTION 3. PAYMENTS........................................................................11
3.1 Payments............................................................................11
3.2 Prepayments.........................................................................11
3.3 Indemnity...........................................................................12
SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.........................................13
4.1 Existence; Compliance with Law......................................................13
4.2 Power; Authorization; Enforceable Obligations.......................................13
4.3 No Litigation.......................................................................13
4.4 Consents, Approvals, Authorizations, Etc............................................13
4.5 No Legal Bar........................................................................14
4.6 Compliance with Building Codes, Zoning Laws, Etc....................................14
4.7 Ownership of Property; Liens........................................................14
4.8 No Default..........................................................................14
4.9 Taxes...............................................................................14
4.10 Availability of Utilities...........................................................14
4.11 Permits, Etc........................................................................14
4.12 Financial Statements................................................................15
4.13 Federal Regulations.................................................................15
4.14 Investment Company Act; Other Regulations...........................................15
4.15 Environmental Matters...............................................................15
4.16 Regulation H........................................................................16
4.17 No Other Assets, Indebtedness.......................................................16
4.18 ERISA...............................................................................17
SECTION 5. AFFIRMATIVE COVENANTS...........................................................18
5.1 Certain Notices.....................................................................18
5.2 Indemnification.....................................................................18
5.3 Expenses............................................................................19
5.4 Single Purpose Entity; Separateness.................................................19
5.5 Inspection of Property; Discussions.................................................21
5.6 Compliance with Project Loan Documents..............................................21
5.7 Further Assurances..................................................................21
5.8 Books and Records; Financial Statements.............................................21
SECTION 6. NEGATIVE COVENANTS..............................................................22
6.1 Limitation on Liens.................................................................22
6.2 Limitation on Contingent Obligations................................................22
6.3 Discharge of Liens..................................................................22
6.4 Transfer or Encumbrance of the Property.............................................22
SECTION 7. CONDITIONS PRECEDENT TO FUNDING.................................................26
7.1 Closing Documents...................................................................26
7.2 Additional Matters..................................................................28
7.3 Environmental Audit.................................................................28
7.4 Commitment Fees.....................................................................28
7.5 Appraisal...........................................................................28
7.6 Subordination and Estoppel..........................................................28
SECTION 8. INTENTIONALLY DELETED...........................................................28
SECTION 9. MATTERS RELATING TO PAYMENTS AND COLLATERAL.....................................29
9.1 The Account.........................................................................29
9.2 Proceeds of Collateral; Proceeds Remaining in Account...............................30
9.3 Certain Remedial Matters............................................................30
9.4 Release of the Property, etc........................................................30
SECTION 10. EVENTS OF DEFAULT..............................................................31
10.1 Events of Default...................................................................31
10.2 Intentionally Deleted...............................................................33
10.3 Intentionally Deleted...............................................................33
10.4 Power of Attorney...................................................................33
SECTION 11. MISCELLANEOUS..................................................................34
11.1 Notices.............................................................................34
11.2 Modifications.......................................................................34
11.3 Rights Cumulative...................................................................34
11.4 Schedules...........................................................................35
11.5 Governing Law.......................................................................35
11.6 Waiver of Jury Trial, Submission to Jurisdiction....................................35
11.7 Captions............................................................................35
11.8 Obligations Non-Recourse............................................................35
Lawrence, KS
No. 0203
11.9 Attorneys' Fees.....................................................................36
11.10 Successive Actions................................................................36
11.11 No Waiver; Time of Essence........................................................37
11.12 Binding Effect; Term; Assignability...............................................37
11.13 Counterparts......................................................................37
11.14 Severability......................................................................37
11.15 Survival..........................................................................37
11.16 Limitation by Law.................................................................38
SCHEDULES
Schedule 1 Land
Schedule 2 Permitted Exceptions
EXHIBITS
Exhibit A Form of Project Loan Note
Exhibit B Form of Certified Rent Roll
Lawrence, KS
No. 0203
