EXHIBIT 5
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LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of July 11, 2002, is by and between CTMPII
FC LF (MS) a Cayman Islands exempted company, having an address c/o Capital
Trust, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Loan
Administrator, Telefax Number (000) 000-0000 (together with its successors and
assigns, "Lender"), LFSRI II SPV REIT CORP., a Delaware corporation with an
address at c/o Lazard Freres Real Estate Investors L.L.C., 00 Xxxxxxxxxxx Xxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000 Attention: General Counsel, Telefax Number: (212)
332-1793 ("LFSRI II BORROWER"), and SENIOR QUARTERS FUNDING CORP., a Delaware
corporation having the same address as LFSRI II Borrower ("SENIOR QUARTERS
BORROWER"; Senior Quarters Borrower and LFSRI II Borrower are hereinafter
individually and collectively referred to as "BORROWER").
RECITALS
WHEREAS, Borrower desires to obtain a loan (the "LOAN") from Lender in
the principal amount of up to SIXTY-FIVE MILLION DOLLARS ($65,000,000.00) (the
"LOAN AMOUNT");
WHEREAS, Lender is willing to make the Loan on the condition that
Borrower execute and deliver this Agreement which shall establish the terms and
conditions of the Loan;
NOW, THEREFORE, in consideration of the making of the Loan and the
mutual covenants and agreements set forth in this Agreement, the parties hereby
covenant and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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Section 1.1. Definitions. For all purposes of this Agreement:
(a) the terms defined in this Article I have the meanings assigned
to them in this Article I, and include the plural as well as the singular;
(b) all accounting terms have the meanings assigned to them in
accordance with GAAP;
(c) the words "herein", "hereof", and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
Article, Section, or other subdivision; and
(d) the following terms have the following meanings:
"AAC III" means American Apartment Communities III, L.P., a Delaware
limited partnership.
"AAC, INC." means American Apartment Communities III, Inc., a Maryland
corporation which is a REIT.
"AACDEC TRANSFER" has the meaning set forth in Section 2.6(b).
"AACDK ENTITIES" means any of ARV, Atria, Cliveden, the Destination
Entities and Kapson.
"ACCOUNTS" has the meaning set forth in Section 3.4.
"ADDITIONAL INTEREST" means collectively the Extension Additional
Interest Payment, the Exit Additional Interest Payment and the Unfunded
Commitment Additional Interest Payment.
"ADVANCED INTEREST RESERVE" has the meaning set forth in Section
2.1(e).
"AFFILIATE" of any specified Person means any Person controlling,
controlled by or under common control with such specified Person. For the
purposes of this Agreement, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or
other beneficial interests, by contract or otherwise; and the terms "controls",
"controlling" and "controlled" have the meanings correlative to the foregoing.
"AGREEMENT" means this Loan Agreement, as the same may from time to
time hereafter be modified, supplemented or amended.
"AMORTIZATION COMMENCEMENT DATE" means the first Payment Date which
occurs following the first full Fiscal Quarter ending after the Senior Loan is
repaid in full.
"ARV" means ARV Assisted Living, Inc., a Delaware corporation.
"ASSIGNEE" has the meaning set forth in Section 8.34.2.
"ASSISTED LIVING INVESTMENTS" means, collectively, ARV, Atria and
Kapson.
"ATRIA" means Atria, Inc., a Delaware corporation.
"ATRIA ADVANCE" has the meaning set forth in Section 2.1.
"ATRIA HOLDINGS" means Atria Holdings LLC, a Delaware limited liability
corporation.
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"ATRIA PORTFOLIO LOAN" means a proposed loan to be made by Lender or an
affiliate or subsidiary thereof to a subsidiary of Atria and/or Kapson.
"BOARD REPLACEMENT ENTITIES" means any of AAC III, AAC, Inc., the
Destination Entities and Cliveden.
"BOARDS" has the meaning set forth in Schedule III.
"BORROWER" has the meaning provided in the preamble to this Agreement.
"BORROWER'S CERTIFICATE" means a certificate of the chief financial
officer of the Borrower, in form and substance satisfactory to Lender in
Lender's discretion, dated as of the Closing Date.
"BORROWER CONTROL GROUP" means each of LFSRI II, LFSRI II Alternative,
LFSRI-CADIM, AAC, Inc., Prometheus SE LLC, Prometheus SERT, LSFRI II Assisted,
Prometheus Assisted, Prometheus ES, Prometheus Interim, Prometheus UK,
Prometheus Senior Quarters, Prometheus SQ Holdings, Atria Holdings, LFSRI SPV,
LFSRI II ES and any direct or indirect Subsidiary of Prometheus Senior Quarters
formed to hold the investment in Atria and/or Kapson.
"BT AGREEMENT" means that certain Second Amended and Restated Credit
Agreement dated as of October 11, 2001, among Atria, LFSRI II, LFSRI II
Alternative, LFSRI-CADIM, Kapson, Hillhaven Properties, Ltd., Atria Stony Brook,
LLC, Atrium at Weston Court, LLC, Atria Springdale, LLC, Kapson Tinton Falls
Corp., and Bankers Trust Company.
"BT GUARANTY" means the guaranty dated as of October 11, 2001 contained
in Article XIII of the BT Agreement.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday, and
(ii) a day on which federally insured depository institutions in New York are
authorized or obligated by law, regulation, governmental decree or executive
order to be closed.
"CALCULATION DATE" means each date, from and after the Effective Date,
on which a determination of Debt Service Coverage Ratio is made by Lender.
"CERTIFICATE OF U.S. WITHHOLDING STATUS" means a certificate
substantially in the form of Exhibit B attached hereto.
"CHASE" means JPMorgan Chase Bank.
"CHIEF FINANCIAL OFFICER" means the chief financial officer of a
specified Entity.
"CLAIM" has the meaning set forth in Section 8.29.
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"CLIVEDEN" means Cliveden Limited, a private company organized under
the laws of England and Wales.
"CLOSED PERIOD" has the meaning set forth in Section 2.6.
"CLOSING DATE" means July 11, 2002.
"CODE" or "IRC" means the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, together with applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"COLLATERAL" means, collectively, all property of any kind whatsoever
of Borrower, including the collateral granted to Lender pursuant to the Pledge
Agreements and Collateral Assignment and any collateral described in any Loan
Document, and all Proceeds and products of any of the foregoing, all whether now
owned or hereafter acquired, and all other property in which Borrower may now or
hereafter have an interest; PROVIDED; HOWEVER, that, as under the Senior Loan,
Borrower shall only be required to pledge the proceeds of its interest in PMAIT.
In no event shall any Dividends and Distributions in excess of 50% thereof paid
or payable from time to time by PMAIT to Borrower constitute Collateral under
this Agreement or any of the Loan Documents.
"COLLATERAL ASSIGNMENTS" means the Collateral Assignments, dated as of
the date hereof, delivered by Borrower and its Affiliates in favor of Lender,
pursuant to Section 3.1 of this Agreement, and the additional collateral
assignments to be delivered to Lender from time to time in accordance with
Sections 2.1, 2.2, 5.1(o) and 6.1(i) of this Agreement, as the same may be
hereafter modified, amended or supplemented from time to time.
"CONDUIT ENTITY" means any entity treated as a "conduit" under U.S.
Treasury Regulation Section 1.881-3 or applicable successor provision.
"CONTINGENT OBLIGATION" means any obligation of a Person guaranteeing
any indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS")
of any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including any obligation of Borrower, whether or not contingent: (i)
to purchase any such primary obligation, or any property constituting direct or
indirect security therefor; (ii) to advance or supply funds (x) for the purchase
or payment of any such primary obligation or (y) to maintain working capital or
equity capital of the primary obligor; (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner or obligee under any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation; or (iv) otherwise to assure or hold harmless the owner
or obligee under such primary obligation against loss in respect thereof. 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
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Obligation is made or, if not stated or determinable, the maximum anticipated
liability in respect thereof (assuming that the contingently obligated Person is
required to perform thereunder) as determined by Lender in good faith.
"CONVERTIBLE SECURITIES" means, with respect to any Entity, any
security, right, subscription, warrant, option, "phantom" stock right or other
any agreement, instrument, indenture, security agreement or other contract that
gives the right to (i) purchase or otherwise receive or be issued any Equity
Interests in such Entity or any security of any kind convertible into or
exchangeable or exercisable for any Equity Interests in such Entity or (ii)
receive or exercise any benefits or rights similar to any rights enjoyed by or
accruing to the holder of Equity Interests of such Entity, including any rights
to participate in the equity or income of such Entity or to participate in or
direct the election of any directors or officers of such Entity or the manner in
which any Equity Interests in such Entity are voted.
"COST EXCLUSIONS" means, (i) payments due to no more than 150 Persons
on account of preferred stock held by such Persons in the applicable member of
the Borrower Control Group necessary for REIT qualification, and (ii) income
taxes due and payable by the applicable member of the Borrower Control Group or
its respective members or partners therein on account of a specified
transaction.
"COVERED TAXES" means taxes other than Excluded Taxes.
"CTIMCO" means CT Investment Management Co., LLC.
"DEBT SERVICE" means, on any Calculation Date, the sum of the amount of
interest, the amount of all amortization payments and any Default Rate interest,
Late Charges, and Unfunded Commitment Additional Interest Payments that become
due and payable in accordance with the Loan Documents during the Fiscal Quarter
in which such Calculation Date occurs, all as determined with respect to (x) the
Principal Indebtedness outstanding on such Calculation Date plus, (y) if the
determination of Debt Service is made under Section 2.1(b), the amount of any
requested advance of the Unfunded/Unreserved Loan Amount. The interest rate to
be applied to any calculation of Debt Service shall be (i) the actual Interest
Rate applicable to payments of Debt Service made or accrued during the
applicable Fiscal Quarter, and (ii) the Interest Rate in effect on the
Calculation Date with respect to Debt Service not yet due and payable for the
remainder of such Fiscal Quarter.
"DEBT SERVICE ACHIEVEMENT" means that, on any Calculation Date (y)
during the Initial Term, the Debt Service Coverage Ratio shall be at least 1.2:1
and (z) during the Extended Term, the Debt Service Coverage Ratio shall be at
least 1.3:1.
"DEBT SERVICE COVERAGE RATIO" means, on any Calculation Date, the ratio
of Net Cash Flow for the Fiscal Quarter immediately preceding the Fiscal Quarter
in
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which the Calculation Date occurs, to Debt Service for the Fiscal Quarter in
which the Calculation Date occurs.
"DEBT SERVICE PAYMENTS" has the meaning set forth in Section 2.1(e).
"DEEMED LOAN AMOUNT REDUCTION" has the meaning set forth in Section
2.1.
"DEFAULT" means the occurrence of any event which, but for the giving
of notice or the passage of time, or both, would be an Event of Default.
"DEFAULT RATE" means the per annum interest rate equal to the lesser of
(i) the Maximum Amount or (ii) the Interest Rate plus five percent (5%).
"DEPOSIT ACCOUNT" has the meaning set forth in Section 3.3.
"DEPOSIT ACCOUNT AGREEMENT" means that certain Deposit and Security
Agreement dated as of the date hereof entered into among Borrower and certain
members of the Borrower Control Group, Lender, Chase and the Servicer, as the
same may hereafter be modified, amended or supplemented from time to time.
"DESTINATION ENTITIES" means Destination Europe Limited and Destination
Europe USA.
"DESTINATION EUROPE LIMITED" means Destination Europe Limited, a
private company organized under the laws of England and Wales.
"DESTINATION EUROPE USA" means Destination Europe USA, LLC, a Delaware
limited liability company.
"DETERMINATION DATE" means with respect to any Interest Accrual Period,
the date which is two (2) Eurodollar Business Days before the commencement of
such Interest Accrual Period.
"DIRECTION LETTERS" means the direction letters pursuant to which each
applicable Operating Company (excluding Cliveden and the Destination Entities)
or member of the Borrower Control Group is directed by Borrower or the
applicable member of the Borrower Control Group to pay directly into the Deposit
Account any and all payments of Dividends and Distributions on account of such
Borrower's or Borrower Control Group member's interest therein.
"DIVIDENDS AND DISTRIBUTIONS" means all cash, securities, dividends,
distributions, proceeds and other property at any time paid or payable to a
Person on account of its Equity Interest in another Person.
"EFFECTIVE DATE" has the meaning set forth in Section 3.3.
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"ENTITY" means a corporation, limited liability company, partnership,
joint venture, estate, trust, unincorporated association, or any other entity,
any federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"EQUITY INTERESTS" means, with respect to an Entity (i) if such Entity
is a limited partnership, partnership interests, associated voting rights and
Convertible Securities in such Entity, or (ii) if such Entity is a limited
liability company, membership interests (or shares), associated voting rights
and Convertible Securities in such Entity, or (iii) if such Entity is a
corporation or a business trust, the share or stock interests, associated voting
rights and Convertible Securities in such Entity, or (iv) with respect to any
other Entity, the ownership interests therein.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this Agreement
and, as of the relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" means any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code, of which Borrower is a member, and (ii) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code, of which Borrower
is a member.
"ERISA INVESTOR" means an investor which is an employee benefit plan
subject to Part 4 of Title I of ERISA.
"EURODOLLAR BUSINESS DAY" means a Business Day on which banks in the
City of London, England are open for interbank or foreign exchange transactions.
"EVENT OF DEFAULT" has the meaning set forth in Section 7.1.
""EXCLUDED TAXES" means, with respect to any Lender or any other
recipient of any payment to be made by or on account of any obligation of
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income or profits by reason of any connection between Lender or any
other party entitled to receive payment hereunder and the relevant taxing
jurisdiction, including, without limitation, a connection arising from such
other Person being or having been a citizen, domiciliary, or resident of such
jurisdiction, being organized in such jurisdiction, or having or having had a
permanent establishment, branch or other fixed place of business therein, but
excluding a connection arising solely from such Person having executed,
delivered, performed its obligations or received any payment under this
Agreement, (b) any taxes imposed by reason of the Lender or such other party
being a Conduit Entity, (c) any
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branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which Borrower is located, (d) in the case
of a Foreign Lender, any tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.13, except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from Borrower
with respect to such Tax pursuant to Section 2.9 and (e) in the case of a
Foreign Lender which is an assignee, any tax that is imposed on amounts payable
to such Foreign Lender which would not have been imposed if CTMPII FC LF (MS)
had not assigned the Loan.
"EXIT ADDITIONAL INTEREST PAYMENT" means two percent (2.0%) of the
aggregate advances (including re-advances) made under the Loan; provided,
however, that the Exit Additional Interest Payment actually paid by Borrower
shall not exceed $1,300,000, in the aggregate.
"EXTENDED MATURITY DATE" has the meaning set forth in Section 2.5(h).
"EXTENDED TERM" shall mean the period commencing on the Maturity Date
and, provided that the Loan has been extended in accordance with the provisions
of Section 2.5(h), terminating on the earlier to occur of the Extended Maturity
Date or the date the Indebtedness is paid in full.
"EXTENSION ADDITIONAL INTEREST PAYMENT" means an amount equal to one
percent (1%) of the Principal Indebtedness that remains outstanding on the
Maturity Date (after taking into account any regularly scheduled quarterly
amortization or other amortization payments on or prior to such date).
"FEE LETTER" means that certain letter agreement dated as of the date
hereof between Borrower and CTIMCO.
"FINAL ADVANCE" has the meaning set forth in Section 2.1.
"FISCAL QUARTER" means each 3-month period ending on January 31, April
30, July 31 and October 31 of each year; provided however that for the purposes
of Section 5.1(i), the term "fiscal quarter" shall mean each calendar quarter.
"FISCAL YEAR" means the 12-month period ending on January 31 of each
year or such other fiscal year of Borrower as Borrower may select from time to
time with the prior written consent of Lender, such consent not to be
unreasonably withheld or delayed; provided however that for the purposes of
Sections 5.1(i) and 5.1(q), the term "Fiscal Year" shall mean each calendar
year.
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"FOREIGN LENDER" means any Lender that is not a "United States person"
(as such term is defined in Section 7701(a)(30) of the Code).
"FUND" means the collective reference to LFSRI II, LFSRI II Alternative
and LFSRI-CADIM.
"FUNDING FEE" means one percent (1%) of the amount of each advance
(including re-advances) of any portion of the Loan, which Funding Fee shall be
paid by Borrower to CTIMCO pursuant to the terms of the Fee Letter; provided,
however, that the Funding Fees actually paid by Borrower shall not exceed
$650,000, in the aggregate.
"GAAP" means generally accepted accounting principles consistently
applied in the United States of America as of the applicable date.
"GOVERNMENTAL AUTHORITY" means any national, federal, state, regional
or local government, or any other political subdivision of any of the foregoing,
in each case with jurisdiction over the relevant Entity, exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GS ATRIA LOAN" means that certain loan made by The Royal Bank of
Scotland PLC to A98 Senior L.L.C., K98 Senior L.L.C., A2000 Senior L.L.C., Atria
Assisted Living, Virginia Beach, L.L.C., Atria Assisted Living, Primacy, L.L.C.
and Atria Assisted Living, Stamford, L.L.C. in the current principal amount of
$144,461,345.17.
"GUARANTY" means the Guaranty of even date herewith from LFSRI II,
LFSRI II Alternative and LFSRI-CADIM to Lender.
"HOLDINGS" means TRC Westfields Holdings L.L.C., a Virginia limited
liability company.
"IMPOSITIONS" means all taxes other than Excluded Taxes (including all
real estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, franchise, income, gross receipts, value added, intangible
transaction privilege, privilege, license or similar taxes), assessments, ground
rents, water, sewer or other rents and charges, excises, levies, fees (including
license, permit, inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character.
"INCLUDING" means including without limiting the generality of the
foregoing.
"INDEBTEDNESS" means, at any given time, the Principal Indebtedness,
together with all accrued and unpaid interest, including Default Interest and
Late Charges thereon, Additional Interest, Funding Fees and all other monetary
obligations due to
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Lender or CTIMCO pursuant hereto, under the Note, the Fee Letter or in
accordance with any of the other Loan Documents, and all other amounts, sums and
expenses paid by or payable to Lender which Borrower is obligated to pay
hereunder or pursuant to the Note or any of the other Loan Documents at such
time.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.29.
"INDEPENDENT DIRECTOR" means, with respect to a corporation, a duly
appointed member of the board of directors of such corporation, reasonably
satisfactory to Lender, who shall not have been at the time of such individual's
appointment, and may not have been at any time during the five years preceding
such appointment, and shall not be at any time while serving as Independent
Director: (i) a direct or indirect legal or beneficial owner of, or an officer,
director, attorney, counsel, partner, member or employee of, such corporation or
any Affiliate thereof, (ii) a customer or creditor of, or supplier or contractor
to, or other Person who derives more than 10% of its purchases or revenues from
its activities with such corporation or any Affiliate thereof, (iii) a Person
controlling, controlled by or under common control with any such direct or
indirect legal or beneficial owner, officer, director, attorney, counsel,
partner, member, employee, customer, creditor, contractor supplier or other
Person, or (iv) a member of the immediate family of any such direct or indirect
legal or beneficial owner, officer, director, attorney, counsel, partner,
member, employee, customer, creditor, contractor, supplier or other Person. As
used in this definition, the term "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities or a person or entity, whether through ownership of
voting securities or other beneficial interest, by contract or otherwise and the
terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing.
Notwithstanding the foregoing, a director designated in the ordinary course of
the provision of services by Corporation Trust Company, Inc. or a similar
corporate service Entity shall be deemed an Independent Director.
"INITIAL ADVANCE" shall have the meaning set forth in Section 2.1.
"INITIAL TERM" shall mean the period commencing on the date hereof and
terminating on the earlier to occur of the Maturity Date or the date the
Indebtedness is paid in full.
"INSTRUMENTS" means all instruments, chattel paper, documents or other
writings evidencing a right to payment, including all notes, drafts,
acceptances, documents of title, guarantees and securities, now or hereafter
received. "INSTRUMENTS" shall include the meaning given to such term in the UCC.
"INTEREST ACCRUAL PERIOD" means each period of time commencing with and
including the first (1st) day of a calendar month to and including the last day
of such calendar month during the term of the Loan. If the Closing Date shall
occur on a date other than the first day of a calendar month, the first Interest
Accrual Period shall
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commence on and include the Closing Date and end on and include the last day of
the calendar month in which the Closing Date occurs. If the Closing Date shall
occur on the last day of a calendar month, the first Interest Accrual Period
shall consist of a one (1) day period consisting of the Closing Date.
"INTEREST RATE" means, for any Interest Accrual Period, a per annum
interest rate equal to nine percent (9%) plus the greater of (i) three percent
(3%) and (ii) LIBOR, adjusted on the first day of each Interest Accrual Period.
"INTOWN" means Intown Holding Company, LLC, a Delaware limited
liability company.
"INTOWN AGREEMENT" means the Amended and Restated Limited Liability
Company Agreement, dated as of November 13, 1998, of Intown, as amended by the
First Amendment, dated as of October 23, 2000, and by the Second Amendment,
dated as of February 8, 2001.
"INVESTOR" has the meaning provided in Section 8.27.
"KAPSON" means Kapson Senior Quarters Corp., a Delaware corporation.
"KONOVER CONSENT" means that certain letter of consent of Lender dated
July 11, 2002 to Borrower, the Fund, Prometheus SERT and Prometheus SE LLC
relating to a certain series of transactions in connection with the acquisition
of KPT by Prometheus SERT and an affiliate of KIMCO Realty Corporation.
"KPT" means Konover Property Trust, Inc., a Maryland corporation.
"LATE CHARGE" means the lesser of (i) five percent (5%) of any amount
due but unpaid and (ii) the maximum late charge permitted to be charged under
the laws of the State of New York.
"LAZARD FRERES REI" means Lazard Freres Real Estate Investors L.L.C., a
New York limited liability company which is the general partner of each of LFSRI
II, LFSRI II Alternative, and LFSRI-CADIM.
"LEGAL REQUIREMENTS" means all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting Borrower, the Loan Documents, the Collateral or any part
thereof, enacted or entered and in force as of the relevant date, and all
permits and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower at any time in force affecting the Collateral or any part
thereof.
"LENDER" has the meaning provided in the preamble to this Agreement.
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"LFSRI-CADIM" means LFSRI II-CADIM Alternative Partnership L.P., a
Delaware limited partnership.
"LFSRI II" means LF Strategic Realty Investors II L.P., a Delaware
limited partnership.
"LFSRI II ALTERNATIVE" means LFSRI II Alternative Partnership L.P., a
Delaware limited partnership.
"LFSRI II ASSISTED" means LSFRI II Assisted Living LLC, a Delaware
limited liability company.
"LFSRI II BORROWER" has the meaning given to such term in the preamble
to this Agreement.
"LFSRI II ES" means LFSRI II Extended Stay L.L.C., a Delaware limited
liability company.
"LFSRI SPV" means LFSRI II SPV E.S. Corp., a Delaware corporation.
"LIABILITIES" has the meaning set forth in Section 8.34.3.
"LIBOR" means with respect to each Interest Accrual Period, the rate
(expressed as a percentage per annum, rounded to the nearest 100th) for deposits
in U.S. dollars for a one-month period that appears on Telerate Page 3750 (or
the successor thereto) as of approximately 11:00 a.m., London, England time, on
the related Determination Date. If such rate does not appear on Telerate Page
3750 as of approximately 11:00 a.m., London, England time, on such Determination
Date, LIBOR shall be the arithmetic mean of the offered rates (expressed as a
percentage per annum) for deposits in U.S. dollars for a one-month period that
appear on the Reuters Screen LIBOR Page as of approximately 11:00 a.m., London,
England time, on such Determination Date, if at least two such offered rates so
appear. If fewer than two such offered rates appear on the Reuters Screen LIBOR
Page as of approximately 11:00 a.m., London, England time, on such Determination
Date, Lender shall request the principal London, England office of any four
major reference banks in the London interbank market selected by Lender to
provide such bank's offered quotation (expressed as a percentage per annum) to
prime banks in the London interbank market for deposits in U. S. Dollars for a
one-month period as of approximately 11:00 a.m., London, England time, on such
Determination Date for amounts of not less than One Million U.S. Dollars (U.S.
$1,000,000.00). If at least two such offered quotations are so provided, LIBOR
shall be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, Lender shall request any three major banks in New
York City selected by Lender to provide such bank's rate (expressed as a
percentage per annum) for loans in U.S. Dollars to leading European banks for a
one month period as of approximately 11:00 a.m., New York City time on the
applicable Determination Date for amounts of not less
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than One Million U.S. Dollars (U.S. $1,000,000.00). If at least two such rates
are so provided, LIBOR shall be the arithmetic mean of such rates. If fewer than
two rates are so provided, then LIBOR for the applicable Interest Accrual Period
shall be LIBOR that was in effect for the next preceding Interest Accrual
Period. LIBOR shall be determined by Lender or its agent in accordance with this
definition.
"LIEN" means any mortgage, deed of trust, deed to secure debt, lien
(statutory or other), pledge, easement, restrictive covenant, hypothecation,
assignment, preference, priority, security interest, or any other encumbrance or
charge, or any interest in any of the foregoing, including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, the
filing of any financing statement or similar instrument under the UCC or
comparable law of any other jurisdiction, domestic or foreign, and mechanic's,
materialmen's and other similar liens and encumbrances.
"LOAN" has the meaning given to such term in the Recitals.
"LOAN AMOUNT" has the meaning given to such term in the Recitals.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Note, the
Pledge Agreements, the Collateral Assignments, the Deposit Account Agreement,
the Guaranty and all other agreements, instruments, certificates and documents
executed and delivered by or on behalf of Borrower or any other Person to
evidence or secure the Loan or otherwise in satisfaction of the requirements of
this Agreement, or the other documents listed above, as each such agreement,
instrument, certificate or document may be amended, supplemented or modified
from time to time.
"MATERIAL ADVERSE CONDITION" means the occurrence, after the date of
this Agreement or, if earlier, the date of the financial statements most
recently furnished to Lender (as the same may have been supplemented in writing)
with respect to a specified Person, of (i) a material adverse change in the
business or the financial condition or results of operations of a specified
Person, (ii) a material adverse change in the ability of a specified Person to
make any payment payable by such Person under or to perform any or all of such
Person's other material obligations under this Agreement or any of the other
Loan Documents, (iii) a condition or circumstance resulting in or causing any
material adverse effect on the legality, validity or enforceability of any of
the Loan Documents or Lender's ability to enforce any of its rights under the
Loan Documents, or (iv) a condition or circumstance resulting in or causing any
material adverse effect on the Lien and security interest of Lender in, or the
value of, the Collateral.
"MATURITY DATE" means July 11, 2005, or such earlier date resulting
from acceleration of the Indebtedness by Lender.
"MAXIMUM AMOUNT" means the maximum rate of interest designated by
applicable laws relating to payment of interest and usury.
13
"MONTHLY INTEREST PAYMENT AMOUNT" means, with respect to any Payment
Date, an amount equal to the aggregate of all accrued and unpaid interest on the
Loan at the applicable Interest Rate, and all accrued and unpaid Unfunded
Commitment Additional Interest Payments on the Loan as of the end of the
immediately preceding Interest Accrual Period.
"MONTHLY PAYMENT AMOUNT" means, with respect to any Payment Date, the
Monthly Interest Payment Amount PLUS, on each February 1, May 1, August 1 and
November 1 from and after the Amortization Commencement Date, a quarterly
amortization payment in the amount of $2,000,000 on such Payment Date.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a Multiemployer Plan defined as such in
Section 3(37) of ERISA to which contributions have been made by Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"NET CASH FLOW" means the aggregate amount of all interest and
regularly scheduled principal payments, and ordinary dividends (but excluding
dividends constituting extraordinary dividends, that is, dividends resulting
from capital transactions and other non-recurring events) paid by all Operating
Companies to Borrower or any member of the Borrower Control Group during any
Fiscal Quarter; provided, that, to the extent any Operating Company declares a
reduction in any such future dividends or shall have failed to pay any such
interest when due (beyond applicable notice and cure periods, if any) or any
such regularly scheduled principal payments, the actual amount of such interest,
regularly scheduled principal payments or dividends paid to Borrower or the
applicable member of the Borrower Control Group for the Fiscal Quarter preceding
such declaration shall be deemed reduced in proportion to the amount such
defaulted interest, principal payments and/or declared reduction in dividends
bears to the aggregate amount of Net Cash Flow (it being understood that, in the
case of an Assisted Living Investment, such deemed reduction shall be
appropriately adjusted to take into account the limitations set forth in the
following sentence). Notwithstanding anything to the contrary hereinabove
provided, the interest, regularly scheduled principal payments and ordinary
dividends paid by Assisted Living Investments shall not account for more than
twenty (20%) percent of Net Cash Flow (determined after taking account of the
limitation on Net Cash Flow from Assisted Living Investments as hereinabove
provided and the resulting reduction, if any, in the corresponding computation
of Net Cash Flow).
"NET CASH FLOW REJECTION FACTOR" means an amount equal to the product
of (y) $5,000,000 MULTIPLIED BY (z) a fraction, (i) the numerator of which is
the aggregate amount of all interest and regularly scheduled principal payments,
and ordinary dividends (but excluding dividends constituting extraordinary
dividends, that is dividends resulting from capital transactions and other
non-recurring events) paid by the Operating Company which is the subject of the
Transfer in question to Borrower or any member of the Borrower Control Group
during the Fiscal Quarter immediately preceding the Fiscal
14
Quarter in which the Transfer in question was made and the attempted prepayment
was rejected and (ii) the denominator of which is the aggregate amount of all
interest and regularly scheduled principal payments, and ordinary dividends (but
excluding dividends constituting extraordinary dividends, that is dividends
resulting from capital transactions and other non-recurring events) paid by all
Operating Companies to Borrower or any member of the Borrower Control Group
during the Fiscal Quarter immediately preceding the Fiscal Quarter in which the
Transfer in question was made and the attempted prepayment was rejected.
"NET EQUITY VALUE" means the aggregate carry value of the Operating
Companies as set forth in the LF Strategic Realty Investors II Quarterly Report
distributed to its investors; provided, however, that if Lender objects to such
carry value, the Net Equity Value shall mean the fair market value of the Fund's
direct or indirect interest in the Operating Companies, as determined by Lender
in its reasonable discretion. Notwithstanding anything to the contrary
hereinabove provided, the carry value attributable to Assisted Living
Investments shall not exceed twenty (20%) percent of the Net Equity Value
(determined after taking account of the limitation on Net Equity Value
attributable to Assisted Living Investments as hereinabove provided and the
resulting reduction, if any, in the corresponding computation of Net Equity
Value).
"NET EQUITY VALUE REJECTION FACTOR" means an amount equal to the
product of (y) $200,000,000 MULTIPLIED BY (z) a fraction, (i) the numerator of
which is the aggregate carry value of the Operating Company which is the subject
of the Transfer in question during the Fiscal Quarter immediately preceding the
Fiscal Quarter in which the Transfer in question was made and the attempted
prepayment was rejected and (ii) the denominator of which is the Net Equity
Value during the Fiscal Quarter immediately preceding the Fiscal Quarter in
which the attempted prepayment was rejected.
"NOTE" means the promissory note, in form and substance satisfactory to
Lender in Lender's discretion, dated the date hereof, made by Borrower to Lender
pursuant to this Agreement, as such promissory note may be modified, amended,
supplemented, extended or consolidated in writing, and any note(s) issued in
exchange therefor or in replacement thereof.
"OFFICERS' CERTIFICATE" means a certificate delivered to Lender by
Borrower which is signed by a senior executive officer of Borrower.
"OPERATING COMPANY" means each of AAC III, KPT, Intown, PMAIT,
Xxxxxxxxxx, ARV, Holdings, Cliveden, Atria, Kapson, and the Destination
Entities.
"OTHER BORROWINGS" means, as to a specified Person, without
duplication, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) all indebtedness of such
Person evidenced by a note, bond, debenture or similar instrument, (iii) the
face amount of all letters of credit issued for the account of such Person and,
without duplication, all unreimbursed amounts drawn
15
thereunder, (iv) all indebtedness of such Person secured by a Lien on any
property owned by such Person whether or not such indebtedness has been assumed,
(v) all Contingent Obligations of such Person, and (vi) all payment obligations
of such Person under any interest rate protection agreement (including any
interest rate swaps, caps, floors, collars or similar agreements) and similar
agreements; PROVIDED, HOWEVER, that no indemnity, assurance or other agreement
to hold harmless another Person which is given in the ordinary course of
business or in connection with a Permitted Transfer shall constitute an "Other
Borrowing."
"PAYMENT BREACH" means the failure of Borrower to pay to Lender on any
Payment Date the amount due and owing on such Payment Date pursuant to this
Agreement.
"PAYMENT DATE" means the first (1st) day of each calendar month during
the Term of the Loan, and the Maturity Date (or, if applicable, the Extended
Maturity Date); provided, however, that for purposes of making payments
hereunder and under the Note, but not for purposes of calculating Interest
Accrual Periods, if the first (1st) day of a given month shall not be a Business
Day, then the Payment Date for such month shall be the next succeeding Business
Day.
"PBGC" means the Pension Benefit Guaranty Corporation established under
ERISA, or any successor thereto.
"PERMITTED INDEBTEDNESS" means the debt and other obligations described
on EXHIBIT A hereto.
"PERMITTED INVESTMENTS" shall mean the following; provided, however,
that any such investment shall mature not later than the Business Day preceding
the next Payment Date following the date of acquisition thereof:
(a) obligations of, or obligations guaranteed as to principal and
interest by, the United States government or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and credit of
the United States of America;
(b) Federal Housing Administration debentures;
(c) Federal Home Loan Mortgage Corp. Debt obligations, Farm Credit
System Consolidated system-wide bonds and notes, Federal Home Loan Banks
Consolidated Debt obligations, Federal National Mortgage Association Debt
obligations, Student Loan Marketing Association Debt obligations, Finance Corp.
debt obligations and Resolution Funding Corp. ("REFCORP") debt obligations;
(d) federal funds, unsecured certificates of deposit, time or
demand deposits, banker's acceptances and repurchase agreements having
maturities of not more
16
than three hundred sixty-five (365) days, of any bank, the short-term debt
obligations of which are rated "A" or better by S&P and "A" or better by
Moody's;
(e) deposits that are fully insured by the Federal Deposit
Insurance Corp. ("FDIC");
(f) debt obligations maturing in three hundred sixty-five (365)
days or less that are rated "A" or higher by S&P and "A" or higher by Moody's;
(g) commercial paper rated "A-1" by S&P and "P-1" by Moody's and
maturing in 365 days or less;
(h) investment in money market funds having assets equal to at
least $750,000,000 rated "Am" or "Am-G" by S&P and "A" by Moody's; or
(i) principal-only strips and interest-only strips of noncallable
obligations issued by the U.S. Treasury, and REFCORP securities stripped by
Federal Reserve Bank of New York;
provided, however, that all instruments described above in clauses (a), (c),
(d), (e), (f) and (g) shall not have an "r" highlighter affixed to their rating
and by its terms should have a predetermined fixed dollar amount or principal
due at maturity that cannot vary or change. Interest may either be fixed or
variable and should be tied to a single interest rate index plus a single fixed
spread (if any), and move proportionally with that index.
"PERMITTED TRANSFER" means any Transfer among the members of the
Borrower Control Group whether by merger, operation of law or otherwise.
"PERSON" means any individual or Entity.
"PLAN" means an employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate and that is covered by Title IV of
ERISA, other than a Multiemployer Plan.
"PLAN ASSETS REGULATION" means the plan assets regulation issued by the
U.S. Department of Labor, 29 C.F.R. Section 2510.3-101, November 13, 1986.
"PLEDGE AGREEMENTS" means the Pledge Agreements, dated as of the date
hereof, delivered by Borrower and its Affiliates in favor of Lender, pursuant to
Section 3.1 of this Agreement, and the additional pledge agreements to be
delivered to Lender from time to time in accordance with Sections 2.1, 2.2,
5.1(o) and 6.1(i) of this Agreement, as the same may be hereafter modified,
amended or supplemented from time to time.
17
"PMAIT" means Prometheus Mid-Atlantic Investors Trust, a Maryland real
estate investment trust.
"PREPAYMENT PREMIUM" means (i) zero dollars in respect of scheduled
amortization payments and in respect of Principal Indebtedness prepaid after the
end of the Closed Period and (ii) the product of (x) ten percent (10%) of the
portion of Principal Indebtedness prepaid prior to the end of the Closed Period
and not otherwise permitted under the provisions of Section 2.6(b), times (y) a
fraction, the numerator of which is the number of days remaining until the end
of the Closed Period on the date of prepayment and the denominator of which is
360.
"PRINCIPAL INDEBTEDNESS" means the principal amount of the Loan
outstanding from time to time.
"PROCEEDS" means all "proceeds," as such term is defined in the UCC,
and, to the extent not included in such definition, all proceeds whether cash or
non-cash, movable or immovable, tangible or intangible (including Insurance
proceeds, condemnation proceeds and proceeds of proceeds), from the Collateral,
including, without limitation, those from the sale, refinancing, exchange,
transfer, collection, loss, damage, disposition, substitution or replacement of
any of the Collateral and all income, gain, credit, distributions and similar
items from or with respect to the Collateral.
"PROMETHEUS ASSISTED" means Prometheus Assisted Living LLC, a Delaware
limited liability company.
"PROMETHEUS ES" means Prometheus Extended Stay LLC, a Delaware limited
liability company.
"PROMETHEUS INTERIM" means Prometheus SQ Interim Corp., a Delaware
corporation.
"PROMETHEUS SE LLC" means Prometheus Southeast Retail LLC, a Delaware
limited liability company.
"PROMETHEUS SENIOR QUARTERS" means Prometheus Senior Quarters LLC, a
Delaware limited liability company.
"PROMETHEUS SERT" means Prometheus Southeast Retail Trust, a Maryland
real estate investment trust.
"PROMETHEUS SQ HOLDINGS" means Prometheus SQ Holdings Corp., a Delaware
corporation.
"PROMETHEUS UK" means Prometheus UK Hospitality LLC, a Delaware limited
liability company.
18
"RATING AGENCIES" means Fitch Investors Services, Inc., Moody's, Xxxx &
Xxxxxx Credit Rating Co. and S&P or any successor to any thereof, and any other
nationally recognized statistical rating organization to the extent that any of
the foregoing have been or will be engaged by Lender or its designees in
connection with or in anticipation of a Securitization (each individually, a
"RATING AGENCY").
"RED CAPITAL LOAN" means that certain loan made by Red Mortgage
Capital, Inc. to Atria Retirement and Assisted Living, Briarcliff, LLC, Atria
Retirement and Assisted Living, Stone Mountain, LLC and Atria Retirement and
Assisted Living, Laurel House, LLC in the aggregate current principal amount of
$6,771,452.52.
"REIT" means an entity which qualifies as a real estate investment
trust under the provisions of Sections 856 through 860 of the IRC or the
corresponding provisions of any successor statute.
"RELEASE AMOUNT" means (x) 100% of all amounts paid or to be paid to
Borrower or to any member of the Borrower Control Group in connection with a
Transfer contemplated under Section 2.6(b)(2) other than a Transfer of the
direct or indirect Equity Interests of the Borrower or Borrower Control Group in
PMAIT, Holdings or Xxxxxxxxxx and (y) 50% of all amounts paid or to be paid to
Borrower or to any member of the Borrower Control Group in connection with a
Transfer, contemplated under Section 2.6(b)(2), of the direct or indirect Equity
Interests of the Borrower or Borrower Control Group in PMAIT, Holdings or
Xxxxxxxxxx, less, in each of (x) and/or (y), (i) Cost Exclusions, (ii) the
reasonable and customary costs and expenses of any such Transfer (including
reasonable attorneys' fees and costs, commercially reasonable brokerage
commissions and transfer taxes) as shall be reasonably approved by the Lender
and (iii) any amounts payable under the Senior Loan.
"REPORTING COMPANY" has the meaning set forth in Section 3.1(a)(10).
"REUTERS SCREEN LIBOR PAGE" means the display designated as page
"LIBOR" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBOR page on the service for the purpose of displaying interbank
rates from London in U.S. Dollars).
"XXXXXXXXXX" means The Xxxxxxxxxx Company, L.P., a Delaware limited
partnership.
"SALE ENTITY" means each of AAC III, AAC Inc., the Destination Entities
and Cliveden.
"S&P" means Standard & Poor's Rating Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"SECURITIES" has the meaning set forth in Section 8.34.3.
19
"SECURITIZATION" has the meaning set forth in Section 8.34.3.
"SELF FUNDED ADVANCES" has the meaning set forth in Section 2.1(e).
"SENIOR LENDER" means Capital Trust, Inc., a Maryland corporation.
"SENIOR LENDER CONSENT" means that certain letter of consent dated as
of the date hereof given by Senior Lender to Borrower.
"SENIOR LOAN" means that certain loan in the principal amount of up to
$110,000,000 made by Senior Lender to Borrower.
"SENIOR LOAN AGREEMENT" means that certain Amended and Restated Loan
Agreement dated as of February 8, 2001 by and between Senior Lender and
Borrower, as amended by that certain letter agreement dated September 5, 2001
and by that certain Second Amendment to Amended and Restated Loan Agreement
dated as of June 30, 2002, and after giving effect to any consents and waivers
with respect thereto prior to the date hereof, and as the same may hereafter be
modified, amended or supplemented from time to time.
"SENIOR LOAN DEPOSIT ACCOUNT AGREEMENT" means that certain Amended and
Restated Deposit and Security Agreement dated as of February 8, 2001, entered
into among Borrower and certain members of the Borrower Control Group, Senior
Lender, Chase and the Servicer in connection with the Senior Loan, as the same
may hereafter be modified, amended or supplemented from time to time.
"SENIOR LOAN DOCUMENTS" means, collectively, the Loan Documents (as
defined in the Senior Loan Agreement), as such documents may be amended,
modified or supplemented from time to time.
"SENIOR QUARTERS BORROWER" has the meaning provided in the preamble to
this Agreement.
"SERVICER" has the meaning given to such term in the Deposit Account
Agreement.
"SERVICING FEE" has the meaning set forth in the Fee Letter.
"SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY" has the meaning set forth in
Section 5.1(n).
"SUBSIDIARY" of any Person means any corporation, partnership, limited
liability company or other Entity in which such Person holds an Equity Interest
constituting more than 50% of the equity classes issued by such Entity.
20
"TELERATE PAGE 3750" means the display designated as "Page 3750" on the
Dow Xxxxx Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. Dollar deposits).
"TERM" means the period from and after July 11, 2002 to and including
the first to occur of (x) the Maturity Date or, if applicable, the Extended
Maturity Date, or (y) the date the Indebtedness is paid in full.
"TRANSACTION COSTS" means all fees, costs, expenses and disbursements
paid or payable by Borrower relating to the Transactions, including, without
limitation, all fees, costs, expenses and disbursements described in Section
8.24.
"TRANSACTIONS" means the transactions contemplated by the Loan
Documents.
"TRANSFER" means any conveyance, transfer, pledge, assignment,
hypothecation, refinancing, mortgage, encumbrance, gift, sale, lease (including
any amendment, extension, modification, waiver or renewal thereof), Lien, or
other disposition, whether direct or indirect, legal or beneficial, by law or
otherwise.
"UCC" means, with respect to any Collateral, the Uniform Commercial
Code as in effect from time to time in the State of New York and, to the extent
applicable, in each other jurisdiction.
"UNFUNDED COMMITMENT ADDITIONAL INTEREST PAYMENT" has the meaning set
forth in Section 2.12.
"UNFUNDED COMMITMENT TERMINATION DATE" shall mean the earlier to occur
of (i) five (5) Business Days after Lender's receipt of written notice from
Borrower that Borrower waives its right to make a request for the Final Advance
of the Loan, and (ii) February 1, 2003
"UNFUNDED/UNRESERVED LOAN AMOUNT" has the meaning set forth in Section
2.1.
"UNUSED PORTION" shall be calculated on a daily basis and shall mean
the Loan Amount LESS the daily weighted average of the Principal Indebtedness.
"U.S. OBLIGATIONS" means obligations of, or obligations fully
guaranteed as to payment of principal and interest by, the United States or any
agency or instrumentality thereof provided such obligations are backed by the
full faith and credit of the United States of America including, without
limitation, obligations of the U.S. Treasury (all direct or fully guaranteed
obligations), the Farmers Home Administration
21
(certificates of beneficial ownership), the General Services Administration
(participation certificates), the U.S. Maritime Administration (guaranteed Title
XI financing), the Small Business Administration (guaranteed participation
certificates and guaranteed pool certificates), the U.S. Department of Housing
and Urban Development (local authority bonds) and the Washington Metropolitan
Area Transit Authority (guaranteed transit bonds); in each case as selected by
Borrower and approved by Lender which approval shall not be unreasonably
withheld, PROVIDED, HOWEVER, that the investments described in this definition
must (A) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (B) if rated by S&P, must not have an "r" highlighter
affixed to their rating, (C) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and (D)
such investments must not be subject to liquidation prior to their maturity.
ARTICLE II
GENERAL TERMS
-------------
Section 2.1. Loan Advances.
(a) On the Closing Date or, if later, the date on which Borrower
fulfills all conditions precedent to funding, Lender will advance to Borrower
$31,200,000 (the "INITIAL ADVANCE"). At the request of the Borrower made in
accordance with and subject to the conditions contained in Section 2.1(b),
Lender will make a one-time final advance to Borrower (the "FINAL ADVANCE") on
or before February 1, 2003 in an amount not to exceed the excess, if any, of the
Loan Amount over the sum of (i) the amount by which the Initial Advance PLUS the
Self Funded Advances exceeds the proceeds, if any, of the Atria Portfolio Loan
that are applied to the repayment of the Principal Indebtedness PLUS (ii) if the
Senior Loan has not been repaid in full on the date of the Final Advance, the
amounts of the Advanced Interest Reserve (the amount which is available for
disbursement for the Final Advance is the "UNFUNDED/UNRESERVED LOAN AMOUNT"). On
the earlier to occur of (1) the date of the Final Advance and (2) the Unfunded
Commitment Termination Date, the Loan Amount shall be deemed reduced by an
amount equal to the excess of the Unfunded/Unreserved Loan Amount over the
amount of the Final Advance (the amount by which the Loan Amount is so deemed to
be reduced is the "DEEMED LOAN AMOUNT REDUCTION"). It is contemplated that the
Initial Advance will be repaid in whole or in part from the proceeds of the
Atria Portfolio Loan if and when the same closes and funds. In this regard, it
is understood that, if the repayment of the Initial Advance occurs prior to the
Final Advance, Borrower shall have the right, subject to compliance with the
terms and conditions of this Agreement, to obtain a readvance of an amount equal
to the proceeds of the Atria Portfolio Loan which are applied to the reduction
of the Principal Indebtedness (i.e., such repayment shall increase, dollar for
dollar, the amount of the Unfunded/Unreserved Loan Amount).
22
(b) Lender's obligation to make the Final Advance of all or any
portion of the Unfunded/Unreserved Loan Amount following the Initial Advance
shall be subject to the conditions that, with respect to such advance requested:
(i) no Default or Event of Default shall have occurred
and be continuing;
(ii) no Material Adverse Condition shall exist with
respect to Borrower, the Fund taken as a whole, any other member of the Borrower
Control Group or any Operating Company; provided, that, if a Material Adverse
Condition exists solely with respect to one or more AACDK Entities and one or
more members of the Borrower Control Group (excluding the Borrower and the
Fund), that own, directly or indirectly, an interest in such AACDK Entities (as
long as the Material Adverse Condition affecting the applicable members of the
Borrower Control Group is solely caused by or results solely from the Material
Adverse Condition of the subject AACDK Entities), and all of the other
conditions to Lender's obligation to make advances of all or any portion of the
Unfunded/Unreserved Loan Amount are satisfied, Lender shall be obligated to fund
such subsequent advance as long as none of the proceeds of such advance shall be
advanced, contributed or otherwise invested, directly or indirectly, in any
Entity as to which a Material Adverse Condition exists at the time of such
advance;
(iii) Lender shall have received Borrower's written request
for such advance not less than 15 nor more than 60 days prior to the requested
funding date for such advance (which request may be revoked at any time by
Borrower prior to the date which is 15 days prior to the requested funding date,
provided that the request for such advance specifies that it is so revocable),
specifying the amount requested, the use of the proceeds attributable to such
advance (which use shall be for a use permitted under Section 2.2 of this
Agreement), the new Collateral, if any, to be furnished in connection therewith,
the Borrower's calculation (with all necessary supporting information)
demonstrating the Debt Service Coverage Ratio (if such advance shall occur after
the Effective Date), and the proposed funding date, and certifying that no
Default or Event of Default has occurred and is continuing;
(iv) INTENTIONALLY DELETED;
(v) INTENTIONALLY DELETED;
(vi) CTIMCO shall have received payment from Borrower of
the Funding Fee, if any, with respect to such advance;
(vii) except as set forth in the Konover Consent, in the
event that subsequent to the Closing Date (x) any member of the Borrower Control
Group shall have acquired any direct or indirect Equity Interest in any Entity,
or (y) any member of the Borrower Control Group shall have made any loans to any
Entity, or (z) any member of the Borrower Control Group shall have purchased or
otherwise acquired any property
23
of any Entity, Lender shall have received a perfected, second priority Lien in
such Equity Interest, loan and property (subject and subordinate only to a Lien
in favor of Senior Lender in accordance with the provisions of the Senior Loan
Documents), as created and evidenced by such instruments (including new
collateral assignments, pledge agreements, Direction Letters, and amendments, if
required by Lender, to the Deposit Account Agreement) as Lender may request, all
in form and substance reasonably satisfactory to Lender; provided, however, that
the foregoing shall not be deemed to constitute a consent or waiver by Lender
(to the extent that such consent is otherwise required by this Agreement or any
Loan Document) with respect to any such purchase, acquisition or loan by
Borrower or any member of the Borrower Control Group;
(viii) the conditions precedent to funding contained in
Section 3.1(a)(3), (4), (5), (6), (7), (8), (9), (10) and (11) shall have been
fulfilled insofar as Lender shall deem them applicable to any subsequent
advance; provided, that, (x) the conditions precedent to funding contained in
Section 3.1(a)(3), (4), (5), (6), and (7) shall only be applicable with respect
to any new Collateral, and (y) the representations and warranties set forth in
the last two sentences of Section 4.1(r) hereto shall not be remade with respect
to any of the AACDK Entities; and
(ix) if such advance shall occur after the Effective Date,
Debt Service Achievement shall be in effect.
(c) INTENTIONALLY DELETED.
(d) Notwithstanding anything contained herein to the contrary,
prior to disbursement of any other portion of the Unfunded/Unreserved Loan
Amount to be advanced at any time after the Effective Date, there shall be
deposited from proceeds of the Loan (it being understood that to the extent
there are insufficient Loan proceeds remaining, such deficiency shall not affect
Borrower's obligation to fund the Interest Reserve and Borrower shall
nonetheless remain liable therefor) into the Interest Reserve of the Deposit
Account an amount which shall be sufficient to pay all interest, on the portion
of the Unfunded/Unreserved Loan Amount as to which Borrower has requested a
disbursement, which will become due and payable (i) on each Payment Date
following the date of such disbursement and occurring during the Fiscal Quarter
in which such disbursement is to occur, and (ii) at Lender's discretion, on each
of the first and second Payment Dates occurring during the Fiscal Quarter next
succeeding the Fiscal Quarter in which such disbursement is to occur, all as
estimated in accordance with the provisions of the Deposit Account Agreement.
(e) Borrower and Lender acknowledge and agree that the estimated
aggregate payments in respect of interest, the Funding Fee, the Unfunded
Commitment Additional Interest Payment and the Servicing Fee, that will accrue
and become due and payable on or under the Loan (the "ESTIMATED DEBT SERVICE
PAYMENTS") from and after the date hereof until the Senior Loan is repaid in
full (based on the assumption that the Senior Loan will be repaid on or about
August 1, 2003) is approximately $8,000,000.
24
Until the Senior Loan has been repaid in full, Borrower hereby authorizes and
directs Lender (which authorization and direction shall be absolute,
unconditional and irrevocable), without necessity of further act or instrument,
to make monthly advances of the Loan for the payment of interest, the Funding
Fee, the Unfunded Commitment Additional Interest Payment and the Servicing Fee
(the "DEBT SERVICE PAYMENTS"), as the same accrue and become due and payable on
or under the Loan in accordance with the provisions of this Agreement and/or the
Fee Letter without the necessity of further act or instrument (the "SELF FUNDED
ADVANCES"). If the Senior Loan has not been repaid on the date of the Final
Advance, Lender shall in its sole discretion recalculate the Estimated Debt
Service Payments that will accrue and become due and payable on or under the
Loan from and after the date of the Final Advance until the date the Senior Loan
is paid in full, which calculation shall be conclusive and binding upon Borrower
absent manifest error and Lender shall thereafter make any appropriate
adjustments to the Unfunded/Unreserved Loan Amount as a result thereof.
Notwithstanding the foregoing, if on the Unfunded Commitment Termination Date,
the Senior Loan has not been repaid in full, then (y) Lender shall in its sole
discretion recalculate the Estimated Debt Service Payments that will accrue and
become due and payable on or under the Loan from and after such date until the
date that the Senior Loan is repaid in full, which calculation shall be
conclusive and binding upon Borrower absent manifest error and (z) Borrower
shall be deemed to have made a request for an advance of a portion of the Loan
in an amount equal to the amount of such recalculated Estimated Debt Service
Payments, and Lender shall fund a portion of the Loan in such amount (the
"ADVANCED INTEREST RESERVE"). Until the Senior Loan is repaid in full, the
Advanced Interest Reserve shall be reserved for disbursement by Lender to cover
the payment of the Debt Service Payments, as the same accrue and become due and
payable on or under the Loan in accordance with the provisions of this Agreement
and/or the Fee Letter until the Senior Loan is repaid in full and such amount
shall not be disbursed for any other purpose. Following the repayment in full of
the Senior Loan and provided no Event of Default shall be continuing, Lender
shall not have any right, title or interest to or in the Advanced Interest
Reserve funded pursuant to this Section 2.1(e) and any funds so reserved shall
be (i) deposited in the Deposit Account in accordance with Section 7 of the
Deposit Account Agreement and (ii) thereafter shall be disbursed from the
Deposit Account in accordance with and subject to the provisions of the Deposit
Account Agreement.
Section 2.2. USE OF PROCEEDS. Proceeds of the Loan may be used by
Borrower for the following purposes. The Initial Advance shall be used by
Borrower to (a) pay interest, Additional Interest, fees, expenses and closing
costs in connection with the Transactions; and (b) to make a loan to Atria
and/or Kapson to allow such Entities to repay (together with funds from other
debt and equity sources) the GS Atria Loan and any portion of the Red Capital
Loan and fees, expenses and other transaction costs in connection therewith.
Until the Senior Loan has been repaid in full, additional monthly advances of
the Loan shall be made for the purposes set forth in Section 2.1(e). To the
extent funded in accordance with the provisions of Section 2.1(e), the Advanced
Interest Reserve shall be used by Borrower for the purposes set forth in Section
2.1(e). Subject to
25
compliance with the terms, covenants and provisions contained herein and in the
other Loan Documents, the Final Advance of all or any portion of the
Unfunded/Unreserved Loan Amount shall be available to (y) pay interest,
Additional Interest, fees, expenses and closing costs in connection with the
Transactions and (z) fund loans to, or additional investments directly or
indirectly in, equity or debt securities of one or more Operating Companies or
in companies owned by one or more Operating Companies.
Section 2.3. SECURITY FOR THE LOAN. The Note and Borrower's obligations
hereunder and under the other Loan Documents shall be secured by the Loan
Documents.
Section 2.4. NOTE. Borrower's obligation to pay the principal of and
interest on the Loan (including Late Charges, Default Rate interest and Exit
Additional Interest Payment), shall be evidenced by this Agreement and by the
Note, duly executed and delivered by Borrower. The Note shall be payable as to
principal, interest, Late Charges, Default Rate interest and Exit Additional
Interest Payment, as specified in this Agreement, with a final maturity on the
Maturity Date or, if applicable, the Extended Maturity Date. Borrower shall pay
all outstanding Indebtedness on the Maturity Date or, if applicable, the
Extended Maturity Date.
Section 2.5. PRINCIPAL AND INTEREST PAYMENTS.
(a) ACCRUAL OF INTEREST. Interest shall accrue on the outstanding
principal balance of the Note and all other amounts due to Lender under the Loan
Documents at the Interest Rate.
(b) PAYMENT OF PRINCIPAL AND INTEREST. On each Payment Date,
Borrower shall pay to the Lender the Monthly Payment Amount (including, by way
of the Self Funded Advances in accordance with Section 2.1(e) hereof).
(c) PAYMENT DATES. All payments required to be made pursuant to
subsections (a) and (b) above shall be made beginning on the first Payment Date
immediately after the end of the first Interest Accrual Period.
(d) CALCULATION OF INTEREST. Interest shall accrue on the
Principal Indebtedness (from the date advanced) and all other amounts due to
Lender under the Loan Documents. Interest shall be computed on the actual number
of days elapsed in each Interest Accrual Period over a 360 day year.
(e) DEFAULT RATE INTEREST. At any time that an Event of Default
has occurred and is continuing, the entire unpaid amount outstanding hereunder
and under the Note will bear interest at the Default Rate.
26
(f) LATE CHARGE. If Borrower fails to make any payment of any sums
due under the Loan Documents within three (3) Business Days after receipt of
notice that the same is due, Borrower shall pay the Late Charge.
(g) MATURITY DATE. On the Maturity Date or, if applicable, the
Extended Maturity Date, Borrower shall pay to Lender all amounts owing under the
Loan Documents, including interest, principal, Late Charges, Default Rate
interest, and the Exit Additional Interest Payment.
(h) EXTENSION OF MATURITY. At Borrower's option, exercisable as
set forth below, the Loan shall be extended for one year and shall mature on
July 11, 2006 or such earlier date as may result from acceleration of the
Indebtedness by Lender ("EXTENDED MATURITY DATE"). The Borrower shall exercise
such option by delivery to Lender of a written request for such extension not
less than ninety (90) days before the Maturity Date. Such extension shall be
subject to the conditions that:
(i) on each of the date of Borrower's request and the
Maturity Date, (A) no Default or Event of Default shall have occurred and be
continuing, and (B) no Material Adverse Condition shall exist with respect to
the Borrower, the Fund taken as a whole, any other member of the Borrower
Control Group or any Operating Company, other than a Material Adverse Condition
which exists solely with respect to one or more AACDK Entities and the members
of the Borrower Control Group (excluding the Borrower and the Fund) that own,
directly or indirectly, an interest in such AACDK Entities (as long as such
Material Adverse Condition affecting the applicable members of the Borrower
Control Group was solely caused by or resulted solely from the Material Adverse
Condition of the subject AACDK Entities);
(ii) Borrower shall represent and warrant to Lender in
such request that, as of the date thereof, no Default or Event of Default
exists, and no Material Adverse Condition exists with respect to the Borrower,
the Fund taken as a whole, any other member of the Borrower Control Group or any
Operating Company other than a Material Adverse Condition which exists solely
with respect to one or more AACDK Entities and the members of the Borrower
Control Group (excluding the Borrower and the Fund) that own, directly or
indirectly, an interest in such AACDK Entities (as long as such Material Adverse
Condition affecting the applicable members of the Borrower Control Group was
solely caused by or resulted solely from the Material Adverse Condition of the
subject AACDK Entities); and
(iii) Borrower's request for such extension shall be
accompanied by the estimated Extension Additional Interest Payment (based on the
assumption that only regularly scheduled quarterly amortization payments will be
made between the date of such notice and the Initial Maturity Date). Provided no
Event of Default shall be continuing, Lender will refund Borrower on the Initial
Maturity Date, the excess, if any, of the amount by which the estimated
Extension Additional Interest
27
Payment exceeds the Extension Additional Interest Payment that would actually
have been due on such date.
Section 2.6. PREPAYMENTS.
(a) VOLUNTARY PREPAYMENT. The provisions of this Section 2.6(a)
are subject to Section 2.6(b). Except for the repayment of the Initial Advance
directly or indirectly with the proceeds of the Atria Portfolio Loan, Borrower
shall not have the right to prepay all or any portion of the principal balance
of the Loan prior to January 11, 2004 (the "CLOSED PERIOD"). The tender of
payment of the Indebtedness during the Closed Period while an Event of Default
exists shall be deemed to constitute a voluntary prepayment for all purposes of
this Agreement, and Lender shall have no obligation to accept such tender unless
accompanied by the applicable Prepayment Premium and the Exit Additional
Interest Payment. From and after the end of the Closed Period, Borrower shall
have the right, on any Payment Date, to prepay the Loan in whole, or in part,
upon at least thirty (30) days' irrevocable prior written notice to Lender,
specifying the amount and the date of prepayment, provided that on the date of
such prepayment Borrower shall pay to Lender the Exit Additional Interest
Payment.
(b) MANDATORY PREPAYMENT. (1) In the event (i) of a Transfer of
Equity Interests in, or a change in control of, Lazard Freres REI, or (ii) of a
change in the general partner of any of LFSRI II, LFSRI II Alternative and
LFSRI-CADIM, or (iii) that LFSRI II, LFSRI II Alternative and LFSRI-CADIM cease
to own and control, directly or indirectly, (y) 100% of the Equity Interests in
the Senior Quarters Borrower or (z) 100% of the common stock in the LFSRI II
Borrower, the entire Indebtedness shall become immediately due and payable,
together with the Exit Additional Interest Payment and any applicable Prepayment
Premium.
(2) Except with respect to a Permitted Transfer, in the event of a
Transfer of the Equity Interests held directly or indirectly by the Fund in any
member of the Borrower Control Group or any Operating Company (any such
Transfers to be made only in an arm's-length transaction to a bona fide third
party purchaser for fair market value), a portion of the Indebtedness shall
become due and payable as hereinafter set forth. Other than with respect to a
Transfer of the Equity Interests held directly or indirectly by the Fund in AAC
III, the Destination Entities or Cliveden (a Transfer of such Equity Interests
in AAC III, the Destination Entities or Cliveden being hereinafter referred to
as an "AACDEC TRANSFER"), the amount of the Indebtedness required to be so
prepaid shall be equal to the lesser of (i) the Release Amount with respect to
such Transfer, and (ii) the outstanding Indebtedness. In the event of a Transfer
of the direct or indirect Equity Interests of Borrower or a member of the
Borrower Control Group in (i) AAC III, a portion of the Indebtedness in an
amount equal to the lesser of (1) $10,000,000 (unless, (y) such Transfer occurs
prior to the Unfunded Commitment Termination Date, the Unfunded/Unreserved Loan
Amount is $10,000,000 or more and Borrower simultaneously therewith notifies
Lender in writing of its election to irrevocably waive its
28
right to receive an advance of a portion of the Unfunded/Unreserved Loan Amount
in the amount of $10,000,000 (in which case the Loan Amount shall be deemed to
be reduced by $10,000,000 and no portion of the Indebtedness shall become due
and payable) or (z) there has been a Deemed Loan Amount Reduction, in which case
the amount, if any, by which $10,000,000 exceeds the Deemed Loan Amount
Reduction), and (2) the outstanding Indebtedness, shall become immediately due
and payable, and Lender shall not be permitted to reject such prepayment and
(ii) Cliveden or the Destination Entities, no portion of the Indebtedness shall
become due and payable. In the event that any Transfer of assets of an Operating
Company in the nature of a capital transaction, or any other non-recurring event
(whether in one transaction or a series of transactions) yields to such
Operating Company amounts used to pay Dividends and Distributions to Borrower or
any member of the Borrower Control Group, then a portion of the Indebtedness
shall become immediately due and payable in an amount equal to the lesser of (x)
the amount by which such Dividends and Distributions exceeds the sum of (i) the
amount of Cost Exclusions resulting from the Transfer giving rise to such
Dividends and Distributions, and (ii) amounts payable under the Senior Loan, if
any, and (y) the outstanding Indebtedness. Any pre-payment hereunder shall be
made only with thirty (30) days' prior written notice (which notice may be
revoked by Borrower as long as such notice specifies that it is revocable).
Borrower shall be required to make mandatory prepayments in accordance with
Section 6(b) of the Deposit Account Agreement.
(3) Notwithstanding anything to the contrary contained in
subsection (2) above (other than clause (i) of the third sentence of subsection
(2) above), Lender shall have the right, in its sole discretion, at any time
during the Closed Period, to reject all or any portion of any prepayment
contemplated by subsection (2) above, in which event Borrower shall have no
right or obligation to prepay the amount so rejected by Lender (but Borrower
shall not thereby be released from the obligation to make further prepayments
hereunder); PROVIDED, HOWEVER, that if such rejected prepayment relates to a
Transfer of Equity Interests which is other than an AACDEC Transfer, then from
and after such rejection, (1) all references to the term "Debt Service Coverage
Ratio" and "Debt Service Achievement" shall no longer be applicable and all
provisions in the Loan Documents referencing such definitions shall be deemed to
be deleted, (2) the minimum amount contained in the "Net Cash Flow" covenant
contained in Section 5.1(s) shall be reduced by the Net Cash Flow Rejection
Factor and (3) the minimum amount contained in the "Net Equity Value" covenant
contained in Section 5.1(t) shall be reduced by the Net Equity Value Rejection
Factor; PROVIDED, FURTHER, that in the event that the rejection of any such
prepayment by Lender pursuant to the foregoing provision would result in
Borrower being in default (including any default that, but for the passage of
time, would occur in close proximity to the rejection of such prepayment and
assuming that no other circumstances would independently give rise to a default)
under this Agreement, Lender shall not be permitted to reject such prepayment
unless Lender waives the default resulting therefrom, which waiver shall be in
form and substance satisfactory to Lender and shall also contain a release of
Borrower and its affiliates from any liability resulting from or caused by
Lender's rejection of such prepayment.
29
(c) APPLICATION OF PREPAYMENT. Upon the receipt of any prepayment,
as long as no Event of Default exists, Lender shall be required, on the date of
receipt thereof, to apply the amount of prepayment to the principal on the Note
in the inverse order of principal payments coming due, together with accrued
interest for the entire Interest Accrual Period in which prepayment occurs, and
all other amounts then due and payable on the Note. Notwithstanding the
provisions of this Section 2.6 to the contrary, if no Event of Default exists
and Borrower is otherwise permitted to make a prepayment hereunder, Borrower
shall have the right to make such prepayment on a date other than a Payment
Date, provided that, together with such prepayment, Borrower shall also pay an
amount necessary to reimburse Lender for any costs, losses or expenses incurred
in connection with breaking any LIBOR contracts.
(d) PARTIAL RELEASE. As long as no Event of Default has occurred
and is continuing, in connection with any Transfer described under Section
2.6(b)(2) hereof (irrespective of whether or not Lender accepts all or any
portion of any mandatory prepayment required thereby and irrespective of the
amount mandatorily required to be prepaid), Lender shall release the Collateral,
or portion thereof, which is the subject of the Transfer. The costs and expenses
of any such release shall be paid by the Borrower. Lender shall grant such
release promptly after Lender is satisfied with the evidence and information
supporting Borrower's right to a release.
Section 2.7. APPLICATION OF PAYMENTS. Except while an Event of Default
exists, all proceeds of any repayment, including prepayments, of the Loan shall
be applied to pay: FIRST, any costs and expenses of Lender required to be
reimbursed under the terms of the Loan Documents, including the Lender's
commercially reasonable attorneys' fees and costs (i) arising as a result of
such repayment or (ii) expended by Lender to protect, preserve, foreclose, or
realize upon, or take any other action with respect to the Collateral; SECOND,
accrued and unpaid interest on the Loan at the Interest Rate; THIRD, the
Principal Indebtedness; and FOURTH, any other amounts then due and owing under
the Loan Documents. During the existence of an Event of Default, all proceeds of
repayment, including any payment or recovery on the Collateral, shall be applied
in such order and in such manner as Lender shall elect in Lender's discretion.
Section 2.8. PAYMENT OF DEBT SERVICE, METHOD AND PLACE OF PAYMENT.
(a) Except as otherwise specifically provided herein, all payments
and prepayments under this Agreement and the Note shall be made to Lender not
later than 11:00 A.M., New York time, on the date when due, and shall be made in
lawful money of the United States of America in federal or other immediately
available funds to an account specified to Borrower by Lender in writing, and
any funds received by Lender after such time, for all purposes hereof, shall be
deemed to have been paid on the next succeeding Business Day.
30
(b) All payments made by Borrower hereunder or by Borrower under
the other Loan Documents, shall be made irrespective of, and without any
deduction for, any set-offs or counterclaims.
Section 2.9. TAXES. All payments made by Borrower under this Agreement
and under the other Loan Documents shall be made free and clear of, and without
deduction or withholding for or on account of, any Covered Taxes.
Section 2.10. EXIT ADDITIONAL INTEREST PAYMENT. On the date of payment
in full of all of the Principal Indebtedness, whether upon a prepayment,
acceleration or at maturity of the Loan, Borrower shall pay the Exit Additional
Interest Payment.
Section 2.11. INTENTIONALLY DELETED .
Section 2.12. UNFUNDED COMMITMENT ADDITIONAL INTEREST PAYMENT. Borrower
shall make a payment at the rate of 1% per annum (the "UNFUNDED COMMITMENT
ADDITIONAL INTEREST PAYMENT") in respect of the Unused Portion of the Loan,
which Unfunded Commitment Additional Interest Payment shall be payable monthly
in arrears, shall be calculated separately for each calendar month or portion
thereof during the term of the Loan on the basis of the actual number of days
elapsed over a 360 day year and on the basis of the daily weighted average of
the Unused Portion of the Loan, from the date of this Agreement until the
Unfunded Commitment Termination Date. Amounts paid in respect of the Unfunded
Commitment Additional Interest Payment shall be credited dollar for dollar
against Borrower's obligation to pay to CTIMCO the Funding Fee in respect of
advances of the Loan subsequent to the Initial Advance. For the avoidance of
doubt, it is understood and agreed that the sum of all payments made by Borrower
in respect of the Unfunded Commitment Additional Interest Payment and the
Funding Fee in any case shall not exceed $650,000 in the aggregate.
Section 2.13. WITHHOLDING. Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax with respect to any Covered Tax
(including by application of any treaty, the benefits of which such Lender is
entitled), with respect to payments under this Agreement shall deliver to
Borrower, on or prior to the date such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) and at such other times as may be
necessary in the reasonable determination of Borrower, (i) two original copies
of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms),
properly completed and duly executed by such Lender, and such other
documentation required under the Code to establish that such Lender is not
subject to deduction or withholding of United States federal income tax with
respect to any payments to such Lender of principal, interest, fees or other
amounts payable under this Agreement, or (ii) if such Lender is not a "bank" or
other Person described in Section 881(c)(3) of the Code and cannot deliver
either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i)
above of this Section 2.13, a Certificate of U. S. Withholding Status together
with two original copies of Internal Revenue Service Form W-8BEN (or any
successor form), properly completed and duly
31
executed by such Lender, and such other documentation required under the Code to
establish that such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Lender of
interest payable under this Agreement. Each Lender that is not a Foreign Lender
shall deliver to Borrower two duly completed copies of United States Internal
Revenue Form W-9 (or applicable successor form) unless it establishes to the
satisfaction of Borrower that the Lender is otherwise eligible for an exemption
from backup withholding tax or other applicable withholding tax. Lender hereby
agrees, from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence required to be provided pursuant to the
first two sentences of this Section 2.13, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, that such Lender shall promptly deliver to
Borrower two new original copies of Internal Revenue Service Form X-0XXX, X-0XXX
or W-9 or a Certificate of U. S. Withholding Status and two original copies of
Internal Revenue Service Form W-8BEN, as the case may be, properly completed and
duly executed by such Lender, and such other documentation required under the
Code to confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to payments to such
Lender under this Agreement, or notify Borrower of its inability to deliver any
such forms, certificates or other evidence.
ARTICLE III
CONDITIONS PRECEDENT AND THE ACCOUNTS
-------------------------------------
Section 3.1. Conditions Precedent to the Making of the Loan.
(a) As a condition precedent to the entry into this Agreement and
the funding of the Initial Advance, Borrower shall have satisfied the following
conditions (unless waived by Lender in accordance with Section 8.4) on or before
the Closing Date:
(1) COMMITMENT CONDITIONS.
(A) Borrower shall have paid to CTIMCO an origination fee
equal to $650,000. Such fee shall be deemed to have been fully earned
upon execution of this Agreement, regardless of whether all or part of
the Loan Amount is actually funded.
(B) Lender shall have completed its "due-diligence"
review of Borrower, the members of the Borrower Control Group, the
Operating Companies and their respective Affiliates, including the
organizational and governing documents, major agreements binding or
affecting, and financial condition of each of them, and such other
documents and information as Lender may request, and the results of
such review shall be satisfactory to Lender in its sole discretion.
32
(2) LOAN DOCUMENTS.
(A) LOAN AGREEMENT. Borrower shall have executed and
delivered this Agreement to Lender.
(B) NOTE. Borrower shall have executed and delivered to
Lender the Note.
(C) COLLATERAL ASSIGNMENTS AND PLEDGE AGREEMENTS.
Borrower shall have executed and delivered and shall have caused each
applicable member of the Borrower Control Group to execute and deliver
to Lender (i) the Collateral Assignments listed on Schedule II,
attached hereto and made a part hereof, in form and substance
satisfactory to Lender and (ii) the Pledge Agreements listed on
Schedule IV, attached hereto and made a part hereof, in form and
substance satisfactory to Lender.
(D) GUARANTY. LFSRI II, LFSRI II Alternative and
LFSRI-CADIM shall have executed and delivered to Lender a guaranty of
repayment of the Loan.
(E) FINANCING STATEMENTS. Borrower shall have executed
and delivered to Lender all financing statements required by Lender to
be filed of record in the appropriate filing offices in each of the
appropriate jurisdictions.
(F) STOCK, ETC. CERTIFICATES. The Borrower and other
grantors under the Collateral Assignments and the Pledge Agreements
shall have confirmed to the Lender in writing that such parties have
previously delivered the certificates and other instruments evidencing
ownership of the Collateral to Senior Lender in connection with the
Senior Loan, together with separate endorsements executed in blank with
respect thereto and shall have taken all other action necessary to
grant Lender a second priority perfected security interest (subject and
subordinate only to a security interest in favor of Senior Lender in
accordance with the provisions of the Senior Loan Documents) in all
"investment property" (as such term is defined in Article 9 of the UCC)
included in the Collateral.
(G) LOCKBOX. Borrower shall have executed and delivered
and caused the applicable members of the Borrower Control Group to
execute and deliver to Lender the Deposit Account Agreement.
(H) CUSTODIAL AGREEMENT LETTER. Lender shall have
received from LaSalle National Bank ("LASALLE"), as custodian under its
Custodial Agreement with Senior Lender, one or more agreements, in form
and substance satisfactory to Lender, pursuant to which LaSalle agrees
that it
33
holds all certificates and other instruments evidencing ownership of
the Collateral for the benefit of Senior Lender and Lender.
(3) OPINIONS OF COUNSEL. Lender shall have received from counsel
satisfactory to Lender, legal opinions in form and substance satisfactory
to Lender in Lender's discretion. All such legal opinions will be addressed
to Lender, dated as of the funding date, and in form and substance
satisfactory to Lender and its counsel. Borrower hereby instructs counsel
to deliver to Lender such opinions addressed to Lender.
(4) LIEN SEARCH REPORTS. Lender shall have received satisfactory
reports of UCC, federal tax lien, bankruptcy, state tax lien, judgment and
pending litigation searches conducted by a search firm reasonably
acceptable to Lender. Such searches shall have been received in relation to
Borrower, and certain members of the Borrower Control Group. Such searches
shall have been conducted in each of the locations designated by Lender in
Lender's reasonable discretion.
(5) CERTIFICATES. Lender shall have received Officer's
Certificates, in each case in form and substance satisfactory to Lender.
(6) CONSENTS, LICENSES, APPROVALS. Lender shall have received
copies of all consents, licenses and approvals, if any, required in
connection with the execution, delivery and performance by Borrower and the
members of the Borrower Control Group under, and the validity and
enforceability of, the Loan Documents, and such consents, licenses and
approvals shall be in full force and effect.
(7) ADDITIONAL MATTERS. Lender shall have received such other
permits, certificates, opinions, documents and instruments relating to the
Loan as may be reasonably required by Lender and all other documents and
all legal matters in connection with the Loan shall be satisfactory in form
and substance to Lender.
(8) REPRESENTATIONS AND WARRANTIES. The representations and
warranties herein and in the other Loan Documents shall be true and correct
as of the date of such funding.
(9) NO INJUNCTION. No law or regulation shall have been adopted,
no order, judgment or decree of any Governmental Authority shall have been
issued or entered, and no litigation shall be pending or threatened, which
in the reasonable judgment of Lender would enjoin, prohibit or restrain, or
impose or result in an adverse effect upon the making or repayment of the
Loan or the consummation of the Transactions.
34
(10) FINANCIAL INFORMATION. Lender shall have received all
financial information (which financial information shall be satisfactory to
Lender in Lender's discretion) relating to the Borrower, the members of the
Borrower Control Group and the Operating Companies, requested by Lender in
Lender's discretion. Such financial information shall be (i) prepared by an
accounting firm approved by Lender in Lender's discretion, (ii) prepared
based on a scope of work determined by Lender in Lender's discretion and
(iii) in form and content acceptable to Lender in Lender's discretion;
PROVIDED, HOWEVER, that the requirements of the preceding sentence shall
not be applicable to any Operating Company that has securities registered
pursuant to Sections 12 or 15(d) of the Securities Exchange Act of 1934, as
amended (a "REPORTING COMPANY").
(11) TRANSACTION COSTS. Borrower shall have paid or caused to be
paid all Transaction Costs.
(b) Lender shall not be obligated to fund any portion of the Loan
Amount unless and until each of the applicable conditions precedent set forth in
this Article III is satisfied and until Borrower provides any other information
reasonably required by Lender. In addition, Lender shall not be obligated to
fund the Loan Amount (other than the Initial Advance) if a Material Adverse
Condition shall exist with respect to the Borrower, the Fund taken as a whole,
any other member of the Borrower Control Group or any Operating Company;
provided, that (i) if a Material Adverse Condition exists solely with respect to
one or more AACDK Entities and the members of the Borrower Control Group
(excluding the Borrower and the Fund) that own, directly or indirectly, any
interest in such AACDK Entities (as long as the Material Adverse Condition
affecting the applicable members of the Borrower Control Group was solely caused
by or results solely from the Material Adverse Condition of the subject AACDK
Entities), and (ii) all the other conditions to Lender's obligation to make the
Final Advance of all or any portion of the Unfunded/Unreserved Loan Amount are
satisfied, Lender shall be obligated to fund such subsequent advance as long as
none of the proceeds of such advance shall be advanced, loaned, contributed or
otherwise invested, directly or indirectly, in any Entity as to which a Material
Adverse Condition exists at the time of such advance by Lender or the advance,
loan, contribution or investment by Borrower or the applicable member of the
Borrower Control Group.
(c) In connection with the Loan, Borrower shall execute and
deliver or cause to be executed and delivered to Lender all additions,
amendments, modifications and supplements to the Note, the Pledge Agreements and
the other Loan Documents, if reasonably requested by Lender to effectuate the
provisions hereof or thereof, and to provide Lender with the full benefit of the
security intended to be provided under the Loan Documents. Without in any way
limiting the foregoing, such additions, modifications and supplements shall
include those deemed reasonably desirable by Lender's counsel in the
jurisdiction in which the Collateral or any part thereof is located.
35
(d) The funding of the Initial Advance and of each subsequent
advance of a portion of the Loan Amount shall constitute, without the necessity
of specifically containing a written statement to such effect, a confirmation,
representation and warranty by Borrower to Lender that, to the best of
Borrower's knowledge, all of the applicable conditions to be satisfied in
connection with the making of such advance have been satisfied (unless waived by
Lender in accordance with Section 8.4), and that all of the representations and
warranties of Borrower set forth in the Loan Documents are true and correct in
all material respects as of the date of the funding of such advance; provided,
that with respect to an advance of a portion of the Loan Amount after the
Initial Advance, the representations and warranties set forth in the last two
sentences of Sections 4.1(r) hereto need not be true concerning an AACDK Entity
or any Collateral constituting Equity Interests in or Instruments issued by such
AACDK Entity, so long as none of the proceeds of such advance shall be advanced,
contributed or otherwise invested directly or indirectly in such AACDK Entity.
Section 3.2. FORM OF LOAN DOCUMENTS AND RELATED MATTERS. The Loan
Documents and all of the certificates, agreements, legal opinions and other
documents and papers referred to in this Article III, unless otherwise
specified, shall be delivered to Lender, and shall be in form and substance
satisfactory to Lender.
Section 3.3. THE ACCOUNTS.
(a) Borrower has previously established such reserve accounts and
has deposited and continues to deposit such amounts into such accounts as
required pursuant to the terms of the Senior Deposit Account Agreement and the
other Senior Loan Documents.
(b) On or before the Effective Date, Borrower shall have
established and shall continue to maintain an account (the "DEPOSIT ACCOUNT") in
Lender's name as secured party at a financial institution designated by Borrower
and reasonably satisfactory to Lender. Commencing on the Effective Date, the
Deposit Account shall be governed by the Deposit Account Agreement. The Deposit
Account Agreement has been executed and delivered and is in full force and
effect as of the date hereof, but the provisions thereof shall not become
operative until the date (the "EFFECTIVE DATE") upon which the Senior Loan has
been paid in full, and all of the collateral for the Senior Loan has been
released by the Senior Lender. Upon repayment of the Senior Loan, Borrower
hereby irrevocably and unconditionally directs (i) Senior Lender to remit or
cause to be remitted to Lender, for deposit into the Deposit Account, all funds
from reserves under the Senior Loan Documents at the time of termination of such
reserves and (ii) Senior Lender to cause all Collateral which is physical in
nature and held by or for the benefit of Lender (e.g., stocks, notes, etc.) in
respect of the Senior Loan to be transferred and delivered to or as directed by
Lender, all of which Collateral shall thereafter be held solely by or for the
benefit of Lender (and any entity which has extended a credit facility
36
to Lender, if any), as security for the payment of the Loan in accordance with
the provisions of this Agreement and the Deposit Account Agreement.
(c) From and after the Effective Date, funds from the Deposit
Account shall be disbursed from time to time in accordance with and in such
order and priority as provided by the terms and provisions of the Deposit
Account Agreement and this Agreement. Until disbursed, Borrower shall have the
right to direct the investment of funds in the Deposit Account in Permitted
Investments, subject to Lender's reasonable approval.
Section 3.4. INVESTMENT AND CONTROL OF ACCOUNTS.
(a) All interest earned on amounts deposited into the Accounts
shall be held in the Accounts and shall be used or disbursed as provided herein
and in the Deposit Account Agreement for the benefit of Borrower. Neither Lender
nor the Servicer shall have any liability for any loss of interest on funds in
any Accounts and no such loss shall affect Borrower's obligation to fund any
Account as required hereunder. Borrower hereby pledges, assigns and grants a
lien and security interest to Lender, as security for payment of all sums due
under the Loan and the performance of all other terms, conditions and provisions
of the Loan Documents and this Agreement on Borrower's part to be paid and
performed, of all Borrower's right, title and interest in and to the Deposit
Account and all other accounts and subaccounts maintained from time to time
under the Deposit Account Agreement (collectively, the "ACCOUNTS"). Borrower
shall not, without obtaining the prior written consent of Lender, further
pledge, assign or grant any lien or security interest in any Account, or permit
any lien or encumbrance to attach thereto, or any levy to be made thereon, or
any UCC Financing Statements, except those naming Lender as the secured party,
to be filed with respect thereto. This Agreement is, among other things,
intended by the parties to be a security agreement for purposes of the Uniform
Commercial Code in effect in New York and each other jurisdiction in which
Accounts may be located.
(b) Notwithstanding the foregoing, at any time an Event of Default
exists and remains uncured after the Effective Date, the Servicer, at Lender's
option and to the extent permitted under applicable law without adversely
affecting the other rights and remedies provided to Lender under this Agreement
or the other Loan Documents, shall distribute all funds then held in, and/or
received subsequently in, the Accounts to Lender to be applied in such order as
Lender in its sole discretion shall determine, (1) to the payment of (y)
interest and Principal Indebtedness on the Note and (z) the other Indebtedness,
until all such amounts are paid in full and (2) to preserve the Collateral.
(c) The Lender shall have exclusive control over and sole right of
withdrawal from each of the Accounts, which shall be exercised solely in
accordance with the provisions of this Agreement and the Deposit Account
Agreement. The Accounts shall be released to or at the direction of the Borrower
upon payment in full of the Indebtedness.
37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1. Representations and Warranties of Borrower.
(a) ORGANIZATION. Borrower (i) is a duly organized and validly
existing Entity in good standing under the laws of the State of its formation,
(ii) is duly qualified as a foreign Entity in each jurisdiction in which the
nature or location of its business, its assets, or any of the Collateral makes
such qualification necessary or desirable, (iii) has the requisite Entity power
and authority to carry on its business as now being conducted, and (iv) has the
requisite Entity power to execute and deliver, and perform its obligations
under, the Loan Documents.
(b) AUTHORIZATION. The execution and delivery by Borrower of the
Loan Documents, Borrower's performance of its obligations thereunder and the
creation of the security interests and Liens provided for in the Loan Documents
(i) have been duly authorized by all requisite Entity action on the part of
Borrower, (ii) will not violate any provision of any applicable Legal
Requirements, any order, writ, decree, injunction or demand of any court or
other Governmental Authority, any organizational document (after giving effect
to certain amendments to the certificates of incorporation of Borrower, copies
of which have been delivered to Lender) of Borrower or any indenture or
agreement or other instrument to which Borrower is a party or by which Borrower
is bound, (iii) will not be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under, or result
in the creation or imposition of any Lien of any nature whatsoever upon any of
the property or assets of Borrower pursuant to, any indenture or agreement or
instrument (after giving effect to the Senior Lender Consent), and (iv) have
been duly executed and delivered by Borrower. Except for those obtained or filed
on or prior to the Closing Date, Borrower is not required to obtain any consent,
approval or authorization from, or to file any declaration or statement with,
any Governmental Authority or other agency in connection with or as a condition
to the execution, delivery or performance of the Loan Documents. The Loan
Documents to which Borrower is a party have been duly authorized, executed and
delivered by Borrower.
(c) ENTITY STATUS. Borrower has been, and will continue to be, a
duly formed and existing Entity in good standing in all relevant jurisdictions.
Borrower at all times since its formation has complied, and will continue to
comply, with the provisions of all of its organizational documents, and the laws
of the state in which Borrower was formed or is doing business relating to the
Entity.
(d) LITIGATION. Except as set forth on Schedule 4.1(d) to this
Agreement, there are no actions, suits or proceedings at law or in equity by or
before any Governmental Authority or other agency now pending and served or, to
the knowledge of Borrower, threatened against Borrower or the Collateral.
38
(e) AGREEMENTS. Borrower is not a party to any agreement or
instrument or subject to any restriction which is reasonably likely to result in
a Material Adverse Condition with respect to the Borrower, the Fund taken as a
whole, any other member of the Borrower Control Group or any Operating Company,
other than a Material Adverse Condition solely with respect to one or more AACDK
Entities and the members of the Borrower Control Group (excluding the Borrower
and the Fund) that own, directly or indirectly, an interest in such AACDK
Entities (as long as such Material Adverse Condition affecting the applicable
members of the Borrower Control Group was solely caused by or resulted solely
from the Material Adverse Condition of the subject AACDK Entities). Borrower is
not in default in any respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any indenture,
agreement or instrument to which it is a party or by which Borrower or its
property is bound or affected.
(f) NO BANKRUPTCY FILING. Borrower is not contemplating either the
filing of a petition by Borrower under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of the assets or
property of Borrower, any member of the Borrower Control Group nor any Operating
Company, and other than with respect to Cliveden, Borrower has no knowledge of
any Person contemplating the filing of any such petition against any such
Entity.
(g) FULL AND ACCURATE DISCLOSURE. No written statement of fact
made by or on behalf of Borrower or any member of the Borrower Control Group,
whether in the Loan Documents or in any other document or certificate delivered
to Lender by or on behalf of Borrower or any member of the Borrower Control
Group, contains any untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or therein not
misleading. There is no fact presently known to Borrower which has not been
disclosed to Lender which materially adversely affects, nor as far as Borrower
can reasonably foresee, would materially adversely affect the business,
operations or condition (financial or otherwise) of Borrower or any member of
the Borrower Control Group or any Operating Company.
(h) LOCATION OF CHIEF EXECUTIVE OFFICES. The location of
Borrower's principal place of business and the location of Borrower's chief
executive office is the address listed in the first paragraph of this Agreement,
and Borrower has no other places of business.
(i) COMPLIANCE. Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority, the
violation of which is reasonably likely to result in a Material Adverse
Condition with respect to the Borrower, the Fund taken as a whole, any other
member of the Borrower Control Group or any Operating Company, other than a
Material Adverse Condition solely with respect to one or more AACDK Entities and
the members of the Borrower Control Group (excluding the Borrower and the Fund)
that own, directly or indirectly, an interest in such
39
AACDK Entities (as long as such Material Adverse Condition affecting the
applicable members of the Borrower Control Group was solely caused by or
resulted solely from the Material Adverse Condition of the subject AACDK
Entities).
(j) OTHER DEBT AND OBLIGATIONS. Borrower has no financial
obligation under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Borrower is a party, or by which Borrower is
bound, other than obligations under the Loan Documents and the Senior Loan
Documents. Borrower has not borrowed or received other debt financing that has
not been heretofore repaid in full (other than the indebtedness evidenced and
secured by the Senior Loan Documents) and Borrower has no known material
Contingent Obligations (exclusive of indemnities, assurances or other agreements
to hold harmless another Person which are given in the ordinary course of
business or in connection with a Permitted Transfer).
(k) ERISA. (1) Each Plan and, to the knowledge of Borrower, each
Multiemployer Plan, is in compliance with, and has been administered in
compliance with, its terms and the applicable provisions of ERISA, the Code and
any other federal or state law, except for such noncompliance as is not
reasonably likely to result in a Material Adverse Condition with respect to the
Borrower, the Fund taken as a whole, any other member of the Borrower Control
Group or any Operating Company, other than a Material Adverse Condition solely
with respect to one or more AACDK Entities and the members of the Borrower
Control Group (excluding the Borrower and the Fund) that own, directly or
indirectly, an interest in such AACDK Entities (as long as such Material Adverse
Condition affecting the applicable members of the Borrower Control Group was
solely caused by or resulted solely from the Material Adverse Condition of the
subject AACDK Entities); and to the knowledge of Borrower no event or condition
has occurred as to which Borrower or any ERISA Affiliate would be under an
obligation to furnish a report to Lender under Section 5.1(j).
(2) Borrower and each member of the Borrower Control Group that
has as an investor an ERISA Investor qualifies as a VCOC or otherwise complies
with an exception set forth in the Plan Assets Regulation, or is an entity with
no investors subject to Title I of ERISA or Section 4975 of the Code, such that
the assets of such Entity would not be subject to Title I of ERISA and/or
Section 4975 of the Code.
(l) SOLVENCY. Borrower (i) has not entered into this Loan
Agreement or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor, and (ii) has received reasonably equivalent value in
exchange for its obligations under the Loan Documents. Giving effect to the
transactions contemplated hereby, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of this
Agreement, exceed Borrower's total liabilities, including subordinated,
unliquidated, or disputed liabilities or Contingent Obligations. The fair
saleable value of Borrower's assets is and will, immediately following the
execution and delivery of this Agreement, be greater than Borrower's probable
liabilities, including the maximum
40
amount of its Contingent Obligations or its debts as such debts become absolute
and matured. Borrower's assets do not and, immediately following the execution
and delivery of this Agreement, will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including Contingent Obligations and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of obligations of Borrower).
(m) NOT FOREIGN PERSON. Borrower is not a "foreign person" within
the meaning ofss. 1445(f)(3) of the Code.
(n) INVESTMENT COMPANY ACT, PUBLIC UTILITY HOLDING COMPANY ACT.
Borrower is not (i) an "investment company" or a company "controlled" by an
"investment company," within the meaning of, and is not required to register
under, the Investment Company Act of 1940, as amended, (ii) a "holding company"
or a "subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (iii) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
(o) NO DEFAULTS. No Default or Event of Default exists under or
with respect to any Loan Document.
(p) LABOR MATTERS. Borrower is not a party to any collective
bargaining agreements.
(q) USE OF PROCEEDS; MARGIN REGULATIONS. Borrower will use the
proceeds of the Loan for the purposes described herein. Other than as set forth
on Schedule 4.1(q), no part of the proceeds of the Loan will be used, whether
directly, indirectly, immediately, incidentally or ultimately, (i) to purchase
or carry any "margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System ("Board of Governors") or to refund
indebtedness originally incurred for such purpose, or (ii) for any purpose which
entails a violation of, or is inconsistent with, such Regulation U or any other
Regulations of the Board of Governors, or (iii) for any purposes prohibited by
applicable Legal Requirements. If requested by Lender, the Borrower, any
applicable member of the Borrower Control Group and the recipient of any portion
of the proceeds of the Loan Amount shall furnish to Lender a statement on
Federal Reserve Form G-3 referred to in said Regulation U.
(r) FINANCIAL INFORMATION. To the best knowledge of Borrower, the
financial data concerning the members of the Borrower Control Group and the
Operating Companies for the year ended December 31, 2001 and the quarter ended
March 31, 2002 that has been delivered by or on behalf of Borrower or any member
of the Borrower Control Group to Lender is true, complete and correct in all
material respects. Since
41
March 31, 2002, except as otherwise disclosed in writing to Lender, there has
been no material adverse change in the financial position of Borrower or any
member of the Borrower Control Group or any Operating Company or in the results
of operations of Borrower or any member of the Borrower Control Group or any
Operating Company. Except for the Permitted Indebtedness, since March 31, 2002,
neither Borrower, any member of the Borrower Control Group nor any Operating
Company has incurred any obligation or liability, contingent or otherwise, not
reflected in such financial data which might materially adversely affect its
business operations or the Collateral.
(s) ENFORCEABILITY. The Loan Documents executed by Borrower or any
of its Affiliates in connection with the Loan, including any Pledge Agreement
and Collateral Assignment, are the legal, valid and binding obligations of
Borrower or such Affiliate, enforceable against Borrower or such Affiliate in
accordance with their terms, subject only to bankruptcy, insolvency and other
limitations on creditors' rights generally and to equitable principles. The Loan
Documents, as of the Closing Date are not, subject to any right of rescission,
set-off, counterclaim or defense by Borrower or such Affiliate, including the
defense of usury, and the operation of any of the terms of the Note, or any
other Loan Documents, or the exercise of any right thereunder, will not render
the Loan Documents unenforceable against Borrower or such Affiliate, in whole or
in part, or subject to any right of rescission, set-off, counterclaim or defense
by Borrower or such Affiliate, including the defense of usury, and neither
Borrower nor any Affiliate has asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.
(t) NO LIABILITIES. Borrower has no liabilities or obligations
including Contingent Obligations (and including liabilities or obligations in
tort, in contract, at law, in equity, pursuant to a statute or regulation, or
otherwise but exclusive of indemnities, assurances or other agreements to hold
harmless another Person which are given in the ordinary course of business or in
connection with a Permitted Transfer) other than those liabilities and
obligations expressly permitted by this Agreement (including those liabilities
and obligations under the Senior Loan).
(u) CONDUCT OF BUSINESS. Borrower does not conduct its business
"also known as", "doing business as" or under any name other than the Borrower's
name set forth in the preamble to this Agreement.
(v) PLEDGE AGREEMENTS. The representations and warranties made by
Borrower and the respective pledgors and assignors under the Pledge Agreements
and Collateral Assignments are true and correct in all material respects.
(w) REIT STATUS. LFSRF II Borrower has not engaged and does not
engage in activities which would in fact jeopardize its election to qualify and
be taxed as a REIT.
(x) INTENTIONALLY DELETED.
42
(y) NON-AFFILIATION. Neither Borrower is an affiliate of Senior
Lender or Citigroup.
(z) ORGANIZATIONAL DOCUMENTS. The organizational documents of
Borrower, each member of the Borrower Control Group and each Operating Company
have previously been delivered to Senior Lender in connection with the closing
and funding of the Senior Loan and, other than those amendments and
modifications set forth on Schedule 4.1(z) (copies of which have been delivered
to Lender).
(aa) DELIVERY OF STOCK, ETC.. Borrower and the other grantors under
the Collateral Assignments and the Pledge Agreements have previously delivered
all certificates and other instruments, if any, evidencing ownership of the
Collateral to Senior Lender in connection with the Senior Loan, together with
separate endorsements executed in blank with respect thereto and have taken all
other actions necessary to grant Senior Lender a first priority perfected
security interest in the Collateral.
Section 4.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower
agrees that (i) all of the representations and warranties of Borrower and its
Affiliates set forth in this Agreement and in the other Loan Documents delivered
on the Closing Date are made as of the Closing Date (except as expressly
otherwise provided) and (ii) all such representations and warranties made by
Borrower and its Affiliates shall survive the delivery of the Note and continue
for so long as any amount remains owing to Lender under this Agreement, the Note
or any of the other Loan Documents. All representations, warranties, covenants
and agreements made in this Agreement or in the other Loan Documents shall be
deemed to have been relied upon by Lender notwithstanding any investigation
heretofore or hereafter made by Lender or on its behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
Section 5.1. BORROWER COVENANTS. Borrower covenants and agrees that,
from the date hereof and until payment in full of the Indebtedness, unless
Lender otherwise consents in writing:
(a) EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS, INSURANCE.
Borrower shall do all things necessary to preserve, renew and keep in full force
and effect the Entity existence, rights, licenses, permits and franchises
necessary for the conduct of its business and comply in all respects with all
applicable Legal Requirements. Borrower shall notify Lender promptly of any
written notice or order that Borrower receives from any Governmental Authority
relating to Borrower's or any of its Affiliates' failure to comply with
applicable Legal Requirements. Borrower shall at all times maintain, preserve
and protect all franchises and trade names and preserve all the remainder of its
property necessary for the continued conduct of its business.
43
(b) LITIGATION. Borrower shall give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
against Borrower.
(c) TAXES AND OTHER CHARGES. Borrower shall pay, or cause to be
paid, all Impositions owed by Borrower as the same become due and payable, and
deliver to Lender receipts for payment or other evidence satisfactory to Lender
that the Impositions have been so paid no later than 30 days before they would
be delinquent if not paid. After prior notice to Lender, Borrower, at its own
expense, may contest, by appropriate legal proceedings, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application of any Impositions, provided that (i) no Default or Event of Default
has occurred and remains uncured, (ii) such proceeding shall suspend the
collection of the Impositions, (iii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of any other instrument to
which Borrower is subject and shall not constitute a default thereunder, (iv) no
part of or interest in the Collateral will be in danger of being sold,
forfeited, terminated, canceled or lost, (v) Borrower shall have furnished such
security as may be required in the proceeding, or as may be requested by Lender,
to insure the payment of any such Impositions, together with all interest and
penalties thereon, and (vi) Borrower shall promptly upon final determination
thereof pay the amount of such Impositions, together with all costs, interest
and penalties. Lender may pay over any such cash deposit or part thereof held by
Lender to the claimant entitled thereto at any time when, in the judgment of
Lender, the entitlement of such claimant is established.
(d) PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe and
perform or cause to be observed and performed each and every term to be observed
or performed by Borrower or any member of the Borrower Control Group pursuant to
the terms of any Pledge Agreement, Collateral Assignment or other Loan Document.
(e) NOTICE OF DEFAULT. Borrower shall promptly advise Lender of
any material adverse change in Borrower's or any member of the Borrower Control
Group's or Operating Company's condition, financial or otherwise, or of the
occurrence of any Default or Event of Default.
(f) COOPERATE IN LEGAL PROCEEDINGS. Except with respect to any
claim by Borrower against Lender, Borrower shall cooperate with Lender with
respect to any proceedings before any Governmental Authority which may in any
way affect the rights of Lender hereunder or any rights obtained by Lender under
any of the Loan Documents and, in connection therewith, not prohibit or prevent
Lender, at its election, from participating in any such proceedings.
(g) PERFORM LOAN DOCUMENTS. Borrower shall, and shall cause the
members of the Borrower Control Group to, observe, perform and satisfy all the
terms, provisions, covenants and conditions required to be observed, performed
or satisfied by any of them, and to pay when due all costs, fees and expenses
required to be paid by any of them under the Loan Documents.
44
(h) FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost
and expense:
(1) upon Lender's request therefor given from
time to time after the occurrence of any Default or Event of Default, pay for
reports of UCC, federal tax lien, state tax lien, judgment and pending
litigation searches relating to Borrower and the members of the Borrower Control
Group;
(2) furnish to Lender all instruments,
documents, certificates, and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished pursuant to the
terms of the Loan Documents;
(3) execute and deliver to Lender such
documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to evidence, preserve and/or protect the
Collateral, as Lender may require in Lender's reasonable discretion, including
the filing of any financing or continuation statements under the UCC with
respect to the Collateral, transferring the Collateral to Lender's possession
(if a security interest in such Collateral can be perfected by possession) and
endorsing to Lender any Collateral which may be evidenced by an instrument; and
(4) do and execute, and cause each member of the
Borrower Control Group to do and execute, all such further lawful acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall require from time to time in its discretion.
(i) FINANCIAL STATEMENTS, REPORTING. Until payment in full of the
Indebtedness, Borrower shall cause the following financial statements and
information, with respect to a Reporting Company, in a form consistent with the
reporting requirements pursuant to the securities laws applicable to any such
Reporting Company and otherwise in a form satisfactory to Lender, to be
delivered to Lender as and when hereinafter provided:
(1) as soon as practicable and in any event
within one hundred twenty (120) days after the end of each Fiscal Year of the
applicable Entities, audited combined statements of financial position of LFSRI
II, LFSRI II Alternative, LFSRI-CADIM (which shall be duly certified by the
Chief Financial Officer of Lazard Freres REI) and audited statements of
financial position of each Operating Company as of the end of each such Fiscal
Year during the Term, including a balance sheet and statement of profits and
losses, as of the date thereof, prepared in accordance with GAAP by a nationally
recognized accounting firm and accompanied by a statement of the accountants
that such financial statements present fairly, in all material respects, the
financial condition of each such Entity as of the end of the Fiscal Year being
reported
45
on and that the results of the operations and cash flows for such year were
prepared and are being reported on in conformity with GAAP;
(2) promptly and in any event within sixty (60)
days after the end of each fiscal quarter of the applicable Entities, (i)
quarterly combined statements of financial position of LFSRI II, LFSRI II
Alternative and LFSRI-CADIM (which shall be duly certified by the Chief
Financial Officer of Lazard Freres REI), (ii) statements of financial position
of each Operating Company, including a balance sheet and statement of profits
and losses, and comparisons of results to prior year results, and (iii) with
respect to each of AAC III, Intown and Xxxxxxxxxx, a detailed schedule of all
indebtedness (including Contingent Obligations) of such Entity, specifying the
lender, the outstanding principal balance of the loan, amortization requirements
(if any), maturity date, extension options (if any), the rate at which interest
is payable and, if different, the rate at which interest accrues, collateral (if
any), and such other information as Lender may reasonably request;
(3) within five (5) days after filing, the
annual Federal income tax return of Borrower, with accompanying schedules
prepared by Borrower;
(4) within three (3) days following receipt by
any member of the Borrower Control Group, a copy of any notice of default
regarding outstanding financial indebtedness of any member of the Borrower
Control Group or any Operating Company;
(5) (A) annual budgets and revisions thereto for
each Operating Company, approved by such Operating Company, and (B) from time to
time, such other reports and information which Lender reasonably requires,
subject to applicable restrictions on providing reports or information at law or
in any applicable agreement;
(6) within five (5) Business Days following
receipt by Borrower of all monthly reports covering each Operating Company and
the members of the Borrower Control Group but in no event later than forty-five
(45) days after the close of the month being reported, copies of said reports;
(7) together with each of the financial
statements and information required pursuant to subdivisions (1) through (4)
above, inclusive, a certificate of the Chief Financial Officer of Borrower that
Borrower has observed and performed, in all material respects, all of its
covenants and other agreements contained in this Agreement and the other Loan
Documents, whether there exists any material Default or Event of Default and, if
there is, specifying the nature and period of existence thereof and the action
taken or proposed to be taken with respect thereto; and
46
(8) from time to time, within five (5) days
following receipt thereof, such reports, financial statements and correspondence
related to the Borrower Control Group or any Operating Company (subject to
applicable restrictions on providing such items at law or in any applicable
agreement) which, in Borrower's judgment, may have a material effect, either
positive or negative, on the financial performance or valuation of the Borrower,
any member of the Borrower Control Group or any Operating Company. For purposes
of this subsection (i)(8), a "material effect" shall mean an effect in excess of
$5 million outside the ordinary course of business.
(j) ERISA. Borrower shall deliver to Lender as soon as possible,
and in any event within ten (10) days, after Borrower knows or has reason to
believe that any of the events or conditions specified below with respect to any
Plan or Multiemployer Plan has occurred or exists, a statement signed by a
senior financial officer of Borrower setting forth details respecting such event
or condition and the action, if any, that Borrower or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC by Borrower or an ERISA Affiliate
with respect to such event or condition):
(1) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan,
as to which PBGC has not by regulation waived the requirement of Section 4043(a)
of ERISA that it be notified within 30 days of the occurrence of such event that
could reasonably be expected to result in (a) the termination of such Plan
(other than pursuant to a standard termination under ERISA Section 4041(b)), (b)
the imposition of a liability on the Borrower or its ERISA Affiliates or (c) the
imposition of a Lien on the assets of the Borrower or its ERISA Affiliates
(provided that a failure to meet the minimum funding standard of Section 412 of
the Code or Section 302 of ERISA, including the failure to make on or before its
due date a required installment under Section 412(m) of the Code or Section
302(e) of ERISA, shall be a reportable event regardless of the issuance of any
waivers in accordance with Section 412(d) of the Code); and any request for a
waiver under Section 412(d) of the Code for any Plan;
(2) the distribution under Section 4041 of ERISA
of a notice of intent to terminate any Plan or any action taken by Borrower or
an ERISA Affiliate to terminate any Plan (other than in a standard termination
pursuant to ERISA Section 4041(b));
(3) the institution by PBGC of proceedings under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by Borrower or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan which could result in the imposition of
liability on the Borrower or its ERISA Affiliates;
47
(4) the complete or partial withdrawal from a
Multiemployer Plan by Borrower or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to satisfy
secondary liability as a result of a purchaser default) or the receipt by
Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is
in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or
that it intends to terminate or has terminated under Section 4041A of ERISA
which could result in the imposition of liability on the Borrower or its ERISA
Affiliates;
(5) the institution of a proceeding by a
fiduciary of any Multiemployer Plan against Borrower or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed or settled
within thirty (30) days;
(6) the adoption of an amendment to any Plan
that, pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which such Plan is a
part if Borrower or an ERISA Affiliate fails to timely provide security to the
Plan in accordance with the provisions of said Sections; and
(7) the imposition of a Lien or a security
interest in connection with a Plan.
(k) ENTITY STATUS. Borrower will and will cause each member of the
Borrower Control Group to (i) continue to comply, and cause their respective
Subsidiaries to comply, with the provisions of all of their respective
organizational and governing documents, and the laws of the state in which each
such Entity was formed relating to each such Entity, and (ii) enter into such
amendments and modifications to such organizational documents as may reasonably
be required by Lender or any Rating Agency to facilitate a Securitization or
other transaction as described in Section 8.34 below. All customary formalities
regarding the Entity existence of Borrower and each member of the Borrower
Control Group will continue to be observed.
(l) IMPOSITIONS AND OTHER CLAIMS. Borrower shall or shall cause
each member of the Borrower Control Group to pay and discharge or cause to be
paid and discharged all Impositions, as well as all lawful claims for labor,
materials and supplies or otherwise, which could become a Lien on the
Collateral.
(m) INTENTIONALLY DELETED.
(n) SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY. Borrower shall
continue to be a Special Purpose Bankruptcy Remote Entity. A "Special Purpose
Bankruptcy Remote Entity" means a corporation, limited partnership or limited
liability company which at all times since its formation and at all times
thereafter (i) was and is organized solely for the purpose of (A) owning a
portion of the Collateral or (B) acting as a member of a limited liability
company that owns a portion of the Collateral, (ii) has not
48
engaged and will not engage in any business unrelated to (A) the ownership of a
portion of the Collateral, or (B) acting as a member of the limited liability
company that owns a portion of the Collateral, (iii) has not had and will not
have any assets other than those related to a portion of the Collateral or its
member interest in the limited liability company that owns a portion of the
Collateral, (iv) has not engaged, sought or consented to and will not engage in,
seek or consent to any dissolution, winding up, liquidation, consolidation,
merger, asset sale, transfer of partnership or membership interests (if such
entity is a general partner in a limited partnership or a member in a limited
liability company), or amendment of its limited partnership agreement, articles
of incorporation, articles of organization, certificate of formation or
operating agreement (as applicable), (v) if such entity is a limited
partnership, has, as its only general partners, Special Purpose Bankruptcy
Remote Entities that are corporations, (vi) if such entity is a corporation has
at least one Independent Director, and has not caused or allowed and will not
cause or allow the board of directors of such entity to take any action
requiring the unanimous affirmative vote of 100% of the members of its board of
directors unless an Independent Director shall have participated in such vote,
(vii) if such entity is a limited liability company, has at least one member
that is a Special Purpose Bankruptcy Remote Entity that is a corporation and
such corporation is the managing member of such limited liability company,
(viii) if such entity is a limited liability company, has articles of
organization, a certificate of formation and/or an operating agreement, as
applicable, providing that (A) such entity will dissolve only upon the
bankruptcy of the managing member, (B) the vote of a majority-in-interest of the
remaining members is sufficient to continue the life of the limited liability
company in the event of such bankruptcy of the managing member and (C) if the
vote of a majority-in-interest of the remaining members to continue the life of
the limited liability company following the bankruptcy of the managing member is
not obtained, the limited liability company may not liquidate its property
without the consent of the applicable Rating Agencies for as long as the Loan is
outstanding, (ix) without the unanimous consent of all of its partners,
directors or members, as applicable, shall not (A) file a bankruptcy or
insolvency petition or otherwise institute insolvency proceedings with respect
to itself or to any other entity in which it has a direct or indirect legal or
beneficial ownership interest, (B) dissolve, liquidate, consolidate, merge, or
sell all or substantially all of its assets or the assets of any other entity in
which it has a direct or indirect legal or beneficial ownership interest, (C)
engage in any other business activity, or amend its organizational documents,
(x) is and will remain solvent and is maintaining and will maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations, (xi)
has not failed and will not fail to correct any known misunderstanding regarding
the separate identity of such entity, (xii) has maintained and will maintain its
accounts, books and records separate from any other Person and will file its own
tax returns, (xiii) has maintained and will maintain its books, records,
resolutions and agreements as official records, (xiv) except as required by the
Senior Loan Deposit Account Agreement and the Deposit Account Agreement, has not
commingled and will not commingle its funds or assets with those of any other
Person, (xv) has held and will hold its assets in its own name, (xvi) has
conducted and will
49
conduct its business in its name, (xvii) has maintained and will maintain its
financial statements, accounting records and other entity documents separate
from any other Person, (xviii) has paid and will pay its own liabilities,
including the salaries of its own employees, only out of its own funds and
assets, (xix) has observed and will observe all partnership, corporate or
limited liability company formalities, as applicable, (xx) has maintained and
will maintain an arm's-length relationship with its Affiliates, (xxi) has no
indebtedness other than the Loan, the Senior Loan and liabilities in the
ordinary course of business relating to the ownership of the Collateral, (xxii)
has not and will not assume or guarantee or become obligated for the debts of
any other Person or hold out its credit as being available to satisfy the
obligations of any other Person except for the Loan, the Senior Loan and the
liabilities permitted pursuant to this Agreement, (xxiii) has not and will not
acquire obligations or securities of its partners, members or shareholders,
(xxiv) has allocated and will allocate fairly and reasonably any overhead for
shared office space and uses separate stationery, invoices and checks, (xxv)
except in connection with the Loan and the Senior Loan has not pledged and will
not pledge its assets for the benefit of any other Person, (xxvi) has held
itself out and identified itself and will hold itself out and identify itself as
a separate and distinct entity under its own name and not as a division or part
of any other Person, (xxvii) has maintained and will maintain its assets in such
a manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any other Person, (xxviii) except
as permitted by Section 2.2 of the Senior Loan Agreement and by Section 2.2
hereof, has not made and will not make loans to any Person, (xxix) has not
identified and will not identify its partners, members or shareholders, or any
Affiliate of any of them, as a division or part of it, (xxx) except as permitted
by Section 2.2 of the Senior Loan Agreement and by Section 2.2 hereof, has not
entered into or been a party to, and will not enter into or be a party to, any
transaction with its partners, members, shareholders or Affiliates except in the
ordinary course of its business and on terms which are intrinsically fair and
are no less favorable to it than would be obtained in a comparable arm's-length
transaction with an unrelated third party, (xxxi) except to the extent covered
by insurance, has no obligation to indemnify its partners, officers, directors
or members, as the case may be, or has such an obligation that is fully
subordinated to the Indebtedness and will not constitute a claim against it in
the event that cash flow in excess of the amount required to pay the
Indebtedness is insufficient to pay such obligation, and (xxxii) if such entity
is a corporation, it is required to consider the interests of its creditors in
connection with all corporate actions.
(o) POST-CLOSING COVENANTS. Borrower and the other specified
members of the Borrower Control Group shall comply with all post-closing
covenants set forth on Schedule III, attached hereto and made a part hereof.
(p) EXPENSES. Borrower shall reimburse Lender upon receipt of
notice for all reasonable costs and expenses (including reasonable attorneys'
fees and costs) incurred by Lender in connection with (i) INTENTIONALLY DELETED;
(ii) Borrower's and its Affiliates' ongoing performance under and compliance
with the Loan
50
Documents; (iii) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications of or
under any Loan Document and any other documents or matters requested by Lender;
(iv) filing and recording of any Loan Documents; (v) inspections and appraisals;
(vi) enforcing or preserving any rights, in response to third party claims or
the prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Borrower, any member of the Borrower
Control Group, the Loan Documents, the Collateral, or any other security given
for the Loan; and (vii) enforcing any obligations of or collecting any payments
due from Borrower or any member of the Borrower Control Group under any Loan
Document or with respect to the Collateral or in connection with any refinancing
or restructuring of the Loan in the nature of a "work-out", or any insolvency or
bankruptcy proceedings; provided, however, that Borrower shall not be liable for
the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender. Any costs and expenses due and payable to Lender hereunder which are not
paid by Borrower within ten days after demand may be paid from any amounts in
the Deposit Account, with notice thereof to Borrower. The obligations and
liabilities of Borrower under this Section shall survive the Maturity Date and,
if applicable, the Extended Maturity Date, and the exercise by Lender of any of
its rights or remedies under the Loan Documents.
(q) REIT STATUS. For Fiscal Year 2002 and each subsequent year
during the Term, (i) LFSRI II Borrower shall qualify and continue to be taxed as
a REIT, (ii) Borrower shall cause each of AAC Inc., PMAIT and (subject to the
transactions contemplated by the Konover Consent) Prometheus SERT to qualify and
continue to be taxed as a REIT, and (iii) Borrower shall not engage in or cause
or suffer any of its Subsidiaries under the direct or indirect control of the
Borrower to engage in any activities which would in fact jeopardize such
qualification and tax treatment.
(r) DIRECTION LETTER AUTHORIZATION. Borrower shall, and shall
cause each applicable member of the Borrower Control Group to, execute and
deliver the Direction Letters to each applicable Operating Company (excluding
Cliveden and the Destination Entities) and/or member of the Borrower Control
Group, as applicable, upon repayment in full of the Senior Loan. Borrower and
each applicable member of the Borrower Control Group shall cooperate with Lender
and take such actions required by Lender to ensure that all such Direction
Letters are countersigned and consented to by the Operating Companies (other
than AAC III).
(s) NET CASH FLOW. Subject to Section 2.6(b)(3), the Net Cash Flow
with respect to any Fiscal Quarter shall not be less than $5,000,000.
(t) NET EQUITY VALUE. Subject to Section 2.6(b)(3), the Net Equity
Value shall at all times be equal to or in excess of $200,000,000.
51
Section 5.2. FUND COVENANTS. Each of LFSRI II, LFSRI II Alternative and
LFSRI-CADIM covenants and agrees that from the date hereof until payment in full
of the Indebtedness:
(a) INTENTIONALLY DELETED.
(b) INDEBTEDNESS. The Fund shall not incur, create, assume, become
or be liable in any manner with respect to Other Borrowings, except the
Indebtedness, the Permitted Indebtedness identified under item 2 of Exhibit A
attached hereto and any Transaction Costs payable in connection with the
Transactions.
ARTICLE VI
NEGATIVE COVENANTS
------------------
Section 6.1. BORROWER NEGATIVE COVENANTS. Borrower covenants and agrees
that, until payment in full of the Indebtedness, it will not do, directly or
indirectly, any of the following unless Lender consents thereto in writing:
(a) Special Purpose Existence and Separateness of Entities.
(x) (i) take any actions in violation of the
Borrower's organizational or governing documents or that would otherwise
adversely affect the Borrower's existence as a Special Purpose Bankruptcy Remote
Entity, or (ii) amend, modify, waive or terminate the Borrower's organizational
or governing documents.
(y) (i) dissolve or liquidate, in whole or in
part, or take any action that could have the effect of causing a dissolution or
liquidation of any of its Subsidiaries, (ii) consolidate or merge with or into
any other entity, (iii) make an assignment for the benefit of creditors, file a
petition in bankruptcy, petition or apply to any tribunal for the appointment of
a custodian, receiver, trustee or other similar official for it, or for a
substantial part of its property, commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt or liquidation law, or admit
its inability to pay its debts generally as they become due, (iv) cause or
permit the Collateral or other assets or property of Borrower to be subject to
any Lien other than as provided for in the Loan Documents or as provided for in
the Senior Loan Documents, (v) Transfer, in one transaction or a series of
transactions, all, or substantially all, of its assets, (vi) make any material
changes in Borrower's present method of conducting business, or (vii) lend money
to any Person (except as permitted by Section 2.2).
(z) (i) undertake the incurrence or assumption
on behalf of Borrower directly or indirectly, of any indebtedness other than the
Loan and the Senior Loan, or (ii) xxxxx x Xxxx in Borrower's assets other than
as set forth in the Loan Documents and in the Senior Loan Documents.
52
(b) LIENS ON THE COLLATERAL. Incur, create, assume, become or be
liable in any manner with respect to, or permit to exist, any Lien with respect
to any Collateral except Liens in favor of Lender and Liens in favor of Senior
Lender under the Senior Loan Documents.
(c) TRANSFER. Except with respect to Permitted Transfers or as
expressly provided in this Agreement, or except as otherwise approved by Lender
in writing in Lender's discretion, allow to occur any Transfer with respect to
Equity Interests in Borrower, any member of the Borrower Control Group (other
than LFSRI II, LFSRI II Alternative and LFSRI-CADIM) or any Operating Company,
or of any Dividends and Distributions payable to or by Borrower, any member of
the Borrower Control Group or any Operating Company, or any other Collateral,
except (i) those Equity Interests which are not owned or controlled (directly or
indirectly) by LFSRI II, LFSRI II Alternative and LFSRI-CADIM, (ii) Dividends
and Distributions payable by LFSRI II, LFSRI II Alternative or LFSRI-CADIM, or
to any of them by any Entity other than the Borrower, any member of the Borrower
Control Group or any Operating Company, (iii) Dividends and Distributions
payable by Borrower, any member of the Borrower Control Group or Operating
Company which is a REIT to holders of Equity Interests necessary to maintain
qualification as a REIT, (iv) Transfers in accordance with the provisions of
Section 2.6(b)(2) and (v) Transfers of 50% of the Dividends and Distributions
payable by PMAIT.
(d) OTHER BORROWINGS. Incur, create, assume, become or be liable
or allow any member of the Borrower Control Group to become or be liable in any
manner with respect to Other Borrowings, except the Indebtedness, the Permitted
Indebtedness and any Transaction Costs payable in connection with the
Transactions.
(e) CHANGE IN BUSINESS. Make any material change in the scope or
nature of its business objectives, purposes or operations, or undertake or
participate in activities other than the continuance of its present business or
allow any member of the Borrower Control Group to do any of the foregoing.
(f) DEBT CANCELLATION. Cancel or otherwise forgive or release any
material claim or debt owed to Borrower by any Person, except for adequate
consideration or in the ordinary course of Borrower's business.
(g) AFFILIATE TRANSACTIONS. Except as permitted by Section 2.2 of
the Senior Loan Agreement or Section 2.2 hereof, enter into, or be a party to,
any transaction with an Affiliate of Borrower, except in the ordinary course of
business and on terms which are no less favorable to Borrower or such Affiliate
than would be obtained in a comparable arm's-length transaction with an
unrelated third party, and, if the amount to be paid to the Affiliate pursuant
to the transaction or series of related transactions is greater than Fifty
Thousand Dollars ($50,000.00) (determined annually on an aggregate basis) fully
disclosed to Lender in advance.
53
(h) CERTAIN RESTRICTIONS. Enter into any agreement which expressly
restricts the ability of Borrower or any member of the Borrower Control Group to
enter into amendments, modifications or waivers of any of the Loan Documents.
(i) ISSUANCE OF EQUITY INTERESTS. Subject to the requirements of
Section 5.1(o), issue or allow to be created any stock or shares or shareholder,
partnership or membership interests, as applicable, including Convertible
Securities or other ownership interests in Borrower or any member of the
Borrower Control Group, except for (x) the issuance of preferred stock to no
more than 150 Persons necessary for REIT qualification, and (y) the issuance of
new Equity Interests that are immediately pledged to Lender pursuant to
documents granting Lender a second priority security interest (subject and
subordinate only to a security interest in favor of Senior Lender in accordance
with the provisions of the Senior Loan Documents) and which are otherwise
reasonably acceptable in form and substance to Lender.
(j) PLACE OF BUSINESS. Change its chief executive office or its
principal place of business or place where its books and records are kept.
(k) IDENTITY. Change its name, identity or organizational
structure in any manner which might make any financing or continuation statement
filed in connection herewith seriously misleading within the meaning of Section
9-506 of the UCC (or any other applicable provision of the UCC).
(l) SUBSIDIARIES. Create any Subsidiaries or otherwise acquire
Equity Interests in any Entity without the prior written consent of Lender.
(m) CONTRACTUAL OBLIGATIONS. Other than the Loan Documents and the
Senior Loan Documents, Borrower and its assets shall not be subject to any Other
Borrowings, and Borrower shall not enter into any agreement, instrument or
undertaking by which it or its assets are bound, except for incurring
liabilities, not material in the aggregate, that are incidental to its
activities as an owner of Collateral.
(n) BORROWER CONTROL GROUP. Neither Borrower nor any member of the
Borrower Control Group shall fail to perform its obligations under (i) the Loan
Documents to which it is a party or by which it is bound, or (ii) under its
organizational or governing documents or any other material agreement to which
it is a party or by which it or its assets are bound or affected.
(o) ERISA. Neither Borrower nor any member of the Borrower Control
Group shall take any action, or omit to take any action, which would cause any
of such Entity's assets to constitute "plan assets" for purposes of ERISA or the
Code.
(p) DIRECTION LETTERS. Neither Borrower nor any member of the
Borrower Control Group shall attempt to revoke, rescind or modify any of the
Direction Letters.
54
ARTICLE VII
DEFAULTS
--------
Section 7.1. EVENT OF DEFAULT. The occurrence of one or more of the
following events shall be an "EVENT OF DEFAULT" hereunder:
(i) if Borrower fails to pay the outstanding Indebtedness
on the Maturity Date or, if applicable, the Extended Maturity Date; or if
Borrower fails to make any prepayment of all or any portion of the Indebtedness
as and when required by Section 2.6;
(ii) the occurrence of a Payment Breach;
(iii) the occurrence of the events identified elsewhere in
the Loan Documents or, as long as the Senior Loan is outstanding, the Senior
Loan Documents as constituting an "Event of Default" hereunder or thereunder;
(iv) any Transfer in violation of Section 6.1(c) of this
Agreement;
(v) if Borrower or any of its Affiliates fails to pay any
other amount payable by such Person pursuant to this Agreement or any other Loan
Document when due and payable in accordance with the provisions hereof or
thereof, as the case may be;
(vi) if any representation or warranty made by Borrower or
any member of the Borrower Control Group herein or in any other Loan Document,
or in any report, certificate, financial statement or other Instrument,
agreement or document furnished by or on behalf of Borrower in connection with
this Agreement, the Note or any other Loan Documents shall have been false or
misleading in any material respect as of the date such representation or
warranty was made or remade;
(vii) any violation of the covenants set forth in Section
5.1(n), 5.1(o), 5.1(s), 5.1(t), 5.2, 6.1(a), 6.1(b), 6.1(d), 6.1(i) or 6.1(l) of
this Agreement;
(viii) if Borrower or any member of the Borrower Control
Group or any Operating Company (other than an AACDK Entity) makes a general
assignment for the benefit of creditors;
(ix) if a receiver, liquidator or trustee shall be
appointed for Borrower, any member of the Borrower Control Group or any
Operating Company (other than an AACDK Entity), or if Borrower or any member of
the Borrower Control Group or any Operating Company (other than an AACDK
Entity), shall be adjudicated as bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement
55
pursuant to federal bankruptcy law, or any similar federal or state law, shall
be filed by or against, consented to, or acquiesced in by Borrower or any member
of the Borrower Control Group or any Operating Company (other than an AACDK
Entity), or if any proceeding for the dissolution or liquidation of Borrower or
any member of the Borrower Control Group or any Operating Company (other than an
AACDK Entity), shall be instituted or if Borrower or any member of the Borrower
Control Group or Operating Company (other than an AACDK Entity), shall generally
not be paying their respective debts as they become due;
(x) if Borrower attempts to delegate its obligations or
assign its rights under this Agreement, any of the other Loan Documents or any
interest herein or therein;
(xi) if any provision of any organizational or governing
document of Borrower or any member of the Borrower Control Group is amended or
modified in any respect (except as required by Section 5.1(o) of this Agreement
or except as otherwise consented to in writing by Lender), or if Borrower or any
member of the Borrower Control Group fails to perform or enforce the provisions
of its organizational or governing documents or attempts to dissolve;
(xii) if an event or condition specified in Section 5.1(j)
shall occur or exist with respect to any Plan or Multiemployer Plan and, as a
result of such event or condition, together with all other such events or
conditions, Borrower or any ERISA Affiliate shall incur or be reasonably likely
to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination
of the foregoing) which would result in or constitute a Material Adverse
Condition with respect to Borrower, the Fund taken as a whole, any other member
of the Borrower Control Group or any Operating Company, other than a Material
Adverse Condition solely with respect to one or more AACDK Entities and the
members of the Borrower Control Group (excluding Borrower and the Fund) that
own, directly or indirectly, an interest in such AACDK Entities (as long as such
Material Adverse Condition affecting the applicable members of the Borrower
Control Group was solely caused by or resulted solely from the Material Adverse
Condition of the subject AACDK Entities);
(xiii) if any financial statement, report or information
provided to Lender by or on behalf of Borrower concerning the Borrower, any
member of the Borrower Control Group or any Operating Company proves to be
inaccurate or misleading in any material respect;
(xiv) if a judgment is entered against Borrower or any
member of the Borrower Control Group or any Operating Company that adversely
affects the ability of Borrower or any member of the Borrower Control Group to
perform its obligations under the Loan Documents, unless such judgment is paid
in full within thirty (30) days after the date of such judgment;
56
(xv) if, after the Effective Date, Debt Service
Achievement is not maintained;
(xvi) if LFSRI II Borrower or any member of the Borrower
Control Group or any Operating Company which is a REIT ceases to be taxed as a
REIT;
(xvii) if Borrower or any member of the Borrower Control
Group or any other Person shall fail to perform any of the other obligations,
agreements, undertakings, terms, covenants, provisions or conditions of this
Agreement, the Note, or the other Loan Documents, not otherwise referred to in
this Section 7.1, for twenty (20) Business Days after written notice to Borrower
from Lender or its successors or assigns; provided that if such default cannot
reasonably be cured within such twenty (20) Business Day period and Borrower
shall have commenced to cure such default within such period and thereafter
diligently and expeditiously proceeds to cure the same, such twenty (20)
Business Day period shall be extended for as long as it shall require Borrower
in the exercise of due diligence to cure such default, it being agreed that no
such extension shall be for a period in excess of ninety (90) days;
(xviii) If Borrower fails to establish the Deposit Account on
or before the Effective Date;
(xix) from and after the Effective Date, the failure to
make any payment required to be made into the Deposit Account pursuant to any of
the Deposit Account Agreement, the Pledge Agreements and/or the Collateral
Assignments.
Section 7.2. REMEDIES. Upon the occurrence and during the continuation
of an Event of Default, subject to the rights of the Senior Lender to exercise
any of its remedies under the Senior Loan Documents, all or any one or more of
the rights, powers and other remedies available to Lender against Borrower or
its Affiliates under this Agreement, the Note, or any of the other Loan
Documents, or at law or in equity may be exercised by Lender at any time and
from time to time (including the right to accelerate and declare the outstanding
principal amount, unpaid interest, Default Rate interest, Late Charges, Exit
Additional Interest Payment and any other amounts owing by Borrower to be
immediately due and payable), without notice or demand, whether or not all or
any portion of the Indebtedness shall be declared due and payable, and whether
or not Lender shall have commenced any foreclosure proceeding or other action
for the enforcement of its rights and remedies under any of the Loan Documents
with respect to all or any portion of the Collateral. Any such rights of Lender
shall be subordinate to the rights of the Senior Lender and shall be cumulative
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its discretion, to the
fullest extent permitted by law, without impairing or otherwise affecting the
other rights and remedies of Lender permitted by law, equity or contract or as
set forth herein or in the other Loan Documents. Notwithstanding anything
contained to the contrary herein, the outstanding principal amount, unpaid
interest, Default Rate interest, Late Charges, Exit Additional Interest Payment
and any other
57
amounts owing by Borrower shall be accelerated and immediately due and payable,
without any election by Lender upon the occurrence of an Event of Default
described in Section 7.1(viii) or Section 7.1(ix).
Section 7.3. REMEDIES CUMULATIVE. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower or any other
Person pursuant to this Agreement or the other Loan Documents or existing at law
or in equity or otherwise. Lender's rights, powers and remedies may be pursued
singly, concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's discretion. No delay or omission to exercise any remedy,
right or power accruing upon an Event of Default shall impair any such remedy,
right or power or shall be construed as a waiver thereof, but any such remedy,
right or power may be exercised from time to time and as often as may be deemed
expedient. A waiver of any Default or Event of Default shall not be construed to
be a waiver of any subsequent Default or Event of Default or to impair any
remedy, right or power consequent thereon. Any and all of Lender's rights with
respect to the Collateral shall continue unimpaired, and Borrower shall be and
remain obligated in accordance with the terms hereof, notwithstanding (i) the
release or substitution of Collateral at any time, or of any rights or interest
therein or (ii) any delay, extension of time, renewal, compromise or other
indulgence granted by Lender in the event of any Default or Event of Default
with respect to the Collateral or otherwise hereunder. Borrower acknowledges
that (x) the use in this Agreement or any Loan Documents of phrases like "if an
Event of Default has occurred and is continuing," "if an Event of Default
remains uncured," or other similar phrases, are not intended to grant to
Borrower or any member of the Borrower Control Group any cure rights other than
those expressly set forth in this Agreement or such Loan Documents, and (y) the
tender of any cure after the occurrence of an Event of Default may be accepted
or rejected in Lender's sole discretion.
Section 7.4. LENDER'S RIGHT TO PERFORM. If Borrower fails to perform
any covenant or obligation contained herein and such failure shall continue for
a period of (5) five Business Days after Borrower's receipt of written notice
thereof from Lender, without in any way limiting Section 7.1 hereof, Lender may,
but shall have no obligation to, itself perform, or cause performance of, such
covenant or obligation, and the expenses of Lender incurred in connection
therewith shall be payable by Borrower to Lender upon demand. Notwithstanding
the foregoing, Lender shall have no obligation to send notice to Borrower of any
such failure.
ARTICLE VIII
MISCELLANEOUS
-------------
Section 8.1. SURVIVAL. Subject to Section 4.2, this Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates
58
delivered pursuant hereto shall survive the execution and delivery of this
Agreement and the execution and delivery by Borrower to Lender of the Note, and
shall continue in full force and effect so long as any portion of the
Indebtedness is outstanding and unpaid. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and agreements in
this Agreement contained, by or on behalf of Borrower, shall inure to the
benefit of the respective successors and assigns of Lender. Nothing in this
Agreement or in any other Loan Document, express or implied, shall give to any
Person other than the parties and the holder(s) of the Note and the other Loan
Documents, and their legal representatives, successors and assigns, any benefit
or any legal or equitable right, remedy or claim hereunder.
Section 8.2. LENDER'S DISCRETION. Whenever pursuant to this Agreement
or any other Loan Document, Lender exercises any right, option or election given
to Lender to approve or disapprove, or consent or withhold consent, or any
arrangement or term is to be satisfactory to Lender or is to be in Lender's
discretion, the decision of Lender to approve or disapprove, consent or withhold
consent, or to decide whether arrangements or terms are satisfactory or not
satisfactory or acceptable or not acceptable to Lender in Lender's discretion,
shall (except as is otherwise specifically herein provided) be in the sole and
absolute discretion of Lender.
Section 8.3. GOVERNING LAW.
(a) This Agreement and the obligations arising hereunder shall be
governed by, and construed in accordance with, the laws of the State of New York
applicable to contracts made and intended to be performed in such State, without
giving effect to principles of conflicts of laws, and any applicable law of the
United States of America. To the fullest extent permitted by law, Borrower
hereby unconditionally and irrevocably waives any claim to assert that the law
of any other jurisdiction governs this Agreement and the Note, and this
Agreement and the Note shall be governed by and construed in accordance with the
internal laws of the State of New York, without giving effect to principles of
conflicts of laws.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING
OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL OR STATE
COURT IN NEW YORK OR IN ANY FEDERAL OR STATE COURT IN ANY JURISDICTION IN WHICH
ANY COLLATERAL IS LOCATED, AND BORROWER WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN
ANY SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT
XXXXXXXX X. XXXXXXXXXX, ESQ., WHOSE ADDRESS IS 00 XXXXXXXXXXX XXXXX, XXX XXXX,
XXX XXXX 00000, AS ITS
59
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL
PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT
SAID ADDRESS (OR AT SUCH OTHER OFFICE AS MAY BE DESIGNATED BY BORROWER FROM TIME
TO TIME IN ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY TO BORROWER AT C/O
LAZARD FRERES REAL ESTATE INVESTORS L.L.C., 00 XXXXXXXXXXX XXXXX, XXX XXXX, XXX
XXXX 00000, ATTENTION: XXXX X. XXXXX AND WRITTEN NOTICE OF SAID SERVICE OF
BORROWER MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH
SUIT, ACTION OR PROCEEDING. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF
ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND
FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT (WHICH OFFICE SHALL BE
DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE OR
IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 8.4. MODIFICATION, WAIVER IN WRITING. No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, the Note or any other Loan Document, or consent to any departure by
Borrower or any of its Affiliates therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given. Except as
otherwise expressly provided herein, no notice to or demand on Borrower shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
Section 8.5. DELAY NOT A WAIVER. Neither any failure nor any delay on
the part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under the Note, or of any other Loan Document, shall operate as or
constitute a waiver thereof, nor shall a single or partial exercise thereof
preclude any other future exercise, or the exercise of any other right, power,
remedy or privilege. In particular, and not by way of limitation, by accepting
payment after the due date of any amount payable under this Agreement, the Note
or any other Loan Document, Lender shall not be deemed to have waived any right
either to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
Section 8.6. NOTICES. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in
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writing and shall be effective for all purposes if hand delivered or sent by (a)
hand delivery, with proof of attempted delivery, (b) certified or registered
United States mail, postage prepaid, (c) expedited prepaid delivery service,
either commercial or United States Postal Service, with proof of attempted
delivery, or (d) by telecopier (with answer back acknowledged) provided that
such telecopied notice must also be delivered by one of the means set forth in
(a), (b) or (c) above, addressed if to Lender at its address set forth on the
first page hereof, and if to Borrower at its designated address set forth on the
first page hereof, or at such other address and Person as shall be designated
from time to time by any party hereto, as the case may be, in a written notice
to the other parties hereto in the manner provided for in this Section 8.6. A
copy of all notices, consents, approvals and requests directed to Borrower shall
be delivered concurrently to c/o Lazard Freres Real Estate Investors L.L.C., 00
Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X.
Xxxxx, Phone Number (000) 000-0000, Telefax Number (000) 000-0000. A copy of all
notices, consents, approvals and requests directed to Lender shall be delivered
concurrently to each of the following: CTMPII FC LF (MS), c/o Capital Trust,
Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx
X. Xxxxxx, Xxxxxx XxxxXxxxxx and Loan Administrator. A notice shall be deemed to
have been given: (a) in the case of hand delivery, at the time of delivery; (b)
in the case of registered or certified mail, when delivered or the first
attempted delivery on a Business Day; (c) in the case of expedited prepaid
delivery upon the first attempted delivery on a Business Day; or (d) in the case
of telecopier, upon receipt of answer back confirmation, provided that such
telecopied notice was also delivered as required in this Section 8.6. A party
receiving a notice which does not comply with the technical requirements for
notice under this Section 8.6 may elect to waive any deficiencies and treat the
notice as having been properly given. If a party refuses delivery, such party
shall be deemed to have received notice on the date of attempted delivery, as
evidenced by courier's or post office proof of attempted delivery.
Section 8.7. TRIAL BY JURY. BORROWER AND LENDER, TO THE FULLEST EXTENT
THAT THEY MAY LAWFULLY DO SO, HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT
TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS.
Section 8.8. HEADINGS. The Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.9. ASSIGNMENT. (a) Lender shall have the right to assign in
whole or in part this Agreement and/or any of the other Loan Documents and the
obligations hereunder or thereunder to any Person and to sell or otherwise
transfer participation interests in all or any portion of the Loan evidenced
hereby provided that each assignee shall comply with the provisions of Section
2.13 and no assignee that is a
61
Foreign Lender shall be entitled to the benefits of Section 2.9 and 2.13 unless
such assignee complies with Section 2.13.
(b) The Note will be registered as to both principal and interest
with Borrower and transfer of the Note may be effected only by surrender of the
old Note and either the reissuance by Borrower of the old Note to the new holder
or the issuance by Borrower of a new instrument to the new holder. Borrower
shall cooperate in effecting any transfer requested by the holder.
Section 8.10. SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 8.11. PREFERENCES. Lender shall have no obligation to marshal
any assets in favor of Borrower or any other party or against or in payment of
any or all of the obligations of Borrower pursuant to this Agreement, the Note
or any other Loan Document. Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of the obligations of Borrower hereunder. To the extent Borrower makes a payment
or payments to Lender for Borrower's benefit, which payment or receipt of
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Lender.
Section 8.12. WAIVER OF NOTICE. Neither Borrower nor any of its
Affiliates shall be entitled to any notices of any nature whatsoever from Lender
except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower or an Affiliate thereof and except with respect to matters for which
Borrower and any applicable Affiliate are not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrower hereby expressly
waives the right to receive any notice from Lender with respect to any matter
for which this Agreement or the other Loan Documents does not specifically and
expressly provide for the giving of notice by Lender to Borrower.
Section 8.13. REMEDIES OF BORROWER. In the event that a claim or
adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement,
the Note, or the other Loan Documents, Lender or such agent, as the case may be,
has an obligation to act
62
reasonably or promptly, then in such event Borrower shall not be entitled to
bring an action for damages, but shall be limited to commencing an action
seeking injunctive relief or declaratory judgment.
Section 8.14. FULL RECOURSE. The Loan and Borrower's obligations
thereunder shall be fully recourse to Borrower.
Section 8.15. INTENTIONALLY DELETED.
Section 8.16. EXHIBITS INCORPORATED. The information set forth on the
cover, heading and recitals hereof, and the Exhibits and Schedules attached
hereto, are hereby incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.
Section 8.17. OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of
Lender's interest in and to this Agreement, the Note, and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to the Loan, this Agreement, the Note, and the
other Loan Documents which Borrower or any of its Affiliates may otherwise have
against any assignor, and no such unrelated counterclaim or defense shall be
interposed or asserted by Borrower or any of its Affiliates in any action or
proceeding brought by any such assignee upon this Agreement, the Note, and other
Loan Documents and any such right to interpose or assert any such unrelated
offset, counterclaim or defense in any such action or proceeding is hereby
expressly waived by Borrower.
Section 8.18. NO JOINT VENTURE OR PARTNERSHIP. Borrower and Lender
intend that the relationship created hereunder be solely that of borrower and
lender. Nothing herein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender.
Section 8.19. WAIVER OF MARSHALLING OF ASSETS DEFENSE. To the fullest
extent that Borrower may legally do so, Borrower waives all rights to a
marshalling of the assets of Borrower, and others with interests in Borrower,
and of the Collateral, or to a sale in inverse order of alienation in the event
of foreclosure of the interests hereby created, and agrees not to assert any
right under any laws pertaining to the marshalling of assets, the sale in
inverse order of alienation, homestead exemption, the administration of estates
of decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Collateral for the
collection of the Indebtedness without any prior or different resort for
collection, or the right of Lender to the payment of the Indebtedness in
preference to every other claimant whatsoever.
Section 8.20. WAIVER OF COUNTERCLAIM. Borrower hereby waives the right
to assert a counterclaim, other than compulsory counterclaim, in any action or
proceeding brought against Borrower by Lender or Lender's agents.
63
Section 8.21. CONFLICT; CONSTRUCTION OF DOCUMENTS. In the event of any
conflict between the provisions of this Agreement and the provisions of the
Note, or any of the other Loan Documents, the provisions of this Agreement shall
prevail. The parties hereto acknowledge that they were represented by counsel in
connection with the negotiation and drafting of the Loan Documents and that the
Loan Documents shall not be subject to the principle of construing their meaning
against the party which drafted same.
Section 8.22. BROKERS AND FINANCIAL ADVISORS. Borrower and Lender
hereby represent that they have dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrower hereby agrees to indemnify
and hold Lender harmless from and against any and all claims, liabilities, costs
and expenses of any kind in any way relating to or arising from a claim by any
Person, that such Person acted on behalf of Borrower in connection with the
transactions contemplated herein. The provisions of this Section shall survive
the expiration and termination of this Agreement and the repayment of the
Indebtedness.
Section 8.23. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 8.24. PAYMENT OF EXPENSES. Borrower shall, whether or not the
Transactions are consummated, pay all Transaction Costs, which shall include all
commitment fees due and payable at closing and all reasonable out-of-pocket
fees, costs, expenses, and disbursements of Lender and its attorneys, local
counsel, accountants and other contractors in connection with (i) the
negotiation, preparation, execution and delivery of the Loan Documents and the
documents and instruments referred to therein, (ii) the creation, perfection or
protection of Lender's Liens in the Collateral (including fees and expenses for
title and lien searches and filing and recording fees, intangibles taxes,
personal property taxes, mortgage recording taxes, due diligence expenses,
travel expenses, (iii) the negotiation, preparation, execution and delivery of
any amendment, waiver or consent relating to any of the Loan Documents, and (iv)
the preservation of rights under and enforcement of the Loan Documents and the
documents and instruments referred to therein, including any restructuring or
rescheduling of the Indebtedness. Notwithstanding anything to the contrary which
may be contained in this Agreement, upon the request of Lender, Borrower shall
pay all costs and expenses incurred by Lender in connection with the Loan after
the date hereof to a designated agent of Lender.
Section 8.25. BANKRUPTCY WAIVER. Borrower hereby agrees that, in
consideration of the recitals and mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, if Borrower (i) files with any bankruptcy court of
competent jurisdiction or is the subject of any petition under Title 11 of the
U.S. Code, as amended, (ii) is the
64
subject of any order for relief issued under Title 11 of the U.S. Code, as
amended, (iii) files or is the subject of any petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future law relating to bankruptcy,
insolvency or other relief of debtors, (iv) has sought or consents to or
acquiesces in the appointment of any trustee, receiver, conservator or
liquidator or (v) is the subject of any order, judgment or decree entered by any
court of competent jurisdiction approving a petition filed against such party
for any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future federal or state act
or law relating to bankruptcy, insolvency or other relief for debtors, the
automatic stay provided by the Federal Bankruptcy Code and any other such
statute shall be modified and annulled as to Lender, so as to permit Lender to
exercise any and all of its rights and remedies, upon request of Lender made on
notice to Borrower and any other party in interest but without the need of
further proof or hearing. Neither Borrower nor any Affiliate of Borrower shall
contest the enforceability of this Section.
Section 8.26. ENTIRE AGREEMENT. This Agreement, together with the
Exhibits and Schedules hereto and the other Loan Documents constitutes the
entire agreement among the parties hereto with respect to the subject matter
contained in this Agreement, the Exhibits and Schedules hereto and the other
Loan Documents and supersedes all prior agreements, understandings and
negotiations between the parties.
Section 8.27. DISSEMINATION OF INFORMATION. If Lender determines at any
time to sell, transfer or assign the Note, this Loan Agreement and any other
Loan Document and any or all servicing rights with respect thereto, or to grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement, subject to receipt by Borrower of a
confidentiality agreement reasonably acceptable to it from any Investor (herein
defined), Lender may forward to each purchaser, transferee, assignee, servicer,
participant or investor in such securities (collectively, the "INVESTOR") or any
Rating Agency rating such securities and each prospective Investor, all
documents and information which Lender now has or may hereafter acquire relating
to the Loan, Borrower, any member of the Borrower Control Group, any guarantor,
any indemnitor and the Collateral, which shall have been furnished by or on
behalf of Borrower, any member of the Borrower Control Group, any guarantor, any
indemnitor, or any party to any Loan Document, or otherwise furnished in
connection with the Loan, as Lender in its discretion determines necessary or
desirable. Notwithstanding the provisions of this Section 8.27 or the provisions
of Section 8.34, Lender shall not disclose the identity of the investors in
LSFRI II, LSFRI II Alternative or LSFRI-CADIM or the members in Lazard Freres
REI in documents intended to be released to the public. Neither Borrower nor any
member of the Borrower Control Group
65
shall have any obligation to any such third party to which Lender delivers such
information unless such Entity so agrees in writing directly with such third
party. Notwithstanding the provisions of this Section 8.27 to the contrary,
neither Borrower nor any member of the Borrower Control Group shall be required
to release or disclose any non-public information concerning any Entity, the
securities of which are traded publicly, to any Person who has not furnished a
confidentiality agreement.
Section 8.28. LIMITATION OF INTEREST. It is the intention of Borrower
and Lender to conform strictly to applicable laws governing the maximum rate of
interest and other charges payable, including usury laws. Accordingly, if the
transactions contemplated hereby would violate any such applicable law, then, in
that event, notwithstanding anything to the contrary in any Loan Document, it is
agreed as follows: (i) the aggregate of all consideration which constitutes
interest under applicable law that is taken, reserved, contracted for, charged
or received under any Loan Document or otherwise in connection with the Loan
shall under no circumstances exceed the maximum amount of interest allowed by
applicable law, and any excess shall be credited to principal by Lender (or if
the Loan shall have been paid in full, refunded to Borrower); and (ii) in the
event that the maturity of the Loan is accelerated by reason of an election by
Lender resulting from any default hereunder or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest may never include more than the maximum amount of interest allowed by
applicable law, and any interest in excess of the maximum amount of interest
allowed by applicable law, if any, provided for in the Loan Documents or
otherwise shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore prepaid, shall be credited to principal (or if
the principal portion of the Loan and any other amounts not constituting
interest shall have been paid in full, refunded to Borrower).
In determining whether or not the interest paid or payable under any
specific contingency exceeds the maximum amount allowed by applicable law,
Lender shall, to the maximum extent permitted under applicable law (a) exclude
voluntary prepayments and the effects thereof, and (b) amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout the
entire contemplated term of the Loan so that the interest rate is uniform
throughout the entire term of the Loan; provided, that if the Loan is paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received for the actual period of existence thereof exceeds the
maximum amount allowed by applicable law, Lender shall refund to Borrower the
amount of such excess, and in such event, Lender shall not be subject to any
penalties provided by any laws for contracting for, charging or receiving
interest in excess of the maximum amount allowed by applicable law.
Section 8.29. INDEMNIFICATION.
(a) In addition to any other indemnifications provided for herein
or in the other Loan Documents, Borrower shall protect, defend, indemnify and
hold harmless Lender and each of its Affiliates and their respective successors
and assigns (including their respective trustees, officers, directors, partners,
employees, attorneys, accountants, professionals and agents and each other
Person, if any, controlling Lender or any of its
66
affiliates within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended) (each, including Lender, an "INDEMNIFIED PARTY") from and against all
liabilities, obligations, claims, and, damages, penalties, causes of action,
losses, fines, costs, expenses (including reasonable attorneys' fees and costs)
imposed upon or incurred by or asserted against any Indemnified Party (other
than with respect to taxes (except for taxes for which Borrower is liable
pursuant to this Agreement) and other than by reason of such Indemnified Party's
default under the Loan Documents or active gross negligence or willful
misconduct, as determined to have occurred pursuant to the final nonappealable
decision of a court of competent jurisdiction) by reason of (i) ownership or
holding of this Agreement, the other Loan Documents, the Collateral or any of
them or any interest therein, including any funds deposited with Lender, (ii)
receipt and application of any balances in the Deposit Account, (iii) any
failure on the part of Borrower or any of its Affiliates, including the members
of the Borrower Control Group, to perform or comply with any of the terms of
this Agreement or any other Loan Document, (iv) any representation or warranty
made in the Note, this Agreement or any of the other Loan Documents being false
or misleading in any material respect as of the date such representation or
warranty was made, (v) any claim by Borrower or any Affiliate of Borrower that
the relationship of Lender and Borrower is other than that of lender and
borrower, or (vi) the execution and delivery of this Agreement and the other
Loan Documents, the transactions contemplated hereby or thereby and the
performance of the parties hereto of their respective obligations hereunder or
thereunder.
(b) In addition to any other indemnification provided for herein
or in the other Loan Documents, LFSRI II, LFSRI II Alternative and LFSRI-CADIM,
jointly and severally, shall protect, indemnify, defend and hold harmless the
Indemnified Parties from and against all liabilities, obligations, claims,
damages, penalties, causes of action, losses, fines, costs, expenses (including
reasonable attorneys' fees and costs) imposed upon or incurred by or asserted
against any Indemnified Party (other than by reason of such Indemnified Party's
default under the Loan Documents or active gross negligence or willful
misconduct, as determined to have occurred pursuant to the final, nonappealable
decision of a court of competent jurisdiction) by reason of any failure on the
part of Borrower or any of its Affiliates, including the members of the Borrower
Control Group, to perform or comply with any of the terms of this Agreement or
any other Loan Document.
(c) Any amounts payable to any Indemnified Party by reason of the
application of this Section 8.29 shall become immediately due and payable and
shall bear interest at the Default Rate from the date loss or damage is
sustained by any Indemnified Party until paid. The indemnifications set forth in
this Section 8.29 shall not be applicable to the extent (1) occasioned, arising
and caused solely as the result of the active gross negligence or willful
misconduct of Lender, its nominee or wholly owned subsidiary or their respective
employees or agents and irrespective of whether occurring prior to or subsequent
to the date upon which Lender, its nominee or wholly owned
67
subsidiary acquires possession of any interest in the Collateral by foreclosure,
sale, acceptance of an assignment in lieu of foreclosure or sale or otherwise,
as determined to have occurred pursuant to the final nonappealable decision of a
court of competent jurisdiction, or (2) as to matters specific and relating
solely to the Collateral, occasioned, arising and caused solely as the result of
any act of any Person (other than an act of Borrower or any of its Affiliates,
or an act of any Governmental Authority, including any change in any applicable
law) and occurring subsequent to the earlier to occur of (A) the date of payment
and performance in full of the Indebtedness and (B) the date upon which Lender,
its nominee or wholly owned subsidiary acquires ownership of the Collateral by
foreclosure, sale, acceptance of an assignment in lieu of foreclosure or sale or
otherwise of the Collateral. The obligations and liabilities of Borrower, LFSRI
II, LFSRI II Alternative and LFSRI-CADIM (each individually, an "INDEMNITOR",
and collectively "INDEMNITORS") under this Section 8.29 shall survive any
termination, satisfaction, or assignment of this Agreement and the exercise by
Lender of any of its rights or remedies hereunder, including the acquisition of
the Collateral by foreclosure or a conveyance in lieu of foreclosure, or
otherwise.
(d) In case any claim, action or proceeding (a "CLAIM") is brought
against any Indemnified Party in respect of which indemnification may be sought
by such Indemnified party pursuant to this Section 8.29, such Indemnified Party
shall give notice thereof to the applicable Indemnitor(s); provided, however,
that the failure of such Indemnified Party to so notify the applicable
Indemnitor(s) shall not limit or affect such Indemnified Party's rights to be
indemnified pursuant to this Section 8.29 hereof, except to the extent such
delay shall materially and adversely prejudice the applicable Indemnitor(s)'s
defense of such Claim. Upon receipt of such notice of Claim, the applicable
Indemnitor(s) shall, at its sole cost and expense, diligently defend any such
Claim with counsel reasonably satisfactory to such Indemnified Party. In the
alternative, the Indemnified Parties may elect to conduct their own defense
through counsel of their own choosing, and at the expense of the applicable
Indemnitor(s) , if (i) the Indemnified Parties reasonably determine that the
conduct of its defense by an Indemnitor presents a conflict or potential
conflict between such Indemnitor and an Indemnified Party that would make
separate representation advisable or otherwise could be prejudicial to its
interests, (ii) the Indemnitors refuse to defend or (iii) the Indemnitors shall
have failed, in Lender's reasonable judgment, to diligently defend the Claim.
The applicable Indemnitor(s)may settle any Claim against Indemnified Parties
without such Indemnified Parties' consent, provided that (x) such settlement is
without any liability, cost or expense whatsoever to such Indemnified Parties,
(y) the settlement does not include or require any admission of liability or
culpability by such Indemnified Parties under any Legal Requirement, whether
criminal or civil in nature, and (z) the applicable Indemnitor(s) obtains an
effective written release of liability for such Indemnified Parties from the
party to the Claim with whom such settlement is being made, which release must
be reasonably acceptable to such Indemnified Parties, and a dismissal with
prejudice with respect to all Claims made by the party with whom such settlement
is being made, with respect to any pending legal action against such Indemnified
Parties in connection with such Claim. If
68
the Indemnified Parties are conducting their own defense as provided above, the
applicable Indemnitor(s)shall be responsible for any good faith settlement of
such Claim entered into by such Indemnified Parties; provided that such
Indemnified Parties have obtained the applicable Indemnitor(s)'s consent to any
such settlement, such consent not to be unreasonably withheld or delayed.
Nothing contained herein shall be construed as requiring any Indemnified Parties
to expend funds or incur costs to defend any Claim in connection with the
matters for which such Indemnified Parties are entitled to indemnification
pursuant to this Section 8.29 hereof.
Section 8.30. BORROWER ACKNOWLEDGMENTS. Borrower hereby acknowledges to
and agrees with Lender that (i) the scope of Lender's business is wide and
includes, but is not limited to, financing, investment in real estate and other
transactions which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates and (ii) Borrower and its Affiliates have been
represented by competent legal counsel and have consulted with such counsel
prior to executing this Loan Agreement and the other Loan Documents.
Section 8.31. PUBLICITY. Lender shall have the right to issue press
releases, advertisements and other promotional materials describing Lender's
participation in the origination of the Loan, subject to Borrower's approval
which shall not be unreasonably withheld, conditioned or delayed.
Section 8.32. CROSS COLLATERALIZATION. Without limitation of any other
right or remedy provided to Lender in this Agreement or any of the other Loan
Documents, Borrower acknowledges and agrees that, to the full extent permitted
under applicable law, upon the occurrence of an Event of Default (i) Lender
shall have the right to pursue all of its rights and remedies in one proceeding,
or separately and independently in separate proceedings which it, as Lender, in
its sole and absolute discretion, shall determine from time to time, (ii) Lender
is not required to either marshal assets, sell Collateral in any inverse order
of alienation, or be subjected to any "one action" or "election of remedies" law
or rule, (iii) the exercise by Lender of any remedies against any Collateral
will not impede Lender from subsequently or simultaneously exercising remedies
against any other Collateral, (iv) all Liens and other rights, remedies and
privileges provided to Lender in this Agreement and in the other Loan Documents
or otherwise shall remain in full force and effect until Lender has exhausted
all of its remedies against the Collateral and all Collateral has been
foreclosed, sold and/or otherwise realized upon and (v) all Collateral shall be
security for the performance of all of Borrower's obligations hereunder.
Section 8.33. RELEASE. Upon full payment of the Indebtedness, Lender
shall execute such releases and reconveyances as are customary to release and
reconvey the Collateral which secures the Loan and, to the extent held by a
custodial agent, shall direct the custodial agent holding the certificates of
shares in KPT to return such shares to their owner.
69
Section 8.34. ASSIGNMENT BY LENDER; PARTICIPATIONS; SECURITIZATION
8.34.1 ASSIGNMENTS AND PARTICIPATIONS. Borrower acknowledges that
Lender may on or after the Closing Date sell and assign participation interests
in and to the Loan, or pledge, hypothecate or encumber, or sell and assign all
or any portion of the Loan, to or with such domestic or foreign banks, insurance
companies, pension funds, trusts or other institutional lenders or other
Persons, parties or investors (including grantor trusts, owner trusts, special
purpose corporations, REMICs, FASITs, real estate investment trusts or other
similar or comparable investment vehicles) as may be selected by Lender in its
sole and absolute discretion and on terms and conditions satisfactory to Lender
in its sole and absolute discretion. Subject to the restrictions on disclosure
of certain information contained in Section 8.27, Borrower and the members of
the Borrower Control Group shall cooperate in all respects with Lender in
connection with the sale of participation interests in, and the pledge,
hypothecation or encumbrance or sale of all or any portion of, the Loan, and
shall, in connection therewith, execute and deliver such estoppels,
certificates, instruments and documents as may be reasonably requested by
Lender, at no out-of-pocket cost to Borrower. Subject to entry into a
confidentiality agreement in customary form for such transactions, Borrower
grants to Lender the right to distribute financial and other information
concerning Borrower, the Collateral, and all other pertinent information with
respect to the Loan to any Person who has purchased a participation interest in
the Loan, or who has purchased the Loan, or who has made a loan to Lender
secured by the Loan or who has expressed an interest in purchasing a
participation interest in the Loan, or expressed an interest in purchasing the
Loan or the making of a loan to Lender secured by the Loan. If requested by
Lender, Borrower shall execute and deliver, and shall cause the members of the
Borrower Control Group (other than the Destination Entities except to the extent
same are directly or indirectly controlled by Borrower) to execute and deliver,
at no cost or expense to Borrower, such documents and instruments as may be
necessary to split the Loan into two or more loans evidenced by separate sets of
notes and secured by separate sets of other related Loan Documents to the full
extent required by Lender to facilitate the sale of participation interests in
the Loan or the sale of the Loan or the making of a loan to Lender secured by
the Loan, it being agreed that (a) any such splitting of the Loan will not
adversely affect or diminish the rights of Borrower as presently set forth
herein and in the other Loan Documents and will not increase the respective
obligations and liabilities of Borrower or any other Person associated or
connected with the Loan or the Collateral, (b) the Loan Documents securing the
Loan as so split will have such priority of lien as may be specified by Lender,
and (c) the retained interest of Lender in the Loan as so split shall be
allocated to or among one or more of such separate loans in a manner specified
by Lender in its sole and absolute discretion. Notwithstanding the provisions of
this Section 8.34.1 to the contrary, neither Borrower nor any member of the
Borrower Control Group shall be required to release or disclose any non-public
information concerning any Entity, the securities of which are traded publicly,
to any Person who has not furnished a confidentiality agreement.
70
8.34.2 EFFECT OF ASSIGNMENT. From and after the effective date of any
assignment of all or any portion of the Loan to any Person (an "ASSIGNEE") (a)
such Assignee shall be a party hereto and to each of the other Loan Documents to
the extent of the applicable percentage or percentages assigned to such Assignee
and, except as otherwise specified herein, shall succeed to the rights and
obligations of Lender hereunder in respect of such applicable percentage or
percentages, and (b) Lender shall relinquish its rights and be released from its
obligations hereunder and under the Loan Documents to the extent of such
applicable percentage or percentages. The liabilities of Lender and each of the
other Assignees shall be separate and not joint and several. Neither Lender nor
any Assignee shall be responsible for the obligations of any other Assignee.
8.34.3 SECURITIZATION. Lender, at its option, may elect to effect a
securitization of the Loan by means of the issuance of certificates of interest
therein or notes secured thereby (the "SECURITIES") rated by one or more Rating
Agencies (the "SECURITIZATION"). In such event and upon request by Lender to
seek to effect such a Securitization, Borrower shall, subject to the
restrictions on disclosure set forth in Section 8.27, promptly thereafter
cooperate (at no out-of-pocket cost to Borrower) in all reasonable respects with
Lender in the Securitization including (a) amending this Agreement and the other
Loan Documents, and executing such additional documents, in order to bifurcate
the Loan into two or more constituent loans or to effect such other changes as
may be reasonably necessary or desirable in connection with a Securitization or
requested by a Rating Agency, (b) providing such information as may be requested
in connection with the preparation of a private placement memorandum or
registration statement required to privately place or publicly distribute the
Securities in a manner which does not conflict with federal or state securities
laws, (c) providing in connection with such information, an indemnification
certificate (i) certifying that Borrower has carefully examined such private
placement memorandum or registration statement, as applicable, including the
sections entitled "Special Considerations", "Description of the Loan and the
Underlying Properties", "Operator", "The Borrower" and "Certain Legal Aspects of
the Loan" (or similarly titled sections), and that such Sections (and any other
Sections reasonably requested), insofar as they relate solely to Borrower, its
Affiliates, the Loan or (to Borrower's knowledge) the Collateral, do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (ii) indemnifying
Lender, the underwriter or placement agent and any of their Affiliates for any
losses, claims, damages or liabilities (the "LIABILITIES") to which such parties
may become subject insofar as the Liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact relating to
Borrower, its Affiliates, the Loan or the Collateral contained in such Sections
or arise out of or are based upon the omission or alleged omission to state
therein a material fact relating to Borrower, its Affiliates, the Loan or (to
Borrower's knowledge) the Collateral required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading and (iii) agreeing to
71
reimburse such parties for any legal or other expenses reasonably incurred by
such parties in connection with investigating or defending the Liabilities, (d)
causing to be rendered (at Lender's expense) such customary and reasonable
opinion letters as may be requested by and satisfactory to any Rating Agency
including substantive nonconsolidation opinion letters and an opinion letter
from local counsel to the Borrower stating that the assignment of the Loan and
the Loan Documents to a trustee in connection with the Securitization is
enforceable, (e) making such customary and reasonable representations,
warranties and covenants with respect to the Borrower, and the members of the
Borrower Control Group, as may be requested by any Rating Agency, (f) providing
such information regarding the Collateral and Borrower, members of the Borrower
Control Group, and their respective Affiliates as may be reasonably requested by
a Rating Agency or potential investors in Securities or otherwise reasonably
required in connection with an election of REMIC or FASIT or other tax status
and ongoing administration and reporting by any trust formed in connection with
the Securitization, (g) amending Borrower's organizational documents or making
such other reasonable changes to the structure of Borrower or such of its
partners or members or shareholders as may be required by any Rating Agency to
conform to requirements customarily imposed in similar transactions, and (h)
obtaining a comfort letter (in customary form and containing customary
exceptions) from a nationally recognized accounting firm in connection with
financial information relating to Borrower and the members of the Borrower
Control Group and which is, in connection with the Securitization, presented in
a private placement memorandum or prospectus. In no event shall Borrower be
required to pay any Rating Agency or other fees or expenses or be required to
pay any costs or expenses whatsoever in connection with any such Securitization
other than the overhead and internal costs incurred by Borrower in cooperating
in the manner described in clauses (a) through (h) above. Notwithstanding the
provisions of this Section 8.34.3 to the contrary, neither Borrower nor any
member of the Borrower Control Group shall be required to release or disclose
any non-public information concerning any Entity, the securities of which are
traded publicly, to any Person who has not furnished a confidentiality
agreement.
8.34.4 OTHER BUSINESS. Lender, each Assignee and each participant and
their respective Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with,
Borrower, members of the Borrower Control Group or any of them, any Affiliate of
Borrower, any of Borrower's subsidiaries and any Person who may do business with
or own interests in or securities of Borrower or any such Affiliate or
subsidiary, without any duty to account therefor.
8.34.5 PRIVITY OF CONTRACT. This Agreement is being entered into by
Lender individually and as agent for all present and future Assignees, and
privity of contract is hereby created among Lender and all present and future
Assignees, on the one hand, and Borrower, on the other hand.
72
Section 8.35. INTENTIONALLY DELETED.
Section 8.36. JOINT AND SEVERAL LIABILITY OF BORROWER. The obligations
of the LFSRI II Borrower and the Senior Quarters Borrower under this Agreement
are joint and several.
Section 8.37. AGREEMENT OF LENDER. In reliance on the truth and
accuracy of the representations and warranties of Borrower set forth in Section
4.1(aa), Lender hereby agrees that the delivery of certificates and instruments
evidencing ownership of the Collateral to Senior Lender, together with
satisfaction of the conditions set forth in Section 3.1(a)(2)(H) hereof to the
satisfaction of Lender, shall fulfill the obligation of Borrower, as of the date
hereof, to deliver the Collateral to Lender.
Section 8.38. CERTAIN FEES. Notwithstanding anything to the contrary in
the Fee Letter or in this Agreement, the Origination Fee (as such term is
defined in the Fee Letter), the Funding Fee (as such term is defined in the Fee
Letter) and the Unfunded Commitment Additional Interest Payment shall not exceed
$1,300,000 in the aggregate.
Section 8.39. TAX STATUS. CTMPII FC LF (MS) represents and warrants
that it is a corporation for United States federal income tax purposes.
Section 8.40. COOPERATION. Lender and Borrower acknowledge and agree
that contemporaneously with their execution and delivery of this Agreement,
Lender and Borrower (including various members of the Borrower Control Group
and/or the Operating Companies) have executed various amendments, consents,
waivers and collateral assignments supplementing and/or otherwise modifying the
provisions of this Agreement with the understanding that such amendments,
consents, waivers and collateral assignments are intended to duplicate, to the
extent applicable, the corresponding amendments, consents, waivers and
collateral assignments granted by the Senior Lender or the Borrower (including
various members of the Borrower Control Group and/or the Operating Companies)
prior to the date hereof with respect to the Senior Loan. Any amendments,
consents, waivers and collateral assignments or other instruments executed and
delivered on or prior to the date hereof that had the effect of modifying the
rights or obligations of Senior Lender or Borrower under the Senior Loan
Documents shall be applicable to and similarly modify the rights and obligations
of Borrower or Lender under the Loan Documents and Lender shall not be permitted
to declare an Event of Default or make any other claim under the Loan Documents
if such Event of Default or if the facts giving rise to such other claim would
not have occurred had such amendments, consents and waivers been executed and
delivered on or prior to the date hereof with respect to the Senior Loan
Documents and been given similar effect with respect to the Loan Documents. In
furtherance of the foregoing, Lender and Borrower shall (and Borrower shall
cause each member of the Borrower Control Group and each Operating Company to)
do and execute, all such further amendments, consents, waivers and collateral
assignments to carry out the intents and purposes of this Section to the extent
that any consents, waivers and collateral assignments given prior to the date
73
hereof in connection with the Senior Loan are discovered not to have been given
in connection with this Loan.
- SIGNATURES BEGIN ON NEXT PAGE -
74
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed by their duly authorized representatives, all as
of the day and year first above written.
LENDER:
CTMPII FC LF (MS),
a Cayman Islands exempted company
By: /s/ Xxxxxx X. Xxxxxxx III
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx III
Title: Authorized Signatory
BORROWER:
LFSRI II Borrower: LFSRI II SPV REIT CORP.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxx
------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President and Chief Financial
Officer
Senior Quarters Borrower: SENIOR QUARTERS FUNDING CORP.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxx
-------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President and Chief Financial
Officer
The undersigned are executing this Agreement solely for the
purpose of agreeing to be bound by the provisions of Section 5.1(o), Section 5.2
and Section 8.29.
LF STRATEGIC REALTY INVESTORS II L.P.,
LFSRI II ALTERNATIVE PARTNERSHIP L.P., and
LFSRI II - CADIM ALTERNATIVE PARTNERSHIP L.P.,
all Delaware limited partnerships
By: Lazard Freres Real Estate Investors L.L.C.,
a New York limited liability company, their
general partner
By: /s/ Xxxx X. Xxxxx
-------------------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Principal and Chief
Financial Officer
TABLE OF CONTENTS
-----------------
PAGE
----
Article I CERTAIN DEFINITIONS..........................................1
Section 1.1. Definitions.....................................1
Article II GENERAL TERMS...............................................22
Section 2.1. Loan Advances..................................22
Section 2.2. Use of Proceeds................................25
Section 2.3. Security for the Loan..........................26
Section 2.4. Note...........................................26
Section 2.5. Principal and Interest Payments................26
Section 2.6. Prepayments....................................27
Section 2.7. Application of Payments........................30
Section 2.8. Payment of Debt Service, Method and
Place of Payment...............................30
Section 2.9. Taxes..........................................30
Section 2.10. Exit Additional Interest Payment...............30
Section 2.11. INTENTIONALLY DELETED..........................30
Section 2.12. Unfunded Commitment Additional Interest
Payment........................................31
Section 2.13. Withholding....................................31
Article III CONDITIONS PRECEDENT AND THE ACCOUNTS.......................32
Section 3.1. Conditions Precedent to the Making of
the Loan.......................................32
Section 3.2. Form of Loan Documents and Related Matters.....36
Section 3.3. The Accounts...................................36
Section 3.4. Investment and Control of Accounts.............37
Article IV REPRESENTATIONS AND WARRANTIES..............................37
Section 4.1. Representations and Warranties of Borrower.....38
Section 4.2. Survival of Representations and Warranties.....43
Article V AFFIRMATIVE COVENANTS.......................................43
Section 5.1. Borrower Covenants.............................43
Section 5.2. Fund Covenants.................................51
Article VI NEGATIVE COVENANTS..........................................52
Section 6.1. Borrower Negative Covenants....................52
i
PAGE
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Article VII DEFAULTS....................................................54
Section 7.1. Event of Default...............................55
Section 7.2. Remedies.......................................57
Section 7.3. Remedies Cumulative............................58
Section 7.4. Lender's Right to Perform......................58
Article VIII MISCELLANEOUS...............................................58
Section 8.1. Survival.......................................58
Section 8.2. Lender's Discretion............................59
Section 8.3. Governing Law..................................59
Section 8.4. Modification, Waiver in Writing................60
Section 8.5. Delay Not a Waiver.............................60
Section 8.6. Notices........................................60
Section 8.7. TRIAL BY JURY..................................61
Section 8.8. Headings.......................................61
Section 8.9. Assignment.....................................61
Section 8.10. Severability...................................62
Section 8.11. Preferences....................................62
Section 8.12. Waiver of Notice...............................62
Section 8.13. Remedies of Borrower...........................63
Section 8.14. Full Recourse..................................63
Section 8.15. INTENTIONALLY DELETED..........................63
Section 8.16. Exhibits Incorporated..........................63
Section 8.17. Offsets, Counterclaims and Defenses............63
Section 8.18. No Joint Venture or Partnership................63
Section 8.19. Waiver of Marshalling of Assets Defense........63
Section 8.20. Waiver of Counterclaim.........................64
Section 8.21. Conflict; Construction of Documents............64
Section 8.22. Brokers and Financial Advisors.................64
Section 8.23. Counterparts...................................64
Section 8.24. Payment of Expenses............................64
Section 8.25. Bankruptcy Waiver..............................65
ii
PAGE
----
Section 8.26. Entire Agreement...............................65
Section 8.27. Dissemination of Information...................65
Section 8.28. Limitation of Interest.........................66
Section 8.29. Indemnification................................67
Section 8.30. Borrower Acknowledgments.......................69
Section 8.31. Publicity......................................69
Section 8.32. Cross Collateralization........................69
Section 8.33. Release........................................70
Section 8.34. Assignment by Lender; Participations;
Securitization.................................70
Section 8.35. INTENTIONALLY DELETED..........................73
Section 8.36. Joint and Several Liability of Borrower........73
Section 8.37. Agreement of Lender............................73
Section 8.38. Certain Fees...................................73
Section 8.39. Tax Status.....................................73
Section 8.40. Cooperation....................................73
EXHIBIT A - PERMITTED INDEBTEDNESS
EXHIBIT B - CERTIFICATE OF U.S. WITHHOLDING STATUS
SCHEDULE I - INTENTIONALLY DELETED
SCHEDULE II -COLLATERAL ASSIGNMENTS
SCHEDULE III - POST-CLOSING COVENANTS
SCHEDULE IV -PLEDGE AGREEMENTS
SCHEDULE 4.1(d) - EXISTING AND THREATENED LITIGATION
SCHEDULE 4.1(q) - MARGIN PROCEEDS
SCHEDULE 4.1(z) - CERTAIN ORGANIZATIONAL DOCUMENTS
iii
LOAN AGREEMENT
Dated as of July 11, 2002
by and between
LFSRI II SPV REIT CORP.
and SENIOR QUARTERS FUNDING CORP.
collectively, (as Borrower)
and
CTMPII FC LF (MS)
(as Lender)
