Exhibit 1
---------
AMENDED AND RESTATED
LOAN AGREEMENT
Dated as of February 8, 2001
by and between
LFSRI II SPV REIT CORP.
and SENIOR QUARTERS FUNDING CORP.
collectively, (as Borrower)
and
CAPITAL TRUST, INC.
(as Lender)
58120.0003
TABLE OF CONTENTS
PAGE
Article I CERTAIN DEFINITIONS..................................................................................2
Section 1.1. Definitions.............................................................................2
Article II GENERAL TERMS.......................................................................................20
Section 2.1. Loan Advances..........................................................................20
Section 2.2. Use of Proceeds........................................................................23
Section 2.3. Security for the Loan..................................................................23
Section 2.4. Notes..................................................................................23
Section 2.5. Principal and Interest Payments........................................................23
Section 2.6. Prepayments............................................................................25
Section 2.7. Application of Payments................................................................26
Section 2.8. Payment of Debt Service, Method and Place of Payment...................................26
Section 2.9. Taxes..................................................................................27
Section 2.10. Exit Fee...............................................................................27
Section 2.11. Servicing Fee..........................................................................27
Article III CONDITIONS PRECEDENT AND THE ACCOUNTS...............................................................27
Section 3.1. Conditions Precedent to the Making of the Loan.........................................27
Section 3.2. Form of Loan Documents and Related Matters.............................................31
Section 3.3. The Accounts...........................................................................31
Section 3.4. Investment and Control of Accounts.....................................................31
Article IV REPRESENTATIONS AND WARRANTIES......................................................................32
Section 4.1. Representations and Warranties of Borrower.............................................32
Section 4.2. Survival of Representations and Warranties.............................................37
Article V AFFIRMATIVE COVENANTS...............................................................................37
Section 5.1. Borrower Covenants.....................................................................37
Article VI NEGATIVE COVENANTS..................................................................................46
Section 6.1. Borrower Negative Covenants............................................................46
Article VII DEFAULTS............................................................................................48
Section 7.1. Event of Default.......................................................................48
Section 7.2. Remedies...............................................................................51
Section 7.3. Remedies Cumulative....................................................................51
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Section 7.4. Lender's Right to Perform..............................................................52
Article VIII MISCELLANEOUS.......................................................................................52
Section 8.1. Survival...............................................................................52
Section 8.2. Lender's Discretion....................................................................52
Section 8.3. Governing Law..........................................................................53
Section 8.4. Modification, Waiver in Writing........................................................54
Section 8.5. Delay Not a Waiver.....................................................................54
Section 8.6. Notices................................................................................54
Section 8.7. TRIAL BY JURY..........................................................................55
Section 8.8. Headings...............................................................................55
Section 8.9. Assignment.............................................................................55
Section 8.10. Severability...........................................................................55
Section 8.11. Preferences............................................................................55
Section 8.12. Waiver of Notice.......................................................................56
Section 8.13. Remedies of Borrower...................................................................56
Section 8.14. Full Recourse..........................................................................56
Section 8.15. Fortress Pledge........................................................................56
Section 8.16. Exhibits Incorporated..................................................................56
Section 8.17. Offsets, Counterclaims and Defenses....................................................56
Section 8.18. No Joint Venture or Partnership........................................................57
Section 8.19. Waiver of Marshalling of Assets Defense................................................57
Section 8.20. Waiver of Counterclaim.................................................................57
Section 8.21. Conflict; Construction of Documents....................................................57
Section 8.22. Brokers and Financial Advisors.........................................................57
Section 8.23. Counterparts...........................................................................58
Section 8.24. Payment of Expenses....................................................................58
Section 8.25. Bankruptcy Waiver......................................................................58
Section 8.26. Entire Agreement.......................................................................59
Section 8.27. Dissemination of Information...........................................................59
Section 8.28. Limitation of Interest.................................................................59
Section 8.29. Indemnification........................................................................60
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Section 8.30. Borrower Acknowledgments...............................................................62
Section 8.31. Publicity..............................................................................63
Section 8.32. Cross Collateralization................................................................63
Section 8.33. Release................................................................................63
Section 8.34. Assignment by Lender; Participations; Securitization...................................63
Section 8.35. Not a Novation.........................................................................66
Section 8.36. Joint and Several Liability of Borrower; Assumption by New Borrower....................66
Section 8.37. Interpretation of Documents............................................................67
EXHIBIT A - PERMITTED INDEBTEDNESS
EXHIBIT B - SCHEDULE OF AMORTIZATION
SCHEDULE I - Original Pledge Agreements
SCHEDULE II - Original Collateral Assignment
SCHEDULE III - Post-Closing Covenants
SCHEDULE IV - New Pledge Agreements
iii
AMENDED AND RESTATED
LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, made as of
February 8, 2001, is by and between CAPITAL TRUST, INC., a Maryland corporation,
having an address at 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 ("Original Borrower"), and SENIOR QUARTERS FUNDING CORP., a Delaware
corporation having the same address as the Original Borrower ("New Borrower";
New Borrower and Original Borrower are hereinafter individually and collectively
referred to as "Borrower").
RECITALS
A. Lender and Original Borrower entered into a Loan
Agreement, dated as of June 30, 1999 (the "Original Loan Agreement") pursuant to
which Lender made a loan (the "Original Loan") to the Original Borrower in the
initial principal amount of $52,500,000.
B. The Original Loan is evidenced by a Note in the original
principal amount of $52,500,000 dated June 30, 1999 (the "Original Note") made
by Original Borrower to Lender, which is guaranteed under certain circumstances
by a Guaranty dated as of June 30, 1999 (the "Original Guaranty") made by LF
Strategic Realty Investors II L.P., LFSRI II-CADIM Alternative Partnership L.P.
and LFSRI II Alternative Partnership L.P. in favor of Lender, and secured by,
among other things, a Deposit and Security Agreement dated as of June 30, 1999
(the "Original Deposit Agreement") by and among Lender, Original Borrower and
the other parties signatory thereto, a Custodial Agreement dated as of June 30,
1999 (the "Original Custodial Agreement") by and among Lender, Original Borrower
and the other parties signatory thereto, and the Pledge and Security Agreements
listed on Schedule I attached hereto (the "Original Pledge Agreements").
C. Lender and Original Borrower entered into an Omnibus
Amendment, dated as of April 24, 2000 (the "First Amendment"), whereby the
Original Loan Agreement, the Original Note, the Original Guaranty, the Original
Deposit Agreement, and the Original Pledge Agreements were amended to reflect,
among other things, an increase in the principal amount of the Original Loan by
an additional $10,000,000 (the "Increased Original Loan"), such that the entire
outstanding principal balance of the Increased Original Loan was $58,500,000 on
the date of the First Amendment. The First Amendment included the provision to
Lender on behalf of the Original Borrower of certain additional collateral
pursuant to the Collateral Assignment listed on Schedule II attached hereto (the
"Original Collateral Assignment"). The Increased Original Loan was evidenced by
the Original Note and a certain Note, dated April 24, 2000, from the Original
Borrower to the Lender in the original principal amount of $10,000,000 (the
"First Additional Note"). As of the date hereof, the outstanding principal
balances of the Original Note and the First Additional Note are $36,250,000 and
$10,000,000, respectively.
D. At the request of the Borrower, the Lender has agreed to
increase the Increased Original Loan by the additional principal amount of
$63,750,000 (the "New Loan Amount") and to make certain other amendments to the
Original Loan Agreement (as amended by the First Amendment) and the related loan
documents, subject to the terms and conditions contained in this Amended and
Restated Loan Agreement. It is the intention of the parties that this Agreement
shall amend and restate the Original Loan Agreement (as amended by the First
Amendment) in its entirety, effective as of the date hereof, but that such
documents shall continue to be effective with respect to all time periods
preceding the date hereof.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth in this Agreement, the parties hereby
amend and restate the Original Loan Agreement (as amended by the First
Amendment) and agree as follows:
Article I
CERTAIN DEFINITIONS
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.
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"AACDFK Entities" means any of ARV, Atria, Cliveden, the
Destination Entities, Fortress and Kapson.
"Accounts" has the meaning set forth in Section 3.4.
"Acknowledgment" means the Acknowledgment, dated the date
hereof, entered into by the Borrower and certain of the members of the Borrower
Control Group, and delivered to Lender in connection with this Agreement.
"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 Amended and Restated Loan Agreement,
as the same may from time to time hereafter be modified, supplemented or
amended.
"Amended and Restated Deposit Account Agreement" means that
certain Amended and Restated Deposit and Security Agreement 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.
"ARV" means ARV Assisted Living, Inc., a Delaware
corporation.
"Assignee" has the meaning set forth in Section 8.34.2.
"Atria" means Atria, Inc., a Delaware corporation.
"Atria Holdings" means Atria Holdings LLC, a Delaware
limited liability corporation.
"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.
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"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 Homebuilders,
Prometheus Interim, Prometheus UK, Prometheus Senior Quarters, Prometheus SQ
Holdings, Atria Holdings, LFSRI SPV, LFSRI II ES.
"BT Agreement" means that certain Amended and Restated
Credit Agreement dated as of December 2, 1999, among Atria, LFSRI II, LFSRI
Alternative, LSFRI-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 made by LFSRI II, LSFRI
Alternative and LSFRI-CADIM 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 on which a determination
of Debt Service Coverage Ratio is made by Lender.
"Chase" means The Chase Manhattan Bank.
"Chief Financial Officer" means the chief financial officer
of a specified Entity.
"Claim" has the meaning set forth in Section 8.29.
"Cliveden" means Cliveden PLC, a private company organized
under the laws of England and Wales.
"Closing Date" means February 8, 2001.
"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. In no event shall any Dividends
and Distributions in excess of 50% thereof paid or payable from time to time by
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PMAIT to Borrower constitute Collateral under this Agreement or any of the Loan
Documents.
"Collateral Assignment" means the Existing Collateral
Assignment.
"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 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.
"Debt Service" means, on any Calculation Date, the amount
of interest, Default Rate interest, Late Charges, Exit Fees and the amount of
all amortization 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 the Principal Indebtedness outstanding on such
Calculation Date plus, (a) if the determination of Debt Service is made under
Section 2.1(b), the amount of any requested advance of the Unfunded Amount, and
5
(b) during any Fiscal Quarter in which no amortization payment is required by
this Agreement, $4,500,000. 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 computed using the LIBOR in effect on the Calculation Date with
respect to Debt Service not yet due and payable for the remainder of such Fiscal
Quarter. If the calculation of Debt Service is made with respect to the Release
Amount, the amount of the Principal Indebtedness used for the purpose of making
such calculation shall be reduced by the amount of proceeds from the applicable
Transfer to be applied to repay the Loan pursuant to Section 2.6(b).
"Debt Service Achievement" means that, on any Calculation
Date, 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 which the Calculation Date occurs, to Debt Service for the
Fiscal Quarter in which the Calculation Date occurs.
"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.
"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) or member of the
Borrower Control Group is directed by the Borrower or the applicable member of
the Borrower Control Group to pay directly into the Deposit Account any and all
6
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.
"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.
"Existing Collateral Assignment" means the Original
Collateral Assignment, as amended by the Acknowledgment.
7
"Existing Notes" means the Original Note, as amended by the
First Amendment and the Acknowledgment, and the First Additional Note, as
amended by the Acknowledgment.
"Existing Pledge Agreements" means the Original Pledge
Agreements, as amended by the First Amendment and by the Acknowledgment.
"Exit Fee" means $1,650,000, being an amount equal to one
and one-half percent (1.5%) of the Loan Amount.
"Extended Maturity Date" has the meaning set forth in
Section 2.5(h).
"First Additional Note" has the meaning given to such term
in the Recitals.
"First Amendment" has the meaning given to such term in the
Recitals.
"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.
"Fortress" means The Fortress Group, Inc., a Delaware
corporation.
"Fortress Pledge Agreement" means the New Pledge Agreement
under which Prometheus Homebuilders pledges to Lender its shares of capital
stock in Fortress.
"Fund" means the collective reference to LFSRI II, LFSRI II
Alternative and LFSRI-CADIM.
"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.
"Guaranty" means the Guaranty of even date herewith from
LFSRI II, LFSRI Alternative and LFSRI-CADIM to Lender.
8
"Impositions" means all 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.
"Increased Original Loan" has the meaning given to such
term in the Recitals.
"Increased Original Loan Documents" means the Original
Note, Original Loan Agreement, Original Pledge Agreements and all other
agreements, documents, certificates and instruments evidencing or securing the
Original Loan as the same were amended by the First Amendment, together with the
First Additional Note, the First Amendment and all other agreements, documents,
certificates and instruments evidencing or securing the Increased Original Loan.
"Indebtedness" means, at any given time, the Principal
Indebtedness, together with all accrued and unpaid interest, including Default
Interest, Late Charges and Exit Fees thereon and all other monetary obligations
due to Lender pursuant hereto, under the Notes 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 Notes 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
9
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.
"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 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 LIBOR plus six and one-half percent (6-1/2%),
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 the date hereof.
"Investor" has the meaning provided in Section 8.27.
"Kapson" means Kapson Senior Quarters Corp., a Delaware
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.
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"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.
"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 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
11
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
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" means the Increased Original Loan, as increased by
the New Loan Amount.
"Loan Amount" means $110,000,000.
"Loan Documents" means, collectively, this Agreement, the
Notes, the Pledge Agreements, the Collateral Assignment, the Amended and
Restated 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
12
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 January 31, 2004, 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.
"Monthly Interest Payment Amount" means, with respect to
any Payment Date, an amount equal to all accrued and unpaid interest on the Loan
as of the end of the immediately preceding Interest Accrual Period.
"Monthly Payment Amount" means, with respect to any Payment
Date, an amount equal to all accrued and unpaid interest on the Loan as of the
end of the immediately preceding Interest Accrual Period plus, the aggregate
amortization payments due and payable under the Notes on such Payment Date in
accordance with the amortization schedule attached hereto as Exhibit B.
"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 ordinary
dividends (but excluding dividends constituting extraordinary dividends, that
is, dividends resulting from capital transactions and other non-recurring
events) paid by AAC III to AAC Inc., by PMAIT to Original Borrower, by KPT to
Prometheus SERT and by Intown to Prometheus ES during any Fiscal Quarter;
provided, that, (i) with respect to dividends paid by Intown, ordinary dividends
in the amounts of $3,442,951 and $3,529,025, respectively, shall be deemed to
have been paid to Prometheus ES on March 31, 2001 and June 30, 2001,
respectively, if such amounts were deemed to have been contributed to Intown on
or before such dates pursuant to Sections 4.3(b)(ii)(A) and 5.1(a) of the Intown
Agreement, and (ii) to the extent any of AAC III, Xxxxxxxxxx, PMAIT, KPT or
Intown declares a reduction in future dividends, the actual amount of dividends
paid to the applicable member of the Borrower Control Group for the Fiscal
Quarter preceding such declaration shall be deemed reduced by such member of the
Borrower Control Group's proportionate share of the declared reduction in
dividends.
13
"New Borrower" has the meaning provided in the preamble to
this Agreement.
"New Loan Amount" has the meaning given to such term in the
Recitals.
"New Pledge Agreements" means 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.
"Notes" means the Existing Notes, as amended by the
Acknowledgment, and the Second Additional Note.
"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, Fortress, Cliveden, Atria, Kapson, and the Destination
Entities.
"Original Borrower" has the meaning given to such term in
the preamble to this Agreement.
"Original Collateral Assignment" has the meaning given to
such term in the Recitals.
"Original Custodial Agreement" has the meaning given to
such term in the Recitals.
"Original Loan" has the meaning given to such term in the
Recitals.
"Original Loan Agreement" has the meaning given to such
term in the Recitals.
"Original Note" has the meaning given to such term in the
Recitals.
"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 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
14
under any interest rate protection agreement (including any interest rate swaps,
caps, floors, collars or similar agreements) and similar agreements.
"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 Notes, 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 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");
15
(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 Existing Pledge Agreements
and the New Pledge Agreements.
"PMAIT" means Prometheus Mid-Atlantic Investment Trust, a
Maryland real estate investment trust.
"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,
16
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 Homebuilders" means Prometheus Homebuilders
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.
"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").
"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 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), less (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, (ii) income taxes due and payable by such member of the Borrower
17
Control Group or its respective members or partners therein as a result of such
Transfer, and (iii) 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; provided, that, if the Transfer directly or indirectly
involves any of AAC III, AAC Inc., PMAIT, Xxxxxxxxxx, KPT or Intown, the Release
Amount shall be increased to the extent necessary to maintain Debt Service
Achievement based on the Net Cash Flow of the remaining Entities specified in
the definition of "Net Cash Flow".
"Retained Amount Reserve" shall have the meaning given to
such term in the Amended and Restated Deposit Account Agreement.
"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.
"Xxxxxxxxxx Letter of Credit" means the collective
reference to (a) the letter of credit required to be delivered to Xxxxxxx Sachs
Mortgage Company ("GSMC") pursuant to Article IX of the Loan Agreement, dated
March 16, 1998, between GSMC and Commerce Square Partners-Philadelphia Plaza,
L.P. ("CSPPP"), and (b) the "Mezzanine LC," as such term is defined in the
Agreement of Limited Partnership of CSPPP.
"Xxxxxxxxxx Letter of Credit Agreement" means (a) the
Amended and Restated Reimbursement Agreement for Standby Letter(s) of Credit,
dated as of June 22, 2000, between PMAIT and PNC Bank, National Association, and
(b) the Amended and Restated Cash Collateral and Security Agreement, dated as of
June 22, 2000, between PMAIT and PNC Bank, National Association.
"Xxxxxxxxxx XXX Reserve" shall have the meaning given to
such term in the Amended and Restated Deposit Account Agreement.
"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.
"Second Additional 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
18
in writing, and any note(s) issued in exchange therefor or in replacement
thereof.
"Securities" has the meaning set forth in Section 8.34.3.
"Securitization" has the meaning set forth in Section
8.34.3.
"Servicer" has the meaning given to such term in the
Amended and Restated Deposit Account Agreement.
"Servicing Fee" has the meaning set forth in Section 2.11.
"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.
"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 June 30, 1999 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 in effect in the jurisdiction in which the relevant Collateral
is located.
"Unfunded Loan Amount" has the meaning set forth in Section
2.1.
19
"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 (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.
"VCOC" means a venture capital operating company as defined
in the Plan Assets Regulation.
Article II
GENERAL TERMS
Section 2.1. Loan Advances.
(a) On the date hereof, the outstanding principal balance
of the Original Note, as amended by the First Amendment, is $36,250,000, and the
outstanding principal balance of the First Additional Note is $10,000,000.
Lender shall lend to Borrower an additional amount equal to the New Loan Amount,
which will be advanced as follows: on the Closing Date or, if later, the date on
which Borrower fulfills all conditions precedent to funding, Lender will advance
to Borrower $38,750,000 ("Initial Advance") and, at the request of the Borrower
made in accordance with and subject to the conditions contained in Section
2.1(b), Lender will advance to Borrower on or before August 1, 2001 in one or
more tranches the additional aggregate amount of not more than $25,000,000
("Unfunded Loan Amount").
(b) Lender's obligation to make advances of all or any
portion of the Unfunded Loan Amount following the Initial Advance shall be
subject to the conditions that, with respect to each such advance requested:
(i) no Default or Event of Default shall have occurred and
be continuing;
20
(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 AACDFK 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 AACDFK 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 AACDFK Entities), and all of the other
conditions to Lender's obligation to make advances of all or any portion of the
Unfunded 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 each advance not less than 30 nor more than 60 days prior to the requested
funding date for such advance, specifying the amount requested, the use of the
proceeds attributable to such advance, the new Collateral to be furnished in
connection therewith, the Borrower's calculation (with all necessary supporting
information) demonstrating the Debt Service Coverage Ratio, and the proposed
funding date, and certifying that no Default or Event of Default has occurred
and is continuing;
(iv) advances shall not be made more often than once in any
rolling 30-day period;
(v) no advance other than the last such advance shall be in
an amount less than $5,000,000;
(vi) Lender shall have received payment from Borrower of a
fee equal to three quarters of one percent (0.75%) of the amount of such
advance;
(vii) 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
of any Entity, Lender shall have received a perfected, first priority Lien in
such interest, loan and property, as created and evidenced by such instruments
(including new pledge agreements, Direction Letters, and amendments, if required
by Lender, to the Amended and Restated 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;
21
(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 AACDFK Entities; and
(ix) Debt Service Achievement shall be in effect.
(c) Notwithstanding anything in this Section 2.1 to the
contrary, until such time as (i) either the BT Guaranty is terminated or the
loan made by Bankers Trust Company pursuant to the BT Agreement has been
extended on terms satisfactory to Lender in Lender's sole and absolute
discretion, and (ii) all obligations of Prometheus ES to make capital
contributions to Intown have been satisfied, Lender shall have no obligation to
advance any portion of the Unfunded Loan Amount except in accordance with the
following: fundings of portions of the Unfunded Loan Amount shall be permitted
only to the extent that, after giving effect to such advance and the application
by Borrower of the proceeds thereof (as hereinafter required to be applied), the
aggregate of the remaining Unfunded Loan Amount plus the balance in the Retained
Amount Reserve shall be equal to or greater than the sum of (x) the lesser of
$35,500,000 and the maximum principal amount guaranteed under the BT Guaranty,
and (y) the amount which Prometheus ES is obligated to contribute to the capital
of Intown. To the extent that proceeds of the Unfunded Loan Amount are disbursed
for such purposes, Borrower and the applicable member(s) of the Borrower Control
Group shall use, directly or indirectly, such proceeds to (A) repay a portion of
the loan made by Bankers Trust Company under the BT Agreement in order to
terminate or reduce the principal amount of the BT Guaranty or otherwise to
induce Bankers Trust Company to extend such loan on terms satisfactory to Lender
in Lender's sole and absolute discretion, and (B) subject to Section 2.1(e),
fund all or a portion of the obligations of Prometheus ES to contribute capital
to Intown.
(d) Notwithstanding anything contained herein to the
contrary, prior to disbursement of any other portion of the Unfunded Loan Amount
to be advanced at any time, there shall be deposited into the Interest Reserve
of the Deposit Account an amount which shall be sufficient to pay all interest,
on the portion of the Unfunded 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 Amended and Restated Deposit
Account Agreement.
22
(e) Notwithstanding anything to the contrary contained in
this Section 2.1, Lender shall have no obligation to disburse the last
$3,750,000 of the Unfunded Loan Amount unless Prometheus ES shall have actually
received a distribution of cash (which shall not have been merely "deemed" to
have been made pursuant to the Intown Agreement) constituting the "Class A
Preferred Return" (as such term is defined in the Intown Agreement) for the
second calendar quarter of 2001).
Section 2.2. Use of Proceeds. Proceeds of the New Loan
Amount may be used by Borrower to (a) pay interest, fees and closing costs in
connection with the Transactions; (b) pay dividends to the Fund for the purpose
of enabling the Fund to make capital contributions to the applicable members of
the Borrower Control Group to fund capital contributions to Intown and payments
to Bankers Trust Company in accordance with Section 2.1(c); (c) fund loans by
the New Borrower to Atria and/or Kapson; (d) pay dividends to the Fund for the
purpose of enabling the Fund (directly or indirectly) to make capital
contributions to New Borrower; and (e) pay dividends to the Fund for the purpose
of making debt or equity investments in or otherwise acquiring additional debt
or equity issued by members of the Borrower Control Group or Operating
Companies, provided however that Lender shall receive a first priority Lien
against the loan or the debt or equity investment so made and the additional
debt or equity otherwise so acquired pursuant to such instruments (including
pledge agreements, new Direction Letters, and amendments, if required by Lender,
to the Amended and Restated Deposit Account Agreement) as Lender may request,
all in form and substance reasonably satisfactory to Lender.
Section 2.3. Security for the Loan. The Notes and
Borrower's obligations hereunder and under the other Loan Documents shall be
secured by the Loan Documents.
Section 2.4. Notes. Borrower's obligation to pay the
principal of and interest on the Loan (including Late Charges, Default Rate
interest and Exit Fees), shall be evidenced by this Agreement and by the Notes,
duly executed and delivered by Borrower. The Notes shall be payable as to
principal, interest, Late Charges, Default Rate interest and Exit Fees, 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 Notes and all other amounts due to Lender
under the Loan Documents at the Interest Rate.
23
(b) Payment of Principal and Interest. On each Payment
Date, Borrower shall pay to the Lender the Monthly Payment Amount, which shall
be applied to the Notes pro rata in accordance with their respective principal
balances.
(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 Notes will bear interest at the Default Rate. (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 Fee.
(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 January 31, 2005 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 AACDFK Entities and the members
of the Borrower Control Group (excluding the Borrower and the Fund) that own,
directly or indirectly, an interest in such AACDFK 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 AACDFK Entities);
24
(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 AACDFK Entities and the members of the Borrower
Control Group (excluding the Borrower and the Fund) that own, directly or
indirectly, an interest in such AACDFK 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 AACDFK Entities); and
(iii) Borrower's request for such extension shall be
accompanied by an extension fee equal to one percent (1%) of the Principal
Indebtedness outstanding on the Maturity Date.
Section 2.6. Prepayments.
(a) Voluntary Prepayment. Borrower shall have the right, on
any Payment Date, to prepay the Loan in whole, but not 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 Fee.
(b) Mandatory Prepayment. In the event of a Transfer of
Equity Interests in or control of Lazard Freres REI, or change in the general
partner of any of LFSRI II, LFSRI II Alternative and LFSRI-CADIM, the entire
Indebtedness shall become immediately due and payable, together with the Exit
Fee. 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 the Borrower,
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. The amount of the Indebtedness
required to be 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 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 the 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
of such Dividends and Distributions, minus the amount of Cost Exclusions
resulting from the Transfer giving rise to such Dividends and Distributions, 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
25
be required to make mandatory prepayments in accordance with Section 6(b) of the
Amended and Restated Deposit Account Agreement.
(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 Notes 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 Notes. Notwithstanding
the provisions of this Section 2.6 to the contrary, if 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 and Exit Fee, if applicable, 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. In connection with any mandatory
prepayment under Section 2.6(b) hereof, Lender shall release the Collateral, or
portion thereof, which is the subject of the Transfer giving rise to such
prepayment. 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, to the
Principal Indebtedness; and fourth, to 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 Notes 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.
26
(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 present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority.
Section 2.10. Exit Fee. 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 Fee.
Section 2.11. Servicing Fee. On the date of the Initial
Advance, Borrower shall pay to Lender an administration and servicing fee equal
to $7,500. Throughout the Term, Borrower shall pay to Lender a fee (the
"Servicing Fee") in the amount equal to 0.05% per annum on the weighted average
Principal Indebtedness outstanding during the applicable period. The Servicing
Fee shall be payable monthly in arrears.
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 Lender an
origination fee equal to $1,462,500. Such fee shall be
deemed to have been fully earned upon execution of this
Agreement, regardless of whether all or part of the New
Loan Amount is actually funded.
(B) Lender shall have completed its
"due-diligence" review of the 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
27
results of such review shall be satisfactory to Lender in
its sole discretion.
(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 Second Additional Note.
(C) 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 the New 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 New Pledge Agreements shall have
delivered the certificates and other instruments evidencing
ownership of the Collateral to Lender, together with
separate endorsements executed in blank with respect
thereto and shall have taken all other action necessary to
grant Lender a first priority perfected security in all
"investment property" included in the Collateral (as such
term is defined in Article 9 of the UCC).
(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 Amended
and Restated Deposit Account Agreement and shall have
delivered to Lender the Direction Letters countersigned and
consented to by the Operating Companies (other than AAC III
and the Destination Entities).
(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
28
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.
(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.
29
(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 New Loan Amount other than the Initial Advance 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 New Loan Amount 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 AACDFK Entities and the members of the
Borrower Control Group (excluding the Borrower and the Fund) that own, directly
or indirectly, any interest in such AACDFK 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 AACDFK Entities), and (ii) all the other conditions to Lender's
obligation to make advances of all or any portion of the Unfunded 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 Notes, 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.
(d) The funding of the Initial Advance and of each
subsequent advance of a portion of the New 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 New 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
AACDFK Entity or any Collateral constituting Equity Interests in or Instruments
issued by such AACDFK Entity, so long as none of the proceeds of such advance
30
shall be advanced, contributed or otherwise invested directly or indirectly in
such AACDFK 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) On or before the Closing Date Borrower shall establish
such reserve accounts and deposit such amounts into such accounts as required
pursuant to the terms of the Loan Documents.
(b) Prior to the Closing Date, Borrower has 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 Closing Date, the Deposit
Account shall be governed by the Amended and Restated Deposit Account Agreement.
(c) 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 Amended and Restated 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 Amended and Restated 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 Amended and
Restated 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-1 Financing Statements, except those naming Lender as the secured party,
31
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, 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 Notes 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 Amended and Restated
Deposit Account Agreement. The Accounts shall be released to or at the direction
of the Borrower upon payment in full of the Indebtedness.
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 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, 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,
32
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. 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.
(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
AACDFK Entities and the members of the Borrower Control Group (excluding the
Borrower and the Fund) that own, directly or indirectly, an interest in such
AACDFK 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 AACDFK
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 and/or Fortress,
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,
33
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 AACDFK Entities
and the members of the Borrower Control Group (excluding the Borrower and the
Fund) that own, directly or indirectly, an interest in such AACDFK 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 AACDFK 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. Borrower has not
borrowed or received other debt financing that has not been heretofore repaid in
full and Borrower has no known material Contingent Obligations.
(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 AACDFK Entities and the members of the Borrower
Control Group (excluding the Borrower and the Fund) that own, directly or
indirectly, an interest in such AACDFK 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 AACDFK 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
34
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 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 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 Increased Original Loan Document immediately prior
to the execution and delivery of this Agreement and 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. 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
35
System ("Board") 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, 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 New 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, all historical financial data concerning the members of the Borrower
Control Group and the Operating Companies 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 September 30, 2000,
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, 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 Increased Original Loan Documents, immediately prior to the
execution and delivery of this Agreement, were not, and 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 Notes, 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) other than those liabilities and obligations expressly
permitted by this Agreement.
36
(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. Original Borrower has not and does not
engage in activities which would in fact jeopardize its election to qualify and
be taxed as a REIT.
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 Notes and
continue for so long as any amount remains owing to Lender under this Agreement,
the Notes 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:
(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.
(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
37
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.
(h) Further Assurances. Borrower shall, at Borrower's sole
cost and expense:
38
(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, in 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 on and that the
39
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
40
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
(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
41
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;
(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
42
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 omitted.
(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 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
43
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 Amended and Restated 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 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 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 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 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 Original Loan
Agreement, by the First Amendment 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
Original Loan Agreement, by the First Amendment 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
44
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) 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) the preparation,
negotiation, execution and delivery of the Loan Documents and the consummation
of the transactions contemplated thereby and all the costs of furnishing all
opinions by counsel for Borrower and its Affiliates; (ii) Borrower's and its
Affiliates' ongoing performance under and compliance with the Loan 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 2001 and each subsequent
year during the Term, the Borrower shall and shall cause each of AAC Inc., PMAIT
and Prometheus SERT to, qualify and continue to be taxed as a REIT, and 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.
45
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, (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, or
(ii) xxxxx x Xxxx in Borrower's assets other than as set forth in the Loan
Documents.
(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.
(c) Transfer. Except with respect to Permitted Transfers or
as expressly provided to the contrary 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
46
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, and (iv)
Transfers with respect to which Borrower makes payments in accordance with the
provisions of Section 2.6(b).
(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 Original 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.
(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 first priority security interest and which are
otherwise reasonably acceptable in form and substance to Lender.
47
(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
9-402(7) 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,
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.
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;
48
(iii) the occurrence of the events identified elsewhere in
the 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 Notes 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), 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 AACDFK 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 AACDFK Entity), or if Borrower or any member of
the Borrower Control Group or any Operating Company (other than an AACDFK
Entity), shall be adjudicated as bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by Borrower or any member of the Borrower Control Group or any
Operating Company (other than an AACDFK 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 AACDFK Entity), shall be
instituted or if Borrower or any member of the Borrower Control Group or
Operating Company (other than an AACDFK 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
49
Agreement), 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 (A) 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 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 AACDFK Entities
and the members of the Borrower Control Group (excluding the Borrower and the
Fund) that own, directly or indirectly, an interest in such AACDFK 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 AACDFK Entities); or (B) Borrower or any member
of the Borrower Control Group that has as an investor any ERISA Investor shall
fail or cease to qualify as a VCOC or otherwise meet an exception under the Plan
Assets Regulation which would prevent the assets of such Borrower or member of
the Borrower Control Group from being subject to Title I of ERISA and/or Section
4975 of the Code;
(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;
(xv) if Debt Service Achievement is not maintained;
(xvi) if 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 Notes, 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
50
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; or
(xviii) the failure to make any payment required to be made
into the Deposit Account pursuant to any of the Amended and Restated Deposit
Account Agreement, the Pledge Agreements and/or the Collateral Assignment.
Section 7.2. Remedies. Upon the occurrence and during the
continuation of an Event of Default, 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 Notes, 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 Fee 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 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 Fee and any other 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
51
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 delivered pursuant hereto shall survive the
execution and delivery of this Agreement and the execution and delivery by
Borrower to Lender of the Notes, 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 Notes 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
52
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
Notes, and this Agreement and the Notes 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 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
53
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 Notes 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 Notes, 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 Notes 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 Notes 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 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 (212)
332-5641. A copy of all notices, consents, approvals and requests directed to
Lender shall be delivered concurrently to each of the following: 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)
54
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 NOTES 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. 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.
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 Notes 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
55
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 Notes, or the other Loan Documents, Lender or such agent, as the case may
be, has an obligation to act 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. Fortress Pledge. Notwithstanding the
provisions of the Fortress Pledge or the other provisions of this Agreement to
the contrary, so long as no Event of Default shall have occurred and be
continuing, Prometheus Homebuilders shall have the right, from time to time, in
good faith to enter into agreements, exchanges of interests or other
restructuring arrangements, with Fortress and its other shareholders, in which
event Lender shall release its collateral under the Fortress Pledge in exchange
for a pledge of such Equity Interests in Fortress or such other rights as
Prometheus Homebuilders or the Fund (directly or indirectly) obtains.
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 Notes, 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 Notes, 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
56
proceeding brought by any such assignee upon this Agreement, the Notes, 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.
Section 8.21. Conflict; Construction of Documents. In the
event of any conflict between the provisions of this Agreement and the
provisions of the Notes, 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.
57
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.
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 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.
58
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 Notes, 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 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,
59
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 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 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 Notes, 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
60
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 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.
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(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 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.
62
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
shall direct the custodial agent holding the certificates of shares in KPT to
return such shares to their owner.
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
63
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.
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
64
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 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
65
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.
Section 8.35. Not a Novation. The Acknowledgment, the
Amended and Restated Deposit Account Agreement and this Agreement constitute a
modification of the Increased Original Loan Documents and are not intended to
and shall not terminate or extinguish any of the indebtedness or obligations
thereunder, nor shall this Agreement, the Acknowledgment or the Amended and
Restated Deposit Account Agreement or any other Loan Document affect or impair
the priority of any liens created thereby, it being the intention of the parties
to carry forward all liens and security interests securing the payment of the
Original Note as amended by the First Amendment, and of the First Additional
Note, which liens and security interests are acknowledged by the parties to be
valid and subsisting against the collateral delivered to Lender in connection
therewith pursuant to the Original Loan Agreement and the First Amendment.
Section 8.36. Joint and Several Liability of Borrower;
Assumption by New Borrower. The obligations of the Original Borrower and New
Borrower under this Agreement are joint and several. Furthermore, in
consideration of the New Loan Amount and without releasing Original Borrower
from any of its obligations under the Increased Original Loan Documents, New
Borrower hereby assumes all obligations of the "borrower" under the Increased
66
Original Loan Documents, so that the obligations of Original Borrower and New
Borrower thereunder shall be the joint and several obligations of each and both
of them.
Section 8.37. Interpretation of Documents. In case of any
contradiction between the provisions of this Agreement and the provisions of the
Increased Original Loan Documents, as amended by the Acknowledgment, the
provisions of this Agreement shall prevail.
- SIGNATURES BEGIN ON NEXT PAGE -
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IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be duly executed by their duly authorized representatives, all
as of the day and year first above written.
LENDER:
CAPITAL TRUST, INC., a Maryland corporation
By: /s/ Xxxxxx Xxxxxxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director
BORROWER:
Original 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
New 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) 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: Principal and
Chief Financial Officer
S-IV-1
