EXHIBIT 10.106
LOAN AGREEMENT
--------------
by and between
TULSA PROMENADE, LLC
as Borrower,
and
CHARTER ONE BANK, N.A.,
as Lender
LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT (this "Agreement"), is made and entered into as of the
14th day of March, 2006, by and between Tulsa Promenade, LLC, a Delaware limited
liability company (the "Borrower") and CHARTER ONE BANK, N.A., a national
banking association (the "Lender").
RECITALS
--------
WHEREAS, Borrower is the owner of certain real property in Tulsa, Oklahoma,
as more particularly described on Exhibit A attached as a part hereof (the
"Land", which term shall include such present improvements and all rights,
privileges, easements, hereditaments and appurtenances thereunto relating or
appertaining);
WHEREAS, improvements on the Land include a regional shopping mall
containing approximately 438,481 square feet of retail space, parking and common
areas related thereto (the "Mall");
WHEREAS, Borrower desires to acquire additional land and retail space
containing approximately 81,320 square feet of retail space currently owned by
Mervyn's Department Store (the "Mervyn's Acquisition");
WHEREAS, Borrower intends to make certain improvements to the Project
(defined herein), including general upgrades and tenant improvements associated
with new leases benefiting the Project;
WHEREAS, Borrower has applied to Lender for a first mortgage loan in the
amount of $50,000,000.00 (the "Loan") for the purpose of such acquisitions and
improvements, and Lender is willing to make the Loan upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein contained, the sufficiency of which is hereby
acknowledged, the parties hereto represent and agree as follows:
ARTICLE I
INCORPORATION AND DEFINITIONS
-----------------------------
The foregoing recitals and all exhibits hereto are made a part of this
Agreement. The following terms shall have the following meanings in this
Agreement:
Additional Debt Service: For purposes of a Subsequent Draw shall mean debt
service calculated as set forth in the definition of Debt Service based on the
amount of such Subsequent Draw.
Adjusted NOI: The annualized amount of rents from Incremental New Leases,
plus the annualized amount of Incremental Reimbursable Expenses minus the
annualized rental income derived from any existing leases expiring within 90
days of such Subsequent Draw minus annualized operating expenses allocated to
the New Incremental Leases (where applicable) based on actual trailing twelve
month expenses for the Project applied on a square foot basis to the leaseable
area of the New Incremental Leases minus Management Fees based on the projected
gross revenues from the Incremental New Leases minus Reserves for Capital
Expenditures allocated to the Incremental New Leases.
Applicable Margin: The percentage set forth below corresponding to the Loan
to Value Ratio in effect at such time:
-----------------------------------------------------------------------------
Level Loan to Value Ratio Applicable Margin for
LIBOR Rate Loans
-----------------------------------------------------------------------------
1 < or = 0.50 to 1.00 1.20%
-----------------------------------------------------------------------------
2 > 0.50 to 1.00 and < or = 0.60 to 1.00 1.35%
-----------------------------------------------------------------------------
3 > 0.60 to 1.00 1.50%
-----------------------------------------------------------------------------
The Applicable Margin shall be determined by the Lender from time to time, based
on the Loan to Value Ratio as determined by Lender in its sole discretion.
Appraisal: An MAI certified appraisal of the Project performed in
accordance with FIRREA and Lender's appraisal requirements by an appraiser
selected and retained by Lender, which shall be acceptable to Lender in its sole
discretion.
Borrower: Tulsa Promenade, LLC, an Oklahoma limited liability company.
Certificate of Compliance: As defined in Section 7.10 (f).
Debt Service: The annual principal and interest payments required for the
current outstanding principal balance of the Loan assuming a thirty (30) year
amortization and the greater of an interest rate equal to (i) the yield on a
10-year United States Treasury Note plus 2.50% and (ii) 7%, provided that for
purposes of Draw A and Draw B, interest will be assumed to be 7%.
Notwithstanding the foregoing, in the event any portion of the Loan is subject
to a Hedging Contract with a fixed rate of interest, calculations of Debt
Service for the portion of the Loan subject to a Hedging Contract shall be based
on the actual fixed interest rate set forth in such Hedging Contract assuming a
thirty (30) year amortization.
Debt Service Coverage Ratio: The ratio of the Borrower's Net Operating
Income to Debt Service.
Default or Event of Default: One or more of the events or occurrences set
forth in Article X below.
Default Rate: As defined in the Note.
Disbursement: A disbursement of Loan Proceeds by Lender as contemplated by
Article VI below.
-2-
Draw A: As defined in Section 3.3 (a).
Draw B: As defined in Section 3.3 (b).
DSC Cash Collateral Reserve: As defined in Section 7.28.1.
DSCR Requirement: As defined in Section 7.28.
Environmental Law: As defined in the Indemnity Agreement by and between
Borrower and Lender dated on or about the date hereof.
Hedging Contracts means, interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, or any other agreements or
arrangements entered into between the Borrower and the Lender and designed to
protect the Borrower against fluctuations in interest rates or currency exchange
rates.
Hedging Obligations means, with respect to the Borrower, all liabilities of
the Borrower to the Lender under Hedging Contracts.
Incremental New Leases: Any New Lease entered into after the immediately
preceding Subsequent Draw, or in the case of the first Subsequent Draw, entered
into after Draw A or Draw B, as the case may be.
Incremental Reimbursable Expenses: Cash expenses incurred by the Borrower,
but which are required to be reimbursed by the tenant(s).
Incremental Value: The Adjusted NOI divided by the Prevailing Cap Rate.
Improvements: All buildings, structures and other improvements, including
all common areas, located or to be located on the Land (and, upon the Mervyn's
Acquisition, on the land subject to such acquisition) and all fixtures and
equipment required for the operation thereof.
Inspecting Agent: Any and all persons or entities from time to time
designated by Lender as Lender's agent to inspect the Project.
Interest Period: As defined in the Note.
LIBOR Rate: Relative to any Interest Period for LIBOR Rate Loans, the
offered rate for deposits of U.S. Dollars in an amount approximately equal to
the amount of the requested LIBOR Rate Loan for a term coextensive with the
designated Interest Period which the British Bankers' Association fixes as its
LIBOR rate as of 11:00 a.m. London time on the day which is two London Banking
Days prior to the beginning of such Interest Period.
LIBOR Rate Loan: Any Loan the rate of interest applicable to which is based
upon the LIBOR Rate.
-3-
LIBOR Lending Rate: Relative to any LIBOR Rate Loan to be made, continued
or maintained as, or converted into, a LIBOR Rate Loan for any Interest Period,
a rate per annum determined pursuant to the following formula:
LIBOR Lending Rate = LIBOR Rate
----------
(1.00 - LIBOR Reserve Percentage)
London Banking Day: A day on which dealings in US dollar deposits are
transacted in the London interbank market.
Loan: As defined in the recitals.
Loan Amount: The lesser of (i) 65% of the value of the Project, or (ii)
$50,000,000.00.
Loan Closing: The date on which the Mortgage is filed with the County
Recorder's office.
Loan Documents: This Agreement, the documents specified in Article IV
hereof, and any other instruments evidencing or securing the obligations of
Borrower or any guarantor under the Note or any of the other Loan Documents.
Loan Opening: The first disbursement of the Loan.
Loan Proceeds: All amounts advanced as part of the Loan, whether advanced
directly to Borrower or other parties.
Loan to Value Ratio: The ratio of the outstanding principal amount of the
Loan to the value of the Project securing the Loan (as determined by the most
recent Appraisal) at the time such calculation is made.
Management Fee: The greater of (i) the actual management fee for the
Project, or (ii) the imputed management fee set forth in the most recent
Appraisal, which, as of the date hereof, is 3%.
Managing Member Glimcher Properties Limited Partnership, a Delaware limited
liability company, as of Loan Closing, to be immediately replaced by Tulsa
Promenade REIT, LLC as set forth in Section 9.2
Maturity Date: _______________, 2009.
Mervyn's Acquisition: As defined in the recitals.
Mervyn's Collateral Account: As defined in Section 3.3(b).
Mortgage: As defined in Section 4(b).
-4-
Net Operating Income or NOI: The sum of the following (without duplication
and determined on a consistent basis with prior periods): (a) rents and other
revenues received in the ordinary course of business from operating the Project
(including proceeds of rent loss insurance but excluding pre-paid rents and
revenues and security deposits except to the extent applied in satisfaction of
tenants' obligations for rent) during the trailing twelve months minus (b) any
income received from leases where tenant has given Borrower notice of its
intention to terminate or not renew its existing lease minus (c) all expenses
paid or accrued related to the ownership, operation or maintenance of the
Project, including, but not limited to, taxes, assessments and other similar
charges, insurance, utilities, payroll costs, maintenance, repair and
landscaping expenses and on-site marketing expenses during the trailing twelve
months minus (d) the Reserves for Capital Expenditures for the Project for the
trailing twelve months minus (e) the Management Fee for the Project for such
period.
New Lease(s): Newly executed leases with national or regional tenants in
accordance with Section 7.30 and with terms of at least five(5) years.
Note: As defined in Section 3.2.
Permitted Exceptions: Encumbrances on the Land expressly agreed to by
Lender, as set forth in Schedule B I of the Title Policy.
Prevailing Cap Rate or PCR: In the event that a Subsequent Draw occurs
within 12 months of the Loan Closing, the Prevailing Cap Rate shall mean 7.37%
(as set forth in the most recent Appraisal). In the event that a Subsequent Draw
occurs later than 12 months following the Loan Closing, the Prevailing Cap Rate
shall mean the lesser of (i) the yield on the prevailing 10-year United States
Treasury Note plus 2.50%; or (ii) the capitalization rate set forth in the most
recent Appraisal, provided that such Appraisal may not be older than twelve (12)
months.
Prime Rate: The rate of interest announced by Lender in Cleveland, Ohio
from time to time as its "Prime Rate." The Borrower acknowledges that the Lender
may make loans to its customers above, at or below the Prime Rate. Interest
accruing by reference to the Prime Rate shall be calculated on the basis of
actual days elapsed and a 360-day year.
Prime Rate Loan: Any Loan for the period(s) when the rate of interest
applicable to such Loan is calculated by reference to the Prime Rate.
Proforma Debt Service: For purposes of a Subsequent Draw shall mean current
Debt Service plus Additional Debt Service.
Proforma NOI: For purposes of a Subsequent Draw shall mean Adjusted NOI
(for such Subsequent Draw) plus NOI (trailing twelve months).
Project: The Land, together with the Improvements, provided that if/when
the Mervyn's Acquisition occurs, the definition of Project shall automatically
include all the land and improvements related to the Mervyn's Acquisition.
Prohibited Transfer: As defined in Section 9.2 below.
-5-
Reference Banks: Means four major banks in the London interbank market.
Request for Disbursement: As defined in Article VI hereof.
Reserves for Capital Expenditures: The amount of annual reserves required
for the Project pursuant to the most recent Appraisal as approved by Lender in
its sole discretion. As of the date hereof, the required annual reserves is $.15
per square foot (total of $43,845.00).
Regulated Materials: As defined in the Indemnity Agreement by and between
Borrower and Lender dated on or about the date hereof.
Required NOI: As defined in Section 7.28.1.
Soft Costs: Costs incurred by Borrower for professional and other services
in connection with the Project.
Subsequent Draw: As defined in Section 3.3 (c).
Title Company: Flagler Title Company.
Title Policy: An ALTA Mortgagee's Loan Title Insurance Policy with extended
coverage issued by the Title Insurer insuring the lien of the Mortgage as a
valid first, prior and paramount lien upon the Project and all appurtenant
easements, and subject to no other exceptions other than the Permitted
Exceptions and otherwise satisfying the requirements of Section 5.1(a).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Representations and Warranties. To induce Lender to execute and perform
this Agreement, Borrower hereby represents, covenants and warrants to Lender as
follows:
(a) At the Loan Closing and at all times thereafter until the Loan is paid
in full, the Borrower will have good and marketable indefeasible fee simple
title to the Land, subject only to the Permitted Exceptions.
(b) Each of the Loan Documents, when executed and delivered, will
constitute the duly authorized, legal, valid and binding obligations of each
party executing the same, and will be enforceable strictly in accordance with
their respective terms.
(c) No condition, circumstance, event, agreement, document, instrument,
restriction, or pending or threatened litigation or proceeding exists which
could materially adversely affect the validity or priority of the liens and
security interests granted to Lender under the Loan Documents, which could
materially adversely affect the ability of Borrower to own the Land and to
operate the Project, which could materially adversely affect the ability of
Borrower to perform its or their respective obligations under the Loan
Documents, which would constitute a default in the obligations of the Borrower
under any of the Loan Documents or which would constitute such a default with
the giving of notice or lapse of time or both.
-6-
(d) The Land, the present use and occupancy of the Land and the use and
occupancy of the Project, does not violate or conflict in any material respect
with any applicable law, statute, ordinance, rule, regulation or order of any
kind, including, without limitation, zoning, building, environmental, land use,
noise abatement, occupational health and safety or other laws, any building
permit or any condition, grant, easement, covenant, condition or restriction,
whether recorded or not.
(e) All financial statements submitted by Borrower to Lender in connection
with this Loan are true and correct in all material respects, have been prepared
in accordance with generally recognized accounting principles consistently
applied, and fairly present the respective financial conditions and results of
operations of the entity and persons which are their subject as of the
respective dates thereof. No material adverse change has occurred in the
financial conditions reflected therein since the respective dates thereof and no
additional borrowings have been made by Borrower since the date thereof other
than the Loan contemplated hereby.
(f) This Agreement and all financial statements, budgets, schedules,
opinions, certificates, confirmations, applications, rent rolls, affidavits,
agreements, and other materials submitted to the Lender in connection with or in
furtherance of this Agreement by or on behalf of the Borrower, fully and fairly
state the matters with which they purport to deal, do not misstate any material
fact, nor, separately or in the aggregate, fail to state any material fact
necessary to make the statements made not misleading.
(g) All utility and municipal services required for the, occupancy and
operation of the Project, including, but not limited to, water supply, storm and
sanitary sewage disposal system, gas, electric and telephone facilities are
available for use.
(h) All permits and licenses required by applicable law to occupy and
operate the Project have been issued and are in full force.
(i) The storm and sanitary sewage disposal system, water system and all
mechanical systems of the Land and the Project comply in all material respects
with all applicable environmental, pollution control and ecological laws,
ordinances, rules and regulations.
(j) All utility, parking, vehicular access (including curb cuts and highway
access), recreational and other permits and easements required for the use and
operation of the Project have been granted and issued, to the extent necessary
or required for the operation and use of the Project.
(k) Except as shown on the survey, the Project does not encroach upon any
building line, set back line, side yard line, or any recorded or visible
easement, or other easement of which Borrower is aware or has reason to believe
may exist, affecting the Land.
-7-
(l) All roads necessary for ingress and egress to the Project and for the
full utilization of the Improvements for their intended purposes have either
been completed pursuant to easements approved by the Lender or the necessary
rights-of-way thereof have been dedicated to public use and accepted by the
appropriate governmental authority.
(m)(i) No condemnation of any portion of the Project and (ii) no denial of
access to the Project from any point of access to the Project, has commenced, or
to the best of Borrower's knowledge, is contemplated by any governmental
authority.
2.2 Continuation of Representations and Warranties. The Borrower hereby
covenants, warrants and agrees that each of the representations and warranties
made in Section 2.1 hereof shall be and shall remain true and correct at the
time of the Loan Closing and at all times thereafter so long as any part of the
Loan shall remain outstanding. Each Request for Disbursement shall constitute a
reaffirmation that these representations and warranties are true on and as of
the date of such Request for Disbursement and will be true on the date of the
Disbursement.
ARTICLE III
THE LOAN
--------
3.1 Agreement to Borrow and Lend. Borrower agrees to borrow from Lender,
and Lender agrees to lend to Borrower, such amount as shall be requested by the
Borrower, but in no event exceeding the stated Loan Amount, on the terms of and
subject to the conditions of this Agreement.
3.2 The Note. The Loan shall be evidenced by a promissory note (the
"Note"), executed by Borrower, payable to the order of Lender and in the Loan
Amount. Interest, maturity, terms of payment of principal and interest,
prepayment premiums, and all other similar terms and conditions of the Loan
shall be as set forth in the Note.
3.3. Permitted Draws.
(a) Initial Draw: Borrower may request and Lender will provide an initial
draw at Loan Closing in an amount up to the lesser of (i) 65% of the purchase
price of the Mall, (ii) 65% of the appraised value of the Mall, (iii) an amount
such that the Debt Service Coverage Ratio for the Project is not less than
1.25x, or (iv) $35,000,000 ("Draw A");
(b) Mervyn's Acquisition Draw: In the event that Borrower proceeds with the
Mervyn's Acquisition, Borrower may request and Lender will provide an additional
draw to fund the Mervyn's Acquisition in an amount up to the lesser of (i) 65%
of the purchase price of the Mervyn's Acquisition, or (ii) 65% of the appraised
value of the Mervyn's Acquisition ("Draw B"); provided that Borrower must
deposit its own funds or draw an additional amount from Loan proceeds (such draw
shall not be restricted by the foregoing) in the amount of one year's Debt
Service for Draw B, to be deposited in an account with Lender (the "Mervyn's
Collateral Account") to be held as additional collateral for the Loan, until
such time as the Project (factoring both the Mall and the Mervyn's Acquisition)
achieves the DSCR Requirement, provided that such release shall not occur prior
to the one year anniversary of the Lender's disbursement of Draw B.
-8-
(c) Subsequent Draws: At any time following the Loan Opening, but not more
than once per quarter, Borrower may request additional draws in the minimum
amount of $1,000,000 (and $250,000 increments thereafter) to reimburse Borrower
for expenses incurred related to improvements made to the Project or incurred
related to any Incremental New Leases (each being a "Subsequent Draw" and
collectively, the "Subsequent Draws") subject to the following:
(i) Borrower must provide evidence that the Project currently complies
with the required minimum Debt Service Coverage Ratio of 1.25x;
(ii) Borrower must provide evidence that the Project will continue to
comply with the required minimum Debt Service Coverage Ratio of 1.25x after such
Subsequent Advance based on Proforma Net Operating Income and Proforma Debt
Service; and
(iii) Such draw may not exceed 65% of the Incremental Value.
In no event shall the aggregate outstanding amount of Draw A, Draw B, and all
Subsequent Draws exceed the aggregate amount of $50,000,000.
3.4. Interest Election. Subject to the terms and conditions set forth in
the Note, interest on the outstanding principal amount of the Note shall accrue,
at Borrower's option, at one of the following rates of interest: (i) the Prime
Rate; or (ii) during the Interest Period applicable thereto at a rate equal to
the sum of the LIBOR Lending Rate for such Interest Period plus the Applicable
Margin thereto and be payable on each Interest Payment Date.
ARTICLE IV
LOAN DOCUMENTS
--------------
Borrower agrees to execute and deliver to Lender, on or prior to the Loan
Opening, the following documents, all of which must be satisfactory to Lender
and Lender's counsel in form, substance and execution and all of which are
executed on or about the date hereof:
(a) The Note.
(b) A mortgage with power of sale, security agreement and financing
statements (the "Mortgage"), duly executed by the Borrower and granting a valid
and subsisting first lien on the Land and the portions of the Project
constituting real property, and a security interest in the personal property and
fixtures securing all obligations of the Borrower under all of the Loan
Documents, subject only to the Permitted Exceptions.
(c) An assignment to Lender from Borrower of the rents, leases, security
and other deposits, income, issues, proceeds and profits associated with or
arising from the Project or any part thereof, and which assignment is prior to
all other such assignments and valid as such against all creditors of Borrower.
-9-
(d) Uniform Commercial Code financing statements, executed by Borrower as
debtor with respect to the Mortgage and the security agreement described in
clauses (b) and (d) hereof, and which financing statements are prior to all
other such financing statements and valid as such against all creditors of
Borrower.
(e) A collateral assignment to Lender of all rights of Borrower in any
contract for management of the Project or any portion thereof, together with
assignments of such maintenance and service contracts entered into in connection
with the operation of the Project as Lender may require, and which assignment is
prior to all other such assignments and valid as such against all creditors of
Borrower.
(f) An indemnity agreement from Borrower in favor of Lender confirming the
perpetual survival of Borrower's representations, warranties and indemnities
herein with respect to Regulated Materials, among other things, and compliance
with all applicable laws.
(g) Such other papers and documents as may be required by this Agreement or
as Lender may reasonably require.
ARTICLE V
CONDITIONS TO LOAN CLOSING
--------------------------
5.1 Unless waived by Lender, Borrower shall furnish the following to Lender
at least five (5) business days prior to the Loan Closing or at such time as is
set forth below, all of which must be strictly satisfactory to Lender and
Lender's counsel in form, content and execution:
(a) Title Policy. A commitment (the "Title Commitment") for issuance of an
ALTA Loan Policy of Title Insurance, Form B-1970 (Amended 10-17-70, or 6-18-87)
(the "Title Policy"), issued by the Title Company to Lender, in the Loan Amount,
insuring the Mortgage to be a valid first, prior and paramount mortgage lien
upon the fee title to the Land and the Project, and a valid first lien upon any
easement in favor of the Premises which provides access to the Premises for
ingress and egress and/or for utilities, to the extent of funded Disbursements
of the Loan, subject only to the Permitted Exceptions and to customary
exceptions which, by their nature, cannot be eliminated until construction of
the Project has been completed, and with all so-called "standard" exceptions
deleted. The Title Commitment shall (i) contain a so-called "Comprehensive
Endorsement"; (ii) contain an endorsement affirmatively insuring the priority of
the Mortgage against any vendor's or mechanic's lien; (iii) affirmatively insure
the Lender that (A) no restrictions of record affecting the Land have been
violated, and that such instruments contain no right of reverter or forfeiture,
(B) the survey described in Section 5.1(b) hereof is accurate and accurately
depicts the same real estate as is covered by the Title Commitment, (C) Lender
is the holder of the Mortgage and that the Mortgage is the first lien against
the Project; (iv) insure contiguity of the Land with adjoining public rights of
way; (v) contain ALTA Variable Rate Endorsement No.6; (vi) contain an
endorsement affirmatively insuring that all future advances of Loan Proceeds
made by Lender shall be secured by the Mortgage and have priority as of the date
the Mortgage is filed for record with the Tulsa County Recorder; and (vii)
contain such other endorsements as Lender may require. If requested by Lender,
appropriate provisions satisfactory to Lender for co-insurance and reinsurance,
-10-
with direct access agreements acceptable in form and substance to Lender, shall
also be obtained. Contemporaneously with delivery to Lender of the Title
Commitment, Borrower shall also deliver to Lender copies of all documents
constituting the Permitted Exceptions. Borrower agrees to deliver to the Title
Agent, with a copy of each to Lender, such other papers, instructions and
documents as the Title Agent may require for the issuance of the Title
Commitment and the issuance of date down endorsements and interim certifications
relating to construction payouts as provided in Article vi hereof, and in
accordance with all requirements of this Agreement.
(b) Survey. A plat survey (the "Survey") of the Land, in duplicate, made by
a registered land surveyor, dated no later than three (3) months prior to Loan
Closing, showing.
(i) the location (and recording numbers, to the extent recorded) of
all visible or recorded easements (including appurtenant easements), water
courses, drains, sewers, public and private roads (including the names and
widths thereof and recording numbers for the dedications thereof), other
rights of way, and curb cuts, if any, within, adjacent to or serving the
Land and Project or to which the Land and Project are or will be subject,
and the location of any such proposed easements; that the same are, and
after Construction of the Project and granting of easements will be,
unobstructed; and that all portions of the Project will have access over
recorded easements to dedicated public roads;
(ii) the common street address of the Land and Project and the
dimensions, boundaries and acreage or square footage of the Land and the
Improvements;
(iii) that all foundations and other structures currently existing and
all other improvements on the Land, are placed within the lot and building
lines, all deed restriction, recorded plats, other restrictions of record
and ordinances relating to the location thereof (and, to the extent that
any such restrictions or ordinances require any structure to be set back
specified distances from any line, showing said line and the measured
distance of said structure, or the proposed location of said structure,
from said line);
(iv) that except as may be shown on the survey there are no
encroachments on the Land from improvements located on adjoining property;
(v) the location and course of all visible utility lines;
(vi) if the Land comprises more than one parcel, interior lines and
other data sufficient to insure contiguity; and
(vii) such additional information which may be required by the Lender
or the Title Company.
The Survey shall be made in accordance with the Minimum Standard Detail
Requirements for ALTA/ACSM Class A Land Title Surveys most recently adopted by
the American Land Title Association.
-11-
(c) Insurance Policies. (i) Evidence of insurance policies as set forth
below, all of which must be satisfactory to Lender, in companies, forms, amounts
and coverage satisfactory to Lender, containing waiver of subrogation and first
mortgagee clauses in favor of Lender and providing for thirty (30) days' written
notice to Lender in advance of cancellation of said policies for non-payment of
premiums or any other reason or for material modification of said policies, and
ten (10) days' written notice to Lender in advance of payment of any insurance
claims under said policies to any person.
(ii) Without limiting the generality of the foregoing, such policies shall
include the following:
(A) Intentionally deleted.
(B) Comprehensive general public liability, property damage and
indemnity insurance, including, without limitation, water damage, so-called
assumed and contractual liability coverage and claims for bodily injury,
death or property damage, naming Lender as an additional insured, in a
minimum amount of One Million Dollars ($1,000,000.00) per person One
Million Dollars ($1,000,000.00) per occurrence, or such other amounts as
Lender may from time to time require, with insurance carriers having a
Best's rating of A or better, in forms and with companies satisfactory to
Lender and with a maximum deductible of One Thousand Dollars ($1,000.00).
Borrower shall also carry and maintain excess of umbrella liability, naming
Lender as an additional insured thereunder in a minimum amount of Two
Million Dollars ($2,000,000.00), with an insurance carrier having a Best's
rating of A or better, in form satisfactory to Lender.
(C) Insurance against loss or damage by fire and such other hazards,
casualties and contingencies (including, without limitation, so called all
risk coverages) as Lender may require, in an amount equal to the greater of
(1) the Loan Amount, or (2) the replacement cost of the Project, with a
replacement cost endorsement and in such amounts so as to avoid the
operation of any coinsurance clause, for such periods and otherwise as
Lender may require from time to time.
(D) Insurance against rent loss or abatement of rent, covering payment
of rent and like charges from the Land over a term of not less than twelve
(12) months, in an amount to be approved by Lender.
(E) Workers' compensation and employee liability insurance, naming
Lender as additional insured, covering all employees working on or about
the Project, and death, injury and/or property damage occurring on or about
the Project, or resulting from activity thereat, with liability insurance
limits for death of or injury to persons not less than Statutory Limits and
for damage to property of not less than Statutory Limits.
Borrower shall deliver renewal certificates of all insurance required above,
together with written evidence of full payment of the annual premiums therefor
at least thirty (30) days prior to the expiration of the existing insurance. Any
such insurance may be provided under so called "blanket" policies, so long as
-12-
the amounts and coverages thereunder will, in Lender's sole judgment, provide
protection equivalent to that provided under a single policy meeting the
requirements of this paragraph.
(d) Compliance with Laws. Evidence satisfactory to Lender that the Project
is in compliance with all applicable laws, ordinances (including zoning),
orders, rules and regulations of applicable governmental or quasigovernmental
authorities (including, without limitation, requirements for parking and
operation of the Project), and that any approvals thereof required from third
parties or any governmental or quasigovernmental authorities have been obtained.
(e) Financial Statements. Current financial statements for the Borrower.
(f) Management Agreement. Prior to the first advance of Loan Proceeds, a
copy of the management agreement. Said agreement to be collaterally assigned to
Lender and consented to by the Manager and the Service Provider.
(g) Environmental Assessment. Evidence, including an environment
assessment, indicating that the Land, and the existing improvements, in Lender's
sole judgment, (i) contain no Regulated Materials and no other contamination
which, even if not so regulated, is known to pose a hazard to the health of any
person on or about the Land, (ii) is not located in a "Wetlands" or "Flood
Plain" area, and (iii) contains no underground storage tanks. Lender reserves
the right, at Borrower's expense, to retain an independent consultant to review
any such evidence submitted by Borrower or to conduct its own investigation of
the Land.
(h) Payment of Loan Origination Fee. Payment to Lender of a Loan
Commitment/Origination Fee in the amount of $52,500.00 (15 basis points of the
amount of Draw A). Borrower shall pay Lender the remainder of the
Commitment/Origination fee in the amount of $22,500 (15 basis points of
remaining undisbursed Loan amount) at the time of the earlier of (i) Draw B, or
(ii) a Subsequent Draw.
(i) Documents of Record. Copies of all covenants, conditions, restrictions,
easements and matters of record which affect the Land.
(j) Equity: Borrower shall have provided evidence reasonably satisfactory
to Lender that Borrower's cash equity invested in the Project is not less than
the greater of (i) 35% of the total cost of the Project, or (ii) $20,405,000.
Borrower's cash equity must be used to pay for acquisition of the Mall.
(k) Borrower's Attorney's Opinion. The opinion of Borrower's legal counsel
that with respect to the Borrower, the Land, and the Project: (a) there is no
threatened or pending litigation that might affect the Loan, the Land, the
Project or the Borrower; (b) the transactions contemplated by this Agreement do
not violate any provision of any law, restriction or other document affecting
the Borrower, the Land, or the Project; (c) the Loan Documents have been duly
executed and delivered, constitute legal, valid and binding obligations of the
Borrower and are enforceable in accordance with their terms; (d) Borrower is a
validly organized and existing limited liability company under the laws of the
State of Delaware and qualified to do business in the State of Oklahoma, that
Borrower has the legal capacity to own, develop and operate the Land and the
Project, and has the legal capacity to perform its obligations under the Loan
-13-
Documents, and that the Loan has been duly authorized by the Borrower, (e) the
individuals executing the Loan Documents are properly authorized to do so on
behalf of Borrower, (f) such other matters (including an opinion with respect to
zoning of the Land and the Project) concerning the Loan, the Loan Documents, and
the Land, the Project, and the Borrower, as the Lender or its counsel may
require.
(l) Organizational Documents.
(1) Certified copy of the Borrower's, Managing Member's, and OG Retail
Holding Co., LLC's Articles of Organization;
(2) Certified copy of Borrower's, Managing Member's, and OG Retail
Holding Co., LLC's Operating Agreement;
(3) Borrower's, Managing Member's, and OG Retail Holding Co., LLC's
Resolutions authorizing Borrower to enter into Loan and designating
the members/officers authorized to execute all Loan Documents.
(4) Certified copy of the Glimcher Properties Limited Partnership
Articles of Organization;
(5) Certified copy of Glimcher Properties Limited Partnership Limited
Partnership Agreement;
(6) Certified copy of the Glimcher Properties Corporation's Articles
of Incorporation;
(7) Certified copy of Glimcher Properties Corporation's By-laws/Code
of Regulations;
(8) Glimcher Properties Corporation's Resolutions authorizing Glimcher
Properties Limited Partnership Resolutions as sole member of Borrower
to enter into Loan.
(m) Full executed copy of the purchase agreement for the Mall.
(n) Lender shall have obtained (at Borrower's cost) an Appraisal of the
Project which Appraisal is satisfactory to Lender in all respects including, but
not limited to, having a fair market evaluation of the Project indicating a
Loan-to-Value Ratio of sixty-five percent (65%) or lower.
(o) Borrower shall concurrently with the Loan Opening, enter into a
derivative rate instrument or Hedging Contract in the minimum amount of 75% of
the projected combined amount of Draw A and Draw B; or upon each Draw A and Draw
B, enter into a derivative rate instrument or Hedging Contract in the minimum
amount of 75% of the amount of such draw.
-14-
(p) Borrower shall use good faith and commercially reasonable efforts to
deliver to Lender, within 60 days of the date hereof subordination
nondisturbance and attornment agreements (the "SNDA's") with JC Penney and
Hollywood Theater. Notwithstanding anything to the contrary contained herein,
Lender shall not be obligated to fund any Subsequent Draws unless and until the
foregoing SNDA's have been delivered to Lender.
(q) Additional Documents. Such other papers and documents regarding
Borrower, the Land or the Project as Lender may require.
ARTICLE VI
DISBURSEMENTS
-------------
6.1 The Disbursements. (a) Subject to the provisions of this Agreement, and
also subject to the terms and conditions of the other Loan Documents, the Lender
shall make and the Borrower shall accept the Loan in periodic Disbursements not
exceeding, in the aggregate, the Loan Amount (except for additional
Disbursements which the Lender shall have the right to make at its option
pursuant to the Mortgage). Disbursements shall be made from Loan Proceeds. The
first disbursement, to be made upon the Loan Closing, shall be in an amount
equal to (i) Draw A, (ii) such other costs and expenses of Loan Closing, as
approved by Lender in its sole and absolute discretion, and (iii) such other
costs and expenses in accordance with Section 6.1(b) below (the "Initial
Disbursement"). All Disbursements following the Initial Disbursement are
hereinafter called "Subsequent Disbursements".
(b) After an Event of Default, Borrower hereby requests and authorizes
Lender to make Disbursements directly to itself for payment and reimbursement of
all interest, charges, costs and expenses incurred by Lender in connection with
the Loan, pursuant to this Agreement or other Loan Documents, including, but not
limited to, (i) interest due on the Loan and any points, loan fees, service
charges, commitment fees, or other fees due to Lender in connection with the
Loan; (ii) all title examination, survey, escrow, filing, search, recording and
registration fees and charges; (iii) all documentary stamp and other taxes and
charges imposed by law on the issuance or recording of any of the Loan
Documents; (iv) all appraisal fees; (v) all title, casualty liability, payment,
performance or other insurance or bond premiums; (vi) all fees and disbursements
for legal services including, without limitation, in-house attorney's costs and
fees, and outside counsel engaged in connection with the preparation,
negotiation, enforcement or administration of this Agreement or any of the Loan
Documents; and (vii) any amounts required to be paid by Borrower under this
Agreement, the Mortgage or any Loan Document after the occurrence of a Default
(all of which are herein referred to as "Loan Expenses").
(c) Except for the Initial Disbursement, which shall be made at the Loan
Opening, Lender shall make each Disbursement within fifteen (15) business days
following receipt of all information required by Lender for the funding of such
Disbursement.
6.2 Requests for Loan Disbursements. All requests for Disbursements,
including, without limitation, the Initial Disbursement shall be submitted on
the Lender's form of "Certificate for Payment", signed by the Borrower stating,
among other things, the amount of Loan Proceeds requested for each item. Each
Certificate for Payment requesting Disbursements for improvements to the Project
-15-
shall be accompanied by (a) the Borrower's affidavit, certifying the amount of
all outstanding balances due but unpaid for work in place for the Project, (b)
invoices from contractors and any other supporting documentation, and (c) lien
waivers from all contractors in the sum received by each such contractor for all
of Borrower's preceding draw requests, all to be in form and substance
satisfactory to Lender and the Title Agent. Borrower shall not submit more than
one Certificate for Payment per quarter. Each Certificate for Payment must be
received by the Lender on or before a date which is at least fifteen (15) days
prior to the date upon which the requested Disbursement is to be made, excluding
the date of receipt by the Lender.
6.3 Loan Opening and Initial Disbursement. The Loan Opening shall be made
at such time as all of the conditions and requirements of this Agreement
required to be performed by Borrower or other parties prior to the Loan Opening
have been satisfied or performed. At the Loan Opening, Lender shall disburse, in
addition to the Initial Disbursement, all funds necessary to pay any Loan
Expenses then due.
6.4 Subsequent Disbursements.
(a) Draw B shall be made by Lender following receipt of Borrower's written
request, provided that, prior to the funding of Draw B, Borrower shall furnish
the following to Lender, all of which must be in form, substance and execution
satisfactory to Lender:
(i) Borrower has delivered to Lender all items in Section 5.1, to the
extent that such items apply or could apply to the Mervyn's Acquisition,
including 5.1 a, b, c, d, f, g, l, and m.
(ii) Borrower has delivered to Lender an amendment to Mortgage and
environmental indemnity agreement in form and substance acceptable to
Lender in its sole discretion, increasing the amount of the Mortgage and
adding the property from the Mervyn's Acquisition as additional security
for the Loan. Borrower hereby agrees to pay any costs related to the
foregoing amendment, including without limitation all recording costs,
mortgage tax, title costs, and reasonable attorney's fees;
(iii) Borrower has caused the Title Company to issue an endorsement to
the Title Policy, which endorsement insures that no claim exists which
constitutes a cloud on the Lender's secured position established by the
insured Mortgage and that no matters exist subordinate to the Mortgage
which are unacceptable to the Lender; accelerates the effective date of the
Title Policy to the date of the requested Disbursement; and covers the
amount of the requested Disbursement so that the total amount insured by
the Title Policy equals the total amount disbursed by Lender under the
terms of this Agreement, an endorsement to the Title Policy to add the
property described in the Mervyn's Acquisition, and any other endorsement
to Title Policy that the Lender deems necessary to protect its security
interest (or at the option of the Lender, confirmation from the Title Agent
that all requirements for the issuance of such an endorsement have been
satisfied and confirmation that the Title Insurer will issue such an
endorsement within a specified time acceptable to the Lender).
-16-
(iv) Evidence that all conditions set forth in Section 6.5 below shall
have been met.
(v) All conditions to the Initial Disbursement have been met, and the
Initial Disbursement has been funded by Lender.
(vi) Borrower has delivered to Lender an updated Certificate of
Compliance, certifying among other things, the names of all tenants who
have given their notice to terminate or not renew their existing lease.
(vii) Borrower has delivered to Lender a certified current revised
rent roll for the Project.
(b) Prior to the funding of each Subsequent Draw, Borrower shall furnish
the following to Lender, all of which must be in form, substance and execution
satisfactory to Lender in its sole and absolute discretion:
(i) Borrower has delivered to Lender an amendment to Mortgage in form
and substance acceptable to Lender in its sole discretion, increasing the
amount of the Mortgage. Borrower hereby agrees to pay any costs related to
the foregoing amendment, including without limitation all recording costs,
mortgage tax, title costs, and reasonable attorney's fees;
ii) An endorsement to the Title Policy, which endorsement insures that
no claim exists which constitutes a cloud on the Lender's secured position
established by the insured Mortgage and that no matters exist subordinate
to the Mortgage which are unacceptable to the Lender; accelerates the
effective date of the Title Policy to the date of the requested
Disbursement; and covers the amount of the requested Disbursement so that
the total amount insured by the Title Policy equals the total amount
disbursed by Lender under the terms of this Agreement (or at the option of
the Lender, confirmation from the Title Agent that all requirements for the
issuance of such an endorsement have been satisfied and confirmation that
the Title Insurer will issue such an endorsement within a specified time
acceptable to the Lender).
(iii) If applicable, the lien waivers required pursuant to Section
6.2; lien waivers from contractors, subcontractors and suppliers shall be
submitted prior to the next scheduled Disbursement.
(iv) The Certificate for Payment required pursuant to Section 6.2
above.
(v) Evidence that all Loan Proceeds disbursed to date have been
applied to payment of costs of the Project (including, but not limited to,
satisfactory waivers of mechanic's and materialmen's liens, affidavits,
sworn statements and receipts for materials), if applicable.
-17-
(vi) Upon Lender's request, evidence that any improvements to the
Project are being constructed in accordance with applicable law. Lender
shall have the right to require, at Borrower's cost, any additional
information to complete Lender's analysis of each Disbursement request of
Borrower.
(vii) Borrower has delivered to Lender an updated Certificate of
Compliance, certifying among other things, current compliance with Debt
Service Coverage Ratio requirements and setting forth all tenants who have
given their notice to terminate or not renew their existing lease.
(viii) Borrower shall have delivered to Lender a fully executed copy
of all Incremental New Leases which contain terms and conditions acceptable
to Lender in Lender's sole discretion.
(ix) Borrower shall have delivered to Lender twelve (12) month
proforma operating statements for the Project reflecting all Incremental
New Leases.
(x) Borrower shall have delivered to Lender a certified current
revised rent roll for the Project.
(xi) Borrower shall have delivered to Lender copies of paid invoices
for improvements made to the Project or costs incurred, if any, related to
Incremental New Leases.
6.5 Conditions to All Disbursements. No Disbursement of Loan Proceeds shall
be made by Lender to Borrower at any time unless:
(a) All conditions precedent to that Disbursement have been satisfied,
including without limitation, performance of all of Borrower's obligations under
this Agreement and the Loan Documents which are to be performed prior to such
Disbursement.
(b) The amount of Loan proceeds disbursed or to be disbursed does not
exceed the lesser of (i) 65% of the purchase price of the Project, (ii) 65% of
the appraised value of the Project, (iii) an amount such that the Debt Service
Coverage Ratio for the Project does not exceed 1.25x (as determined pursuant to
the requirements for such disbursement).
(c) No Default has occurred under this Agreement, or under any of the Loan
Documents, and no event, circumstance or condition has occurred or exists which,
with the passage of time or the giving of notice, would constitute such a
Default.
(d) No material litigation or proceedings are pending or threatened
(including but not limited to, proceedings under Title 11 of the United States
Code) against Borrower, the Land or the Project.
(e) No material adverse change has occurred or is threatened with respect
to the Project or the financial condition of Borrower.
-18-
(f) All representations and warranties made by Borrower to Lender herein
and otherwise in connection with this Loan continue to be accurate, and all
statements and representations made in the application for this Loan submitted
to Lender continue to be accurate.
(g) No uninsured damage to or destruction of the Project or any portion
thereof shall have occurred.
(h) If requested by Lender, Lender has received a satisfactory report from
Lender's Inspecting Agent, indicating that the items for which payment has been
requested have been performed at or incorporated into the Project. The cost of
this inspection shall be paid directly by Borrower.
(i) The Loan is not in default and Borrower has complied with all of the
terms and conditions of this Agreement.
6.6 Intentionally deleted.
6.7 Documents Required for Final Disbursement. The final Certificate for
Payment for the final Disbursement shall be accompanied by the following, all of
which shall be strictly satisfactory to Lender in its sole and absolute
discretion:
(a) Borrower shall have furnished Lender with current searches of all
Uniform Commercial Code financing statements filed with the Secretary of State
of Oklahoma and/or the Recorder for Tulsa County, Oklahoma, against Borrower as
debtors, showing that no Uniform Commercial Code financing statements are filed
or recorded against Borrower in which the collateral is described as personal
property or fixtures located on the Project or used in connection with the
Project.
(b) An affidavit of the Borrower stating that each person providing any
material or performing any work in connection with the Project has been paid in
full and that all withholding taxes have been paid.
(c) Any permits, licenses, certificates of occupancy or other evidence of
compliance with the requirements of any governmental authorities necessary for
the use of the Land.
(d) If requested by Lender, a satisfactory final inspection report of
Lender's Inspecting Agent and a representative of the permanent lender if any,
indicating that the Project has been fully completed in accordance, the
requirements of this Agreement and the requirements of all New Leases.
(e) Evidence that all insurance required under the terms of this Agreement
is in full force and effect.
(f) Such other items as may be required by Lender, including, without
limitation, evidence that the improvements have been completed to the
satisfaction of the Lender and in a manner sufficient to satisfy the terms of
any permanent loan commitment.
-19-
6.10 Intentionally deleted.
6.11 Intentionally deleted.
6.12 Intentionally deleted.
6.13 Provisions Applicable to All Disbursements. (a) By execution of this
Agreement, Borrower authorizes Lender to make any Disbursement to the account to
receive such Disbursement, and the Borrower agrees that, in so doing, the Lender
is not acting as agent or trustee for the Borrower and the Lender will not be
held accountable for any such Disbursement made in good faith.
(b) Each Certificate For Payment by the Borrower shall constitute an
affirmation that the warranties and representations contained in Article II of
this Agreement remain true and correct and that no breach of the covenants of
Borrower contained in this Agreement has occurred, in each case as of the date
of the Disbursement, unless Lender is notified to the contrary prior to funding
of the requested Disbursement.
(c) The Lender may apply amounts due hereunder to the satisfaction of the
conditions hereof, and amounts so applied shall be part of the Loan and shall be
secured by the Mortgage, evidenced by the Note, bear interest in accordance with
the Note and shall be due and payable in accordance with the provisions of the
Note.
ARTICLE VII
FURTHER COVENANTS OF BORROWER
-----------------------------
7.1 Construction of Project. Borrower agrees that any new improvements to
the Project will be constructed and fully equipped in a good and workmanlike
manner with materials of high quality, in accordance with applicable building,
zoning, pollution control, and environmental protection and other laws and
ordinances and the New Leases. Borrower agrees that all materials contracted or
purchased for construction of new improvements to the Project and all labor
hired or contracted for with respect to the Project and paid for with Loan
Proceeds will be used and employed solely on the Project and for no other
purpose.
7.2 Intentionally deleted
7.3 Inspection by Lender. If requested by Lender, Borrower will cooperate
(and will cause the contractors to cooperate) with Lender in arranging for
inspections of the progress of the construction of new improvements to the
Project by Lender's Inspecting Agent, from time to time, and Borrower will
cooperate (and will cause any managing agent to cooperate) with Lender in
arranging for inspections, from time to time, of the Project by Lender and its
Inspecting Agents.
7.4 Mechanics' Liens. Borrower will not suffer or permit any mechanics'
lien claims to be filed or otherwise asserted against the Project or any funds
due any contractor, and will promptly bond or discharge the same if any claims
for lien or any proceedings for the enforcement thereof are filed or commenced;
provided, however, that Borrower shall have the right to contest in good faith
-20-
and with due diligence the validity of any such lien or claim upon furnishing to
the Title Agent such security or indemnity as it may require to induce the Title
Agent to issue its Title Policy or an endorsement thereto insuring against all
such claims, liens or proceedings; and provided further that Lender will not be
required to make any further Disbursements of the Loan Proceeds unless (i) any
mechanics' lien claims shown by any title insurance commitments or interim
binders or certifications have been bonded against, released or insured against
by the Title Agent or (ii) Borrower shall have provided Lender with such other
security with respect to such claim as may be acceptable to Lender, in its sole
discretion. In the event Borrower elects to bond any mechanic's lien claim, such
bond shall be in an amount equal to at least one hundred twenty-five percent
(125%) of such claim.
7.5 Settlement of Mechanics' Lien Claims. If Borrower shall fail promptly
to bond or discharge any mechanics' lien claim filed or otherwise asserted or to
contest any such claims and give security or indemnity in the manner provided in
subsection 7.4 above, or, having commenced to contest the same, and having given
such security or indemnity, shall thereafter fail to prosecute such contest in
good faith or with due diligence, or fail to maintain such indemnity or security
so required by the Title Agent for its full amount, or, upon adverse conclusion
of any such contest, shall fail to cause any judgment or decree to be satisfied
and lien to be released, then, and in any such event, Lender may at its election
(but shall not be required to), (i) procure the release and discharge of any
such claim and any judgment or decree thereon, without inquiring into or
investigating the amount, validity or enforceability of such lien or claim and
(ii) effect any settlement or compromise of the same, or may furnish such
security or indemnity to the Title Agent, and any amounts so expended by Lender,
including premiums paid or security furnished in connection with the issuance of
any surety company bonds, shall be deemed to constitute disbursements of the
Loan Proceeds hereunder (even if the total amount of disbursements would exceed
the face amount of the Note).
7.6 Intentionally deleted.
7.7 Renewal of Insurance. Borrower shall pay timely all premiums on all
insurance policies required under this Agreement from time to time; and when and
as additional insurance is required from time to time during the term of the
Loan and when and as any policies of insurance may expire, furnish to Lender,
premiums prepaid, additional and renewal insurance policies in companies,
coverage and amounts satisfactory to Lender, all in accordance with Section
5.1(c). Notwithstanding this Section, in the event of Borrower's default under
this Agreement or any of the Loan Documents, Lender shall have the right (but
not the obligation) to place and maintain insurance required to be placed and
maintained by Borrower hereunder and treat the amounts expended therefor as
additional disbursements of Loan Proceeds (even if the total amount of
disbursements would exceed the face amount of the Note).
7.8 Proceedings to Enjoin or Prevent Operation. If any proceedings are
filed seeking to enjoin or otherwise prevent or declare unlawful the occupancy,
maintenance or operation of the Project or any portion thereof, Borrower shall
at its sole expense (i) cause such proceedings to be vigorously contested in
good faith and (ii) in the event of an adverse ruling or decision, prosecute all
allowable appeals therefrom. Without limiting the generality of the foregoing,
Borrower shall resist the entry or seek the stay of any temporary or permanent
injunction that may be entered and use its best efforts to bring about a
favorable and speedy disposition of all such proceedings.
-21-
7.9 Lender's Action for Its Own Protection Only. The authority herein
conferred upon Lender, and any action taken by Lender, including, without
limitation, actions to inspect the Project, to procure waivers or sworn
statements, and to approve contracts, will be exercised and taken by Lender and
by Lender's other advisors or representatives for their own protection only and
may not be relied upon by Borrower or any other person for any purposes
whatever. Neither Lender nor any other advisor or representative of Lender shall
be deemed to have assumed any responsibility to Borrower or any other person
with respect to any such action herein authorized or taken by Lender or any
other advisor or representative of Lender or with respect to the proper
construction of improvements on the Project, performance of contracts,
subcontracts or purchase orders by any contractor, subcontractor or material
supplier, or prevention of mechanics' liens from being claimed or asserted
against any of the Project. Any review, investigation or inspection conducted by
Lender, or any other architectural or engineering consultants retained by Lender
or any agent or representative of Lender in order to verify independently
Borrower's satisfaction of any conditions precedent to Loan disbursements under
this Agreement, Borrower's performance of any of the covenants, agreements and
obligations of Borrower under this Agreement, or the validity of any
representations and warranties made by Borrower hereunder (regardless of whether
or not the party conducting such review, investigation or inspection should have
discovered that any of such conditions precedent were not satisfied or that any
such covenants, agreements or obligations were not performed or that any such
representations or warranties were not true), shall not affect (or constitute a
waiver by Lender of) (i) any of Borrower's representations and warranties under
this Agreement or Lender's reliance thereon or (ii) Lender's reliance upon any
certifications of Borrower or the Architect required under this Agreement or any
other facts, information or reports furnished Lender by Borrower hereunder.
7.10 Furnishing Information. (a) Within 90 days of the end of each calendar
year, Borrower shall deliver or cause to be delivered to Lender financial
statements for Borrower prepared by an accountant and within 30 days following
the filing of the same, annual federal income tax returns for Borrower. Any such
financial statements for Borrower shall be of review quality or on a form
provided by Lender and certified as true and correct by Borrower.
(b) Within 30 days following the end of each quarter and prior to any
Disbursement, Borrower shall deliver to Lender current rent rolls for the
Project, which shall include information on the amount of units rented, the
rental under each lease; and the term of each lease, as well as any other
related information as may be requested by Lender. All such rent rolls shall be
certified as true and correct by Borrower.
(c) Within 30 days following the end of each quarter except that Borrower
shall have 45 days following the fourth quarter, Borrower shall deliver to
Lender annual cash flow and operating statements for the Project showing actual
sources and uses of cash during the preceding twelve (12) months. All such
statements shall be certified as true and correct by Borrower.
-22-
(d) Within 45 days following the end of each fiscal year, Borrower shall
deliver to Lender a proforma operating budget for the Project.
(e) Within 30 days following the end of each quarter, Borrower shall
deliver historical tenant sales reports (as available).
(f) Within 30 days following the end of each quarter and prior to any
Disbursement, Borrower shall deliver to Lender a certified certificate of
compliance, substantially in the form attached hereto as Exhibit B, certifying,
among other things, current compliance with Debt Service Coverage Ratio
requirements and setting forth all tenants who have given their notice to
terminate or not renew their existing lease (the "Certificate of Compliance").
(g) Additionally, Borrower will:
(i) promptly supply Lender with such information concerning its
affairs and property relating to the development and operation of the
Project, including but not limited to monthly management reports, as Lender
may request from time to time hereafter;
(ii) promptly notify Lender of any condition or event which
constitutes (or which upon the giving of notice or lapse of time or both
would constitute) a breach or event of default of any term, condition,
warranty, representation or provision of this Agreement or of any of the
Loan Documents;
(iii) promptly notify Lender of any "material adverse financial
change" in its respective financial conditions, and maintain a standard and
modern system of accounting in accordance with generally accepted
accounting principles;
(iv) promptly notify Lender of any "materially adverse financial
change" in connection with the operation of the Project;
(v) upon reasonable notice from Lender, at any time whatever during
regular business hours permit Lender or any of its agents or
representatives to have access to and examine all of its books and records
regarding the development and operation of the Project; and
(vi) permit Lender to copy and make abstracts from any and all of said
books and records.
7.11 Documents of Further Assurance. Borrower shall, from time to time,
upon Lender's request, execute, deliver, record and furnish such documents as
Lender may reasonably deem necessary or desirable to (i) perfect and maintain
perfected as valid liens upon the Project, the liens granted by Borrower to
Lender under the Mortgage and the assignments and other security interests under
the other Loan Documents as contemplated by this Agreement, (ii) correct any
errors of a typographical nature which may be contained in any of the Loan
Documents, and (iii) consummate fully the transaction contemplated under this
Agreement.
-23-
7.12 Intentionally deleted.
7.13 Operation of Project. As long as any portion of the Loan remains
outstanding, the Project shall be operated in a first class manner as a
commercial retail property.
7.14 Management Agents' and Brokers' Contracts. Borrower shall not enter
into, any new management contract or materially modify, or amend any management
contracts for the Project, without the prior written approval of Lender which
approval shall not unreasonably be withheld, except as specifically permitted
pursuant to that certain Assignment of Management Agreement executed in
conjunction herewith.
7.15 Furnishing Notices. Borrower shall provide Lender with copies of all
notices with respect to any non compliance or default pertaining to the Project
or any part thereof received by Borrower (or its agents or representatives) from
any federal, state or local governmental official, body, board or department,
within three (3) business days after such notice is received.
7.16 Intentionally deleted.
7.17 No Additional Debt; No Assignment. As more particularly provided in
Section 9.2, Borrower shall not consent or agree to any lien, mortgage, security
interest, encumbrance, or sale and leaseback transaction affecting the Land.
7.18 Hold Disbursements in Trust. Borrower will pay all costs, expenses and
fees relating to the equipping, fixturing, use and operation of the Project.
7.19 Indemnification. Borrower hereby indemnifies Lender and agrees to
defend Lender and hold Lender harmless from and against all claims, injuries,
losses, costs, damages, liabilities and expenses (including attorneys' fees and
consequential damages) of any and every kind to any persons or property by
reason of (i) the construction or other work contemplated herein (except by
reason of the negligence or willful misconduct of Lender), (ii) the operation or
maintenance of the Project (except by reason of the negligence or willful
misconduct of Lender), (iii) any other action or inaction by, or matter which is
the responsibility of Borrower (except by reason of the gross negligence or
willful misconduct of Lender), or (iv) the breach of any representation or
obligation of Borrower hereunder.
7.20 Prohibition Against Cash Distributions and Application of Net Cash
Flow to Other Expenditures. In no event shall Borrower make any disbursements
from rental or other cash flow from the Land and the Project to any party during
any month until the installment due under the Note has been reserved or
allocated for such month.
7.21 Insurance Reporting Requirements. Borrower shall promptly notify the
insurance carrier or agent therefor (with a copy of such notification being
provided to Lender) if there is any increase in hazard relating to the Project,
or transfer of ownership.
7.22 Compliance With Laws. Borrower shall comply with all applicable
requirements of any governmental authority having jurisdiction. In no event
shall Borrower consent to or cause any zoning change on the Project or any
portion thereof (including any variance, plan approval, rezoning, or
modification of any zoning commitment) without Lender's prior written consent.
-24-
7.23 Alterations. Without the prior written consent of Lender, Borrower
shall not make any material alterations to the Project, if the costs of such
alterations will exceed $3,000,000.00.
7.24 Lost Note. Borrower shall, if the Note is mutilated, destroyed, lost
or stolen, deliver to Lender, in substitution therefor, a new promissory note
containing the same terms and conditions as the Note with a notation thereon of
the unpaid principal accrued and unpaid interest.
7.25 Regulated Materials. Borrower shall comply with any and all laws,
regulations or orders with respect to the discharge and removal of Regulated
Materials, shall pay immediately when due the costs of removal of any such
Regulated Materials, and shall keep the Project free of any lien imposed
pursuant to such laws, regulations or orders. In the event Borrower fails to do
so, after notice to Borrower and the expiration of the earlier of (i) applicable
cure periods hereunder or (ii) the cure period permitted under applicable law,
regulation or order, Lender may either declare this Agreement to be in default
or cause the Project to be freed from the Regulated Materials with the cost of
the removal added to the indebtedness evidenced by the Note and secured by the
Mortgage (regardless of whether such indebtedness then increases the outstanding
balance of the Note to an amount in excess of the face amount thereof). Borrower
further agrees that Borrower shall not release or dispose of any Regulated
Materials at the Project without the express prior approval of Lender and any
such release or disposal will be in compliance with all applicable laws and
regulations and conditions, if any, established by Lender, including, without
limitation, those set forth in Section 6 of the Mortgage. Lender shall have the
right at any time to conduct an environmental audit of the Project for
reasonable cause, at Borrower's sole cost and expense, and Borrower shall
cooperate in the conduct of such environmental audit. Borrower shall give Lender
and its agents and its employees access to the Project to inspect and test the
Project and to remove Regulated Materials. Borrower hereby indemnifies Lender
and agrees to defend Lender and hold Lender harmless from and against all
claims, injuries, losses, costs, damages, liabilities and expenses (including
attorneys' fees and consequential damages) by reason of any claim in connection
with any Regulated Materials which were present at the Project during or prior
to Borrower's ownership of the Project. The foregoing indemnification shall be
included within the indemnity agreement referred to in clause(n) of Article iv
hereof, and shall survive repayment of the Note.
7.26 Asbestos. Without limiting the generality of Section 7.25 above,
Borrower shall not install nor permit to be installed in the Project asbestos or
any substance containing asbestos. If Borrower shall fail to comply with this
section, Lender may declare this Agreement to be in default and/or do whatever
is necessary to eliminate said substances from the Project or otherwise comply
with the applicable law, regulation, or order and the costs thereof shall be
added to the indebtedness evidenced by the Note and secured by the Mortgage.
7.27 Additional Appraisals. Borrower hereby covenants and agrees that
Lender may, in its sole discretion, require annually an updated Appraisal for
the Project, at Borrower's expense. Notwithstanding he foregoing, in no event
shall Lender require Borrower to provide more than two (2) additional Appraisals
during the term of the Loan.
-25-
7.28 Minimum Debt Service Coverage Ratio. Borrower hereby covenants and
agrees that the Project will maintain a minimum Debt Service Coverage Ratio
during the term of the Loan of 1.25x (the "DSCR Requirement"), measured
quarterly. For purposes of compliance with this Section 7.28, during the 12
months immediately following the Mervyn's Acquisition, all costs, income and
debt service related to the Mervyn's Acquisition will be excluded from such
calculation. Beginning 12 months following the Mervyn's Acquisition, all Debt
Service Coverage Ratio calculations shall include the entire Project, including
all income, costs and debt service related to the Mervyn's Acquisition. Upon
Borrower's achievement of the DSCR Requirement in any quarter beginning with the
twelve month anniversary following the Mervyn's Acquisition, Lender will release
the funds from the Mervyn's Collateral Account to Borrower.
For purposes of compliance with this Section 7.28, during the 12 months
immediately following a Subsequent Draw, all calculations of Debt Service
Coverage Ratio which include an Incremental New Lease shall include a proforma
annualized number for the income, costs and expenses of any Incremental New
Lease that has been in effect for less than 12 months.
Borrower hereby covenants and agrees that Borrower must evidence compliance
with the DSCR Requirement prior to Draw B or any Subsequent Draw.
7.28.1 Failure to Maintain required Debt Service Coverage Ratio. In the
event that Borrower fails to maintain the minimum Debt Service Coverage Ratio
pursuant to Section 7.28, Borrower shall have a period of Six (6) months to cure
such covenant violation.
In the event that Borrower does not achieve the DSCR Requirement within six
(6) months of the covenant violation, Borrower shall establish with Lender a
cash collateral reserve account (the "DSC Cash Collateral Reserve"). The amount
the DSC Cash Collateral Reserve shall be calculated by Lender as follows:
Required NOI minus actual NOI
"Required NOI" shall mean current Debt Service times 1.25
The DSC Cash Collateral reserve shall be held by Lender as additional security
for the Loan until such time as Borrower achieves the DSCR Requirement using
actual NOI. For any quarter in which Borrower fails to achieve the DSCR
Requirement, Borrower shall adjust the amount of the DSC Cash Collateral Reserve
accordingly, to insure that such amount when added to the actual NOI would be
sufficient to achieve the DSCR Requirement. Upon Borrower's achievement of the
DSCR Requirement based on actual NOI, Lender shall release the funds from the
DSC Cash Collateral reserve to Borrower.
Notwithstanding anything to the contrary contained herein, in the event
that the Debt Service Coverage Ratio for the Project falls below 1.05x, Borrower
shall within three (3) days of receiving notice from Lender, repay the loan in
the aggregate amount of all Subsequent Draws outstanding and shall establish the
DSC Cash Collateral Reserve as calculated above. Lender shall not be obligated
to make any Subsequent Draws until Borrower achieves the DSCR Requirement for
two consecutive quarters. Upon achieving the DSCR Requirement for two
-26-
consecutive quarters, Borrower may redraw portions of the Loan repaid pursuant
to this section subject to the conditions for Subsequent Draws set forth in
Section 3.3(c).
7.29 Equity: Borrower shall maintain at all times cash equity invested in
the Project of not less than the greater of (i) 35% of the total cost of the
Project, or (ii) $20,405,000.
7.30 New Leases with any tenant for space in excess of 10,000 square shall
be subject to Lender's approval which approval shall not be unreasonably
withheld or delayed. Lender approval shall not be required for any new leases
with tenants for 10,000 square feet of space or less if such new leases are: (i)
written substantially in accordance with the standard form of lease which has
been approved by Lender (subject to any commercially reasonable changes made in
the course of negotiations with the applicable tenant), (ii) not be to an
Affiliate of Borrower (iii) be on commercially reasonable terms at rental rates
comparable to existing local market rates for similar properties, (iii) provide
that such lease is subordinate to the Mortgage and that the lessee will attorn
to Lender and any purchaser at a foreclosure sale and (iv) not contain any terms
which would materially adversely affect Lender's rights under the Loan
Documents.
Whenever Lender's approval or consent is required for any new lease or
leasing action, Borrower shall have the right to submit a term sheet of such
transaction to Lender for Lender's approval, such approval not to be
unreasonably withheld, conditioned or delayed. Any such term sheet submitted to
Lender shall set forth all material terms of the proposed transaction including,
without limitation, identity of tenant, square footage, term, rent, rent
credits, abatements, work allowances and tenant improvements to be constructed
by Borrower. Lender shall use good faith efforts to respond within ten (10)
Business Days after Lender's receipt of Borrower's written request for approval
or consent of such term sheet. If Lender fails to respond to such request within
ten (10) Business Days, and Borrower sends a second request containing a legend
in bold letters stating that Lender's failure to respond within five (5)
Business Days shall be deemed consent or approval, Lender shall be deemed to
have approved or consented to such term sheet if Lender fails to respond to such
second written request before the expiration of such five (5) Business Day
period.
ARTICLE VIII
CASUALTIES AND CONDEMNATION
---------------------------
8.1 Notice. In case of any material damage or destruction, taking, or
condemnation of the Project, or any part thereof, or any interest therein or
right accruing thereto, Borrower shall promptly give to Lender written notice
generally describing the nature and extent of such damage, destruction or taking
which has resulted or which may result therefrom. So long as Borrower is not in
default, Borrower may adjust, settle and compromise any such insurance policy or
any proposed condemnation award, but in any event, no final adjustment,
compromise or settlement of any insurance claim or condemnation award that
exceeds $3,000,000.00 shall be entered into without the prior written approval
of Lender as to such settlement, adjustment or compromise thereof. Lender may
appear in any such proceedings and negotiations and Borrower shall promptly
deliver to Lender copies of all notices and pleadings in any such proceedings.
Borrower will in good faith, file and prosecute all claims necessary for any
award or payment resulting from such damage, destruction or taking. All costs
and expenses incurred by Lender in exercising its rights under this section
shall constitute indebtedness secured by the Mortgage.
-27-
8.2 Application of Insurance Proceeds and Condemnation Awards. (a) Upon
occurrence of any loss or damage to all or any portion of the Project resulting
from fire, vandalism, malicious mischief or any other casualty or physical harm
(a "Casualty") or any exercise of the power of condemnation or eminent domain (a
"Taking"), Lender may elect to collect, retain and apply as a Loan prepayment
all proceeds (the "Proceeds") of any insurance policies collected or claimed as
a result of such Casualty and all awards resulting from such Taking ("Awards")
after deduction of all expenses of collection and settlement, including
attorney's and adjusters' fees and charges. To the extent that the proceeds or
awards exceed $3,000,000.00. Subject to the provisions of Section 8.1 above,
Borrower hereby authorizes Lender, at Lender's option, to collect any losses
under any insurance with respect to the Project which is kept, or caused to be
kept, by Borrower, and hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, for such purposes. Any Proceeds or
Awards remaining after payment in full of the Loan and all other sums due Lender
hereunder shall be paid by Lender to Borrower without any allowance for interest
thereon. Notwithstanding anything to the contrary contained herein, in the event
that (i) no Event of Default has occurred and is continuing hereunder, (ii) the
Proceeds or Awards, as the case may be, are sufficient to rebuild the Project
or, if they are insufficient, as determined by Lender in its sole discretion,
Borrower provides Lender with additional funds necessary, as determined in
Lender's sole discretion (iii) after completion of the reconstruction, the loan
to value ratio of the Project is satisfactory to Lender, as determined in
Lender's sole discretion, then the Proceeds or Awards, as the case may be,
shall, at Borrower's request, be applied towards reconstruction of the Project,
which funds shall be disbursed pursuant to the disbursement provisions set forth
herein.
(b) In the event Lender does not apply the Proceeds or Awards to prepayment
of the Loan as provided for in Section 8.2(a) above or in the event such
Proceeds or Awards, if applied, do not fully discharge the Loan, Borrower will:
(i) Proceed with diligence to make settlement (which shall be subject
to the approval of Lender) with insurers or with condemning authorities and
cause the Proceeds or Awards to be deposited with Lender, unless Lender
shall elect to exercise its right under the Mortgage to make such
settlement without the consent of Borrower.
(ii) In the event of any unreasonable delay in making settlement with
insurers or effecting collection of Proceeds or Awards, Borrower shall
deposit with Lender the full amount required to meet the obligations due
under the Loan, disregarding such Proceeds or Awards.
(iii) In the event the Proceeds or Award deposited with Lender are
insufficient to complete reconstruction of the Project, Borrower shall
deposit with Lender additional funds as necessary, as determined by Lender
in its sole discretion.
(iv) Promptly proceed with construction and restoration of the
Project, including the repair of all such loss or damage.
-28-
All Proceeds, Awards and funds deposited by Borrower hereunder shall first be
fully disbursed before disbursement of any further Loan Proceeds. Borrower shall
not be entitled to any payment of or credit for interest on such Proceeds,
Awards and funds. In the event of deposit by Borrower of the full amount
required to complete reconstruction of the Project, as aforesaid, upon the
subsequent receipt of Proceeds or Awards, such Proceeds or Awards, as and when
received, may be collected and retained by Borrower.
(c) Lender shall not be obligated to see to the proper application of any
of the Proceeds nor shall the amount so released or used be deemed a payment on
any indebtedness evidenced by the Note or secured by any of the Loan Documents.
In the event of foreclosure of the Mortgage or other transfer of title in lieu
of foreclosure, all right, title and interest of Lender, in and to any insurance
policies then in force shall pass to the purchaser or Lender, as the case may
be.
(d) All proceeds of use and occupancy or rental value insurance shall be
paid to Lender for the purposes of paying, to the extent available and
necessary, in the following order: (i) insurance premiums payable with respect
to any insurance required to be carried by Borrower hereunder; (ii) taxes,
assessments and charges payable by Borrower under any of the Loan Documents; and
(iii) all amounts payable on the Note, together with any and all other amounts
evidenced or secured by any of the Loan Documents, and to the extent that such
insurance proceeds are available to pay the items listed in clauses(i), (ii) and
(iii), Lender shall pay such items for the account of Borrower. All such
insurance proceeds not deemed necessary, in Lender's sole opinion, to pay the
above items shall be paid over to Borrower.
(e) Upon failure on the part of Borrower promptly to commence or continue
the repair or restoration of the Project after settlement of any claim with the
insurer, Lender shall have the right to apply such Proceeds to the payment of
any indebtedness secured by the Loan Documents, and resort to such other
remedies available to Lender hereunder; provided, however, that nothing herein
contained shall prevent Lender from applying at any time the whole or any part
of such insurance proceeds to the curing of any Event of Default hereunder.
ARTICLE IX
ASSIGNMENTS, SALE AND ENCUMBRANCES
----------------------------------
9.1 Lender's Right to Assign. Lender may assign, negotiate, pledge or
otherwise hypothecate this Agreement or any of its rights and security
hereunder, including the Note, and any of the other Loan Documents to any bank,
participant or financial institution, and in case of such assignment, Borrower
will accord full recognition thereto, and hereby agree that all rights and
remedies of Lender in connection with the interest so assigned shall be
enforceable against Borrower by such bank, participant or financial institution
with the same force and effect and to the same extent as the same would have
been enforceable by Lender but for such assignment.
9.2 Prohibition of Assignments and Encumbrances by Borrower. Borrower shall
not, without the prior written consent of Lender, create, effect, consent to,
attempt, contract for, agree to make, suffer or permit any conveyance, sale,
assignment, transfer, lien, pledge, mortgage, security interest, encumbrance or
alienation ("Prohibited Transfer") of all or any portion of, or any interest in,
the Land, or the Project, whether effected directly, indirectly, voluntarily,
-29-
involuntarily, or by operation of law or otherwise; provided, however, that the
foregoing shall not apply to (i) liens securing the Loan, (ii) the lien of
current taxes and assessments not in default, (iii) leases permitted pursuant to
this Agreement, and (iv) the Permitted Exceptions.
Notwithstanding the foregoing, the transfer of 100% of the Glimcher
Properties Limited Partnership's interest in Borrower to Tulsa Promenade REIT,
LLC shall be a permitted transfer. Also the transfer of up to 50% of the
interest of any member in Tulsa Promenade REIT, LLC or in OG Retail Holding Co.,
LLC shall be permitted without Lender consent.
ARTICLE X
DEFAULTS BY BORROWER
--------------------
The occurrence of any one or more of the following shall constitute an
"Event of Default" hereunder, and any Event of Default which may occur hereunder
shall constitute a default under each of the other Loan Documents:
(a) A failure by Borrower to make any payment on the Note when and as the
same becomes due, which failure continues for a period of fifteen (15) days.
(b) Any failure of Borrower for a period of thirty (30) days after written
notice from Lender to Borrower, to observe or perform any of the covenants
(other than payment of the Note or payments required hereunder), contained in
this Agreement or any of the other Loan Documents; provided, that such thirty
(30)-day period shall be extended to permit the cure of any default which by its
nature is not reasonably susceptible to cure within said thirty (30)-day period,
so long as Borrower promptly within said thirty (30)-day period commences its
efforts to cure and thereafter diligently pursues the same to completion.
(c) Any failure by Borrower to repay the Loan or any portion thereof as
required herein.
(d) The failure of Borrower to fund the DSC Cash Collateral Reserve as
required herein.
(e) Intentionally deleted.
(f) The occurrence of a Prohibited Transfer.
(g) The existence of any collusion, fraud, dishonesty or bad faith by or
with the acquiescence of Borrower, which in any way relates to or affects the
Loan or the Project.
(h) If, at any time, any material representation, statement, report or
certificate made now or hereafter by Borrower is not true and correct, or if at
any time any material statement or representation made in the construction loan
application or any supporting materials submitted to Lender for this Loan is not
true and correct.
(i) If all or a substantial part of the assets of Borrower are attached,
seized, subjected to a writ or distress warrant, or is levied upon, and such
attachment, seizure, writ, warrant or levy is not vacated within thirty (30)
days thereafter.
-30-
(j) If Borrower is enjoined or restrained or in any way prevented by court
order from performing any of its obligations hereunder or under the other Loan
Documents or conducting all or a substantial part of its business affairs.
(k) If Borrower:
(i) Shall file a voluntary petition in bankruptcy or for arrangement,
reorganization or other relief under any chapter of the federal bankruptcy
code of any similar law, state or federal, now or hereafter in effect;
(ii) Shall file an answer or other pleading in any proceedings
admitting insolvency, bankruptcy, or inability to pay its debts as they
mature;
(iii) Within sixty (60) days after the filing against it of any
involuntary proceedings under the federal bankruptcy code or similar law,
state or federal, now or hereafter in effect, such proceedings shall not
have been vacated;
(iv) Any order appointing a receiver, trustee or liquidator for it or
for all or a major part of its property or the Land shall not be vacated
within sixty (60) days following entry thereof;
(v) Shall be adjudicated a bankrupt;
(vi) Shall make an assignment for the benefit of creditors or shall
admit in writing its inability to pay its debts generally as they become
due or shall consent to the appointment of a receiver or trustee or
liquidator of all or the major part of its property, or the Land.
(l) If Borrower fails to maintain the equity required pursuant to Section
7.29, and such covenant violation is not cured within 7 days.
(m) If Borrower defaults in the due performance under any other Loan
Documents with Lender beyond any applicable grace period contained therein,
including, without limitation, all agreements between Lender and the Borrower
which give rise to Hedging Obligations.
ARTICLE XI
LENDER'S REMEDIES UPON DEFAULT
------------------------------
11.1 Remedies Conferred Upon Lender. Upon the occurrence of any Event of
Default, Lender, in addition to all remedies conferred upon Lender by law and by
the terms of the Note, the Mortgage and the other Loan Documents, may pursue any
one or more of the following remedies concurrently or successively, it being the
intent hereof that none of such remedies shall be to the exclusion of any
others:
-31-
(a) Withhold further disbursement of Loan Proceeds and terminate any or all
of its obligations to Borrower.
(b) Declare the Note to be due and payable forthwith, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived.
(c) In addition to any rights of set-off that Lender may have under
applicable law, Lender may, without notice of any kind to Borrower, appropriate
and apply to the payment of the Note or of any sums due under this Agreement,
any and all balances, deposits, credits, accounts, certificates of deposit,
instruments or money of Borrower then or thereafter in the possession of Lender,
including but not limited to the Mervyn's Collateral Account, and the DSC Cash
Collateral Account.
(d) Exercise or pursue any other remedy or cause of action permitted at law
or at equity or under this Agreement or any other Loan Document, including but
not limited to foreclosure of the Mortgage and enforcement of all Loan
Documents.
11.2 Right of Lender to Make Advances to Cure Defaults. In the event that
Borrower shall fail to perform any of its covenants or agreements herein or in
any of the other Loan Documents contained, Lender may (but shall not be required
to) perform any of such covenants and agreements, and any amounts so expended by
Lender shall be deemed advanced by Lender under an obligation to do so
regardless of the identity of the person or persons to whom said funds are
disbursed. Loan Proceeds advanced by Lender in the exercise of its judgment that
the same are needed to complete the Project to protect its security for the Loan
are obligatory advances hereunder and shall constitute additional indebtedness
payable on demand which is evidenced and secured by the Loan Documents.
11.3 Attorneys' Fees. Borrower will pay Lender's reasonable attorneys' fees
and costs in connection with the administration and enforcement of this
Agreement; without limiting the generality of the foregoing, if at any time or
times hereafter the Lender employs counsel for advice or other representation
with respect to any matter concerning Borrower, this Agreement, the Land or the
Loan Documents or to protect, collect, lease, sell, take possession of or
liquidate all or any portion of the Land, or to attempt to enforce or protect
any security interest or lien or other right in any of the premises or under any
of the Loan Documents, or to enforce any rights of the Lender or obligations of
Borrower or any other person, firm or corporation which may be obligated to
Lender by virtue of this Agreement or under any of the Loan Documents or any
other agreement, instrument or document, heretofore or hereafter delivered to
Lender in furtherance hereof, then in any such event, all of the attorneys'
reasonable fees arising from such services, and any expenses, costs and charges
relating thereto, shall constitute an additional indebtedness owing by Borrower
to Lender payable on demand, and evidenced and secured by the Loan Documents.
11.4 No Waiver. No failure by Lender to exercise, or delay by Lender in
exercising, any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement and in the Loan Documents are cumulative and not
exclusive of each other or of any right or remedy provided by law or equity. No
-32-
notice to or demand on Borrower in any case shall, in itself entitle Borrower to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of Lender to any other or further action in
any circumstances without notice or demand.
11.5 Availability of Remedies. All of the remedies set forth herein and/or
provided by law or equity shall be equally available to Lender, and the choice
by Lender of one (1) such alternative over another shall not be subject to
question or challenge by Borrower or any other person, nor shall any such choice
be asserted as a defense, set-off, or failure to mitigate damages in any action,
proceeding, or counteraction by Lender to recover or seeking any other remedy
under this Loan Agreement or any of the Loan Documents, nor shall such choice
preclude Lender from subsequently electing to exercise a different remedy,
except as otherwise provided by law. The parties have agreed to the alternative
remedies hereof specified in part because they recognize that the choice of
remedies in the event of a failure hereunder will necessarily be and should
properly be a matter of business judgment, which the passage of time and events
may or may not prove to have been the best choice to maximize recovery by Lender
at the lowest cost to Borrower. It is the intention of the parties that such
choice by Lender be given conclusive effect regardless of such subsequent
developments. At any sale of the security or collateral for the Loan or any part
thereof whether by foreclosure or otherwise, Lender may in its discretion
purchase all or any part of such collateral so sold or offered for sale for its
own account and may apply against the balance due Lender pursuant to the terms
of the Note the amount bid therefore.
ARTICLE XII
MISCELLANEOUS
-------------
12.1 Time Is of the Essence. Lender and Borrower agree that time is of the
essence of all of their covenants under this Agreement.
12.2 Prior Agreements. This Agreement and the other Loan Documents, and any
other documents or instruments executed pursuant thereto or contemplated
thereby, shall represent the entire, integrated agreement between the parties
hereto with respect to construction and equipping of the Project not yet in
place, and shall supersede all prior negotiations, representations, or
agreements pertaining thereto, either oral or written, which shall survive the
execution of this Agreement by Borrower and Lender, and the occurrence of the
Loan Closing, and shall be included in the term "Loan Documents." This Agreement
and any provision hereof shall not be modified, amended, waived or discharged in
any manner other than by a written amendment executed by all parties to this
Agreement. An action on the part of the Lender waiving a specific provision or
requirement herein contained, shall not be construed to be a waiver of future
application of such provision or requirement or a waiver of any other provision
or requirement hereunder.
12.3 Disclaimer by Lender. Lender shall not be liable to any subcontractor,
supplier, laborer, architect, engineer or any other party for services performed
or materials supplied in connection with construction of improvements to the
Project. Lender shall not be liable for any debts or claims accruing in favor of
any such parties against Borrower or against the Land. The Borrower shall not be
considered an agent of Lender for any purposes, and Lender is not a venture
-33-
partner with Borrower. Lender shall not be deemed to be in privity of contract
with any contractor, subcontractor or provider of services on or to the Land,
nor shall any payment of funds directly to a contractor, subcontractor or
provider of services on or to the Land, be deemed to create any third party
beneficiary status or recognition of same by Lender unless and until Lender
expressly assumes such status in writing. Approvals granted by Lender for any
matters covered under this Agreement shall be narrowly construed to cover only
the parties and facts identified in any written approval or if not in writing
such approvals shall be solely for the benefit of Borrower.
12.4 Indemnification. To the fullest extent permitted by law, Borrower
hereby agrees to protect, indemnify, defend and save harmless, Lender and its
directors, officers, agents and employees from and against any and all
liability, expense or damage of any kind or nature and from any suits, claims,
or demands, including legal fees and expenses, arising out of this Agreement or
in connection herewith, except to the extent such suit, claim or damage is
caused by any act, omission or willful misconduct of Lender, its directors,
officers, agents and authorized employees. This obligation on the part of
Borrower shall survive the closing of the Loan, the repayment thereof and any
cancellation of the Loan Agreement.
12.5 Captions. The captions and headings of various articles and sections
of this Agreement and exhibits pertaining hereto are for convenience only and
not to be considered as defining or limiting in any way the scope or intent of
the provisions hereof.
12.6 Inconsistent Terms and Partial Invalidity. In the event of any
inconsistency among the terms hereof (including incorporated terms), or between
such terms and the terms of any other Loan Document, this Loan Agreement shall
be controlling. If any provision of this Agreement, or any paragraph, sentence,
clause, phrase, or word, or the application thereof, in any circumstances, is
adjudicated by a court of competent jurisdiction to be invalid, the validity of
the remainder of this Agreement shall be construed as if such invalid part were
never included herein.
12.7 Gender and Number. Any word herein which is expressed in the masculine
or neuter gender shall be deemed to include the masculine, feminine and neuter
genders. Any word herein which is expressed in the singular or plural number
shall be deemed, whenever appropriate in the context, to include the singular
and plural.
12.8 Definitions Included in Amendments. Definitions contained in this
Agreement which identify documents, including, without limitation, the Loan
Documents, shall be deemed to include all amendments and supplements to such
documents from the date hereof, and all future amendments and supplements
thereto entered into from time to time to satisfy the requirements of this
Agreement or otherwise with the consent of the Lender. Reference to this
Agreement contained in any of the foregoing documents shall be deemed to include
all amendments and supplements to this Agreement.
12.9 WAIVER OF JURY TRIAL. BORROWER AND LENDER EACH WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT OR RELATING THERETO OR ARISING FROM THE BANKING RELATIONSHIP
WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
-34-
12.10 Notices. Except for any notice required under applicable law to be
given in another manner, any notice, demand, request or other communication
which any party hereto may be required or may desire to give hereunder shall be
in writing and shall be deemed to have been properly given (i) if hand delivered
or if sent by telecopy, effective upon receipt or (ii) if delivered by overnight
courier service, effective on the day following delivery to such courier
service, or (iii) if mailed by United States registered or certified mail,
postage prepaid, return receipt requested, effective two (2) days after deposit
in the United States mails; addressed in each case as follows:
If to Borrower:
Tulsa Promenade, LLC
c/o Glimcher Properties Limited Partnership
000 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: General Counsel
If to Lender:
Charter One Bank, N.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
or at such other address or to such other addressee as the party to be served
with notice may have furnished in writing to the party seeking or desiring to
serve notice as a place for the service of notice.
12.11 Office of Foreign Asset Control (OFAC) and Patriot Act 326 (PA 326)
verification of customers.
a. PAC326. To help the government fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify and record information that identifies each customer who opens an
account (including the extension of credit to a customer). Therefore, all new
and existing customers are subject to the identity verification requirements.
When you open an account with any entity within the Lender's family of
companies, we require the following information for the Business: Business Name,
Business Address, Business TIN and Business Phone Number. For the Business
Representative (person signing for the Business), we require the following
information: Individual's Name, Individual's Address, Identification Information
and Date of Birth.
b. OFAC. In addition, all financial institutions must check all
Borrowers; Collateral Owners; Guarantors; Co-signors; Receiving and Sending
Parties; Members, Managing Members, and Trustees; and Limited Partners, Managing
Members and Beneficiaries holding interest; against the US Department of
Treasury's list for Specially Designated Nationals and Blocked Persons.
-35-
c. Both the PAC 326 and OFAC verifications must be completed prior to
Closing.
14.11 Governing Law. This Agreement has been negotiated, executed and
delivered at Cleveland, Ohio, and shall be construed and enforced in accordance
with the laws of the State of Ohio, without reference to the choice of law or
conflicts of law principles of that State.
14.12 Nonrecourse Except as otherwise set forth in this section, Lender's
recourse under this Agreement, the Note, the Mortgage and the Loan Documents
shall be limited to and satisfied from the Project and the proceeds thereof, the
rents and all other income arising therefrom, the other assets of Borrower
arising out of the Project which are given as collateral for the Note, and any
other collateral given in writing to Lender as security for repayment of the
Note, including, but not limited to the Mervyn's Collateral Account and DSC Cash
Collateral Account (all of the foregoing are collectively referred to as the
("Loan Collateral"). Notwithstanding the preceding sentence:
(a) Lender may, in accordance with the terms of this Agreement, the
Note, the Mortgage or any Loan Document: (i) foreclose the lien of the Mortgage,
(ii) take appropriate action to enforce this Agreement, the Note, the Mortgage
and any Loan Documents to realize upon and/or protect the Loan Collateral, (iii)
name Borrower as a party defendant in any action brought under this Agreement,
the Note, the Mortgage or any Loan Document so long as the exercise of any
remedy is limited to the Loan Collateral, (iv) pursue all of its rights and
remedies against any guarantor or surety or master tenant, whether or not such
guarantor or surety or master tenant is a partner, member or other owner of
Borrower, (v) pursue all of its rights and remedies against Borrower under that
certain Indemnity Agreement of even date herewith;
(b)Lender may seek damages or other monetary relief to the extent of
actual monetary loss, or any other remedy at law or in equity against Borrower
by reason of or in connection with (i) the failure of Borrower to pay to Lender,
upon demand, all rents, issues and profits of the Project to which Lender is
entitled pursuant to this Agreement, the Note, the Mortgage or the Loan
Documents following an Event of Default, (ii) any waste of the Project or any
willful act or omission by Borrower which damages or materially reduces the
value of the Project, (iii) the failure to apply all rents, issues and profits
from the Project to the payment of operating expenses, real estate taxes,
insurance, capital repair items, and the payment of sums due and owing under
this Agreement, the Note, the Mortgage or the Loan Documents prior to any other
expenditure or distribution by Borrower, (iv) the failure to account for and to
turn over security deposits (and interest required by law or agreement to be
paid thereon) or prepaid rents following the occurrence of an Event of Default
under this Agreement, the Note, the Mortgage or any Loan Documents, (v) the
failure to timely pay real estate taxes or any regular or special assessments
affecting the Project, (vi) the failure to account for and to turn over real
estate tax accruals following the occurrence of an Event of Default under this
Agreement, the Note, the Mortgage or any Loan Documents, (vii) the failure to
maintain casualty and liability insurance as required under the Mortgage or the
-36-
Loan Documents or to apply insurance proceeds or condemnation awards relating to
the Project or other collateral in the manner required under applicable
provisions of this Agreement, the Note, the Mortgage or any Loan Documents
(viii) costs and expenses, including, without limitation, attorney's fees and
transfer taxes, incurred by Lender in connection with the enforcement of this
Agreement, the Note, the Mortgage or the Loan Documents or a deed-in-lieu of
foreclosure;
(c) Borrower shall become personally liable for payment of the
indebtedness evidenced by this Agreement, the Note and performance of all other
obligations of Borrower under this Agreement, the Note, the Mortgage and the
Loan Documents upon the occurrence of any of the following: (i) fraud or willful
misrepresentation of a material fact by Borrower, any members of Borrower, in
connection with the Note, the Mortgage or the Loan Documents or any request for
any action or consent by Lender, (ii) a transfer of any interest in the Borrower
or all or any portion of the Project or any interest therein in violation of the
terms of this Agreement, the Note, the Mortgage or the Loan Documents, or (iii)
the incurrence by Borrower of any indebtedness in violation of the terms of this
Agreement, the Note, the Mortgage or any Loan Document (whether secured or
unsecured, direct or contingent), other than unsecured debt or routine trade
payables incurred in the ordinary course of business in connection with the
operation of the Project.
In addition, Borrower shall be responsible for any costs and expenses
incurred by Lender in connection with the collection of any amounts for which
Borrower is personally liable under this section, including attorneys' fees and
expenses, court costs, filing fees, and all other costs and expenses incurred in
connection therewith.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK --
SIGNATURE PAGE TO IMMEDIATELY FOLLOW]
-37-
IN WITNESS WHEREOF, the parties have caused these presents to be executed
the day and year first above written.
BORROWER:
TULSA PROMENADE, LLC, a Delaware limited liability
company
By: GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited
partnership, its sole member
By: GLIMCHER PROPERTIES CORPORATION,
a Delaware corporation, its general partner
By:__________________________________
Xxxxxx X. Xxxxxxx
Executive Vice President
LENDER:
CHARTER ONE BANK, N.A.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
-38-
EXHIBIT A
(Legal Description
EXHIBIT B
Certificate of Compliance
Charter One Bank, N.A.
________________________
________________________
Re: Loan Agreement dated as of ________ (as amended, modified, supplemented,
restated, or renewed, from time to time, the "Agreement"), between TULSA
PROMENADE, LLC, (the "Borrower"), and CHARTER ONE BANK, N.A. ("Lender").
Reference is made to the Agreement. Capitalized terms used in this Certificate
(including schedules and other attachments hereto, this "Certificate") without
definition have the meanings specified in the Agreement.
Pursuant to applicable provisions of the Agreement, the undersigned, hereby
certifies to the Lender that the information furnished in the attached
schedules, including, without limitation, each of the calculations listed below
are true, correct and complete in all material respects as of the last day of
the fiscal periods subject to the financial statements and associated covenants
being delivered to the Lender pursuant to the Agreement together with this
Certificate (such statements the "Financial Statements" and the periods covered
thereby the "reporting period") and for such reporting periods.
The undersigned hereby further certifies to the Lender that:
1. Compliance with Financial Covenants. As shown below, the Borrower is in
full compliance with the financial covenants contained in the Agreement.
A. Covenant: Debt Service Coverage Ratio of not less than 1.25: 1.0 tested
quarterly and prior to any Disbursement, the calculation of which is set
forth in Schedule A attached hereto.
Debt Service Coverage of ______ : 1.0 for period ending ________, 200___.
B. Covenant: Draw amount of no more than 65% of Incremental Value and
Proforma Debt Service Coverage Ratio of not less than 1.25: 1.0 prior to
any Subsequent Draw, the calculation of which is set forth in Schedule B
attached hereto.
65% of Incremental Value: $___________
Debt Service Coverage of ______ : 1.0
C. Covenant: Borrower Equity in the Project: The greater of (i) 35% of the
total cost of the Project, or (ii) $20,405,000.
Compliance? (Yes or No) ____________________
2. Tenants Giving Notice. The following tenants have given Borrower or its
managing agent notice of it intent to terminate or not renew it's existing
lease. Borrower has no knowledge of any other tenant that intends to give
such notice.
(i)_________________________________________________
(ii) _______________________________________________
(iii) ______________________________________________
3. Rent Roll. The undersigned hereby certifies that the rent roll attached
hereto as Schedule C is accurate as of the date hereof, and accurately
reflects the status of all leases and their expiration dates.
4. Review of Condition. The undersigned has reviewed the terms of the
Agreement, including, but not limited to, the representations and
warranties of the Borrower set forth in the Agreement and the covenants of
the Borrower set forth in the Agreement, and has made, or caused to be made
under his or her supervision, a review in reasonable detail of the
transactions and condition of the Borrower through the reporting periods.
5. Representations and Warranties. To the undersigned's actual knowledge, the
representations and warranties of the Borrower contained in the Loan
Documents, including those contained in the Agreement, are true and
accurate in all material respects as of the date hereof and were true and
accurate in all material respects at all times during the reporting period
except as expressly noted on Schedule D hereto.
6. Covenants. To the undersigned's actual knowledge, during the reporting
period, the Borrower observed and performed all of the respective covenants
and other agreements under the Agreement and the Loan Documents, and
satisfied each of the conditions contained therein to be observed,
performed or satisfied by the Borrower, except as expressly noted on
Schedule D hereto.
7. No Event of Default. To the undersigned's actual knowledge, no Event of
Default exists as of the date hereof or existed at any time during the
reporting period, except as expressly noted on Schedule D hereto.
-2-
IN WITNESS WHEREOF, this Certificate is executed by the undersigned this
____ day of __________, 200__.
BORROWER:
TULSA PROMENADE, LLC, a Delaware limited liability
company
By: TULSA PROMENADE REIT, LLC, a Delaware
limited liability company, its sole member
By: OG RETAIL HOLDING CO., LLC, a Delaware
limited liability company, its managing member
By: GLIMCHER PROPERTIES LIMITED
PARTNERSHIP, a Delaware limited
partnership, its administering member
By: GLIMCHER PROPERTIES CORPORATION,
a Delaware corporation, its sole member
By:__________________________________
Xxxxxx X. Xxxxxxx
Executive Vice President
-3-
Schedule A
Debt Service Coverage Ratio Quarterly Compliance
Tulsa Promenade
Quarterly Covenant Compliance
Tested as of xx/xx/xx
(Trailing Twelve Month $000)
Debt Service Coverage:
--------------------------------------------------------------------------------
TTM Base Rents $
Annualized Rents from new Leases in effect < 12 months $________
Plus:
CAM Reimbursement $________
Specialty Leasing $________
Other Recovery/Reimbursement $________
Percentage Rents $________
Miscellaneous Income $________
Less: Rents from Tenants Providing Notice $________
Effective Gross Income $________
Less: TTM Cash Expenses $________
Annualized Cash Expenses from new Leases in effect < 12 months $________
Minimum Management Fee (per appraisal) $________
Allowance for Capital Expenditures (per appraisal) $________
Total Operating Expenses $________
(1) NET OPERATING INCOME $________
(2) DEBT SERVICE $________
(1) / (2) DEBT SERVICE COVERAGE (DSC) ________
Required DSC Reserve:
--------------------------------------------------------------------------------
If DSC > 1.25x then $0; otherwise, DSC Reserve
equals ((2)*1.25) - (1)) $________
=========
Schedule B
Subsequent Draw Compliance Worksheet
Tulsa Promenade
Supplemental Draw Request
as of xx/xx/xx
TTM Compliance? _________ (Y /N)
I. Incremental Value of Acceptable New Leases:
Annualized Incremental Base Rents $_________
Plus: Annualized Incremental Reimbursable Expenses $_________
Less: Annualized Rental Income from Expiring Leases within 90 days $_________
Annualized Incremental Operating Expenses (if applicable) $_________
Incremental Management Fee (per appraisal) $_________
Allowance for Incremental Capital Expenditures (per appraisal) $_________
Adjusted Incremental NOI $_________
Divided by: Prevailing Cap Rate (per Loan Agreement) $_________
INCREMENTAL VALUE
Subsequent Draw Amount @ 65% Incremental Value $_________
II. Pro-Forma Debt Service Coverage:
Net Operating Income (per Covenant Compliance worksheet) $_________
Plus: Adjusted Incremental NOI $_________
(1) PRO-FORMA ANNUALIZED NOI
III. Projected Debt Service:
Current Outstanding Loan Balance $_________
Plus: Subsequent Draw Amount $_________
Proposed Aggregate Balance $_________
(2) Projected Debt Service $_________
(1) / (2) DSCR (must > 1.25x) _________
Schedule C
Rent Roll
Schedule D
Violations of Covenants or Warranties
