EXHIBIT 10.66
MEZZANINE LOAN AGREEMENT
DATED AS OF JULY 11, 2002
BY AND AMONG
XXXXXXXX HOLDINGS LLC, MEDFORD HOLDINGS LLC AND WARRENTON HOLDINGS LLC
COLLECTIVELY, AS BORROWERS
AND
UBS WARBURG REAL ESTATE INVESTMENTS INC.,
AS MEZZANINE LENDER
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MEZZANINE LOAN AGREEMENT
THIS MEZZANINE LOAN AGREEMENT, dated as of July 11, 2002 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
"AGREEMENT"), by and among UBS WARBURG REAL ESTATE INVESTMENTS INC., a Delaware
corporation, having an address at 1285 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (together with its successors and assigns, collectively,
"MEZZANINE LENDER") and XXXXXXXX HOLDINGS LLC, a Delaware limited liability
company, having an address at c/o Horizon Group Properties, Inc., 00 Xxxx Xxxxxx
Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 (together with its permitted
successors and assigns, collectively, "LAUGHLIN MEZZANINE BORROWER"), MEDFORD
HOLDINGS LLC, a Delaware limited liability company, having an address at c/o
Horizon Group Properties, Inc., 00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000 (together with its permitted successors and assigns,
collectively, "MEDFORD MEZZANINE BORROWER"), and WARRENTON HOLDINGS LLC, a
Delaware limited liability company, having an address at c/o Horizon Group
Properties, Inc., 00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000
(together with its permitted successors and assigns, collectively, "WARRENTON
MEZZANINE BORROWER"); and together with Laughlin Mezzanine Borrower and Medford
Mezzanine Borrower, each a "BORROWER" and collectively, "BORROWERS").
All capitalized terms used herein shall have the respective meanings set
forth in ARTICLE 1 hereof.
W I T N E S S E T H :
WHEREAS, Borrowers desire to obtain the Mezzanine Loan from Mezzanine
Lender; and
WHEREAS, Mezzanine Lender is willing to make the Mezzanine Loan to
Borrowers, subject to and in accordance with the conditions and terms of this
Agreement and the other Mezzanine Loan Documents.
NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree,
represent and warrant as follows:
ARTICLE 1
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1.1 SPECIFIC DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly provided:
"ACCOUNTS" shall have the meaning set forth in SECTION 6.1.1.
"ACQUIRED PROPERTY STATEMENTS" shall have the meaning set forth in SECTION
9.1(c)(i).
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"AFFILIATE" shall mean, as to any Person, any other Person that (i) owns
directly or indirectly forty-nine percent (49%) or more of all equity interests
in such Person, and/or (ii) is in control of, is controlled by or is under
common ownership or control with such Person, and/or (iii) is a director or
officer of such Person or of an Affiliate of such Person, and/or (iv) is the
spouse, issue or parent of such Person or of an Affiliate of such Person. As
used in this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management,
policies or activities of such Person, whether through ownership of voting
securities, by contract or otherwise.
"AGENT" shall mean Wachovia Bank, National Association and any successor
Eligible Institution thereto.
"AGREEMENT" shall have the meaning set forth in the introductory paragraph
hereto.
"ALTA" shall mean American Land Title Association, or any successor
thereto.
"ALTERATION THRESHOLD" shall mean, with respect to any alterations to an
Individual Property, the sum of Twenty-Five Thousand and No/100 Dollars
($25,000.00).
"ANNUAL BUDGET" shall mean the operating and capital budget for each
Individual Property setting forth, on a month-by-month basis, in reasonable
detail, each line item of the good faith estimate of each respective Owner and
each Borrower of the anticipated Gross Revenue, Operating Expenses, and Capital
Expenditures for the applicable Fiscal Year.
"APPROVED ANNUAL BUDGET" shall have the meaning set forth in SECTION
4.1.7(e).
"APPROVED CAPITAL EXPENDITURES" shall mean Capital Expenditures incurred by
each Owner and either included in the Approved Annual Budget or approved by
Mezzanine Lender, which approval shall not be unreasonably withheld or delayed.
"APPROVED LEASING EXPENSES" shall mean actual out-of-pocket expenses which
may include fees and expenses of a leasing group owned by a Borrower Affiliate
if in compliance with the Approved Annual Budget incurred by the applicable
Owner in leasing space at the respective Individual Property pursuant to Leases
entered into in accordance with the Mezzanine Loan Documents and the Senior Loan
Documents, including brokerage commissions and tenant improvements, which
expenses (i) are (A) specifically approved by Mezzanine Lender in connection
with approving the applicable Lease, (B) incurred in the ordinary course of
business and on market terms and conditions in connection with Leases which do
not require Mezzanine Lender's approval under the Mezzanine Loan Documents, and
Mezzanine Lender shall have received and approved, which approval shall not be
unreasonably withheld or delayed, a budget for such tenant improvement costs and
a schedule of leasing commissions payments payable in connection therewith, or
(C) otherwise approved by Mezzanine Lender, which approval shall not be
unreasonably withheld or delayed, and (ii) are substantiated by executed Lease
documents and brokerage agreements.
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"APPROVED OPERATING EXPENSES" shall mean Operating Expenses incurred by the
applicable Owner that (i) are included in the Approved Annual Budget for the
current calendar month, (ii) are for real estate taxes, insurance premiums,
electric, gas, oil, water, sewer or other utility service to the applicable
Individual Property, (iii) are for property management fees payable to Manager
under the Management Agreement, such amounts not to exceed 3.0% of the monthly
Gross Revenue, or (iv) have been reasonably approved by Senior Lender.
"ASSIGNMENT OF LEASES" shall mean, with respect to each Individual
Property, that certain first priority Assignment of Leases and Rents, dated as
of the date hereof, from the applicable Owner, as assignor, to Senior Lender, as
assignee, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
"ASSIGNMENT OF MANAGEMENT AGREEMENT" shall mean, with respect to each
Individual Property, that certain Manager's Consent and Subordination of
Management Agreement and Management Fees dated as of the date hereof among the
applicable Borrower, the applicable Owner, Manager and Mezzanine Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
"AWARD" shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of the Properties.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors'
rights.
"BORROWER" and "BORROWERS" shall have the meaning set forth in the
introductory paragraph hereto.
"BROKER" shall have the meaning set forth in SECTION 11.21.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
legal holiday on which national banks are not open for general business in (i)
the State of New York, (ii) the state where the corporate trust office of the
Trustee is located, or (iii) the state where the servicing offices of the
Servicer are located.
"CAPITAL EXPENDITURES" for any period shall mean amounts expended for
replacements and alterations to the Properties and required to be capitalized
according to GAAP.
"CASUALTY" shall mean the occurrence of any casualty, damage or injury, by
fire or otherwise, to the Properties or any part thereof.
"CLOSING DATE" shall mean the date of the funding of the Mezzanine Loan.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"COLLATERAL" shall have the meaning set forth in the Pledges.
"CONDEMNATION" shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part of
the Properties, or any interest therein or right accruing thereto, including any
right of access thereto or any change of grade affecting the Properties or any
part thereof.
"CONSOLIDATED SUBSIDIARIES" shall mean as to any Person each Subsidiary of
such a person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated with
the financial statements of such Person in accordance with Guarantor GAAP.
"CO-OBLIGOR PLEDGES" shall mean, with respect to each Borrower, that
certain second priority Guarantor Pledge and Security Agreement dated as of the
date hereof executed and delivered by such Borrower to Mezzanine Lender as
security for the Laughlin Mezzanine Loan, the Medford Mezzanine Loan or the
Warrenton Mezzanine Loan, as the case may be, which encumbers the 100% equity
ownership interest of such Borrower in the applicable Owner, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.
"DEBT" shall mean the Outstanding Principal Balance together with all
interest accrued and unpaid thereon and all other sums (including the Yield
Maintenance Premium, if applicable) due to Mezzanine Lender in respect of the
Mezzanine Loan under the Mezzanine Notes, this Agreement, the Pledges, the
Environmental Indemnity or any other Mezzanine Loan Document.
"DEBT SERVICE ACCOUNT" shall have the meaning set forth in the Subordinate
Cash Management Agreement.
"DEBT SERVICE COVERAGE RATIO" shall mean, a ratio for the applicable period
in which:
(a) the numerator is the Net Cash Flow for such period; and
(b) the denominator is the Debt Service.
"DEBT SERVICE" shall mean, with respect to any particular period of time,
the aggregate amount of scheduled principal and interest payments due and
payable under the Mezzanine Notes and the Senior Notes at any given time in
respect of the applicable Individual Property during such period.
"DEFAULT RATE" shall mean, with respect to the Mezzanine Loan, a rate per
annum equal to the lesser of (i) the Maximum Legal Rate or (ii) five percent
(5%) above the Interest Rate.
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"DEFAULT" shall mean the occurrence of any event hereunder or under any
other Mezzanine Loan Document which, but for the giving of notice or passage of
time, or both, would be an Event of Default.
"DISCLOSURE DOCUMENT" shall have the meaning set forth in SECTION 9.2(a).
"DISCLOSURE DOCUMENT DATE" shall have the meaning set forth in SECTION
9.1(c)(iv).
"EASEMENTS" shall have the meaning set forth in SECTION 3.1.12.
"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (i) an account or
accounts maintained with a federal or state-chartered depository institution or
trust company which complies with the definition of Eligible Institution or (ii)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company is subject to regulations substantially similar to 12 C.F.R. Section
9.10(b), having in either case a combined capital and surplus of at least
$50,000,000.00 and subject to supervision or examination by federal and state
authorities. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.
"ELIGIBLE INSTITUTION" shall mean a depository institution insured by the
Federal Deposit Insurance Corporation the short term unsecured debt obligations
or commercial paper of which are rated at least A-1 by S&P, P-1 by Moody's, and
F-1+ by Fitch in the case of accounts in which funds are held for thirty (30)
days or less or, in the case of Letters of Credit or accounts in which funds are
held for more than thirty (30) days, the long term unsecured debt obligations of
which are rated at least "AA" by Fitch and S&P and "Aa2" by Moody's.
"EMBARGOED PERSON" shall have the meaning set forth in SECTION 4.2.17
hereof.
"ENVIRONMENTAL INDEMNITY" shall mean that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrowers and Guarantors in
connection with the Mezzanine Loan for the benefit of Mezzanine Lender.
"EQUIPMENT" shall have the meaning set forth in the granting clause of the
related Mortgages with respect to each Individual Property.
"ERISA" shall have the meaning set forth in SECTION 4.2.13.
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 10.1.
"EXCHANGE ACT" shall have the meaning set forth in SECTION 9.2(a).
"EXCHANGE ACT FILING" shall have the meaning set forth in SECTION
9.1(c)(vi).
"EXTRAORDINARY EXPENSES" shall have the meaning set forth in SECTION
4.1.7(e).
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"FINANCING STATEMENTS" shall mean the UCC Financing Statements naming
Borrowers, as debtors, and Mezzanine Lender, as secured party, pertaining to the
Collateral, and filed with the in the appropriate filing office or offices
required under applicable state law.
"FIRST PLEDGES" shall mean, with respect to each Borrower, that certain
first priority Pledge and Security Agreement dated as of the date hereof
executed and delivered by such Borrower to Mezzanine Lender as security for the
Laughlin Mezzanine Loan, the Medford Mezzanine Loan or the Warrenton Mezzanine
Loan, as the case may be, which encumbers the 100% equity ownership interest of
such Borrower in the applicable Owner, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
"FISCAL YEAR" shall mean each twelve month period commencing on January 1
and ending on December 31 during each year of the Term.
"FITCH" shall mean Fitch IBCA, Inc.
"FIXTURES" shall have the meaning set forth in the grantIng clauses of the
related Mortgages with respect to each Individual Property.
"FULL REPLACEMENT COST" shall have the meaning set forth in SECTION
5.1.1(a)(i).
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.
"GOVERNMENTAL AUTHORITY" shall mean any court, board, agency, commission,
office or authority of any nature whatsoever or any governmental unit (federal,
state, commonwealth, county, district, municipal, city or otherwise) whether now
or hereafter in existence.
"GROSS REVENUE" shall mean, with respect to each Individual Property, all
revenue derived from the ownership and operation of such Individual Property
from whatever source, including Rents.
"GUARANTOR GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those used in preparation of the consolidated
financial statements of each Guarantor dated July 11, 2002.
"GUARANTORS" shall mean collectively, Horizon Group Properties, Inc., a
Maryland corporation, and Horizon Group Properties, L.P., a Delaware limited
partnership.
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"GUARANTY" shall mean that certain Guaranty of Recourse Obligations dated
as of the date hereof from Guarantors for the benefit of Mezzanine Lender.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause of
the related Mortgages with respect to each Individual Property.
"INDEBTEDNESS" shall mean, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (iv) all
indebtedness guaranteed by such Person, directly or indirectly, (v) all
obligations under leases that constitute capital leases for which such Person is
liable, and (vi) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case whether such
Person is liable contingently or otherwise, as obligor, guarantor or otherwise,
or in respect of which obligations such Person otherwise assures a creditor
against loss.
"INDEMNIFIED LIABILITIES" shall have the meaning set forth in SECTION
11.13(b).
"INDEPENDENT DIRECTOR" shall have the meaning set forth in SECTION
3.1.24(p).
"INDIVIDUAL PROPERTY" shall mean, as applicable, each of the Laughlin
Property, the Medford Property and the Warrenton Property.
"INITIAL LEVERAGE RATIO" shall mean the Leverage Ratio as of July 11, 2002.
"INSOLVENCY OPINION" shall mean those certain bankruptcy non-consolidation
opinion letters dated the date hereof delivered by Xxxxxx Xxxxxx & Xxxxx in
connection with the Mezzanine Loan.
"INSURANCE PREMIUMS" shall have the meaning set forth in SECTION 5.1.1(b).
"INTERCOMPANY INDEBTEDNESS" shall mean any Indebtedness due to the
applicable Guarantor or any Subsidiary of such Guarantor from any other
Subsidiary of such Guarantor.
"INTERCREDITOR AGREEMENT" shall mean that certain Intercreditor Agreement
dated as of the date hereof by and between Senior Lender and Mezzanine Lender.
"INTEREST PERIOD" shall have the meaning set forth in SECTION 2.3.2.
"INTEREST RATE" shall mean a rate per annum equal to seventeen and seven
one-hundredths percent (17.07%), which rate includes a seven one-hundredths
percent (.07%) servicing fee.
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"XX XXXXXX INDEBTEDNESS" shall mean (i) that certain indebtedness and all
liabilities related thereto by and between Gretna, Sealy, Traverse City Outlet
Centers, L.L.C., as borrower, and Xxxxxx Guaranty Trust Company of New York, as
lender, and (ii) that certain indebtedness and all liabilities related thereto
by and between Daleville, Sommerset, Tulare Outlet Centers, L.P., as borrower,
and Xxxxxx Guaranty Trust Company of New York, as lender.
"LAND" shall mean the real property described in SCHEDULE IV attached
hereto and made a part hereof.
"LAUGHLIN MEZZANINE BORROWER" shall have the meaning set forth in the
introductory paragraph hereto.
"LAUGHLIN MEZZANINE LOAN" shall have the meaning set forth in SECTION
2.1.1.
"LAUGHLIN MEZZANINE NOTE" shall have the meaning set forth in SECTION
2.1.3.
"LAUGHLIN MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean a constant
monthly payment of $62,453.26 with respect to the Laughlin Mezzanine Loan.
"LAUGHLIN OUTSTANDING PRINCIPAL BALANCE" shall mean, as of any date, the
outstanding principal balance of the Laughlin Mezzanine Loan.
"LAUGHLIN OWNER" shall mean Xxxxxxxx Outlet Center LLC.
"LAUGHLIN PROPERTY" shall mean the real property known as Xxxxxxxx Outlet
Center in Laughlin, Nevada, as more particularly described on SCHEDULE IV
attached hereto, the Improvements thereon, the Equipment, Personal Property,
Fixtures and all personal property owned by Laughlin Owner.
"LEASE" shall mean any lease, sublease or sub-sublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy, all or any portion of any space in the
Property, and every modification, amendment or other agreement relating to such
lease, sublease, sub-sublease, or other agreement entered into in connection
with such lease, sublease, sub-sublease, or other agreement and every guarantee
of the performance and observance of the covenants, conditions and agreements to
be performed and observed by the other party thereto.
"LEGAL REQUIREMENTS" shall mean all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities affecting any Owner, any Borrower or any Individual Property or any
part thereof or the construction, use, alteration or operation thereof, or any
part thereof, whether now or hereafter enacted and in force, including the
Americans with Disabilities Act of 1990, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to any Owner or any Borrower, at any time in force affecting any Property
or any
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part thereof, including any which may (i) require repairs, modifications or
alterations in or to any Individual Property or any part thereof, or (ii) in any
way limit the use and enjoyment thereof.
"LETTER OF CREDIT" shall mean an irrevocable, unconditional, transferable,
clean sight draft letter of credit acceptable to Lender and the Rating Agencies
(either an evergreen letter of credit or one which does not expire until at
least thirty (30) Business Days after the Stated Maturity Date) in favor of
Lender and entitling Lender to draw thereon in New York, New York, issued by a
domestic Eligible Institution or the U.S. agency or branch of a foreign Eligible
Institution. If at any time the bank issuing any such Letter of Credit shall
cease to be an Eligible Institution, Lender shall have the right immediately to
draw down the same in full and hold the proceeds of such draw in accordance with
the applicable provisions hereof.
"LEVERAGE RATIO" shall mean at any time the ratio, expressed as a
percentage, of the Total Liabilities to Tangible Assets of each Guarantor and
its respective Consolidated Subsidiaries.
"LIABILITIES" shall have the meaning set forth in SECTION 9.2(b).
"LIEN" shall mean, with respect to each Individual Property, any mortgage,
deed of trust, lien (statutory or otherwise), pledge, hypothecation, easement,
restrictive covenant, preference, assignment, security interest, or any other
encumbrance, charge or transfer of, or any agreement to enter into or create any
of the foregoing, on or affecting (i) all or any portion of the Properties or
any interest therein, (ii) any direct or indirect interest in any Borrower or
any SPC Party or (iii) all or part of the Collateral, including any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic's, materialmen's and other similar liens
and encumbrances.
"MAJOR CONTRACT" shall mean (i) any property management or brokerage
agreement or (ii) any cleaning, maintenance, service or other contract or
agreement of any kind (other than Leases) of a material nature (materiality for
these purposes to include contracts in excess of $25,000.00 or which extend
beyond one year (unless cancelable on thirty (30) days or less notice)), in
either case relating to the ownership, leasing, management, use, operation,
maintenance, repair or restoration of any Individual Property or the Collateral,
whether written or oral.
"MAJOR LEASE" shall mean any Lease which, either individually, or when
taken together with any other Lease with the same Tenant or its Affiliates, (i)
covers more than 3,750 square feet at any Individual Property or (ii) provides
any Tenant with more than $5 per square foot as a tenant improvement allowance
or landlord work allowance.
"MANAGEMENT AGREEMENT" shall mean, with respect to each Individual
Property, the management agreement entered into by and between an Owner and the
Manager, pursuant to which the Manager is to provide management and other
services with respect to such Individual Property.
"MANAGER" shall mean Horizon Group Properties, L.P., a Delaware limited
partnership, or any other manager approved by Mezzanine Lender and the Rating
Agencies in accordance with the terms and conditions of the Mezzanine Loan
Documents.
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"MANAGER TERMINATION RATIO" shall have the meaning set forth in SECTION
7.3.
"MATERIAL ALTERATION" shall have the meaning set forth in SECTION 4.1.11.
"MATURITY DATE" shall mean the date on which the final payment of principal
of the Notes becomes due and payable as therein or herein provided, whether at
the Stated Maturity Date, by declaration of acceleration, or otherwise.
"MAXIMUM LEGAL RATE" shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Mezzanine
Notes and as provided for herein or the other Mezzanine Loan Documents, under
the laws of such Governmental Authority whose laws are held by any court of
competent jurisdiction to govern the interest rate provisions of the Mezzanine
Loan.
"MEDFORD MEZZANINE BORROWER" shall have the meaning set forth in the
introductory paragraph hereto.
"MEDFORD MEZZANINE LOAN" shall have the meaning set forth in SECTION 2.1.1.
"MEDFORD MEZZANINE NOTE" shall have the meaning set forth in SECTION 2.1.3.
"MEDFORD MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean a constant monthly
payment of $35,687.58 with respect to the Medford Mezzanine Loan.
"MEDFORD OUTSTANDING PRINCIPAL BALANCE" shall mean, as of any date, the
outstanding principal balance of the Medford Mezzanine Loan.
"MEDFORD OWNER" shall mean Medford Outlet Center LLC.
"MEDFORD PROPERTY" shall mean the real property known as Medford Outlet
Center in Medford, Minnesota, as more particularly described on SCHEDULE IV
attached hereto, the Improvements thereon, the Equipment, Personal Property,
Fixtures and all personal property owned by Medford Owner.
"MEZZANINE LENDER" shall have the meaning set forth in the introductory
paragraph hereto.
"MEZZANINE LOAN" shall have the meaning set forth in SECTION 2.1.1.
"MEZZANINE LOAN DOCUMENTS" shall mean, collectively, this Agreement, the
Mezzanine Notes, the Pledges, the Subordinate Cash Management Agreement, the
Environmental Indemnity, the Assignment of Management Agreement, the Financing
Statements, the Guaranty, the Co-Obligor Pledges and any other documents,
agreements and instruments now or hereafter evidencing, securing or delivered to
Mezzanine Lender in connection with the Mezzanine Loan, as the same may
hereafter be amended, restated, replaced, supplemented or otherwise modified
form time to time.
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"MEZZANINE NOTE" and "MEZZANINE NOTES" shall have the respective meanings
set forth in SECTION 2.1.3.
"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean the aggregate of the
Laughlin Monthly Debt Service Payment Amount, the Medford Monthly Debt Service
Payment Amount and the Warrenton Monthly Debt Service Payment Amount.
"MONTHLY PAYMENT DATE" shall mean the eleventh (11th) day of every calendar
month occurring during the Term.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc.
"MORTGAGES" shall mean the First Mortgages and Second Mortgages, each as
defined in the Senior Loan Agreement, encumbering the Properties under the
Senior Loan Documents, and each being a "MORTGAGE."
"NET CASH FLOW" shall mean, for any period, the actual net cash flow of
each Individual Property as reasonably determined by mezzanine Lender after
deducting therefrom deposits to (but not withdrawals from) the reserves required
under the Senior Loan Documents.
"NET PROCEEDS" shall mean: (i) the net amount of all insurance proceeds
payable as a result of a Casualty to any Individual Property, after deduction of
reasonable costs and expenses (including reasonable attorneys' fees and costs),
if any, in collecting such insurance proceeds, or (ii) the net amount of the
Award, after deduction of reasonable costs and expenses (including reasonable
attorneys' fees and costs), if any, in collecting such Award.
"NOTICE" shall have the meaning set forth in SECTION 11.6.
"OBLIGATIONS" shall mean, collectively, each Borrower's respective
obligations for the payment of the Debt and the performance of the Other
Obligations.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Mezzanine
Lender by each Borrower which is signed by an authorized senior officer of an
SPC Party.
"OPERATING AGREEMENTS" shall mean any covenants, restrictions or agreements
of record relating to the construction, operation or use of any Individual
Property.
"OPERATING EXPENSES" shall mean all costs and expenses relating to the
operation, maintenance and/or management of each Individual Property, including
utilities, repairs and maintenance, insurance, property taxes and assessments,
advertising expenses, payroll and related taxes, equipment lease payments and
management fees payable under each Management Agreement not to exceed three
percent (3.0%) of the monthly Gross Revenue, but excluding actual Capital
Expenditures, depreciation, amortization and deposits required to be made to the
reserves required under the Senior Loan Documents.
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"OTHER CHARGES" shall mean all ground rents, maintenance charges,
impositions other than Taxes and any other charges, including vault charges and
license fees for the use of vaults, chutes and similar areas adjoining any
Individual Property, now or hereafter levied or assessed or imposed against such
Individual Property or any part thereof.
"OTHER OBLIGATIONS" shall mean (a) the performance of all obligations of
each Borrower contained herein; (b) the performance of each obligation of each
Borrower contained in any other Mezzanine Loan Document; and (c) the performance
of each obligation of each Borrower contained in any renewal, extension,
amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of this Agreement, the Mezzanine Notes or any
other Mezzanine Loan Document.
"OUTSTANDING PRINCIPAL BALANCE" shall mean, as of any date, the aggregate
of the Laughlin Outstanding Principal Balance, the Medford Outstanding Principal
Balance and the Warrenton Outstanding Principal Balance.
"OWNERS" shall mean, collectively, Laughlin Owner, Medford Owner and
Warrenton Owner, each being an "OWNER".
"PERMITTED ENCUMBRANCES" shall mean, with respect to an Individual
Property, collectively, (i) the Liens and security interests created by the
Mezzanine Loan Documents, (ii) all Liens and security interests created by the
Senior Loan Documents, including, but not limited to, matters disclosed in the
Title Insurance Policy relating to such Individual Property and otherwise
acceptable to Mezzanine Lender in its sole discretion, (iii) Liens, if any, for
Taxes imposed by any Governmental Authority not yet due or delinquent, (iv) any
workers', mechanics' or similar Liens on such Individual Property provided any
such Lien is discharged or bonded in accordance with Section 3.6 of the
applicable Mortgage, and (v) such other title and survey exceptions as Mezzanine
Lender has approved or may approve in writing in Mezzanine Lender's sole
discretion.
"PERMITTED TRANSFERS" shall have the meaning specified in SECTION 8.1.1.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, joint venture, estate, trust, unincorporated association, any
Governmental Authority and any fiduciary acting in such capacity on behalf of
any of the foregoing.
"PERSONAL PROPERTY" shall have the meaning set forth in the granting
clauses of the related Mortgages with respect to each Individual Property.
"PLEDGES" shall mean the First Pledges and the Co-Obligor Pledges,
collectively.
"POLICIES" shall have the meaning set forth in SECTION 5.1.1(b).
"PREPAYMENT DATE" shall mean the date on which the Mezzanine Loan is
prepaid in accordance with the terms hereof.
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"PREPAYMENT LOCKOUT EXPIRATION DATE" shall mean July 11, 2004.
"PROPERTIES" shall mean, collectively, the Xxxxxxxx Property, the Medford
Property and the Warrenton Property, each being a "PROPERTY".
"QUALIFIED CARRIER" shall have the meaning set forth in SECTION 5.1.1(h).
"RATING AGENCIES" shall mean, prior to the final Securitization of the
Mezzanine Loan, each of S&P, Xxxxx'x and Fitch or any other
nationally-recognized statistical rating agency which has been designated by
Mezzanine Lender and, after the final Securitization of the Mezzanine Loan,
shall mean any of the foregoing that have rated any of the Securities.
"RATING AGENCY CONFIRMATION" shall mean a written affirmation from each of
the Rating Agencies that the credit rating of the Securities by such Rating
Agency immediately prior to the occurrence of the event with respect to which
such Rating Agency Confirmation is sought will not be qualified, downgraded or
withdrawn as a result of the occurrence of such event, which affirmation may be
granted or withheld in such Rating Agency's sole and absolute discretion.
"RATING SURVEILLANCE CHARGE" shall have the meaning set forth in SECTION
9.3.
"REGISTRATION STATEMENT" shall have the meaning set forth in SECTION
9.2(b).
"REMIC TRUST" shall mean a "real estate mortgage investment conduit" within
the meaning of SECTION 860D of the Code that holds the Mezzanine Note.
"RENTS" shall mean, with respect to each Individual Property, all rents,
rent equivalents, moneys payable as damages (including payments by reason of the
rejection of a Lease in a bankruptcy proceeding) or in lieu of rent or rent
equivalents, royalties (including all oil and gas or other mineral royalties and
bonuses), income, fees, receivables, receipts, revenues, deposits (including
security, utility and other deposits), accounts, cash, issues, profits, charges
for services rendered, and other payment and consideration of whatever form or
nature received by or paid to or for the account of or benefit of any Owner, any
Borrower, any Manager or any of their agents or employees from any and all
sources arising from or attributable to such Individual Property and the
Improvements, including all receivables, customer obligations, installment
payment obligations and other obligations now existing or hereafter arising or
created out of the sale, lease, sublease, license, concession or other grant of
the right of the use and occupancy of such Individual Property or rendering of
services by any Owner, any Borrower, any Manager or any of their agents or
employees, and proceeds, if any, from business interruption or other loss of
income insurance.
"RESTORATION THRESHOLD" shall mean the lesser of (x) $250,000.00 and (y)
ten percent (10%) of the outstanding principal balance due under the Senior Note
related to the applicable Property.
"RESTORATION" shall have the meaning set forth in SECTION 5.2.1.
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"RICO" shall have the meaning set forth in SECTION 11.22(i).
"S&P" shall mean Standard & Poor's Ratings Group, a division of the
XxXxxx-Xxxx Companies.
"SECONDARY MARKET TRANSACTION" shall have the meaning set forth in SECTION
9.1(a).
"SECURITIES" shall have the meaning set forth in SECTION 9.1(a).
"SECURITIES ACT" shall have the meaning set forth in SECTION 9.2(a).
"SECURITIZATION" shall have the meaning set forth in SECTION 9.1(a).
"SENIOR CASH MANAGEMENT AGREEMENT" shall mean the Cash Management Agreement
dated the date hereof among Owners, Senior Lender, Manager and Agent.
"SENIOR DEPOSIT ACCOUNT" shall mean the "Deposit Account" established
pursuant to the terms of the Senior Loan Agreement (as such term is defined in
SECTION 6.1 of the Senior Loan Agreement).
"SENIOR LENDER" shall mean UBS Warburg Real Estate Investments Inc., or any
successor holder of the Senior Loan.
"SENIOR LOAN" shall mean the $22,000,000.00 mortgage loan made by Senior
Lender to Owners in accordance with the Senior Loan Agreement.
"SENIOR LOAN AGREEMENT" shall mean the Loan Agreement dated as of the date
hereof by and among Senior Lender and Owners.
"SENIOR LOAN DOCUMENTS" shall mean the "Loan Documents" as defined in the
Senior Loan Agreement.
"SENIOR NOTES" shall mean, collectively, the Xxxxxxxx Note, the Medford
Note and the Warrenton Note, as defined in the Senior Loan Agreement, each dated
as of the date hereof in the aggregate original principal amount of
$22,000,000.00 made by Owners and payable to Senior Lender.
"SERVICER" shall have the meaning set forth in SECTION 11.24.
"SERVICING AGREEMENT" shall have the meaning set forth in SECTION 11.24.
"SEVERED LOAN DOCUMENTS" shall have the meaning set forth in SECTION
10.2(c).
"SPC PARTY" shall have the meaning set forth in SECTION 3.1.24(o).
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"STANDARD STATEMENTS" shall have the meaning set forth in SECTION
9.1(c)(i).
"STATE" shall mean Delaware.
"STATED MATURITY DATE" shall mean July 11, 2005.
"SUBORDINATE CASH MANAGEMENT AGREEMENT" shall mean that certain Subordinate
Cash Management Agreement dated as of the date hereof among Mezzanine Lender,
Borrowers, Owners and Agent.
"SUBORDINATE DEPOSIT ACCOUNT" shall mean an Eligible Account established
pursuant to the terms of the Subordinate Cash Management Agreement and
controlled by Mezzanine Lender.
"SUBSIDIARY" shall mean with respect to any Person, any corporation,
association, joint venture, partnership or other business entity (whether now
existing or hereafter organized) of which at least a majority of the voting
stock or other ownership interests having ordinary voting power for the election
of directors (or the equivalent) is, at the time as of which any determination
is being made, owned or controlled by such Person or one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person.
"TANGIBLE ASSETS" means as at any date of determination thereof, the sum of
all amounts that would be included as assets on a consolidated balance sheet of
the applicable Guarantor and any Consolidated Subsidiaries of such Guarantor as
at such date computed in accordance with Guarantor GAAP, plus (a) accumulated
depreciation (as of July 11, 2002 and at any date of determination subsequent
thereto), computed in accordance with Guarantor GAAP, actually included in such
calculation for each fiscal period ending subsequent to July 11, 2002, for all
items of real property included therein, MINUS (b) the assets which secure the
XX Xxxxxx Indebtedness, (c) the amount of any Intercompany Indebtedness, (d) the
amount of any other Indebtedness owed to such Guarantor or any Subsidiary of
such Guarantor, by any member, officer, director or Affiliate of such Guarantor
or any Subsidiary of such Guarantor, (e) the value of any intangible assets
(including any value attributable to goodwill, organizational expenses,
trademarks, tradenames and similar intellectual property rights, franchises,
licenses, and other items which would properly be treated as intangibles in
accordance with Guarantor GAAP, (f) the unamortized cost of mortgage servicing
contracts or other value attributable to mortgage servicing contracts or rights
(whether or not the value of any such rights would be included in the
computation of assets or net worth under Guarantor GAAP), (g) all reserves,
prepaid expenses, deferred charges or unamortized debt discount and expense
(except those paid or incurred in the ordinary course of business), (h) without
duplication of amounts allocable to assets already excluded therefrom in
accordance with Guarantor GAAP, the value of any other securities of, capital
contributions to, or investments in any Affiliate of such Guarantor unless
publicly traded, readily marketable, or capable of independent valuation, but
not readily marketable because of, for example, restrictions on transfer or
other requirements of law where such restrictions or requirements are reasonably
taken into consideration in determining the value thereof), and (i) any write-up
in the book value of any asset (other then readily marketable securities)
resulting from a revaluation thereof subsequent to such Guarantor's fiscal year
end for the most recent fiscal year end of such Guarantor.
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"TAXES" shall mean all real estate and personal property taxes,
assessments, water rates or sewer rents, now or hereafter levied or assessed or
imposed against the Properties or part thereof, together with all interest and
penalties thereon.
"TENANT" shall mean any Person obligated by contract or otherwise to pay
monies (including a percentage of gross income, revenue or profits) under any
Lease now or hereafter affecting all or any part of any Individual Property.
"TERM" shall mean the entire term of this Agreement, which shall expire
upon repayment in full of the Obligations and full performance of each and every
obligation to be performed by Borrowers pursuant to the Mezzanine Loan
Documents.
"TERRORISM INSURANCE CAP" shall have the meaning set forth in SECTION
5.1.1(h).
"TITLE INSURANCE POLICY" shall mean, with respect to each Individual
Property, collectively, (i) the lender's title insurance policies issued to
Senior Lender in connection with the Senior Loan and (ii) a UCC Plus insurance
policy in the form acceptable to Mezzanine Lender issued with respect to the
Financing Statements.
"TOTAL LIABILITIES" shall mean, as at any date of determination thereof,
the sum for the applicable Guarantor and its Consolidated Subsidiaries,
determined (without duplication) in accordance with the Guarantor GAAP, of all
Indebtedness of such Guarantor and its Consolidated Subsidiaries, but excluding
the XX Xxxxxx Indebtedness and all accrued liabilities related thereto.
"TRANSFER FEE" shall have the meaning set forth in SECTION 8.1.2(a).
"TRANSFER" shall have the meaning set forth in SECTION 4.2.1.
"TRANSFEROR" shall have the meaning set forth in SECTION 3.1.43.
"TRUSTEE" shall mean any trustee holding the Mezzanine Loan in a
Securitization.
"U.S. OBLIGATIONS" shall mean securities evidencing an obligation to timely
pay principal and/or interest in a full and timely manner that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged, and (ii) not subject to prepayment, call or early
redemption.
"U.S. PERSON" shall mean any Person that is (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any state, commonwealth or
district thereof, or (iii) any estate or trust that is subject to United States
federal income taxation, regardless of the source of its income.
"UBS GROUP" shall have the meaning set forth in SECTION 9.2(b).
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"UBS" shall have the meaning set forth in SECTION 9.2(b).
"UCC" or "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code
as in effect in the State.
"UNDERWRITER GROUP" shall have the meaning set forth in SECTION 9.2(b).
"UPDATED INFORMATION" shall have the meaning set forth in SECTION
9.1(b)(i).
"WARRENTON MEZZANINE BORROWER" shall have the meaning set forth in the
introductory paragraph hereto.
"WARRENTON MEZZANINE LOAN" shall have the meaning set forth in SECTION
2.1.1.
"WARRENTON MEZZANINE NOTE" shall have the meaning set forth in SECTION
2.1.3.
"WARRENTON MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean a constant
monthly payment of $26,765.68 with respect to the Warrenton Mezzanine Loan.
"WARRENTON OUTSTANDING PRINCIPAL BALANCE" shall mean, as of any date, the
outstanding principal balance of the Warrenton Mezzanine Loan.
"WARRENTON OWNER" shall mean Warrenton Outlet Center LLC.
"WARRENTON PROPERTY" shall mean the real property known as Warrenton Outlet
Center in Warrenton, Missouri, as more particularly described on SCHEDULE IV
attached hereto, the Improvements thereon, the Equipment, Personal Property,
Fixtures and all personal property owned by Warrenton Owner.
"YIELD MAINTENANCE PREMIUM" shall mean, with respect to any payment or
prepayment of principal or acceleration of the Mezzanine Loan on or before the
Prepayment Lockout Expiration Date, an amount an amount equal to the product of
the following: (A) the amount of such prepayment (or the amount of principal so
accelerated), multiplied by (B) the Interest Rate, multiplied by (C) a fraction
(expressed as a percentage) having a numerator equal to the number of days
difference between the Prepayment Lockout Expiration Date and the date such
prepayment occurs (or the next succeeding Monthly Payment Date through which
interest has been paid by Borrowers) and a denominator equal to 360.
1.2 PRINCIPLES OF CONSTRUCTION.
All references to sections and schedules are to sections and schedules in
or to this Agreement unless otherwise specified. Unless otherwise specified, the
words "hereof," "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement and the word "including" shall
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mean "including but not limited to". Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined
ARTICLE 2
THE MEZZANINE LOAN
2.1 THE MEZZANINE LOAN.
2.1.1 AGREEMENT TO LEND AND BORROW. Subject to and upon the
terms and conditions set forth herein, on the Closing Date Mezzanine Lender
shall (i) make a loan to Xxxxxxxx Mezzanine Borrower and Xxxxxxxx Mezzanine
Borrower shall accept a loan from Mezzanine Lender in the original principal sum
of up to $1,750,000.00 (the "XXXXXXXX MEZZANINE LOAN"), (ii) make a loan to
Medford Mezzanine Borrower and Medford Mezzanine Borrower shall accept a loan
from Mezzanine Lender in the original principal sum of up to $1,000,000.00 (the
"MEDFORD MEZZANINE LOAN"), and (iii) make a loan to Warrenton Mezzanine Borrower
and Warrenton Mezzanine Borrower shall accept a loan from Mezzanine Lender in
the original principal sum of up to $750,000.00 (the "WARRENTON MEZZANINE Loan";
and the Warrenton Mezzanine Loan, together with the Xxxxxxxx Mezzanine Loan and
the Medford Mezzanine Loan, collectively, the "MEZZANINE LOAN").
2.1.2 SINGLE DISBURSEMENT TO BORROWERS. Xxxxxxxx Mezzanine
Borrower, Medford Mezzanine Borrower and Warrenton Mezzanine Borrower shall
receive only one borrowing hereunder in respect of the Xxxxxxxx Mezzanine Loan,
the Medford Mezzanine Loan and the Warrenton Mezzanine Loan, respectively, and
any amount borrowed and repaid hereunder by the applicable Borrower in respect
of the Xxxxxxxx Mezzanine Loan, the Medford Mezzanine Loan and the Warrenton
Mezzanine Loan may not be reborrowed by the applicable Borrower or any other
Borrower.
2.1.3 THE MEZZANINE NOTES. The Xxxxxxxx Mezzanine Loan shall be
evidenced by that certain promissory note dated the date hereof, in the stated
principal amount of One Million Seven Hundred Fifty Thousand and No/100 Dollars
($1,750,000.00) executed by Xxxxxxxx Mezzanine Borrower and payable to the order
of Mezzanine Lender in evidence of the Xxxxxxxx Mezzanine Loan (as the same may
hereafter be amended, supplemented, restated, increased, extended or
consolidated from time to time, the "XXXXXXXX MEZZANINE NOTE") and shall be
repaid in accordance with the terms of this Agreement and the Xxxxxxxx Mezzanine
Note. The Medford Mezzanine Loan shall be evidenced by that certain promissory
note dated the date hereof, in the stated principal amount of One Million and
No/100 Dollars ($1,000,000.00) executed by Medford Mezzanine Borrower and
payable to the order of Mezzanine Lender in evidence of the Medford Mezzanine
Loan (as the same may hereafter be amended, supplemented, restated, increased,
extended or consolidated from time to time, the "MEDFORD MEZZANINE NOTE") and
shall be repaid in accordance with the terms of this Agreement and the Medford
Mezzanine Note. The Warrenton Mezzanine Loan shall be evidenced by that certain
promissory note dated the date hereof, in the stated principal amount of Seven
Hundred Fifty Thousand and No/100 Dollars ($750,000.00) executed by Warrenton
Mezzanine Borrower and payable to the order of Mezzanine Lender in
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evidence of the Warrenton Mezzanine Loan (as the same may hereafter be amended,
supplemented, restated, increased, extended or consolidated from time to time,
the "WARRENTON MEZZANINE NOTE"; and the Warrenton Mezzanine Note, together with
the Xxxxxxxx Mezzanine Note and the Medford Mezzanine Note, individually, a
"MEZZANINE NOTE" and, collectively, the "MEZZANINE NOTES"), and shall be repaid
in accordance with the terms of this Agreement and the Warrenton Mezzanine Note.
2.1.4 USE OF PROCEEDS. Xxxxxxxx Mezzanine Borrower, Medford
Mezzanine Borrower and Warrenton Mezzanine Borrower shall use proceeds of the
Xxxxxxxx Mezzanine Loan, Medford Mezzanine Loan and Warrenton Mezzanine Loan,
respectively to (i) make a capital contribution to the respective Owner and (ii)
pay costs and expenses incurred in connection with the closing of the Mezzanine
Loan, as approved by Mezzanine Lender. Any excess proceeds may be used for any
lawful purpose.
2.2 INTEREST RATE.
2.2.1 INTEREST RATE. Interest on each of the Xxxxxxxx
Outstanding Principal Balance, the Medford Outstanding Principal Balance and the
Warrenton Outstanding Principal Balance shall accrue throughout the Term at the
Interest Rate.
2.2.2 DEFAULT RATE. In the event that, and for so long as, any
Event of Default shall have occurred and be continuing, the Xxxxxxxx Outstanding
Principal Balance, the Medford Outstanding Principal Balance and the Warrenton
Outstanding Principal Balance and, to the extent permitted by law, overdue
interest in respect of the Xxxxxxxx Mezzanine Loan, Medford Mezzanine Loan and
the Warrenton Mezzanine Loan, shall accrue interest at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein. Interest at the Default Rate shall be paid
immediately upon demand, which demand may be made as frequently as Mezzanine
Lender shall elect.
2.2.3 INTEREST CALCULATION. Interest on each of the Xxxxxxxx
Outstanding Principal Balance, the Medford Outstanding Principal Balance and the
Warrenton Outstanding Principal Balance shall be calculated by multiplying (A)
the actual number of days elapsed in the period for which the calculation is
being made by (B) a daily rate based on a three hundred sixty (360) day year
(that is, the Interest Rate or the Default Rate, as then applicable, expressed
as an annual rate divided by 360) by (C) each of the Xxxxxxxx Outstanding
Principal Balance, the Medford Outstanding Principal Balance and the Warrenton
Outstanding Principal Balance, as applicable. The accrual period for calculating
interest due on each Monthly Payment Date shall be the Interest Period
immediately prior to such Monthly Payment Date.
2.2.4 USURY SAVINGS. This Agreement and the other Mezzanine Loan
Documents are subject to the express condition that at no time shall Borrowers
be required to pay interest on the principal balance of the Mezzanine Loan at a
rate which could subject Mezzanine Lender to either civil or criminal liability
as a result of being in excess of the Maximum Legal Rate. If by the terms of
this Agreement or the other Mezzanine Loan Documents, Borrowers are at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of the Maximum Legal Rate, the Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to the
Maximum Legal Rate and all previous payments in excess of the
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Maximum Legal Rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder. All sums paid or
agreed to be paid to Mezzanine Lender for the use, forbearance, or detention of
the sums due under the Mezzanine Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
stated term of the Mezzanine Loan until payment in full so that the rate or
amount of interest on account of the Mezzanine Loan does not exceed the Maximum
Legal Rate from time to time in effect and applicable to the Mezzanine Loan for
so long as the Mezzanine Loan is outstanding.
2.3 MEZZANINE LOAN PAYMENTS.
2.3.1 MONTHLY PAYMENTS.
(a) Xxxxxxxx Mezzanine Borrower shall pay to Mezzanine Lender
on each Monthly Payment Date beginning on August 11, 2002 and thereafter
throughout the Term, a payment of principal and interest in an amount equal to
the Xxxxxxxx Monthly Debt Service Payment Amount, which payments shall be
applied first to accrued and unpaid interest and the balance to the Xxxxxxxx
Outstanding Principal Balance.
(b) Medford Mezzanine Borrower shall pay to Mezzanine Lender
on each Monthly Payment Date beginning on August 11, 2002 and thereafter
throughout the Term, a payment of principal and interest in an amount equal to
the Medford Monthly Debt Service Payment Amount, which payments shall be applied
first to accrued and unpaid interest and the balance to the Medford Outstanding
Principal Balance.
(c) Warrenton Mezzanine Borrower shall pay to Mezzanine Lender
on each Monthly Payment Date beginning on August 11, 2002 and thereafter
throughout the Term, a payment of principal and interest in an amount equal to
the Warrenton Monthly Debt Service Payment Amount, which payments shall be
applied first to accrued and unpaid interest and the balance to the Warrenton
Outstanding Principal Balance.
2.3.2 PAYMENTS GENERALLY. Each interest accrual period (each, an
"INTEREST PERIOD") shall commence on the eleventh (11th) day of each calendar
month during the term of the Mezzanine Loan and shall end on and include the
tenth (10th) day of the next occurring calendar month. For purposes of making
payments hereunder, but not for purposes of calculating interest accrual
periods, if the day on which such payment is due is not a Business Day, then
amounts due on such date shall be due on the immediately preceding Business Day.
Mezzanine Lender shall have the right from time to time, in its sole discretion,
upon not less than thirty (30) days prior written notice to Borrowers, to change
the Monthly Payment Date to a different calendar day each month which is not
more than five (5) days earlier nor more than five (5) days later than the
eleventh day of each calendar month; PROVIDED, HOWEVER, that if Mezzanine Lender
shall have elected to change the Monthly Payment Date as aforesaid, Mezzanine
Lender shall adjust the Interest Period accordingly. With respect to payments of
principal due on the Maturity Date, interest shall be payable at the Interest
Rate or the Default Rate, as the case may be, through and including the day
immediately preceding such Maturity Date. All amounts due pursuant to this
Agreement and the other Mezzanine
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Loan Documents shall be payable without setoff, counterclaim, defense or any
other deduction whatsoever.
2.3.3 PAYMENT ON MATURITY DATE. Xxxxxxxx Mezzanine Borrower,
Medford Mezzanine Borrower and Warrenton Mezzanine Borrower shall pay to
Mezzanine Lender on the Maturity Date the Xxxxxxxx Outstanding Principal
Balance, the Medford Outstanding Principal Balance and the Warrenton Outstanding
Principal Balance, respectively, all accrued and unpaid interest and all other
amounts due hereunder and under the Mezzanine Notes, the Pledges and the other
Mezzanine Loan Documents.
2.3.4 LATE PAYMENT CHARGE. If any principal, interest or any
other sum due under the Mezzanine Loan Documents, including the payment of
principal due on the Maturity Date, is not paid by any Borrower on the date on
which it is due, such Borrower shall pay to Mezzanine Lender upon demand an
amount equal to the lesser of five percent (5%) of such unpaid sum or the
maximum amount permitted by applicable law in order to defray the expense
incurred by Mezzanine Lender in handling and processing such delinquent payment
and to compensate Mezzanine Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Pledges and the other Mezzanine
Loan Documents.
2.3.5 METHOD AND PLACE OF PAYMENT.
(a) Except as otherwise specifically provided herein, all
payments and prepayments under this Agreement and the Mezzanine Notes shall be
made to Mezzanine Lender not later than 1:00 P.M., New York City time, on the
date when due and shall be made in lawful money of the United States of America
in immediately available funds at Mezzanine Lender's office or at such other
place as Mezzanine Lender shall from time to time designate in writing, and any
funds received by Mezzanine Lender after such time shall, for all purposes
hereof, be deemed to have been paid on the next succeeding Business Day.
(b) Whenever any payment to be made hereunder or under any
other Mezzanine Loan Document shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day and, with respect to payments of principal due on the Maturity
Date, interest shall be payable at the Interest Rate or the Default Rate, as the
case may be, during such extension.
(c) All payments required to be made by any of the Borrowers
hereunder or under the Mezzanine Notes or the other Mezzanine Loan Documents
shall be made irrespective of, and without deduction for, any setoff, claim or
counterclaim and shall be made irrespective of any defense thereto.
(d) Nothing contained herein shall be deemed a waiver of or
amendment to the joint and several liability of Borrowers for the Obligations
nor the method of or description of payments to be made hereunder.
2.4 PREPAYMENTS.
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2.4.1 VOLUNTARY PREPAYMENTS.
(a) Borrowers expressly waive any right to prepay the
Mezzanine Loan, in whole or in part, except as hereinafter provided.
(b) Notwithstanding anything herein or in any other Mezzanine
Loan Documents to the contrary, except as the result of an acceleration of the
Stated Maturity Date or if expressly required or permitted under any Mezzanine
Loan Document, including (i) payments of the Monthly Debt Service Payment
Amount, (ii) prepayments of the Mezzanine Loan in its entirety pursuant to
SECTION 2.4.1(c) and the satisfaction of the terms and conditions contained
therein and (iii) as a result of any of the mandatory prepayment events
specified in SECTION 2.4.2, Borrowers may not voluntarily prepay the Mezzanine
Loan, in whole or in part, prior to the Prepayment Lockout Expiration Date.
(c) Provided that no Event of Default shall have occurred and
be continuing, Borrowers may, at any time following the Prepayment Lockout
Expiration Date, elect to prepay the Mezzanine Loan, in whole (but not in part),
on any Business Day, provided, with respect to any prepayment (i) Borrowers have
given Mezzanine Lender written notice of such prepayment not more than thirty
(30) days and not less than fifteen (15) days prior to the date of such
prepayment and (ii) such prepayment is accompanied by all interest accrued on
the amount so prepaid and all other fees and other sums due hereunder and under
the other Mezzanine Loan Documents up to and including the date of prepayment,
if any; PROVIDED, HOWEVER, that if such prepayment occurs on a day other than a
Monthly Payment Date, Borrowers shall also pay to Mezzanine Lender interest
which would have accrued thereon to the next Monthly Payment Date.
(d) Except as otherwise expressly provided hereunder, the
Yield Maintenance Premium shall be due under any and all circumstances where all
or any portion of the Mezzanine Loan is paid on or prior to the Prepayment
Lockout Expiration Date, whether such prepayment is voluntary or involuntary,
even if such prepayment results from Mezzanine Lender's exercise of its rights
upon Borrowers' default and acceleration of the Maturity Date (irrespective of
whether foreclosure proceedings have been commenced), and shall be in addition
to any other fees or sums due hereunder or under any of the other Mezzanine Loan
Documents. No tender of a prepayment with respect to which the Yield Maintenance
Premium is due shall be effective unless such prepayment is accompanied by the
Yield Maintenance Premium.
(e) If Borrowers have elected to prepay the Mezzanine Loan in
whole pursuant to SECTION 2.4.1(c) above, the Collateral shall be released from
the Lien of the Pledge and Financing Statements. In connection with such release
of the Lien, Borrowers shall submit to Mezzanine Lender, not less than thirty
(30) days prior to the Prepayment Date (or such shorter time as is acceptable to
Mezzanine Lender in its sole discretion), a release of Lien (and related
Mezzanine Loan Documents) for execution and approval by Mezzanine Lender. Such
release shall be in a form appropriate in the jurisdiction in which the
Financing Statements were filed and contain standard provisions protecting the
rights of the releasing lender. In addition, Borrowers shall provide all other
documentation Mezzanine Lender reasonably requires to be delivered by Borrowers
in connection with such release, together with an Officer's Certificate
certifying that such documentation (i) is in compliance with all Legal
Requirements, and (ii) will effect such release in accordance with the terms of
this Agreement. Borrowers shall pay all costs, taxes and expenses associated
with the
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release of the Lien of the Pledges and the Financing Statements, including
Mezzanine Lender's reasonable attorneys' fees. Except as set forth in this
SECTION 2.4, no repayment or prepayment of all or any portion of the Mezzanine
Note shall cause, give rise to a right to require, or otherwise result in, the
release of the Lien of the Pledges and the Financing Statements on the
Collateral.
2.4.2 MANDATORY PREPAYMENTS.
(a) If Mezzanine Lender is not obligated to make Net Proceeds
available to any Borrower for Restoration in respect of an Individual Property,
on the next occurring Monthly Payment Date following the date on which (a)
Mezzanine Lender actually receives any Net Proceeds, and (b) Mezzanine Lender
has determined that such Net Proceeds shall be applied against the Xxxxxxxx
Outstanding Principal Balance, the Medford Outstanding Principal Balance or the
Warrenton Outstanding Principal Balance, as applicable, such Borrower shall
prepay, or authorize Mezzanine Lender to apply Net Proceeds as a prepayment of,
the Xxxxxxxx Outstanding Principal Balance, the Medford Outstanding Principal
Balance or the Warrenton Outstanding Principal Balance, as applicable, in an
amount equal to one hundred percent (100%) of such Net Proceeds. So long as no
Event of Default has occurred and is continuing, no Yield Maintenance Premium
shall be due in connection with any prepayment made pursuant to this SECTION
2.4.2. Any partial prepayment under this SECTION 2.4.2 shall be applied to the
last payments of principal due under the Xxxxxxxx Mezzanine Loan, the Medford
Mezzanine Loan or the Warrenton Mezzanine Loan, as applicable.
(b) Any sums that otherwise would be payable to Owners or
distributable to Borrowers in connection with the refinancing or other payoff of
the Senior Loan permitted hereunder (including any refund of reserves on deposit
with Senior Lender) shall be immediately remitted by Borrowers to Mezzanine
Lender up to the amount necessary to fully repay the Mezzanine Loan including
all interest accrued to the date of prepayment and any other sums then due and
payable by Borrowers to Mezzanine Lender, including, the applicable Yield
Maintenance Premium (if such prepayment occurs on or prior to the Prepayment
Lockout Expiration Date).
2.4.3 PREPAYMENTS AFTER DEFAULT. If, after an Event of Default,
payment of all or any part of the Debt is tendered by any of the Borrowers, a
purchaser at foreclosure or any other Person, such tender shall be deemed an
attempt to circumvent the prohibition against prepayment set forth in SECTION
2.4.1 and Borrowers, such purchaser at foreclosure or other Person shall pay the
Yield Maintenance Premium (if such payment occurs on or prior to the Prepayment
Lockout Expiration Date), in addition to the outstanding principal balance, all
accrued and unpaid interest and other amounts payable under the Mezzanine Loan
Documents.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 BORROWER REPRESENTATIONS.
As an inducement to Mezzanine Lender to enter into this Agreement and to
make the Mezzanine Loan, each Borrower hereby represents and warrants as follows
(except to the extent (if
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any) disclosed on SCHEDULE III with reference to a specific Section of this
ARTICLE 3), which representations and warranties shall be true and correct as of
the date hereof and shall survive the Closing Date hereunder and each Borrower
shall, to the extent reasonably in such Borrower's control, unless otherwise
permitted hereunder (including, without limitation, in connection with a
Permitted Transfer) or agreed to in writing by Mezzanine Lender, cause such
representations and warranties to remain true and correct until all of the
Obligations are repaid in full:
3.1.1 ORGANIZATION. Each Owner, each Borrower and each SPC Party
is duly organized, validly existing and in good standing with full power and
authority to own its assets and conduct its business, and is duly qualified in
all jurisdictions in which the ownership or lease of its property or the conduct
of its business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on its ability to perform its
Obligations hereunder, and each Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Mezzanine Loan Documents by it, and has the power and authority to
execute, deliver and perform under this Agreement, the other Mezzanine Loan
Documents and all the transactions contemplated hereby.
3.1.2 PROCEEDINGS. This Agreement and the other Mezzanine Loan
Documents have been duly authorized, executed and delivered by each Borrower and
constitute a legal, valid and binding obligation of each Borrower, enforceable
against each Borrower in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally,
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
3.1.3 NO CONFLICTS. The execution and delivery of this Agreement
and the other Mezzanine Loan Documents by each Borrower and the performance of
its Obligations hereunder and thereunder will not conflict with any provision of
any law or regulation to which any Owner or any Borrower is subject, or conflict
with, result in a breach of, or constitute a default under, any of the terms,
conditions or provisions of any of any Owner's or any Borrower's organizational
documents or any agreement or instrument to which any Owner or any Borrower is a
party or by which it is bound, or any order or decree applicable to any Owner or
any Borrower, or result in the creation or imposition of any Lien on any of any
Owner's or any Borrower's assets or property (other than pursuant to the Senior
Loan Documents or the Mezzanine Loan Documents).
3.1.4 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to each Borrower's best knowledge, threatened against
any Borrower, any SPC Party, any Owner, any Guarantor, the Manager or the
Property in any court or by or before any other Governmental Authority which, if
adversely determined, might materially and adversely affect the condition
(financial or otherwise) or business of any Borrower (including the ability of
any Borrower to carry out the transactions contemplated by this Agreement), such
SPC Party any Owner, any Guarantor, Manager or the condition or ownership of the
Properties or the Collateral.
3.1.5 AGREEMENTS. No Borrower or Owner is in default with
respect to any order or decree of any court or any order, regulation or demand
of any Governmental Authority, which default would have consequences that would
materially and adversely affect the condition (financial or
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other) or operations of any Borrower or any Owner or its respective properties
or might have consequences that would materially and adversely affect Borrower's
performance hereunder. No Borrower or Owner is in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Collateral
or any Individual Property is bound.
3.1.6 CONSENTS. No consent, approval, authorization or order of
any court or Governmental Authority is required for the execution, delivery and
performance by any Borrower of, or compliance by any Borrower with, this
Agreement or the other Mezzanine Loan Documents or the consummation of the
transactions contemplated hereby, other than those which have been obtained by
each Borrower.
3.1.7 TITLE. Each Owner has good, marketable and insurable fee
simple title to the real property comprising part of each Individual Property
and good title to the balance of such Individual Property owned by it, free and
clear of all Liens whatsoever except the Permitted Encumbrances. Each First
Mortgage, when properly recorded in the appropriate records, together with any
Uniform Commercial Code financing statements required to be filed in connection
therewith, will create (i) a valid, first priority, perfected Lien on each
Owner's interest in the applicable Individual Property, subject only to
Permitted Encumbrances, and (ii) perfected security interests in and to, and
perfected collateral assignments of, all personalty (including the Leases), all
in accordance with the terms thereof, in each case subject only to Permitted
Encumbrances. Each Second Mortgage, when properly recorded in the appropriate
records, together with any Uniform Commercial Code financing statements required
to be filed in connection therewith, will create (i) a valid, second priority,
perfected Lien on each Owner's interest in the applicable Individual Property,
subject only to Permitted Encumbrances, and (ii) perfected security interests in
and to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances. To each Owner's and each Borrower's best
knowledge, there are no mechanics', materialman's or other similar Liens or
claims which have been filed for work, labor or materials affecting any
Individual Property which are or may be Liens prior to, or equal or coordinate
with, the Liens created by the Senior Loan Documents or the Mezzanine Loan
Documents. None of the Permitted Encumbrances, individually or in the aggregate,
(a) materially interfere with the benefits of the security intended to be
provided by each Mortgage and this Agreement, (b) materially and adversely
affect the value of any Individual Property, (c) impair the use or operations of
any Individual Property, or (d) impair any Owner's or any Borrower's ability to
pay its obligations in a timely manner.
3.1.8 NO PLAN ASSETS. As of the date hereof and throughout the
Term (i) each Borrower is not and will not be an "employee benefit plan," as
defined in SECTION 3(3) of ERISA, subject to Title I of ERISA, (ii) none of the
assets of any Borrower constitutes or will constitute "plan assets" of one or
more such plans within the meaning of 29 C.F.R. SECTION 2510.3-101, (iii) each
Borrower is not and will not be a "governmental plan" within the meaning of
SECTION 3(32) of ERISA, and (iv) transactions by or with any Borrower are not
and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans.
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3.1.9 COMPLIANCE. Each Borrower, each Owner and, to Borrower's
best knowledge, the Properties and the use thereof comply in all material
respects with all applicable Legal Requirements, including parking, building and
zoning and land use laws, ordinances, regulations and codes except as may be
otherwise disclosed in the Permitted Encumbrances or Title Insurance Policies.
No Owner or any Borrower is in default or violation of any order, writ,
injunction, decree or demand of any Governmental Authority, the violation of
which might materially adversely affect the condition (financial or otherwise)
or business of any Owner or any Borrower. No Owner or Borrower has committed any
act which may give any Governmental Authority the right to cause any Owner or
any Borrower to forfeit any Individual Property, the Collateral or any part
thereof or any monies paid in performance of any Borrower's Obligations under
any of the Mezzanine Loan Documents. The Properties are used exclusively for
retail outlet center purposes and other appurtenant and related uses. In the
event that all or any part of the Improvements are destroyed or damaged, said
Improvements can be legally reconstructed to their condition prior to such
damage or destruction, and thereafter exist for the same use without violating
any zoning or other ordinances applicable thereto and without the necessity of
obtaining any variances or special permits. No legal proceedings are pending or,
to the best knowledge of each Borrower, threatened with respect to the zoning of
any Individual Property. Neither the zoning nor any other right to construct,
use or operate any Individual Property is in any way dependent upon or related
to any property other than the applicable Individual Property. The use being
made of each Individual Property is in conformity with the certificate of
occupancy issued for such Individual Property and all other restrictions,
covenants and conditions affecting such Individual Property.
3.1.10 FINANCIAL INFORMATION. All financial data, including the
statements of cash flow and income and operating expense, that have been
delivered to Mezzanine Lender in respect of each Borrower, each Owner and the
Properties (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of each Borrower, each Owner and
the Properties as of the date of such reports, and (iii) have been prepared in
accordance with GAAP throughout the periods covered, except as disclosed
therein. No Owner or Borrower has any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or anticipated
losses from any unfavorable commitments that are known to any Borrower and
reasonably likely to have a materially adverse effect on any Borrower, any
Owner, the Properties or the operation thereof, except as referred to or
reflected in said financial statements. Since the date of the financial
statements, there has been no material adverse change in the financial
condition, operations or business of any Borrower, any Owner or the Properties
from that set forth in said financial statements.
3.1.11 CONDEMNATION. No Condemnation or other proceeding has been
commenced or, to each Borrower's best knowledge, is contemplated with respect to
all or any portion of any Individual Property or for the relocation of roadways
providing access to any Individual Property.
3.1.12 EASEMENTS; UTILITIES AND PUBLIC ACCESS. All easements,
cross easements, licenses, air rights and rights-of-way or other similar
property interests (collectively, "EASEMENTS"), if any, necessary for the full
utilization of the Improvements for their intended purposes have been obtained,
are described in the applicable Title Insurance Policy and, to Borrower's best
knowledge, are in full force and effect without default thereunder. Each
Individual Property has rights of access
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to public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service such Individual Property for its intended uses.
All public utilities necessary or convenient to the full use and enjoyment of
each Individual Property are located in the public right-of-way abutting such
Individual Property, and all such utilities are connected so as to serve such
Individual Property without passing over other property absent a valid easement.
All roads necessary for the use of each Individual Property for its current
purpose have been completed and dedicated to public use and accepted by all
Governmental Authorities.
3.1.13 SEPARATE LOTS. Each Individual Property is comprised of
one (1) or more parcels which constitute separate tax lots and do not constitute
a portion of any other tax lot not a part of such Individual Property.
3.1.14 ASSESSMENTS. There are no pending or, to Borrower's best
knowledge, proposed special or other assessments for public improvements or
otherwise affecting any Individual Property, nor, to Borrower's best knowledge,
are there any contemplated improvements to the Property that may result in such
special or other assessments.
3.1.15 ENFORCEABILITY. The Mezzanine Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense by any
Borrower, including the defense of usury, nor would the operation of any of the
terms of the Mezzanine Loan Documents, or the exercise of any right thereunder,
render the Mezzanine Loan Documents unenforceable, and no Borrower has asserted
any right of rescission, set-off, counterclaim or defense with respect thereto.
3.1.16 COLLATERAL.
(a) Borrowers are the sole beneficial owners of the Collateral
and no Lien exists or will exist (except the Permitted Encumbrances) upon the
Collateral at any time and no right or option to acquire the same exists in
favor of any other Person.
(b) The Collateral is not and will not be subject to any
contractual restriction upon the transfer thereof (except for any such
restriction contained in the Pledges).
(c) The chief place of business of each Borrower and the
office where each Borrower keeps its records concerning the Collateral will be
located at all times at the address specified as such Borrower's address in
SECTION 11.6.
(d) There is no certificate or instrument evidencing or
representing any of the Collateral.
(e) The Pledges and the Financing Statements create a valid
security interest in the Collateral, securing the payment of the Obligations,
and upon the filing in the appropriate filing offices of the Financing
Statements, such security interest will be perfected, first priority security
interests under the First Pledge and second priority security interests under
the Co-Obligor Pledge, and all filings and other actions necessary to perfect
such security interests will have been duly taken. Upon the exercise of its
rights and remedies under the Pledges and the Financing Statements, Mezzanine
Lender will succeed to all of the rights, title and interest of each Borrower in
each Owner
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without the consent of any other Person and will, without the consent of any
other Person, be admitted as a member in such Owner. Each Owner is, and will be
taxed, as a partnership and not as a corporation under the Code and all other
applicable laws.
3.1.17 INSURANCE. Each Borrower has obtained and has delivered
(or has caused each Owner to obtain and deliver) to Mezzanine Lender original or
certified copies of all of the Policies, with all premiums prepaid thereunder,
reflecting the insurance coverages, amounts and other requirements set forth in
this Agreement. No claims have been made under any of the Policies, and no
Person, including any Owner or any Borrower, has done, by act or omission,
anything which would impair the coverage of any of the Policies.
3.1.18 LICENSES. All permits and approvals, including without
limitation, certificates of occupancy required by any Governmental Authority for
the use, occupancy and/or operation of each Individual Property in the manner in
which such Individual Property is currently being used, occupied and operated
have been obtained and, to the applicable Borrower's best knowledge, and are in
full force and effect.
3.1.19 FLOOD ZONE. None of the Improvements on any Individual
Property is located in an area identified by the Federal Emergency Management
Agency as a special flood hazard area.
3.1.20 PHYSICAL CONDITION. Each Individual Property, including
all buildings, Improvements, parking facilities, sidewalks, storm drainage
systems, roofs, plumbing systems, HVAC systems, fire protection systems,
electrical systems, Equipment, elevators, exterior sidings and doors,
landscaping, irrigation systems and all structural components, are in good
condition, order and repair in all material respects; to Borrower's best
knowledge, there exists no structural or other material defects or damages in
any Individual Property, whether latent or otherwise, and no Borrower or any
Owner has received notice from any insurance company or bonding company of any
defects or inadequacies in any Individual Property, or any part thereof, which
would adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
3.1.21 BOUNDARIES. All of the Improvements which were included in
determining the appraised value of each Individual Property lie wholly within
the boundaries and building restriction lines of such Individual Property, and
no improvements on adjoining properties encroach upon any Individual Property,
and no easements or other encumbrances affecting any Individual Property
encroach upon any of the Improvements, so as to affect the value or
marketability of such Individual Property, except those which are insured
against by the applicable Title Insurance Policy.
3.1.22 LEASES. Each rent roll attached hereto as SCHEDULE I is
true, complete and correct in all material respects and no Individual Property
is subject to any Leases other than the Leases described in SCHEDULE I. The
Leases identified on SCHEDULE I are in full force and effect, there are no
defaults under any Major Lease by either party and, with respect to any Leases
that are not Major Leases, to Borrower's best knowledge, there are no defaults
thereunder by either party. The copies of the Leases delivered to Mezzanine
Lender are true and complete, and there are no oral agreements with respect
thereto. No Rent (including security deposits) has been paid more than one (1)
month in advance of its due date. All work to be performed by any Owner under
each Lease has
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been performed as required and has been accepted by the applicable Tenant. Any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by each Owner to any Tenant has
already been received by such Tenant. The Tenants under the Leases have accepted
possession of and are in occupancy of all of their respective demised premises
and have commenced the payment of rent under the Leases. Each Borrower has
delivered (or has caused each Owner to deliver) to Mezzanine Lender a true,
correct and complete list of all security deposits made by Tenants at the
applicable Individual Property which have not been applied (including accrued
interest thereon), all of which are held by the applicable Owner in accordance
with the terms of the applicable Lease and applicable Legal Requirements. To
Borrower's best knowledge, each Tenant under a Major Lease is free from
bankruptcy or reorganization proceedings. To Borrower's best knowledge, no
Tenant under any Lease is in default under the terms and conditions of such
Lease. No Tenant under any Lease (or any sublease) is an Affiliate of any
Borrower or any Owner, except as may be otherwise disclosed on SCHEDULE I. The
Tenants under the Leases are open for business and paying full, unabated rent.
There are no brokerage fees or commissions due and payable in connection with
the leasing of space at the Properties, except as has been previously disclosed
to Mezzanine Lender in writing, and no such fees or commissions will become due
and payable in the future in connection with the Leases, including by reason of
any extension of such Lease or expansion of the space leased thereunder, except
as has previously been disclosed to Mezzanine Lender in writing.
3.1.23 FILING AND RECORDING TAXES. All transfer taxes, deed
stamps, intangible taxes or other amounts in the nature of transfer taxes
required to be paid under applicable Legal Requirements in connection with the
transfer of each Individual Property to the applicable Owner have been paid or
are being paid simultaneously herewith. All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid under applicable Legal
Requirements in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Mezzanine Loan Documents
and the Senior Loan Documents (including the Mortgages) have been paid or are
being paid simultaneously herewith. All taxes and governmental assessments due
and owing in respect of any Individual Property have been paid, or an escrow of
funds in an amount sufficient to cover such payments has been established
pursuant to the Senior Loan Documents, by this Agreement or are insured against
by the applicable Title Insurance Policy.
3.1.24 SINGLE PURPOSE. Each Borrower hereby represents and
warrants to, and covenants with, Mezzanine Lender that as of the date hereof and
until such time as the Obligations shall be paid and performed in full:
(a) Such Borrower does not own and will not own any asset or
property other than (i) the Collateral and indirect ownership of the applicable
Property, and (ii) incidental personal property necessary in connection
therewith.
(b) Such Borrower has not engaged and will not engage in any
business other than the ownership, management and operation of the Properties
and/or the Collateral and Borrower will conduct and operate its business as
presently conducted and operated.
(c) Such Borrower has not and will not enter into any contract
or agreement with any Affiliate of any Borrower or any Owner, any constituent
party of any Borrower or any Owner or
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any Affiliate of any constituent party, except upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any such party.
(d) Such Borrower has not incurred and will not incur any
Indebtedness other than the Debt.
(e) Such Borrower has not made and will not make any loans or
advances to any third party (including any Affiliate or constituent party), and
has not and shall not acquire obligations or securities of its Affiliates.
(f) Such Borrower is and will remain solvent and such Borrower
will pay its debts and liabilities (including, as applicable, shared personnel
and overhead expenses) from its assets as the same shall become due.
(g) Such Borrower has done or caused to be done and will do
all things necessary to observe organizational formalities and preserve its
existence, and such Borrower will not, nor will Borrower permit Owner or any SPC
Party to, (i) terminate or fail to comply with the provisions of its respective
organizational documents or, (ii) unless (A) Mezzanine Lender has consented and
(B) following a Securitization of the Mezzanine Loan, the applicable Rating
Agencies have issued a Rating Agency Confirmation, amend, modify or otherwise
change its operating agreement or other organizational documents.
(h) Such Borrower has maintained and will maintain all of its
books, records, financial statements and bank accounts separate from those of
its Affiliates and any other Person, including, without limitation, any other
Borrower. Such Borrower's assets will not be listed as assets on the financial
statement of any other Person, PROVIDED, HOWEVER, that such Borrower's assets
may be included in a consolidated financial statement of its Affiliates provided
that (i) appropriate notation shall be made on such consolidated financial
statements or the notes thereto to indicate the separateness of such Borrower
and such Affiliates and to indicate that such Borrower's assets and credit are
not available to satisfy the debts and other obligations of such Affiliates or
any other Person, and (ii) such assets shall be listed on such Borrower's own
separate balance sheet. Such Borrower will file its own tax returns (to the
extent such Borrower is required to file any tax returns) and will not file a
consolidated federal income tax return with any other Person, unless required by
any Legal Requirements, tax code or GAAP. Such Borrower has maintained and shall
maintain its books, records, resolutions and agreements as official records.
(i) Such Borrower will be, and at all times will hold itself
out to the public as, a legal entity separate and distinct from any other entity
(including any Affiliate of such Borrower or any constituent party of such
Borrower), shall correct any known misunderstanding regarding its status as a
separate entity, shall conduct business in its own name, shall not identify
itself or any of its Affiliates as a division or part of the other and shall
maintain and utilize separate stationery, invoices and checks bearing its own
name.
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(j) Such Borrower has maintained and will maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations.
(k) Neither such Borrower nor any constituent party will seek
or effect the liquidation, dissolution, winding up, consolidation, asset sale,
or merger, in whole or in part, of Borrower.
(l) Such Borrower has not and will not commingle the funds and
other assets of Borrower with those of any Affiliate or constituent party or any
other Person, and has held and will hold all of its assets in its own name.
(m) Such Borrower has and will maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any Affiliate or constituent party
or any other Person, except as provided herein and in any other Mezzanine Loan
Documents.
(n) Such Borrower has not and will not assume or guarantee or
become obligated for the debts of any other Person and does not and will not
hold itself out to be responsible for or have its credit available to satisfy
the debts or obligations of any other Person.
(o) Such Borrower's general partner or managing member, as
applicable, (each, an "SPC PARTY") shall be a corporation whose sole asset is
its interest in such Borrower and each such SPC Party (i) will cause Borrower to
comply, with each of the representations, warranties, and covenants contained in
this SECTION 3.1.24; (ii) will at all times comply with each of the
representations, warranties, and covenants contained in this SECTION 3.1.24
(other than subsections (a), (b), (d) and (aa)) as if such representation,
warranty or covenant was made directly by such SPC Party; (iii) will not engage
any business or activity other than owning an interest in such Borrower; (iv)
will not acquire or own any assets other than its partnership or membership
interest in such Borrower; and (v) will not incur any Obligations, secured or
unsecured, direct or contingent (including guaranteeing any obligation) other
than unsecured trade payables incurred in the ordinary course of business
related to the ownership of an interest in such Borrower that (x) do not exceed
at any one time $10,000, and (y) are paid within thirty (30) days after the date
incurred. Upon the withdrawal or the disassociation of an SPC Party from such
Borrower, such Borrower shall immediately appoint a new SPC Party whose articles
of incorporation are substantially similar to those of such SPC Party and
deliver a new non-consolidation opinion to the Rating Agency or Rating Agencies,
as applicable, with respect to the new SPC Party and its equity owners.
(p) The organizational documents of each SPC Party shall
provide that (and such Borrower shall at all times cause there to be) at least
two duly appointed members of the board of directors (an "INDEPENDENT DIRECTOR")
of such SPC Party reasonably satisfactory to Mezzanine Lender who shall not have
been at the time of such individual's appointment or at any time while serving
as an Independent Director, and may not have been at any time during the
preceding five (5) years (i) a stockholder, director (other than as an
Independent Director), officer, employee, partner, attorney or counsel of any
Borrower or any Affiliate of either of them, (ii) a customer, supplier or other
Person who derives any of its purchases or revenues from its activities with a
SPC Party, any
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Borrower or any Affiliate of either of them, (iii) a Person or other entity
controlling or under common control with any such stockholder, partner,
customer, supplier or other Person, or (iv) a member of the immediate family of
any such stockholder, director, officer, employee, partner, customer, supplier
or other Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of such Person, whether
through ownership of voting securities, by contract or otherwise.
(q) The organizational documents of each SPC Party shall
provide that the board of directors of such SPC Party shall not take any action
which, under the terms of any certificate of incorporation, by-laws or any
voting trust agreement with respect to any common stock, requires a unanimous
vote of the board of directors of such SPC Party unless at the time of such
action there shall be at least two members of the board of directors who are
Independent Directors (and such Independent Directors have participated in such
vote). The SPC Party will not without the unanimous written consent of its board
of directors including the Independent Directors, on behalf of itself or such
Borrower (i) file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, (ii) seek or consent to the appointment
of a receiver, liquidator or any similar official, (iii) take any action that
might cause such entity to become insolvent, or (iv) make an assignment for the
benefit of creditors.
(r) Such Borrower shall conduct its business so that the
assumptions made with respect to such Borrower in the Insolvency Opinion shall
be true and correct in all respects. In connection with the foregoing, such
Borrower hereby covenants and agrees that it will comply with or cause the
compliance with, (i) all of the facts and assumptions (whether regarding such
Borrower or any other Person) set forth in the Insolvency Opinion, (ii) all the
representations, warranties and covenants in this SECTION 3.1.24, and (iii) all
of the organizational documents of such Borrower and any SPC Party.
(s) Such Borrower will not permit any Affiliate or constituent
party independent access to its bank accounts.
(t) Such Borrower has paid and shall pay the salaries of its
own employees (if any) from its own funds and maintain a sufficient number of
employees (if any) in light of its contemplated business operations.
(u) Such Borrower has compensated and shall compensate each of
its consultants and agents from its funds for services provided to it and pay
from its own assets all obligations of any kind incurred.
(v) Such Borrower has not, and without the unanimous consent
of all of its directors or members (including all Independent Directors), as
applicable, will not (i) file a bankruptcy, insolvency or reorganization
petition or otherwise institute insolvency proceedings or otherwise seek any
relief under any laws relating to the relief from debts or the protection of
debtors generally, (ii) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official
for such entity or for all or any portion of such
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Borrower's properties, (iii) make any assignment for the benefit of such
Borrower's creditors or (iv) take any action that might cause such Borrower to
become insolvent.
(w) Such Borrower has maintained and will maintain an
arm's-length relationship with its Affiliates.
(x) Such Borrower has allocated and will allocate fairly and
reasonably shared expenses, including shared office space.
(y) Except in connection with the Mezzanine Loan, such
Borrower has not pledged and will not pledge its assets for the benefit of any
other Person.
(z) Such Borrower has and will have no obligation to indemnify
its officers, directors or members, as the case may be, or has such an
obligation that is fully subordinated to the Obligations and will not constitute
a claim against it if cash flow in excess of the amount required to pay the
Obligations is insufficient to pay such obligation.
(aa) If such Borrower is a limited liability company, such
Borrower has and will have articles of organization, a certificate of formation
and/or an operating agreement, as applicable, providing that (i) such entity
will dissolve only upon the bankruptcy of the managing member, (ii) the vote of
a majority-in-interest of the remaining members is sufficient to continue the
life of the limited liability company in the event of such bankruptcy of the
managing member and (iii) if the vote of a majority-in-interest of the remaining
members to continue the life of the limited liability company following the
bankruptcy of the managing member is not obtained, the limited liability company
may not liquidate the Property without the consent of the applicable Rating
Agencies for as long as the Mezzanine Loan is outstanding.
(bb) Such Borrower and each Independent Director will consider
the interests of such Borrower's creditors in connection with all limited
liability company actions.
3.1.25 TAX FILINGS. To the extent required, each Borrower has
filed (or has obtained effective extensions for filing) all federal, state,
commonwealth, district and local tax returns required to be filed and has paid
or made adequate provision for the payment of all federal, state, commonwealth,
district and local taxes, charges and assessments payable by such Borrower. Each
Borrower believes that its tax returns (if any) properly reflect the income and
taxes of such Borrower for the periods covered thereby, subject only to
reasonable adjustments required by the Internal Revenue Service or other
applicable tax authority upon audit.
3.1.26 SOLVENCY. No Borrower (i) has entered into the transaction
or any Mezzanine Loan Document with the actual intent to hinder, delay, or
defraud any creditor, and (ii) each Borrower received reasonably equivalent
value in exchange for its Obligations under the Mezzanine Loan Documents. Giving
effect to the Mezzanine Loan, the fair saleable value of each Borrower's assets
exceeds and will, immediately following the making of the Mezzanine Loan, exceed
such Borrower's total liabilities, including subordinated, unliquidated,
disputed and contingent liabilities. The fair saleable value of each Borrower's
assets is, and will immediately following the making of the Mezzanine Loan, will
be, greater than such Borrower's probable liabilities, including the
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maximum amount of its contingent liabilities on its debts as such debts become
absolute and matured. No Borrower's assets do and, immediately following the
making of the Mezzanine Loan will, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted. No Borrower
intends to, and no Borrower believes that it will, incur Indebtedness and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such Indebtedness and liabilities as they mature (taking into
account the timing and amounts of cash to be received by each Borrower and the
amounts to be payable on or in respect of the Obligations of each Borrower).
3.1.27 FEDERAL RESERVE REGULATIONS. No part of the proceeds of
the Mezzanine Loan will be used for the purpose of purchasing or acquiring any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose which would be inconsistent
with such Regulation U or any other Regulations of such Board of Governors, or
for any purposes prohibited by Legal Requirements or by the terms and conditions
of this Agreement or the other Mezzanine Loan Documents.
3.1.28 OWNERSHIP OF OWNER; ORGANIZATIONAL CHART. Borrowers are
the owners of 100% of the issued and outstanding ownership interests in the
respective Owners, free and clear of all Liens and encumbrances. No other
ownership interests in any Owners have been issued or are issuable. All of the
ownership interests in Owners have been duly and validly issued, have been fully
paid for and are non-assessable. There are no options or rights to acquire any
ownership interests in any Owner. The organizational chart attached as SCHEDULE
II hereto, relating to Borrowers and Owners and certain Affiliates and other
parties, is true, complete and correct on and as of the date hereof. No Person
other than those Persons shown on SCHEDULE II have any ownership interest in, or
right of control, directly or indirectly, in any Borrower or Owners.
3.1.29 ORGANIZATIONAL STATUS. Xxxxxxxx Mezzanine Borrower's exact
legal name is: Xxxxxxxx Holdings LLC. Xxxxxxxx Mezzanine Borrower is of the
following organizational type: limited liability, and the jurisdiction in which
Xxxxxxxx Mezzanine Borrower is organized is: Delaware. Xxxxxxxx Mezzanine
Borrower's Tax I.D. number is 00-0000000 and Xxxxxxxx Mezzanine Borrower's
Delaware Organizational I.D. number is 3544631. Medford Mezzanine Borrower's
exact legal name is: Medford Holdings LLC. Medford Mezzanine Borrower is of the
following organizational type: limited liability, and the jurisdiction in which
Medford Mezzanine Borrower is organized is: Delaware. Medford Mezzanine
Borrower's Tax I.D. number is 00-0000000 and Medford Mezzanine Borrower's
Delaware Organizational I.D. number is 3544628. Warrenton Mezzanine Borrower's
exact legal name is: Warrenton Holdings LLC. Warrenton Mezzanine Borrower is of
the following organizational type: limited liability, and the jurisdiction in
which Warrenton Mezzanine Borrower is organized is: Delaware. Warrenton
Mezzanine Borrower's Tax I.D. number is 00-0000000 and Warrenton Mezzanine
Borrower's Delaware Organizational I.D. number is 3544633.
3.1.30 BANK HOLDING COMPANY. No Owner or Borrower is a "bank
holding company" or a direct or indirect subsidiary of a "bank holding company"
as defined in the Bank Holding Company Act of 1956, as amended, and Regulation Y
thereunder of the Board of Governors of the Federal Reserve System.
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3.1.31 NO CASUALTY. The Improvements have suffered no material
casualty or damage which has not been fully repaired and the cost thereof fully
paid.
3.1.32 PURCHASE OPTIONS. Neither the Collateral nor the
Properties nor any part thereof are subject to any purchase options or other
similar rights in favor of third parties.
3.1.33 FIRPTA. No Owner or Borrower is a "foreign person" within
the meaning of SECTIONS 1445 or 7701 of the Code.
3.1.34 PUHCA. No Owner or Borrower is a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company", all as defined in the Public
Utility Holding Company Act of 1935, as amended.
3.1.35 INVESTMENT COMPANY ACT. No Owner or Borrower is (i) an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or (ii) subject
to any other United States federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.
3.1.36 USE OF PROPERTY. Each Individual Property consists solely
of a shopping center and related operations and is used for no other purpose.
3.1.37 FISCAL YEAR. Each fiscal year of each Borrower commences
on January 1.
3.1.38 NO OTHER FINANCING. No Borrower has borrowed any funds
which have not heretofore been repaid in full, except for the Mezzanine Loan.
3.1.39 CONTRACTS.
(a) No Borrower or Owner has entered into, or is bound by, any
Major Contract which continues in existence, except those previously disclosed
in writing to Mezzanine Lender.
(b) Each of the Major Contracts is in full force and effect,
there are no monetary or other material defaults by any Owner or any Borrower,
as the case may be, thereunder and, to the best knowledge of any Borrower, there
are no monetary or other material defaults thereunder by any other party
thereto. None of any Borrower, any Owner, Manager or any other Person acting on
any Borrower's or any Owner's, as the case may be, behalf has given or received
any notice of default under any of the Major Contracts that remains uncured or
in dispute.
(c) Each Borrower has delivered (or has caused each Owner to
deliver) true, correct and complete copies of the Major Contracts (including all
amendments and supplements thereto) to Mezzanine Lender.
(d) Except for the Manager under the applicable Management
Agreement, no Major Contract has as a party an Affiliate of any Borrower or any
Owner. All fees and other compensation for services previously performed under
the Management Agreement have been paid in full.
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3.1.40 FULL AND ACCURATE DISCLOSURE. No statement of fact made by
any Borrower in this Agreement or in any of the other Mezzanine Loan Documents
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained herein or therein not misleading.
There is no material fact presently known to any Borrower which has not been
disclosed to Mezzanine Lender which materially adversely affects, nor as far as
any Borrower can foresee, would materially adversely affect, the Properties or
the business, operations or condition (financial or otherwise) of any Borrower,
any Owner or Guarantor, other than with regard to market risk inherent in
projecting future operations.
3.1.41 OTHER OBLIGATIONS AND LIABILITIES. No Owner or Borrower
has liabilities or other obligations that arose or accrued prior to the date
hereof that, either individually or in the aggregate, could have a material
adverse effect on any Owner, any Borrower, any Individual Property and/or any
Owner's or any Borrower's ability to pay the Debt. No Owner or Borrower has
known contingent liabilities.
3.1.42 SENIOR LOAN. The Senior Loan has been fully funded in the
amount of $22,000,000.00. The outstanding principal balance of the Senior Loan,
as of the Closing Date, is $22,000,000.00. No default, breach, violation or
event of default has occurred under the Senior Loan Documents which remains
uncured or unwaived and no circumstances, event or condition has occurred or
exists which, with the giving of notice and/or the expiration of the applicable
period would constitute an event of default under the Senior Loan Documents.
Each and every representation and warranty made to Senior Lender by each Owner
or any guarantor under the Senior Loan contained in any one or more of the
Senior Loan Documents is true, correct, complete and accurate in all material
respects as of the date hereof.
3.1.43 TRANSFER OF PROPERTIES. An Affiliate of Owners previously
owned the Properties (the "TRANSFEROR"). At such time as Transferor transferred
each Individual Property to the applicable Owner, such Transferor (i) was not
insolvent, (ii) was not rendered insolvent by the transfer of the Properties and
(iii) received fair consideration for the transfer of the Properties.
3.2 SURVIVAL OF REPRESENTATIONS.
The representations and warranties set forth in SECTION 3.1 shall survive
until the Obligations have been paid and performed in full.
ARTICLE 4
BORROWER COVENANTS
4.1 BORROWER AFFIRMATIVE COVENANTS.
Each Borrower hereby covenants and agrees with Mezzanine Lender that
throughout the Term:
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4.1.1 PAYMENT AND PERFORMANCE OF OBLIGATIONS. Borrowers shall
pay and otherwise perform the Obligations in accordance with the terms of this
Agreement and the other Mezzanine Loan Documents.
4.1.2 EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS. Each
Borrower and each SPC Party shall (and each Borrower shall cause each Owner to)
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, licenses, permits and franchises and
comply with all Legal Requirements applicable to it, the Collateral and the
Properties.
4.1.3 TAXES AND OTHER CHARGES. Borrowers shall pay (or shall
cause the respective Owner to pay) all Taxes and Other Charges now or hereafter
levied, assessed or imposed as the same become due and payable, and, upon
written request, shall furnish to Mezzanine Lender receipts for the payment of
the Taxes and the Other Charges prior to the date the same shall become
delinquent (PROVIDED, HOWEVER, that Borrowers need not pay directly (nor cause
Owners to pay directly) Taxes nor furnish (or cause Owners to furnish) such
receipts for payment of Taxes to the extent that funds to pay for such Taxes
have been deposited into the reserves required under the Senior Loan Documents.
Borrowers shall not permit or suffer (unless in connection with a contest by
appropriate legal proceeding described hereinbelow) and shall promptly (and
shall cause Owners not to) permit or suffer and shall promptly cause Owners to
discharge, any Lien or charge against the Properties, and shall cause Owners to
promptly pay for all utility services provided to the Properties. After prior
notice to Mezzanine Lender, any Borrower, at its own expense, may cause Owners
to contest by appropriate legal proceeding, conducted in good faith and with due
diligence, the amount or validity of any Taxes or Other Charges, provided that
(i) no Event of Default has occurred and remains uncured; (ii) such proceeding
shall be permitted under and be conducted in accordance with all applicable
statutes, laws and ordinances; (iii) neither the Properties nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) such Borrower shall cause such Owner, promptly upon final
determination thereof, to pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the Property; and (vi) such Borrower shall deposit with
Mezzanine Lender cash, or other security as may be approved by Mezzanine Lender,
in an amount equal to one hundred twenty-five percent (125%) of the contested
amount, to insure the payment of any such Taxes or Other Charges, together with
all interest and penalties thereon (PROVIDED, HOWEVER, that no such security
will be required if Owners have provided adequate security for the same to
Senior Lender in accordance with the Senior Loan Documents). Mezzanine Lender
may pay over any such cash or other security held by Mezzanine Lender to the
claimant entitled thereto at any time when, in the judgment of Mezzanine Lender,
the entitlement of such claimant is established.
4.1.4 LITIGATION. Borrowers shall give prompt notice to
Mezzanine Lender of any litigation or governmental proceedings pending or
threatened against any Borrower, any Owner, any SPC Party or any Guarantor which
might materially adversely affect the Collateral, the Property or any
Borrower's, any Owner's, any SPC Party's or any Guarantor's condition (financial
or otherwise) or business (including any Borrower's ability to perform its
Obligations hereunder or under the other
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Mezzanine Loan Documents and such Owner's ability to perform its obligations
under the Senior Loan Documents).
4.1.5 ACCESS TO PROPERTY; INSPECTION. Borrowers shall permit any
authorized representatives designated by Mezzanine Lender to visit, examine,
audit, and inspect, upon reasonable notice and during normal business hours, the
Properties or any part thereof, including any financial and accounting records
located at the Properties, and to make copies and take extracts therefrom, and
to discuss its and their affairs, finances and business with its and their
officers and independent public accountants (with Borrowers' representative(s)
present in all instances), at such reasonable times during normal business hours
and as often as may be reasonably requested. Borrowers shall cause their
Affiliates to make all books of account and records so available at the office
where the same are regularly maintained. Mezzanine Lender shall have the right
to copy, duplicate and make abstracts from such books and records as Mezzanine
Lender may require. During the continuance of an Event of Default, Borrowers
shall pay any costs incurred by Mezzanine Lender to examine such books, records
and accounts. Borrowers acknowledge and agree that (i) all of such audits,
inspections and reports shall be made for the sole benefit of Mezzanine Lender,
and not for the benefit of Borrowers or any third party, and neither Mezzanine
Lender nor Mezzanine Lender's auditors or inspectors or any of Mezzanine
Lender's representatives, agents or contractors assumes any responsibility or
liability (except to Mezzanine Lender) by reason of such audits, inspections or
reports, (ii) Borrowers will not rely upon any of such audits, inspections or
reports for any purpose whatsoever, and (iii) the performance of such audits,
inspections and reports will not constitute a waiver of any of the provisions of
this Agreement or any other Mezzanine Loan Document or any of the obligations of
Borrowers hereunder or thereunder. Borrowers further acknowledge and agree that
neither Mezzanine Lender nor Mezzanine Lender's inspector, representatives,
agents or contractors shall be deemed to be in any way responsible for any
matters related to design or construction of the Improvements or any
construction work. At any time during the term of the Mezzanine Loan, Borrowers
shall cooperate with Mezzanine Lender and use reasonable efforts to assist
Mezzanine Lender in obtaining appraisals of Properties. Such cooperation and
assistance from Borrowers shall include but not be limited to the obligation to
provide Mezzanine Lender or Mezzanine Lender's appraiser with the following: (i)
reasonable access to the Properties, (ii) a current certified rent roll for each
Individual Property in form and substance satisfactory to Mezzanine Lender,
including current asking rents and a history of change in asking rents and
historical vacancy for the past three years, (iii) current and budgeted income
and expense statements for the prior three years, (iv) the then existing site
plan and survey of each Individual Property, (v) the building plans and
specifications, including typical elevation and floor plans, to the extent in
any Borrower's possession or reasonably available to Borrowers; (vi) the current
and prior year real estate tax bills, (vii) a detailed list of past and
scheduled capital improvements and the costs thereof, (viii) all environmental
reports and other applicable information relating to each Individual Property,
and (ix) copies of all recent appraisals/property description information or
brochures, including descriptions of amenities and services relating to each
Individual Property to the extent in any Borrower's possession or reasonably
available to Borrowers. The appraiser performing any such appraisal shall be
engaged by Mezzanine Lender, and Borrowers shall be responsible for any fees
payable to said appraiser in connection with an appraisal of each Individual
Property. Borrowers shall cooperate with Mezzanine Lender with respect to any
proceedings before any Governmental Authority which may in any way affect the
rights of Mezzanine Lender hereunder or any rights obtained by
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Mezzanine Lender under any of the Mezzanine Loan Documents and, in connection
therewith, not prohibit Mezzanine Lender, at its election, from participating in
any such proceedings.
4.1.6 FURTHER ASSURANCES; SUPPLEMENTAL MORTGAGE AFFIDAVITS.
Borrowers shall, at their sole cost and expense:
(a) execute and deliver to Mezzanine Lender such documents,
instruments, certificates, assignments and other writings, and do such other
acts necessary or desirable, to evidence, preserve and/or protect the collateral
at any time securing or intended to secure the Obligations, as Mezzanine Lender
may reasonably require; and
(b) do and execute all and such further lawful and reasonable
acts, conveyances and assurances for the better and more effective carrying out
of the intents and purposes of this Agreement and the other Mezzanine Loan
Documents, as Mezzanine Lender shall reasonably require from time to time.
4.1.7 FINANCIAL REPORTING.
(a) Each Borrower shall (and shall cause each Owner to keep)
and maintain or will cause to be kept and maintained proper and accurate books
and records, in accordance with GAAP, reflecting the financial affairs of
Borrowers and such Owner. Mezzanine Lender shall have the right from time to
time during normal business hours upon reasonable notice (which may be given
verbally) to any Borrower to examine such books and records at the office of
such Borrower or other Person maintaining such books and records and to make
such copies or extracts thereof as Mezzanine Lender shall desire. After an Event
of Default, Borrowers shall pay any costs incurred by Mezzanine Lender to
examine such books, records and accounts, as Mezzanine Lender shall determine to
be reasonably necessary or appropriate in the protection of Mezzanine Lender's
interest.
(b) Each Borrower shall furnish Mezzanine Lender annually,
within ninety (90) days following the end of each Fiscal Year, a complete copy
of such Borrower's and each Owner's annual financial statements audited by a
"Big Four" accounting firm or other independent certified public accountant
acceptable to Mezzanine Lender prepared in accordance with GAAP covering the
applicable Individual Property, including statements of income and expense and
cash flow for such Borrower and such Owner and the applicable Individual
Property and a balance sheet for such Borrower and such Owner. Such statements
shall set forth Net Cash Flow, Gross Revenue and Operating Expenses for the
applicable Individual Property. Each Borrower's and each Owner's annual
financial statements shall be accompanied by (A) a current rent roll for the
applicable Individual Property, and (B) an Officer's Certificate certifying (i)
that such annual financial statement is true, correct, accurate and complete and
fairly presents the financial condition and the results of operations of such
Borrower, such Owner and the applicable Individual Property, and (ii) whether to
the best of such Borrower's best knowledge there exists an event or circumstance
which constitutes a Default or Event of Default by any Borrower under the
Mezzanine Loan Documents or the Senior Loan Documents and if such Default or
Event of Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy the same.
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(c) Each Borrower will furnish (or cause each Owner to
furnish) to Mezzanine Lender on or before the forty-fifth (45th) day after the
end of each calendar quarter throughout the Term, the following items,
accompanied by an Officer's Certificate certifying that such items are true,
correct, accurate and complete and fairly present the financial condition and
results of the operations of such Borrower, such Owner and the applicable
Individual Property in a manner consistent with GAAP, as applicable:
(i) quarterly and year-to-date statements of income and
expense and cash flow prepared in a manner consistent with GAAP for such
quarter with respect to the applicable Individual Property, with a balance
sheet for such quarter for such Borrower and such Owner;
(ii) a calculation reflecting the Debt Service Coverage
Ratio as of the last day of such quarter, for such quarter and the last
four quarters;
(iii) a current rent roll for the Individual Property;
and
(iv) quarterly and annual summary reports containing
each of the following with respect to the applicable Individual Property
for the most recently completed quarter or calendar year, as the case may
be: (A) aggregate sales by Tenants under Leases or other occupants of the
Individual Property, both on an actual (or to the extent such information
is not provided by Tenants, Manager's or such Borrower's, or such Owner's,
as the case may be, reasonable estimate) and on a comparable store basis,
(B) rent per square foot payable by each Tenant, and (C) aggregate
occupancy of the applicable Individual Property by anchor space and in-line
store space as of December 31.
(d) at any time that the Mezzanine Loan is not subject to a
Securitization, each Borrower will furnish (or cause each Owner to furnish) to
Mezzanine Lender on or before the thirtieth (30th) day after the end of each
calendar month the following items, accompanied by an Officer's Certificate
certifying that such items are true, correct, accurate, and complete and fairly
present the financial condition and results of the operations of such Borrower,
such Owner and the applicable Individual Property in a manner consistent with
GAAP, as applicable:
(i) monthly and year-to-date statements of income and
expense and cash flow prepared in a manner consistent with GAAP for such
month with respect to the applicable Individual Property, with a balance
sheet as of such month;
(ii) a comparison of the budgeted income and expenses
and the actual income and expenses for such month and year to date for the
applicable Individual Property, together with a detailed explanation of any
variances of more than ten percent (10%) between budgeted and actual
amounts for such period and year to date;
(iii) a current rent roll for the applicable Individual
Property; and
(iv) a summary report containing each of the following
with respect to the applicable Individual Property for the most recently
completed calendar month: (A)
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aggregate sales by Tenants under Leases or other occupants of the
applicable Individual Property, both on an actual (or to the extent such
information is not provided by Tenants, Manager's, such Borrower's or such
Owner's best estimate) and on a comparable store basis, (B) rent per square
foot payable by each Tenant, and (C) aggregate occupancy of the applicable
Individual Property by anchor space and in-line store space as of the last
day of the preceding month.
(e) Each Borrower shall submit to Mezzanine Lender by November
15 of each year the Annual Budget for the succeeding Fiscal Year for the related
Individual Property. Mezzanine Lender shall have the right to approve each
Annual Budget and Annual Budgets approved by Mezzanine Lender shall hereinafter
be referred to as an "APPROVED ANNUAL BUDGET". In the event that a Borrower
incurs an extraordinary operating expense or extraordinary capital expenditure
not set forth in the Approved Annual Budget (each an "EXTRAORDINARY EXPENSE"),
then such Borrower shall promptly deliver to Mezzanine Lender a reasonably
detailed explanation of such proposed Extraordinary Expense for Mezzanine
Lender's approval. Until such time that any Annual Budget has been approved by
Mezzanine Lender, the prior Approved Annual Budget shall apply for all purposes
hereunder (with such adjustments as reasonably determined by Mezzanine Lender
(including a 5% increase in any line item of discretionary expenses and actual
increases for any non-discretionary expenses)). Promptly upon receipt thereof,
each Borrower will deliver copies of all significant reports submitted to each
Owner, each Borrower or any Guarantor, as applicable, by independent public
accountants in connection with each annual, interim or special audit of the
financial statements of each Owner, each Borrower or such Guarantor, as
applicable, made by such accountants, including the comment letter submitted by
such accountants to management in connection with their annual audit.
(f) Each Borrower shall furnish or cause each Owner to furnish
to Mezzanine Lender, within five (5) Business Days after request (or as soon
thereafter as may be reasonably possible), such further detailed information
with respect to the operation of the applicable Individual Property and/or the
financial affairs of such Borrower or such Owner as may be reasonably requested
by Mezzanine Lender, including a comparison of the budgeted income and expenses
and the actual income and expenses for a quarter and year to date for such
Individual Property, together with a detailed explanation of any variances of
more than ten percent (10%) between budgeted and actual amounts for such period
and year to date.
4.1.8 LIEN ON THE COLLATERAL. Borrower will warrant and defend
the validity and priority of the Liens of the Mezzanine Loan Documents on the
Collateral against the claims of all Persons whomsoever, subject only to
Permitted Encumbrances.
4.1.9 ESTOPPEL STATEMENT.
(a) After request by Mezzanine Lender, each Borrower shall
within ten (10) Business Days furnish Mezzanine Lender with a statement, duly
acknowledged and certified, stating (i) the Outstanding Principal Balance of
such Borrower's applicable Mezzanine Note, (ii) the Interest Rate for such
Borrower's applicable Mezzanine Note, (iii) the date installments of interest
and/or principal were last paid, (iv) any offsets or defenses to the payment and
performance of the Obligations, if any, and (v) that this Agreement and the
other Mezzanine Loan Documents to which
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such Borrower is a party have not been modified or if modified, giving
particulars of such modification.
(b) After request by any Borrower, Mezzanine Lender shall
within ten (10) Business Days furnish such Borrower with a statement, duly
acknowledged and certified, stating (i) the Outstanding Principal Balance of
such Borrower's applicable Mezzanine Note, (ii) the Interest Rate for such
Borrower's applicable Mezzanine Note, (iii) the date installments of interest
and/or principal were last paid, and (iv) whether or not Mezzanine Lender has
sent any notice of default under the Mezzanine Loan Documents which remains
uncured in the opinion of Mezzanine Lender.
(c) Each Borrower shall deliver (or cause each Owner to
deliver) to Mezzanine Lender, upon five (5) Business Days' notice from Mezzanine
Lender, an estoppel certificate from each Tenant under any Lease at such Owner's
Individual Property (provided that such Borrower or such Owner, as the case may
be, shall only be required to use commercially reasonable efforts to obtain an
estoppel certificate from any Tenant not required to provide an estoppel
certificate under its Lease); provided, that such certificate may be in the form
required under such Lease; and provided, further, that no Borrower or Owner, as
the case may be, shall be required to deliver such certificates more frequently
than two (2) times in any calendar year.
(d) Borrowers shall deliver (or cause each Owner to deliver)
to Mezzanine Lender, upon five (5) Business Days' notice from Mezzanine Lender,
estoppel certificates from each party under the Senior Loan Documents; provided,
that such certificates may be in the form required under the Senior Loan
Documents; and provided, further, that Borrowers or such Owner, as the case may
be, shall not be required to deliver such certificates more than two (2) times
during any applicable year.
4.1.10 LEASES.
(a) All Leases and all renewals of Leases executed after the
date hereof shall (i) provide for economic terms, including rental rates
comparable to existing local market rates for similar properties, (ii) be on
commercially reasonable terms, (iii) have a term of not less than three (3)
years with respect to any Major Leases and one (1) year with respect to any
other Lease, (iv) provide that such Lease is subordinate to the applicable
Mortgages and the applicable Assignment of Leases under the Senior Loan and that
the Tenant thereunder will attorn to Senior Lender or Mezzanine Lender and any
purchaser at a foreclosure sale, (v) be to Tenants that are creditworthy, (v) be
written on a commercially reasonable form of Lease, (vi) not be to an Affiliate
of any Borrower, any Owner or either Guarantor or any guarantor under the Senior
Loan Documents, and (vii) not contain any option to purchase, any right of first
refusal to purchase, any right to terminate (except in the event of the
destruction or condemnation of substantially all of the applicable Individual
Property or in the event such right is a market standard term at the time of
execution of such Lease), any requirement for a non-disturbance or recognition
agreement (other than Mezzanine Lender's form thereof), or any other terms which
would materially adversely affect Mezzanine Lender's rights under the Mezzanine
Loan Documents. All Major Leases and all renewals, amendments and modifications
thereof executed after the date hereof shall be subject to Mezzanine Lender's
prior approval, which approval shall not, so long as no Event of Default is
continuing, be unreasonably withheld or delayed. Mezzanine Lender shall execute
and deliver its standard form of
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subordination, non-disturbance and attornment agreement to Tenants under any
future Major Lease approved by Mezzanine Lender promptly upon request, with such
commercially reasonable changes as may be requested by such Tenants and which
are reasonably acceptable to Mezzanine Lender. Notwithstanding anything to the
contrary in this SECTION 4.1.10, Mezzanine Lender agrees not to unreasonably
withhold its consent for any matter requiring Mezzanine Lender's consent under
this SECTION 4.1.10 if Senior Lender has granted its consent to such Owner in
connection with such matter.
(b) Each Borrower (i) shall cause each Owner to observe and
perform the obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (ii) shall enforce the terms, covenants and
conditions contained in the Leases upon the part of the Tenants thereunder to be
observed or performed in a commercially reasonable manner, PROVIDED, HOWEVER,
such Borrower shall cause such Owner not to terminate or accept a surrender of a
Lease without Mezzanine Lender's prior approval; (iii) shall not collect any of
the Rents more than one (1) month in advance (other than security deposits);
(iv) shall not execute any assignment of lessor's interest in the Leases or the
Rents (except as contemplated by the Mezzanine Loan Documents); and (v) shall
not alter, modify or change any Lease so as to change the amount of or payment
date for rent, change the expiration date, grant any option for additional space
or term, materially reduce the obligations of the Tenant or increase the
obligations of the lessor. Upon request, such Borrower shall (or shall cause
such Owner to) furnish Mezzanine Lender with executed copies of all Leases.
(c) All security deposits of Tenants, whether held in cash or
any other form and to the extent such security deposits for any Individual
Property exceed $25,000.00 in the aggregate, shall not be commingled with any
other funds of any Borrower or any Owner and, if cash, shall be deposited by
such Owner at a separately designated account under such Owner's control and
held in accordance with the terms of the Senior Loan Documents and applicable
Legal Requirements. Any bond or other instrument which any Owner or any Borrower
is permitted to hold in lieu of cash security deposits under any applicable
Legal Requirements (i) shall be maintained in full force and effect in the full
amount of such deposits unless replaced by cash deposits as herein above
described, (ii) shall be issued by an institution reasonably satisfactory to
Senior Lender and Mezzanine Lender, (iii) shall, if permitted pursuant to any
Legal Requirements, name Senior Lender and Mezzanine Lender as payee or
mortgagee thereunder (or at Senior Lender's and Mezzanine Lender's option, be
fully assignable to Senior Lender and Mezzanine Lender), and (iv) shall in all
respects comply with any applicable Legal Requirements and otherwise be
satisfactory to Senior Lender and Mezzanine Lender. Each Borrower shall, upon
request, provide Mezzanine Lender with evidence satisfactory to Mezzanine Lender
of compliance with the foregoing.
(d) Borrower shall have the right to permit each Owner,
without the consent or approval of Mezzanine Lender in any instance, to
terminate or accept a surrender of any Lease that is not a Major Lease.
4.1.11 ALTERATIONS. Mezzanine Lender's prior approval shall be
required in connection with any alterations to any Improvements (i) that may
have a material adverse effect on any Borrower's or any Owner's financial
condition, the value of the applicable Individual Property or the ongoing
revenues and expenses of such Individual Property or, (ii) the cost of which
(including any related alteration, improvement or replacement) is reasonably
anticipated to exceed the
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Alteration Threshold (either of the foregoing, a "MATERIAL ALTERATION"). If the
total unpaid amounts incurred and to be incurred with respect to such
alterations to the Improvements shall at any time exceed the Alteration
Threshold, such Borrower shall promptly deliver to Mezzanine Lender as security
for the payment of such amounts and as additional security for such Owner's
Obligations under the Mezzanine Loan Documents any of the following: (i) cash,
(ii) a Letter of Credit, (iii) U.S. Obligations, (iv) other securities
acceptable to Mezzanine Lender, provided that Mezzanine Lender shall have
received a Rating Agency Confirmation as to the form and issuer of same, or (v)
a completion bond, provided that Mezzanine Lender shall have received a Rating
Agency Confirmation as to the form and issuer of same (PROVIDED, HOWEVER, that
no such security will be required if such Owner has provided adequate security
for the same to Senior Lender in accordance with the Senior Loan Documents).
Such security shall be in an amount equal to the excess of the total unpaid
amounts incurred and to be incurred with respect to such alterations to the
Improvements (other than such amounts to be paid or reimbursed by Tenants under
the Leases) over the Alteration Threshold. Upon substantial completion of any
Material Alteration, the applicable Borrower shall or shall cause the applicable
Owner to provide evidence reasonably satisfactory to Mezzanine Lender that (i)
the Material Alteration was constructed in accordance with applicable Legal
Requirements, (ii) all contractors, subcontractors, materialmen and
professionals who provided work, materials or services in connection with the
Material Alteration have been paid in full and have delivered unconditional
releases of liens and (iii) all material licenses and permits necessary for the
use, operation and occupancy of the Material Alteration (other than those which
depend on the performance of tenant improvement work) have been issued.
Notwithstanding the foregoing, Mezzanine Lender agrees not to unreasonably
withhold its consent for any Material Alteration requiring Mezzanine Lender's
consent under this SECTION 4.1.11 if Senior Lender has granted its consent to
such Owner in connection with such matter.
4.1.12 APPROVAL OF MAJOR CONTRACTS. Each Borrower shall be
required to cause each Owner to obtain Mezzanine Lender's prior written approval
of any and all Major Contracts affecting the applicable Individual Property,
which approval may be granted or withheld in Mezzanine Lender's sole discretion.
Notwithstanding the foregoing, Mezzanine Lender agrees not to unreasonably
withhold its consent for any Major Contract requiring Mezzanine Lender's consent
under this SECTION 4.1.12 if Senior Lender has granted its consent to such Owner
in connection with such matter. If any renewal or extension of a Major Contract
previously approved by Mezzanine Lender is on substantially similar terms, such
Borrower shall not be required to cause such Owner to obtain Mezzanine Lender's
approval for any such renewal or extension.
4.2 BORROWER NEGATIVE COVENANTS.
Each Borrower covenants and agrees with Mezzanine Lender that throughout
the Term:
4.2.1 DUE ON SALE AND ENCUMBRANCE; TRANSFERS OF INTERESTS.
Without the prior written consent of Mezzanine Lender, which consent may be
given or withheld in Mezzanine Lender's sole and absolute discretion, but, in
each instance, subject to the provisions of Article 8, neither any Borrower, any
Owner nor any other Person having a direct or indirect ownership or beneficial
interest in any Borrower or any Owner shall (and such Borrower shall not permit
such Owner to) sell, convey, mortgage, grant, bargain, encumber, pledge, assign
or transfer (i) any
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Individual Property or any part thereof, (ii) the Collateral or any part thereof
or (iii) any interest, direct or indirect, in any Borrower, any Owner, any SPC
Party whether voluntarily or involuntarily (a "TRANSFER"). A Transfer within the
meaning of this SECTION 4.2.1 shall be deemed to include (i) an installment
sales agreement wherein any Owner agrees to sell any Individual Property or any
part thereof for a price to be paid in installments; (ii) an agreement by any
Owner leasing all or a substantial part of any Individual Property for any
purpose other than the actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in, any
Owner's right, title and interest in and to any Leases or any Rents; (iii) if
any Borrower, any Owner, either Guarantor or any general partner, managing
member or controlling shareholder of such Borrower, such Owner or such Guarantor
is a corporation, the voluntary or involuntary sale, conveyance or transfer of
such corporation's stock (or the stock of any corporation directly or indirectly
controlling such corporation by operation of law or otherwise) or the creation
or issuance of new stock in one or a series of transactions by which an
aggregate of more than 10% of such corporation's stock shall be vested in a
party or parties who are not now stockholders or any change in the control of
such corporation, except to the extent such Transfer is a Permitted Transfer
under SECTION 8.1; (iv) if any Borrower, any Owner, either Guarantor or any
general partner, managing member or controlling shareholder of such Borrower,
such Owner, or any Guarantor is a limited or general partnership, joint venture
or limited liability company, the change, removal, resignation or addition of a
general partner, managing partner, limited partner, joint venturer or member or
the transfer of the partnership interest of any general partner, managing
partner or limited partner or the transfer of the interest of any joint venturer
or member, except to the extent such Transfer is a Permitted Transfer under
SECTION 8.1; and (v) any pledge, hypothecation, assignment, transfer or other
encumbrance of any direct or indirect ownership interest in any Borrower or any
Owner or any SPC Party.
4.2.2 LIENS. No Borrower shall create, incur, assume or suffer
to exist any Lien on any direct or indirect interest in any Borrower or any SPC
Party or any Owner or any portion of the Properties or the Collateral except for
the Permitted Encumbrances.
4.2.3 DISSOLUTION. No Borrower shall (and shall not permit any
Owner to) (i) engage in any dissolution, liquidation or consolidation or merger
with or into any other business entity, (ii) engage in any business activity not
related to the ownership and operation of such Owner or the applicable
Individual Property, as the case may be (iii) transfer, lease or sell, in one
transaction or any combination of transactions, all or substantially all of the
property or assets of any Borrower except to the extent expressly permitted by
the Mezzanine Loan Documents, or (iv) cause, permit or suffer any SPC Party to
(A) dissolve, wind up or liquidate or take any action, or omit to take any
action, as a result of which such SPC Party would be dissolved, wound up or
liquidated in whole or in part, or (B) amend, modify, waive or terminate the
organizational documents of such SPC Party in each case without obtaining the
prior consent of Mezzanine Lender.
4.2.4 CHANGE IN BUSINESS.
(a) No Borrower shall enter into any line of business other
than the ownership of the Collateral.
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(b) No Borrower shall permit any Owner to enter into any line
of business other than the ownership and operation of the Properties. No
Borrower shall permit any Owner to change the current use of any Individual
Property in any material respect.
4.2.5 DEBT CANCELLATION. No Borrower shall and no Borrower shall
permit any Owner to cancel or otherwise forgive or release any claim or debt
(other than the termination of Leases in accordance herewith) owed to any
Borrower or any Owner, as the case may be, by any Person, except for adequate
consideration and in the ordinary course any Borrower's or any Owner's, as the
case may be, business.
4.2.6 AFFILIATE TRANSACTIONS. No Borrower shall and no Borrower
shall permit any Owner to enter into, or be a party to, any transaction with an
Affiliate of any Borrower, any Owner or any of the partners, members or
shareholders, as applicable, of any Borrower or any Owner except in the ordinary
course of business and on terms which are fully disclosed to Mezzanine Lender in
advance and are no less favorable to such Borrower, such Owner or such Affiliate
than would be obtained in a comparable arm's-length transaction with an
unrelated third party.
4.2.7 ZONING. No Borrower shall and no Borrower shall permit any
Owner to initiate or consent to any zoning reclassification of any portion of
any Individual Property or seek any variance under any existing zoning ordinance
or use or permit the use of any portion of any Individual Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior consent of Mezzanine Lender.
4.2.8 ASSETS.
(a) No Borrower shall purchase or own any property other than
the Collateral and any property necessary or incidental to the ownership of the
Collateral.
(b) No Borrower shall permit any Owner to purchase or own any
property other than the applicable Individual Property and any property
necessary or incidental for the operation of such Individual Property.
4.2.9 NO JOINT ASSESSMENT. No Borrower shall and no Borrower
shall permit any Owner to suffer, permit or initiate the joint assessment of the
Property (i) with any other real property constituting a tax lot separate from
the applicable Individual Property, and (ii) with any portion of the Property
which may be deemed to constitute personal property, or any other procedure
whereby the Lien of any taxes which may be levied against such personal property
shall be assessed or levied or charged to the Property.
4.2.10 PRINCIPAL PLACE OF BUSINESS. No Borrower shall and no
Borrower shall permit any Owner to change its principal place of business from
the address set forth on the first page of this Agreement without first giving
Mezzanine Lender thirty (30) days prior written notice.
4.2.11 CHANGE OF NAME, IDENTITY OR STRUCTURE. No Borrower shall
and no Borrower shall permit any Owner to change such Borrower's or such Owner's
name, identity (including its
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trade name or names) or, if not an individual, such Borrower's or such Owner's
corporate, partnership or other structure without notifying Mezzanine Lender of
such change in writing at least thirty (30) days prior to the effective date of
such change and, in the case of a change in any Borrower's or any Owner's
structure, without first obtaining the prior written consent of Mezzanine
Lender. Such Borrower shall execute and deliver to Mezzanine Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change required by Mezzanine Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the written request of Mezzanine Lender, each
Borrower shall (or shall cause each Owner to) execute a certificate in form
satisfactory to Mezzanine Lender listing the trade names under which such Owner
intends to operate such Individual Property, and representing and warranting
that such Owner does business under no other trade name with respect to the
applicable Individual Property.
4.2.12 SPECIAL PURPOSE. Without in any way limiting the
provisions of this ARTICLE 4, no Borrower shall and no Borrower shall permit any
Owner to take or permit any action that would result in any Borrower, any Owner
or any SPC Party not being in compliance with the representations, warranties
and covenants set forth in SECTION 3.1.24 of this Agreement and SECTION 3.1.24
of the Senior Loan Agreement.
4.2.13 ERISA.
(a) No Borrower shall and no Borrower shall permit Owner to
engage in any transaction which would cause any obligation, or action taken or
to be taken, hereunder (or the exercise by Mezzanine Lender of any of its rights
under the Mezzanine Notes, this Agreement or the other Mezzanine Loan Documents)
or under the Senior Loan Documents (or the exercise by Senior Lender of any of
its rights under the Senior Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Each Borrower shall deliver and shall cause each Owner to
deliver to Mezzanine Lender such certifications or other evidence from time to
time throughout the Term, as requested by Mezzanine Lender in its sole
discretion, that (A) such Borrower or such Owner, as the case may be, is not and
does not maintain an "employee benefit plan" as defined in SECTION 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of SECTION 3(3) of ERISA; (B) such Borrower or such Owner, as the case
may be, is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (C) one or more of the
following circumstances is true:
(i) Equity interests in such Borrower or such Owner, as the
case may be, are publicly offered securities, within the meaning of 29
C.F.R. Section 2510.3-101(b)(2);
(ii) Less than twenty-five percent (25%) of each outstanding
class of equity interests in such Borrower or such Owner, as the case may
be, are held by "benefit plan investors" within the meaning of 29 C.F.R.
Section 2510.3-101(f)(2); or
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(iii) Such Borrower or such Owner, as the case may be, qualifies
as an "operating company" or a "real estate operating company" within the
meaning of 29 C.F.R. Section 2510.3-101(c) or (e).
4.2.14 COMPLIANCE WITH RESTRICTIVE COVENANTS, ETC. No Borrower
will and no Borrower will permit any Owner to modify in any material respect,
waive in any material respect or release any Easements, restrictive covenants or
other Permitted Encumbrances, or suffer, consent to or permit the foregoing,
without Mezzanine Lender's prior written consent, which consent may be granted
or denied in Mezzanine Lender's sole discretion.
4.2.15 INCURRENCE OF EXPENSES. Borrowers shall cause each Owner
not to incur any Operating Expense, Capital Expenditure, leasing expense or
other expense unless it is an Approved Operating Expense, Approved Capital
Expenditure or Approved Leasing Expense.
4.2.16 EMBARGOED PERSON. At all times throughout the term of the
Mezzanine Loan, including after giving effect to any Transfers permitted
pursuant to the Mezzanine Loan Documents, (a) none of the funds or other assets
of any Borrower, any Owner or any Guarantor shall constitute property of, or
shall be beneficially owned, directly or indirectly, by any Person subject to
trade restrictions under United States law, including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. Sections 1701 ET SEQ.,
The Trading with the Enemy Act, 50 U.S.C. App. 1 ET SEQ., and any Executive
Orders or regulations promulgated thereunder, with the result that the
investment in any Borrower, any Owner or any Guarantor, as applicable (whether
directly or indirectly), would be prohibited by law (each, an "EMBARGOED
PERSON"), or the Mezzanine Loan made by Mezzanine Lender would be in violation
of law, (b) no Embargoed Person shall have any interest of any nature whatsoever
in any Borrower, any Owner or any Guarantor, as applicable, with the result that
the investment in such Borrower, such Owner or such Guarantor, as applicable
(whether directly or indirectly), would be prohibited by law or the Mezzanine
Loan would be in violation of law, and (c) none of the funds of any Borrower,
any Owner or any Guarantor, as applicable, shall be derived from any unlawful
activity with the result that the investment in such Borrower, such Owner or
such Guarantor, as applicable (whether directly or indirectly), would be
prohibited by law or the Mezzanine Loan would be in violation of law.
ARTICLE 5
INSURANCE, CASUALTY AND CONDEMNATION
5.1 INSURANCE.
5.1.1 INSURANCE POLICIES.
(a) Each Borrower, at its sole cost and expense (or at the
sole cost and expense of each Owner) shall cause each Owner to obtain and
maintain during the entire Term, or caused to be maintained, insurance policies
for such Borrower, the applicable Owner and the applicable Individual Property
providing at least the following coverages:
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(i) Casualty insurance against loss or damage by fire,
lightning and such other perils as are included in a standard "special
form" policy (formerly known as an "all-risk" endorsement policy), and
against loss or damage by all other risks and hazards covered by a standard
extended coverage insurance policy, including riot and civil commotion,
vandalism, malicious mischief, burglary and theft, in each case (A) in an
amount equal to one hundred percent (100%) of the "FULL REPLACEMENT COST"
of the applicable Individual Property, which for purposes of this Agreement
shall mean actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings) with a waiver of
depreciation, but the amount shall in no event be less than the Outstanding
Principal Balance hereunder and under the Senior Loan Documents; (B)
containing an agreed amount endorsement with respect to the Improvements
and personal property at the applicable Individual Property waiving all
co-insurance provisions; (C) providing for no deductible in excess of the
lesser of Ten Thousand and No/100 Dollars ($10,000.00) and five percent
(5%) of Net Cash Flow for all such insurance coverage for each Individual
Property; and (D) containing an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the Improvements or the use of the
applicable Individual Property shall at any time constitute legal
non-conforming structures or uses and compensating for loss of value or
property resulting from operation of law and the cost of demolition and the
increased cost of construction in amounts as required by Mezzanine Lender.
In addition, Borrower shall obtain (or cause each Owner to obtain): (y) if
any portion of the Improvements on any applicable Individual Property is
currently or at any time in the future located in a federally designated
"special flood hazard area", flood hazard insurance with respect to such
Individual Property in an amount equal to the lesser of (1) the Outstanding
Principal Balance and the outstanding principal balance under the Senior
Loan Documents or (2) the maximum amount of such insurance available under
the National Flood Insurance Act of 1968, the Flood Disaster Protection Act
of 1973 or the National Flood Insurance Reform Act of 1994, as each may be
amended or such greater amount as Mezzanine Lender shall require; and (z)
earthquake insurance with respect to any Individual Property in amounts and
in form and substance satisfactory to Mezzanine Lender in the event such
applicable Individual Property is located in an area with a high degree of
seismic activity, provided that the insurance pursuant to clauses (y) and
(z) hereof shall be on terms consistent with the comprehensive all risk
insurance policy required under this subsection (i);
(ii) commercial general liability insurance, including a
broad form comprehensive general liability endorsement and coverages
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about the applicable Individual Property, such
insurance (A) to be on the so-called "occurrence" form and containing
minimum limits per occurrence of One Million and No/100 Dollars
($1,000,000.00), with a combined limit per policy year, excluding umbrella
coverage, of not less than Two Million and No/100 Dollars ($2,000,000.00);
(B) to continue at not less than the aforesaid limit until reasonably
required to be changed by Mezzanine Lender by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and completed
operations on an "if any" basis; (3) independent contractors; (4) blanket
contractual liability for all legal
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contracts; and (5) contractual liability covering the indemnities contained
in ARTICLE 9 of the applicable Mortgages for such Individual Property, to
the extent same is available;
(iii) rental loss and/or business income interruption
insurance (A) with loss payable to Mezzanine Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i)
above and SECTION 5.1.1(h) below; (c) covering a period of restoration of
eighteen (18) months and containing an extended period of indemnity
endorsement which provides that after the physical loss to the Improvements
and Personal Property located at the applicable Individual Property has
been repaired, the continued loss of income will be insured until such
income either returns to the same level it was at prior to the loss, or the
expiration of eighteen (18) months from the date that the applicable
Individual Property is repaired or replaced and operations are resumed,
whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) in an amount equal to one hundred
percent (100%) of the reasonably projected Gross Revenue from the
applicable Individual Property for a period of thirty-six (36) months from
the date that the applicable Individual Property is repaired or replaced
and operations are resumed. The amount of such business income insurance
shall be determined prior to the date hereof and at least once each year
thereafter based on Borrower's or such Owner's reasonable estimate of the
Gross Revenue from such Individual Property for the succeeding twenty-four
(24) month period. All proceeds payable to Mezzanine Lender pursuant to
this subsection shall be held by Mezzanine Lender and shall be applied to
the Obligations secured by the Mezzanine Loan Documents from time to time
due and payable hereunder and under the applicable Mezzanine Note;
PROVIDED, HOWEVER, that nothing herein contained shall be deemed to relieve
any Borrower of its obligation to pay the Debt on the respective dates of
payment provided for in the applicable Mezzanine Note and the other
Mezzanine Loan Documents except to the extent such amounts are actually
paid out of the proceeds of such business income insurance;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the Improvements at
the applicable Individual Property, and only if such Individual Property
coverage form does not otherwise apply, (A) owner's contingent or
protective liability insurance covering claims not covered by or under the
terms or provisions of the above mentioned commercial general liability
insurance policy; and (B) the insurance provided for in subsection (i)
above written in a so-called builder's risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy such Individual
Property, and (4) with an agreed amount endorsement waiving co-insurance
provisions;
(v) workers' compensation, subject to the statutory limits
of the state in which the applicable Individual Property is located, and
employer's liability insurance with limits which are reasonably required
from time to time by Mezzanine Lender in respect of any work or operations
on or about such Individual Property, or in connection with such Individual
Property or its operation (if applicable);
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(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Mezzanine Lender
on terms consistent with the commercial property insurance policy required
under subsection (i) above;
(vii) umbrella liability insurance in addition to primary
coverage in an amount not less than Twenty-Five Million and No/100 Dollars
($25,000,000.00) per occurrence on terms consistent with the commercial
general liability insurance policy required under subsection (ii) above and
(viii) below;
(viii) motor vehicle liability coverage for all owned and
non-owned vehicles, including rented and leased vehicles containing minimum
limits per occurrence, including umbrella coverage, with limits which are
reasonably required from time to time by Mezzanine Lender;
(ix) windstorm insurance in an amount equal to the
Outstanding Principal Balance and the outstanding principal balance of the
Senior Loan or such lesser amount as reasonably agreed to by Mezzanine
Lender in writing;
(x) insurance against employee dishonesty in an amount not
less than one (1) month of Gross Revenue from the applicable Individual
Property and with a deductible not greater than Ten Thousand and No/100
Dollars ($10,000.00); and
(xi) upon sixty (60) days' notice, such other reasonable
insurance and in such reasonable amounts as Mezzanine Lender from time to
time may reasonably request against such other insurable hazards which at
the time are commonly insured against for properties similar to the
applicable Individual Property located in or around the region in which
such Individual Property is located.
(b) All insurance provided for in SECTION 5.1.1(a) shall be
obtained under valid and enforceable policies (collectively, the "POLICIES" or
in the singular, the "POLICY") and shall be subject to the approval of Mezzanine
Lender as to form and substance including deductibles, loss payees and insureds.
Not less than ten (10) days prior to the expiration dates of the Policies
theretofore furnished to Mezzanine Lender, certificates of insurance evidencing
the Policies accompanied by evidence satisfactory to Mezzanine Lender of payment
of the premiums then due thereunder (the "INSURANCE PREMIUMS"), shall be
delivered, or caused to be delivered, by each Borrower to Mezzanine Lender.
(c) Any blanket insurance Policy shall specifically allocate
to the applicable Individual Property the amount of coverage from time to time
required hereunder and shall otherwise provide the same protection as would a
separate Policy insuring only such Individual Property in compliance with the
provisions of SECTION 5.1.1(a).
(d) All Policies of insurance provided for or contemplated by
SECTION 5.1.1(a), except for the Policy referenced in SECTION 5.1.1(a)(v), shall
name the applicable Owner as the insured and, subject to the rights of Senior
Lender under the Senior Loan Documents, Mezzanine Lender and its successors
and/or assigns as the additional insured, as its interests may appear, and in
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the case of property damage, boiler and machinery, flood and earthquake
insurance, and subject to the rights of Senior Lender under the Senior Loan
Documents, shall contain a so-called New York standard non-contributing
mortgagee clause in favor of Mezzanine Lender providing that the loss thereunder
shall be payable to Mezzanine Lender. Additionally, if any Borrower obtains
property insurance coverage in addition to or in excess of that required by
SECTION 5.1.1(a)(i), then, subject to the rights of Senior Lender under the
Senior Loan Documents, such insurance policies shall also contain a so-called
New York standard non-contributing mortgagee clause in favor of Mezzanine Lender
providing that the loss thereunder shall be payable to Mezzanine Lender.
(e) All Policies of insurance provided for in SECTION
5.1.1(a), except for the Policies referenced in SECTION 5.1.1(a)(v) and
(a)(viii) shall contain clauses or endorsements to the effect that:
(i) no act or negligence of any Owner or Borrower, or
anyone acting for any Owner or Borrower, or of any Tenant or other
occupant, or failure to comply with the provisions of any Policy, which
might otherwise result in a forfeiture of the insurance or any part
thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Mezzanine Lender is concerned;
(ii) the Policy shall not be canceled without at least
thirty (30) days' written notice to Mezzanine Lender and any other party
named therein as an additional insured and, if obtainable by Borrowers or
each Owner using commercially reasonable efforts, shall not be materially
changed (other than to increase the coverage provided thereby) without such
a thirty (30) day notice; and
(iii) Mezzanine Lender shall not be liable for any
Insurance Premiums thereon or subject to any assessments thereunder.
(f) If at any time Mezzanine Lender is not in receipt of
written evidence that all insurance required hereunder is in full force and
effect, Mezzanine Lender shall have the right, without notice to Borrowers or
any Owner, subject to the rights of Senior Lender, to take such action as
Mezzanine Lender deems necessary to protect its interest in the Collateral,
including the obtaining of such insurance coverage as Mezzanine Lender in its
sole discretion deems appropriate and all premiums incurred by Mezzanine Lender
in connection with such action or in obtaining such insurance and keeping it in
effect shall be paid by Borrower to Mezzanine Lender upon demand and until paid
shall be secured by the Pledges and shall bear interest at the Default Rate.
(g) In the event of foreclosure of the Pledges or other
transfer of title to the Collateral in extinguishment in whole or in part of the
Debt, all right, title and interest of the Borrowers in and to the Policies that
are not blanket Policies then in force concerning the Properties and all
proceeds payable thereunder shall thereupon vest in the purchaser at such
foreclosure or Mezzanine Lender or other transferee in the event of such other
transfer of the Collateral.
(h) Notwithstanding anything in SECTION 5.1.1(a)(i) to the
contrary, Borrowers shall be required to obtain and maintain Policies which do
not contain exclusions for loss, cost, damage or liability caused by "terrorism"
or "terrorist acts", no matter how defined in such Policies
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and provided that such terrorism coverage is available. If any of the Policies
include any such terrorism exclusion(s), Borrowers shall obtain and maintain
terrorism coverage to cover such exclusion(s) from a carrier which otherwise
satisfies the rating criteria specified in SECTION 5.1.2 (a "QUALIFIED CARRIER")
or, in the event that such terrorism coverage is not available from a Qualified
Carrier, Borrowers shall obtain such terrorism coverage from the highest rated
insurance company providing such terrorism coverage. If such terrorism coverage
is available as aforesaid, Borrowers shall cause each Owner with respect to the
applicable Individual Property to obtain and maintain such terrorism coverage in
an amount equal to 100% of the Full Replacement Cost of the applicable
Individual Property (but in no event shall Borrowers be required to obtain
terrorism coverage in an aggregate amount exceeding $30,000,000.00), provided
that such Owner shall not be required to incur a cost for such terrorism
coverage that is in excess of three (3) times the cost for all other insurance
coverage required pursuant to this SECTION 5.1.1 (the "TERRORISM INSURANCE CAP")
for the immediately preceding annual policy period. In the event that, with
respect to any Individual Property, the annual premium for terrorism coverage in
an amount equal to the Full Replacement Cost coverage exceeds the Terrorism
Insurance Cap, such Owner shall be required to maintain as much terrorism
coverage as is available for a premium equal to the Terrorism Insurance Cap.
5.1.2 INSURANCE COMPANY. All Policies required pursuant to
SECTION 5.1.1 (i) shall be issued by companies licensed to do business in the
state where the applicable Individual Property is located, with a financial
strength and claims paying ability rating of at least A:X from A.M. Best Company
and at least "AA" or better by S & P; (ii) shall, with respect to all property
insurance policies, name Mezzanine Lender and its successors and/or assigns as
their interest may appear as the Mezzanine Lender and Mortgagee; (iii) shall,
subject to the rights of Senior Lender under the Senior Loan Documents, with
respect to all property insurance policies and rental loss and/or business
interruption insurance policies, contain a Standard Mortgagee Clause and a
Mezzanine Lender's Loss Payable Endorsement, or their equivalents, naming
Mezzanine Lender as the person to whom all payments made by such insurance
company shall be paid; (iv) shall, with respect to all liability policies,
subject to the rights of Senior Lender under the Senior Loan Documents, name
Mezzanine Lender and its successors and/or assigns as an additional insured; (v)
shall contain a waiver of subrogation against Mezzanine Lender; (vi) shall
contain such provisions as Mezzanine Lender deems reasonably necessary or
desirable to protect its interest including endorsements providing that neither
the applicable Borrower, Mezzanine Lender nor any other party shall be a
co-insurer under said Policies and that Mezzanine Lender shall receive at least
thirty (30) days prior written notice of any modification, reduction or
cancellation; and (vii) shall be otherwise reasonably satisfactory in form and
substance to Mezzanine Lender and shall be approved by Mezzanine Lender as to
amounts, form, risk coverage, deductibles, loss payees and insureds. Certified
copies of the Policies shall be delivered to Mezzanine Lender, c/o UBS Warburg
Real Estate Investments Inc., 1285 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attn: Xxxxxx Xxxxxxxxx, Director, on the date hereof with
respect to the current Policies and within thirty (30) days after the effective
date thereof with respect to all renewal Policies. Borrowers shall cause Owners
to pay the Insurance Premiums annually in advance as the same become due and
payable and shall cause Owners to furnish to Mezzanine Lender evidence of the
renewal of each of the Policies with receipts for the payment of the Insurance
Premiums or other evidence of such payment reasonably satisfactory to Mezzanine
Lender (PROVIDED, HOWEVER, that Borrowers shall not be required to cause Owners
to pay such Insurance Premiums nor furnish such evidence of payment to Mezzanine
Lender in the event that the
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amounts required to pay such Insurance Premiums have been deposited into a
reserve as required under the Senior Loan Documents). In addition to the
insurance coverages described in SECTION 5.1.1) above, Borrowers shall cause
Owners to obtain such other insurance as may from time to time be reasonably
required by Mezzanine Lender in order to protect its interests. Within thirty
(30) days after request by Mezzanine Lender, Borrowers shall cause Owners to
obtain such increases in the amounts of coverage required hereunder as may be
reasonably requested by Mezzanine Lender, taking into consideration changes in
the value of money over time, changes in liability laws, changes in prudent
customs and practices, and the like.
5.2 CASUALTY AND CONDEMNATION.
5.2.1 CASUALTY. If the Property shall sustain a Casualty,
Borrowers shall give prompt notice of such Casualty to Mezzanine Lender and,
subject to the requirements of the Senior Loan Documents, shall promptly
commence and diligently prosecute to completion (or cause owner to promptly
commence and diligently prosecute to completion) the repair and restoration of
the applicable Property as nearly as possible to the condition the applicable
Property was in immediately prior to such Casualty (a "RESTORATION") and
otherwise in accordance with this SECTION 5.2.1 and the Senior Loan Documents,
it being understood, however, that Borrower, or Owner, as the case may be, shall
not be obligated to restore the applicable Property to the precise condition of
the applicable Property prior to such Casualty provided the applicable Property
is restored, to the extent practicable, to be of at least equal value and of
substantially the same character as prior to the Casualty. Subject to the
requirements of the Senior Loan Documents, Borrowers shall pay (or cause Owner
to pay) all costs of such Restoration whether or not such costs are covered by
insurance. Subject to the rights of Senior Lender under the Senior Loan
Documents, Mezzanine Lender may, but shall not be obligated to, submit proof of
loss if not submitted promptly by Borrower or Owner. In the event of a Casualty
where the loss does not exceed the Restoration Threshold, Borrower may cause
Owner to settle and adjust such claim; provided that (i) no Event of Default has
occurred and is continuing and (ii) such adjustment is carried out in a
commercially reasonable and timely manner. In the event of a Casualty where the
loss exceeds the Restoration Threshold or if an Event of Default then exists,
subject to the rights of Senior Lender under the Senior Loan Documents,
Borrowers may settle and adjust such claim only with the consent of Mezzanine
Lender (which consent shall not be unreasonably withheld or delayed) and
Mezzanine Lender shall have the opportunity to participate, at Borrower's cost,
in any such adjustments; PROVIDED, HOWEVER, if Borrowers fail to cause the
applicable Owner to settle and adjust such claim within 60 days after the
Casualty, Mezzanine Lender shall have the right, subject to the rights of Senior
Lender under the Senior Loan Documents, to settle and adjust such claim at such
Borrower's cost and without any Borrower's or any Owner's consent.
Notwithstanding any Casualty, Borrowers shall continue to pay the Obligations at
the time and in the manner provided for its payment in the Mezzanine Notes and
in this Agreement.
5.2.2 CONDEMNATION. Borrowers shall give Mezzanine Lender prompt
notice of any actual or threatened Condemnation by any Governmental Authority of
all or any part of the Properties and shall deliver, or cause to be delivered,
to Mezzanine Lender a copy of any and all papers served in connection with such
proceedings. Provided no Event of Default has occurred and is continuing, in the
event of a Condemnation where the amount of the taking does not exceed the
Restoration Threshold, Borrowers may cause the applicable Owner to settle and
compromise such
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Condemnation; provided that the same is effected in a commercially reasonable
and timely manner. In the event a Condemnation where the amount of the taking
exceeds the Restoration Threshold or if an Event of Default then exists and
subject to the rights of Senior Lender under the Senior Loan Documents,
Borrowers may cause the applicable Owner to settle and compromise the
Condemnation only with the consent of Mezzanine Lender (which consent shall not
be unreasonably withheld or delayed) and Mezzanine Lender shall have the
opportunity to participate, at Borrowers' cost, in any litigation and settlement
discussions in respect thereof and Borrowers shall from time to time deliver, or
cause to be delivered, to Mezzanine Lender all instruments requested by
Mezzanine Lender to permit such participation. Borrowers shall, at their
expense, cause the applicable Owner to diligently prosecute any such
proceedings, and shall consult with Mezzanine Lender, its attorneys and experts,
and cooperate with them in the carrying on or defense of any such proceedings.
Notwithstanding any Condemnation, Borrowers shall continue to pay the
Obligations at the time and in the manner provided for its payment in the
Mezzanine Notes and in this Agreement. Mezzanine Lender shall not be limited to
the interest paid on the Award by any Governmental Authority but shall be
entitled to receive, subject to the rights of Senior Lender under the Senior
Loan Documents, out of the Award interest at the rate or rates provided herein
or in the Mezzanine Note. If the Properties or any portion thereof is taken by
any Governmental Authority, Borrowers shall cause the applicable Owner to
promptly commence and diligently prosecute the Restoration of the applicable
Property and otherwise comply with the provisions of this SECTION 5.2.2 and the
Senior Loan Documents. If such Property is sold, through foreclosure or
otherwise, prior to the receipt by Mezzanine Lender of the Award, Mezzanine
Lender shall have the right, whether or not a deficiency judgment on the
Mezzanine Notes shall have been sought, recovered or denied, but subject to the
rights of Senior Lender under the Senior Loan Documents, to receive the Award,
or a portion thereof sufficient to pay the Obligations.
5.2.3 CASUALTY AND CONDEMNATION PROCEEDS. If, pursuant to the
terms of the Senior Loan Documents, any Owner is ever entitled to receive any
portion of any Net Proceeds (i.e., such amounts are not required to be used for
restoration or to be applied to repayment of the Senior Loan), Borrowers shall
cause such portion of such Net Proceeds to be deposited into the Subordinate
Deposit Account and all such amounts shall then be applied to the payment of the
Obligations. If such application to the Obligations occurs on or prior to the
Prepayment Lockout Expiration Date, any such application to the Obligations
shall be together with an additional amount equal to the Yield Maintenance
Premium applicable thereto.
5.2.4 RELEASE OF AN INDIVIDUAL PROPERTY. In the event that
Owners elect to prepay the outstanding principal balance under the Senior Loan
and obtain a release with respect to an Individual Property pursuant to the
terms of either SECTION 5.2(c)(ii) or SECTION 5.3(d) of the Senior Loan
Agreement, Borrowers shall only permit Owners to obtain a release of such
Individual Property, if Borrowers shall cause Owners to deposit with Mezzanine
Lender an amount equal to 200% of the Outstanding Principal Balance of the
Mezzanine Loan applicable to such Individual Property as of such date as a
prepayment thereof, and all amounts in excess of such Outstanding Principal
Balance attributable to such Individual Property shall be deposited by Mezzanine
Lender into the Subordinate Deposit Account and applied in such order and
priority as Mezzanine Lender
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shall determine in its sole discretion. In the event of such prepayment as
aforesaid, if an Event of Default has not occurred, no Yield Maintenance Premium
shall be payable by Borrowers.
ARTICLE 6
CASH MANAGEMENT AND RESERVE FUNDS
6.1 CASH MANAGEMENT ARRANGEMENTS AND RESERVES
6.1.1 CASH MANAGEMENT ARRANGEMENTS. Each Borrower shall cause
each Owner to cause all Gross Revenue, if any, remaining in the Senior Deposit
Account, after application of all payments required under SECTION 6.10.1(a) of
the Senior Loan Agreement, to be deposited by Agent into the Subordinate Deposit
Account and applied and disbursed in accordance with this Agreement and the
Subordinate Cash Management Agreement. The Subordinate Deposit Account and all
subaccounts established by Mezzanine Lender therein (which may be ledger or book
entry accounts and not actual accounts) shall at all times be Eligible Accounts
(such subaccounts are referred to herein as "ACCOUNTS"). The Subordinate Deposit
Account and any Account will be under the sole control and dominion of Mezzanine
Lender, and Borrowers shall have no right of withdrawal therefrom. Borrowers
shall pay for all expenses of opening and maintaining all of the above accounts.
6.1.2 RESERVES. If at any time during the Term, Senior Lender is
not requiring Owner to make the required deposits pursuant to SECTIONS 6.3, 6.4,
6.5, 6.6 and 6.9 of the Senior Loan Agreement with respect to escrows for Taxes,
Insurance Premiums, Capital Expenditures and lease rollover expenses, then
Mezzanine Lender shall have the right, at its option, to require Borrowers to
make such required deposits to Agent, in which case such deposits shall be made
by Borrowers and held in Accounts and disbursed by Agent substantially in
accordance with the provisions of such applicable sections of the Senior Loan
Agreement.
6.2 SECURITY INTEREST IN ACCOUNTS.
6.2.1 GRANT OF SECURITY INTEREST. Borrowers hereby pledge,
assign and grant a security interest to Mezzanine Lender, as security for
payment of the Obligations and the performance of all other terms, conditions
and covenants of the Mezzanine Loan Documents on Borrowers' part to be paid and
performed, in all of Borrowers' right, title and interest in and to all payments
to or monies held in the Subordinate Deposit Account and the Accounts. The
Subordinate Deposit Account and all Accounts shall be under the sole dominion
and control of Mezzanine Lender. All funds in the Subordinate Deposit Account
and all Accounts shall not constitute a trust fund and may be commingled with
other monies held by Mezzanine Lender.
6.2.2 INCOME TAXES; INTEREST. Each Borrower shall report on its
federal, state and local income tax returns all interest or income accrued on
the funds in the Subordinate Deposit Account. The funds in the Subordinate
Deposit Account shall earn interest at a rate commensurate with the rate of
interest paid from time to time on money market accounts at a commercial bank
selected by Mezzanine Lender in its sole discretion from time to time, with
interest credited monthly to such funds. All earnings or interest on such funds
shall be and become part of the respective
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funds held in the Subordinate Deposit Account and shall be disbursed as provided
in the paragraph(s) of this Agreement applicable thereto.
6.2.3 PROHIBITION AGAINST FURTHER ENCUMBRANCE. Borrowers shall
not, without the prior consent of Mezzanine Lender, further pledge, assign or
grant any security interest in the Subordinate Deposit Account or any Account or
permit any lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements, except those naming Mezzanine Lender
as the secured party, to be filed with respect thereto.
6.3 PROPERTY CASH FLOW ALLOCATION.
6.3.1 ORDER OF PRIORITY OF FUNDS IN SUBORDINATE DEPOSIT ACCOUNT.
On each Monthly Payment Date during the Term, except during the continuance of
an Event of Default, all funds deposited into the Subordinate Deposit Account
during the immediately preceding Interest Period shall be applied on such
Monthly Payment Date in the following order of priority: (i) First, funds
sufficient to pay the Monthly Debt Service Amount due to Mezzanine Lender on
such Monthly Payment Date (plus, if applicable, funds sufficient to pay any
interest accruing at the Default Rate and late payment charges, if any, and all
other amounts then due to Mezzanine Lender under the Mezzanine Loan Documents)
into the Debt Service Account; and (ii) Lastly, provided no Event of Default has
occurred and is continuing, payments to Borrower of any excess amounts.
6.3.2 APPLICATION AFTER EVENT OF DEFAULT. Notwithstanding
anything to the contrary contained in SECTION 6.3.1, upon the occurrence of an
Event of Default, Mezzanine Lender, at its option, may withdraw any amounts
deposited into the Subordinate Deposit Account and all proceeds of repayment to
payment of the Obligations in such order, proportion and priority as Mezzanine
Lender may determine in its sole discretion. Mezzanine Lender's right to
withdraw and apply such funds in the Subordinate Deposit Account shall be in
addition to all other rights and remedies provided to Mezzanine Lender under the
Mezzanine Loan Documents.
ARTICLE 7
PROPERTY MANAGEMENT
7.1 THE MANAGEMENT AGREEMENT.
Borrowers shall cause Owners to (i) cause Manager to manage the applicable
Individual Property in accordance with the applicable Management Agreement, (ii)
diligently perform and observe in all material respects all of the terms,
covenants and conditions of the Management Agreement on the part of Owner to be
performed and observed, (iii) promptly notify Mezzanine Lender of any default
under the Management Agreement of which it is aware, (iv) promptly deliver to
Mezzanine Lender a copy of each financial statement, business plan, capital
expenditures plan, report and estimate received by it under the Management
Agreement and (v) promptly enforce the performance and observance in all
material respects of all of the covenants required to be performed and observed
by Manager under the Management Agreement. If such Owner shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of such Owner to be performed or observed,
then, without limiting Mezzanine
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Lender's other rights or remedies under this Agreement or the other Mezzanine
Loan Documents, and without waiving or releasing such Borrower from any of its
Obligations hereunder or under the Management Agreement, but subject to the
rights of Senior Lender under the Senior Loan Documents, Mezzanine Lender shall
have the right, but shall be under no obligation, to pay any sums and to perform
any act as may be appropriate to cause all the material terms, covenants and
conditions of the Management Agreement on the part of such Owner to be performed
or observed.
7.2 PROHIBITION AGAINST TERMINATION OR MODIFICATION.
No Borrower shall permit any Owner to (i) surrender, terminate, cancel,
modify, renew or extend the Management Agreement in respect of the applicable
Individual Property, (ii) enter into any other agreement relating to the
management or operation of the applicable Individual Property with Manager or
any other Person, (iii) consent to the assignment by the Manager of its interest
under the Management Agreement or (iv) waive or release any of its rights and
remedies under the Management Agreement, in each case without the express
consent of Mezzanine Lender, which consent shall not be unreasonably withheld;
PROVIDED, HOWEVER, with respect to a new manager such consent may be conditioned
upon such Borrower delivering a Rating Agency Confirmation as to such new
manager and management agreement. If at any time Mezzanine Lender consents to
the appointment of a new manager, such new manager, as a condition of Mezzanine
Lender's consent, Borrowers shall and shall cause the applicable Owner to
execute a subordination of management agreement in the form then used by
Mezzanine Lender.
7.3 REPLACEMENT OF MANAGER.
Subject to the rights of Senior Lender under the Senior Loan Documents,
Mezzanine Lender shall have the right to require Borrowers to cause Owners to
replace the Manager with a Person chosen by Borrowers or Owners and approved by
Mezzanine Lender upon the occurrence of any one or more of the following events:
(i) from and after the Stated Maturity Date, (ii) at any time following the
occurrence and during the continuance of an Event of Default, (iii) if at any
time the Debt Service Coverage Ratio with respect to any Individual Property
falls below 1.10 to 1.0 (the "MANAGER TERMINATION RATIO"), for any two
consecutive calendar quarters calculated on a trailing twelve (12) month basis,
as determined by Mezzanine Lender in its reasonable discretion, (iv) if Manager
shall be in default in any material respect under any Management Agreement
beyond any applicable notice and cure period, (v) if Manager shall become
insolvent or a debtor in any bankruptcy or insolvency proceeding, or (vi) if at
any time the Manager has engaged in gross negligence, fraud or willful
misconduct.
ARTICLE 8
PERMITTED TRANSFERS
8.1 PERMITTED TRANSFERS OF INTERESTS IN BORROWERS. Notwithstanding
anything to the contrary contained in SECTION 4.2.1, the following Transfers
("PERMITTED TRANSFERS") shall be deemed to be permitted upon the conditions
hereinafter set forth in this SECTION 8.1:
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(a) TRANSFERS RELATING TO BORROWERS. Provided that no Default or
Event of Default shall have occurred and remain uncured, a Transfer of a direct
or indirect interest in any Borrower, provided that (A) such Transfer shall not
(y) cause the transferee (together with its Affiliates) to acquire Control of
such Borrower or any SPC Party or to increase its direct or indirect interest in
such Borrower or in any SPC Party to an amount which equals or exceeds
forty-nine percent (49%), or (z) result in such Borrower or any SPC Party no
longer being Controlled by Horizon Group Properties, Inc., a Maryland
corporation, and Horizon Group Properties, L.P., a Delaware limited partnership,
(B) after giving effect to such Transfer, Horizon Group Properties, L.P. shall
continue to own at least fifty-one percent (51%) of all equity interests (direct
or indirect) in such Borrower, (C) such Borrower shall give Mezzanine Lender
notice of such Transfer together with copies of all instruments effecting such
Transfer not less than ten (10) days prior to the date of such Transfer, and (D)
the legal and financial structure of such Borrower and its members or partners,
as applicable, and the single purpose nature and bankruptcy remoteness of such
Borrower and its members or partners, as applicable, after such Transfer, shall
satisfy Mezzanine Lender's then current applicable underwriting criteria and
requirements; and
(b) TRANSFERS RELATING TO GUARANTORS. Nothing contained in this
Agreement or the other Mezzanine Loan Documents shall in any way restrict or
prohibit, nor shall any notice to Mezzanine Lender or consent of Mezzanine
Lender be required in connection with, the Transfer or issuance of any interests
in either Guarantor; PROVIDED, THAT, immediately after giving effect to each
such Transfer, (i) Horizon Group Properties, Inc., a Maryland corporation, shall
continue to be the sole managing general partner of Horizon Group Properties,
L.P., a Delaware limited partnership, (ii) Horizon Group Properties, Inc., a
Maryland corporation, shall remain in control of the business and operations of
Horizon Group Properties, L.P., a Delaware limited partnership, and shall own at
least fifty percent (51%) of all equity interests (direct or indirect) in
Horizon Group Properties, L.P., a Delaware limited partnership, and (iii)
Horizon Group Properties, L.P., a Delaware limited partnership, shall continue
to own at least fifty-one percent (51%) of all equity interests (direct or
indirect) in each Borrower. Nothing contained herein shall be deemed to prohibit
the sale of publicly traded shares in Horizon Group Properties, Inc., a Maryland
corporation, on a nationally recognized exchange and in the ordinary course of
business.
For purposes of this Section 8.1, (i) a change of "Control" of any Person shall
be deemed to have occurred if (A) there is any change in the identity of any
individual or entity or any group of individuals or entities who have the right,
by virtue of any partnership agreement, articles of incorporation, by-laws,
articles of organization, operating agreement or any other agreement, with or
without taking any formative action, to cause such Person to take some action or
to prevent, restrict or impede such Person from taking some action which, in
either case, such Person could take or could refrain from taking were it not for
the rights of such individuals, or (B) the individual or entity or group of
individuals or entities that "Control" such Person as described in clause (A)
ever cease to own at least fifty-one percent (51%) of all equity interests
(direct or indirect) in such Person; and (ii) an "immediate family member" shall
mean a sibling, spouse or a child of any interest holder.
ARTICLE 9
SALE AND SECURITIZATION OF COLLATERAL
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9.1 SALE OF MORTGAGE AND SECURITIZATION.
(a) Mezzanine Lender shall have the right (i) to sell or
otherwise transfer the Mezzanine Loan (including, without limitation, the
Xxxxxxxx Mezzanine Loan, the Medford Mezzanine Loan and/or the Warrenton
Mezzanine Loan) or any portion thereof as a whole loan, (ii) to sell
participation interests in the Mezzanine Loan (including, without limitation,
the Xxxxxxxx Mezzanine Loan, the Medford Mezzanine Loan and/or the Warrenton
Mezzanine Loan), or (iii) to securitize the Mezzanine Loan (including, without
limitation, the Xxxxxxxx Mezzanine Loan, the Medford Mezzanine Loan and/or the
Warrenton Mezzanine Loan) or any portion thereof in a single asset
securitization or a pooled loan securitization. (The transactions referred to in
clauses (i), (ii) and (iii) shall hereinafter be referred to collectively as
"SECONDARY MARKET TRANSACTIONS" and the transactions referred to in clause (iii)
shall hereinafter be referred to as a "SECURITIZATION". Any certificates, notes
or other securities issued in connection with a Securitization are hereinafter
referred to as "SECURITIES").
(b) If requested by Mezzanine Lender, Borrowers shall (and shall
cause Owners to) assist Mezzanine Lender, at Borrowers' reasonable expense, in
satisfying the market standards to which Mezzanine Lender customarily adheres or
which may be required in the marketplace or by the Rating Agencies in connection
with any Secondary Market Transactions, including to:
(i) (A) provide updated financial and other information
with respect to the Properties, the business operated at the Properties,
each Borrower, each Owner and the Manager, (B) provide updated budgets
relating to the Properties, and (C) provide updated appraisals, market
studies, environmental reviews (Phase I's and, if appropriate, Phase II's),
property condition reports and other due diligence investigations of the
Property (the "UPDATED INFORMATION"), together, if customary, with
appropriate verification of the Updated Information through letters of
auditors or opinions of counsel acceptable to Mezzanine Lender and the
Rating Agencies;
(ii) provide opinions of counsel, which may be relied upon
by Mezzanine Lender, the Rating Agencies and their respective counsel,
agents and representatives, as to non-consolidation, fraudulent conveyance,
and true sale or any other opinion customary in Secondary Market
Transactions or required by the Rating Agencies with respect to the
Properties, Owners, Borrowers and their Affiliates, which counsel and
opinions shall be satisfactory to Mezzanine Lender and the Rating Agencies;
(iii) provide updated, as of the closing date of the
Secondary Market Transaction, representations and warranties made in the
Mezzanine Loan Documents and such additional representations and warranties
as the Rating Agencies may require; and
(iv) execute amendments to the Mezzanine Loan Documents and
Borrowers' organizational documents requested by Mezzanine Lender;
PROVIDED, HOWEVER, that Borrowers shall not be required to modify or amend
any Mezzanine Loan Document if such modification or amendment would (A)
change the interest rate, the stated maturity or
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the amortization of principal as set forth herein or in the Mezzanine
Notes, or (B) modify or amend any other material economic term of the
Mezzanine Loan.
(c) If requested by Mezzanine Lender, each Borrower shall (or
shall cause each Owner to) provide Mezzanine Lender with the following financial
statements (it being understood that Mezzanine Lender shall request (i) full
financial statements if it anticipates that the principal amount of the
Mezzanine Loan at the time of a Securitization may, or if the principal amount
of the Mezzanine Loan at any time during which the Mezzanine Loan is included in
a Securitization does, equal or exceed 20% of the aggregate principal amount of
all similar type loans included in the Securitization, and (ii) summaries of
such financial statements if the principal amount of the Mezzanine Loan at any
such time equals or exceeds 10% of such aggregate principal amount) (all
references to Regulation S-X in this Section 9.1(c) referring to Regulation S-X
of the Securities Act):
(i) As of the Closing Date, a balance sheet with respect
to the Properties for the two most recent Fiscal Years, meeting the
requirements of SECTION 210.3-01 of Regulation S-X, and statements of
income and statements of cash flows with respect to the Properties for the
three most recent Fiscal Years, meeting the requirements of SECTION
210.3-02 of Regulation S-X, and, to the extent that such balance sheet is
more than 135 days old as of the Closing Date, interim financial statements
of the Properties meeting the requirements of SECTION 210.3-01 and 210.3-02
of Regulation S-X (all of such financial statements, collectively, the
"STANDARD STATEMENTS"); PROVIDED, HOWEVER, that if the Properties would be
deemed to constitute a business and not real estate under Regulation S-X
that has been acquired by Owners from an unaffiliated third party, as to
which the other conditions set forth in SECTION 210.3-05 of Regulation S-X
for provision of financial statements in accordance with such Section have
been met, at Mezzanine Lender's election in lieu of or in addition to the
Standard Statements otherwise required by this SECTION 9.1(c)(i), Borrowers
shall instead provide (or cause Owners to provide) the financial statements
required by such SECTION 210.3-05 of Regulation S-X ("ACQUIRED PROPERTY
STATEMENTS").
(ii) Not later than thirty (30) days after the end of each
fiscal quarter following the Closing Date, a balance sheet of the
applicable Individual Property as of the end of such fiscal quarter,
meeting the requirements of Section 210.3-01 of Regulation S-X, and
statements of income and statements of cash flows of such Individual
Property for the period commencing on the day following the last day of the
most recent Fiscal Year and ending on the date of such balance sheet and
for the corresponding period of the most recent Fiscal Year, meeting the
requirements of Section 210.3-02 of Regulation S-X (provided, that if for
such corresponding period of the most recent Fiscal Year Acquired Property
Statements were permitted to be provided hereunder pursuant to paragraph
(i) above, such Borrower shall instead provide, or cause such Owner to
provide, Acquired Property Statements for such corresponding period). If
requested by Mezzanine Lender, such Borrower shall also provide (or cause
Owner to provide) "summarized financial information," as defined in Section
210.1-02(bb) of Regulation S-X, with respect to such quarterly financial
statements.
(iii) Not later than sixty (60) days after the end of each
Fiscal Year following the Closing Date, a balance sheet of the applicable
Individual Property as of the end of such Fiscal Year, meeting the
requirements of Section 210.3-01 of Regulation S-X,
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and statements of income and statements of cash flows of the Property for
such Fiscal Year, meeting the requirements of Section 210.3-02 of
Regulation S-X. If requested by Mezzanine Lender, such Borrower shall
provide (or cause the applicable Owner to provide) summarized financial
information with respect to such annual financial statements.
(iv) Upon ten (10) Business Days after notice from
Mezzanine Lender in connection with the Securitization of this Mezzanine
Loan, such additional financial statements, such that, as of the date (each
a "DISCLOSURE DOCUMENT DATE") of each Disclosure Document, Borrowers shall
have provided (or shall have caused Owners to provide) Mezzanine Lender
with all financial statements as described in paragraph (i) above; provided
that the Fiscal Year and interim periods for which such financial
statements shall be provided shall be determined as of such Disclosure
Document Date.
(v) In the event Mezzanine Lender determines, in
connection with a Securitization, that the financial statements required in
order to comply with Regulation S-X or any Legal Requirements are other
than as provided herein, then notwithstanding the provisions of this
Section, Mezzanine Lender may request, and Borrowers shall (or cause Owners
to) promptly provide, such combination of Acquired Property Statements
and/or Standard Statements as may be necessary for such compliance.
(vi) Any other or additional financial statements, or
financial, statistical or operating information, as shall be required
pursuant to Regulation S-X or other Legal Requirements in connection with
any Disclosure Document or any filing under or pursuant to the Exchange Act
in connection with or relating to a Securitization (hereinafter an
"EXCHANGE ACT FILING") or as shall otherwise be requested by Mezzanine
Lender to meet disclosure, rating agency or marketing requirements.
All financial statements provided by Borrowers or Owners pursuant to this
SECTION 9.1(c) shall be prepared in accordance with GAAP, and shall meet the
requirements of Regulation S-X and other applicable Legal Requirements. All
financial statements relating to a Fiscal Year shall be audited by independent
accountants in accordance with generally accepted auditing standards, Regulation
S-X and all other applicable Legal Requirements, shall be accompanied by the
manually executed report of the independent accountants thereon, which report
shall meet the requirements of Regulation S-X and all other applicable Legal
Requirements, and shall be further accompanied by a manually executed written
consent of the independent accountants, in form and substance acceptable to
Mezzanine Lender, to the inclusion of such financial statements in any
Disclosure Document and any Exchange Act Filing and to the use of the name of
such independent accountants and the reference to such independent accountants
as "experts" in any Disclosure Document and Exchange Act Filing, all of which
shall be provided at the same time as the related financial statements are
required to be provided. All other financial statements shall be certified by
the chief financial officer of the applicable Borrower or Owner, as the case may
be, which certification shall state that such financial statements meet the
requirements set forth in the first sentence of this paragraph.
9.2 SECURITIZATION INDEMNIFICATION.
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(a) Each Borrower understands that information provided to
Mezzanine Lender by such Borrower, such Owner, and its respective agents,
counsel and representatives may be included in disclosure documents in
connection with the Securitization, including an offering circular, a
prospectus, prospectus supplement, private placement memorandum or other
offering document (each, a "DISCLOSURE DOCUMENT") and may also be included in
filings with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "SECURITIES ACT"), or the Securities and Exchange
Act of 1934, as amended (the "EXCHANGE ACT"), and may be made available to
investors or prospective investors in the Securities, the Rating Agencies, and
service providers relating to the Securitization.
(b) Each Borrower shall provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, an agreement (A)
certifying that such Borrower has examined such provisions of the Disclosure
Documents as specified by Mezzanine Lender and that each such Disclosure
Document, as it relates to such Borrower, such Borrower's Affiliates, the
Properties, Owners, Manager and all other aspects of the Mezzanine Loan, does
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading (provided such
Disclosure Documents are not materially modified after Borrower's review), (B)
indemnifying Mezzanine Lender (and for purposes of this SECTION 9.2, Mezzanine
Lender hereunder shall include its officers and directors), the Affiliate of UBS
Warburg ("UBS") that has filed the registration statement relating to the
Securitization (the "REGISTRATION STATEMENT"), each of its directors, each of
its officers who have signed the Registration Statement and each Person that
controls the Affiliate within the meaning of SECTION 15 of the Securities Act or
SECTION 20 of the Exchange Act (collectively, the "UBS GROUP"), and UBS, and any
other placement agent or underwriter with respect to the Securitization, each of
their respective directors and each Person who controls UBS or any other
placement agent or underwriter within the meaning of SECTION 15 of the
Securities Act or SECTION 20 of the Exchange Act (collectively, the "UNDERWRITER
GROUP") for any losses, claims, damages or liabilities (collectively, the
"LIABILITIES") which Mezzanine Lender, the UBS Group or the Underwriter Group
incur insofar as the Liabilities arise out of, or are based upon, any untrue
statement or alleged untrue statement of any material fact contained in such
sections specified by Mezzanine Lender or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact required to be
stated in such sections specified by Mezzanine Lender or necessary in order to
make the statements in such sections specified by Mezzanine Lender, in light of
the circumstances under which they were made, not misleading and (C) agreeing to
reimburse Mezzanine Lender, the UBS Group and/or the Underwriter Group for any
legal or other expenses reasonably incurred by Mezzanine Lender, the UBS Group
and/or the Underwriter Group in connection with investigating or defending the
Liabilities; PROVIDED, HOWEVER, that Borrowers will be liable in any such case
under clauses (B) or (C) above only to the extent that any such Liability arises
out of, or is based upon, any such untrue statement or omission made therein in
reliance upon and in conformity with information furnished to Mezzanine Lender
by or on behalf of Borrowers in connection with the preparation of the
Disclosure Document or in connection with the underwriting or closing of the
Mezzanine Loan, including financial statements of Borrowers and Owners and
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operating statements and rent rolls with respect to the Properties. This
indemnity agreement will be in addition to any liability which Borrowers may
otherwise have.
(c) In connection with any Exchange Act Filing, Borrowers shall
(i) indemnify Mezzanine Lender, the UBS Group and the Underwriter Group for
Liabilities to which Mezzanine Lender, the UBS Group and/or the Underwriter
Group actually incur insofar as the Liabilities arise out of or are based upon
the omission or alleged omission to state in the Disclosure Document a material
fact required to be stated in the Disclosure Document in order to make the
statements in the Disclosure Document, in light of the circumstances under which
they were made, not misleading and (ii) reimburse Mezzanine Lender, the UBS
Group and/or the Underwriter Group for any legal or other expenses reasonably
incurred by Mezzanine Lender, the UBS Group and/or the Underwriter Group in
connection with defending or investigating the Liabilities.
(d) Promptly after receipt by an indemnified party under this
SECTION 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this SECTION 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and,
to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party under this SECTION 9.2, such indemnified party shall
pay for any reasonable legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; PROVIDED, HOWEVER, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party at the cost of the indemnifying party. The
indemnifying party shall not be liable for the expenses of more than one
separate counsel unless an indemnified party shall have reasonably concluded
that there may be legal defenses available to it that are different from or
additional to those available to the indemnifying party.
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in SECTION 9.2(b) or
(c) is for any reason held to be unenforceable as to an indemnified party in
respect of any Liabilities (or action in respect thereof) referred to therein
which would otherwise be indemnifiable under SECTION 9.2(b) or (c), the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); PROVIDED, HOWEVER, that no Person guilty of fraudulent
misrepresentation (within the meaning of SECTION 11(f) of the Securities Act)
shall be
383
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
UBS's and Borrowers' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted; (ii) the opportunity to
correct and prevent any statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Mezzanine Lender and Borrowers
hereby agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation.
(f) The liabilities and obligations of both Borrowers and
Mezzanine Lender under this SECTION 9.2 shall survive the termination of this
Agreement and the satisfaction and discharge of the Debt.
9.3 RATING SURVEILLANCE.
Mezzanine Lender will retain the Rating Agencies to provide rating
surveillance services on any certificates issued in a Securitization. Such
rating surveillance will be at the expense of Borrowers, but shall not exceed a
one-time charge of $5,000.00 (the "RATING SURVEILLANCE CHARGE").
9.4 SEVERANCE DOCUMENTATION.
Mezzanine Lender shall have the right, at any time (whether prior to or
after any sale, participation or Securitization of all or any portion of the
Mezzanine Loan) to modify the Mezzanine Loan (including, without limitation, the
Xxxxxxxx Mezzanine Loan, the Medford Mezzanine Loan and/or the Warrenton
Mezzanine Loan) in order to create one or more senior and subordinate notes
(i.e., an A/B or A/B/C structure) and/or one or more additional components of
any or all of the Mezzanine Notes, reduce the number of components of any or all
of the Mezzanine Notes, revise the interest rate for each component, reallocate
the principal balances of the Mezzanine Notes and/or the components, increase or
decrease the monthly debt service payments for each component or eliminate the
component structure and/or the multiple note structure of the Mezzanine Loan
(including the elimination of the related allocations of principal and interest
payments), provided that the Outstanding Principal Balance of all components
immediately after the effective date of such modification equals the Outstanding
Principal Balance of the Mezzanine Loan immediately prior to such modification
and the weighted average of the interest rates for all components immediately
after the effective date of such modification equals the interest rate of the
original Mezzanine Notes immediately prior to such modification and, taken as a
whole, the economic and other material terms and provisions of the Mezzanine
Loan, as so modified, are not materially less favorable to Borrowers. At
Mezzanine Lender's election, each note comprising the Mezzanine Loan may be
subject to one or more Securitizations. Mezzanine Lender shall have the right to
modify any or all of the Mezzanine Notes and any components in accordance with
this SECTION 9.4 and, provided that such modification shall comply with the
terms of this SECTION 9.4, it shall become immediately effective. If requested
by Mezzanine Lender, Borrowers shall promptly execute amendments to the
Mezzanine Loan Documents to evidence any such modification.
ARTICLE 10
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DEFAULTS
10.1 EVENTS OF DEFAULT.
(a) Each of the following events shall constitute an event of
default hereunder (an "EVENT OF DEFAULT"):
(i) if any monthly installment of principal and/or
interest due under any of the Mezzanine Notes or the payment of the
Obligations due on the Maturity Date is not paid when due;
(ii) if any other portion of the Obligations (other than as
set forth in the foregoing clause (i)) is not paid when due and such
non-payment continues for five (5) days following written notice to
Borrowers that the same is due and payable;
(iii) if any of the Taxes or Other Charges are not paid when
due (provided that it shall not be an Event of Default if there are
sufficient funds in the tax reserve account established pursuant to the
terms of the Senior Loan Agreement to pay such amounts when due, no other
Event of Default is then continuing and Agent fails to make such payment in
violation of the Senior Loan Agreement);
(iv) if any of the Policies are not (A) delivered to
Mezzanine Lender and (B) kept in full force and effect in accordance with
the terms and conditions hereof;
(v) subject to the provisions of SECTION 8.1, if any
Borrower breaches or permits or suffers a breach of the provisions of
SECTION 4.2.1;
(vi) if any representation or warranty made by any Borrower
or either or both Guarantors herein or in any other Mezzanine Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Mezzanine Lender, shall have
been false or misleading in any material respect as of the date such
representation or warranty was made;
(vii) if any Borrower, any Owner, any SPC Party or either or
both Guarantors shall make an assignment for the benefit of creditors;
(viii) if a receiver, liquidator or trustee shall be
appointed for any Borrower, any Owner, any SPC Party or either or both
Guarantors or if any Borrower, any Owner, any SPC Party or either or both
Guarantors shall be adjudicated a bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, any Borrower, any Owner, any
SPC Party or either or both Guarantors, or if any proceeding for the
dissolution or liquidation of any Borrower, any Owner, any SPC Party or
either or both Guarantors shall be instituted; PROVIDED, HOWEVER, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by any Borrower, any Owner,
385
such SPC Party or either or both Guarantors, upon the same not being
discharged, stayed or dismissed within thirty (30) days following its
filing;
(ix) if any Borrower attempts to assign its rights under
this Agreement or any of the other Mezzanine Loan Documents or any interest
herein or therein in contravention of the Mezzanine Loan Documents;
(x) if any of the assumptions contained in the Insolvency
Opinion, or in any other non-consolidation opinion delivered to Mezzanine
Lender in connection with the Mezzanine Loan, or in any other
non-consolidation opinion delivered subsequent to the closing of the
Mezzanine Loan, is or shall become untrue in any material respect;
(xi) if any Borrower or any SPC Party breaches any
representation, warranty or covenant contained in SECTION 3.1.24 hereof or
if any Owner breaches any representation, warranty or covenant contained in
SECTION 3.1.24 of the Senior Loan Agreement;
(xii) if any Event of Default as defined or described in the
Senior Loan Documents occurs; or any other event shall occur or condition
shall exist, if the effect of such event or condition is to accelerate or
permit Senior Lender to accelerate the maturity of any portion of the
Senior Loan;
(xiii) if any Borrower shall continue to be in Default under
any of the other terms, covenants or conditions of this Agreement not
specified in subsections (i) to (xi) above, and such Default shall continue
for ten (10) days after written notice to such Borrower from Mezzanine
Lender, in the case of any such other Default which can be cured by the
payment of a sum of money, or for thirty (30) days after written notice to
Borrowers from Mezzanine Lender in the case of any such Default; PROVIDED,
HOWEVER, that if such non-monetary Default is susceptible of cure but
cannot reasonably be cured within such 30-day period, and provided further
that such Borrower shall have commenced to cure such Default within such
30-day period and thereafter diligently and expeditiously proceeds to cure
the same, such 30-day period shall be extended for such time as is
reasonably necessary for such Borrower in the exercise of due diligence to
cure such Default, such additional period not to exceed ninety (90) days;
(xiv) if there shall be an Event of Default under any of the
other Mezzanine Loan Documents beyond any applicable notice and cure
periods contained in such Mezzanine Loan Documents, whether as to any
Borrower, either or both Guarantors or any Property, or if any other such
event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate the maturity of any portion of the Obligations
or to permit Mezzanine Lender to accelerate the maturity of all or any
portion of the Obligations;
(xv) if any Borrower breaches the negative covenant
contained in SECTION 4.2.15 hereof or acts or neglects to act in such a
manner as to be considered a default under the Operating Agreements.
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(xvi) If at any time the Leverage Ratio is more than five
percent (5%) greater than the Initial Leverage Ratio.
(b) Upon the occurrence of an Event of Default (other than an
Event of Default described in clauses (vii), (viii) or (ix) above) and at any
time thereafter Mezzanine Lender may, in addition to any other rights or
remedies available to it pursuant to this Agreement and the other Mezzanine Loan
Documents or at law or in equity, take such action, without notice or demand,
that Mezzanine Lender deems advisable to protect and enforce its rights against
Borrowers and in and to the Collateral, including declaring the Obligations to
be immediately due and payable, and Mezzanine Lender may enforce or avail itself
of any or all rights or remedies provided in the Mezzanine Loan Documents
against Borrowers and the Collateral, including all rights or remedies available
at law or in equity; and upon any Event of Default described in clauses (vii),
(viii) or (ix) above, the Debt and all other Obligations of Borrowers hereunder
and under the other Mezzanine Loan Documents shall immediately and automatically
become due and payable, without notice or demand, and each Borrower hereby
expressly waives any such notice or demand, anything contained herein or in any
other Mezzanine Loan Document to the contrary notwithstanding.
10.2 REMEDIES.
(a) Upon the occurrence and during the continuance of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Mezzanine Lender against Borrowers under this Agreement or
any of the other Mezzanine Loan Documents executed and delivered by, or
applicable to, any Borrower or at law or in equity may be exercised by Mezzanine
Lender at any time and from time to time, whether or not all or any of the
Obligations shall be declared due and payable, and whether or not Mezzanine
Lender shall have commenced any foreclosure proceeding or other action for the
enforcement of its rights and remedies under any of the Mezzanine Loan Documents
with respect to the Collateral. Any such actions taken by Mezzanine Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Mezzanine
Lender may determine in its sole discretion, to the fullest extent permitted by
law, without impairing or otherwise affecting the other rights and remedies of
Mezzanine Lender permitted by law, equity or contract or as set forth herein or
in the other Mezzanine Loan Documents. Without limiting the generality of the
foregoing, if an Event of Default is continuing (i) Mezzanine Lender shall not
be subject to any "one action" or "election of remedies" law or rule, and (ii)
all Liens and other rights, remedies or privileges provided to Mezzanine Lender
shall remain in full force and effect until Mezzanine Lender has exhausted all
of its remedies against the Collateral, the Pledges, Financing Statements and
the other Mezzanine Loan Documents has been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Obligations or the Obligations has been
paid in full.
(b) Mezzanine Lender shall have the right from time to time to
partially foreclose on any or all of the Pledges in any manner and for any
amounts secured by the Pledges then due and payable as determined by Mezzanine
Lender in its sole discretion, including the following circumstances: (i) in the
event any Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal and interest, Mezzanine Lender may
foreclose any or all of the Pledges to recover such delinquent payments, or (ii)
in the event
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Mezzanine Lender elects to accelerate less than the entire Outstanding Principal
Balance, Mezzanine Lender may foreclose any or all of the Pledges to recover so
much of the Outstanding Principal Balance of the Mezzanine Loan as Mezzanine
Lender may accelerate and such other sums secured by the Pledges as Mezzanine
Lender may elect. Notwithstanding one or more partial foreclosures, the
Collateral shall remain subject to the Pledges to secure payment of the sums
secured by the Pledges and not previously recovered.
(c) Mezzanine Lender shall have the right from time to time to
sever the Mezzanine Notes and the other Mezzanine Loan Documents into one or
more separate notes, pledges and other security documents (the "SEVERED LOAN
DOCUMENTS") in such denominations as Mezzanine Lender shall determine in its
sole discretion for purposes of evidencing and enforcing its rights and remedies
provided hereunder. Each Borrower shall execute and deliver to Mezzanine Lender
from time to time, promptly after the request of Mezzanine Lender, a severance
agreement and such other reasonable documents as Mezzanine Lender shall request
in order to effect the severance described in the preceding sentence, all in
form and substance reasonably satisfactory to Mezzanine Lender. Each Borrower
hereby absolutely and irrevocably appoints Mezzanine Lender as its true and
lawful attorney, coupled with an interest, in its name and stead to make and
execute all documents necessary or desirable to effect the aforesaid severance,
each Borrower ratifying all that its said attorney shall do by virtue thereof;
PROVIDED, HOWEVER, Mezzanine Lender shall not make or execute any such documents
under such power until three (3) days after notice has been given to Borrower by
Mezzanine Lender of Mezzanine Lender's intent to exercise its rights under such
power. Except as may be required in connection with a Securitization pursuant to
SECTION 9.1 hereof, (i) Borrower shall not be obligated to pay any costs or
expenses incurred in connection with the preparation, execution, recording or
filing of the Severed Loan Documents, and (ii) the Severed Loan Documents shall
not contain any representations, warranties or covenants not contained in the
Mezzanine Loan Documents.
(d) Any amounts recovered from the Collateral or any other
collateral for the Mezzanine Loan after and during the continuance of an Event
of Default may be applied by Mezzanine Lender toward the payment of any interest
and/or principal of the Mezzanine Loan and/or any other amounts due under the
Mezzanine Loan Documents in such order, priority and proportions as Mezzanine
Lender in its sole discretion shall determine.
10.3 MEZZANINE LENDER'S RIGHT TO PERFORM.
If any Borrower fails to perform any covenant or obligation contained
herein and such failure shall continue for a period of five (5) Business Days
after such Borrower's receipt of written notice thereof from Mezzanine Lender,
without in any way limiting Mezzanine Lender's right to exercise any of its
rights, powers or remedies as provided hereunder, or under any of the other
Mezzanine Loan Documents, Mezzanine Lender may, but shall have no obligation to,
perform, or cause the performance of, such covenant or obligation, and all
costs, expenses, liabilities, penalties and fines of Mezzanine Lender incurred
or paid in connection therewith shall be payable by Borrowers to Mezzanine
Lender upon demand and if not paid shall be added to the Obligations (and to the
extent permitted under applicable laws, secured by the Pledges and the other
Mezzanine Loan Documents)
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and shall bear interest thereafter at the Default Rate. Notwithstanding the
foregoing, Mezzanine Lender shall have no obligation to send notice to Borrowers
of any such failure.
10.4 REMEDIES CUMULATIVE.
The rights, powers and remedies of Mezzanine Lender under this Agreement
shall be cumulative and not exclusive of any other right, power or remedy which
Mezzanine Lender may have against Borrowers pursuant to this Agreement or the
other Mezzanine Loan Documents, or existing at law or in equity or otherwise.
Mezzanine Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Mezzanine Lender
may determine in Mezzanine Lender's sole discretion. No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of one Default or Event of
Default with respect to any Borrower shall not be construed to be a waiver of
any subsequent Default or Event of Default by any Borrower or to impair any
remedy, right or power consequent thereon.
ARTICLE 11
MISCELLANEOUS
11.1 SUCCESSORS AND ASSIGNS.
All covenants, promises and agreements in this Agreement, by or on behalf
of Borrowers, shall inure to the benefit of the legal representatives,
successors and assigns of Mezzanine Lender.
11.2 MEZZANINE LENDER'S DISCRETION.
Whenever pursuant to this Agreement Mezzanine Lender exercises any right
given to it to approve or disapprove any matter, or any arrangement or term is
to be satisfactory to Mezzanine Lender, the decision of Mezzanine Lender to
approve or disapprove such matter or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Mezzanine Lender and shall be
final and conclusive. Prior to a Securitization, whenever pursuant to this
Agreement the Rating Agencies are given any right to approve or disapprove any
matter, or any arrangement or term is to be satisfactory to the Rating Agencies,
the decision of Mezzanine Lender to approve or disapprove such matter or to
decide whether arrangements or terms are satisfactory or not satisfactory, based
upon Mezzanine Lender's determination of Rating Agency criteria, shall be
substituted therefore.
11.3 GOVERNING LAW.
(a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY MEZZANINE LENDER AND ACCEPTED BY BORROWERS IN THE STATE OF NEW YORK, AND
THE PROCEEDS OF THE NOTES DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE
STATE OF NEW YORK, WHICH
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STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION AND
ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER MEZZANINE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND
CONSTRUED ACCORDING TO, THE LAW OF THE STATE, COMMONWEALTH OR DISTRICT, AS
APPLICABLE, IN WHICH THE APPLICABLE INDIVIDUAL PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE,
COMMONWEALTH OR DISTRICT, AS APPLICABLE, THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL MEZZANINE LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, EACH BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION
GOVERNS THIS AGREEMENT AND THE NOTES, AND THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST MEZZANINE LENDER
OR ANY OR ALL OF THE BORROWERS ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY
AT MEZZANINE LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN XXX
XXXX XX XXX XXXX, XXXXXX XX XXX XXXX, PURSUANT TO SECTION 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND EACH BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW
OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. EACH
BORROWER DOES HEREBY DESIGNATE AND APPOINT:
XXXXXX XXXXXX & XXXXX
000 XXXX 00XX XXXXXX, XXXXX 0000
XXX XXXX, XXX XXXX 00000X
ATTENTION: XXXXX X. XXXXXXXXX, ESQ. (CHICAGO
OFFICE)
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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND EACH BORROWER AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE MAILED OR DELIVERED TO ANY OR ALL BORROWERS IN THE MANNER PROVIDED
HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON EACH
BORROWER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH
BORROWER (I) SHALL GIVE PROMPT NOTICE TO MEZZANINE LENDER OF ANY CHANGED ADDRESS
OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), PROVIDED THERE SHALL ALWAYS BE THE SAME AUTHORIZED
AGENT FOR ALL BORROWERS, AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS
DISSOLVED WITHOUT LEAVING A SUCCESSOR, PROVIDED THERE SHALL ALWAYS BE THE SAME
AUTHORIZED AGENT FOR ALL BORROWERS.
11.4 MODIFICATION, WAIVER IN WRITING.
No modification, amendment, extension, discharge, termination or waiver of
any provision of this Agreement or of any other Mezzanine Loan Document, nor
consent to any departure by any Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party or parties
against whom enforcement is sought, and then such waiver or consent shall be
effective only in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to, or demand on any
Borrowers, shall entitle any or all Borrowers to any other or future notice or
demand in the same, similar or other circumstances.
11.5 DELAY NOT A WAIVER.
Neither any failure nor any delay on the part of Mezzanine Lender in
insisting upon strict performance of any term, condition, covenant or agreement,
or exercising any right, power, remedy or privilege hereunder, or under any
other Mezzanine Loan Document, shall operate as or constitute a waiver thereof,
nor shall a single or partial exercise thereof preclude any other future
exercise, or the exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment after the due
date of any amount payable under this Agreement or any other Mezzanine Loan
Document, Mezzanine Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this Agreement
or the other Mezzanine Loan Documents, or to declare a default for failure to
effect prompt payment of any such other amount. Mezzanine Lender shall have the
right to waive or reduce any time periods that Mezzanine Lender is entitled to
under the Mezzanine Loan Documents in its sole and absolute discretion.
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11.6 NOTICES.
All notices, demands, requests, consents, approvals or other communications
(any of the foregoing, a "NOTICE") required, permitted, or desired to be given
hereunder shall be in writing and shall be sent by telefax (with answer back
acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or reputable overnight courier addressed
to the party to be so notified at its address hereinafter set forth, or to such
other address as such party may hereafter specify in accordance with the
provisions of this SECTION 11.6. Any Notice shall be deemed to have been
received: (a) three (3) days after the date such Notice is mailed, (b) on the
date of sending by telefax if sent during business hours on a Business Day
(otherwise on the next Business Day), (c) on the date of delivery by hand if
delivered during business hours on a Business Day (otherwise on the next
Business Day), and (d) on the next Business Day if sent by an overnight
commercial courier, in each case addressed to the parties as follows:
If to Mezzanine UBS Warburg Real Estate Investments Inc.
Lender: 1285 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No. (000) 000-0000
with a copy to: Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No. (000) 000-0000
and: Wachovia Bank, National Association
8739 Research Dr., URP4
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
or any successor Servicer of the Mezzanine Loan
If to Borrowers: c/o Horizon Group Properties, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xx.Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
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and c/o Horizon Group Properties, Inc.
0000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxxxx
Facsimile No.: (000) 000 0000
with a copy to: Xxxxxx Xxxxxx & Xxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days written notice of such change to the other parties in
accordance with the provisions of this SECTION 11.6. Notices shall be deemed to
have been given on the date as set forth above, even if there is an inability to
actually deliver any such Notice because of a changed address of which no Notice
was given, or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Notice from Mezzanine Lender may also be given by Servicer and
Mezzanine Lender hereby acknowledges and agrees that Borrower shall be entitled
to rely on any Notice given by Servicer as if it had been sent by Mezzanine
Lender.
11.7 TRIAL BY JURY.
EACH BORROWER AND MEZZANINE LENDER HEREBY AGREES NOT TO ELECT A TRIAL BY
JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THE MEZZANINE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
GIVEN KNOWINGLY AND VOLUNTARILY BY EACH BORROWER AND MEZZANINE LENDER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED
TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF
THIS WAIVER.
11.8 HEADINGS.
The Article and/or Section headings and the Table of Contents in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
11.9 SEVERABILITY.
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Wherever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.10 PREFERENCES.
Mezzanine Lender shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments by Borrowers (or any of them) to any
portion of the Obligations of Borrowers hereunder. To the extent any or all
Borrowers make a payment or payments to Mezzanine Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the Obligations hereunder or part thereof intended to be satisfied
shall be revived and continue in full force and effect, as if such payment or
proceeds had not been received by Mezzanine Lender.
11.11 WAIVER OF NOTICE.
No Borrower shall be entitled to any notices of any nature whatsoever from
Mezzanine Lender except with respect to matters for which this Agreement or the
other Mezzanine Loan Documents specifically and expressly provide for the giving
of notice by Mezzanine Lender to Borrowers and except with respect to matters
for which Borrowers are not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Each Borrower hereby expressly waives
the right to receive any notice from Mezzanine Lender with respect to any matter
for which this Agreement or the other Mezzanine Loan Documents do not
specifically and expressly provide for the giving of notice by Mezzanine Lender
to Borrowers (or any of them).
11.12 REMEDIES OF BORROWER.
In the event that a claim or adjudication is made that Mezzanine Lender or
its agents have acted unreasonably or unreasonably delayed acting in any case
where, by law or under this Agreement or the other Mezzanine Loan Documents,
Mezzanine Lender or such agent, as the case may be, has an obligation to act
reasonably or promptly, neither Mezzanine Lender nor its agents shall be liable
for any monetary damages, and Borrowers' (and each Borrower's) sole remedy shall
be limited to commencing an action seeking injunctive relief or declaratory
judgment. Any action or proceeding to determine whether Mezzanine Lender has
acted reasonably shall be determined by an action seeking declaratory judgment.
11.13 EXPENSES; INDEMNITY.
(a) Borrowers shall pay or, if Borrowers fail to pay, reimburse
Mezzanine Lender upon receipt of notice from Mezzanine Lender, for all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by Mezzanine Lender in connection with (i)
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Borrowers' (and each Borrower's) ongoing performance of and compliance with
Borrowers' (and each Borrower's) agreements and covenants contained in this
Agreement and the other Mezzanine Loan Documents on its part to be performed or
complied with after the Closing Date, including confirming compliance with
environmental and insurance requirements; (ii) Mezzanine Lender's ongoing
performance of and compliance with all agreements and covenants contained in
this Agreement and the other Mezzanine Loan Documents on its part to be
performed or complied with after the Closing Date; (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Mezzanine Loan
Documents and any other documents or matters requested by Borrowers (or any of
them); (iv) the filing and recording fees and expenses, title insurance and
reasonable fees and expenses of counsel for providing to Mezzanine Lender all
required legal opinions, and other similar expenses incurred, in creating and
perfecting the Liens in favor of Mezzanine Lender pursuant to this Agreement and
the other Mezzanine Loan Documents; (v) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation, in each case against, under or affecting
Borrowers (or any of them), this Agreement, the other Mezzanine Loan Documents,
the Collateral, or any other security given for the Mezzanine Loan; and (vi)
enforcing any Obligations of or collecting any payments due from Borrowers (or
any of them) under this Agreement, the other Mezzanine Loan Documents or with
respect to the Collateral or in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the nature of a
"work-out" or of any insolvency or bankruptcy proceedings; PROVIDED, HOWEVER,
that Borrowers shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the active gross negligence,
illegal acts, fraud or willful misconduct of Mezzanine Lender. Any costs due and
payable to Mezzanine Lender may be paid, at Mezzanine Lender's election in its
sole discretion, from any amounts in the Subordinate Deposit Account.
(b) Borrowers shall indemnify, defend and hold harmless Mezzanine
Lender from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including the reasonable fees and
disbursements of counsel for Mezzanine Lender in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not Mezzanine Lender shall be designated a party thereto), that may
be imposed on, incurred by, or asserted against Mezzanine Lender in any manner
relating to or arising out of (i) any breach by any or all Borrowers of
its/their Obligations under, or any material misrepresentation by any or all
Borrowers contained in, this Agreement or the other Mezzanine Loan Documents,
(ii) the use or intended use of the proceeds of the Mezzanine Loan, (iii) any
information provided by or on behalf of any or all Borrowers or any or all
Owners, or contained in any documentation approved by any or all Borrowers; (iv)
ownership of the Pledges, the Collateral or any interest therein, or receipt of
any Rents; (v) any accident, injury to or death of persons or loss of or damage
to property occurring in, on or about any or all of the Properties or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (vi) any use, nonuse or condition in, on or about the any or all of the
Properties or on adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (vii) performance of any labor or services or
the furnishing of any materials or other property in respect of any or all of
the Properties; (viii) any failure of any or all of the Properties to comply
with any Legal Requirement; (ix) any claim by brokers, finders or similar
persons claiming
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to be entitled to a commission in connection with any Lease or other transaction
involving any or all of the Properties or any part thereof, or any liability
asserted against Mezzanine Lender with respect thereto; and (x) the claims of
any lessee of any portion of any or all of the Properties or any Person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; (collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, HOWEVER,
that Borrowers shall not have any obligation to Mezzanine Lender hereunder to
the extent that such Indemnified Liabilities arise from the active gross
negligence, illegal acts, fraud or willful misconduct of Mezzanine Lender. To
the extent that the undertaking to indemnify, defend and hold harmless set forth
in the preceding sentence may be unenforceable because it violates any law or
public policy, Borrowers shall pay the maximum portion that it is permitted to
pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by Mezzanine Lender.
11.14 SCHEDULES INCORPORATED.
The Schedules annexed hereto are hereby incorporated herein as a part of
this Agreement with the same effect as if set forth in the body hereof.
11.15 OFFSETS, COUNTERCLAIMS AND DEFENSES.
Any assignee of Mezzanine Lender's interest in and to this Agreement and
the other Mezzanine Loan Documents shall take the same free and clear of all
offsets, counterclaims or defenses which are unrelated to such documents which
Borrowers may otherwise have against any assignor of such documents, and no such
unrelated counterclaim or defense shall be interposed or asserted by Borrowers
in any action or proceeding brought by any such assignee upon such documents and
any such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by each
Borrower.
11.16 NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES.
(a) Borrowers and Mezzanine Lender intend that the relationships
created hereunder and under the other Mezzanine Loan Documents be solely that of
borrowers and lender. Nothing herein or therein is intended to create a joint
venture, partnership, tenancy in common, or joint tenancy relationship between
Borrowers and Mezzanine Lender nor to grant Mezzanine Lender any interest in the
Collateral other than that of pledgee, beneficiary or lender.
(b) This Agreement and the other Mezzanine Loan Documents are
solely for the benefit of Mezzanine Lender and nothing contained in this
Agreement or the other Mezzanine Loan Documents shall be deemed to confer upon
anyone other than Mezzanine Lender any right to insist upon or to enforce the
performance or observance of any of the Obligations contained herein or therein.
All conditions to the obligations of Mezzanine Lender to make the Mezzanine Loan
hereunder are imposed solely and exclusively for the benefit of Mezzanine Lender
and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that
Mezzanine Lender will refuse to make the Mezzanine Loan in the absence of strict
compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or
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in part by Mezzanine Lender if, in Mezzanine Lender's sole discretion, Mezzanine
Lender deems it advisable or desirable to do so.
11.17 PUBLICITY.
All news releases, publicity or advertising by Borrowers (or any of them)
or their Affiliates through any media intended to reach the general public which
refers to the Mezzanine Loan Documents or the financing evidenced by the
Mezzanine Loan Documents, to Mezzanine Lender, UBS or any of their affiliates
shall be subject to the prior approval of Mezzanine Lender, which approval shall
not be unreasonably withheld.
11.18 WAIVER OF MARSHALLING OF ASSETS.
To the fullest extent permitted by law, each Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of such
Borrower, such Owners, their respective members or partners, as applicable, and
others with interests in such Borrower or such Owner, and of the applicable
Individual Property, and shall not assert any right under any laws pertaining to
the marshalling of assets, the sale in inverse order of alienation, homestead
exemption, the administration of estates of decedents, or any other matters
whatsoever to defeat, reduce or affect the right of Mezzanine Lender under the
Mezzanine Loan Documents to a sale of the Collateral for the collection of the
Obligations without any prior or different resort for collection or of the right
of Mezzanine Lender to the payment of the Obligations out of the net proceeds of
the Collateral in preference to every other claimant whatsoever.
11.19 WAIVER OF OFFSETS/DEFENSES/COUNTERCLAIMS.
Each Borrower hereby waives the right to assert a counterclaim, other than
a compulsory counterclaim, in any action or proceeding brought against it by
Mezzanine Lender or its agents or otherwise to offset any obligations to make
the payments required by the Mezzanine Loan Documents. No failure by Mezzanine
Lender to perform any of its obligations hereunder shall be a valid defense to,
or result in any offset against, any payments which Borrowers (or any of them)
are obligated to make under any of the Mezzanine Loan Documents.
11.20 CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE.
In the event of any conflict between the provisions of this Agreement and
any of the other Mezzanine Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
competent counsel in connection with the negotiation, drafting and execution of
the Mezzanine Loan Documents and that such Mezzanine Loan Documents shall not be
subject to the principle of construing their meaning against the party which
drafted same. Each Borrower acknowledges that, with respect to the Mezzanine
Loan, such Borrower shall rely solely on its own judgment and advisors in
entering into the Mezzanine Loan without relying in any manner on any
statements, representations or recommendations of Mezzanine Lender or any
parent, subsidiary or affiliate of Mezzanine Lender. Mezzanine Lender shall not
be subject to any limitation whatsoever in the exercise of any rights or
remedies available to it under any of the Mezzanine Loan
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Documents or any other agreements or instruments which govern the Mezzanine Loan
by virtue of the ownership by it or any parent, subsidiary or affiliate of
Mezzanine Lender of any equity interest any of them may acquire in any or all of
the Borrowers, and each Borrower hereby irrevocably waives the right to raise
any defense or take any action on the basis of the foregoing with respect to
Mezzanine Lender's exercise of any such rights or remedies. Each Borrower
acknowledges that Mezzanine Lender engages in the business of real estate
financings and other real estate transactions and investments which may be
viewed as adverse to or competitive with the business of such Borrower or its
Affiliates.
11.21 BROKERS AND FINANCIAL ADVISORS.
Borrowers hereby represent that, except for Xxxxxx Xxxxx Partners
("BROKER"), they have dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the transactions
contemplated by this Agreement. Borrowers will pay Broker a commission pursuant
to a separate agreement. Borrowers shall indemnify, defend and hold Mezzanine
Lender harmless from and against any and all claims, liabilities, costs and
expenses of any kind (including Mezzanine Lender's attorneys' fees and expenses)
in any way relating to or arising from a claim by any Person (including Broker)
that such Person acted on behalf of Borrowers (or any of them) or Mezzanine
Lender in connection with the transactions contemplated herein. The provisions
of this SECTION 11.21 shall survive the expiration and termination of this
Agreement and the payment of the Obligations.
11.22 EXCULPATION.
(a) Subject to the qualifications below, Mezzanine Lender shall
not enforce the liability and obligation of Borrowers to perform and observe the
Obligations contained in the Mezzanine Notes, this Agreement, the Pledges or the
other Mezzanine Loan Documents by any action or proceeding wherein a money
judgment shall be sought against Borrowers (or any of them) or their members or
managers, except that Mezzanine Lender may bring a foreclosure action, an action
for specific performance or any other appropriate action or proceeding to enable
Mezzanine Lender to enforce and realize upon its interest under the Mezzanine
Notes, this Agreement, the Pledges and the other Mezzanine Loan Documents, or in
the Collateral or any other collateral given to Mezzanine Lender pursuant to the
Mezzanine Loan Documents; PROVIDED, HOWEVER, that, except as specifically
provided herein, any judgment in any such action or proceeding shall be
enforceable against Borrowers only to the extent of each Borrower's respective
interest in the Collateral and in any other collateral given to Mezzanine
Lender, and Mezzanine Lender, by accepting the Mezzanine Notes, this Agreement,
the Pledges and the other Mezzanine Loan Documents, shall not xxx for, seek or
demand any deficiency judgment against Borrowers (or any of them) or their
members or managers in any such action or proceeding under or by reason of or
under or in connection with the Mezzanine Notes, this Agreement, the Pledges or
the other Mezzanine Loan Documents. The provisions of this Section shall not,
however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Mezzanine Loan Documents; (b) impair the
right of Mezzanine Lender to name Borrowers (or any of them) as a party
defendant in any action or suit for foreclosure and sale under the Pledges or
the other Mezzanine Loan Documents; (c) affect the validity or enforceability of
any of the Mezzanine Loan Documents or any guaranty made in
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connection with the Mezzanine Loan or any of the rights and remedies of
Mezzanine Lender thereunder; (d) impair the right of Mezzanine Lender to obtain
the appointment of a receiver; (e) constitute a prohibition against Mezzanine
Lender to seek a deficiency judgment against Borrowers (or any of them) in order
to fully realize the security granted by the Pledges or to commence any other
appropriate action or proceeding in order for Mezzanine Lender to exercise its
remedies against the Collateral; or (f) constitute a waiver of the right of
Mezzanine Lender to enforce the liability and obligation of Borrowers (or any of
them), by money judgment or otherwise, to the extent of any loss, damage, cost,
expense, liability, claim or other obligation actually incurred by Mezzanine
Lender (which shall be exclusive of any cancellation rights) (including
attorneys' fees and costs reasonably incurred) arising out of or in connection
with the following:
(i) fraud or material misrepresentation of a material fact
by or on behalf of Borrowers (or any of them) or either or both Guarantors
or any of their respective agents or representatives in connection with the
Mezzanine Loan, including by reason of any claim under the Racketeer
Influenced and Corrupt Organizations Act ("RICO");
(ii) the gross negligence or willful misconduct by or on
behalf of Borrowers, Owners (or any of them) or either or both Guarantors
or any of their respective agents or representatives in connection with the
Mezzanine Loan;
(iii) the breach by any Borrower of any representation,
warranty, covenant or indemnification provision in the Environmental
Indemnity or in any other Mezzanine Loan Document concerning environmental
laws, hazardous substances and/or asbestos and any indemnification of
Mezzanine Lender with respect thereto in either document;
(iv) wrongful removal or willful destruction of any portion
of the Properties after an Event of Default;
(v) any intentional, physical waste of any Individual
Property resulting from the action or inaction of Borrowers, Owners (or any
of them) or Manager which materially adversely affects the value of such
Individual Property;
(vi) any Legal Requirement (including RICO) resulting in
the forfeiture by Borrowers, Owners (or any of them) of any Individual
Property, or any material portion thereof, because of the conduct or
purported conduct of criminal activity by Borrowers, Owners (or any of
them) or either or both Guarantors or any of their respective agents or
representatives in connection therewith;
(vii) any material misrepresentation, miscertification or
breach of warranty by any Borrower with respect to any representation,
warranty or certification contained in this Agreement or any other
Mezzanine Loan Document or in any document executed in connection
therewith, pursuant to any of the Mezzanine Loan Documents or otherwise to
induce Mezzanine Lender to make the Mezzanine Loan, or any advance thereof,
or to release monies from any account held by Mezzanine Lender (including
any reserve or escrow) or to take other action with respect to any of the
Collateral for the Mezzanine Loan;
399
(viii) the misapplication or conversion by or on behalf of
Borrowers, Owners (or any of them) of (A) any insurance proceeds paid by
reason of any loss, damage or destruction to any Individual Property, (B)
any Awards or other amounts received in connection with the Condemnation of
all or a portion of any Individual Property, or (C) any Gross Revenues
(including Rents, security deposits, advance deposits or any other deposits
and Lease Termination Payments);
(ix) failure to pay charges for labor or materials or other
charges that can create Liens on any portion of any Individual Property, to
the extent such Liens are not bonded over or discharged in accordance with
SECTION 3.6 of the Mortgages;
(x) any security deposits, advance deposits or any other
deposits collected with respect to any Individual Property which are not
delivered to Mezzanine Lender in accordance with the provisions of the
Mezzanine Loan Documents;
(xi) the failure to pay Taxes with respect to any
Individual Property if such Individual Property generates sufficient Gross
Revenue to pay such Taxes;
(xii) failure to obtain and maintain the fully paid for
Policies in accordance with SECTION 5.1.1 hereof;
(xiii) the failure of any or all of the Borrowers to cause
Owners to permit on-site inspections of any or all of the Properties as
required by SECTION 4.1.5 hereof or to provide financial information as
required by SECTION 4.1.7 hereof; and/or
(xiv) Borrowers' indemnification of Mezzanine Lender set
forth in SECTION 9.2 hereof.
Notwithstanding anything to the contrary in this Agreement or any of
the other Mezzanine Loan Documents, (A) Mezzanine Lender shall not be
deemed to have waived any right which Mezzanine Lender may have under
SECTION 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy
Code to file a claim for the full amount of the Obligations or to require
that all collateral shall continue to secure all of the Obligations owing
to Mezzanine Lender in accordance with the Mezzanine Loan Documents, and
(B) the Obligations shall be fully recourse to Borrowers in the event that:
(i) any or all of the Borrowers fail to maintain its/their status as a
single purpose entity or fail to appoint a new property manager upon the
request of Mezzanine Lender after the occurrence of any of the events set
forth in SECTION 7.3, each as required by, and in accordance with the terms
and provisions of, this Agreement and the Pledges; (ii) any or all of the
Borrowers fail to obtain Mezzanine Lender's prior consent to any
subordinate financing or other voluntary Lien encumbering any Individual
Property or the Collateral; (iii) any or all of the Borrowers fail to
obtain Mezzanine Lender's prior consent to any Transfer of any Individual
Property or the Collateral or any interest therein or any Transfer of any
direct or indirect interest in Borrowers (or any of them), in either case
as required by the Pledges or this Agreement other than a Permitted
Transfer; (iv) Borrowers (or any of them) file a voluntary petition under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law; (v) an Affiliate, officer, director or
400
representative which controls, directly or indirectly, any Borrower files,
or joins in the filing of, an involuntary petition against Borrowers (or
any of them) under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, or solicits or causes to be solicited
petitioning creditors for any involuntary petition against Borrowers (or
any of them) from any Person; (vi) Borrowers (or any of them) file an
answer consenting to, or otherwise acquiescing in, or joining in, any
involuntary petition filed against it by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
or solicits or causes to be solicited petitioning creditors for any
involuntary petition from any Person; (vii) any Affiliate, officer,
director or representative which controls Borrowers (or any of them)
consent to, or acquiesces in, or joins in, an application for the
appointment of a custodian, receiver, trustee or examiner for Borrowers (or
any of them) or any portion of any Individual Property or the Collateral;
(viii) Borrowers (or any of them) make an assignment for the benefit of
creditors or admit, in writing or in any legal proceeding, its insolvency
or inability to pay its/their debts as they become due; or (ix) if either
or both Guarantors (or any Person comprising either or both Guarantors),
Borrowers (or any of them) or any Affiliate of any of the foregoing, in
connection with any enforcement action or exercise or assertion of any
right or remedy by or on behalf of Mezzanine Lender or performance of the
obligations in question without incurring recourse hereunder.under or in
connection with the Guaranty, the Mezzanine Notes, the Pledges or any other
Mezzanine Loan Document, seeks a defense, judicial intervention or
injunctive or other equitable relief of any kind, or asserts in a pleading
filed in connection with a judicial proceeding any defense against
Mezzanine Lender or any right in connection with any security for the
Mezzanine Loan, which the court in any such action or proceeding determines
is without merit (in the case of a defense) or is unwarranted (in the case
of a request for judicial intervention or injunctive or other equitable
relief); PROVIDED, HOWEVER, that Borrowers shall be entitled to assert a
good faith defense of payment
11.23 PRIOR AGREEMENTS.
This Agreement and the other Mezzanine Loan Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions
contemplated hereby and thereby, and all prior agreements among or between such
parties, whether oral or written, including the Application Letter dated March
26, 2002 (as amended by letter dated May 23, 2002) between Horizon Group
Properties, Inc. and Mezzanine Lender, are superseded by the terms of this
Agreement and the other Mezzanine Loan Documents.
11.24 SERVICER.
At the option of Mezzanine Lender, the Mezzanine Loan may be serviced by a
servicer (the "SERVICER") selected by Mezzanine Lender and Mezzanine Lender may
delegate all or any portion of its responsibilities under this Agreement and the
other Mezzanine Loan Documents to the Servicer pursuant to a servicing agreement
(the "SERVICING AGREEMENT") between Mezzanine Lender and Servicer. Borrower
shall be responsible for payment of the monthly servicing fee due to the
Servicer under the Servicing Agreement and any reasonable set-up fees and/or any
other initial costs relating to or arising under the Servicing Agreement.
401
11.25 JOINT AND SEVERAL LIABILITY.
If more than one Person has executed this Agreement as "Borrower," the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.
11.26 CREATION OF SECURITY INTEREST.
Notwithstanding any other provision set forth in this Agreement, the
Mezzanine Note, the Pledges or any of the other Mezzanine Loan Documents,
Mezzanine Lender may at any time create a security interest in all or any
portion of its rights under this Agreement, the Mezzanine Notes, the Pledges and
any other Mezzanine Loan Document (including the advances owing to it) in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System.
11.27 ASSIGNMENTS AND PARTICIPATIONS.
(a) Mezzanine Lender may assign to one or more Persons all or a
portion of its rights and obligations under this Agreement.
(b) Upon such execution and delivery, from and after the
effective date specified in the related assignment and acceptance agreement, the
assignee thereunder shall be a party hereto and shall have the rights and
obligations of Mezzanine Lender hereunder to the extent of its interest in the
Mezzanine Loan.
(c) Mezzanine Lender may sell participations to one or more
Persons in or to all or a portion of its rights and obligations under this
Agreement; PROVIDED, HOWEVER, that (i) Mezzanine Lender's obligations under this
Agreement shall remain unchanged, (ii) Mezzanine Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(ii) Mezzanine Lender shall remain the holder of any Mezzanine Notes for all
purposes of this Mezzanine Loan Agreement and (iv) Borrowers shall continue to
deal solely and directly with Mezzanine Lender in connection with Mezzanine
Lender's rights and obligations under and in respect of this Agreement and the
other Mezzanine Loan Documents.
Mezzanine Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this SECTION 11.27, disclose to
the assignee or participant or proposed assignees or participants, as the case
may be, any information relating to Borrowers (or any of them), Owners (or any
of them) or any of its/their Affiliates or to any aspect of the Mezzanine Loan
that has been furnished to Mezzanine Lender by or on behalf of the Borrowers (or
any of them), Owners (or any of them) or any of its/their Affiliates.
11.28 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
402
11.29 PROOFS OF CLAIM.
In the case of any receivership, insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition or other proceedings affecting any
Borrower, any Owner, any SPC Party or any Guarantor, or their respective
creditors or property, Mezzanine Lender, to the extent permitted by law, shall
be entitled to file such proofs of claim and other documents as may be necessary
or advisable in order to have the claims of Mezzanine Lender allowed in such
proceedings for the Obligations at the date of the institution of such
proceedings and for any additional amount which may become due and payable by
Borrowers hereunder after such date.
11.30 WAIVER OF STAY.
Borrower agrees (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive Borrower from paying all or any portion of the Obligations or which may
affect the covenants or the performance of this Agreement; and Borrower (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the holders, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
11.31 SET-OFF.
In addition to any rights and remedies of Mezzanine Lender provided by this
Agreement and by law, Mezzanine Lender shall have the right in its sole
discretion, without prior notice to Borrowers, any such notice being expressly
waived by each Borrower to the extent permitted by applicable law, upon any
amount becoming due and payable by Borrowers (or any of them) hereunder (whether
at the stated maturity, by acceleration or otherwise) to set-off and appropriate
and apply against such amount any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by Mezzanine Lender or any Affiliate thereof to or for the credit or the
account of Borrowers. Mezzanine Lender agrees promptly to notify Borrowers after
any such set-off and application made by Mezzanine Lender; provided that the
failure to give such notice shall not affect the validity of such set-off and
application.
ARTICLE 12
SENIOR LOAN
12.1.1 COMPLIANCE WITH SENIOR LOAN DOCUMENTS.
(a) Borrowers shall, or shall cause Owners to (i) pay all
principal, interest and other sums required to be paid by Owners under and
pursuant to the provisions of the Senior Loan
403
Documents; (ii) diligently perform, observe and comply with all of the terms,
provisions, covenants and obligations of Owners under all of the Senior Loan
Documents as and when required under the Senior Loan Documents, unless such
performance or observance shall be waived in writing by Senior Lender.
(b) Borrowers shall cause Owners to fund all reserves required
to be funded pursuant to the Senior Loan Documents. In the event of a
refinancing of the Senior Loan permitted by the terms of this Agreement,
Borrowers will cause all reserves on deposit with Senior Lender to be utilized
by Owners to reduce the amount due and payable to Mezzanine Lender or
alternatively shall be remitted to Mezzanine Lender as a mandatory prepayment of
the Mezzanine Loan.
(c) Promptly (and, in any event, no later than one Business
Day) after receipt, Borrowers will deliver to Mezzanine Lender a true, correct
and complete copy of all notices, demands, requests or material correspondence
(including electronically transmitted items) received from Senior Lender by
Owner or any guarantor under the Senior Loan Documents.
(d) Unless otherwise delivered to Mezzanine Lender pursuant to
the provisions of SECTION 4.1.6, Borrowers will deliver (or cause Owners to
deliver) to Mezzanine Lender all of the financial statements, reports,
certificates and related items delivered or required to be delivered by Owners
to Senior Lender under the Senior Loan Documents as and when due under the
Senior Loan Documents.
12.2 SENIOR LOAN DEFAULTS.
(a) Without limiting the generality of the other provisions of
this Agreement, and without waiving or releasing Borrowers from any of their
obligations hereunder, if there shall occur any default under the Senior Loan
Documents, Borrowers hereby expressly agree that Mezzanine Lender shall have the
immediate right, without prior notice to Borrowers, but shall be under no
obligation: (i) to pay all or any part of the Senior Loan and any other sums
that are then due and payable, and to perform any act or take any action on
behalf of any Borrower and/or any Owner as may be appropriate, to cause all of
the terms, covenants and conditions of the Senior Loan Documents on the part of
any Owner to be performed or observed thereunder to be promptly performed or
observed; and (ii) to pay any other amounts and take any other action as
Mezzanine Lender, in its sole and absolute discretion, shall deem advisable to
protect or preserve the rights and interests of Mezzanine Lender in the
Mezzanine Loan and/or the Collateral. All sums so paid and the costs and
expenses incurred by Mezzanine Lender in exercising rights under this SECTION
8.2 (including attorneys' fees) (i) shall constitute additional advances of the
Mezzanine Loan to Borrowers, (ii) shall increase the then unpaid principal
balance of the Mezzanine Loan, (iii) shall bear interest at the Default Rate for
the period from the date that such costs or expenses were incurred to the date
of payment to Mezzanine Lender, (iv) shall constitute a portion of the
Obligations, and (v) shall be secured by the Pledges.
(b) Borrowers hereby indemnify Mezzanine Lender from and against
all liabilities, obligations, losses, damages, penalties, assessments, actions,
or causes of action, judgments, suits, claims, demands, costs, expenses
(including attorneys' and other professional fees, whether or not suit is
brought, and settlement costs) and disbursements of any kind or nature
404
whatsoever which may be imposed on, incurred by or asserted against Mezzanine
Lender as a result of the foregoing actions. Mezzanine Lender shall have no
obligation to Borrowers, any Borrower Representative, any Owner or any other
party to make any such payment or performance. Borrowers shall not impede,
interfere with, hinder or delay, and shall not permit Owners to impede,
interfere with, hinder or delay, any effort or action on the part of Mezzanine
Lender to cure any default or asserted default under the Senior Loan, or to
otherwise protect or preserve Mezzanine Lender's interests in the Mezzanine Loan
and the Collateral following a default or asserted default under the Senior
Loan.
(c) Any default or breach by Owners under the Senior Loan
Documents which is not cured prior to the expiration of any applicable grace,
notice or cure period afforded to Owners under the Senior Loan Documents shall
constitute an Event of Default, without regard to any subsequent payment or
performance of any such obligations by Mezzanine Lender. Borrowers hereby grant
Mezzanine Lender and any person designated by Mezzanine Lender the right to
enter upon the Properties at any time following the occurrence and during the
continuance of any default, or the assertion by Senior Lender that a default has
occurred under the Senior Loan Documents, for the purpose of taking any such
action or to appear in, defend or bring any action or proceeding to protect
Borrowers', Owners' and/or Mezzanine Lender's interest. Mezzanine Lender may
take such action as Mezzanine Lender deems reasonably necessary or desirable to
carry out the intents and purposes of this subsection (including communicating
with Senior Lender with respect to any Senior Loan defaults), without prior
notice to, or consent from, any Borrower. Mezzanine Lender shall have no
obligation to complete any cure or attempted cure undertaken or commenced by
Mezzanine Lender.
(d) If Mezzanine Lender shall receive a copy of any notice of
default under the Senior Loan Documents sent by Senior Lender to any Owner, such
notice shall constitute full protection to Mezzanine Lender for any action taken
or omitted to be taken by Mezzanine Lender, in good faith, in reliance thereon.
As a material inducement to Mezzanine Lender's making the Mezzanine Loan,
Borrowers hereby absolutely and unconditionally release and waive all claims
against Mezzanine Lender arising out of Mezzanine Lender's exercise of its
rights and remedies provided in this SECTION 8.2, except for Mezzanine Lender's
gross negligence or willful misconduct. In the event that Mezzanine Lender makes
any payment in respect of the Senior Loan, Mezzanine Lender shall be subrogated
to all of the rights of Senior Lender under the Senior Loan Documents against
the Properties, in addition to all other rights it may have under the Mezzanine
Loan Documents.
12.2 SENIOR LOAN ESTOPPELS.
After request by Mezzanine Lender, Borrowers shall (or shall cause Owners
to) from time to time, use reasonable efforts to obtain from Senior Lender such
estoppel certificates with respect to the status of the Senior Loan and
compliance by Owners with the terms of the Senior Loan Documents as may
reasonably be requested by Mezzanine Lender. In the event or to the extent that
Senior Lender is not legally obligated to deliver such estoppel certificates and
is unwilling to deliver the same, or is legally obligated to deliver such
estoppel certificates but breaches such obligation, then Borrowers shall not be
in breach of this provision so long as Borrowers furnish to Mezzanine Lender an
estoppel executed by Borrowers and Owners expressly representing to Mezzanine
Lender
405
the information requested by Mezzanine Lender regarding the status of the Senior
Loan and the compliance by Owners with the terms of the Senior Loan Documents.
Borrowers hereby indemnify Mezzanine Lender from and against all liabilities,
obligations, losses, damages, penalties, assessments, actions, or causes of
action, judgments, suits, claims, demands, costs, expenses (including attorneys'
and other professional fees, whether or not suit is brought and settlement
costs) and disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Mezzanine Lender based in whole or in part
upon any fact, event, condition, or circumstances relating to the Senior Loan
which was misrepresented in, or which warrants disclosure and was omitted from
such estoppel executed by Borrowers and Owners.
12.2.3 NO AMENDMENTS TO SENIOR LOAN; REFINANCING OF SENIOR LOAN,
ETC.
(a) Without obtaining the prior written consent of Mezzanine
Lender, Borrowers shall not cause or permit Owners to (i) amend or modify the
Senior Loan Documents, (ii) refinance the Senior Loan unless such refinancing is
in an amount sufficient to repay the Mezzanine Loan (including all interest, the
Yield Maintenance Premium and all other amounts due to Mezzanine Lender) in its
entirety and such proceeds are used to so repay the Mezzanine Loan or (iii) take
any action in violation of the terms of the Senior Loan Documents.
(b) Borrowers will not permit Owners to make any elections or
request any consents or waivers or exercise any right, election or remedy under
any of the Senior Loan Documents which would materially adverse effect any
Borrower, any Owner, the Properties or the operation thereof without first
obtaining the prior written approval of Mezzanine Lender. Borrowers shall cause
Owners to provide Mezzanine Lender with a copy of any amendment or modification
to the Senior Loan Documents within ten (10) Business Days after the execution
thereof.
12.2.4 ACQUISITION OF SENIOR LOAN
Neither any Borrower, any SPC Party, any Owner nor any Affiliate of any of
them shall acquire or agree to acquire the Senior Loan, or any portion thereof
or any interest therein, or any direct or indirect ownership interest in the
holder of the Senior Loan, via purchase, transfer, exchange or otherwise, and
any breach or attempted breach of this provision shall constitute an Event of
Default hereunder. If, solely by operation of applicable subrogation law, any
Borrower, any SPC Party, any Owner or any Affiliate of any of them shall have
failed to comply with the foregoing, then Borrowers: (i) shall immediately
notify Mezzanine Lender of such failure; (ii) shall cause any and all such
prohibited parties acquiring any interest in the Senior Loan Documents: (A) not
to enforce the Senior Loan Documents; and (B) upon the request of Mezzanine
Lender, to the extent any of such prohibited parties has or have the power or
authority to do so, to promptly: (1) cancel the promissory note evidencing the
Senior Loan, (2) reconvey and release the lien securing the Senior Loan and any
other collateral under the Senior Loan Documents, and (3) discontinue and
terminate any enforcement proceeding(s) under the Senior Loan Documents.
12.2.5 DEED IN LIEU OF FORECLOSURE.
Borrowers shall not, and Borrowers shall not cause, suffer or permit Owners
to, enter into any deed-in-lieu or consensual foreclosure with or for the
benefit of Senior Lender or any of its affiliates.
406
Without the express prior written consent of Mezzanine Lender, Borrowers shall
not, and Borrowers shall not cause, suffer or permit Owners to, enter into any
consensual sale or other transaction in connection with the Senior Loan which
could diminish, modify, terminate, impair or otherwise adversely affect the
interests of Mezzanine Lender or Borrowers, the Collateral or any portion
thereof or any interest therein or of Owners in the Properties or any portion
thereof or any interest therein.
12.3 INTERCREDITOR AGREEMENT.
Borrowers hereby acknowledge and agree that any intercreditor agreement
entered into between Mezzanine Lender and Senior Lender will be solely for the
benefit of Mezzanine Lender and Senior Lender, and that Borrowers and Owners
shall not be intended third-party beneficiaries of any of the provisions
therein, shall have no rights thereunder and shall not be entitled to rely on
any of the provisions contained therein. Mezzanine Lender and Senior Lender
shall have no obligation to disclose to Borrowers the contents of the
intercreditor agreement. Borrowers' obligations hereunder are and will be
independent of such intercreditor agreement and shall remain unmodified by the
terms and provisions thereof.
[NO FURTHER TEXT ON THIS PAGE]
407
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.
BORROWER:
XXXXXXXX HOLDINGS LLC, a Delaware limited
liability company
By:
-------------------------------------
Name:
Title:
MEDFORD HOLDINGS LLC, a Delaware limited
liability company
By:
-------------------------------------
Name:
Title:
WARRENTON HOLDINGS LLC, a Delaware
limited liability company
By:
-------------------------------------
Name:
Title:
408
MEZZANINE LENDER:
UBS WARBURG REAL ESTATE
INVESTMENTS INC., a Delaware corporation
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
409
SCHEDULE I
RENT ROLL
(Attached hereto)
410
SCHEDULE II
ORGANIZATIONAL CHART
(Attached hereto)
411
SCHEDULE III
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
412
SCHEDULE IV
LEGAL DESCRIPTION
(Attached hereto)
413
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION................................................ 320
1.1 Specific Definitions........................................................... 320
1.2 Principles of Construction..................................................... 336
ARTICLE 2 THE MEZZANINE LOAN..................................................................... 337
2.1 The Mezzanine Loan............................................................. 337
2.1.1 Agreement to Lend and Borrow............................................ 337
2.1.2 Single Disbursement to Borrowers........................................ 337
2.1.3 The Mezzanine Notes..................................................... 337
2.1.4 Use of Proceeds......................................................... 338
2.2 Interest Rate.................................................................. 338
2.2.1 Interest Rate........................................................... 338
2.2.2 Default Rate............................................................ 338
2.2.3 Interest Calculation.................................................... 338
2.2.4 Usury Savings........................................................... 338
2.3 Mezzanine Loan Payments........................................................ 339
2.3.1 Payments Before Stated Maturity Date.................................... 339
2.3.2 Payments Generally...................................................... 339
2.3.3 Payment on Maturity Date................................................ 340
2.3.4 Late Payment Charge..................................................... 340
2.3.5 Method and Place of Payment............................................. 340
2.4 Prepayments.................................................................... 340
2.4.1 Voluntary Prepayments................................................... 341
2.4.2 Mandatory Prepayments................................................... 342
2.4.3 Prepayments After Default............................................... 342
ARTICLE 3 REPRESENTATIONS AND WARRANTIES......................................................... 342
3.1 Borrower Representations....................................................... 342
3.1.1 Organization............................................................ 343
3.1.2 Proceedings............................................................. 343
3.1.3 No Conflicts............................................................ 343
3.1.4 Litigation.............................................................. 343
3.1.5 Agreements.............................................................. 343
3.1.6 Consents................................................................ 344
3.1.7 Title................................................................... 344
3.1.8 No Plan Assets.......................................................... 344
3.1.9 Compliance.............................................................. 345
3.1.10 Financial Information................................................... 345
3.1.11 Condemnation............................................................ 345
414
3.1.12 Easements; Utilities and Public Access.................................. 345
3.1.13 Separate Lots........................................................... 346
3.1.14 Assessments............................................................. 346
3.1.15 Enforceability.......................................................... 346
3.1.16 Collateral.............................................................. 346
3.1.17 Insurance............................................................... 347
3.1.18 Licenses................................................................ 347
3.1.19 Flood Zone.............................................................. 347
3.1.20 Physical Condition...................................................... 347
3.1.21 Boundaries.............................................................. 347
3.1.22 Leases.................................................................. 347
3.1.23 Filing and Recording Taxes.............................................. 348
3.1.24 Single Purpose.......................................................... 348
3.1.25 Tax Filings............................................................. 352
3.1.26 Solvency................................................................ 352
3.1.27 Federal Reserve Regulations............................................. 353
3.1.28 Ownership of Owner; Organizational Chart................................ 353
3.1.29 Organizational Status................................................... 353
3.1.30 Bank Holding Company.................................................... 353
3.1.31 No Casualty............................................................. 354
3.1.32 Purchase Options........................................................ 354
3.1.33 FIRPTA.................................................................. 354
3.1.34 PUHCA................................................................... 354
3.1.35 Investment Company Act.................................................. 354
3.1.36 Use of Property......................................................... 354
3.1.37 Fiscal Year............................................................. 354
3.1.38 No Other Financing...................................................... 354
3.1.39 Contracts............................................................... 354
3.1.40 Full and Accurate Disclosure............................................ 355
3.1.41 Other Obligations and Liabilities....................................... 355
3.1.42 Senior Loan............................................................. 355
3.1.43 Transfer of Properties.................................................. 34
3.2 Survival of Representations.................................................... 355
ARTICLE 4 BORROWER COVENANTS..................................................................... 355
4.1 Borrower Affirmative Covenants................................................. 355
4.1.1 Payment and Performance of Obligations.................................. 356
4.1.2 Existence; Compliance with Legal Requirements........................... 356
4.1.3 Taxes and Other Charges................................................. 356
4.1.4 Litigation.............................................................. 356
4.1.5 Access to Property; Inspection.......................................... 357
4.1.6 Further Assurances; Supplemental Mortgage Affidavits.................... 358
4.1.7 Financial Reporting..................................................... 358
415
4.1.8 Lien on the Collateral.................................................. 360
4.1.9 Estoppel Statement...................................................... 360
4.1.10 Leases.................................................................. 361
4.1.11 Alterations............................................................. 362
4.1.12 Approval of Major Contracts............................................. 363
4.2 Borrower Negative Covenants.................................................... 363
4.2.1 Due on Sale and Encumbrance; Transfers of Interests..................... 363
4.2.2 Liens................................................................... 364
4.2.3 Dissolution............................................................. 364
4.2.4 Change in Business...................................................... 364
4.2.5 Debt Cancellation....................................................... 365
4.2.6 Affiliate Transactions.................................................. 365
4.2.7 Zoning.................................................................. 365
4.2.8 Assets.................................................................. 365
4.2.9 No Joint Assessment..................................................... 365
4.2.10 Principal Place of Business............................................. 365
4.2.11 Change of Name, Identity or Structure................................... 365
4.2.12 Special Purpose......................................................... 366
4.2.13 ERISA................................................................... 366
4.2.14 Compliance with Restrictive Covenants, Etc.............................. 367
4.2.15 Incurrence of Expenses.................................................. 367
4.2.16 Compliance with Restrictive Covenants, Etc..ERROR! BOOKMARK NOT DEFINED.
4.2.17 Embargoed Person........................................................ 367
ARTICLE 5 INSURANCE, CASUALTY AND CONDEMNATION................................................... 367
5.1 Insurance...................................................................... 367
5.1.1 Insurance Policies...................................................... 367
5.1.2 Insurance Company....................................................... 372
5.2 Casualty and Condemnation...................................................... 373
5.2.1 Casualty................................................................ 373
5.2.2 Condemnation............................................................ 373
5.2.3 Casualty and Condemnation Proceeds...................................... 374
5.2.4 Release of an Individual Property....................................... 53
ARTICLE 6 CASH MANAGEMENT AND RESERVE FUNDS...................................................... 375
6.1 Cash Management Arrangements and Reserves...................................... 375
6.1.1 Cash Management Arrangements............................................ 375
6.1.2 Reserves................................................................ 375
6.2 Security Interest in Accounts.................................................. 375
6.2.1 Grant of Security Interest.............................................. 375
6.2.2 Income Taxes; Interest.................................................. 375
6.2.3 Prohibition Against Further Encumbrance................................. 376
6.3 Property Cash Flow Allocation.................................................. 376
6.3.1 Order of Priority of Funds in Subordinate Deposit Account............... 376
416
6.3.2 Application After Event of Default...................................... 376
ARTICLE 7 PROPERTY MANAGEMENT.................................................................... 376
7.1 The Management Agreement....................................................... 376
7.2 Prohibition Against Termination or Modification................................ 377
7.3 Replacement of Manager......................................................... 377
ARTICLE 8 PERMITTED TRANSFERS.................................................................... 377
8.1 Permitted Transfers of Interests in Borrowers.................................. 377
8.1.1 Notwithstanding anything to the contrary contained in Section 4.2.1, the
following Transfers ("Permitted Transfers") shall be deemed to be permitted
hereunder without the consent of Mezzanine Lender:............................. 377
8.1.2 Permitted Transfers of Properties...........ERROR! BOOKMARK NOT DEFINED.
ARTICLE 9 SALE AND SECURITIZATION OF COLLATERAL.................................................. 378
9.1 Sale of Mortgage and Securitization............................................ 379
9.2 Securitization Indemnification................................................. 381
9.3 Rating Surveillance............................................................ 384
9.4 Severance Documentation........................................................ 384
ARTICLE 10 DEFAULTS.............................................................................. 384
10.1 Events of Default.............................................................. 385
10.2 Remedies....................................................................... 387
10.3 Mezzanine Lender's Right to Perform............................................ 388
10.4 Remedies Cumulative............................................................ 389
ARTICLE 11 MISCELLANEOUS......................................................................... 389
11.1 Successors and Assigns......................................................... 389
11.2 Mezzanine Lender's Discretion.................................................. 389
11.3 Governing Law.................................................................. 389
11.4 Modification, Waiver in Writing................................................ 391
11.5 Delay Not a Waiver............................................................. 391
11.6 Notices........................................................................ 392
11.7 Trial by Jury.................................................................. 393
11.8 Headings....................................................................... 393
11.9 Severability................................................................... 393
11.10 Preferences.................................................................... 394
11.11 Waiver of Notice............................................................... 394
11.12 Remedies of Borrower........................................................... 394
11.13 Expenses; Indemnity............................................................ 394
11.14 Schedules Incorporated......................................................... 396
417
11.15 Offsets, Counterclaims and Defenses............................................ 396
11.16 No Joint Venture or Partnership; No Third Party Beneficiaries.................. 396
11.17 Publicity...................................................................... 397
11.18 Waiver of Marshalling of Assets................................................ 397
11.19 Waiver of Offsets/Defenses/Counterclaims....................................... 397
11.20 Conflict; Construction of Documents; Reliance.................................. 397
11.21 Brokers and Financial Advisors................................................. 398
11.22 Exculpation.................................................................... 398
11.23 Prior Agreements............................................................... 401
11.24 Servicer............................................................ .......... 401
11.25 Joint and Several Liability.................................................... 402
11.26 Creation of Security Interest.................................................. 402
11.27 Assignments and Participations................................................. 402
11.28 Counterparts................................................................... 402
11.29 Proofs of Claim................................................................ 403
11.30 Waiver of Stay................................................................. 403
11.31 Set-Off........................................................................ 403
ARTICLE 12 SENIOR LOAN........................................................................... 403
12.1.1 Compliance with Senior Loan Documents................................... 403
12.2 Senior Loan Defaults........................................................... 404
12.2.2 Senior Loan Estoppels................................................... 405
12.2.3 No Amendments to Senior Loan; Refinancing of Senior Loan, Etc........... 406
12.2.4 Acquisition of Senior Loan.............................................. 406
12.2.5 Deed in Lieu of Foreclosure............................................. 406
12.3 Intercreditor Agreement........................................................ 407
SCHEDULES
SCHEDULE I RENT ROLL
SCHEDULE II ORGANIZATIONAL CHART
SCHEDULE III EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
SCHEDULE IV LEGAL DESCRIPTIONS
418
