REAFFIRMATION, CONSENT TO TRANSFER AND SUBSTITUTION OF INDEMNITOR

 

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                                                                 Exhibit 10.61

 

                       REAFFIRMATION, CONSENT TO TRANSFER

                         AND SUBSTITUTION OF INDEMNITOR

 

     THIS REAFFIRMATION, AND CONSENT TO TRANSFER AND SUBSTITUTION OF INDEMNITOR

(this "AGREEMENT") is made and entered into as September 7, 2004, by and among

the following parties:

 

A.    LINTON DELRAY, LLC, a Delaware limited liability company having a new

     address at 31500 Northwestern Highway, Suite 300, Farmington Hills, MI

     48334 ("BORROWER");

 

B.    INVESTCORP PROPERTIES LIMITED, a Delaware corporation having an address at

     280 Park Avenue, New York, NY 10017 (the "ORIGINAL INDEMNITOR");

 

C.    DELRAY RETAIL, INC., a Delaware corporation having an address at 280 Park

     Avenue, New York, NY 10017 (the "ORIGINAL PRINCIPAL");

 

D.    DIVERSIFIED INVEST III, LLC, a Delaware limited liability company having an

     address at 280 Park Avenue, New York, NY 10017 ("DIVERSIFIED", and together

     with the Original Principal, "SELLER");

 

     (Original Indemnitor, Original Principal and Diversified are sometimes

     referred to herein as the "ORIGINAL OBLIGORS");

 

E.    RAMCO DELRAY SPC, INC., a Delaware corporation having an address at 31500

     Northwestern Highway, Suite 300, Farmington Hills, MI 48334, the Managing

     Member of Borrower (the "SUBSTITUTE PRINCIPAL");

 

F.    RAMCO - GERSHENSON PROPERTIES, L.P., a Delaware limited partnership having

     an address at 31500 Northwestern Highway, Suite 300, Farmington Hills, MI

     48334 (the "PURCHASER", and in its capacity as a substitute indemnitor, the

     "SUBSTITUTE INDEMNITOR");

 

     (Purchaser, Substitute Principal and Substitute Indemnitor are sometimes

     referred to herein as the "SUBSTITUTE OBLIGORS")

 

G.    LASALLE BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR THE REGISTERED HOLDERS OF

     LB-UBS COMMERCIAL MORTGAGE TRUST 2003-C8, COMMERCIAL MORTGAGE PASS-THROUGH

     CERTIFICATES, SERIES 2003-C8 whose mailing address is c/o Wachovia

     Securities, Commercial Real Estate Services, 8739 Research Dr., URP4,

     Charlotte, NC 28288-1075 (28262-1075 for overnight deliveries) ("LENDER").

 

 

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                                    RECITALS

 

     1. Lehman Brothers Bank FSB (the "ORIGINAL LENDER"), pursuant to the Loan

Documents (as hereinafter defined) made a loan to Borrower in the original

principal amount of $43,250,000 (the "LOAN"). The Loan is evidenced and secured

by the following documents executed in favor of Original Lender by Borrower:

 

     a.    Promissory Note dated as of August 7, 2003, payable by Borrower to

          Original Lender in the original principal amount of $43,250,000 (the

          "NOTE");

 

     b.    Mortgage and Security Agreement (the "MORTGAGE") of even date with the

          Note, granted by Borrower to Original Lender, recorded in the real

          estate records of Palm Beach County, State of Florida ("RECORDER'S

          OFFICE");

 

     c.    Assignment of Leases and Rents of even date with the Note granted by

          Borrower to Original Lender, recorded in the Recorder's Office (the

          "ASSIGNMENT");

 

     d.    UCC-1 financing statements with Borrower as debtor and Original Lender

          as secured party, filed with the Recorder's Office and with the

          Secretary of State of the State of Delaware (collectively the

          "FINANCING STATEMENTS");

 

     e.    Guaranty of Recourse Obligations of Borrower by and between Original

          Indemnitor and Original Lender of even date with the Note (the

          "INDEMNITY AGREEMENT");

 

     f.    Environmental Indemnity Agreement by and between Borrower, Original

          Indemnitor and Original Lender of even date with the Note (the

          "ENVIRONMENTAL INDEMNITY AGREEMENT");

 

     g.    Cash Management Agreement by and between Borrower and Original Lender

          of even date with the Note;

 

     h.    Assignment of Agreements, Permits and Contracts by and between

          Borrower and Original Lender of even date with the Note;

 

     i.    Replacement Reserve and Security Agreement by and between Borrower and

          Original Lender of even date with the Note;

 

     j.    Completion/Repair and Security Agreement by and between Borrower and

           Original Lender of even date with the Note; and

 

     k.    Tenant Improvement and Leasing Commission Reserve and Security

          Agreement by and between Borrower and Original Lender of even date

          with the Note.

 

     The foregoing documents, together with any and all other documents executed

by Borrower and/or Original Indemnitor in connection with the Loan, are

collectively called the "LOAN DOCUMENTS."

 

 

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     2. Original Lender assigned, sold and transferred its interest in the Loan

and all Loan Documents to Lender and Lender is the current holder of all of

Original Lender's interest in the Loan and Loan Documents.

 

     3. Borrower continues to be the owner of fee title to the real property and

improvements located thereon and continues to be the owner of all of the

property as described in and encumbered by the Mortgage and the other Loan

Documents (the "PROPERTY").

 

     4. Pursuant to that certain Contract of Sale and Purchase dated June 29,

2004, (such agreement together with all amendments thereto the "PURCHASE

AGREEMENT"), Diversified agreed to transfer and sell all of Diversified's

membership interests in the Borrower (representing 99.9% of the ownership

interests of Borrower) to the Purchaser and Original Principal agreed to

transfer and sell all of Original Principal's membership interest in the

Borrower (representing 0.10% of the ownership interests of Borrower) to the

Substitute Principal (collectively, the "TRANSFERRED OWNERSHIP INTERESTS").

 

     5. Borrower (after giving effect to transfer of the Transferred Ownership

Interests) and Purchaser agreed that Substitute Principal would be substituted

in place of and instead of Original Principal as the sole Manager of the

Borrower (the "TRANSFERRED MANAGEMENT INTERESTS").

 

     (the transfers contemplated in Section 4 and Section 5 above are referred

     to as the "TRANSFER").

 

     6. The parties acknowledge and agree that Section 8.1 of the Mortgage

requires the consent of Lender for the Transfer. Borrower, Original Obligors and

Substitute Obligors have all requested that Lender consent to the Transfer,

subject to conditions contained in the Mortgage, the other Loan Documents and

this Agreement.

 

     7. Borrower, Original Obligors and Substitute Obligors have also all

requested that Lender consent to the substitution of Substitute Indemnitor as

indemnitor and guarantor under the Indemnity Agreement and the Environmental

Indemnity Agreement and to the assumption by Substitute Indemnitor of all the

obligations of Original Indemnitor under the Indemnity Agreement, the

Environmental Indemnity Agreement, and the other Loan Documents to which

Original Indemnitor is a party (the "SUBSTITUTION").

 

     8. Lender is willing to consent to the Transfer and the Substitution on and

subject to the terms and conditions set forth in this Agreement and in the

Mortgage and in the other Loan Documents.

 

                             STATEMENT OF AGREEMENT

 

     In consideration of the mutual covenants and agreements set forth herein,

the parties hereto hereby agree as follows:

 

 

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     1. CERTAIN REPRESENTATIONS, WARRANTIES, AND COVENANTS REGARDING THE

TRANSFER.

 

     a.    Diversified hereby represents and warrants to Lender that it is owner

          of 99.9% of the Transferred Ownership Interests, that its ownership

          interest is unencumbered, that contemporaneously with the execution

          and delivery hereof, it has conveyed and transferred its Transferred

          Ownership Interests, and that Diversified is not obtaining or

          retaining any security interest or other interest in its Transferred

          Ownership Interests. Diversified further represents and warrants to

          Lender that in connection with the Transfer, Diversified has retained

          no ownership or managerial interest in the Borrower.

 

     b.    Original Principal hereby represents and warrants to Lender that it is

          the owner of 0.10% of the Transferred Ownership Interests and the

          Transferred Management Interests, that its ownership interest is

          unencumbered, that contemporaneously with the execution and delivery

          hereof, it has conveyed and transferred all of its Transferred

          Ownership Interests and all of the Transferred Management Interests to

          Substitute Principal, and that Original Principal is not obtaining or

          retaining any security interest in its Transferred Ownership Interests

          or Transferred Management Interests; Original Principal further

          represents and warrants to Lender in connection with the Transfer,

          Original Principal has retained no ownership or managerial interest in

          the Borrower.

 

     c.    Purchaser hereby represents and warrants to Lender, as of the date

          hereof, that simultaneously with the execution and delivery hereof,

          Purchaser has purchased from Diversified all of its Transferred

          Ownership Interests and that Purchaser has not conveyed or granted

          Seller, Original Principal or any other party any security interest or

          other interest in the Transferred Ownership Interests.

 

     d.    Substitute Principal hereby represents and warrants to Lender, as of

          the date hereof, that simultaneously with the execution and delivery

          hereof, Substitute Principal has purchased from Original Principal all

          of its Transferred Ownership Interest and all of the Transferred

          Management Interests and that Substitute Principal has not conveyed or

          granted Seller, Original Principal or any other party any security

          interest or other interest in the Transferred Ownership Interests or

          Transferred Management Interests.

 

     e.    Original Principal hereby represents and warrants to Lender that the

          organizational documents of Borrower, as delivered to Original Lender

          in connection with the closing of the Loan (the "BORROWER

          ORGANIZATIONAL DOCUMENTS") have not been modified, amended, altered or

          changed since the date of the closing of the Loan.

 

     f.    Borrower, Original Principal, Substitute Principal, Diversified and

          Purchaser each hereby represent and warrant to Lender that, other than

          the substitution of Purchaser and Substitute Principal as the owner of

          the Transferred Ownership Interests and the Transferred Management

          Interests, the Transfer will not result in

 

 

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          any modification, amendment, alteration or change to the Borrower

          Organizational Documents (other than changes to the Borrower

          Organizational Documents necessary to effect the Transfer and

           Substitution). Purchaser and Substitute Principal each hereby

          covenants and agrees that it will be bound by the provisions of the

          Borrower Organizational Documents. Borrower, Purchaser and Substitute

          Principal covenant and agree that Borrower will remain a bankruptcy

          remote, special purpose entity throughout the term of the Loan in

          accordance with the terms of the Loan Documents.

 

     g.    Original Principal hereby represents and warrants to Lender that the

          organizational documents of Original Principal, as delivered to

          Original Lender in connection with the closing of the Loan (the

          "ORIGINAL PRINCIPAL ORGANIZATIONAL DOCUMENTS") have not been modified,

          amended, altered or changed since the date of the closing of the Loan

          (other than changes to the Original Principal Organizational Documents

          necessary to effect the Transfer and Substitution).

 

     2. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BORROWER, ORIGINAL

INDEMNITOR, ORIGINAL PRINCIPAL AND DIVERSIFIED.

 

     a.    The Borrower and Original Principal each hereby represent and warrant

          to Lender, as of the date hereof, that:

 

          i.    the Mortgage is a valid first lien on the Property for the full

               unpaid principal amount of the Loan and all other amounts as

               stated therein;

 

          ii.   there are no defaults under the provisions of the Note, the

               Mortgage, the Indemnity Agreement, the Environmental Indemnity

               Agreement, or the other Loan Documents;

 

          iii. there are no defenses, set-offs or rights of defense, set-off or

               counterclaim whether legal, equitable or otherwise to the

               obligations evidenced by or set forth in the Note, the Mortgage,

               the Indemnity Agreement, the Environmental Indemnity Agreement,

               or the other Loan Documents;

 

          iv.   all provisions of the Note, Mortgage, the Indemnity Agreement,

               the Environmental Indemnity Agreement, and other Loan Documents

               are in full force and effect, except as modified herein;

 

          v.    there are no subordinate liens of any kind covering or relating

               to the Property nor are there any mechanics' liens or liens for

               unpaid taxes or assessments encumbering the Property, nor has

               notice of a lien or notice of intent to file a lien been

               received; and

 

 

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          vi.   The Borrower and Original Principal hereby represent and warrant

               that the representations and warranties made by Borrower in the

               Mortgage, Note, other Loan Documents or in any other documents or

               instruments delivered in connection with the Note, the Mortgage,

               or other Loan Documents are true, on and as of the date hereof,

               with the same force and effect as if made on and as of the date

               hereof, except as disclosed to Lender, and provided that

               "Permitted Exceptions" shall be updated to include any exceptions

               to title shown in the title policy issued to Borrower on the date

               hereof, and that no representation is made with respect to

               Section 5.14(a) of the Mortgage or Exhibits D and E to Borrower's

               Certification and the Rent Roll attached hereto shall be

               substituted for Exhibit J to Borrower's Certification.

 

          vii. The Original Indemnitor hereby represents and warrants that the

               representations and warranties, if any, made by Original

               Indemnitor in the Mortgage, Note, other Loan Documents or in any

                other documents or instruments delivered in connection with the

               Note, the Mortgage, or other Loan Documents are true, on and as

               of the date hereof, with the same force and effect as if made on

               and as of the date hereof.

 

     b.    Original Indemnitor hereby represents and warrants that (i) the

          representations and warranties made by Original Indemnitor under the

          Indemnity Agreement and Environmental Indemnity Agreement are true, on

          and as of the date hereof, with the same force and effect as made on

          and as of the date hereof; (ii) there are no defaults under the

          provisions of the Indemnity Agreement and the Environmental Indemnity

          Agreement; (iii) all provisions of the Indemnity Agreement and the

          Environmental Indemnity Agreement are in full force and effect; and

          (iv) there are no defenses, setoffs or rights of defense, setoff or

          counterclaim whether legal, equitable or otherwise to the obligations

          set forth in the Indemnity Agreement or Environmental Indemnity

          Agreement.

 

     c.    Original Principal, Original Indemnitor and Diversified hereby

          covenant and agree that from and after the date hereof, Lender may

          deal solely with Borrower (as newly constituted) and Substitute

          Obligors in all matters relating to the Loan, the Loan Documents, and

          the Property and that Lender has no further duty or obligation of any

          nature relating to this Loan or the Loan Documents to Original

          Principal, Original Indemnitor and Diversified.

 

     d.    Original Obligors understand and intend that Lender shall rely on the

          representations, warranties and covenants contained herein.

 

     3. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BORROWER AND SUBSTITUTE

OBLIGORS.

 

 

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     a.    Substitute Obligors hereby represent and warrant to Lender, as of the

           date hereof, that:

 

          i.    to the knowledge of Substitute Obligors, no default or Event of

               Default (as defined in the Mortgage) has occurred or is

               continuing;

 

          ii.   to the knowledge of Substitute Obligors, all provisions of the

               Loan Documents are in full force and effect; and

 

          iii. to the knowledge of Substitute Obligors, the representations and

               warranties made in the Mortgage, Note, and other Loan Documents

                or in any other documents or instruments delivered in connection

               with the Note, the Mortgage, or the other Loan Documents are

               true, on and as of the date hereof (except as specified in

               Section 2(a)(vii)).

 

     b.    Borrower and Substitute Obligors hereby covenant and agree as follows:

 

          i.    Borrower and Substitute Indemnitor shall perform all the

               respective past, present and future obligations contained in the

               Loan Documents in accordance with the terms of this Agreement;

 

          ii.   Borrower shall continue to pay when and as due all sums due under

               the Note and other Loan Documents (as modified hereby);

 

          iii. Borrower and Substitute Indemnitor shall perform all the

               respective obligations imposed under the Note, Mortgage,

               Indemnity Agreement, Environmental Indemnity Agreement and all

               other Loan Documents, all as modified hereby;

 

          iv.   Borrower shall not hereafter, without Lender's prior consent in

               accordance with the terms of the Loan Documents, further encumber

               the Property or sell or transfer the Property or any interest

               therein, except as may be specifically permitted in the Loan

               Documents;

 

     c.    Substitute Obligors understand and intend that Lender shall rely on

          the representations, warranties and covenants contained herein.

 

     4. CONSENT AND REAFFIRMATION OF BORROWER.

 

     a.    Borrower hereby represents and warrants to Lender that it has reviewed

          the Purchase Agreement, this Agreement, and all the documents executed

          in accordance therewith or herewith. Borrower consents to the Transfer

           and to the Substitution under the terms of the Purchase Agreement and

          this Agreement.

 

 

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          Borrower further covenants and agrees that the Transfer and the

          Substitution shall not, and shall not be deemed to, impair, limit,

          abrogate or reduce in any manner or to any extent the liability or

          obligations of the Borrower under the Loan Documents.

 

     b.    Borrower hereby renews, reaffirms, ratifies and confirms the Note, the

          Mortgage and the other Loan Documents and acknowledges and agrees that

          the Loan Documents remain in full force and effect without impairment

          and without modification (except as specifically provided herein), and

          that no rights or remedies of Lender under the Loan Documents have

          been waived. Borrower reaffirms the truth and accuracy of all

          representations and warranties made by Borrower in the Loan Documents

          as if made on the date hereof.

 

     c.    Borrower agrees to continue to pay, perform, and discharge each and

          every obligation of payment and performance under, pursuant to and as

          set forth in the Note, the Mortgage, the Environmental Indemnity

           Agreement, and the other Loan Documents at the time, in the manner and

          otherwise in all respects as therein provided.

 

     d.    Borrower hereby acknowledges, agrees and warrants that (i) there are

          no rights of set-off or counterclaim, nor any defenses of any kind,

          whether legal, equitable or otherwise, which would enable Borrower to

          avoid or delay timely performance of its obligations under the Note,

          Mortgage, Indemnity Agreement, Environmental Indemnity Agreement, or

          any of the Loan Documents, as applicable; (ii) there are no monetary

          encumbrances or liens of any kind or nature against the Property

          except those created by the Loan Documents; and (iii) all rights,

           priorities, titles, liens and equities securing the payment of the

          Note are expressly recognized as valid and are in all things renewed,

          continued and preserved in force to secure payment of the Note, except

          as amended herein.

 

     5. ASSUMPTION OF OBLIGATIONS BY SUBSTITUTE INDEMNITOR.   From and after the

date of this Agreement, the Substitute Indemnitor shall be obligated and

responsible for the performance of each and all of the obligations and

agreements of the Original Indemnitor under the Loan and the Loan Documents,

including, without limitation, the Indemnity Agreement and the Environmental

Indemnity Agreement, and the Substitute Indemnitor shall be liable and

responsible for each and all of the liabilities of the Original Indemnitor

thereunder, as fully and completely as if the Substitute Indemnitor had

originally executed and delivered the Loan Documents as the Indemnitor

thereunder, including, without limitation, all of those obligations, agreements

and liabilities which would have, but for the provisions of this Agreement, been

the obligations, agreements and liabilities of the Original Indemnitor, without

regard to when such obligations, agreements and liabilities arise, accrue or

have arisen or accrued, and without regard to the Original Indemnitor then

responsible or liable therefor at the time of such accrual. From and after the

date hereof, the Substitute Indemnitor further agrees to abide by and be bound

by all of the terms of the Loan Documents having reference to the Original

Indemnitor, all as though each of the Loan Documents had been made, executed,

and delivered by the Substitute Indemnitor as the Original Indemnitor. From and

after the date hereof, the Substitute Indemnitor hereby agrees to pay, perform,

and discharge each and every obligation of payment and

 

 

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performance of the Original Indemnitor under, pursuant to and as set forth in

the Loan Documents at the time, in the manner and otherwise in all respects as

therein provided.

 

     The Substitute Indemnitor acknowledges and agrees that following the

Transfer it will be an affiliate of the Borrower and will derive substantial

economic benefit from the Lender's agreement to consent to the Transfer and that

there is adequate consideration for the Substitution. The Substitute Indemnitor

acknowledges that the Lender would not consent to the Transfer without the

agreement of Substitute Indemnitor to execute and deliver this Agreement as

substitute indemnitor.

 

     6. CONSENT.

 

     a.    Subject to the terms and conditions set forth in this Agreement,

          Lender consents to the Transfer, subject to the Mortgage and the other

          Loan Documents. Lender's consent to the Transfer shall, however, not

           constitute its consent to any subsequent transfers of the Property or

          any interest therein (as defined in the Mortgage).

 

     b.    Lender hereby consents to the Original Principal filing the

          Certificate of Amendment of Certificate of Incorporation of Delray

          Retail Inc. with the Secretary of State of the State of Delaware in

          connection with the Transfer and conforming changes to the by-laws of

          that corporation. Lender's consent herein shall not constitute its

          consent to any other previous amendment or modifications of the

          Original Principal Organizational Documents made without the Lender's

          explicit consent.

 

     c.    Lender hereby consents to the First Amendment to Operating Agreement

          of Linton Delray, LLC. Lender's consent herein shall not constitute

          its consent to any other previous or future amendments or

          modifications of the Borrower Organizational Documents.

 

     7. CONSENT TO SUBSTITUTION AND RELEASE OF ORIGINAL INDEMNITOR.   Subject to

the terms and conditions set forth in this Agreement, Lender consents to the

Substitution. From and after the date of this Agreement, the Original Indemnitor

shall, with respect only to those matters first arising or accruing after the

date of this Agreement, be fully released of their liability as the Indemnitor

under the Loan Documents, including without limitation, the Indemnity Agreement

and Environmental Indemnity Agreement, and the Substitute Indemnitor shall be

substituted, in each and every respect, for the Original Indemnitor, in lieu of

and in place of the Original Indemnitor with respect to each and every reference

to the Indemnitor, in the Loan Documents, including without limitation, the

Indemnity Agreement and Environmental Indemnity Agreement. The Original

Indemnitor hereby acknowledges and agrees that the release set forth herein

shall not be construed to release the Original Indemnitor from any liability

under any of the Loan Documents, including, without limitation, the Indemnity

Agreement and Environmental Indemnity Agreement, for any acts or events

occurring or obligations arising prior to or upon the date of this Agreement,

whether or not such acts, events or obligations are, as of the date of this

Agreement known or ascertainable.

 

 

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     8. NOTICES TO BORROWER AND INDEMNITOR.   Without amending, modifying or

otherwise affecting the provisions of the Loan Documents except as expre