Exhibit10.3
Prudential Loan No.
706108165
LOAN
AGREEMENT
This LOAN AGREEMENT (this “
Agreement ”) dated as of March 31, 2009, is made and
entered into by and between FELCOR/CSS (SPE), L.L.C., a Delaware
limited liability company (“ Borrower ”), and
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey
corporation (“ Lender ”).
RECITALS:
Lender has agreed to make a Loan
(defined below) to Borrower in the principal amount of up to ONE
HUNDRED TWENTY MILLION AND 00/100 DOLLARS ($120,000,000.00) to
refinance the existing loan encumbering the Embassy Suites hotel
projects situated on the real property legally described on
Exhibit A-1 through
Exhibit A-7 .
The parties desire to enter into
this Agreement in order to set forth their respective rights and
obligations in connection with the administration of the
Loan.
NOW, THEREFORE, IN
CONSIDERATION of the
foregoing recitals, and the mutual covenants and promises of the
parties contained in this Agreement, the parties agree as
follows:
Section 1.01
Loan
Documents Defined Terms . Capitalized terms which are not
otherwise defined in this Agreement shall have the same meaning
given to such terms in the Instruments (defined below) or other
Documents in which such terms are expressly defined.
Section 1.02
General Terms . In addition to other capitalized
terms defined herein, when used herein the terms set forth on
Schedule 1 attached
hereto shall have the respective meanings set forth on Schedule
1 .
Section 2.01
The
Loan . Lender agrees to make the Loan to Borrower subject
to the terms and conditions of this Agreement and the Documents,
and Borrower agrees to repay the Loan in accordance with the terms
and conditions of this Agreement and the Documents.
Section 2.02
Disbursements. The Loan shall be disbursed in two
disbursements, subject to compliance with the terms of this
Agreement. Concurrently herewith, Lender shall disburse
$118,292,600.00 (the “ First Disbursement ”).
The second disbursement in the amount of $1,707,400.00 (the “
Second Disbursement ”) shall be made upon satisfaction
of the following requirements:
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(a)
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The Second Disbursement shall occur
on or before the Outside Date;
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(b)
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The Second Disbursement shall occur
upon no less than five (5) business days written notice from
Borrower to Lender, which notice shall be accompanied by a
certification from Borrower, together with evidence reasonably
satisfactory to Lender, that Borrower’s affiliates closed on
a first mortgage term loan for approximately $200,000,000,
the
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proceeds of which are being used to
repay an existing line of credit facility of Borrower’s
affiliates, thereby extinguishing applicable covenants set forth
therein (collectively, the “ Refinance ”).
Lender and Borrower agree that a copy of the disbursement or
settlement statement issued by the applicable title insurance
company providing lender’s title insurance on the Refinance
executed on behalf of the title company and the borrower and lender
under the Refinance shall be deemed to be satisfactory evidence of
the closing of the Refinance.
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(c)
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At the time of the Second
Disbursement, there is no Event of Default under the Documents (or
no event which with the passage of time or the giving of notice or
both, would constitute an Event of Default);
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(d)
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Unless each title policy issued at
Closing and insuring the first lien of the Instruments provides
affirmative coverage that the Second Disbursement shall have
priority over intervening liens, Borrower shall cause to be
delivered to Lender an endorsement to the title policy insuring the
first lien of the Instruments in the total principal amount of the
Loan;
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(e)
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Borrower shall execute and deliver
any documents Lender shall reasonably require to evidence the
Second Disbursement;
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(f)
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Borrower shall pay all legal fees
and expenses, recording costs, mortgage taxes and intangible taxes,
if any.
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If the Second Disbursement shall not
occur by the Outside Date, (i) Borrower shall have no further right
to receive, and Lender shall have no obligation to fund, the Second
Disbursement or any portion thereof, (ii) Borrower will not owe
Lender any fees, including any Prepayment Premium, with respect to
the unfunded Second Disbursement, (iii) the Principal Amount of the
Loan shall be the amount of the First Disbursement (subject to
reduction due to normal scheduled principal repayments from
amortization and in connection with repayments as provided for in
Section 5.03 below),
and (iv) the Allocated Loan Amounts shall be the Allocated Loan
Amounts (before Second Disbursement) as reflected in the Exhibit
B attached
hereto.
Section 2.03
Payments . Payments on the Loan shall be made as
provided in the Notes. All payments due under the Documents shall
be paid by wire transfer of immediately available funds to an
account of Lender as directed by Lender from time to
time.
Section 2.04
Application of Payments . Until an Event of Default
occurs, all payments received under the Notes shall be applied in
the following order: (a) to unpaid Daily Charges, Late Charges and
costs of collection; (b) to any Prepayment Premium due; (c) to
interest due on the Balance (as defined in the Notes); and (d) then
to the Balance. After an Event of Default, all payments shall be
applied in any order determined by Lender in its sole
discretion.
Section 2.05
Late
Charges . If any scheduled payment due under the Notes is
not fully paid by its Due Date (other than the principal payment
due on the Maturity Date), a charge of $500.00 per day (the “
Daily Charge ”) shall be assessed for each day that
elapses from and after the Due Date until such payment is made in
full (including the date payment is made); provided, however, that
if any such payment, together with all accrued Daily Charges, is
not fully paid by the fourteenth (14 th ) day following
the applicable Due Date, a late charge equal to the lesser of (i)
four percent (4%) of such payment or (ii) the maximum amount
allowed by law (the “ Late Charge ”) shall be
assessed and be immediately due and payable. The Late Charge shall
be payable in lieu of Daily Charges that shall have accrued. The
Late Charge may be assessed only once on each overdue payment.
These charges shall be paid to defray the expenses incurred by
Lender in handling and processing such delinquent payment(s) and to
compensate Lender for the loss
of the use of such funds. The Daily
Charge and Late Charge shall be secured by the Documents. The
imposition of the Daily Charge, Late Charge, and/or requirement
that interest be paid at the Default Rate shall not be construed in
any way to (i) excuse Borrower from its obligation to make each
payment under the Notes promptly when due or (ii) preclude Lender
from exercising any rights or remedies available under the
Documents upon an Event of Default.
Section 2.06
Security . The Loan shall be secured by the
Instruments creating a first lien on each Individual Property, the
Assignments of Leases and the other Documents. The parties intend
that the Notes, Instruments and other Documents encumbering the
Individual Property and evidencing and securing the Allocated
Principal Amount for each Individual Property shall be fully
cross-collateralized and cross-defaulted. The cross-collateral and
cross-default nature of the Loan shall not be released with respect
to any Allocated Principal Amount for any Individual Property,
notwithstanding that such Allocated Principal Amount may be paid in
full, unless and until the conditions for obtaining a partial
release set forth in Section 5.03 below shall have been satisfied.
Section 2.07
Prepayment . The Loan may be prepaid, in whole or in
part, upon at least thirty (30) days’ prior written notice to
Lender and upon payment of all accrued interest (and other
Obligations due under the Documents) and a prepayment premium
(“ Prepayment Premium ”) equal to the greater of
(a) the product of one percent (1%) of the principal amount being
prepaid multiplied by the quotient of (i) the number of full months
remaining until the Maturity Date, calculated as of the prepayment
date, divided by (ii) sixty (60), or (b) the Present Value of the
Loan less the amount of principal and accrued interest (if any)
being prepaid, calculated as of the prepayment date. The Prepayment
Premium shall be due and payable, except as provided in this
Agreement or as limited by law, upon any prepayment of the Loan,
whether voluntary or involuntary, and Lender shall not be obligated
to accept any prepayment of this Note unless it is accompanied by
the Prepayment Premium, all accrued interest and all other
Obligations due under the Documents. Lender shall notify Borrower
of the amount of and the calculation used to determine the
Prepayment Premium. Borrower agrees that (a) Lender shall not be
obligated to actually reinvest the amount prepaid in any Treasury
obligation and (b) the Prepayment Premium is directly related to
the damages that Lender will suffer as a result of the prepayment.
The “ Present Value of the Loan ” shall be
determined by discounting all scheduled payments remaining to the
Maturity Date attributable to the amount being prepaid at the
Discount Rate. If prepayment occurs on a date other than a Due
Date, the actual number of days remaining from the date of
prepayment to the next Due Date will be used to discount within
this period. Notwithstanding the foregoing, no Prepayment Premium
shall be due if this Note is prepaid during the last thirty (30)
days prior to the Maturity Date. With respect to the foregoing
provisions, Borrower hereby expressly agrees as follows:
(a) The Note
Rate (as defined in the Notes) has been determined based on the sum
of (i) the Treasury Rate in effect at the time the Note Rate
was determined under the Loan Application submitted to Lender, plus
(ii) an interest rate spread over such Treasury Rate, which
together represent Lender’s agreed-upon return for making the
proceeds of the Loan hereunder available to Borrower over the term
of such Loan.
(b) The
determination of the Note Rate, and in particular the aforesaid
interest rate spread, were based on the expectation and agreement
of Borrower and Lender that the principal sums advanced hereunder
would not be prepaid during the term of the Loan, or if any such
prepayment occurs, the Prepayment Premium (calculated in the manner
set forth above) would apply (except as expressly permitted by this
Agreement).
(c) The
Lender’s business involves making financial commitments to
others based in part on the returns it expects to receive from the
Loan and other similar loans made by Lender, and Lender’s
financial performance as a business depends not only on the returns
from each loan or
investment it makes but also upon
the aggregate amounts of the loans and investments it is able to
make over any given period of time.
(d) In the
event of a prepayment hereunder, Lender will be required to
redeploy the funds received into other loans or investments, which
(i) may not provide a return to Lender comparable to the return
Lender anticipates based on the Note Rate and (ii) may reduce the
total amount of loans or investments Lender is able to make during
the term of the Loan, which in turn may impair the profitability of
Lender’s business. Therefore, in order to compensate Lender
for the potential impact and risks to its business of prepayments
under this Note, Lender has limited the Borrower’s right to
prepay this Note and has offered the method of calculation of the
Prepayment Premium set forth above.
(e) Borrower
acknowledges that Lender could have restricted prepayments for a
portion of the term of the Loan or determined that it would not
permit prepayments altogether under the Notes during its term, and
therefore, in electing to permit prepayments hereunder, Lender is
entitled to determine and negotiate the terms on which it will
accept prepayments of its loans.
Therefore, in consideration of
Lender’s agreement to the Note Rate set forth herein, and in
recognition of Lender’s reliance on the prepayment provisions
of this Agreement (including the method of calculating the
Prepayment Premium), Borrower agrees that the manner of calculation
of the Prepayment Premium set forth in this Agreement represents
bargained-for compensation to Lender for granting to Borrower the
privilege of prepaying the Notes on the terms set forth herein and
for the potential loss of future income to Lender arising from
having to redeploy the amounts prepaid under the Notes into other
loans or investments. As such, the Prepayment Premium constitutes
reasonable compensation to Lender for making the Loan on the terms
reflected in the Notes and does not represent any form of damages
(liquidated or otherwise), nor does it represent a
penalty.
Section 2.08
Use
of Proceeds . Borrower shall use the proceeds of the
Loan to repay and discharge any existing loans relating to the
Property and pay costs and expenses incurred in connection with the
closing of the Loan. The balance, if any, shall be distributed to
Borrower and may be disbursed by Borrower in its
discretion.
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3.
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REPRESENTATIONS AND
WARRANTIES
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Borrower hereby represents and
warrants to Lender as follows:
Section 3.01
Title, Legal Status and Authority . Borrower (i) is
seised of the Land and Improvements in fee simple and has good and
marketable title to each Individual Property, free and clear of all
liens, charges, encumbrances, and security interests, except the
respective Permitted Encumbrances (as such term is defined in each
Instrument); (ii) will forever warrant and defend its title to the
Property and the validity, enforceability, and priority of the lien
and security interest created by this Instrument against the claims
of all persons; (iii) is a limited liability company duly
organized, validly existing, and in good standing and qualified to
transact business under the laws of its state of organization or
incorporation (“ Organization State ”) and the
state where each Individual Property is located; and (iv) has all
necessary approvals, governmental and otherwise, and full power and
authority to own its properties (including the Property) and carry
on its business.
Section 3.02
Validity of Documents . The execution, delivery and
performance of the Documents and the borrowing evidenced by the
Notes (i) are within the power of Borrower; (ii) have been
authorized by all requisite action; (iii) have received all
necessary approvals and consents; (iv) will not violate, conflict
with, breach, or constitute (with notice or lapse of time, or both)
a default under (1) any law, order or
judgment of any court, governmental
authority, or the governing instrument of Borrower or (2) any
indenture, agreement, or other instrument to which Borrower is a
party or by which it or any of its property is bound or affected;
(v) will not result in the creation or imposition of any lien,
charge, or encumbrance upon any of its properties or assets except
for those in the Instruments; and (vi) will not require any
authorization or license from, or any filing with, any governmental
or other body (except for the recordation of the Instruments, the
Assignments and Uniform Commercial Code (“ U.C.C.
”) filings). The Documents constitute legal, valid, and
binding obligations of Borrower.
Section 3.03
Litigation . There is no action, suit, or proceeding,
judicial, administrative, or otherwise (including any condemnation
or similar proceeding), pending or, to the best knowledge of
Borrower, threatened or contemplated against, or affecting, any
Individual Property or Borrower which would have a material adverse
effect on any Individual Property or Borrower’s ability to
perform its obligations.
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Section
3.04
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Status of
Property .
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(a) The
Land and Improvements are not located in an area identified by the
Secretary of Housing and Urban Development, or any successor, as an
area having special flood hazards pursuant to 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 have
been or may be amended, or any successor law (collectively, the
“ Flood Acts ”) or, if located within any such
area, Borrower has and will maintain the insurance prescribed in
Section 4.06 below.
(b) Borrower
has all necessary (i) certificates, licenses, and other approvals,
governmental and otherwise, for the operation of the Property and
the conduct of its business and (ii) zoning, building code, land
use, environmental and other similar permits or approvals, all of
which are currently in full force and effect and not subject to
revocation, suspension, forfeiture, or modification. The Property
and its use and occupancy is in compliance with all Laws and
Borrower has received no notice of any violation or potential
violation of the Laws which has not been remedied or
satisfied.
(c) Each
Individual Property is served by all utilities (including water and
sewer) required for its use.
(d) All
public roads and streets necessary to serve each Individual
Property for its use have been completed, are serviceable, are
legally open, and have been dedicated to and accepted by the
appropriate governmental entities.
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(e)
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Each Individual Property is free
from damage caused by fire or other casualty.
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(f) All
costs and expenses for labor, materials, supplies, and equipment
used in the construction of the Improvements have been paid in full
except for the Permitted Encumbrances.
(g) Borrower
owns and has paid in full for all furnishings, fixtures, and
equipment (other than tenants’ property) required for the
operation of the each Individual Property as a hotel, free of all
security interests, liens, or encumbrances except the Permitted
Encumbrances and those created by the Instruments.
(h) Each
Individual Property is assessed for real estate tax purposes as one
or more wholly independent tax lot(s), separate from any adjoining
land or improvements, and no other land or improvements are
assessed and taxed together with any of the Individual
Properties.
Section 3.05
Tax
Status of Borrower. Borrower is a “disregarded entity”
as defined in Section 1.1445-2(b)(2)(iii) of the Income Tax
Regulations issued under the Internal Revenue Code of 1986 and
FLLP, the entity that will be responsible for filing and paying
income taxes on behalf of Borrower, is neither a “disregarded
entity”, nor a “foreign person” within the
meaning of Sections 1445 and 7701 of the Internal Revenue Code of
1986.
Section 3.06
Bankruptcy and Equivalent Value. No bankruptcy, reorganization, insolvency,
liquidation, or other proceeding for the relief of debtors has been
instituted by or against any of the Recourse Parties. Borrower has
received reasonably equivalent value for granting the
Instruments.
Section 3.07
Disclosure . Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could
cause any representation or warranty made herein to be materially
misleading. There has been no adverse change in any condition,
fact, circumstance, or event that would make any such information
materially inaccurate, incomplete or otherwise
misleading.
Section 3.08
Illegal Activity. No portion of the Property has been or will be
purchased, improved, fixtured, equipped or furnished with proceeds
of any illegal activity and, to the best of Borrower’s
knowledge, there are no illegal activities at or on the
Property.
Section 3.09
OFAC
Lists . (i) Neither Borrower, nor any persons or entities
holding any legal or beneficial interest whatsoever in Borrower
(whether directly or indirectly), are named on any list of persons,
entities, and governments issued by the Office of Foreign Assets
Control of the United States Department of the Treasury (“
OFAC ”) pursuant to Executive Order 13224 –
Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism (“
Executive Order 13224 ”), as in effect on the date
hereof, or any similar list issued by OFAC or any other department
or agency of the United States of America (collectively, the
“ OFAC Lists ”); provided, however, that (A)
with respect to individual beneficiaries of any governmental plans
or employee benefit plans holding interests in Borrower
(collectively, the “ Individual Beneficiaries
”), the foregoing representations and warranties are limited
to Borrower’s actual knowledge, and (B) with respect to
individual shareholders of any publicly traded company holding an
interest in Borrower (collectively, the “ Individual
Shareholders ”), the foregoing representations and
warranties are limited to Borrower’s actual knowledge; (ii)
neither Borrower, nor any persons or entities holding any legal or
beneficial interest whatsoever in Borrower (whether directly or
indirectly), are included in, owned by, controlled by, acting for
or on behalf of, providing assistance, support, sponsorship, or
services of any kind to, or otherwise associated with any of the
persons or entities referred to or described in the OFAC Lists;
provided, however, that (A) with respect to any Individual
Beneficiaries holding a interests in Borrower, the foregoing
representations and warranties are limited to Borrower’s
actual knowledge, and (B) with respect to any Individual
Shareholders holding interests in Borrower, the foregoing
representations and warranties are limited to Borrower’s
actual knowledge; (iii) neither any guarantor, nor any persons or
entities holding any legal or beneficial interest whatsoever in any
guarantor (whether directly or indirectly), are named on any OFAC
Lists; provided, however, that (A) with respect to any Individual
Beneficiaries holding interests in any guarantor, the foregoing
representations and warranties are limited to Borrower’s
actual knowledge, and (B) with respect to any Individual
Shareholders holding interests in any guarantor, the foregoing
representations and warranties are limited to Borrower’s
actual knowledge; and (iv) neither Borrower nor any guarantor has
knowingly conducted business with or engaged in any transaction
with any person or entity named on any of the OFAC Lists or any
person or entity included in, owned by, controlled by, acting for
or on behalf of, providing assistance, support, sponsorship, or
services of any kind to, or otherwise associated with any of the
persons or entities referred to or described in the OFAC
Lists.
Section 3.10
Property as Single Asset. (i) Borrower’s only
asset is the Property, (ii) while the Loan remains outstanding,
Borrower shall not own any assets in addition to the Property
(other than assets used in connection with the ownership or
operation of the Property), and (iii) the Property generates,
either directly or indirectly, substantially all of the gross
income of the Borrower and there is no substantial business being
conducted, either directly or indirectly, by the Borrower other
than the business of owning the Property and the activities
incidental thereto.
Section 3.11
Franchise Agreement. Each Franchise Agreement is in full force and
effect and there is no default, breach or violation existing
thereunder by any party thereto and no event has occurred (other
than payments due but not yet delinquent) that, with the passage of
time or the giving of notice, or both, would constitute a default,
breach or violation by any party thereunder.
Section 3.12
Management Agreement . Each Management Agreement is
in full force and effect and there is no default, breach or
violation existing thereunder by any party thereto and no event has
occurred (other than payments due but not yet delinquent) that,
with the passage of time or the giving of notice, or both, would
constitute a default, breach or violation by any party
thereunder.
Section 3.13
Noncontravention. Neither the execution and delivery of the
Documents, the Borrower’s performance thereunder, the
recordation of the Instruments, nor the exercise of any remedies
under the Instruments or any other Documents, will adversely affect
Borrower’s rights under the Franchise Agreement, the
Management Agreement, or any of the certificates, licenses or
permits referenced in the Documents, except as otherwise expressly
contemplated by the Documents.
Section 3.14
SPE
Requirements . Borrower is in compliance with the special
purpose entity provisions (the “ SPE Requirements
”) set forth on Exhibit C attached hereto.
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4.
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COVENANTS AND
AGREEMENTS
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Borrower covenants and agrees with
Lender as follows:
Section 4.01
Payment of Obligations . Borrower shall timely pay
and cause to be performed the Obligations (as such term is defined
in the Instruments).
Section 4.02
Continuation of Existence . Borrower shall not (a)
dissolve, terminate, or otherwise dispose of, directly, indirectly
or by operation of law, all or substantially all of its assets; (b)
reorganize or change its legal structure without Lender’s
prior written consent, except as otherwise expressly permitted
under Section 5.01 below; (c) change its name, address, or the name
under which Borrower conducts its business without promptly
notifying Lender; or (d) do anything to cause the representations
in Section 3.02 to become untrue.
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Section
4.03
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Taxes and Other
Charges .
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(a)
Payment of Assessments . Borrower shall pay when due all
taxes, liens, assessments, utility charges (public or private and
including sewer fees), ground rents, maintenance charges, dues,
fines, impositions, and public and other charges of any character
(including penalties and interest) assessed against, or which could
become a lien against, the Property (“ Assessments
”) and in all events prior to the date any fine, penalty,
interest or charge for nonpayment may be imposed. Borrower shall
provide Lender with receipts evidencing payments of real estate
taxes within thirty (30) days after their due date.
(b)
Right to Contest . So long as no Event of Default (defined
below) has occurred, Borrower may, prior to delinquency and at its
sole expense, contest any Assessment, provided that, for any
Assessment in excess of $50,000 and/or any Assessment that remains
unpaid for in excess of ninety (90) days after the date any fine,
penalty, interest or charge for nonpayment may be imposed,
Borrower’s obligation to pay the Assessment as required above
shall not be changed or extended unless (i) Borrower gives Lender
prior written notice of its intent to contest an Assessment; (ii)
Borrower demonstrates to Lender’s reasonable satisfaction
that (A) the applicable Individual Property will not be sold to
satisfy the Assessment prior to the final determination of the
legal proceedings, (B) Borrower has taken such actions as are
required or permitted to accomplish a stay of any such sale, and
(C) Borrower has either (1) furnished a bond or surety
(satisfactory to Lender in form and amount) sufficient to prevent a
sale of the applicable Individual Property or (2) at Lender’s
option, deposited one hundred fifty percent (150%) of the full
amount necessary to pay any unpaid portion of the Assessments with
Lender; and (iii) such proceeding shall be permitted under any
other instrument to which Borrower or the applicable Individual
Property is subject (whether superior or inferior to this
Instrument); provided, however, that the foregoing shall not
restrict the contesting of any income taxes, franchise taxes,
ground rents, maintenance charges, and utility charges.
(c)
Documentary Stamps and Other Charge s. Borrower shall pay
all taxes, assessments, charges, expenses, costs and fees
(including registration and recording fees and revenue, transfer,
stamp, intangible, and any similar taxes) (collectively, the
“ Transaction Taxes ”) required in connection
with the making and/or recording of the Documents. If Borrower
fails to pay the Transaction Taxes after demand, Lender may (but is
not obligated to) pay these and Borrower shall reimburse Lender on
demand for any amount so paid with interest at the applicable
interest rate specified in the Note, which shall be the Default
Rate unless prohibited by Laws.
(d)
Changes in Laws Regarding Taxation . If any law (i) deducts
from the value of real property for the purpose of taxation any
lien or encumbrance thereon, (ii) taxes deeds of trust or debts
secured by deeds of trust for federal, state or local purposes or
changes the manner of the collection of any such existing taxes,
and/or (iii) imposes a tax, either directly or indirectly, on any
of the Documents or the Obligations, Borrower shall, if permitted
by law, pay such tax within the statutory period or within twenty
(20) days after demand by Lender, whichever is less; provided,
however, that if, in the opinion of Lender, Borrower is not
permitted by law to pay such taxes, Lender shall have the option to
declare the Obligations immediately due and payable (without any
Prepayment Premium) upon one hundred twenty (120) days’
notice to Borrower.
Section 4.04
Defense of Title, Litigation and Rights under
Documents . Borrower shall forever warrant, defend and
preserve Borrower’s title to the Property, the validity,
enforceability and priority of this Instruments and the lien or
security interest created thereby, and any rights under the
Documents of Lender and/or any trustee under any Instrument against
the claims of all persons, and shall promptly notify Lender and any
trustee of any such claims. Lender and/or any trustee (whether or
not named as a party to such proceedings) is authorized and
empowered (but shall not be obligated) to take such additional
steps as it may deem necessary or proper for the defense of any
such proceeding or the protection of the lien, security interest,
validity, enforceability, or priority of the applicable Instrument,
title to the Property, or any rights of Lender and/or any trustee
under the Documents, including the employment of counsel, the
prosecution and/or defense of litigation, the compromise, release,
or discharge of such adverse claims, the purchase of any tax title,
the removal of any such liens and security interests, and any other
actions Lender and/or any trustee deems necessary to protect its or
their interests. Borrower authorizes Lender and/or any trustee to
take any actions required to be taken by Borrower, or permitted to
be taken by Lender and/or trustee, in the Documents in the name and
on behalf of Borrower. Borrower shall reimburse Lender and the
trustee on demand for all expenses (including reasonable
attorneys’ fees) incurred in connection with the foregoing
and Lender’s or trustee’s exercise of its or
their
rights under the Documents. All such
expenses of Lender and/or any trustee, until reimbursed by
Borrower, shall be part of the Obligations, bear interest from the
date of demand at the Default Rate (as defined in the Notes) and
shall be secured by the Instruments.
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Section
4.05
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Compliance With Laws and
Operation and Maintenance of Property .
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(a)
Repair and Maintenance . Borrower will operate and maintain
the Property in good order, repair, and operating condition.
Borrower will promptly make all necessary repairs, replacements,
additions, and improvements necessary to ensure that the Property
shall not in any way be diminished or impaired. Borrower will not
cause or allow any portion of the Property to be misused, wasted,
or to deteriorate and Borrower will not abandon the Property. No
new building, structure, or other improvement shall be constructed
on the Land nor shall any material part of the Improvements be
removed, demolished, or structurally or materially altered, without
Lender’s prior written consent.
(b)
Replacement of Property . Borrower will keep the Property
fully equipped and will replace all worn out or obsolete personal
property in a commercially reasonable manner with comparable
fixtures or personal property. Borrower will not, without
Lender’s prior written consent, remove any personal property
covered by any Instrument unless the same is replaced by Borrower
in a commercially reasonable manner with a comparable article (i)
owned by Borrower free and clear of any lien or security interest
(other than the Permitted Encumbrances and those created by any
Instrument) or (ii) leased by Borrower (A) with Lender’s
prior written consent or (B) if the replaced personal property was
either (x) leased at the time of execution of this Agreement, or
(y) photocopiers and postage meter machines.
(c)
Compliance with Laws . Borrower shall comply with and shall
cause each Individual Property to be maintained, used, and operated
in compliance (or, in the case of the Americans with Disabilities
Act of 1990, substantially comply or substantial compliance) with
all (i) present and future laws, Environmental Laws (defined
below), ordinances, regulations, rules, orders and requirements
(including zoning and building codes) of any governmental or
quasi-governmental authority or agency applicable to Borrower or
applicable to the Individual Property (collectively, the “
Laws ”); (ii) orders, rules, and regulations of any
regulatory, licensing, accrediting, insurance underwriting or
rating organization, or other body exercising similar functions;
(iii) duties or obligations of any kind imposed under any Permitted
Encumbrance or by law, covenant, condition, agreement, or easement,
public or private; and (iv) policies of insurance at any time in
force with respect to the Property. If proceedings are initiated or
Borrower receives notice that Borrower or the Property is not in
compliance with any of the foregoing, Borrower will promptly send
Lender notice and a copy of the proceeding or violation notice.
Without limiting Lender’s rights and remedies underthe
Documents or otherwise, if Borrower or the Property is not in
compliance in any material respect with all Laws, Lender may impose
additional requirements upon Borrower including monetary reserves
or financial equivalents.
(d)
Zoning and Title Matters . Borrower shall not, without
Lender’s prior written consent, (i) initiate or support any
zoning reclassification of any Individual Property or variance
under existing zoning ordinances; (ii) modify or supplement any of
the Permitted Encumbrances; (iii) impose any restrictive covenants
or encumbrances upon the Property; (iv) execute or file any
subdivision plat affecting any Individual Property; (v) consent to
the annexation of any Individual Property to any municipality; (vi)
permit any Individual Property to be used by the public or any
person in a way that might make a claim of adverse possession or
any implied dedication or easement possible; (vii) cause or permit
any Individual Property to become a non-conforming use under zoning
ordinances or any present or future non-conforming use of any
Individual Property to be discontinued; or (viii) fail to comply
with the terms of the Permitted Encumbrances.
(a)
Property and Time Element Insurance . Borrower shall keep
the Property insured for the benefit of Borrower and Lender (with
Lender named as mortgagee) by (i) a special form property insurance
policy with an agreed amount endorsement for full replacement cost
(defined below) without any coinsurance provisions or penalties, or
the broadest form of coverage available, in an amount sufficient to
prevent Lender from ever becoming a coinsurer under the policy or
Laws, and with a deductible not to exceed One Hundred Thousand
Dollars ($100,000.00); provided, however, that the deductible for
wind and earthquake insurance shall be five percent (5%) of the
total insured value of each Individual Property; (ii) a policy or
endorsement insuring against acts of terrorism; (iii) a policy or
endorsement providing business income insurance (including business
interruption insurance, and extra expense insurance and/or rent
insurance) on an actual loss sustained basis in an amount equal to
at least one (1) year’s total income from each Individual
Property including all Rents (as defined in the Instruments) plus
all other pro forma annual income such as percentage rent and
tenant reimbursements of fixed and operating expenses, which
business interruption insurance shall also provide coverage as
aforesaid for any additional hazards as may be required pursuant to
the terms of the Documents; (iv) a policy or endorsement insuring
against damage by flood if any Individual Property is located in a
Special Flood Hazard Area identified by the Federal Emergency
Management Agency or any successor or related government agency as
a 100 year flood plain currently classified as Flood Insurance Rate
Map Zones “A”, “AO”, “AH”,
“A1-A30”, “AE”, “A99”,
“V”, “V1-V30”, and “VE” in an
amount equal to the allocated loan amount for such Individual
Property; (v) a policy or endorsement covering against damage or
loss from (A) sprinkler system leakage and (B) boilers, boiler
tanks, HVAC systems, heating and air-conditioning equipment,
pressure vessels, auxiliary piping, and similar apparatus, in the
amount reasonably required by Lender; (vi) during the period of any
construction, repair, restoration, or replacement of any Individual
Property, a standard builder’s risk policy with extended
coverage in an amount at least equal to the full replacement cost
of such Individual Property, and worker’s compensation, in
statutory amounts to the extent such coverage is not provided by
Manager or the builder; and (vii) a policy or endorsement covering
against damage or loss by earthquake and other natural phenomenon
in the amounts reasonably required by Lender. “ Full
replacement cost ” shall mean the one hundred percent
(100%) replacement cost of the applicable Individual Property,
without allowance for depreciation and exclusive of the cost of
excavations, foundations, footings, and value of land, and shall be
subject to verification by Lender. Full replacement cost will be
determined, at Borrower’s expense, periodically upon policy
expiration or renewal by the insurance company or an appraiser,
engineer, architect, or contractor approved by said company and
Lender.
(b)
Liability and Other Insurance . Borrower shall maintain
commercial general liability insurance with per occurrence limits
of $1,000,000, a products/completed operations limit of $2,000,000,
and a general aggregate limit of $2,000,000, with an
excess/umbrella liability policy of not less than $10,000,000 per
occurrence and annual aggregate covering Borrower, with Lender
named as an additional insured, against claims for bodily injury or
death or property damage occurring in, upon, or about the Property
or any street, drive, sidewalk, curb, or passageway adjacent
thereto. The insurance policies shall also include operations and
blanket contractual liability coverage which insures contractual
liability under the indemnifications set forth in Section 7 below
(but such coverage or the amount thereof shall in no way limit such
indemnifications). Upon request, Borrower shall also carry
additional insurance or additional amounts of insurance covering
Borrower or the Property as Lender shall reasonably
require.
(c)
Form of Policy . All insurance required under this Section
shall be fully paid for, non-assessable, and the policies shall
contain such provisions, endorsements, and expiration dates as
Lender shall reasonably require. The policies shall be issued by
insurance companies authorized to do business in the Property
States, approved by Lender, and must have and maintain a current
financial strength rating of “A-, X” (or higher) from
A.M. Best or equivalent (or if a rating by A.M. Best is no longer
available, a
similar rating from a similar or
successor service). In addition, all policies shall (i) include a
standard mortgagee clause, without contribution, in the name of
Lender, (ii) provide that they shall not be canceled, amended, or
materially altered (including reduction in the scope or limits of
coverage) without at least thirty (30) days’ prior written
notice to Lender except in the event of cancellation for
non-payment of premium, in which case only ten (10) days’
prior written notice will be given to Lender, and (iii) include a
waiver of subrogation clause substantially equivalent to the
following: “The Company may require from the Insured an
assignment of all rights of recovery against any party for loss to
the extent that payment therefor is made by the Company, but the
Company shall not acquire any rights of recovery which the Insured
has expressly waived prior to loss, nor shall such waiver affect
the Insured’s rights under this policy”.
(d)
Original Policies . Borrower shall deliver to Lender (i)
certificates evidencing all policies (and renewals) required under
this Section and (ii) receipts evidencing payment of all premiums
on such policies at least thirty (30) days prior to their
expiration. If original and renewal policies are unavailable or if
coverage is under a blanket policy, Borrower shall deliver
duplicate originals or original ACORD 28 (2003/10) and ACORD 25-S
certificates (or equivalent certificates) evidencing that such
policies are in full force and effect.
(e)
General Provisions . Borrower shall not carry separate or
additional insurance concurrent in form or contributing in the
event of loss with that required under this Section unless endorsed
in favor of Lender as per this Section and approved by Lender in
all respects. In the event of foreclosure of any Instrument or
other transfer of title or assignment of any Individual Property in
extinguishment, in whole or in part, of the Obligations, all right,
title, and interest of Borrower in and to all policies of insurance
then in force regarding the Property and all proceeds payable
thereunder and unearned premiums thereon shall immediately vest in
the purchaser or other transferee of any Individual Property. No
approval by Lender of any insurer shall be construed to be a
representation, certification, or warranty of its solvency. No
approval by Lender as to the amount, type, or form of any insurance
shall be construed to be a representation, certification, or
warranty of its sufficiency. Borrower shall comply with all
insurance requirements and shall not cause or permit any condition
to exist which would be prohibited by any insurance requirement or
would invalidate the insurance coverage on the Property.
(f)
Waiver of Subrogation . A waiver of subrogation shall be
obtained by Borrower from its insurers and, consequently, Borrower
for itself, and on behalf of its insurers, hereby waives and
releases any and all right to claim or recover against Lender, its
officers, employees, agents and representatives, for any loss of or
damage to Borrower, other persons, the Property, Borrower’s
property or the property of other persons from any cause required
to be insured against by the provisions of this Agreement or
otherwise insured against by Borrower.
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Section
4.07
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Damage and Destruction of
Property .
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(a)
Borrower’s Obligations . If any damage to, loss, or
destruction of any Individual Property occurs (any “
Damage ”), (i) Borrower shall promptly notify Lender
and take all necessary steps to preserve any undamaged part of such
Individual Property and (ii) if the insurance proceeds are made
available for Restoration (defined below) (but regardless of
whether any proceeds are sufficient for Restoration), Borrower
shall promptly commence and diligently pursue to completion the
restoration, replacement, and rebuilding of the applicable
Individual Property as nearly as possible to its value and
condition immediately prior to the Damage or a Taking (defined
below) in accordance with plans and specifications approved by
Lender (“ Restoration ”). Borrower shall comply
with other reasonable requirements established by Lender to
preserve the security under the Instruments.
(b)
Lender’s Rights . If any Damage occurs and some or all
of it is covered by insurance, then (i) Lender may, but is not
obligated to, make proof of loss if not made promptly by Borrower
and Lender is authorized and empowered by Borrower to settle,
adjust, or compromise any claims for the Damage; (ii) each
insurance company concerned is authorized and directed to make
payment directly to Lender for the Damage; and (iii) Lender may
apply the insurance proceeds in any order it determines (1) to
reimburse Lender for all Costs (defined below) related to
collection of the proceeds and (2) subject to Section 4.07(c) and,
if the Damage does not satisfy the conditions of Section 4.07(c),
at Lender’s option, to (A) payment (without any Prepayment
Premium) of all or part of the Obligations, whether or not then due
and payable, in the order determined by Lender (provided that if
any Obligations remain outstanding after this payment, the unpaid
Obligations shall continue in full force and effect and Borrower
shall not be excused in the payment thereof); (B) the cure of any
default under the Documents; or (C) the Restoration.
Notwithstanding the foregoing, Borrower shall have the right to
settle, adjust or compromise any claim for Damage if the total
amount of such claim is less than $2,000,000 for the affected
Individual Property, provided, that, (x) if the total amount of
such claim is less than $500,000, Borrower promptly uses the full
amount of such insurance proceeds for Restoration of the Damage and
provides evidence thereof to Lender in a manner acceptable to
Lender, and (y) if the total amount of such claim equals or exceeds
$500,000, all such insurance proceeds shall be paid directly to
Lender to be held and applied or disbursed as provided in this
Section 4.07. Any insurance proceeds held by Lender shall be held
without the payment of interest thereon. Notwithstanding anything
in this Agreement or at law or in equity to the contrary, none of
the insurance proceeds paid to Lender shall be deemed trust funds
and Lender may dispose of these proceeds as provided in this
Section. Borrower expressly assumes all risk of loss from any
Damage, whether or not insurable or insured against.
(c)
Application of Proceeds to Restoration . Lender shall make
the Net Proceeds (defined below) available to Borrower for
Restoration if: (i) there shall then be no Event of Default; (ii)
Lender shall be satisfied that Restoration can and will be
completed within one (1) year after the Damage occurs and at least
nine (9) months prior to the maturity of the Loan, (iii) Borrower
shall have entered into a general construction contract acceptable
in all respects to Lender for Restoration, which contract must
include provision for retainage of not less than ten percent (10%)
until final completion of the Restoration; and (iv) in
Lender’s reasonable judgment, after Restoration has been
completed the net cash flow of the applicable Individual Property
will be sufficient to cover all costs and operating expenses of
such Individual Property, including payments due and reserves
required under the Documents for such Individual Property.
Notwithstanding any provision of this Agreement to the contrary,
Lender shall not be obligated to make any portion of the Net
Proceeds available for Restoration (whether as a result of Damage
or a Taking) unless, at the time of the disbursement request,
Lender has determined in its reasonable discretion that (y)
Restoration can be completed at a cost which does not exceed the
aggregate of the remaining Net Proceeds and any funds deposited
with Lender by Borrower (“ Additional Funds ”)
and (z) the aggregate of any loss of rental income insurance
proceeds which the carrier has acknowledged to be payable (“
Rent Loss Proceeds ”) and any funds deposited with
Lender by Borrower are sufficient to cover all costs and operating
expenses of the applicable Individual Property, including payments
due and reserves required under the Documents for such Individual
Property.
(d)
Disbursement of Proceeds . If Lender elects or is required
to make insurance proceeds or the Award (defined below), as the
case may be, available for Restoration, Lender shall, through a
disbursement procedure established by Lender, periodically (and, in
any event, within ten (10) Business Days (defined in the Note)
after submission by Borrower to Lender of the required
documentation) make available to Borrower in installments the net
amount of all insurance proceeds or the Award, as the case may be,
received by Lender after deduction of all reasonable costs and
expenses incurred by Lender in connection with the collection and
disbursement of such proceeds (“ Net Proceeds ”)
and, if any, the Additional Funds. The amounts periodically
disbursed to Borrower shall be based upon the amounts currently due
under the construction contract for Restoration and Lender’s
receipt of (i) appropriate lien
waivers, (ii) a certification of the
percentage of Restoration completed by an architect or engineer
acceptable to Lender, and (iii) title insurance protection against
materialmen’s and mechanics’ liens. At Lender’s
election, a disbursing agent selected by Lender shall disburse such
funds, and Borrower shall pay such agent’s reasonable fees
and expenses. The Net Proceeds, Rent Loss Proceeds, and any
Additional Funds shall constitute additional security for the Loan
and Borrower shall execute, deliver, file and/or record, at its
expense, such instruments as Lender requires to grant to Lender a
perfected, first-priority security interest in these funds. If the
Net Proceeds are made available for Restoration and (x) Borrower
refuses or fails to complete the Restoration, (y) an Event of
Default occurs, or (z) the Net Proceeds or Additional Funds are not
applied to Restoration, then any undisbursed portion may, at
Lender’s option, be applied to the Obligations in any order
of priority, and any application to principal shall be deemed a
voluntary prepayment subject to the Prepayment Premium.
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Section
4.08
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Condemnation
.
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(a)
Borrower’s Obligations . Borrower will promptly notify
Lender of any threatened or instituted proceedings for the
condemnation or taking by eminent domain of any Individual Property
including any change in any street (whether as to grade, access, or
otherwise) (a “ Taking ”). Borrower shall, at
its expense, (i) diligently prosecute these proceedings, (ii)
deliver to Lender copies of all papers served in connection
therewith, and (iii) if the amount of the Award is reasonably
expected to exceed $250,000, consult and cooperate with Lender in
the handling of these proceedings. If the amount of the Award is
reasonably expected to exceed $1,000,000, no settlement of these
proceedings shall be made by Borrower without Lender’s prior
written consent. Lender may participate in these proceedings (but
shall not be obligated to do so) and Borrower will sign and deliver
all instruments requested by Lender to permit this
participation.
(b)
Lender’s Rights to Proceeds . All condemnation awards,
judgments, decrees, or proceeds of sale in lieu of condemnation
(“ Award ”) are assigned and shall be paid to
Lender. Borrower authorizes Lender to collect and receive them, to
give receipts for them, to accept them in the amount received
without question or appeal, and/or to appeal any judgment, decree,
or Award. Borrower will sign and deliver all instruments requested
by Lender to permit these actions.
(c)
Application of Award . Lender may apply any Award in any
order it determines (1) to reimburse Lender for all Costs related
to collection of the Award and (2) subject to Section 4.08(d) and,
if the Award does not satisfy the conditions of Section 4.08(d), at
Lender’s option, to (A) payment (without any Prepayment
Premium) of all or part of the Obligations, whether or not then due
and payable, in the order determined by Lender (provided that if
any Obligations remain outstanding after this payment, the unpaid
Obligations shall continue in full force and effect and Borrower
shall not be excused in the payment thereof); (B) the cure of any
default under the Documents; or (C) the Restoration. If Borrower
receives any Award, Borrower shall promptly deliver such Award to
Lender. Notwithstanding anything in this Instrument or at law or in
equity to the contrary, none of the Award paid to Lender shall be
deemed trust funds and Lender may dispose of these proceeds as
provided in this Section.
(d)
Application of Award to Restoration . Lender shall permit
the application of the Award to Restoration if: (i) no more than
ten percent (10%) of the land constituting the Individual Property
is taken, such land is located along the perimeter or periphery of
the Individual Property and no portion of the Improvements is
located on such land, (ii) the amount of the loss does not exceed
$500,000; (iii) the Taking does not affect access to such
Individual Property from any public right-of-way in a material
adverse manner; (iv) there is no Event of Default at the time of
the Taking or the application of the Award; (v) after Restoration,
such Individual Property and its use will be in compliance with all
Laws; (vi) in Lender’s reasonable judgment, Restoration is
practical and can be completed within one (1) year after the Taking
and at least nine (9) months prior to the maturity of the Loan;
(vii) the Tenants listed in
Exhibit G (“ Restaurant Tenants ”)
agree in writing to continue their Leases without abatement of rent
or are replaced by tenants with Leases of equal economic value;
(viii) Borrower shall have entered into a general construction
contract acceptable in all respects to Lender for Restoration,
which contract must include provision for retainage of not less
than ten percent (10%) until final completion of the Restoration;
and (ix) in Lender’s reasonable judgment, after Restoration
has been completed the net cash flow of the applicable Individual
Property will be sufficient to cover all costs and operating
expenses of such Individual Property, including payments due and
reserves required under the Documents. Any portion of the Award
that is in excess of the cost of any Restoration permitted above,
may, in Lender’s sole discretion, be applied against the
Obligations or paid to Borrower. If the Award is disbursed to
Borrower under the provisions of this Section 4.08(d), then such
Award shall be disbursed to Borrower in accordance with the terms
and conditions of Section 4.07(d).
(e)
Effect on the Obligations . Notwithstanding any Taking,
Borrower shall continue to pay and perform the Obligations as
provided in the Documents. Any reduction in the Obligations due to
application of the Award shall take effect only upon Lender’s
actual receipt and application of the Award to the Obligations. If
the applicable Individual Property shall have been foreclosed, sold
pursuant to any power of sale granted hereunder, or transferred by
deed-in-lieu of foreclosure prior to Lender’s actual receipt
of the Award, Lender may apply the Award received to the extent of
any deficiency upon such sale and Costs incurred by Lender in
connection with such sale.
Section 4.09
Liens
and Liabilities. Borrower shall pay, bond, or otherwise discharge
all claims and demands of mechanics, materialmen, laborers, and
others which, if unpaid, might result in a lien or encumbrance on
the Property or the Rents (collectively, “ Liens
”), provided that Borrower shall not be in violation of this
sentence so long as the Lien shall be discharged (by payment,
bonding or otherwise) within sixty (60) days after the claim is
made. Borrower shall, at its sole expense, do everything necessary
to preserve the lien and security interest created by the
Instruments and their priority. Nothing in the Documents shall be
deemed or construed as constituting the consent or request by
Lender or any trustee, express or implied, to any contractor,
subcontractor, laborer, mechanic or materialman for the performance
of any labor or the furnishing of any material for any improvement,
construction, alteration, or repair of the Property. Borrower
further agrees that neither Lender nor any trustee stands in any
fiduciary relationship to Borrower. Any contributions made,
directly or indirectly, to Borrower by or on behalf of any of its
partners, members, principals or any party related to such parties
shall be treated as equity and shall be subordinate and inferior to
the rights of Lender under the Documents.
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Section
4.10
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Leasing
Restrictions.
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(a) With
respect to the Primary Lease, Borrower shall not (and Lessee, by
its joinder to this Agreement, agrees not to), without first
obtaining Lender’s prior written consent, (i) amend or modify
the Primary Lease, (ii) extend or renew the Primary Lease, (iii)
terminate or accept the surrender of the Primary Lease, (iv) enter
into any new Primary Lease, or (v) grant any consent or approval
required under the Primary Lease that is inconsistent with the
terms of the Documents.
(b) With
respect to any Restaurant Lease, Borrower shall not, without first
obtaining Lender's prior written consent, (1) amend or modify
any Restaurant Lease , (2) extend or renew (except in accordance
with mandatory actions by the lessor under the existing Restaurant
Lease provisions, if any) any Restaurant Lease, (3) terminate
or accept the surrender of any Restaurant Lease, (4) enter
into any new Restaurant Lease, or (5) accept any (i) prepayment of
rent more than one (1) month in advance, (ii) termination fee, or
(iii) similar payment.
(c)
With respect to any other Lease
that is not a Restaurant Lease or the Primary Lease, Borrower or
Lessee may (1) enter into a new Lease (if such new Lease does not
give the tenant any rights,
whether in the form of expansion
rights, rights of first refusal to lease or purchase, or otherwise,
relating to property which is not part of the respective Individual
Property and/or would require Borrower, Lessee and/or Lender to
possess or control any property other than the respective
Individual Property to honor such rights and/or would grant such
tenant any purchase rights with respect to any portion of the
Property), (2) terminate any Lease, or (3) amend any Lease (if such
amendment does not give the tenant any rights, whether in the form
of expansion rights, rights of first refusal to lease or purchase,
or otherwise, relating to property which is not part of the
respective Individual Property and/or would require Borrower,
Lessee and/or Lender to possess or control any property other than
the respective Individual Property to honor such rights and/or
would grant such tenant any purchase rights with respect to any
portion of the Property), provided, that, all decisions made and
all actions taken by Borrower or Lessee pursuant to subsections c
(1), (2) and (3) above represent prudent business practices for the
benefit of each Individual Property and are on market terms and
rents (based on the type, quality and location of each Individual
Property) and are bona fide, binding contracts, duly authorized and
executed with third-party tenants unrelated to Borrower, Lessee,
any of the Recourse Parties or any of their affiliates. For
purposes of this subsection, Manager, any of its subsidiaries and
any successor third-party, unaffiliated management company shall
not be deemed to be related or affiliated with Lessee or any of the
Recourse Parties by virtue of being Manager. All free rent and
similar concessions shall be given only at the beginning of the
term of the Lease, there shall be no step down or other decrease in
base rent payable over the term of the applicable Lease, there
shall be no increase in the landlord's obligations to pay operating
expenses, taxes or insurance or change in the base year, and there
shall be no economic obligations on the landlord under a Lease
beyond maintaining the respective Individual Property. Any
allowance for tenant improvements shall only be given at the
beginning of the term of the Lease.
(d) No
portion of the Property shall (1) be leased to any party or entity
that uses dry cleaning solvents on the Property or (2) permit the
use or storage of hazardous substances in excess of limits allowed
by applicable law, rule or regulation.
(e) Lender
shall respond to a request from Borrower or Lessee for approval of
new leases, lease amendments, lease terminations or any other lease
action requiring Lender’s approval within fifteen (15)
business days after receipt of the items specified below or
Lender’s right to consent to or approve the request shall be
deemed waived, if the request from Borrower or Lessee complies with
the following requirements (the “ Special Notice
Provisions ”):
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(i)
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The request must be in writing, and
copies of the request must be sent to both Lender’s servicing
and law departments in accordance with the notice provisions of the
Documents.
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(ii)
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The request must contain a blank
sheet on the top of it with only the following language appearing
in the middle of the sheet in at least as large font as is used in
the remainder of Borrower’s or Lessee's request: LENDER
MUST RESPOND TO THIS REQUEST WITHIN 15 BUSINESS DAYS FROM THE DATE
OF LENDER’S RECEIPT OF THIS NOTICE OR LENDER’S RIGHT TO
CONSENT TO OR APPROVE THIS REQUEST SHALL BE DEEMED
WAIVED.
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(iii)
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Each such request shall include: (1)
a servicing fee payable to Lender in the amount of $500 and a
letter wherein Borrower states that it shall pay Lender’s
reasonable outside legal fees and disbursements, (2) a copy of the
applicable Lease or Lease amendment and all documents referenced
therein, all work letters,
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all floor layouts, all lease
guaranties, all documents evidencing any loan to the tenant, and
any other documents that shall be necessary or appropriate for
Lender to render a decision on Borrower’s or Lessee's
request, (3) a lease summary setting forth the basic terms of such
Lease, and (4) such financial information as is in Borrower’s
or Lessee's possession regarding the tenant and any
guarantor.
In the event Borrower or Lessee
fails to comply with the Special Notice Provisions, (i) Lender
shall not be required to respond within the specific period of
time, (ii) Lender's right to consent to or approve the request will
not be deemed waived if Lender fails to respond within the specific
period of time, and (iii) Lender shall not be deemed to have
consented to or approved the request if Lender fails to respond
with the specific period of time. This subsection 4.10(e) is not
intended to apply to those particular leasing actions described in
subsection 4.10(c) above that do not require Lender approval or
consent.
(a) Borrower
understands and acknowledges that, as of the date hereof, the
source of funds from which Lender is extending the Loan will
include one or more of the following accounts: (i) an
“insurance company general account,” as that term is
defined in Prohibited Transaction Class Exemption (“
PTE ”) 95-60 (60 Fed. Reg. 35925 (Jul. 12, 1995)), as
to which Lender meets the conditions for relief in Sections I and
IV of PTE 95-60; (ii) pooled and single client insurance company
separate accounts, which are subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended
(“ ERISA ”); and (iii) one or more insurance
company separate accounts maintained solely in connection with
fixed contractual obligations of the insurance company, under which
the amounts payable or credited to the plan are not affected in any
manner by the investment performance of the separate
account.
(b) Borrower
represents and warrants to Lender that (i) Borrower is not an
“employee benefit plan” as defined in Section 3(3) of
ERISA, or a “governmental plan” within the meaning of
Section 3(32) of ERISA; (ii) Borrower is not a “party in
interest”, as defined in Section 3(14) of ERISA, other than
as a service provider or an affiliate of a service provider, to any
employee benefit plan that has invested in a separate account
described in Section 3.11(a)(ii) above, from which funds have been
derived to make the Loan, or if so, the execution of the Documents
and making of the Loan thereunder do not constitute nonexempt
prohibited transactions under ERISA; (iii) Borrower is not subject
to state statutes regulating investments and fiduciary obligations
with respect to governmental plans, or if subject to such statutes,
is not in violation thereof in the execution of the Documents and
the making of the Loan thereunder; (iv) the assets of Borrower do
not constitute “plan assets” of one or more plans
within the meaning of 29 C.F.R. Section 2510.3-101; and (v) one or
more of the following circumstances is true: (1) equity interests
in Borrower are publicly offered securities, within the meaning of
29 C.F.R. Section 2510.3-101(b)(2); (2) less than twenty-five
percent (25%) of all equity interests in Borrower are held by
“benefit plan investors” within the meaning of 29
C.F.R. Section 2510.3-101(f)(2); or (3) Borrower qualifies as an
“operating company,” a “venture capital operating
company” or a “real estate operating company”
within the meaning of 29 C.F.R. Section 2510.3-101(c), (d) or (e),
respectively.
(c) Borrower
shall deliver to Lender such certifications and/or other evidence
periodically requested by Lender, in its sole discretion, to verify
the representations and warranties in Section 4.11(b) above.
Failure to deliver these certifications or evidence, breach of
these representations and warranties, or consummation of any
transaction which would cause this Instrument or any exercise of
Lender’s rights under this Instrument to (i) constitute a
non-exempt prohibited transaction under ERISA or (ii) violate ERISA
or any state statute regulating governmental plans (collectively, a
“ Violation ”), shall be an Event of Default.
Notwithstanding anything in the Documents to the contrary, no sale,
assignment, or transfer of any direct or indirect right, title, or
interest in Borrower or any Individual Property (including creation
of a junior lien, encumbrance or leasehold interest) shall be
permitted which would, in Lender’s opinion,
negate Borrower’s
representations in this Section or cause a Violation. At least
fifteen (15) days before consummation of any of the foregoing,
Borrower shall obtain from the proposed transferee or lienholder
(i) a certification to Lender that the representations and
warranties of this Section 4.11 will be true after consummation and
(ii) an agreement to comply with this Section 4.11.
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Section
4.12
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Environmental Representations,
Warranties, and Covenants.
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(a)
Environmental Representations and Warranties . Borrower
represents and warrants, to the best of Borrower’s knowledge
(after due inquiry and investigation) and additionally based upon
the environmental site assessment report of each Individual
Property (collectively, the “ Environmental Report
”), that except as fully disclosed in the Environmental
Report delivered to and approved by Lender: (i) there are no
Hazardous Materials (defined below) or underground storage tanks
affecting the Property (“ affecting the Property
” shall mean “in, on, under, stored, used or migrating
to or from any Individual Property”) except for (A) routine
cleaning, janitorial and other materials and supplies necessary to
operate each Individual Property for its current use and (B)
Hazardous Materials that are (1) in compliance with Environmental
Laws (defined below), (2) have all required permits, and (3) are in
only the amounts necessary to operate each respective Individual
Property; (ii) there are no past, present or threatened Releases
(defined below) of Hazardous Materials in violation of any
Environmental Law affecting the Property; (iii) there is no past or
present non-compliance with Environmental Laws or with permits
issued pursuant thereto; (iv) Borrower does not know of, and has
not received, any written or oral notice or communication from any
person relating to Hazardous Materials affecting any Individual
Property; and (v) Borrower has provided to Lender, in writing, all
information relating to environmental conditions affecting each
Individual Property known to Borrower or contained in
Borrower’s files. “ Environmental Law ”
means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations, standards, policies and
other government directives or requirements, as well as common law,
that apply to Borrower or any Individual Property and relate to
Hazardous Materials including the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource
Conservation and Recovery Act. “ Hazardous Materials
” shall mean petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil;
explosives, flammable materials; radioactive materials;
polychlorinated biphenyls (“ PCBs ”) and
compounds containing them; lead and lead-based paint; Microbial
Matter, infectious substances, asbestos or asbestos-containing
materials in any form that is or could become friable; underground
or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Property is
prohibited by any federal, state or local authority; any substance
that requires special handling; and any other material or substance
now or in the future defined as a “hazardous
substance,” “hazardous material,”
“hazardous waste,” “toxic substance,”
“toxic pollutant,” “contaminant,” or
“pollutant” within the meaning of any Environmental
Law. “ Release ” of any Hazardous Materials
includes any release, deposit, discharge, emission, leaking,
spilling, seeping, migrating, pumping, pouring, escaping, dumping,
disposing or other movement of Hazardous Materials. “
Microbial Matter ” shall mean the presence of fungi or
bacterial matter which reproduces through the release of spores or
the splitting of cells, including, but not limited to, mold, mildew
and viruses, whether or not such Microbial Matter is
living.
(b)
Environmental Covenants . Borrower covenants and agrees
that: (i) all use and operation of the Property shall be in
compliance with all Environmental Laws and required permits; (ii)
there shall be no Releases of Hazardous Materials affecting the
Property in violation of Environmental Laws; (iii) there shall be
no Hazardous Materials affecting the Property except (A) routine
cleaning and janitorial supplies, (B) in compliance with all
Environmental Laws, (C) in compliance with all required permits,
and (D) (1) in only the amounts necessary to operate each
respective Individual Property or (2) as shall have been fully
disclosed to and approved by Lender in writing; (iv) Borrower shall
keep each Individual Property free and clear of all liens and
encumbrances imposed by any Environmental Laws due to any act or
omission by Borrower or any person (the “ Environmental
Liens ”); (v) Borrower shall, at its sole
expense, fully and expeditiously
cooperate in all activities performed under Section 4.12(c)
including providing all relevant information and making
knowledgeable persons available for interviews; (vi) Borrower
shall, at its sole expense, (A) perform any environmental site
assessment or other investigation of environmental conditions at
any Individual Property upon Lender’s request based on
Lender’s reasonable belief that such Individual Property is
not in compliance with all Environmental Laws, (B) share with
Lender the results and reports and Lender and the Indemnified
Parties (defined below) shall be entitled to rely on such results
and reports, and (C) complete any remediation of Hazardous
Materials affecting any Individual Property or other actions
required by any Environmental Laws; (vii) Borrower shall not allow
any Tenant or other user of the Property to violate any
Environmental Law; (viii) Borrower shall immediately notify Lender
in writing after it becomes aware of (A) the presence, Release, or
threatened Release of Hazardous Materials affecting any Individual
Property, (B) any non-compliance of any Individual Property with
any Environmental Laws, (C) any actual or potential Environmental
Lien, (D) any required or proposed remediation of environmental
conditions relating to any Individual Property, or (E) any written
communication or notice from any person relating to Hazardous
Materials, or any oral communication relating to or alleging any
violation or potential violation of Environmental Law, and (ix) if
an Asbestos Operation and Maintenance Plan and any other Operation
and Maintenance Plan (collectively, the “ O&M Plan
”) is in effect (or required by Lender to be implemented) at
the time of the closing of the Loan, then Borrower shall, at its
sole expense, implement and continue the O&M Plan (with any
modifications required to comply with applicable Laws) until
payment and full satisfaction of the Obligations. Any failure of
Borrower to perform its obligations under this Section 4.12 shall
constitute bad faith waste of the Property.
(c)
Lender’s Rights . Lender and any person designated by
Lender may enter any Individual Property to assess the
environmental condition of such Individual Property and its use
including (i) conducting any environmental assessment or audit (the
scope of which shall be determined by Lender) and (ii) taking
samples of soil, groundwater or other water, air, or building
materials, and conducting other invasive testing at all reasonable
times when (A) a default has occurred under the Documents, (B)
Lender reasonably believes that a Release has occurred or such
Individual Property is not in compliance with all Environmental
Laws, or (C) the Loan is being considered for sale (any
out-of-pocket expenses incurred in connection with the entry under
clause (C) only shall be at Lender’s expense). Borrower shall
cooperate with and provide access to Lender and such
person.
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Section
4.13
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Reserve Funds for Replacements
of Furniture, Fixtures and Equipment.
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(a)
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Borrower shall make monthly deposits
with Lender to provide a cumulative reserve for the replacement and
repair of furniture, fixtures, and equipment, including but not
limited to individual rooms, lobby, floor coverings (carpet and
pad, floor tiles), window coverings (mini blinds/drapes),
multi-purpose rooms, dining rooms, interior repainting, windows,
doors, plumbing fixtures (water heaters, sinks, tubs, toilets),
kitchen equipment, the water fountains, administrative areas,
furniture, and other related equipment required to maintain the
quality and life of the property and improvements thereto, to
include major capital improvements such as roof replacement,
parking lot maintenance, heating, ventilation and air conditioning
and other extraordinary exterior replacements or repairs that are
necessary over time to uphold the structural integrity of the asset
as originally designed, constructed or improved (such items shall
be referred to collectively as the “ FF&E ”)
in the manner set forth in paragraph (b) below.
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(b)
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Commencing on the first Due Date and
continuing regularly thereafter on each Due Date until the payment
in full of all sums due under the Notes, Borrower shall deposit
monthly with Lender funds (said funds, together with any interest
thereon, shall be referred to as
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CENTRAL\31200109.7
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