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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): JULY 9, 1999
HORIZON GROUP PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 0-24123 38-3407933
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
77 WEST WACKER DRIVE, SUITE 4200
CHICAGO, ILLINOIS 60601
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (312) 917-8870
No Change
(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS.
On July 9, 1999, Horizon Group Properties, Inc. (the "Company")
completed a $46.6 million debt financing with Morgan Guaranty Trust Company
of New York. The financing consists of (i) nonrecourse loans totaling $22.85
million secured by three factory outlet centers located in Daleville,
Indiana, Somerset, Pennsylvania and Tulare, California and (ii) nonrecourse
loans totaling $23.75 million secured by three factory outlet centers located
in Gretna, Nebraska, Sealy, Texas and Traverse City, Michigan. The loans bear
interest at a fixed rate of 8.46%, mature on August 1, 2009 and require the
monthly payment of interest and principal pursuant to a 25 year amortization
schedule. The proceeds from the loans together with Company funds were used
to repay $46.8 million of indebtedness under the Company's credit facility
with Capital Company of America (formerly Nomura Asset Capital Corporation).
The Company issued a press release on July, 12, 1999, a copy of
which is attached hereto as Exhibit 99.8.
2
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Number Description
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10.20 Fixed Rate Note dated as of July 9, 1999 between Gretna,
Sealy, Traverse City Outlet Centers, L.L.C. and Morgan
Guaranty Trust Company of New York related to the
financing of the factory outlet center in Gretna,
Nebraska.
10.21 Deed of Trust and Security Agreement for the benefit of
Morgan Guaranty Trust Company of New York, as lender, from
Gretna, Sealy, Traverse City Outlet Centers, L.L.C., as
borrower, related to the financing of the factory outlet
center in Gretna, Nebraska.
10.22 Guaranty for the benefit of Morgan Guaranty Trust Company
of New York by Horizon Group Properties, Inc. related to
the Gretna, Sealy and Traverse City loans.
99.8 Press Release issued by the Company on July 12, 1999
regarding the financing of six of the Company's factory
outlet centers.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
HORIZON GROUP PROPERTIES, INC.
(Registrant)
Date: August 3, 1999
By: /s/ Gary J. Skoien
------------------------
Name: Gary J. Skoien
Title: President and Chief Executive Officer
4
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EXHIBIT INDEX
Number Description
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10.20 Fixed Rate Note dated as of July 9, 1999 between Gretna,
Sealy, Traverse City Outlet Centers, L.L.C. and Morgan
Guaranty Trust Company of New York related to the
financing of the factory outlet center in Gretna,
Nebraska.
10.21 Deed of Trust and Security Agreement for the benefit of
Morgan Guaranty Trust Company of New York, as lender, from
Gretna, Sealy, Traverse City Outlet Centers, L.L.C., as
borrower, related to the financing of the factory outlet
center in Gretna, Nebraska.
10.22 Guaranty for the benefit of Morgan Guaranty Trust Company
of New York by Horizon Group Properties, Inc. related
to the Gretna, Sealy and Traverse City loans.
99.8 Press Release issued by the Company on July 12, 1999
regarding the financing of six of the Company's factory
outlet centers.
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Pool II
Loan No. V_04078
Nebraska
FIXED RATE NOTE
$7,485,000.00 July ___, 1999
FOR VALUE RECEIVED, GRETNA, SEALY, TRAVERSE CITY OUTLET CENTERS, L.L.C.,
a Delaware limited liability company (hereinafter referred to as "BORROWER"),
promises to pay to the order of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a
New York banking corporation, its successors and assigns (hereinafter
referred to as "LENDER"), at the office of Lender or its agent, designee, or
assignee at 60 Wall Street, New York, New York 10260-0060, Attention: Loan
Servicing, or at such place as Lender or its agent, designee, or assignee may
from time to time designate in writing, the principal sum of SEVEN MILLION
FOUR HUNDRED EIGHTY FIVE THOUSAND AND NO/100 DOLLARS ($7,485,000.00), in
lawful money of the United States of America, with interest thereon to be
computed on the unpaid principal balance from time to time outstanding at the
Applicable Interest Rate (hereinafter defined) at all times prior to the
occurrence of an Event of Default (as defined in the Security Instruments
[hereinafter defined]), and to be paid in installments as set forth below.
Unless otherwise herein defined, all initially capitalized terms shall have
the meanings given such terms in the Security Instruments.
1. PAYMENT TERMS
Principal and interest due under this Note shall be paid as follows:
(A) A payment of $60,069.62 on the first day of August, 1999;
(B) A constant payment of $60,069.62, on the first day of September,
1999, and on the first day of each calendar month thereafter, up to and
including the first day of July, 2009; and
(C) On the Anticipated Repayment Date and on the first day of each
calendar month thereafter until this Note is paid in full, in the manner set
forth in SECTION 18 of this Note;
with payments under this Note to be applied pursuant to the provisions of
SECTION 18 of this Note, or if the provisions of SECTION 18 of this Note are
not yet effective, as follows:
(i) First, to the payment of interest and other costs and
charges due in connection with this Note or the Debt, as Lender may
determine in its sole
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discretion; and
(ii) The balance shall be applied toward the reduction of
the principal sum;
and on the first day of August, 2009 (the "MATURITY DATE" or the "ANTICIPATED
REPAYMENT DATE"), the entire outstanding principal balance hereof, together
with all accrued but unpaid interest thereon, shall be due and payable in
full, PROVIDED, HOWEVER, that in the event such amounts are not paid in full
on such date, the Maturity Date shall be extended to the first day of August,
2024 (the "EXTENDED MATURITY DATE"). Interest on the principal sum of this
Note shall be calculated on the basis of a three hundred sixty (360) day year
and paid for the actual number of days elapsed. All amounts due under this
Note shall be payable without setoff, counterclaim or any other deduction
whatsoever.
2. INTEREST
The term "APPLICABLE INTEREST RATE" as used in this Note shall mean (a)
from the date of this Note through but not including the Anticipated
Repayment Date, a rate per annum equal to eight and 46/100 percent (8.46%)
(the "INITIAL INTEREST RATE"), and (b) from and after the Anticipated
Repayment Date through and including the date this Note is paid in full, a
rate per annum equal to the greater of (i) the Initial Interest Rate plus two
percent (2.0%), or (ii) the Treasury Index (as hereinafter defined) plus four
and 55/100 percent (4.55%) ((i) or (ii), as applicable, the "REVISED INTEREST
RATE"). The term "TREASURY INDEX" for purposes of this Section 2 means the
yield calculated by the linear interpolation of the yields, as reported in
Federal Reserve Statistical Release H.15-Selected Interest Rates under the
heading "U.S. Government Securities/Treasury Constant Maturities" for the
week ending prior to the Anticipated Repayment Date, of U.S. Treasury
constant maturities with maturity dates (one longer and one shorter) most
nearly approximating ten (10) years after the Anticipated Repayment Date. (In
the event Release H.15 is no longer published, Lender shall select a
comparable publication to determine the Treasury Rate.)
3. SECURITY
This Note is secured by, and Lender is entitled to the benefits of, the
Security Instruments, the Assignments, the Environmental Agreement, and the
other Loan Documents (hereinafter defined). The term "SECURITY INSTRUMENTS"
means collectively (i) the Deed of Trust and Security Agreement dated the
date hereof given by Borrower for the use and benefit of Lender covering the
estate of Borrower in certain premises located in Gretna, Nebraska, (ii) the
Deed of Trust and Security Agreement dated the date hereof given by Borrower
for the use and benefit of Lender covering the estate of Borrower in certain
premises located in Sealy, Texas, and (iii) the Mortgage dated the date
hereof given by Borrower for the use and benefit of Lender covering the
estate of Borrower in certain premises located in Traverse City, Michigan
(all of such premises,
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together with all properties, rights, titles, estates and interests now or
hereafter securing the Debt and/or other obligations of Borrower under the
Loan Documents, are collectively referred to herein as the "PROPERTY"). The
term "ASSIGNMENT" means (i) the Assignment of Leases and Rents of even date
herewith executed by Borrower in favor of Lender, covering the interest of
Borrower in certain premises located in Gretna, Nebraska, (ii) the Assignment
of Leases and Rents dated the date hereof given by Borrower for the use and
benefit of Lender covering the estate of Borrower in certain premises located
in Sealy, Texas, and (iii) the Assignment of Leases dated the date hereof
given by Borrower for the use and benefit of Lender covering the estate of
Borrower in certain premises located in Traverse City, Michigan. The term
"ENVIRONMENTAL AGREEMENT" means the Environmental Indemnity Agreement of even
date herewith executed by Borrower in favor of Lender. The term "ESCROW
AGREEMENT" means collectively the Escrow Agreements for Reserves and Impounds
of even date herewith executed by Borrower in favor of Lender for each of the
Loans. The term "LOAN DOCUMENTS" refers collectively to this Note, those
certain Fixed Rate Notes of even date herewith also evidencing the Debt
(together with the Note, referred to collectively herein as the "NOTES"), the
Security Instruments, the Assignments, the Environmental Agreement, the
Escrow Agreement and any and all other documents executed in connection with
this Note or now or hereafter executed by Borrower and/or others and by or in
favor of Lender, which wholly or partially secure or guarantee payment of
this Note or pertains to indebtedness evidenced by this Note.
4. LATE FEE
If any installment payable under this Note is not received by Lender
within ten (10) days after the date on which it is due (without regard to any
applicable cure and/or notice period), Borrower shall pay to Lender upon
demand an amount equal to the lesser of (a) five percent (5%) of such unpaid
sum or (b) the maximum amount permitted by applicable law to defray the
expenses incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment, and such amount shall be secured by the Loan Documents.
5. DEFAULT AND ACCELERATION
So long as an Event of Default exists, Lender may, at its option, without
notice or demand to Borrower, declare the Debt immediately due and payable. All
remedies hereunder, under the Loan Documents and at law or in equity shall be
cumulative. In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security for the Debt or to
defend against any claims asserted by Borrower arising from or related to the
Loan Documents, Borrower also agrees to pay to Lender on demand all costs of
collection or defense incurred by Lender, including reasonable attorneys' fees
for the services of counsel whether or not suit be brought.
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6. DEFAULT INTEREST
Upon the occurrence of an Event of Default Borrower shall pay interest
on the entire unpaid principal sum and any other amounts due under the Loan
Documents at the rate equal to the lesser of (a) the maximum rate permitted
by applicable law, or (b) the greater of (i) five percent (5%) above the
highest Applicable Interest Rate contained in any of the Notes or (ii) five
percent (5%) above the Prime Rate (hereinafter defined), in effect at the
time of the occurrence of the Event of Default (the "DEFAULT RATE"). The term
"PRIME RATE" means the prime rate reported in the Money Rates section of THE
WALL STREET JOURNAL. In the event that THE WALL STREET JOURNAL should cease
or temporarily interrupt publication, the term "PRIME RATE" shall mean the
daily average prime rate published in another business newspaper, or business
section of a newspaper, of national standing and general circulation chosen
by Lender. In the event that a prime rate is no longer generally published or
is limited, regulated or administered by a governmental or quasi-governmental
body, then Lender shall select a comparable interest rate index which is
readily available and verifiable to Borrower but is beyond Lender's control.
The Default Rate shall be computed from the occurrence of the Event of
Default until the actual receipt and collection of a sum of money determined
by Lender to be sufficient to cure the Event of Default. Amounts of interest
accrued at the Default Rate shall constitute a portion of the Debt, and shall
be deemed secured by the Loan Documents. This clause, however, shall not be
construed as an agreement or privilege to extend the date of the payment of
the Debt, nor as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default.
7. PREPAYMENT
(A) The principal balance of this Note may not be prepaid in whole
or in part (except with respect to the application of casualty or
condemnation proceeds) prior to the Maturity Date. If following the
occurrence of any Event of Default, Borrower shall tender payment to Lender
or Lender shall receive proceeds (whether through foreclosure or the exercise
of the other remedies available to Lender under the Security Instruments or
the other Loan Documents), Borrower shall pay in addition to interest accrued
and unpaid on the principal balance of this Note and all other sums then due
under this Note and the other Loan Documents a prepayment consideration in an
amount equal to the greater of (A) one percent (1%) of the outstanding
principal balance of this Note at the time such payment or proceeds are
received, or (B) (x) the present value as of the date such payment or
proceeds are received of the remaining scheduled payments of principal and
interest from the date such payment or proceeds are received through the
Maturity Date (including any balloon payment) determined by discounting such
payments at the Discount Rate (as hereinafter defined), less (y) the amount
of the payment or proceeds received. The term "DISCOUNT RATE" means the rate
which, when compounded monthly, is equivalent to the Treasury Rate (as
hereinafter defined), when compounded semi-annually. The term "TREASURY RATE"
means the yield calculated by the linear interpolation of the yields, as
reported in Federal Reserve Statistical Release H.15-Selected Interest Rates
under the heading
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"U.S. Government Securities/Treasury Constant Maturities" for the week ending
prior to the date the payment or such proceeds are received, of U.S. Treasury
constant maturities with maturity dates (one longer and one shorter) most
nearly approximating the Maturity Date. (In the event Release H.15 is no
longer published, Lender shall select a comparable publication to determine
the Treasury Rate.) Lender shall promptly notify Borrower of the amount and
the basis of determination of the required prepayment consideration, which
shall be conclusive except in the case of manifest error. Notwithstanding the
foregoing, Borrower shall have the additional privilege to prepay the entire
principal balance of this Note (together with any other sums constituting the
Debt) on any scheduled payment date occurring on or after that date which is
three (3) months preceding the Maturity Date without any fee or consideration
for such privilege. Notwithstanding the foregoing, any prepayment not made in
connection with defeasance or release under Article XV of the Security
Instruments may be applied by the Lender to the outstanding principal balance
of one or more of any of the Notes, in Lender's sole discretion. Borrower may
defease the Loan to the extent permitted by the Security Instruments, and
such defeasance shall not be deemed a prepayment for purposes of this SECTION
7(a).
(B) If the prepayment results from the application to the Debt of
the casualty or condemnation proceeds from the Property, no prepayment
consideration will be imposed. Partial prepayments of principal resulting
from the application of casualty or condemnation proceeds to the Debt shall
not change the amounts of subsequent monthly installments nor change the
dates on which such installments are due, unless Lender shall otherwise agree
in writing.
8. SAVINGS CLAUSE
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance
due hereunder at a rate which could subject Lender to either civil or
criminal liability as a result of being in excess of the maximum interest
rate which Borrower is permitted by applicable law to contract or agree to
pay. If by the terms of this Note, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of such maximum rate, the Applicable Interest Rate or the Default
Rate, as the case may be, shall be deemed to be immediately reduced to such
maximum rate and all previous payments in excess of the maximum rate shall be
deemed to have been payments in reduction of principal and not on account of
the interest due hereunder. All sums paid or agreed to be paid to Lender for
the use, forbearance, or detention of the Debt evidenced by this Note, shall,
to the extent permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full stated term of this Note until payment in full
so that the rate or amount of interest on account of the Debt evidenced by
this Note does not exceed the maximum lawful rate of interest from time to
time in effect and applicable to the Debt evidenced by this Note for so long
as the Debt evidenced by this Note is outstanding. Notwithstanding anything
to the contrary contained herein or in any of the other Loan Documents, it is
not the intention of Lender
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to accelerate the maturity of any interest that has not accrued at the time
of such acceleration or to collect unearned interest at the time of such
acceleration.
9. WAIVERS
(A) Except as specifically provided in the Loan Documents, Borrower
and any endorsers, sureties or guarantors hereof jointly and severally waive
presentment and demand for payment, notice of intent to accelerate maturity,
notice of acceleration of maturity, protest and notice of protest and
non-payment, all applicable exemption rights, valuation and appraisement,
notice of demand, and all other notices in connection with the delivery,
acceptance, performance, default or enforcement of the payment of this Note
or any of the other Notes and the bringing of suit and diligence in taking
any action to collect any sums owing hereunder or in proceeding against any
of the rights and collateral securing payment hereof. Borrower and any
surety, endorser or guarantor hereof agree (i) that the time for any payments
hereunder may be extended from time to time without notice and consent, (ii)
to the acceptance by Lender of further collateral, (iii) the release by
Lender of any existing collateral for the payment of this Note or any of the
other Notes, (iv) to any and all renewals, waivers or modifications that may
be granted by Lender with respect to the payment or other provisions of this
Note, and/or (v) that additional Borrowers, endorsers, guarantors or sureties
may become parties hereto all without notice to them and without in any
manner affecting their liability under or with respect to this Note or any of
the other Notes. No extension of time for the payment of this Note or any of
the other Notes or any installment hereof or thereof shall affect the
liability of Borrower under this Note or any of the other Notes or any
endorser or guarantor hereof or thereof even though the Borrower or such
endorser or guarantor is not a party to such agreement.
(B) Failure of Lender to exercise any of the options granted herein
to Lender upon the happening of one or more of the events giving rise to such
options shall not constitute a waiver of the right to exercise the same or
any other option at any subsequent time in respect to the same or any other
event. The acceptance by Lender of any payment hereunder that is less than
payment in full of all amounts due and payable at the time of such payment
shall not constitute a waiver of the right to exercise any of the options
granted herein to Lender at that time or at any subsequent time or nullify
any prior exercise of any such option without the express written
acknowledgment of the Lender.
10. EXCULPATION
(A) Notwithstanding anything in the Loan Documents to the contrary,
but subject to the qualifications below, Lender and Borrower agree that:
(i) Borrower shall be liable upon the Debt and for the
other obligations arising under the Loan Documents to the full
extent (but only to the extent) of the security therefor; PROVIDED,
HOWEVER, that in the event (A) of fraud,
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wilful misconduct or intentional material misrepresentation by
Borrower, its general partners, if any, its members, if any, an
affiliated property manager or by any Guarantor or any Indemnitor
in connection with the Loans evidenced by the Notes, (B) of
Borrower's (excluding actions taken by a trustee appointed during
an involuntary bankruptcy) breach or default under Sections
2.02(g), 9.01 or 9.02 of the Security Instruments, or (C) the
Property or any part thereof becomes an asset in a voluntary
bankruptcy or voluntary insolvency proceeding, the limitation on
recourse set forth in this SUBSECTION 10(a) will be null and void
and completely inapplicable, and this Note, the other Notes and the
Debt shall be with full recourse to Borrower.
(ii) If a default occurs in the timely and proper payment
of all or any part of the Debt, or in the payment or performance of
any other obligation under the Security Instruments or the
Assignments, Lender shall not enforce the liability and obligation
of Borrower to perform and observe the obligations contained in the
Notes or the Security Instruments by any action or proceeding
wherein a money judgment shall be sought against Borrower, except
that Lender may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable
Lender to enforce and realize upon the Security Instruments, the
other Loan Documents and the interest in the Property, the Rents
and any other collateral given to Lender created by the Security
Instruments and the other Loan Documents; PROVIDED, HOWEVER, that
any judgment in any action or proceeding shall be enforceable
against Borrower only to the extent of Borrower's interest in the
Property, in the Rents and in any other collateral given to Lender.
Lender, by accepting the Notes and the Security Instruments, agrees
that it shall not, except as otherwise herein provided, sue for,
seek or demand any deficiency judgment against Borrower in any
action or proceeding, under or by reason of or under or in
connection with the Notes, the other Loan Documents or the Security
Instruments.
(iii) The provisions of this SUBSECTION 10(a) shall not
(A) constitute a waiver, release or impairment of any obligation
evidenced or secured by the Notes, the other Loan Documents or the
Security Instruments; (B) impair the right of Lender to name
Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under the Security Instruments; (C) affect the
validity or enforceability of any indemnity, guaranty, master lease
or similar instrument made in connection with the Notes, the
Security Instruments, or the other Loan Documents; (D) impair the
right of Lender to obtain the appointment of a receiver; (E) impair
the enforcement of the Assignments executed in connection herewith;
(F) impair the right of Lender to enforce indemnification
provisions of the Security Instruments; or (G) impair the right of
Lender to obtain a deficiency judgment or judgment on the Notes
against Borrower if necessary to obtain any insurance proceeds or
condemnation awards to which Lender would otherwise be entitled
under the Security Instruments; PROVIDED, HOWEVER, Lender shall
only enforce such judgment
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against the insurance proceeds and/or condemnation awards.
(iv) Notwithstanding the provisions of this Article to
the contrary, Borrower shall be personally liable to Lender for the
Losses it incurs due to: (A) the application of Rents not in
accordance with the Loan Documents; (B) the application of
insurance proceeds or condemnation awards not in accordance with
the Loan Documents; (C) Borrower's failure to return or to
reimburse Lender for all material Personal Property taken from the
Property by or on behalf of Borrower and not replaced with Personal
Property of the same utility and of the same or greater value; (D)
any act of actual waste or arson by Borrower, any principal,
affiliate, general partner or member thereof or by any Indemnitor
or any Guarantor; (E) any fees or commissions paid by Borrower to
any principal, affiliate, general partner or member of Borrower,
any Indemnitor or any Guarantor in violation of the terms of the
Notes, the Security Instruments or the other Loan Documents; (F)
Borrower's failure to comply with the provisions of Section 16.02
of the Security Instruments; or (G) any breach of the Environmental
Indemnity.
(B) Nothing herein shall be deemed to be a waiver of any right
which Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt or to require that all collateral shall continue to secure all of the
Debt, owing to Lender in accordance with and subject to the limitations set
forth in the Notes, the Security Instruments and the other Loan Documents.
11. AUTHORITY
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to
execute, deliver and perform its obligations pursuant to the Notes and the
other Loan Documents and that the Notes and the other Loan Documents
constitute legal, valid and binding obligations of Borrower. Borrower further
represents that the Loans evidenced by the Loan Documents were made for
business or commercial purposes and not for personal, family or household use.
12. NOTICES
All notices or other communications required or permitted to be
given pursuant hereto shall be given in the manner and be effective as
specified in the Security Instruments, directed to the parties at their
respective addresses as provided therein.
13. TRANSFER
Lender shall have the unrestricted right at any time or from time to
time to sell this Note and the Loans evidenced by the Notes and the Loan
Documents or
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participation interests therein. Borrower shall execute, acknowledge and
deliver any and all instruments requested by Lender to satisfy such
purchasers or participants that the unpaid indebtedness evidenced by the
Notes are outstanding upon the terms and provisions set out in the Notes and
the other Loan Documents. To the extent, if any, specified in such assignment
or participation, such assignee(s) or participant(s) shall have the rights
and benefits with respect to the Notes and the other Loan Documents as such
assignee(s) or participant(s) would have if they were the Lender hereunder.
14. WAIVER OF TRIAL BY JURY
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE
NOTES OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION
ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO, THOSE RELATING
TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN LENDER AND BORROWER; (B)
USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE
ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF
COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST
OR CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER
EGO, INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS,
COERCION, UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF
TORTIOUS INTERFERENCE WITH PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR
OF ANTITRUST; OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER, AND IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY BORROWER.
15. APPLICABLE LAW; JURISDICTION
(A) THIS NOTE WAS NEGOTIATED IN THE STATE OF ILLINOIS, AND MADE BY
BORROWER AND ACCEPTED BY LENDER IN THE STATE OF ILLINOIS, AND THE PROCEEDS OF
THIS NOTE WERE DISBURSED IN THE STATE OF ILLINOIS, WHICH STATE THE PARTIES
AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING
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HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW,
BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS NOTE AND THIS NOTE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS NOTE MAY AT LENDER'S OPTION BE INSTITUTED
IN ANY FEDERAL OR STATE COURT IN THE CITY OF CHICAGO, COOK COUNTY, ILLINOIS,
AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED
ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING,
AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT
IN ANY SUIT, ACTION OR PROCEEDING.
16. [Intentionally Omitted]
17. NO ORAL CHANGE
The provisions of the Notes and the Loan Documents may be amended or
revised only by an instrument in writing signed by the Borrower and Lender.
The Notes and all the other Loan Documents embody the final, entire agreement
of Borrower and Lender and supersede any and all prior commitments,
agreements, representations and understandings, whether written or oral,
relating to the subject matter hereof and thereof and may not be contradicted
or varied by evidence of prior, contemporaneous or subsequent oral agreements
or discussions of Borrower and Lender. There are no oral agreements between
Borrower and Lender.
18. ANTICIPATED REPAYMENT DATE PROVISIONS
(a) The following subsections shall apply from and after
the "ANTICIPATED REPAYMENT DATE":
(i) For the calendar year in which the Anticipated
Repayment Date occurs and for each calendar year thereafter until
the Notes are paid in full, Borrower shall submit to Lender for
Lender's written approval an annual budget (an "ANNUAL BUDGET") not
later than (i) 60 days prior to the Anticipated Repayment Date for
the calendar year in which the Anticipated Repayment Date occurs
and (ii) sixty (60) days prior to the commencement of each calendar
year thereafter, in form reasonably satisfactory to Lender setting
forth in reasonable detail budgeted monthly operating income and
monthly operating capital and
<PAGE>
other expenses for the Property. Each Annual Budget shall contain,
among other things, limitations on management fees, third party
service fees and other expenses as Lender may reasonably determine.
Each Annual Budget must be satisfactory to Lender in its reasonable
discretion and each such Annual Budget approved by Lender in
accordance with the terms hereof shall hereinafter be referred to
as an "APPROVED BUDGET." Until such time as Lender approves a
proposed Annual Budget, the most recently Approved Budget shall
apply; provided, that such Approved Budget shall be adjusted to
reflect actual increases in real estate taxes, insurance premiums
and utilities expenses.
(ii) In the event that Borrower must incur any
extraordinary operating expense or capital expense not set forth in
the applicable Approved Budget or reserved for in the On-going
Replacement Fund (each, an "EXTRAORDINARY EXPENSE"), then Borrower
shall promptly deliver to Lender a reasonably detailed explanation
of such proposed Extraordinary Expense for Lender's approval.
(iii) For the purposes of this Note, "OPERATING
EXPENSES" shall mean, for any period, the operating expenses for
the operation and maintenance of the Property as set forth in an
Approved Budget to the extent such expenses are actually paid by
Borrower and excluding (1) expenses for which Borrower shall be
reimbursed from, or which shall be paid for out of, any Funds (as
defined in the Escrow Agreement), and (2) any management fees
payable to affiliates of the Borrower unless Lender has approved
the same in its sole discretion pursuant to an Approved Budget.
(iv) From and after the Anticipated Repayment
Date, interest shall accrue on the unpaid principal balance from
time to time outstanding under this Note at the Revised Interest
Rate. Interest accrued at the Revised Interest Rate and not paid
pursuant to this SECTION 18 shall be deferred and added to the
principal balance of this Note and shall earn interest at the
Revised Interest Rate to the extent permitted by applicable law
(such accrued interest and any interest thereon is hereinafter
referred to as "ACCRUED INTEREST"). All of the unpaid principal
balance of this Note, including, without limitation, any Accrued
Interest, if not sooner paid pursuant to the provisions hereof
shall be due and payable on the Extended Maturity Date.
(v) Borrower shall be obligated to pay, and Lender
shall collect from the Deposit Account (as defined in the Clearing
Account Agreement of even date herewith among Borrower, Lender and
the Clearing Bank (as defined therein)) to the extent of funds on
deposit in such account, on the Anticipated Repayment Date and on
the first day of each calendar month thereafter to and including
the Extended Maturity Date the following payments from amounts in
the Deposit Account to be applied in the listed order of priority:
<PAGE>
(1) First, to the payment of the amount
set forth in Section 1(b) of this Note (the "MONTHLY DEBT
SERVICE PAYMENT AMOUNT") to be applied first to the payment
of interest computed at the Initial Interest Rate with the
remainder applied to the reduction of the outstanding
principal balance of this Note and then to the payment of
the "Monthly Debt Service Payment Amount" as defined in
each of the other Notes;
(2) Second, to payments to the Tax and
Insurance Funds (as defined in the Escrow Agreement) in
accordance with the terms and conditions of the Escrow
Agreement;
(3) Third, to payments to the On-going
Replacement Funds and TI&LC Funds (each as defined in the
Escrow Agreement) in accordance with the terms and
conditions of the Escrow Agreement;
(4) Fourth, to payments for monthly
Operating Expenses pursuant to the terms and conditions of
the related Approved Budget;
(5) Fifth, to payment for Extraordinary
Expenses approved by Lender, if any;
(6) Sixth, to payment of the outstanding
principal balance of this Note and each of the other Notes
until such outstanding principal balance is paid in full;
and
(7) Seventh, payments to Lender of the
balance of the funds then on deposit in the Deposit Account
to be applied to (x) any other amounts due under the Loan
Documents, and (y) Accrued Interest in whatever proportion
and priority as Lender may determine.
(vi) Nothing in this ARTICLE 18 shall limit, reduce or
otherwise affect Borrower's obligations to make payments of the
Monthly Debt Service Payment Amount, payments to the Tax and
Insurance Funds, On-going Replacement Funds, TI&LC Funds and
payments of other amounts due hereunder and under the other Loan
Documents, whether or not Rents (as defined in the Security
Instruments) are available to make such payments.
<PAGE>
Executed as of the day and year first above written.
BORROWER:
GRETNA, SEALY, TRAVERSE CITY OUTLET
CENTERS, L.L.C., a Delaware limited
liability company
By: GRETNA, SEALY, TRAVERSE CITY FINANCE
COMPANY, INC., a Delaware corporation,
its Managing Member
By:
Name:
Title:
<PAGE>
Pool II
Loan No. V_04078
Nebraska
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GRETNA, SEALY, TRAVERSE CITY OUTLET CENTERS, L.L.C.,
as Borrower
to
ANTHONY C. NAIMOLI,
as Deed Trustee,
for the benefit of
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Lender
---------------
DEED OF TRUST AND SECURITY AGREEMENT
---------------
Dated: As of July __, 1999
PREPARED BY AND UPON RECORDATION RETURN TO:
Womble Carlyle Sandridge & Rice, PLLC
3500 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: James H. Thompson, Esq.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I DEFINITIONS
Section 1.01 Certain Definitions 5
ARTICLE II COVENANTS, WARRANTIES AND REPRESENTATIONS OF BORROWER
Section 2.01 Payment of Debt 19
Section 2.02 Representations and Warranties of Borrower 19
Section 2.03 Further Acts, etc. 28
Section 2.04 Recording of Mortgage, etc. 28
Section 2.05 Representations and Warranties as to the Mortgaged Property 29
Section 2.06 Removal of Lien 33
Section 2.07 Cost of Defending and Upholding this Deed of Trust Lien 34
Section 2.08 Use of the Mortgaged Property 34
Section 2.09 Financial Reports 34
Section 2.10 Litigation 36
ARTICLE III INSURANCE AND CASUALTY RESTORATION
Section 3.01 Insurance Coverage 36
Section 3.02 Policy Terms 38
Section 3.03 Assignment of Policies 39
Section 3.04 Casualty Restoration 40
Section 3.05 Compliance with Insurance Requirements 44
Section 3.06 Event of Default During Restoration 45
Section 3.07 Application of Proceeds to Debt Reduction 45
ARTICLE IV IMPOSITIONS
Section 4.01 Payment of Impositions, Utilities and Taxes, etc. 46
Section 4.02 Deduction from Value 47
Section 4.03 No Joint Assessment 47
Section 4.04 Right to Contest 47
Section 4.05 No Credits on Account of the Debt 48
Section 4.06 Documentary Stamps 48
ARTICLE V LOSS PROCEEDS
Section 5.01 Loss Proceeds 48
ARTICLE VI CONDEMNATION
Section 6.01 Condemnation 49
ARTICLE VII LEASES AND RENTS
Section 7.01 Assignment 50
Section 7.02 Management of Mortgaged Property 51
</TABLE>
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TABLE OF CONTENTS (CON'T.)
<TABLE>
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<S> <C>
ARTICLE VIII MAINTENANCE AND REPAIR
Section 8.01 Maintenance and Repair of the Mortgaged Property;
Alterations; Replacement of Equipment 53
ARTICLE IX TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY
Section 9.01 Other Encumbrances 55
Section 9.02 No Transfer 55
Section 9.03 Due on Sale 55
Section 9.04 Permitted Transfer 56
ARTICLE X CERTIFICATES
Section 10.01 Estoppel Certificates 58
ARTICLE XI NOTICES
Section 11.01 Notices 58
ARTICLE XII INDEMNIFICATION
Section 12.01 Indemnification Covering Mortgaged Property 59
ARTICLE XIII DEFAULTS
Section 13.01 Events of Default 60
Section 13.02 Remedies 62
Section 13.03 Payment of Debt After Default 65
Section 13.04 Possession of the Mortgaged Property 66
Section 13.05 Interest After Default 66
Section 13.06 Borrower's Actions After Default 66
Section 13.07 Control by Lender After Default 67
Section 13.08 Right to Cure Defaults 67
Section 13.09 Late Payment Charge 67
Section 13.10 Recovery of Sums Required to Be Paid 68
Section 13.11 Marshalling and Other Matters 68
Section 13.12 Tax Reduction Proceedings 68
Section 13.13 General Provisions Regarding Remedies 68
ARTICLE XIV COMPLIANCE WITH REQUIREMENTS
Section 14.01 Compliance with Legal Requirements 69
Section 14.02 Compliance with Recorded Documents; No Future Grants 70
ARTICLE XV DEFEASANCE; RELEASE
Section 15.01 Defeasance; Release 70
Section 15.02 Release of Property 71
Section 15.03 Substitution of Property 72
</TABLE>
<PAGE>
TABLE OF CONTENTS (CON'T.)
<TABLE>
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<S> <C>
ARTICLE XVI ENVIRONMENTAL COMPLIANCE
Section 16.01 Covenants, Representations and Warranties 75
Section 16.02 Environmental Indemnification 78
ARTICLE XVII ASSIGNMENTS
Section 17.01 Participations and Assignments 79
ARTICLE XVIII MISCELLANEOUS
Section 18.01 Right of Entry 79
Section 18.02 Cumulative Rights 79
Section 18.03 Liability 79
Section 18.04 Exhibits Incorporated 79
Section 18.05 Severable Provisions 79
Section 18.06 Duplicate Originals 80
Section 18.07 No Oral Change 80
Section 18.08 Waiver of Counterclaim, Etc. 80
Section 18.09 Headings; Construction of Documents; etc. 80
Section 18.10 Sole Discretion of Lender 80
Section 18.11 Waiver of Notice 80
Section 18.12 Covenants Run with the Land 81
Section 18.13 Governing Law; Jurisdiction. 81
Section 18.14 Security Agreement 82
Section 18.15 Actions and Proceedings 83
Section 18.16 Usury Laws 83
Section 18.17 Remedies of Borrower 83
Section 18.18 Offsets, Counterclaims and Defenses 83
Section 18.19 No Merger 84
Section 18.20 Restoration of Rights 84
Section 18.21 Waiver of Statute of Limitations 84
Section 18.22 Advances 84
Section 18.23 Application of Default Rate Not a Waiver 84
Section 18.24 Intervening Lien 85
Section 18.25 No Joint Venture or Partnership 85
Section 18.26 Time of the Essence 85
Section 18.27 Borrower's Obligations Absolute 85
Section 18.28 Publicity 85
Section 18.29 Securitization Opinions 86
Section 18.30 Cooperation with Rating Agencies 86
Section 18.31 Securitization Financials 86
Section 18.32 Reasonable Attorneys' Fees 86
Section 18.33 Return of Escrows and Defeasance Deposit. 86
</TABLE>
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TABLE OF CONTENTS (CON'T.)
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<S> <C>
Section 18.34 Business Loan Recital/statutory Exemption. 86
Section 18.35 Concerning the Deed Trustee. 87
Section 18.36 Deed Trustee's Fees. 87
ARTICLE XIX SPECIAL STATE OF NEBRASKA PROVISIONS
Section 19.01 Effective as a Financing Statement. 87
Section 19.02 Power of Sale. 87
Section 19.03 Request for Notice. 88
Section 19.04 Deed Trustee Compensation. 88
ARTICLE XX RELEASE PARCEL
EXHIBIT A--Legal Description
EXHIBIT B--Form of Cash Flow Statement
EXHIBIT C--Initial Allocated Loan Amount
EXHIBIT D--Release Parcel
</TABLE>
<PAGE>
DEED OF TRUST AND SECURITY AGREEMENT
This DEED OF TRUST AND SECURITY AGREEMENT is made as of the __ day
of July, 1999, by GRETNA, SEALY, TRAVERSE CITY OUTLET CENTERS, L.L.C., a
Delaware limited liability company, having an address of 77 West Wacker
Drive, Suite 4200, Chicago, Illinois 60601 (hereinafter referred to as
"BORROWER"), to ANTHONY C. NAIMOLI, having an address of c/o Fidelity
National Title Insurance Company, 1500 Walnut Street, Suite 300,
Philadelphia, Pennsylvania 19102 (hereinafter referred to as "DEED TRUSTEE"),
for the benefit of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, having an
address at 60 Wall Street, New York, New York 10260-0060 (hereinafter
referred to as "LENDER").
W I T N E S S E T H:
WHEREAS, Lender has authorized (i) a loan (hereinafter referred to as
the "GRETNA LOAN") to the Borrower in the maximum principal sum of SEVEN MILLION
FOUR HUNDRED AND EIGHTY-FIVE THOUSAND AND NO/100THS DOLLARS ($7,485,000.00)
(hereinafter referred to as the "GRETNA LOAN AMOUNT"), which Gretna Loan is
evidenced by that certain note, dated the date hereof (hereinafter referred to
as the "GRETNA NOTE") given by the Borrower, as maker, to Lender, as payee with
a final maturity date of August 1, 2024 (or if such date is not a Business Day,
the next succeeding Business Day); (ii) a loan (hereinafter referred to as the
"SEALY LOAN") to the Borrower in the maximum principal sum of ELEVEN MILLION ONE
HUNDRED AND FIFTEEN THOUSAND AND NO/100THS DOLLARS ($11,115,000.00) (hereinafter
referred to as the "SEALY LOAN AMOUNT"), which Sealy Loan is evidenced by that
certain note, dated the date hereof (hereinafter referred to as the "SEALY
NOTE") given by the Borrower, as maker, to Lender, as payee with a final
maturity date of August 1, 2024 (or if such date is not a Business Day, the next
succeeding Business Day); and (iii) a loan (hereinafter referred to as the
"TRAVERSE CITY LOAN") to the Borrower in the maximum principal sum of FIVE
MILLION TWO HUNDRED AND FIVE THOUSAND AND NO/100THS DOLLARS ($5,205,000.00)
(hereinafter referred to as the "TRAVERSE CITY LOAN AMOUNT"), which Traverse
City Loan is evidenced by that certain note, dated the date hereof (hereinafter
referred to as the "TRAVERSE CITY NOTE") given by the Borrower, as maker, to
Lender, as payee with a final maturity date of August 1, 2024 (or if such date
is not a Business Day, the next succeeding Business Day); (the Gretna Loan,
Sealy Loan and Traverse City Loan are collectively referred to herein as the
"LOANS," the Gretna Loan Amount, Sealy Loan Amount and Traverse City Loan Amount
are collectively referred to herein as the "LOAN AMOUNTS," and the Gretna Note,
the Sealy Note and the Traverse City Note, together with all extensions,
renewals, modifications, substitutions and amendments thereof are collectively
referred to herein as the "NOTES");
WHEREAS, in consideration of the Loans, the Borrower has agreed to make
payments in amounts sufficient to pay and redeem, and provide for the payment
and redemption of the principal of, premium, if any, and interest on the Notes
when due;
WHEREAS, Borrower desires by this Deed of Trust to provide for, among
other things, the issuance of the Notes and for the deposit, deed and pledge by
Borrower with, and the creation of a security interest in favor of, Lender, as
security for the Borrower's obligations to Lender from time to time pursuant to
the Notes and the other Loan Documents;
<PAGE>
WHEREAS, Borrower and Lender intend these recitals to be a material
part of this Deed of Trust; and
2
<PAGE>
WHEREAS, all things necessary to make this Deed of Trust the valid and
legally binding obligation of Borrower in accordance with its terms, for the
uses and purposes herein set forth, have been done and performed.
NOW THEREFORE, to secure the payment of the principal of, prepayment
premium (if any) and interest on the Notes and all other obligations,
liabilities or sums due or to become due under this Deed of Trust, the Notes or
any other Loan Document, including, without limitation, interest on said
obligations, liabilities or sums (said principal, premium, interest and other
sums being hereinafter referred to as the "DEBT"), and the performance of all
other covenants, obligations and liabilities of the Borrower pursuant to the
Loan Documents, Borrower has executed and delivered this Deed of Trust; and
Borrower has irrevocably granted, and by these presents and by the execution and
delivery hereof does hereby irrevocably grant, bargain, sell, alien, demise,
release, convey, assign, transfer, deed, hypothecate, pledge, set over, warrant,
mortgage and confirm to Deed Trustee, as to the Premises and Improvements,
forever, in trust with power of sale, and to Lender, as to the remainder of the
Mortgaged Property, all right, title and interest of Borrower, if any, in and to
all of the following property, rights, interests and estates:
(a) the plot(s), piece(s) or parcel(s) of real property described in
Exhibit A attached hereto and made a part hereof (individually and collectively,
hereinafter referred to as the "PREMISES");
(b) (i) all buildings, foundations, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
of every kind or nature now or hereafter located on the Premises (hereinafter
collectively referred to as the "IMPROVEMENTS"); and (ii) to the extent
permitted by law, the name or names, if any, as may now or hereafter be used for
each Improvement, and the goodwill associated therewith;
(c) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, ditches, ditch rights, reservoirs and reservoir rights, air rights and
development rights, lateral support, drainage, gas, oil and mineral rights,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
belonging, relating or pertaining to the Premises or the Improvements and the
reversion and reversions, remainder and remainders, whether existing or
hereafter acquired, and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center line
thereof and any and all sidewalks, drives, curbs, passageways, streets, spaces
and alleys adjacent to or used in connection with the Premises and/or
Improvements and all the estates, rights, titles, interests, property,
possession, claim and demand whatsoever, both in law and in equity, of Borrower
of, in and to the Premises and Improvements and every part and parcel thereof,
with the appurtenances thereto;
3
<PAGE>
(d) all machinery, equipment, fittings, apparatus, appliances,
furniture, furnishings, tools, fixtures (including, but not limited to, all
heating, air conditioning, ventilating, waste disposal, sprinkler and fire and
theft protection equipment, plumbing, lighting, communications and elevator
fixtures) and other property of every kind and nature whatsoever owned by
Borrower, or in which Borrower has or shall have an interest, now or hereafter
located upon, or in, and used in connection with the Premises or the
Improvements, or appurtenant thereto, and all building equipment, materials and
supplies of any nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon, or in, and used in
connection with the Premises or the Improvements or appurtenant thereto,
(hereinafter all of the foregoing items described in this paragraph (d) are
collectively called the "EQUIPMENT"), all of which, and any replacements,
modifications, alterations and additions thereto, to the extent permitted by
applicable law, shall be deemed to constitute fixtures (the "FIXTURES"), and are
part of the real estate and security for the payment of the Debt and the
performance of Borrower's obligations. To the extent any portion of the
Equipment is not real property or Fixtures under applicable law, it shall be
deemed to be personal property, and this Deed of Trust shall constitute a
security agreement creating a security interest therein in favor of Lender under
the UCC;
(e) all awards or payments, including interest thereon, which may
hereafter be made with respect to the Premises, the Improvements, the Fixtures,
or the Equipment, whether from the exercise of the right of eminent domain
(including but not limited to any transfer made in lieu of or in anticipation of
the exercise of said right), or for a change of grade, or for any other injury
to or decrease in the value of the Premises, the Improvements or the Equipment
or refunds with respect to the payment of property taxes and assessments, and
all other proceeds of the conversion, voluntary or involuntary, of the Premises,
Improvements, Equipment, Fixtures or any other Mortgaged Property or part
thereof into cash or liquidated claims;
(f) all leases, tenancies, licenses and other agreements affecting the
use, enjoyment or occupancy of the Premises, the Improvements, the Fixtures, or
the Equipment or any portion thereof now or hereafter entered into, whether
before or after the filing by or against Borrower of any petition for relief
under the Bankruptcy Code and all reciprocal easement agreements, license
agreements and other agreements with Pad Owners (hereinafter collectively
referred to as the "LEASES"), together with all cash or security deposits, lease
termination payments, advance rentals and payments of similar nature and
guarantees or other security held by Borrower in connection therewith to the
extent of Borrower's right or interest therein and all remainders, reversions
and other rights and estates appurtenant thereto, and all base, fixed,
percentage or additional rents, and other rents, oil and gas or other mineral
royalties, and bonuses, issues, profits and rebates and refunds or other
payments made by any Governmental Authority from or relating to the Premises,
the Improvements, the Fixtures or the Equipment plus all rents, common area
charges and other payments, whether paid or accruing before or after the filing
by or against Borrower of any petition for relief under the Bankruptcy Code (the
"RENTS") and all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Debt;
4
<PAGE>
(g) all proceeds of and any unearned premiums on any insurance policies
covering the Premises, the Improvements, the Fixtures, the Rent or the
Equipment, including, without limitation, the right to receive and apply the
proceeds of any insurance, judgments, or settlements made in lieu thereof in
accordance with the terms hereof, for damage to the Premises, the Improvements,
the Fixtures or the Equipment and all refunds or rebates of Impositions, and
interest paid or payable with respect thereto;
(h) all monies deposited or to be deposited in any funds or accounts
maintained or deposited with Lender, or its assigns, in connection herewith,
including, without limitation, all escrows, deposits, reserves and impounds
established pursuant to those certain Escrow Agreements for Reserves and
Impounds of even date herewith executed by the Borrower;
(i) all accounts receivable, contract rights, franchises, interests,
estate or other claims, both at law and in equity, relating to the Premises, the
Improvements, the Fixtures or the Equipment, not included in Rents;
(j) all claims against any Person with respect to any damage to the
Premises, the Improvements, the Fixtures or Equipment, including, without
limitation, damage arising from any defect in or with respect to the design or
construction of the Improvements, the Fixtures or the Equipment and any damage
resulting therefrom;
(k) all deposits or other security or advance payments, including
rental payments made by or on behalf of Borrower to others, with respect to (i)
insurance policies, (ii) utility services, (iii) cleaning, maintenance, repair
or similar services, (iv) refuse removal or sewer service, (v) parking or
similar services or rights and (vi) rental of Equipment, if any, relating to or
otherwise used in the operation of the Premises, Improvements, the Fixtures or
Equipment;
(l) all intangible property relating to the Premises, the Improvements,
the Fixtures or the Equipment or its operation, including, without limitation,
trade names, trademarks, logos, building names and goodwill (excluding, however,
the foregoing to the extent it is owned by Horizon Group Properties, Inc. or is
used generally with respect to properties owned, directly or indirectly, by
Horizon Group Properties, Inc.);
(m) all advertising material, guaranties, warranties, building permits,
other permits, licenses, plans and specifications, shop and working drawings,
soil tests, appraisals and other documents, materials and/or personal property
of any kind now or hereafter existing in or relating to the Premises, the
Improvements, the Fixtures, and the Equipment;
(n) all drawings, designs, plans and specifications prepared by the
architects, engineers, interior designers, landscape designers and any other
consultants or professionals for the design, development, construction, repair
and/or improvement of the Mortgaged Property, as amended from time to time;
5
<PAGE>
(o) subject to the terms and conditions hereof, the right, in the name
of and on behalf of Borrower, to appear in and defend any action or proceeding
brought with respect to the Premises, the Improvements, the Fixtures or the
Equipment and to commence any action or proceeding to protect the interest of
Lender in the Premises, the Improvements, the Fixtures or the Equipment; and
(p) all proceeds, products, substitutions and accessions (including
claims and demands therefor) of each of the foregoing.
The right, title and interest of Borrower in the foregoing items (a)
through (p), are collectively referred to as the "MORTGAGED PROPERTY."
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the proper use and benefit of Lender, and Deed Trustee and the
successors and assigns of Lender and Deed Trustee in fee simple, forever.
IN TRUST, WITH POWER OF SALE, to secure the payment to Lender of the
Debt at the time and in the manner provided for its payment in the Notes, this
Deed of Trust and the other Loan Documents.
AND Borrower covenants with and warrants to Lender that:
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINITIONS.
For all purposes of this Deed of Trust, except as otherwise expressly
provided or unless the context clearly indicates a contrary intent:
(i) the capitalized terms defined in this Section
have the meanings assigned to them in this Section, and include the plural as
well as the singular;
(ii) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with GAAP; and
(iii) the words "herein", "hereof," and "hereunder"
and other words of similar import refer to this Deed of Trust as a whole and
not to any particular Section or other subdivision.
"AFFILIATE" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities by contract or otherwise; and
the terms "controlling" and "controlled" have the meanings correlative to the
foregoing.
6
<PAGE>
"AGGREGATE DEBT SERVICE COVERAGE" shall mean the quotient obtained
by dividing the aggregate Net Operating Income for all of the Properties for
the specified period by the aggregate payments of interest and principal (not
including the amount of principal payable upon maturity) due for such
specified period under the Notes (determined as of the date the calculation
of Aggregate Debt Service Coverage is required or requested hereunder).
"ALLOCATED LOAN AMOUNT" shall mean the Initial Allocated Loan Amount of
each Property as such amount may be adjusted from time to time as hereinafter
set forth. Upon each adjustment in the principal portion of the Debt (each a
"TOTAL ADJUSTMENT"), whether as a result of amortization or as otherwise
expressly provided herein or in any other Loan Document, each Allocated Loan
Amount shall be increased or decreased, as the case may be, by an amount equal
to the product of (i) the Total Adjustment, and (ii) a fraction, the numerator
of which is the applicable Allocated Loan Amount (prior to the adjustment in
question) and the denominator of which is the Debt prior to the adjustment to
the principal portion of the Debt which results in the recalculation of the
Allocated Loan Amount. However, when the principal portion of the Debt is
reduced as a result of Lender's receipt of (i) Net Proceeds, the Allocated Loan
Amounts for the Property with respect to which the Net Proceeds were received
shall be reduced to zero (the amount by which such Allocated Loan Amount is
reduced being referred to as the "FORECLOSED ALLOCATED AMOUNT") and each other
Allocated Loan Amount shall (x) if the Net Proceeds exceed the Foreclosed
Allocated Amount (such excess being referred to as the "SURPLUS NET PROCEEDS"),
be decreased by an amount equal to the product of (1) the Surplus Net Proceeds
and (2) a fraction, the numerator of which is the applicable Allocated Loan
Amount (prior to the adjustment in question) and the denominator of which is the
aggregate of all of the Allocated Loan Amounts (prior to the adjustment in
question) other than the Allocated Loan Amount applicable to the Property with
respect to which the Net Proceeds were received (such fraction being referred to
as the "NET PROCEEDS ADJUSTMENT FRACTION"), (y) if the Foreclosed Allocated
Amount exceeds the Net Proceeds (such excess being referred to as the "NET
PROCEEDS DEFICIENCY"), be increased by an amount equal to the product of (1) the
Net Proceeds Deficiency and (2) the Net Proceeds Adjustment Fraction, or (z) if
the Net Proceeds equal the Foreclosed Allocated Amount, remain unadjusted, or
(ii) Loss Proceeds, the Allocated Loan Amount for the Property with respect to
which the Loss Proceeds were received shall be decreased by an amount equal to
the sum of Loss Proceeds which are applied towards the reduction of the Debt as
set forth in Article III hereof, if any, but in no event shall the Allocated
Loan Amount for the Property with respect to which the Loss Proceeds were
received be reduced to an amount less than zero (the amount by which such
Allocated Loan Amount is reduced being referred to as the "LOSS PROCEEDS
ALLOCATED AMOUNT") and each other Allocated Loan Amount shall be decreased by an
amount equal to the product of (1) the excess of (a) the Loss Proceeds over (b)
the Loss Proceeds Allocated Amount, and (2) a fraction, the numerator of which
is the applicable Allocated Loan Amount (prior to the adjustment in question)
and the denominator of which is the aggregate of all of the Allocated Loan
Amounts (prior to the adjustment in question) other than the Allocated Loan
Amount applicable to the Property to which such Loss Proceeds were applied.
"ANTICIPATED REPAYMENT DATE" has the meaning set forth in the Notes.
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"APPRAISAL" shall mean the appraisal of the Mortgaged Property and all
supplemental reports or updates thereto previously delivered to Lender in
connection with the Loans.
"APPRAISER" shall mean the Person who prepared the Appraisal.
"APPROVED MANAGER STANDARD" shall mean the standard of business
operations, practices and procedures customarily employed by entities having a
senior executive with at least seven (7) years' experience in the management of
retail shopping centers which manage not less than 1,000,000 square feet,
including, without limitation, certain retail shopping centers which contain
more than 100,000 square feet.
"ARCHITECT" shall have the meaning set forth in Section 3.04(b)(i)
hereof.
"ASSIGNMENT" shall mean the Assignment of Leases and Rents of even date
herewith relating to the Mortgaged Property given by Borrower to Lender.
"BANKRUPTCY CODE" shall mean 11 U.S.C. Section 101 et seq., as
amended from time to time.
"BORROWER" shall mean Borrower named herein and any successor to the
obligations of Borrower.
"BUSINESS DAY" shall mean any day other than (a) a Saturday or Sunday,
or (b) a day on which banking and savings and loan institutions in the State of
New York are authorized or obligated by law or executive order to be closed, or
at any time during which the Loans are an asset of a securitization, the cities,
states and/or commonwealths used in the comparable definition of "Business Day"
in the securitization documents.
"CLOSING DATE" shall mean the date of the Notes.
"CODE" shall mean the Internal Revenue Code of 1986, as amended and as
it may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto.
"CONDEMNATION PROCEEDS" shall mean all of the proceeds in respect of
any Taking or purchase in lieu thereof.
"CONTRACTUAL OBLIGATION" shall mean, as to any Person any agreement,
instrument or undertaking to which such Person is a party or by which it or any
of the property owned by it is bound.
"DEBT" shall have the meaning set forth in the recitals hereto.
"DEBT SERVICE" shall mean the amount of interest and principal payments
due and payable in accordance with the Notes during an applicable period.
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"DEBT SERVICE COVERAGE" of the Mortgaged Property shall mean the
quotient obtained by dividing Net Operating Income of the Mortgaged Property
for the specified period by the sum of the (a) aggregate payments of
interest, principal and all other sums due for such specified period under
the Note identified with the Mortgaged Property (determined as of the date
the calculation of Debt Service Coverage is required or requested hereunder)
and (b) aggregate payments of interest, principal and all other sums due for
such specified period pursuant to the terms of subordinate financing, if any,
then affecting the Mortgaged Property or, if Debt Service Coverage is being
calculated in connection with a request for consent to any subordinate
financing, then proposed.
"DEED OF TRUST" shall mean this Deed of Trust as originally executed or
as it may hereafter from time to time be supplemented, amended, modified or
extended by one or more indentures supplemental hereto.
"DEED TRUSTEE" shall mean the Deed Trustee named herein and its
successors or assigns.
"DEFAULT" shall mean any Event of Default or event which would
constitute an Event of Default if all requirements in connection therewith for
the giving of notice, the lapse of time, and the happening of any further
condition, event or act, had been satisfied.
"DEFAULT RATE" shall mean the lesser of (a) the highest rate allowable
at law and (b) five percent (5%) above the greater of (i) the interest rate set
forth in the Notes and (ii) the rate announced by Morgan Guaranty Trust Company
of New York as its "prime" rate as such rate may change from time to time.
"DEFAULT RATE INTEREST" shall mean, to the extent the Default Rate
becomes applicable, interest in excess of the interest which would have accrued
on (a) the principal amounts of the Loans which are outstanding from time to
time and (b) any accrued but unpaid interest, if the Default Rate was not
applicable.
"DEFEASANCE DEPOSIT" shall mean an amount equal to the total cost
incurred or to be incurred in the purchase on behalf of Borrower of Federal
Obligations necessary to meet the Scheduled Defeasance Payments.
"DEVELOPMENT LAWS" shall mean all applicable subdivision, zoning,
environmental protection, wetlands protection, or land use laws or ordinances,
and any and all applicable rules and regulations of any Governmental Authority
promulgated thereunder or related thereto.
"ELIGIBLE ACCOUNT" shall mean a segregated account which is either (i)
an account or accounts maintained with a depository institution or trust
company, the long term unsecured debt obligations of which are rated by each of
the Rating Agencies (or, if not rated by Duff & Phelps Credit Rating Co. ("DCR")
or Fitch Investors Services L.P. ("FITCH"), otherwise acceptable to DCR or
Fitch, as applicable, as confirmed in writing that such account would not, in
and of itself, result in a downgrade, qualification or withdrawal of the then
current ratings assigned to any certificates issued in connection with a
Securitization) in its highest rating category at all times or, if the funds in
such
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account are to be held in such account for less than 30 days, the short term
obligations of which are rated by each of the Rating Agencies (or, if not rated
by DCR or Fitch, otherwise acceptable to DCR or Fitch, as applicable, as
confirmed in writing that such account would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any certificates issued in connection with a Securitization) in its highest
rating category at all times) or (ii) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company acting in its fiduciary capacity which, in the case of a state chartered
depository institution is subject to regulations substantially similar to 12
C.F.R. Section 9.10(b), having in either case a combined capital and surplus of
at least $100,000,000 and subject to supervision or examination by federal and
state authority, or otherwise acceptable (as evidenced by a written confirmation
from each Rating Agency that such account would not, in and of itself, cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any certificates issued in connection with a Securitization) to each Rating
Agency, which may be an account maintained by Lender or its agents. Eligible
Accounts may bear interest. The title of each Eligible Account shall indicate
that the funds held therein are held in trust for the uses and purposes set
forth herein.
"ENGINEER" shall have the meaning set forth in Section 3.04(b)(i)
hereof.
"ENVIRONMENTAL PROBLEM" shall mean any of the following:
(a) the presence of any Hazardous Material on, in, under, or above
all or any portion of the Mortgaged Property;
(b) the release or threatened release of any Hazardous Material from or
onto the Mortgaged Property;
(c) the violation or threatened violation of any Environmental Statute
with respect to the Mortgaged Property; or
(d) the failure to obtain or to abide by the terms or conditions of any
permit or approval required under any Environmental Statute with respect to the
Mortgaged Property.
A condition described above shall be an Environmental Problem
regardless of whether or not any Governmental Authority has taken any action in
connection with the condition and regardless of whether that condition was in
existence on or before the date hereof.
"ENVIRONMENTAL REPORT" shall mean collectively, the environmental audit
reports for the Properties and any supplements or updates thereto, previously
delivered to Lender in connection with the Loans or any previous financing.
"ENVIRONMENTAL STATUTE" shall mean any federal, state or local statute,
ordinance, rule or regulation, any judicial or administrative order (whether or
not on consent) or judgment applicable to Borrower or the Mortgaged Property
including, without limitation, any judgment or settlement based on common law
theories, and any provisions or condition of any permit, license or other
authorization binding on Borrower relating to (a) the protection of the
environment, the safety and
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health of persons (including employees) or the public welfare from actual or
potential exposure (or effects of exposure) to any actual or potential release,
discharge, disposal or emission (whether past or present) of any Hazardous
Materials or (b) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Hazardous Materials, including,
but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section 9601 ET SEQ., the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976,
as amended by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C.
Section 6901 ET SEQ., the Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 U.S.C. Section 1251, ET SEQ., the Toxic Substances
Control Act of 1976, 15 U.S.C. Section 2601 ET SEQ., the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 1101 ET SEQ., the Clean
Air Act of 1966, as amended, 42 U.S.C. Section 7401 ET SEQ., the National
Environmental Policy Act of 1975, 42 U.S.C. Section 4321, the Rivers and
Harbours Act of 1899, 33 U.S.C. Section 401 ET SEQ., the Endangered Species Act
of 1973, as amended, 16 U.S.C. Section 1531 ET SEQ., the Occupational Safety and
Health Act of 1970, as amended, 29 U.S.C. Section 651 ET SEQ., and the Safe
Drinking Water Act of 1974, as amended, 42 U.S.C. Section 300(f) ET SEQ., and
all rules, regulations and guidance documents promulgated or published
thereunder.
"EQUIPMENT" shall have the meaning set forth in granting clause (d) of
this Deed of Trust.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated thereunder.
Section references to ERISA are to ERISA, as in effect at the date of this Deed
of Trust and, as of the relevant date, any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA AFFILIATE" shall mean any corporation or trade or business that
is a member of any group of organizations (a) described in Section 414(b) or (c)
of the Code of which Borrower or Guarantor is a member and (b) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which Borrower or Guarantor is a member.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 13.01
hereof.
"FEDERAL OBLIGATIONS" shall mean non-callable direct obligations of, or
obligations fully guaranteed as to payment of principal and interest by, the
United States of America or any agency or instrumentality thereof, provided that
such obligations are backed by the full faith and credit of the United States of
America as chosen by Borrower.
"FISCAL YEAR" shall mean the twelve month period commencing on January
1 and ending on December 31 during each year of the term of this Deed of Trust,
or such other fiscal year of Borrower as Borrower may select from time to time.
"FIXTURES" shall have the meaning set forth in granting clause (d) of
this Deed of Trust.
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"GAAP" shall mean generally accepted accounting principles in the
United States of America, as of the date of the applicable financial report,
consistently applied.
"GENERAL PARTNER" shall mean, if Borrower is a partnership, each
general partner of Borrower and, if applicable, each general partner of such
general partner and if Borrower is a limited liability company, the corporate
manager of Borrower.
"GOVERNMENTAL AUTHORITY" shall mean, with respect to any Person, any
federal or State government or other political subdivision thereof and any
entity, including any regulatory or administrative authority or court,
exercising executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal, in each case having jurisdiction over such
applicable Person or such Person's property.
"GUARANTOR" shall mean any Person guaranteeing, in whole or in part,
the obligations of Borrower under the Loan Documents.
"HAZARDOUS MATERIAL" shall mean any flammable, explosive or radioactive
materials, hazardous materials or wastes, hazardous or toxic substances,
pollutants or related materials, asbestos or any material containing asbestos,
or any other substance or material as defined in or regulated by any
Environmental Statutes.
"IMPOSITIONS" shall mean all taxes (including, without limitation, all
real estate, ad valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible, transaction, privilege
or license or similar taxes), assessments (including, without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not commenced or completed
within the term of this Deed of Trust), ground rents, water, sewer or other
rents and charges, excises, levies, fees (including, without limitation,
license, permit, inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Mortgaged Property and/or any Rent (including all interest and penalties
thereon), which at any time prior to, during or in respect of the term hereof is
assessed or is a lien upon (a) Borrower (including, without limitation, all
franchise, single business or other taxes imposed on Borrower for the privilege
of doing business in the jurisdiction in which the Mortgaged Property or any
other collateral delivered or pledged to Lender in connection with the Loans is
located) or Lender, (b) the Mortgaged Property or any part thereof or any Rent
therefrom or any estate, right, title or interest therein, or (c) any occupancy,
operation, use or possession of, or sales from, or activity conducted on, or in
connection with the Mortgaged Property, or any part thereof, or the leasing or
use of the Mortgaged Property, or any part thereof, or the acquisition or
financing of the acquisition of the Mortgaged Property, or any part thereof, by
Borrower.
"IMPROVEMENTS" shall have the meaning set forth in the granting clause
(b) of this Deed of Trust.
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"INDEPENDENT" shall mean, when used with respect to any Person, a
Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in Borrower, or in any
Affiliate of Borrower or any constituent partner, shareholder, member or
Lender of Borrower and (c) is not connected with Borrower or any Affiliate of
Borrower or any constituent partner, shareholder, member or Lender of
Borrower as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate shall be
provided, such opinion or certificate shall state that the Person executing
the same has read this definition and is Independent within the meaning
hereof.
"INITIAL ALLOCATED LOAN AMOUNT" shall mean the portion of the Loan
Amounts allocated to each Property as set forth on Exhibit C annexed hereto and
made a part hereof.
"INSTITUTIONAL LENDER" shall mean any of the following Persons: (a) any
bank, savings and loan association, savings institution, trust company or
national banking association, acting for its own account or in a fiduciary
capacity, (b) any charitable foundation, (c) any insurance company or pension
and/or annuity company, (d) any fraternal benefit society, (e) any pension,
retirement or profit sharing trust or fund within the meaning of Title I of
ERISA or for which any bank, trust company, national banking association or
investment adviser registered under the Investment Advisers Act of 1940, as
amended, is acting as trustee or agent, (f) any investment company or business
development company, as defined in the Investment Company Act of 1940, as
amended, (g) any small business investment company licensed under the Small
Business Investment Act of 1958, as amended, (h) any broker or dealer registered
under the Securities and Exchange Act of 1934, or any investment adviser
registered under the Investment Adviser Act of 1940, as amended, (i) any
government, any public employees' pension or retirement system, or any other
government agency supervising the investment of public funds, or (j) any other
entity all of the equity owners of which are Institutional Lenders; provided
that each of said Persons shall have net assets equal to or greater than
$500,000,000, be in the business of making commercial mortgage loans, secured by
properties of like type, size and value as the Mortgaged Property and have a
long term credit rating which is not less than A (or its equivalent) from the
Rating Agency.
"INSURANCE PROCEEDS" shall mean all of the proceeds received under the
insurance policies required to be maintained by Borrower pursuant to Article III
hereof.
"INSURANCE REQUIREMENTS" shall mean all terms of any insurance policy
required by this Deed of Trust, all requirements of the issuer of any such
policy, and all regulations and then current standards applicable to or
affecting the Mortgaged Property or any use or condition thereof.
"LATE CHARGE" shall have the meaning set forth in Section 13.09 hereof.
"LEASES" shall have the meaning set forth in granting clause (f) of
this Deed of Trust.
"LEGAL REQUIREMENT" shall mean as to any Person, the certificate of
incorporation, by-laws, certificate of limited partnership, agreement of limited
partnership or other organization or governing documents of such Person, and any
law, statute, order, ordinance, judgement, decree, injunction,
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treaty, rule or regulation (including, without limitation, Environmental
Statutes, Development Laws and Use Requirements) or determination of an
arbitrator or a court or other Governmental Authority.
"LENDER" shall mean the Lender named herein and its successors or
assigns.
"LOANS" shall have the meaning set forth in the Recitals hereto.
"LOAN AMOUNTS" shall have the meaning set forth in the Recitals
hereto.
"LOAN DOCUMENTS" shall mean this Deed of Trust, any other Security
Instrument, the Notes, the Assignment, and any and all other agreements,
instruments, certificates or documents executed and delivered by Borrower or any
Affiliate of Borrower in connection with the Loans.
"LOSS PROCEEDS" shall mean, collectively, all Insurance Proceeds and
all Condemnation Proceeds as defined herein, or as the context shall require,
any other Security Instruments.
"MAJOR SPACE LEASE" shall mean any Space Lease of a tenant or Affiliate
of such tenant where such tenant or such Affiliate leases, in the aggregate, ten
percent (10%) or more of the Total GLA.
"MANAGEMENT AGREEMENT" shall have the meaning set forth in Section
7.02 hereof.
"MANAGER" shall mean the Person, other than Borrower, which manages the
Mortgaged Property on behalf of Borrower.
"MANAGER CERTIFICATION" shall have the meaning set forth in Section
2.09 hereof.
"MATERIAL ADVERSE EFFECT" shall mean any event or condition that has a
material adverse effect on (a) the Mortgaged Property, (b) the business, profits
or condition (financial or otherwise) of Borrower, (c) the enforceability,
validity, perfection or priority of the lien of any Loan Document or (d) the
ability of Borrower to perform any obligations under any Loan Document.
"MONTHLY DEBT SERVICE PAYMENT" shall mean a monthly payment of
principal in an amount equal to that which is required to fully amortize the
Loans based upon a twenty-five (25) year amortization schedule of level payments
of principal and interest.
"MORTGAGED PROPERTY" shall have the meaning set forth in the granting
clauses of this Deed of Trust.
"MULTI-EMPLOYER PLAN" shall mean a multi-employer plan defined as such
in Section 3(37) of ERISA to which during the five-year period ended prior to
the date of this Mortgage, contributions have been, or were required to have
been, made by Borrower, Guarantor or any ERISA Affiliate and which is covered by
Title IV of ERISA.
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"NET OPERATING INCOME" shall mean in each Fiscal Year or portion
thereof during the term hereof, Operating Income less Operating Expenses.
"NET PROCEEDS" shall mean the excess of (i)(x) the purchase price (at
foreclosure or otherwise) actually received by Lender with respect to the
Property as a result of the exercise by Lender of its rights, powers, privileges
and other remedies after the occurrence of an Event of Default hereunder or
under any other Security Instrument, or (y) in the event that Lender (or
Lender's nominee) is the purchaser at foreclosure by credit bid, then the amount
of such credit bid, in either case, over (ii) all costs and expenses, including,
without limitation, all attorneys' fees and disbursements and any brokerage
fees, if applicable, incurred by Lender in connection with the exercise of such
remedies, including the sale of such Property after a foreclosure against the
Property.
"NOTES" shall have the meaning set forth in the recitals hereof.
"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender by
Borrower which is signed on behalf of Borrower by an authorized representative
of Borrower which states that the items set forth in such certificate are true,
accurate and complete in all respects.
"OPERATING EXPENSES" shall mean, in each Fiscal Year or portion thereof
during the term hereof, all expenses directly attributable to the operation,
repair and/or maintenance of the Mortgaged Property including, without
limitation, Impositions, insurance premiums, management fees and costs
attributable to the operation, repair and maintenance of the systems for
heating, ventilating and air conditioning the Improvements and actually paid for
by Borrower. Operating Expenses shall not include interest, principal and
premium, if any, due under the Notes or otherwise in connection with the Debt,
income taxes, extraordinary capital improvements costs, or any non-cash charge
or expense such as depreciation or amortization.
"OPERATING INCOME" shall mean, in each Fiscal Year or portion thereof
during the term hereof, all revenue derived by Borrower arising from the
Mortgaged Property including, without limitation, rental revenues (whether
denominated as basic rent, additional rent, escalation payments, electrical
payments or otherwise) and other fees and charges payable pursuant to Leases or
otherwise in connection with the Mortgaged Property, and business interruption,
rent or other similar insurance proceeds. Operating Income shall not include (a)
Insurance Proceeds (other than proceeds of rent, business interruption or other
similar insurance allocable to the applicable period) and Condemnation Proceeds
(other than Condemnation Proceeds arising from a temporary taking or the use and
occupancy of all or part of the applicable Mortgaged Property allocable to the
applicable period), or interest accrued on such Condemnation Proceeds, (b)
proceeds of any financing, (c) proceeds of any sale, exchange or transfer of the
Mortgaged Property or any part thereof or interest therein, (d) capital
contributions or loans to Borrower or an Affiliate of Borrower, (e) any item of
income otherwise includable in Operating Income but paid directly by any tenant
to a Person other than Borrower except for real estate taxes paid directly to
any taxing authority by any tenant, (f) any other extraordinary, nonrecurring
revenues, (g) Rent paid by or on behalf of any lessee under a Space Lease which
is the subject of any proceeding or action relating to its bankruptcy,
reorganization or other arrangement pursuant to federal bankruptcy law or any
similar federal or state law or which
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has been adjudicated a bankrupt or insolvent unless such Space Lease has been
affirmed by the trustee in such proceeding or action, (h) Rent paid by or on
behalf of any lessee under a Space Lease the demised premises of which are not
occupied either by such lessee or by a sublessee thereof (i) Rent paid by or on
behalf of any lessee under a Space Lease in whole or partial consideration for
the termination of any Space Lease, or (j) sales tax rebates from any
Governmental Authority.
"PAD OWNERS" shall mean any owner of any fee interest in property
contiguous to or surrounded by the Mortgaged Property who has entered into or is
subject to a reciprocal easement agreement or other agreement or agreements with
Borrower either (a) in connection with an existing or potential improvement on
such property or (b) relating to or affecting the Mortgaged Property.
"PAYMENT DATE" shall mean, with respect to each month, the first (1st)
calendar day in such month, or if such day is not a Business Day, the next
following Business Day.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
"PERMITTED ENCUMBRANCES" shall have the meaning set forth in Section
2.05(a) hereof.
"PERSON" shall mean any individual, corporation, limited liability
company, partnership, joint venture, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
"PLAN" shall mean an employee benefit or other plan established or
maintained by Borrower, Guarantor or any ERISA Affiliate during the five-year
period ended prior to the date of this Deed of Trust or to which Borrower,
Guarantor or any ERISA Affiliate makes, is obligated to make or has, within the
five year period ended prior to the date of this Deed of Trust, been required to
make contributions (whether or not covered by Title IV of ERISA or Section 302
of ERISA or Section 401(a) or 412 of the Code), other than a Multi-employer
Plan.
"PREMISES" shall have the meaning set forth in granting clause (a) of
this Deed of Trust.
"PRINCIPAL AMOUNTS" shall mean the Loan Amounts as such amount may be
reduced from time to time pursuant to the terms of this Mortgage, the Notes or
the other Loan Documents.
"PRINCIPAL PAYMENTS" shall mean all payments of principal made pursuant
to the terms of the Notes.
"PROPERTY" shall mean the Mortgaged Property and each parcel or parcels
of real property encumbered by a Security Instrument as identified on Exhibit C
attached hereto and made a part hereof.
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"PROPERTY AGREEMENTS" shall mean all agreements, grants of easements
and/or rights-of-way, reciprocal easement agreements, permits, declarations of
covenants, conditions and restrictions, disposition and development agreements,
planned unit development agreements, management or parking agreements, party
wall agreements or other instruments affecting the Mortgaged Property,
including, without limitation any Pad Owners, but not including any brokerage
agreements, management agreements, service contracts, Space Leases or the Loan
Documents.
"RATING AGENCY" shall mean Standard & Poor's Rating Group, a
division of McGraw Hill, Inc. ("STANDARD & POOR'S"), Fitch Investors
Services, L.P. ("FITCH"), Moody's Investors Service, Inc. ("MOODY'S"), and
Duff & Phelps Credit Rating Co., collectively, and any successor to any of
them; PROVIDED, HOWEVER, that at any time after a Securitization, "Rating
Agency" shall mean those of the foregoing rating agencies that from time to
time rate the securities issued in connection with such Securitization.
"REALTY" shall have the meaning set forth in Section 2.05(b) hereof.
"RENT" shall have the meaning set forth in granting clause (f) of this
Deed of Trust.
"RENT ROLL" shall have the meaning set forth in Section 2.05(o) hereof.
"REQUIRED DEBT SERVICE COVERAGE" shall mean (i) for each Property, a
Debt Service Coverage: (a) Traverse City - 1.45, (b) Gretna - 1.42, and (c)
Sealy - 1.62, and (ii) an Aggregate Debt Service Coverage of not less than the
weighed average of the foregoing amounts for each Property (weighted on the
basis of Allocated Loan Amounts).
"RETENTION AMOUNT" shall have the meaning set forth in Section
3.04(b)(vii) hereof.
"SCHEDULED DEFEASANCE PAYMENTS" shall mean:
(a) with respect to a defeasance of the Loans in whole, payments on or
prior to, but as close as possible to (i) each scheduled Payment Date, after the
date of defeasance and through and including the Anticipated Repayment Date,
upon which interest payments or interest and Principal Payments are required
under the Loan Documents and in amounts equal to the scheduled payments due on
such dates under the Loan Documents and (ii) the Anticipated Repayment Date, of
the Principal Amounts and any accrued and unpaid interest thereon; or
(b) with respect to any defeasance of individual Loan payments, on or
prior to, but as close as possible to, (i) each scheduled Payment Date after the
date of defeasance through and including the Anticipated Repayment Date, of the
monthly installments of principal and interest due on the applicable Note and
(ii) the Anticipated Repayment Date, of the unpaid portion of the amount of the
applicable Loan Amount so defeased and any accrued and unpaid interest thereon.
"SECURITIES ACT" shall mean the Securities Act of 1933, as the same
shall be amended from time to time.
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"SECURITY INSTRUMENTS" shall mean collectively each mortgage, deed
of trust, deed to secure debt, security agreement, assignment of rents and
fixture filings as originally executed or as same may hereafter from time to
time be supplemented, amended, modified or extended by one or more indentures
supplemental thereto granted by Borrower to Lender as security for the Notes.
"SECURITIZATION" shall mean a public or private offering of securities
by Lender or any of its Affiliates or their respective successors and assigns
which are collateralized, in whole or in part, by this Deed of Trust and the
other Loan Documents.
"SECURITY AGREEMENT" shall have the meaning set forth in Section
15.01 hereof.
"SINGLE PURPOSE ENTITY" shall mean a corporation, partnership, joint
venture, limited liability company, trust or unincorporated association, which
is formed or organized solely for the purpose of holding, directly, an ownership
interest in the Property, does not engage in any business unrelated to the
Property, does not have any assets other than those related to its interest in
the Property or any indebtedness other than as permitted by this Deed of Trust
or the other Loan Documents, has its own separate books and records and has its
own accounts, in each case which are separate and apart from the books and
records and accounts of any other Person, and holds itself out as being a
Person, separate and apart from any other Person and which otherwise satisfies
the criteria of the Rating Agency, as in effect on the Closing Date, for a
special-purpose bankruptcy remote entity. Borrower agrees that it shall at all
times have a corporate managing member which is a Single Purpose Entity, which
corporate managing member shall have at least one director that is "independent"
as defined in the articles of incorporation of such managing member.
"SOLVENT" shall mean, as to any Person, that (a) the sum of the assets
of such Person, at a fair valuation, exceeds its liabilities, including
contingent liabilities, (b) such Person has sufficient capital with which to
conduct its business as presently conducted and as proposed to be conducted and
(c) such Person has not incurred debts, and does not intend to incur debts,
beyond its ability to pay such debts as they mature. For purposes of this
definition, "DEBT" means any liability on a claim, and "CLAIM" means (a) a right
to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured, or (b) a right to an equitable remedy
for breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured, or unsecured. With respect to
any such contingent liabilities, such liabilities shall be computed in
accordance with GAAP at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability.
"SPACE LEASES" shall mean any Lease or sublease thereunder (including,
without limitation, any Major Space Lease) or any other agreement providing for
the use and occupancy of a portion of the Mortgaged Property as the same may be
amended, renewed or supplemented.
"STATE" shall mean any of the states which are members of the United
States of America.
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"SUBSTANTIAL CASUALTY" shall have the meaning set forth in Section
3.04 hereof.
"TAKING" shall mean a condemnation or taking pursuant to the lawful
exercise of the power of eminent domain.
"TOTAL GLA" shall mean the total gross leasable area of the Mortgaged
Property, including all Space Leases.
"TRANSFER" shall mean the conveyance, assignment, sale, mortgaging,
encumbrance, pledging, hypothecation, granting of a security interest in,
granting of options with respect to, or other disposition of (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) all or any portion of any legal
or beneficial interest (a) in all or any portion of the Mortgaged Property; (b)
if Borrower or, if Borrower is a partnership or limited liability company, any
General Partner, is a corporation, in the stock of Borrower or any General
Partner; (c) in Borrower (or any trust of which Borrower is a trustee); or (d)
if Borrower is a limited or general partnership, limited liability company,
joint venture, trust, nominee trust, tenancy in common or other unincorporated
form of business association or form of ownership interest, in any Person having
a direct legal or beneficial ownership in Borrower, excluding any legal or
beneficial interest in any constituent limited partner or nonmanaging member of
Borrower, but including any legal or beneficial interest in any General Partner
and shall also include, without limitation to the foregoing, the following: an
installment sales agreement wherein Borrower agrees to sell the Mortgaged
Property or any part thereof or any interest therein for a price to be paid in
installments; an agreement by Borrower leasing all or a substantial part of the
Mortgaged Property to one or more Persons pursuant to a single or related
transactions, or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower's right, title and interest in and to any Leases
or any Rent; any instrument subjecting the Mortgaged Property to a condominium
regime or transferring ownership to a cooperative corporation; and the
dissolution or termination of Borrower or the merger or consolidation of
Borrower with any other Person. Notwithstanding the foregoing, a transfer of
legal or beneficial interest in the Borrower shall not constitute a Transfer
provided that any member which as of the Closing Date holds in excess of 51% of
the legal and beneficial interest in Borrower retains 51% or more of the legal
and beneficial interest in Borrower.
"TREASURY CONSTANT MATURITY YIELD INDEX" shall mean the average yield
for "This Week" as reported by the Federal Reserve Board in Federal Reserve
Statistical Release H.15 (519).
"UCC" shall mean the Uniform Commercial Code as in effect in the State
in which the Mortgaged Property is located.
"UNSCHEDULED PAYMENTS" shall mean (a) all Loss Proceeds that Borrower
is required to apply to the repayment of the Debt pursuant to this Deed of
Trust, the Notes or any other Loan Documents, (b) any funds representing a
voluntary or involuntary principal prepayment other than scheduled Principal
Payments, and (c) any Net Proceeds.
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"USE REQUIREMENTS" shall mean any and all building codes, permits,
certificates of occupancy or compliance, laws, regulations, or ordinances
(including, without limitation, health, pollution, fire protection, medical and
day-care facilities, waste product and sewage disposal regulations),
restrictions of record, easements, reciprocal easements, declarations or other
agreements affecting the use of the Mortgaged Property or any part thereof.
"WELFARE PLAN" shall mean an employee welfare benefit plan as defined
in Section 3(1) of ERISA established or maintained by Borrower, Guarantor or any
ERISA Affiliate or that covers any current or former employee of Borrower,
Guarantor or any ERISA Affiliate.
"WORK" shall have the meaning set forth in Section 3.04(a)(i) hereof.
"YIELD MAINTENANCE PREMIUM" shall mean the premium which shall be the
product of (a) a fraction, the numerator of which is the positive excess, if
any, of (i) the present value of all future payments of principal and interest
on the Principal Amounts, including the principal amount due at maturity, to be
made on the Notes before the prepayment in question, discounted at an interest
rate per annum equal to the Treasury Constant Maturity Yield Index published
during the second full week preceding the date on which such premium is payable
for instruments having a maturity coterminous with the remaining term of the
Notes, over (ii) the Principal Amounts immediately before such prepayment, and
the denominator of which is the Principal Amounts immediately prior to the
prepayment, and (b) the Principal Amounts being prepaid; PROVIDED, HOWEVER, that
if there is no Treasury Constant Maturity Yield Index for instruments having a
maturity coterminous with the remaining term of the Notes, then the index
referred to in (1) above shall be equal to the weighted average yield to
maturity of the Treasury Constant Maturity Yield Indices with maturities next
longer and shorter than such remaining average life to maturity, calculated by
averaging (and rounding upward to the nearest whole multiple of 1/100 of 1% per
annum, if the average is not such a multiple) the yields of the relevant
Treasury Constant Maturity Yield Indices (rounded, if necessary, to the nearest
1/100 of 1% with any figure of 1/200 of 1% or above rounded upward).
ARTICLE II
COVENANTS, WARRANTIES AND REPRESENTATIONS OF BORROWER
Section 2.01 PAYMENT OF DEBT. Borrower will pay the Debt at the time
and in the manner provided in the Notes and the other Loan Documents, all in
lawful money of the United States of America in immediately available funds.
Section 2.02 REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower
represents and warrants to Lender as of the Closing Date or such other date as
is set forth below:
(a) ORGANIZATION AND AUTHORITY. Borrower (i) is a limited
liability company, general partnership, limited partnership or corporation, as
the case may be, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation, (ii) has all requisite power and
authority and all necessary licenses and permits to own and operate the
Mortgaged Property and to carry on its business as now conducted and as
presently proposed to be conducted
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and (iii) is duly qualified, authorized to do business and in good standing in
the jurisdiction where the Mortgaged Property is located and in each other
jurisdiction where the conduct of its business or the nature of its activities
makes such qualification necessary except where the failure to be so qualified
would not have a Material Adverse Effect. If Borrower is a limited liability
company, limited partnership or general partnership, each general partner or
managing member, as applicable, of Borrower which is a corporation is duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) POWER. Borrower and, if applicable, each General Partner
has full power and authority to execute, deliver and perform, as applicable, the
Loan Documents to which it is a party, to make the borrowings thereunder, to
execute and deliver the Notes and to grant to Lender a first, prior, perfected
and continuing lien on and security interest in the Mortgaged Property, subject
only to the Permitted Encumbrances.
(c) AUTHORIZATION OF BORROWING. The execution, delivery and
performance of the Loan Documents to which Borrower is a party, the making of
the borrowings thereunder, the execution and delivery of the Notes, the grant of
the liens on the Mortgaged Property pursuant to the Loan Documents to which
Borrower is a party and the consummation of the Loans are within the powers of
Borrower and have been duly authorized by Borrower and, if applicable, the
General Partners, by all requisite action (and Borrower hereby represents that
no approval or action of any member, limited partner or shareholder, as
applicable, of Borrower is required to authorize any of the Loan Documents to
which Borrower is a party) and will constitute the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with their
terms, except as enforcement may be stayed or limited by bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in proceedings at law or in
equity) and will not (i) violate any provision of its partnership agreement or
partnership certificate or certificate of incorporation or by-laws or articles
of organization, as applicable, or, to its knowledge, any law, judgment, order,
rule or regulation of any court, panel or other Governmental Authority, domestic
or foreign, binding upon Borrower or the Mortgaged Property, or (ii) violate any
provision of any indenture, agreement, mortgage, contract or other instrument to
which Borrower or, if applicable, any General Partner is a party or by which any
of their respective property, assets or revenues are bound, or be in conflict
with, result in an acceleration of any obligation or a breach of or constitute
(with notice or lapse of time or both) default or require any payment or
prepayment under, any such indenture, agreement, mortgage, contract or other
instrument except where such breach or default would not result in a Material
Adverse Effect, or (iii) result in the creation or imposition of any lien,
except those in favor of Lender as provided in the Loan Documents to which it is
a party.
(d) CONSENT. Neither Borrower nor, if applicable, any General
Partner, is required to obtain any consent, approval or authorization from, or
to file any declaration or statement with, any Governmental Authority or other
agency in connection with or as a condition to the execution, delivery or
performance of this Deed of Trust, the Notes or the other Loan Documents which
has not been so obtained or filed.
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(e) INTEREST RATE. The rate of interest paid under the Notes
and the method and manner of the calculation thereof do not violate any usury or
other law or applicable Legal Requirement.
(f) OTHER AGREEMENTS. Neither Borrower nor, if applicable, any
General Partner, is in violation of its organizational documents or any
agreement or instrument by which it is bound, or any judgment, decree, writ,
injunction, order or award of any arbitrator, court or Governmental Authority,
or any Legal Requirement, in each case, applicable to Borrower or the Mortgaged
Property, except for such violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
(g) SINGLE PURPOSE ENTITY. Borrower covenants and agrees that
it has not and shall not, and agrees that its SPE corporate managing member (the
"PRINCIPAL"), shall not:
(i) (A) with respect to Borrower, engage
in any business or activity other than the acquisition, ownership, operation
and maintenance of the Property, and activities incidental thereto, and (B)
with respect to Principal, engage in any business or activity other than the
ownership of an interest in Borrower, and activities incidental thereto,
including the management of the Property;
(ii) with respect to Borrower, acquire or
own any material asset other than (A) the Property, and (B) such incidental
personal property as may be necessary for the operation of the Property and
with respect to Principal, acquire or own any material asset other than (A)
its membership interest in the Borrower, and (B) such incidental personal
property necessary for the ownership of such membership interest;
(iii) merge into or consolidate with any
person or entity or dissolve, terminate or liquidate in whole or in part,
transfer or otherwise dispose of all or substantially all of its assets or
change its legal structure, without in each case Lender's consent;
(iv) fail to preserve its existence as an
entity duly organized, validly existing and in good standing (if applicable)
under the laws of the jurisdiction of its organization or formation, or
without the prior written consent of Lender, amend, modify, terminate or fail
to comply with the provisions of Borrower's Articles of Organization,
Operating Agreement or similar organizational documents, as the case may be,
or of Principal's Articles or Certificate of Incorporation, By-laws or
similar organizational documents, as the case may be, whichever is applicable;
(v) own any subsidiary or make any
investment in or acquire the obligations or securities of any other person or
entity without the consent of Lender;
(vi) commingle its assets with the assets
of any of its principal(s), affiliates, or of any other person or entity;
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(vii) with respect to Borrower, incur any
debt, secured or unsecured (including guaranteeing any obligation), other
than the Debt, except as otherwise permitted herein and unsecured trade and
operational debt incurred with trade creditors in the ordinary course of its
business of owning and operating the Property in such amounts as are normal
and reasonable under the circumstances, provided that such debt is not
evidenced by a note and is paid when due and provided in any event the
outstanding principal balance of such debt shall not exceed at any one time
two percent (2%) of the outstanding Debt; and with respect to Principal,
incur any debt, secured or unsecured (including guaranteeing any obligation);
(viii) fail to pay its debts and liabilities
from its assets as the same shall become due to the extent such assets are
available from the ownership and operation of the Property;
(ix) fail to maintain its records, books of
account and bank accounts separate and apart from those of the general
partners, members, principals and Affiliates of Borrower or of Principal, as
the case may be, the Affiliates of a general partner or member of Borrower or
of Principal, as the case may be, and any other person or entity;
(x) except for the Management Agreement
and office leases to Affiliates in place as of the date hereof and disclosed
to Lender, enter into any contract or agreement with any general partner,
member, principal or affiliate of Borrower or of Principal, as the case may
be, any Guarantor, or any general partner, member, principal or affiliate
thereof, except upon terms and conditions that are intrinsically fair and
substantially similar to those that would be available on an arms-length
basis with third parties other than any general partner, member, principal or
affiliate of Borrower or Principal, as the case may be, Guarantor or any
general partner, member, principal or Affiliate thereof;
(xi) seek the dissolution or winding up in
whole, or in part, of Borrower or Principal, as the case may be;
(xii) fail to correct any known
misunderstandings regarding the separate identity of Borrower or Principal,
as the case may be;
(xiii) hold itself out to be responsible (or
pledge its assets as security) for the debts of another person;
(xiv) make any loans or advances to any
third party, including any general partner, member, principal or Affiliate of
Borrower or of Principal, as the case may be, or any general partner, member,
principal or affiliate thereof;
(xv) fail to file its own tax returns
(provided Principal may file as part of a consolidated return) or to use
separate stationary, invoices and checks;
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(xvi) fail either to hold itself out to the
public as a legal entity separate and distinct from any other entity or
person or to conduct its business solely in its own name in order not (i) to
mislead others as to the identity with which such other party is transacting
business, or (ii) to suggest that Borrower or Principal, as the case may be,
is responsible for the debts of any third party (including any general
partner, member, principal or Affiliate of Borrower or of Principal, as the
case may be, or any general partner, member, principal or Affiliate thereof);
(xvii) fail to allocate fairly and reasonably
among Borrower and any third party (including, without limitation, Principal
and Guarantor) any overhead for shared office space;
(xviii) fail to pay the salaries of its own
employees and maintain a sufficient number of employees for its contemplated
business operations to the extent income is available from the ownership and
operation of the Property;
(xix) fail to maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations to the extent
income is available from the ownership and operation of the Property;
(xx) file a voluntary petition or otherwise
initiate proceedings to have the Borrower or the Principal adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against the Borrower or the Principal, or file a
petition seeking or consenting to reorganization or relief of the Borrower or
the Principal as debtor under any applicable federal or state law relating to
bankruptcy, insolvency, or other relief for debtors with respect to the
Borrower or the Principal; or seek or consent to the appointment of any
trustee, receiver, conservator, assignee, sequestrator, custodian, liquidator
(or other similar official) of the Borrower or the Principal or of all or any
substantial part of the properties and assets of the Borrower or the
Principal, or make any general assignment for the benefit of creditors of the
Borrower or the Principal, or declare or effect a moratorium on the Borrower
or the Principal debt or take any action in furtherance of any such action;
(xxi) share any common logo with or hold
itself out as or be considered as a department or division of (A) any general
partner, principal, member or affiliate of Borrower or of Principal, as the
case may be, (B) any affiliate of a general partner of Borrower or of
Principal, as the case may be, or (C) any other person or entity;
(xxii) fail to conduct its business so that
the assumptions made with respect to the Borrower and Principal in that
certain "substantive non-consolidation" opinion letter (the "INSOLVENCY
OPINION") delivered by Winston & Strawn in connection with the origination of
the Loans shall be true and correct in all respects;
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(xxiii) with respect to Principal, fail at any
time to have at least one (1) independent director who is not at the time of
initial appointment and has not been at any time during the preceding five
(5) years: (A) a stockholder, director, officer, employee or member of the
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Borrower, the Principal or any Affiliate of either of them; (B) other than with
respect to CT Corporation Systems Corp., a customer, supplier or other person
who purchases any goods or services from or derives any revenues from its
activities with the Borrower, the Principal or any Affiliate of either of them;
(C) a person or other entity controlling or under common control with any such
stockholder, member, customer, supplier or other person; (D) an attorney or
counsel to the Borrower, the Principal or any of their Affiliates or (E) a
member of the immediate family of any such stockholder, director, officer,
employee, member, customer, supplier or other person; or
(xxiv) fail to prepare and maintain financial
records and accounts of each of the Borrower and Principal in accordance with
generally accepted accounting principles and susceptible to audit or fail to
cause any consolidated financial statements of which the Borrower or
Principal is a part to certain footnotes or other information to the effect
that the Mortgaged Property is owned by the Borrower and that any property
owned by Principal is owned by Principal and is not available to pay
creditors of any other member of the consolidated group;
(xxv) fail to conduct its business so as to
avoid or to correct any misunderstanding on the part of any creditor
concerning the fact that any invoices and other statements of account from
creditors of the Borrower are to be addressed and mailed directly to the
Borrower;
(xxvi) transfer assets between the Borrower
and any Affiliate thereof without reasonably equivalent value or with the
intent to hinder, delay or defraud creditors;
(xxvii) fail to conduct its business so as to
avoid or correct any misunderstanding on the part of any creditor who
provides any loan or extension of credit to any Affiliate other than Borrower
concerning the fact that no Affiliate owns the Mortgaged Property or any
other asset of the Borrower; or
(xxviii) make any representations by Borrower
or Principal that the assets or credit worthiness of any Affiliate thereof
are or will be available for the payment of its liabilities, or permit any
representations to be made by any Affiliate thereof that its assets or credit
worthiness are or will be available for the payment of liabilities of such
Affiliate.
(h) NO DEFAULTS. No Default or Event of Default has occurred
and is continuing or would occur as a result of the consummation of the
transactions contemplated by the Loan Documents. Borrower is not in default in
the payment or performance of any of its Contractual Obligations in any material
respect.
(i) GOVERNMENTAL CONSENTS AND APPROVALS. Borrower and, if
applicable, each General Partner, have obtained or made all necessary (i)
consents, approvals and authorizations, and registrations and filings of or with
all Governmental Authorities and (ii) consents, approvals, waivers and
notifications of partners, stockholders, creditors, lessors and other
nongovernmental Persons, in each case, which are required to be obtained or made
by Borrower or, if applicable, the General Partner, in connection with the
execution and delivery of, and the performance by Borrower of its obligations
under, the Loan Documents.
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(j) INVESTMENT COMPANY ACT STATUS. Borrower is not an
"investment company," or a company "controlled" by an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
(k) COMPLIANCE WITH LAW. Borrower is in compliance in all
material respects with all Legal Requirements to which it or the Mortgaged
Property is subject, including, without limitation, all Environmental Statutes,
the Occupational Safety and Health Act of 1970, the Americans with Disabilities
Act and ERISA. No portion of the Mortgaged Property has been or will be
purchased, improved, fixtured, equipped or furnished with proceeds of any
illegal activity.
(l) FINANCIAL INFORMATION. All financial data that has been
delivered by Borrower to Lender (i) is true, complete and correct in all
material respects, (ii) accurately represents the financial condition and
results of operations of the Persons covered thereby as of the date on which the
same shall have been furnished, and (iii) has been prepared in accordance with
GAAP (or such other accounting basis as is reasonably acceptable to Lender)
throughout the periods covered. As of the date hereof, neither Borrower nor, if
applicable, any General Partner, has any material contingent liability,
liability for taxes or other unusual or forward commitment not reflected in such
financial statements delivered to Lender; since the date of the last financial
statements delivered by Borrower to Lender except as otherwise disclosed in such
financial statements or notes thereto, there has been no change in the assets,
liabilities or financial position of Borrower nor, if applicable, any General
Partner, or in the results of operations of Borrower which would have a Material
Adverse Effect. Neither Borrower nor, if applicable, any General Partner, has
incurred any obligation or liability, contingent or otherwise not reflected in
such financial statements which would have a Material Adverse Effect.
(m) TRANSACTION BROKERAGE FEES. Borrower has not dealt with
any financial advisors, brokers, underwriters, placement agents, agents or
finders in connection with the transactions contemplated by this Deed of Trust
except for Lender and its Affiliates. All brokerage fees, commissions and other
expenses payable in connection with the transactions contemplated by the Loan
Documents have been paid in full contemporaneously with the execution of the
Loan Documents and the funding of the Loans. Borrower hereby agrees to indemnify
and hold Lender harmless from and against any and all claims, liabilities, costs
and expenses of any kind in any way relating to or arising from (i) a claim by
any Person that such Person acted on behalf of Borrower in connection with the
transactions contemplated herein or (ii) any breach of the foregoing
representation. The provisions of this subsection (m) shall survive the
repayment of the Debt.
(n) FEDERAL RESERVE REGULATIONS. No part of the proceeds of
the Loans will be used for the purpose of purchasing or acquiring any "margin
stock" within the meaning of Regulations G, T, U or X of the Board of Governors
of the Federal Reserve System or for any other purpose which would be
inconsistent with such Regulations G, T, U or X or any other Regulations of such
Board of Governors, or for any purposes prohibited by Legal Requirements or by
the terms and conditions of the Loan Documents.
(o) PENDING LITIGATION. There are no actions, suits or
proceedings pending or, to the best knowledge of Borrower, threatened against or
affecting Borrower or the Mortgaged Property
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in any court or before any Governmental Authority which if adversely
determined either individually or collectively has or is reasonably likely to
have a Material Adverse Effect.
(p) SOLVENCY; NO BANKRUPTCY. Each of Borrower and, if
applicable, the General Partner, (i) is and has at all times been Solvent and
will be Solvent immediately upon the consummation of the transactions
contemplated by the Loan Documents and (ii) is free from bankruptcy,
reorganization or arrangement proceedings or a general assignment for the
benefit of creditors and is not contemplating the filing of a petition under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
major portion of such Person's assets or property and Borrower has no knowledge
of any Person contemplating the filing of any such petition against it or, if
applicable, the General Partner. None of the transactions contemplated hereby
will be or have been made with an intent to hinder, delay or defraud any present
or future creditors of Borrower and Borrower has received reasonably equivalent
value in exchange for its obligations under the Loan Documents. Borrower's
assets do not, and immediately upon consummation of the transaction contemplated
in the Loan Documents will not, constitute unreasonably small capital to carry
out its business as presently conducted or as proposed to be conducted. Borrower
does not intend to, nor believe that it will, incur debts and liabilities beyond
its ability to pay such debts as they may mature.
(q) USE OF PROCEEDS. The proceeds of the Loans shall be
applied by Borrower to, INTER ALIA, (i) satisfy certain mortgage loans presently
encumbering all or a part of the Mortgaged Property, and (ii) pay certain
transaction costs incurred by Borrower in connection with the Loans. No portion
of the proceeds of the Loans will be used for family, personal, agricultural or
household use.
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(r) TAX FILINGS. Borrower and, if applicable, each General
Partner, have filed all federal, state and local tax returns required to be
filed and have paid or made adequate provision for the payment of all federal,
state and local taxes, charges and assessments payable by Borrower and, if
applicable, the General Partners. Borrower and, if applicable, the General
Partners, believe that their respective tax returns properly reflect the income
and taxes of Borrower and said General Partner, if any, for the periods covered
thereby, subject only to reasonable adjustments required by the Internal Revenue
Service or other applicable tax authority upon audit.
(s) NOT FOREIGN PERSON. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Code.
(t) ERISA.
(i) The assets of Borrower and Guarantor are not
and will not become treated as "plan assets", whether by operation of law or
under regulations promulgated under ERISA. Each Plan, and, to the knowledge
of Borrower, each Multi-employer Plan, is in compliance in all material
respects with, and has been administered in all material respects in
compliance with, its terms and the applicable provisions of ERISA, the Code
and any other applicable Legal Requirement, and no event or condition has
occurred and is continuing as to which Borrower would be under an obligation
to furnish a report to Lender under clause (ii)(A) of this Section. Other
than an application for a favorable determination letter with respect to a
Plan, there are no pending issues or claims before the Internal Revenue
Service, the United States Department of Labor or any court of competent
jurisdiction related to any Plan under which Borrower, Guarantor or any ERISA
Affiliate, directly or indirectly (through an indemnification agreement or
otherwise), could be subject to any material risk of liability under Section
409 or 502(i) of ERISA or Section 4975 of the Code. No Welfare Plan provides
or will provide benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to any current or former
employee of Borrower, Guarantor or any ERISA Affiliate beyond his or her
retirement or other termination of service other than (A) coverage mandated
by applicable law, (B) death or disability benefits that have been fully
provided for by fully paid up insurance or (C) severance benefits.
(ii) Borrower will furnish to Lender as soon as
possible, and in any event within ten (10) days after Borrower knows or has
reason to believe that any of the events or conditions specified below with
respect to any Plan or Multi-employer Plan has occurred or exists, an
Officer's Certificate setting forth details respecting such event or
condition and the action, if any, that Borrower or its ERISA Affiliate
proposes to take with respect thereto (and a copy of any report or notice
required to be filed with or given to PBGC (or any other relevant
Governmental Authority) by Borrower or an ERISA Affiliate with respect to
such event or condition, if such report or notice is required to be filed
with the PBGC or any other relevant Governmental Authority:
(A) any reportable event, as defined
in Section 4043(c) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which PBGC has not by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within thirty
(30) days of the occurrence of such event (provided that a failure to meet
the minimum funding standard
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of Section 412 of the Code of Section 302 of ERISA, including, without
limitation, the failure to make on or before its due date a required installment
under Section 412(m) of the Code of Section 302(e) of ERISA, shall be a
reportable event regardless of the issuance of any waivers in accordance with
Section 412(d) of the Code), and any request for a waiver under Section 412(d)
of the Code for any Plan;
(B) the distribution under Section
4041 of ERISA of a notice of intent to terminate any Plan or any action taken
by Borrower or an ERISA Affiliate to terminate any Plan;
(C) the institution by PBGC of
proceedings under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the receipt by Borrower
or any ERISA Affiliate of a notice from a Multi-employer Plan that such
action has been taken by PBGC with respect to such Multi-employer Plan;
(D) the complete or partial withdrawal
from a Multi-employer Plan by Borrower or any ERISA Affiliate that results in
liability under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default) or the
receipt by Borrower or any ERISA Affiliate of notice from a Multi-employer
Plan that it is in reorganization or insolvency pursuant to Section 4241 or
4245 of ERISA or that it intends to terminate or has terminated under Section
4041A of ERISA;
(E) the institution of a proceeding by
a fiduciary of any Multi-employer Plan against Borrower or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed
within thirty (30) days;
(F) the adoption of an amendment to
any Plan that, pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which
such Plan is a part if Borrower or an ERISA Affiliate fails to timely provide
security to the Plan in accordance with the provisions of said Sections; or
(G) the imposition of a lien or a
security interest in connection with a Plan.
(iii) Borrower shall not knowingly engage in or
permit any transaction in connection with which Borrower, Guarantor or any
ERISA Affiliate could be subject to either a material civil penalty or
material tax assessed pursuant to Section 502(i) or 502(l) of ERISA or
Section 4975 of the Code, permit any Welfare Plan to provide benefits,
including without limitation, medical benefits (whether or not insured), with
respect to any current or former employee of Borrower, Guarantor or any ERISA
Affiliate beyond his or her retirement or other termination of service other
than (A) coverage mandated by applicable law, (B) death or disability
benefits that have been fully provided for by paid up insurance or otherwise
or (C) severance benefits, permit the assets of Borrower or Guarantor to
become "plan assets", whether by operation of law or under regulations
promulgated under ERISA or adopt, amend (except as may be required by
applicable law) or increase the amount of any benefit or amount payable
under, or permit any ERISA Affiliate
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to adopt, amend (except as may be required by applicable law) or increase the
amount of any benefit or amount payable under, any employee benefit plan
(including, without limitation, any employee welfare benefit plan) or other
plan, policy or arrangement, except for normal increases in the ordinary
course of business consistent with past practice that, in the aggregate, do
not result in a material increase in benefits expense to Borrower, Guarantor
or any ERISA Affiliate.
(u) LABOR MATTERS. Borrower is not a party to any
collective bargaining agreements.
(v) There are no agreements, written or oral, between the
Borrower and any Affiliate thereof pursuant to which such Affiliate is
obligated to purchase the Mortgaged Property from Borrower, and no Affiliate
of Borrower has any right to compel the Borrower to sell the Mortgaged
Property to it pursuant to a written or oral agreement or otherwise.
Section 2.03 FURTHER ACTS, ETC. Borrower will, at the cost of
Borrower, and without expense to Lender, do, execute, acknowledge and deliver
all and every such further acts, deeds, conveyances, mortgages, assignments,
notices of assignments, transfers and assurances as Lender or Deed Trustee
shall, from time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Lender the property
and rights hereby mortgaged, given, granted, bargained, sold, alienated,
enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated, or which
Borrower may be or may hereafter become bound to convey or assign to Lender
or Deed Trustee for carrying out or facilitating the performance of the terms
of this Deed of Trust or for filing, registering or recording this Deed of
Trust and, on demand, will execute and deliver and hereby authorizes Lender
to execute in the name of Borrower or without the signature of Borrower to
the extent Lender may lawfully do so, one or more financing statements,
chattel mortgages or comparable security instruments, to evidence more
effectively the lien hereof upon the Mortgaged Property. Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the
purpose of protecting, perfecting, preserving and realizing upon the
interests granted pursuant to this Deed of Trust and to effect the intent
hereof, all as fully and effectually as Borrower might or could do; and
Borrower hereby ratifies all that Lender shall lawfully do or cause to be
done by virtue hereof.
Section 2.04 RECORDING OF MORTGAGE, ETC. Borrower forthwith upon the
execution and delivery of this Deed of Trust and thereafter, from time to
time, will cause this Deed of Trust, and any security instrument creating a
lien or security interest or evidencing the lien hereof upon the Mortgaged
Property and each instrument of further assurance to be filed, registered or
recorded in such manner and in such places as may be required by any present
or future law in order to publish notice of and fully protect the lien or
security interest hereof upon, and the interest of Lender in, the Mortgaged
Property. Borrower will pay all filing, registration or recording fees, and
all expenses incident to the preparation, execution and acknowledgment of
this Deed of Trust, any mortgage supplemental hereto, any security instrument
with respect to the Mortgaged Property and any instrument of further
assurance, and all federal, state, county and municipal, taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of this Deed of Trust, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance, except where prohibited by law to do so, in
which event Lender may declare the Debt to be immediately due and payable.
Borrower shall hold
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harmless and indemnify Lender and Deed Trustee, and their successors and
assigns, against any liability incurred as a result of the imposition of any
tax on the making and recording of this Deed of Trust.
Section 2.05 REPRESENTATIONS AND WARRANTIES AS TO THE MORTGAGED
PROPERTY. Borrower represents and warrants with respect to the Mortgaged
Property as follows:
(a) LIEN PRIORITY. This Deed of Trust is a valid and
enforceable first lien on the Mortgaged Property, free and clear of all
encumbrances and liens having priority over the lien of this Deed of Trust,
except for the items set forth as exceptions to or subordinate matters in the
title insurance policy insuring the lien of this Deed of Trust, none of
which, individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by this Deed of Trust,
materially affect the value or marketability of the Mortgaged Property,
materially impair the use or operation of the Mortgaged Property for the use
currently being made thereof or materially impair Borrower's ability to pay
its obligations in a timely manner (such items being the "PERMITTED
ENCUMBRANCES").
(b) TITLE. Borrower has, subject only to the Permitted
Encumbrances, good, insurable and marketable fee simple title to the
Premises, Improvements and Fixtures (collectively the "REALTY") and to all
easements and rights benefitting the Realty and has the right, power and
authority to mortgage, give, grant, bargain, sell, alien, convey, confirm,
pledge, assign, and hypothecate the Mortgaged Property. Borrower will
preserve its interest in and title to the Mortgaged Property and will forever
warrant and defend the same to Lender against any and all claims made by,
through or under Borrower and will forever warrant and defend the validity
and priority of the lien and security interest created herein against the
claims of all Persons whomsoever claiming by, through or under Borrower. The
foregoing warranty of title shall survive the foreclosure of this Deed of
Trust and shall inure to the benefit of and be enforceable by Lender in the
event Lender acquires title to the Mortgaged Property pursuant to any
foreclosure. In addition, there are no outstanding options or rights of first
refusal to purchase the Mortgaged Property or Borrower's ownership thereof.
(c) TAXES AND IMPOSITIONS. All taxes and other Impositions
and governmental assessments due and owing in respect of, and affecting, the
Mortgaged Property have been paid. Borrower has paid all Impositions which
constitute special governmental assessments in full, except for those
assessments which are permitted by applicable Legal Requirements to be paid
in installments, in which case all installments which are due and payable
have been paid in full. There are no pending, or to Borrower's best
knowledge, proposed special or other assessments for public improvements or
otherwise affecting the Mortgaged Property.
(d) CASUALTY; FLOOD ZONE. The Realty is in good repair and
free and clear of any damage, destruction or casualty (whether or not covered
by insurance) that would materially affect the value of the Realty or the use
for which the Realty was intended. No portion of the Premises is located in
an "area of special flood hazard," as that term is defined in the regulations
of the Federal Insurance Administration, Department of Housing and Urban
Development, under the National Flood Insurance Act of 1968, as amended (24
CFR Section 1909.1) or Borrower has obtained the flood insurance required by
Section 3.01(a)(vi) hereof. The Premises either does not lie in a 100 year
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flood plain that has been identified by the Secretary of Housing and Urban
Development or any other Governmental Authority or, if it does, Borrower has
obtained the flood insurance required by Section 3.01(a)(vi) hereof.
(e) COMPLETION; ENCROACHMENT. All Improvements necessary
for the use and operation of the Premises, including, without limitation, all
Improvements which were included for purposes of determining the appraised
value of the Mortgaged Property in the Appraisal, have been completed and
none of said Improvements lie outside the boundaries and building restriction
lines of the Premises. Except as set forth in the title insurance policy
insuring the lien of this Deed of Trust, no improvements on adjoining
properties encroach upon the Premises.
(f) SEPARATE LOT. The Premises are taxed separately without
regard to any other real estate and constitute a legally subdivided lot under
all applicable Legal Requirements (or, if not subdivided, no subdivision or
platting of the Premises is required under applicable Legal Requirements),
and for all purposes may be mortgaged, conveyed or otherwise dealt with as an
independent parcel. The Mortgaged Property does not benefit from any tax
abatement or exemption.
(g) USE. The existence of all Improvements, the present use
and operation thereof and the access of the Premises and the Improvements to
all of the utilities and other items referred to in paragraph (k) below are
in compliance in all material respects with all Leases affecting the
Mortgaged Property and all applicable Legal Requirements, including, without
limitation, Environmental Statutes, Development Laws and Use Requirements.
Borrower has not received any notice from any Governmental Authority alleging
any uncured violation relating to the Mortgaged Property of any applicable
Legal Requirements.
(h) LICENSES AND PERMITS. Borrower currently holds and will
continue to hold all certificates of occupancy, licenses, registrations,
permits, consents, franchises and approvals of any Governmental Authority or
any other Person which are material for the lawful occupancy and operation of
the Realty or which are material to the ownership or operation of the
Mortgaged Property or the conduct of Borrower's business. All such
certificates of occupancy, licenses, registrations, permits, consents,
franchises and approvals are current and in full force and effect.
(i) [Intentionally Omitted]
(j) PROPERTY PROCEEDINGS. There are no actions, suits or
proceedings pending or to the knowledge of the Borrower, threatened in any
court or before any Governmental Authority or arbitration board or tribunal
(i) relating to (A) the zoning of the Premises or any part thereof, (B) any
certificates of occupancy, licenses, registrations, permits, consents or
approvals issued with respect to the Mortgaged Property or any part thereof,
(C) the condemnation of the Mortgaged Property or any part thereof, or (D)
the condemnation or relocation of any roadways abutting the Premises required
for access or the denial or limitation of access to the Premises or any part
thereof from any point of access to the Premises, (ii) asserting that (A) any
such zoning, certificates of occupancy, licenses, registrations, permits,
consents and/or approvals do not permit the operation of any material portion
of the Realty as presently being conducted, (B) any material improvements
located on the Premises or any part thereof cannot be located thereon or
operated with their intended use or (C) the operation of the Mortgaged
Property or any part thereof is in violation in any material
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respect of any Environmental Statutes, Development Laws or other Legal
Requirements or Space Leases or Property Agreements or (iii) which (A) might
affect the validity or priority of any Loan Document or (B) have a Material
Adverse Effect.
(k) UTILITIES. The Premises has all necessary legal access
to water, gas and electrical supply, storm and sanitary sewerage facilities,
other required public utilities (with respect to each of the aforementioned
items, by means of either a direct connection to the source of such utilities
or through connections available on publicly dedicated roadways directly
abutting the Premises or through permanent insurable easements benefitting
the Premises), fire and police protection, parking, and means of direct
access between the Premises and public highways over recognized curb cuts (or
such access to public highways is through private roadways which may be used
for ingress and egress pursuant to permanent insurable easements).
(l) MECHANICS' LIENS. The Mortgaged Property is free and
clear of any mechanics' liens or liens in the nature thereof, and no rights
are outstanding that under law could give rise to any such liens, any of
which liens are or may be prior to, or equal with, the lien of this Deed of
Trust, except those which are insured against by the title insurance policy
insuring the lien of this Deed of Trust.
(m) TITLE INSURANCE AND SURVEY. Lender has received a
lenders' title insurance policy insuring this Deed of Trust as a first lien
on the Mortgaged Property subject only to Permitted Encumbrances.
(n) INSURANCE. The Mortgaged Property is insured in
accordance with the requirements set forth in Article III hereof.
(o) SPACE LEASES.
(i) Borrower has delivered a true, correct
and complete copy of all Space Leases as of the date hereof, together with a
complete schedule of all such Space Leases (collectively, the "RENT ROLL").
(ii) Each Space Lease constitutes the legal,
valid and binding obligation of Borrower and, to the knowledge of Borrower,
is enforceable against the tenant thereof. No default by Borrower, or to
Borrower's knowledge except as disclosed to Lender, by any tenant, exists, or
with the passing of time or the giving of notice would exist, (A) under any
Major Space Lease or (B) under any other Space Leases which would, in the
aggregate, have a Material Adverse Effect.
(iii) No tenant under any Space Lease has, as
of the date hereof, paid Rent more than thirty (30) days in advance, and the
Rents under such Space Leases have not been waived, released, or otherwise
discharged or compromised.
(iv) All work to be performed by Borrower
under the Space Leases has been substantially performed, all contributions to
be made by Borrower to the tenants thereunder
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have been made except for any held-back amounts, and all other conditions
precedent to each such tenant's obligations thereunder have been satisfied.
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(v) Except as previously disclosed to
Lender in writing, there are no options to terminate any Space Lease.
(vi) Each tenant under a Space Lease or such
tenant's authorized subtenant is currently occupying the space demised by
such Space Lease.
(vii) Borrower has delivered to Lender a
true, correct and complete copy of the form of all Space Leases described in
the Rent Roll.
(viii) Each Space Lease is in full force and
effect and (except as disclosed on the Rent Roll) has not been assigned,
modified, supplemented or amended in any way.
(ix) No Space Lease provides any party with
the right to obtain a lien or encumbrance upon the Mortgaged Property
superior to the lien of this Deed of Trust.
(p) PROPERTY AGREEMENTS.
(i) Borrower has delivered to Lender true,
correct and complete copies of all Property Agreements.
(ii) No Property Agreement provides any
party with the right to obtain a lien or encumbrance upon the Mortgaged
Property superior to the lien of this Deed of Trust.
(iii) No default exists or with the passing
of time or the giving of notice or both would exist under any Property
Agreement which would, individually or in the aggregate, have a Material
Adverse Effect.
(iv) Except as set forth in the Rent Roll,
Borrower has not received or given any written communication which alleges
that a default exists or, with the giving of notice or the lapse of time, or
both, would exist under the provisions of any Property Agreement.
(v) No condition exists whereby Borrower or
any future owner of the Mortgaged Property may be required to purchase any
other parcel of land which is subject to any Property Agreement or which
gives any Person a right to purchase, or right of first refusal with respect
to, the Mortgaged Property.
(vi) To the best knowledge of Borrower, no
offset or any right of offset exists respecting continued contributions to be
made by any party to any Property Agreement except as expressly set forth
therein.
(vii) All "pre-opening" requirements
contained in all Property Agreements (including, but not limited to, all
off-site and on-site construction requirements), if any, have been fulfilled,
and, to the best of Borrower's knowledge, no condition now exists whereby any
party to any such Property Agreement could refuse to honor its obligations
thereunder.
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(viii) All work, if any, to be performed by
Borrower under each of the Property Agreements has been substantially
performed, all contributions to be made by Borrower to any party to such
Property Agreements have been made, and all other conditions to such party's
obligations thereunder have been satisfied.
(q) PERSONAL PROPERTY. Borrower has delivered to Lender a
true, correct and complete schedule of all material personal property, if
any, owned by Borrower and located upon the Mortgaged Property or used in
connection with the use or operation of the Mortgaged Property and Borrower
represents that it has good and marketable title to all such personal
property, free and clear of any liens, except for liens created under the
Loan Documents and liens which describe the equipment and other personal
property owned by tenants and except for Permitted Encumbrances.
(r) LEASING BROKERAGE AND MANAGEMENT FEES. Except as
previously disclosed to Lender in writing, there are no brokerage fees or
commissions payable by Borrower with respect to the leasing of space at the
Mortgaged Property and there are no management fees payable by Borrower with
respect to the management of the Mortgaged Property.
Section 2.06 REMOVAL OF LIEN.
(a) Borrower shall, at its expense, maintain this Deed of
Trust as a first lien on the Mortgaged Property and shall keep the Mortgaged
Property free and clear of all liens of any kind and nature other than the
Permitted Encumbrances, except to the extent being contested as allowed
herein. Borrower shall, within ten (10) days following the filing thereof,
promptly discharge of record, by bond or otherwise, any such liens and,
promptly upon request by Lender, shall deliver to Lender evidence reasonably
satisfactory to Lender of the discharge thereof.
(b) Except as set forth in Section 2.06(c) or 4.04,
Borrower shall (i) pay, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers, and others which, if
unpaid, might result in, or permit the creation of, a lien on the Mortgaged
Property or any part thereof, or on the revenues, rents, issues, income or
profits arising therefrom, (ii) cause to be removed of record (by payment or
posting of bond or settlement or otherwise) any mechanics', materialmen's,
laborers', or other lien on the Mortgaged Property, or any part thereof, or
on the revenues, rents, issues, income or profit arising therefrom, and (iii)
in general, do or cause to be done, without expense to Lender, everything
reasonably necessary to preserve in full the lien of this Deed of Trust. If
Borrower fails to comply with the requirements of paragraph (b) of this
Section 2.06, then, upon five (5) Business Days' prior notice to Borrower,
Lender may, but shall not be obligated to, pay any such lien, and Borrower
shall, within five (5) Business Days after Lender's demand therefor,
reimburse Lender for all sums so expended, together with interest thereon at
the Default Rate from the date advanced, all of which shall be deemed part of
the Debt. Nothing contained herein shall be deemed a consent or request of
Lender, express or implied, by inference or otherwise, to the performance of
any alteration, repair or other work by any contractor, subcontractor or
laborer or the furnishing of any materials by any materialmen in connection
therewith.
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(c) Notwithstanding the foregoing, Borrower may contest any
lien and/or not pay claims and demands (other than a lien relating to
non-payment of Impositions, the contest of which shall be governed by Section
4.04 hereof) of the type set forth in subparagraph (b)(i) and/or (ii) of this
Section 2.06 provided that, following prior notice to Lender (i) Borrower is
contesting the validity of such lien or claim with due diligence and in good
faith and by appropriate proceedings, without cost or expense to Lender or
any of its agents, employees, officers, or directors, (ii) neither the
Mortgaged Property nor any part thereof nor interest therein, shall be in any
danger of being sold, forfeited or lost by reason of such contest by
Borrower, (iii) such contest by Borrower shall not affect the ownership, use
or occupancy of the Mortgaged Property, (iv) such contest by Borrower shall
not subject Lender or Borrower to the risk of civil or criminal liability
(other than the civil liability of Borrower for the amount of the lien in
question), (v) such lien is subordinate to the lien of this Mortgage, (vi)
Borrower has not consented to such lien, (vii) Borrower has given Lender
prompt notice of the filing of such lien and, upon request by Lender from
time to time, notice of the status of such contest by Borrower and/or
confirmation of the continuing satisfaction of the conditions set forth in
this Section 2.06(c), (viii) Borrower shall promptly pay the obligation
secured by such lien upon a final determination of Borrower's liability
therefor, and (ix) Borrower shall deliver to Lender cash, a bond or other
security acceptable to Lender equal to 125% of the contested amount pursuant
to collateral arrangements reasonably satisfactory to Lender.
Section 2.07 COST OF DEFENDING AND UPHOLDING THIS DEED OF TRUST
LIEN. If any action or proceeding is commenced to which Lender or Deed
Trustee is made a party relating to the Loan Documents and/or the Mortgaged
Property or Lender's or Deed Trustee's interest therein or in which it
becomes necessary to defend or uphold the lien of this Deed of Trust or any
other Loan Document, Borrower shall, on demand, reimburse Lender and/or Deed
Trustee for all expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by Lender and/or Deed Trustee in
connection therewith, and such sum, together with interest thereon at the
Default Rate from and after such demand until fully paid, shall constitute a
part of the Debt.
Section 2.08 USE OF THE MORTGAGED PROPERTY. Borrower will use, or
cause to be used, the Mortgaged Property for such use as is permitted
pursuant to applicable Legal Requirements including, without limitation,
under the certificate of occupancy applicable to the Mortgaged Property, and
which is required by the Loan Documents. Borrower shall not suffer or permit
the Mortgaged Property or any portion thereof to be used by the public, any
tenant, or any Person not subject to a Lease, in a manner as is reasonably
likely to impair Borrower's title to the Mortgaged Property, or in such
manner as may give rise to a claim or claims of adverse usage or adverse
possession by the public, or of implied dedication of the Mortgaged Property
or any part thereof.
Section 2.09 FINANCIAL REPORTS.
(a) Borrower will keep and maintain or will cause to be
kept and maintained on a Fiscal Year basis, in accordance with GAAP (or such
other accounting basis reasonably acceptable to Lender) consistently applied,
proper and accurate books, records and accounts reflecting (i) all of the
financial affairs of Borrower and (ii) all items of income and expense in
connection with the
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operation of the Mortgaged Property or in connection with any services,
equipment or furnishings provided in connection with the operation thereof,
whether such income or expense may be realized by Borrower or by any other
Person whatsoever, excepting lessees unrelated to and unaffiliated with
Borrower who have leased from Borrower portions of the Premises for the
purpose of occupying the same. Lender shall have the right from time to time
at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of Borrower or other Person
maintaining such books, records and accounts and to make such copies or
extracts thereof as Lender shall desire. After the occurrence of an Event of
Default, Borrower shall pay any costs and expenses incurred by Lender to
examine Borrower's accounting records with respect to the Mortgaged Property,
as Lender shall determine to be necessary or appropriate in the protection of
Lender's interest.
(b) Borrower will furnish Lender annually, within one
hundred twenty (120) days following the end of each Fiscal Year of Borrower,
with a complete copy of Borrower's financial statement audited by an
Independent certified public accountant (provided the audit shall be of
consolidated financial statements including the Borrower unless Lender
requests audited, consolidating financial statements of the Borrower) that is
acceptable to Lender in accordance with GAAP (or such other accounting basis
reasonably acceptable to Lender) consistently applied covering (i) all of the
financial affairs of Borrower and (ii) the operation of the Mortgaged
Property for such Fiscal Year and containing a statement of revenues and
expenses, a statement of assets and liabilities and a statement of Borrower's
equity. Such audited financial statement may be prepared on a combined basis
with the other Properties. Together with Borrower's annual financial
statements, Borrower shall supplement the combined financial statement with
information on a property-by-property basis that was used in the preparation
of the combined statement and shall furnish to Lender an Officer's
Certificate certifying as of the date thereof (i) that the annual financial
statements accurately represent the results of operation and financial
condition of Borrower and the Mortgaged Property (or, in the case of a
combined financial statement, the results of operation and financial
condition of the Properties) all in accordance with GAAP consistently
applied, and (ii) whether there exists an event or circumstance which
constitutes, or which upon notice or lapse of time or both would constitute,
a Default under the Notes or any other Loan Document executed and delivered
by Borrower, and if such event or circumstance exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy
such event or circumstance.
(c) Borrower will furnish Lender monthly, within thirty
(30) days following the end of each month, with a true, complete and correct
cash flow statement with respect to the Mortgaged Property in the form
attached hereto as Exhibit B and made a part hereof, showing (i) all cash
receipts of any kind whatsoever and all cash payments and disbursements, and
(ii) year-to-date summaries of such cash receipts, payments and disbursements
together with a certification of the Manager stating that such cash flow
statement is true, complete and correct.
(d) Borrower will furnish Lender monthly, within thirty
(30) days following the end of each month, with a certification of the
Manager stating that all Operating Expenses with respect to the Mortgaged
Property which had accrued as of the last day of the month preceding the
delivery of the cash flow statement referred to in clause (c) above have been
fully paid or otherwise
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reserved or provided for by the Manager (any such certification or any
certification furnished by a Manager pursuant to clause (c) above, a "MANAGER
CERTIFICATION").
(e) Borrower will furnish Lender annually, upon request by
Lender therefor, within thirty (30) days following receipt of such request,
with a true, complete and correct rent roll for the Mortgaged Property,
including a list of which tenants are in default under their respective
leases, dated as of the date of Lender's request, identifying each tenant,
the monthly rent and additional rent, if any, payable by such tenant, the
expiration date of such tenant's Lease, the security deposit, if any, held by
Borrower under the Lease, the space covered by the Lease, and the arrearages
for such tenant, if any, and such rent roll shall be accompanied by an
Officer's Certificate, dated as of the date of the delivery of such rent
roll, certifying that such rent roll is true, correct and complete in all
material respects as of its date.
(f) Borrower shall furnish to Lender, within thirty (30)
days after Lender's request therefor, with such further detailed information
with respect to the operation of the Mortgaged Property and the financial
affairs of Borrower as may be reasonably requested by Lender.
(g) Borrower will furnish Lender annually, within one
hundred twenty (120) days after the end of each Fiscal Year, with a report
setting forth (i) the Net Operating Income for such Fiscal Year, (ii) the
average occupancy rate of the Mortgaged Property during such Fiscal Year, and
(iii) the capital repairs, replacements and improvements performed at the
Mortgaged Property during such Fiscal Year.
Section 2.10 LITIGATION. Borrower will give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened
(in writing) against Borrower which might have a Material Adverse Effect.
ARTICLE III
INSURANCE AND CASUALTY RESTORATION
Section 3.01 INSURANCE COVERAGE. Borrower shall, at its expense,
maintain the following insurance coverages with respect to the Mortgaged
Property during the term of this Deed of Trust:
(a)
(i) Insurance against loss or damage by
fire, casualty and other hazards included in an "all-risk" extended coverage
endorsement or its equivalent, including if the Mortgaged Property
constitutes a legal non-conforming use, an ordinance of law coverage
endorsement which contains "Demolition Cost", "Loss Due to Operation of Law"
and "Increased Cost of Construction" coverages, covering the Mortgaged
Property in an amount not less than the greater of (A) 100% of the insurable
replacement value of the Mortgaged Property (exclusive of the Premises and
footings and foundations) and (B) such other amount as is necessary to
prevent any reduction in such policy by reason of and to prevent Borrower,
Lender or any other insured thereunder from being deemed to be a co-insurer.
Not less frequently than once every three years,
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Borrower, at its option, shall either (A) have the Appraisal updated or
obtain a new appraisal of the insurable value of the Mortgaged Property, (B)
have a valuation of the insurable value of the Mortgaged Property made by or
for its insurance carrier conducted by a Person experienced in valuing
properties of similar type to that of the Mortgaged Property which are in the
geographical area in which the Mortgaged Property is located or (C) provide
such other evidence as will, in Lender's sole judgment, enable Lender to
determine whether there shall have been an increase in the insurable value of
the Mortgaged Property and Borrower shall deliver such updated Appraisal, new
appraisal, insurance valuation or other evidence acceptable to Lender, as the
case may be, and, if such updated Appraisal, new appraisal, insurance
valuation, or other evidence acceptable to Lender reflects an increase in the
insurable value of the Mortgaged Property, the amount of insurance required
hereunder shall be increased accordingly and Borrower shall deliver evidence
satisfactory to Lender that such policy has been so increased.
(ii) Commercial comprehensive general
liability insurance against claims for personal and bodily injury and/or
death to one or more persons or property damage, occurring on, in or about
the Mortgaged Property (including the adjoining streets, sidewalks and
passageways therein) of not less than $10,000,000.00.
(iii) Business interruption, rent loss or
other similar insurance (A) with loss payable to Lender, (B) covering all
risks required to be covered by the insurance provided for in Section
3.01(a)(i) and (C) in an amount not less than 100% of the projected fixed or
base rent plus percentage rent for the succeeding eighteen (18) month period
based on an occupancy rate of 100%. The amount of such insurance shall be
determined upon the execution of this Deed of Trust, and not more frequently
than once each calendar year thereafter based on Borrower's reasonable
estimate of projected fixed or base rent plus percentage rent, from the
Mortgaged Property for the next succeeding eighteen (18) months. In the event
the Mortgaged Property shall be damaged or destroyed, Borrower shall and
hereby does assign to Lender all payment of claims under the policies of such
insurance, and all amounts payable thereunder, and all net amounts, shall be
collected by Lender under such policies and shall be applied in accordance
with this Deed of Trust; PROVIDED, HOWEVER, that nothing herein contained
shall be deemed to relieve Borrower of its obligations to timely pay all
amounts due under the Loan Documents.
(iv) War risk insurance when such insurance
is obtainable from the United States of America or any agency or
instrumentality thereof at reasonable rates (for the maximum amount of
insurance obtainable).
(v) Insurance against loss or damages from
(A) leakage of sprinkler systems and (B) explosion of steam boilers, air
conditioning equipment, pressure vessels or similar apparatus now or
hereafter installed at the Mortgaged Property, in such amounts as Lender may
from time to time reasonably require and which are then customarily required
by Institutional Lenders of similar properties similarly situated.
(vi) Flood insurance in an amount equal to
the full insurable value of the Mortgaged Property or the maximum amount
available, whichever is less, if the Improvements are located in an area
designated by the Secretary of Housing and Urban Development as being "an
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area of special flood hazard" under the National Flood Insurance Program
(i.e., having a one percent or greater chance of flooding), and if flood
insurance is available under the National Flood Insurance Act.
(vii) Worker's compensation insurance or
other similar insurance which may be required by Governmental Authorities or
Legal Requirements.
(viii) Such other insurance as may from time
to time be required by Lender and which is then customarily required by
Institutional Lenders for similar properties similarly situated, against
other insurable hazards, including, but not limited to, malicious mischief,
vandalism, windstorm or earthquake, which at the time are commonly insured
against and generally available in the case of properties similarly situated,
due regard to be given to the size and type of the Premises, Improvements,
Fixtures and Equipment and their location, construction and use.
(b) If Borrower is a partnership or limited liability
company, Borrower shall cause the General Partners to maintain fidelity
insurance in an amount equal to or greater than the annual Operating Income
of the Mortgaged Property for the six (6) month period immediately preceding
the date on which the premium for such insurance is due and payable.
(c) Borrower shall cause any Manager of the Mortgaged
Property to maintain fidelity insurance in an amount equal to or greater than
the annual Operating Income of the Mortgaged Property for the six (6) month
period immediately preceding the date on which the premium for such insurance
is due and payable or such lesser amount as Lender shall approve.
Section 3.02 POLICY TERMS.
(a) All insurance required by this Article III shall be in
the form (other than with respect to Sections 3.01(a)(vi) and (vii) above
when insurance in those two sub-sections is placed with a governmental agency
or instrumentality on such agency's forms) and amount and with deductibles
as, from time to time, shall be reasonably acceptable to Lender, under valid
and enforceable policies issued by financially responsible insurers
authorized to do business in the State where the Mortgaged Property is
located, with a general policyholder's service rating of not less than A and
a financial rating of not less than IX as rated in the most currently
available Best's Insurance Reports (or the equivalent, if such rating system
shall hereafter be altered or replaced) and shall have a claims paying
ability rating of not less than "AA" from a Rating Agency or, if not rated by
a Rating Agency, then a claims paying ability rating of "AA" from at least
two nationally recognized statistical rating agencies. Originals or certified
copies of all insurance policies shall be delivered to and held by Lender.
All such policies (except policies for worker's compensation) shall name
Lender as an additional named insured, shall provide for loss payable to
Lender and shall contain (or have attached): (i) standard "non-contributory
Lender" endorsement or its equivalent relating, INTER ALIA, to recovery by
Lender notwithstanding the negligent or willful acts or omissions of
Borrower; (ii) a waiver of subrogation endorsement as to Lender; (iii) an
endorsement indicating that neither Lender nor Borrower shall be or be deemed
to be a co-insurer with respect to any casualty
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risk insured by such policies and shall provide for a deductible per loss of
an amount not more than that which is customarily maintained by owners of
similar properties similarly situated, and (iv) a provision that such
policies shall not be canceled, terminated, denied renewal or amended,
including, without limitation, any amendment reducing the scope or limits of
coverage, without at least thirty (30) days' prior written notice to Lender
in each instance. Not less than thirty (30) days prior to the expiration
dates of the insurance policies obtained pursuant to this Deed of Trust,
originals or certified copies of renewals of such policies (or certificates
evidencing such renewals) bearing notations evidencing the payment of
premiums or accompanied by other reasonable evidence of such payment (which
premiums shall not be paid by Borrower through or by any financing
arrangement which would entitle an insurer to terminate a policy) shall be
delivered by Borrower to Lender. Borrower shall not carry separate insurance,
concurrent in kind or form or contributing in the event of loss, with any
insurance required under this Article III.
(b) If Borrower fails to maintain and deliver to Lender the
original policies or certificates of insurance required by this Mortgage, and
if there are insufficient funds held in escrow for such purpose by Lender to
pay the premiums for same, Lender may, at its option, procure such insurance,
and Borrower shall pay, or as the case may be, reimburse Lender for, all
premiums thereon promptly, upon demand by Lender, with interest thereon at
the Default Rate from the date paid by Lender to the date of repayment and
such sum shall constitute a part of the Debt.
(c) Borrower shall notify Lender of the renewal premium of
each insurance policy and Lender shall be entitled to pay such amount on
behalf of Borrower from funds held in escrow for such purpose by Lender. With
respect to insurance policies which require periodic payments (i.e., monthly
or quarterly) of premiums, Lender shall be entitled to pay such amounts
fifteen (15) days (or such lesser number of days as Lender shall determine)
prior to the respective due dates of such installments.
(d) The insurance required by this Deed of Trust may, at
the option of Borrower, be effected by blanket and/or umbrella policies
issued to Borrower covering the Mortgaged Property provided that, in each
case, the policies otherwise comply with the provisions of this Deed of Trust
and allocate to the Mortgaged Property, from time to time (but in no event
less than once a year), the coverage specified by this Deed of Trust, without
possibility of reduction or coinsurance by reason of, or damage to, any other
property (real or personal) named therein. If the insurance required by this
Deed of Trust shall be effected by any such blanket or umbrella policies,
Borrower shall furnish to Lender original policies or certified copies
thereof, or an original certificate of insurance together with reasonable
access to the original of such policy to review such policy's coverage.
Section 3.03 ASSIGNMENT OF POLICIES.
(a) Borrower hereby assigns to Lender the proceeds of all
insurance (other than worker's compensation and liability insurance) obtained
pursuant to this Deed of Trust, all of which proceeds shall be payable to
Lender as collateral and further security for the payment of the Debt and the
performance of the Borrower's obligations hereunder and under the other Loan
Documents, and
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Borrower hereby authorizes and directs the issuer of any such insurance to
make payment of such proceeds directly to Lender. Except as otherwise
expressly provided in Section 3.04 or elsewhere in this Article III, Lender
shall have the option, in its discretion, and without regard to the adequacy
of its security, to apply all or any part of the proceeds it may receive
pursuant to this Article in such manner as Lender may elect to any one or
more of the following: (i) the payment of the Debt, whether or not then due,
in any proportion or priority as Lender, in its discretion, may elect, (ii)
the repair or restoration of the Mortgaged Property, (iii) the cure of any
Default or (iv) the reimbursement of the costs and expenses of Lender
incurred pursuant to the terms hereof in connection with the recovery of the
Insurance Proceeds. Nothing herein contained shall be deemed to excuse
Borrower from repairing or maintaining the Mortgaged Property as provided in
this Deed of Trust or restoring all damage or destruction to the Mortgaged
Property, regardless of the sufficiency of the Insurance Proceeds, and the
application or release by Lender of any Insurance Proceeds shall not cure or
waive any Default or notice of Default.
(b) In the event of the foreclosure of this Deed of Trust
or any other transfer of title or assignment of all or any part of the
Mortgaged Property in extinguishment, in whole or in part, of the Debt, all
right, title and interest of Borrower in and to all policies of insurance
required by this Deed of Trust shall inure to the benefit of the successor in
interest to Borrower or the purchaser of such Mortgaged Property. If, prior
to the receipt by Lender of any proceeds, the Mortgaged Property or any
portion thereof shall have been sold on foreclosure of this Deed of Trust or
by deed in lieu thereof or otherwise, or any claim under such insurance
policy arising during the term of this Deed of Trust is not paid until after
the extinguishment of the Debt, and Lender shall not have received the entire
amount of the Debt outstanding at the time of such extinguishment, then, the
proceeds of any such insurance to the extent of the amount of the Debt not so
received, shall be paid to and be the property of Lender, together with
interest thereon at the Default Rate, and the reasonable attorney's fees,
costs and disbursements incurred by Lender in connection with the collection
of the proceeds which shall be paid to Lender and Borrower hereby assigns,
transfers and sets over to Lender all of Borrower's right, title and interest
in and to such proceeds. Any proceeds deposited with Lender shall be held by
Lender in an interest-bearing account, but Lender makes no representation or
warranty as to the rate or amount of interest, if any, which may accrue on
such deposit and shall have no liability in connection therewith. Interest
accrued, if any, on the proceeds shall be deemed to constitute a part of the
proceeds for purposes of this Deed of Trust. The provisions of this Section
3.03(b) shall survive the termination of this Deed of Trust by foreclosure,
deed in lieu thereof or otherwise as consequence of the exercise of the
rights and remedies of Lender hereunder after a Default.
Section 3.04 CASUALTY RESTORATION.
(a)
(i) In the event of any damage to or
destruction of the Mortgaged Property in an amount in excess of the
deductible under the hazard policy, Borrower shall give prompt written notice
to Lender (which notice shall set forth Borrower's good faith estimate of the
cost of repairing or restoring such damage or destruction, or if Borrower
cannot reasonably estimate
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the anticipated cost of restoration, Borrower shall nonetheless give Lender
prompt notice of the occurrence of such damage or destruction, and will
diligently proceed to obtain estimates to enable Borrower to quantify the
anticipated cost and time required for such restoration, whereupon Borrower
shall promptly notify Lender of such good faith estimate) and, provided that
restoration does not violate any Legal Requirements, Borrower shall promptly
commence and diligently prosecute to completion the repair, restoration or
rebuilding of the Mortgaged Property so damaged or destroyed to a condition
such that the Mortgaged Property shall be at least equal in value to that
immediately prior to the damage to the extent practicable, in full compliance
with all Legal Requirements and the provisions of all Leases, and in
accordance with Section 3.04(b) below. Such repair, restoration or rebuilding
of the Mortgaged Property are sometimes hereinafter collectively referred to
as the "WORK."
(ii) Borrower shall not adjust, compromise
or settle any claim for Insurance Proceeds without the prior written consent
of Lender, which shall not be unreasonably withheld or delayed; PROVIDED,
HOWEVER, that, except during the continuance of an Event of Default, Lender's
consent shall not be required with respect to the adjustment, compromising or
settlement of any claim for Insurance Proceeds in an amount less than
$250,000 and Borrower may collect directly and apply such proceeds of less
than $250,000 as required herein.
(iii) Subject to Section 3.04(a)(iv), Lender
shall apply any Insurance Proceeds which it may receive towards the Work in
accordance with Section 3.04(b) and the other applicable sections of this
Article III.
(iv) If (A) an Event of Default shall have
occurred and be continuing, (B) Lender is not reasonably satisfied that the
Aggregate Debt Service Coverage, after substantial completion of the Work,
will not be at least equal to the Required Debt Service Coverage, (C) more
than seventy-five percent (75%) of the reasonably estimated aggregate
insurable value of the Mortgaged Property is damaged or destroyed, (D) Lender
is not reasonably satisfied that the Work can be completed six (6) months
prior to the Anticipated Repayment Date or (E) Lender is not reasonably
satisfied that the Work can be completed within twelve (12) months of the
damage to or destruction of the Mortgaged Property (collectively, a
"SUBSTANTIAL CASUALTY"), Lender shall have the option, in its sole discretion
to apply any Insurance Proceeds it may receive pursuant to this Deed of Trust
(less any cost to Lender of recovering and paying out such proceeds incurred
pursuant to the terms hereof and not otherwise reimbursed to Lender,
including, without limitation, reasonable attorneys' fees and expenses) to
the payment of the Debt, without any prepayment fee or charge of any kind,
including, without limitation, Yield Maintenance Premium, or to allow such
proceeds to be used for the Work pursuant to the terms and subject to the
conditions of Section 3.04(b) hereof and the other applicable sections of
this Article III.
(v) In the event that Lender elects or is
obligated hereunder to allow Insurance Proceeds to be used for the Work, any
excess proceeds remaining after completion of such Work shall be applied to
the payment of the Debt without any prepayment fee or charge of any kind,
including, without limitation, Yield Maintenance Premium.
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(b) If any Condemnation Proceeds, in accordance with
Section 6.01(a) or any Insurance Proceeds in accordance with Section 3.04(a),
are to be applied to the repair, restoration or rebuilding of the Mortgaged
Property, then such proceeds shall be deposited into a segregated
interest-bearing bank account at a bank chosen by Lender, which shall be an
Eligible Account, held by Lender and shall be paid out from time to time to
Borrower as the Work progresses (less any cost to Lender of recovering and
paying out such proceeds, including, without limitation, reasonable
attorneys' fees and costs allocable to inspecting the Work and the plans and
specifications therefor) subject to Section 5.01 hereof and to all of the
following conditions:
(i) An architect or engineer or other
Person reasonably acceptable to Lender selected by Borrower and reasonably
acceptable to Lender (an "ARCHITECT" or "ENGINEER") or a Person otherwise
reasonably acceptable to Lender, shall have delivered to Lender a certificate
estimating the cost of completing the Work, and, if the amount set forth
therein is more than the sum of the amount of Insurance Proceeds then being
held by Lender in connection with a casualty and amounts agreed to be paid as
part of a final settlement under the insurance policy upon or before
completion of the Work (plus any deductible in an amount not to exceed
$10,000), Borrower shall have delivered to Lender (A) cash collateral in an
amount equal to such excess, (B) an unconditional, irrevocable, clean sight
draft letter of credit, in form, substance and issued by a bank reasonably
acceptable to Lender, in the amount of such excess and draws on such letter
of credit shall be made by Lender to make payments pursuant to this Article
III following exhaustion of the Insurance Proceeds therefor or (C) a
completion bond in form, substance and issued by a surety company reasonably
acceptable to Lender.
(ii) If the cost of the Work is reasonably
estimated by an Architect or Engineer in a certification reasonably
acceptable to Lender to be equal to or exceed ten percent (10%) of the
Allocated Loan Amount, such Work shall be performed under the supervision of
an Architect or Engineer, it being understood that the plans and
specifications with respect thereto shall provide for Work so that, upon
completion thereof, the Mortgaged Property shall be at least equal in
replacement value and general utility to the Mortgaged Property prior to the
damage or destruction.
(iii) Each request for payment shall be made
on not less than ten (10) days' prior notice to Lender and shall be
accompanied by a certificate of an Architect or Engineer, or, if the Work is
not required to be supervised by an Architect or Engineer or other Person
reasonably acceptable to Lender, by an Officer's Certificate stating (A) that
payment is for work completed in compliance with the plans and
specifications, if required under clause (ii) above, (B) that the sum
requested is required to reimburse Borrower for payments by Borrower to date,
or is due to the contractor, subcontractors, materialmen, laborers,
engineers, architects or other Persons rendering services or materials for
the Work (giving a brief description of such services and materials), and
that when added to all sums previously paid out by Lender does not exceed the
value of the Work done to the date of such certificate, (C) if the sum
requested is to cover payment relating to repair and restoration of personal
property required or relating to the Mortgaged Property, that title to the
personal property items covered by the request for payment is vested in
Borrower (unless Borrower is lessee of such personal property), and (D) that
the Insurance Proceeds and other amounts
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deposited by Borrower held by Lender after such payment is more than the
estimated remaining cost to complete such Work; PROVIDED, HOWEVER, that if
such certificate is given by an Architect or Engineer or other Person
reasonably acceptable to Lender, such Architect or Engineer or other Person
reasonably acceptable to Lender shall certify as to clause (A) above, and
such Officer's Certificate shall certify as to the remaining clauses above,
and provided, further, that Lender shall not be obligated to disburse such
funds if Lender determines, in Lender's reasonable discretion, that Borrower
shall not be in compliance with this Section 3.04(b).
(iv) Each request for payment shall be
accompanied by waivers of lien, in customary form and substance, covering
that part of the Work for which payment or reimbursement is being requested
and, if required by Lender, a search prepared by a title company or licensed
abstractor, or by other evidence satisfactory to Lender that there has not
been filed with respect to the Mortgaged Property any mechanic's or other
lien or instrument for retention of title relating to any part of the Work
not discharged of record. Additionally, as to any personal property covered
by the request for payment, Lender shall be furnished with evidence of having
incurred a payment obligation therefor and such further evidence reasonably
satisfactory to assure Lender that UCC filings therefor provide a valid first
lien on the personal property.
(v) Lender shall have the right to inspect
the Work at all reasonable times upon reasonable prior notice and may
condition any disbursement of Insurance Proceeds upon satisfactory compliance
by Borrower with the provisions hereof. Neither the approval by Lender of any
required plans and specifications for the Work nor the inspection by Lender
of the Work shall make Lender responsible for the preparation of such plans
and specifications, or the compliance of such plans and specifications of the
Work, with any applicable law, regulation, ordinance, covenant or agreement.
(vi) Insurance Proceeds shall not be
disbursed more frequently than once every thirty (30) days.
(vii) Until such time as the Work has been
substantially completed, Lender shall not be obligated to disburse up to ten
percent (10%) of the cost of the Work (the "RETENTION AMOUNT") to Borrower.
Upon substantial completion of the Work, Borrower shall send notice thereof
to Lender and, subject to the conditions of Section 3.04(b)(i)-(iv), Lender
shall disburse one-half of the Retention Amount to Borrower; PROVIDED,
HOWEVER, that the remaining one-half of the Retention Amount shall be
disbursed to Borrower when Lender shall have received copies of any and all
final certificates of occupancy or other certificates, licenses and permits
required for the ownership, occupancy and operation of the Mortgaged Property
in accordance with all Legal Requirements. Borrower hereby covenants to
diligently seek to obtain any such certificates, licenses and permits.
(viii) Upon failure on the part of Borrower
promptly to commence the Work or to proceed diligently and continuously to
completion of the Work, which failure shall continue after notice for thirty
(30) days, Lender may apply any Insurance Proceeds or Condemnation Proceeds
it then or thereafter holds to the payment of the Debt in accordance with
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the provisions of the Notes; PROVIDED, HOWEVER, that Lender shall be entitled
to apply at any time all or any portion of the Insurance Proceeds or
Condemnation Proceeds it then holds to the extent necessary to cure any Event
of Default under this Deed of Trust, the Notes or any other Loan Document.
(c) If Borrower (i) within one hundred twenty (120) days
after the occurrence of any damage to the Mortgaged Property or any portion
thereof in an amount in excess of the deductible for the hazard insurance
policy (or such shorter period as may be required under any Major Space
Lease) shall fail to submit to Lender for approval plans and specifications
(if required pursuant to Section 3.04(b)(ii) hereof) for the Work (approved
by the Architect and by all Governmental Authorities whose approval is
required), (ii) after any such plans and specifications are approved by all
Governmental Authorities, the Architect and Lender, shall fail to promptly
commence such Work or (iii) shall fail to diligently prosecute such Work to
completion, then, in addition to all other rights available hereunder, at law
or in equity, Lender, or any receiver of the Mortgaged Property or any
portion thereof, upon five (5) days' prior notice to Borrower (except in the
event of emergency in which case no notice shall be required), may (but shall
have no obligation to) perform or cause to be performed such Work, and may
take such other steps as it reasonably deems advisable. Borrower hereby
waives, for Borrower, any claim, other than for gross negligence or willful
misconduct, against Lender and any receiver arising out of any act or
omission of Lender or such receiver pursuant hereto, and Lender may apply all
or any portion of the proceeds of insurance (without the need to fulfill any
other requirements of this Section 3.04) to reimburse Lender and such
receiver, for all costs not reimbursed to Lender or such receiver upon demand
together with interest thereon at the Default Rate from the date such amounts
are advanced until the same are paid to Lender or the receiver.
(d) Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to collect and receive any
insurance proceeds paid with respect to any portion of the Mortgaged Property
or the insurance policies required to be maintained hereunder, and to endorse
any checks, drafts or other instruments representing any insurance proceeds
whether payable by reason of loss thereunder or otherwise.
Section 3.05 COMPLIANCE WITH INSURANCE REQUIREMENTS. Borrower
promptly shall comply with, and shall cause the Mortgaged Property to comply
with, all Insurance Requirements, even if such compliance requires structural
changes or improvements or would result in interference with the use or
enjoyment of the Mortgaged Property or any portion thereof provided Borrower
shall have a right to contest in good faith and with diligence such Insurance
Requirements provided (a) no Event of Default shall exist during such contest
and such contest shall not subject the Mortgaged Property or any portion
thereof to any lien or affect the priority of the lien of this Deed of Trust,
(b) failure to comply with such Insurance Requirements will not subject
Lender, Deed Trustee or any of their agents, employees, officers or directors
to any civil or criminal liability, (c) such contest will not cause any
reduction in insurance coverage, (d) such contest shall not affect the
ownership, use or occupancy of the Mortgaged Property, (e) the Mortgaged
Property or any part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such contest
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by Borrower, (f) Borrower has given Lender prompt notice of such contest and,
upon request by Lender from time to time, notice of the status of such
contest by Borrower and/or information of the continuing satisfaction of the
conditions set forth in clauses (a) through (e) of this Section 3.05, (g)
upon a final determination of such contest, Borrower shall promptly comply
with the requirements thereof, and (h) prior to and during such contest,
Borrower shall furnish to Lender security satisfactory to Lender, in its
reasonable discretion, against loss or injury by reason of such contest or
the noncompliance with such Insurance Requirement (and if such security is
cash, Lender shall deposit the same in an interest bearing account and
interest accrued thereon, if any, shall be deemed to constitute a part of
such security for purposes of this Deed of Trust, but Lender makes no
representation or warranty as to the rate or amount of interest, if any,
which may accrue thereon and shall have no liability in connection therewith.
If Borrower shall use the Mortgaged Property or any material portion thereof
in any manner which could permit the insurer to cancel any insurance required
to be provided hereunder, Borrower immediately shall obtain a substitute
policy which shall satisfy the requirements of this Deed of Trust and which
shall be effective on or prior to the date on which any such other insurance
policy shall be canceled. Borrower shall not by any action or omission
invalidate any insurance policy required to be carried hereunder unless such
policy is replaced as aforesaid, or materially increase the premiums on any
such policy above the normal premium charged for such policy. Borrower shall
cooperate with Lender in obtaining for Lender the benefits of any insurance
proceeds lawfully or equitably payable to Lender in connection with the
transaction contemplated hereby.
Section 3.06 EVENT OF DEFAULT DURING RESTORATION. Notwithstanding
anything to the contrary contained in this Deed of Trust including, without
limitation, the provisions of this Article III, if, at the time of any
casualty affecting the Mortgaged Property or any part thereof, or at any time
during any Work, or at any time that Lender is holding or is entitled to
receive any proceeds of any insurance pursuant to this Mortgage, an Event of
Default exists and is continuing, Lender shall then have no obligation to
make such proceeds available for Work and Lender shall have the right and
option, to be exercised in its sole and absolute discretion and election,
with respect to the proceeds of any such insurance, either to retain and
apply such proceeds in reimbursement for the actual costs, fees and expenses
incurred by Lender in accordance with the terms hereof in connection with the
adjustment of the loss and any balance toward payment of the Debt in such
priority and proportions as Lender, in its sole discretion, shall deem
proper, or towards the Work, upon such terms and conditions as Lender shall
determine, or to cure such Event of Default, or to any one or more of the
foregoing as Lender, in its sole and absolute discretion, may determine. If
Lender shall receive and retain such Insurance Proceeds, the lien of this
Deed of Trust shall be reduced only by the amount thereof received, after
reimbursement to Lender of expenses of collection, and actually applied by
Lender in reduction of the principal sum payable under the Notes in
accordance with the Notes.
Section 3.07 APPLICATION OF PROCEEDS TO DEBT REDUCTION.
(a) No damage to the Mortgaged Property, or any part
thereof, by fire or other casualty whatsoever, whether such damage be partial
or total, shall relieve Borrower from its liability
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to pay in full the Debt and to perform its obligations under this Deed of
Trust and the other Loan Documents except to the extent any rent (business
interruption) insurance is paid to Lender and applied to the Debt.
(b) If any Insurance Proceeds are applied to reduce the
Debt, Lender shall apply the same in accordance with the provisions of the
Notes.
ARTICLE IV
IMPOSITIONS
Section 4.01 PAYMENT OF IMPOSITIONS, UTILITIES AND TAXES, ETC.
(a) Borrower shall pay or cause to be paid all Impositions
prior to the date upon which any fine, penalty, interest or cost for
nonpayment is imposed, and furnish to Lender, upon request, receipted bills
of the appropriate taxing authority or other documentation reasonably
satisfactory to Lender evidencing the payment thereof. If Borrower shall fail
to pay any Imposition in accordance with this Section and is not contesting
or causing a contesting of such Imposition in accordance with Section 4.04
hereof, or if there are insufficient funds held in escrow by Lender for such
purpose to pay any Imposition, Lender shall have the right, but shall not be
obligated, to pay that Imposition, and Borrower shall repay to Lender, on
demand, any amount paid by Lender, with interest thereon at the Default Rate
from the date of the advance thereof to the date of repayment, and such
amount shall constitute a portion of the Debt secured by this Deed of Trust
and the other Security Instruments.
(b) Borrower shall, prior to the date upon which any fine,
penalty, interest or cost for the nonpayment is imposed, pay or cause to be
paid all charges for electricity, power, gas, water and other services and
utilities in connection with the Mortgaged Property, and shall, upon request,
deliver to Lender receipts or other documentation reasonably satisfactory to
Lender evidencing payment thereof. If Borrower shall fail to pay any amount
required to be paid by Borrower pursuant to this Section 4.01 and is not
contesting such charges in accordance with Section 4.04 hereof, Lender shall
have the right, but shall not be obligated, to pay that amount, and Borrower
will repay to Lender, on demand, any amount paid by Lender with interest
thereon at the Default Rate from the date of the advance thereof to the date
of repayment, and such amount shall constitute a portion of the Debt secured
by this Deed of Trust and the other Security Instruments.
(c) Borrower shall pay all taxes, charges, filing,
registration and recording fees, excises and levies imposed upon Lender by
reason of or in connection with its ownership of any Loan Document or any
other instrument related thereto, or resulting from the execution, delivery
and recording of, or the lien created by, or the obligation evidenced by, any
of them, other than income, franchise and other similar taxes imposed on
Lender and shall pay all corporate stamp taxes, if any, and other taxes,
required to be paid on the Loan Documents. If Borrower shall fail to make any
such payment within ten (10) days after written notice thereof from Lender,
Lender shall have the right, but shall not be obligated, to pay the amount
due, and Borrower shall reimburse Lender therefor, on
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demand, with interest thereon at the Default Rate from the date of the
advance thereof to the date of repayment, and such amount shall constitute a
portion of the Debt secured by this Deed of Trust and the other Security
Instruments.
Section 4.02 DEDUCTION FROM VALUE. In the event of the passage after
the date of this Deed of Trust of any Legal Requirement deducting from the
value of the Mortgaged Property for the purpose of taxation, any lien thereon
or changing in any way the Legal Requirements now in force for the taxation
of this Deed of Trust, the other Security Instruments and/or the Debt for
federal, state or local purposes, or the manner of the operation of any such
taxes so as to adversely affect the interest of Lender, or impose any tax or
other charge on any Loan Document, then Borrower will pay such tax, with
interest and penalties thereon, if any, within the statutory period. In the
event the payment of such tax or interest and penalties by Borrower would be
unlawful, or taxable to Lender or unenforceable or provide the basis for a
defense of usury, then in any such event, Lender shall have the option, by
written notice of not less than thirty (30) days, to declare the Debt
immediately due and payable, with no prepayment penalty, including without
limitation, Yield Maintenance Premium.
Section 4.03 NO JOINT ASSESSMENT. Borrower shall not consent to or
initiate the joint assessment of the Premises or the Improvements (a) with
any other real property constituting a separate tax lot and Borrower
represents and covenants that the Premises and the Improvements are and shall
remain a separate tax lot or (b) with any portion of the Mortgaged Property
which may be deemed to constitute personal property, or any other procedure
whereby the lien of any taxes which may be levied against such personal
property shall be assessed or levied or charged to the Mortgaged Property as
a single lien.
Section 4.04 RIGHT TO CONTEST. Borrower shall have the right, after
prior notice to Lender, at its sole expense, to contest by appropriate legal
proceedings diligently conducted in good faith, without cost or expense to
Lender or any of its agents, employees, officers or directors, the validity,
amount or application of any Imposition or any charge described in Section
4.01(b), provided that (a) no Default or Event of Default shall exist during
such proceedings and such contest shall not (unless Borrower shall comply
with clause (d) of this Section 4.04) subject the Mortgaged Property or any
portion thereof to any lien or affect the priority of the lien of this Deed
of Trust, (b) failure to pay such Imposition or charge will not subject
Lender, Deed Trustee or any of their agents, employees, officers or directors
to any civil or criminal liability, (c) the contest suspends enforcement of
the Imposition or charge (unless Borrower first pays the Imposition or
charge), (d) prior to and during such contest, Borrower shall furnish to
Lender security satisfactory to Lender, in its reasonable discretion, against
loss or injury by reason of such contest or the non-payment of such
Imposition or charge (and if such security is cash, Lender may deposit the
same in an interest-bearing account and interest accrued thereon, if any,
shall be deemed to constitute a part of such security for purposes of this
Deed of Trust, but Lender (i) makes no representation or warranty as to the
rate or amount of interest, if any, which may accrue thereon and shall have
no liability in connection therewith and (ii) shall not be deemed to be a
trustee or fiduciary with respect to its receipt of any such security and any
such security may be commingled with other monies of Lender),
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(e) such contest shall not affect the ownership, use or occupancy of the
Mortgaged Property, (f) the Mortgaged Property or any part thereof or any
interest therein shall not be in any danger of being sold, forfeited or lost
by reason of such contest by Borrower, (g) Borrower has given Lender notice
of the commencement of such contest and upon request by Lender, from time to
time, notice of the status of such contest by Borrower and/or confirmation of
the continuing satisfaction of clauses (a) through (f) of this Section 4.04,
and (h) upon a final determination of such contest, Borrower shall promptly
comply with the requirements thereof. Upon completion of any contest,
Borrower shall immediately pay the amount due, if any, and deliver to Lender
proof of the completion of the contest and payment of the amount due, if any,
following which, Lender shall return the security, if any, deposited with
Lender pursuant to clause (d) of this Section 4.04. Borrower shall not pay
any Imposition in installments unless permitted by applicable Legal
Requirements, and shall, upon the request of Lender, deliver copies of all
notices relating to any Imposition or other charge covered by this Article IV
to Lender.
Section 4.05 NO CREDITS ON ACCOUNT OF THE DEBT. Borrower will not
claim or demand or be entitled to any credit or credits on account of the
Debt for any part of the Impositions assessed against the Mortgaged Property
or any part thereof and no deduction shall otherwise be made or claimed from
the taxable value of the Mortgaged Property, or any part thereof, by reason
of this Deed of Trust or the Debt. In the event such claim, credit or
deduction shall be required by Legal Requirements, Lender shall have the
option, by written notice of not less than thirty (30) days, to declare the
Debt immediately due and payable, and Borrower hereby agrees to pay such
amounts not later than thirty (30) days after such notice, provided no Yield
Maintenance Premium shall be due in connection with such prepayment.
Section 4.06 DOCUMENTARY STAMPS. If, at any time, the United States
of America, any State or Commonwealth thereof or any subdivision of any such
State shall require revenue or other stamps to be affixed to the Notes or
this Deed of Trust, or impose any other tax or charges on the same, Borrower
will pay the same, with interest and penalties thereon, if any.
ARTICLE V
LOSS PROCEEDS
Section 5.01 LOSS PROCEEDS. In the event of a casualty to the
Mortgaged Property, unless Lender elects, or is required pursuant to Article
III hereof to make all of the Insurance Proceeds available to Borrower for
restoration, Lender and Borrower shall cause all such Insurance Proceeds to
be paid by the insurer directly to Lender, whereupon Lender shall, after
deducting Lender's costs of recovering and paying out such Insurance
Proceeds, including without limitation, reasonable attorneys' fees, apply
same to reduce the Debt in accordance with the terms of the Notes. In the
event that Insurance Proceeds are to be applied toward restoration, Lender
shall hold such funds in a segregated bank account at a bank chosen by
Lender, which shall be an Eligible Account, and shall disburse same in
accordance with the provisions of Section 3.04 hereof. Unless Lender elects,
or is required pursuant to Section 6.01 hereof to make all of the
Condemnation Proceeds available to Borrower for restoration, Lender and
Borrower shall cause all such Condemnation Proceeds to be
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paid to Lender, whereupon Lender shall, after deducting Lender's costs of
recovering and paying out such Condemnation Proceeds, including without
limitation, reasonable attorneys' fees, apply same to reduce the Debt in
accordance with the terms of the Notes. In the event that Condemnation
Proceeds are to be applied toward restoration, Lender shall hold such funds
in a segregated bank account at a bank chosen by Lender, which shall be an
Eligible Account, and shall disburse same in accordance with the provisions
of Section 3.04 hereof. If any Loss Proceeds are received by Borrower, such
Loss Proceeds shall be received in trust for Lender, shall be segregated from
other funds of Borrower, and shall be forthwith paid to Lender to hold in a
segregated bank account at a bank chosen by Lender, in each case to be
applied or disbursed in accordance with the foregoing. Any Loss Proceeds made
available to Borrower for restoration in accordance herewith, to the extent
not used by Borrower in connection with, or to the extent they exceed the
cost of, such restoration, shall be paid to Lender whereupon Lender shall
apply the same to reduce the Debt in accordance with the terms of the Notes.
ARTICLE VI
CONDEMNATION
Section 6.01 CONDEMNATION.
(a) Borrower shall notify Lender promptly of the
commencement or threat of any Taking of the Mortgaged Property or any portion
thereof. Lender is hereby irrevocably appointed as Borrower's
attorney-in-fact, coupled with an interest, with exclusive power to collect,
receive and retain the proceeds of any such Taking and to make any compromise
or settlement in connection with such proceedings (subject to Borrower's
reasonable approval, except during the continuance of an Event of Default, in
which event Borrower's approval shall not be required), subject to the
provisions of this Deed of Trust; PROVIDED, HOWEVER, that Borrower may
participate in any such proceedings and shall be authorized and entitled to
compromise or settle any such proceeding with respect to Condemnation
Proceeds in an amount less than five percent (5%) of the outstanding
principal sum of the Loans. Borrower shall execute and deliver to Lender any
and all instruments reasonably required in connection with any such
proceeding promptly after request therefor by Lender. Except as set forth
above, Borrower shall not adjust, compromise, settle or enter into any
agreement with respect to such proceedings without the prior consent of
Lender which shall not be unreasonably withheld. All Condemnation Proceeds
are hereby assigned to and shall be paid to Lender. With respect to
Condemnation Proceeds in an amount in excess of five percent (5%) of the
outstanding principal sum of the Loans, Borrower hereby authorizes Lender to
compromise, settle, collect and receive such Condemnation Proceeds, and to
give proper receipts and acquittance therefor. Lender shall have the option,
in Lender's sole discretion, to apply such Condemnation Proceeds (less any
cost to Lender of recovering and paying out such proceeds, including, without
limitation, reasonable attorneys' fees and disbursements and costs allocable
to inspecting any repair, restoration or rebuilding work and the plans and
specifications therefor) toward the payment of the Debt or to allow such
proceeds to be used for the Work. In the event Lender elects to make
Condemnation Proceeds available to be used toward the restoration or
rebuilding of the Mortgaged
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Property to a usable whole, such Condemnation Proceeds shall be disbursed in
the manner and subject to the conditions set forth in Section 3.04(b). Any
excess proceeds remaining after completion of such restoration or rebuilding
shall be applied to the repayment of the Debt. If the Condemnation Proceeds
are used to reduce the Debt, they shall be applied in accordance with the
provisions of the Notes with no prepayment penalty whatsoever, including,
without limitation, Yield Maintenance Premium. Borrower shall promptly
execute and deliver all instruments requested by Lender for the purpose of
confirming the assignment of the Condemnation Proceeds to Lender.
Notwithstanding the foregoing, Condemnation Proceeds in an amount less than
five percent (5%) of the Allocated Loan Amount for a particular Property
shall be applied to the Work pursuant to all of the terms and provisions
applicable to Insurance Proceeds that are applied to Work provided (A) no
Event of Default has occurred and is continuing, (B) Lender is reasonably
satisfied that the Aggregate Debt Service Coverage, after substantial
completion of the Work, will be at least equal to the Required Debt Service
Coverage, (C) Lender is reasonably satisfied that the Work can be completed
six (6) months prior to the Anticipated Repayment Date and (D) Lender is
reasonably satisfied that the Work can be completed within twelve (12) months
of the Taking of the Mortgaged Property.
(b) Application of all or any part of the Condemnation
Proceeds to the Debt shall be made in accordance with the provisions of
Sections 3.06 and 3.07. No application of the Condemnation Proceeds to the
reduction of the Debt shall have the effect of releasing the lien of this
Deed of Trust until the remainder of the Debt has been paid in full. In the
case of any Taking, Lender, to the extent that Lender has not been reimbursed
by Borrower, shall be entitled, as a first priority out of any Condemnation
Proceeds, to reimbursement for all costs, fees and expenses reasonably
incurred in the determination and collection of any Condemnation Proceeds.
All Condemnation Proceeds deposited with Lender pursuant to this Section,
until expended or applied as provided herein, may be commingled with the
general funds of Lender and shall constitute additional security for the
payment of the Debt and the payment and performance of Borrower's
obligations. All awards so deposited with Lender shall be held by Lender in
an Eligible Account and invested in permitted investments, but Lender makes
no representation or warranty as to the rate or amount of interest, if any,
which may accrue on any such deposit and shall have no liability in
connection therewith. For purposes hereof, any reference to the award shall
be deemed to include interest, if any, which has accrued thereon.
ARTICLE VII
LEASES AND RENTS
Section 7.01 ASSIGNMENT.
(a) Borrower does hereby bargain, sell, assign and set over
unto Lender, all of Borrower's interest in the Leases and Rents. The
assignment of Leases and Rents in this Section 7.01 is an absolute,
unconditional and present assignment from Borrower to Lender and not an
assignment for security and the existence or exercise of Borrower's revocable
license to collect Rent shall not operate to subordinate this assignment to
any subsequent assignment. The exercise
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by Lender of any of its rights or remedies pursuant to this Section 7.01
shall not be deemed to make Lender a Lender-in-possession. In addition to the
provisions of this Article VII, Borrower shall comply with all terms,
provisions and conditions of the Assignment.
(b) So long as there shall exist and be continuing no Event
of Default, Borrower shall have a revocable license to take all actions with
respect to all Leases and Rents, present and future, including the right to
use the Rents, subject to the terms of this Mortgage, the Assignment and the
Clearing Account Agreement executed by Borrower of even date herewith.
(c) In a separate instrument Borrower shall, as requested
from time to time by Lender, assign to Lender or its nominee by specific or
general assignment, any and all Leases, such assignments to be in form and
content reasonably acceptable to Lender, but subject to the provisions of
Section 7.01(b) hereof. Borrower agrees to deliver to Lender, within thirty
(30) days after Lender's request, a true and complete copy of every Lease
and, within ten (10) days after Lender's request, a complete list of the
Leases, certified by Borrower to be true accurate and complete and stating
the demised premises, the names of the lessees, the Rent payable under the
Leases, the date to which such Rents have been paid, the material terms of
the Leases, including, without limitation, the dates of occupancy, the dates
of expiration, any Rent concessions, work obligations or other inducements
granted to the lessees thereunder, and any renewal options.
(d) The rights of Lender contained in this Article VII, the
Assignment or any other assignment of any Lease shall not result in any
obligation or liability of Lender to Borrower or any lessee under a Lease or
any party claiming through any such lessee.
(e) At any time after an Event of Default, the license
granted hereinabove may be revoked by Lender, and Lender or a receiver
appointed in accordance with this Deed of Trust may enter upon the Mortgaged
Property, and collect, retain and apply the Rents toward payment of the Debt
in such priority and proportions as Lender in its sole discretion shall deem
proper.
(f) In addition to the rights which Lender may have herein,
upon the occurrence of any Event of Default, Lender, at its option, may
require Borrower to pay monthly in advance to Lender, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for the
use and occupation of such part of the Mortgaged Property as may be used and
occupied by Borrower and may require Borrower to vacate and surrender
possession of the Mortgaged Property to Lender or to such receiver and, in
default thereof, Borrower may be evicted by summary proceedings or otherwise.
Section 7.02 MANAGEMENT OF MORTGAGED PROPERTY.
(a) Borrower shall manage the Mortgaged Property or cause
the Mortgaged Property to be managed in a manner which is consistent with the
Approved Manager Standard. All Space Leases shall provide for rental rates
comparable to then existing local market rates and terms
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and conditions which constitute good and prudent business practice and are
consistent with prevailing market terms and conditions, and shall be
arm's-length transactions. All Leases shall provide that they are subordinate
to this Deed of Trust and that the lessees thereunder attorn to Lender. Upon
request of Lender, Borrower shall deliver copies of all Leases, amendments,
modifications and renewals to Lender.
(b) Borrower (i) shall observe and perform all of its
material obligations under the Leases pursuant to applicable Legal
Requirements and shall not do or permit to be done anything to impair the
value of the Leases as security for the Debt; (ii) shall promptly, upon
Lender's request, send copies to Lender of all notices of default which
Borrower shall receive under the Leases; (iii) shall, consistent with the
Approved Manager Standard, enforce all of the material terms, covenants and
conditions contained in the Leases to be observed or performed; (iv) shall
not collect any of the Rents under the Leases more than one (1) month in
advance (except that Borrower may collect in advance such security deposits
as are permitted pursuant to applicable Legal Requirements and are
commercially reasonable in the prevailing market); (v) shall not execute any
other assign ment of lessor's interest in the Leases or the Rents except as
otherwise expressly permitted pursuant to this Deed of Trust; (vi) shall not
cancel or terminate any of the Leases or accept a surrender thereof in any
manner inconsistent with the Approved Manager Standard; (vii) shall not
convey, transfer or suffer or permit a conveyance or transfer of all or any
part of the Premises or the Improvements or of any interest therein so as to
effect a merger of the estates and rights of, or a termination or diminution
of the obligations of, lessees thereunder; (viii) shall notify Lender of any
material alteration, modification or change in the terms of any guaranty of
any Major Space Lease or cancellation or termination of such guaranty
promptly upon effectuation of same unless altered, cancelled, modified or
changed in the ordinary course of business; (ix) shall, in accordance with
the Approved Manager Standard, make all reasonable efforts to seek lessees
for space as it becomes vacant and enter into Leases in accordance with the
terms hereof; (x) shall not materially modify, alter or amend any Major Space
Lease or Property Agreement with any Pad Owner without Lender's consent,
which consent will not be unreasonably withheld or delayed; (xi) shall notify
Lender promptly if any Pad Owner shall cease business operations or of the
occurrence of any event of which it becomes aware affecting a Pad Owner or
its property which might have any material adverse effect on the Mortgaged
Property; and (xii) shall, without limitation to any other provision hereof,
execute and deliver at the request of Lender all such further assurances,
confirmations and assignments in connection with the Mortgaged Property as
are required herein and as Lender shall from time to time reasonably require.
(c) All security deposits of lessees, whether held in cash
or any other form, shall be treated by Borrower as trust funds, but shall not
be commingled with any other funds of Borrower. Any bond or other instrument
which Borrower is permitted to hold in lieu of cash security deposits under
applicable Legal Requirements shall be maintained in full force and effect
unless replaced by cash deposits as hereinabove described, shall be issued by
a Person reasonably satisfactory to Lender, shall, if permitted pursuant to
Legal Requirements, at Lender's option, name Lender as payee or Lender
thereunder or be fully assignable to Lender and shall, in all respects,
comply with applicable Legal Requirements and otherwise be reasonably
satisfactory to Lender. Borrower shall, upon request, provide Lender with
evidence reasonably satisfactory to Lender of
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Borrower's compliance with the foregoing. Following the occurrence and during
the continuance of any Event of Default, Borrower shall, upon Lender's
request, if permitted by applicable Legal Requirements, turn over the
security deposits (and any interest thereon) to Lender to be held by Lender
in accordance with the terms of the Leases and all Legal Requirements.
(d) If (i) the Net Operating Income of the Mortgaged
Property in any Fiscal Year declines by more than twenty-five percent (25%)
in such Fiscal Year from the Net Operating Income of the Mortgaged Property
for the Fiscal Year immediately preceding the Closing Date or (ii) an Event
of Default has occurred, then, if Lender determines in its reasonable
discretion prior to the removal of the existing manager that a reputable
independent property manager can manage the Mortgaged Property at competitive
rates more efficiently and with better results than Borrower or Borrower's
Manager, Lender shall have the right to appoint such reputable independent
property manager selected by Lender, in Lender's sole discretion, to manage
the Mortgaged Property.
(e) Borrower covenants and agrees with Lender that (i) the
Mortgaged Property will be managed at all times by the Manager pursuant to
the management agreement approved by Lender (the "MANAGEMENT AGREEMENT"),
(ii) after Borrower has knowledge of a fifty percent (50%) or more change in
control of the ownership of the Manager, Borrower will promptly give Lender
notice thereof (a "MANAGER CONTROL NOTICE") and (iii) the Management
Agreement may be terminated by Lender at any time for cause (including, but
not limited to, Manager's gross negligence, misappropriation of funds,
willful misconduct or fraud) or at any time following either (A) the
occurrence of an Event of Default, or (B) the receipt of a Manager Control
Notice, and a substitute managing agent shall be appointed by Borrower,
subject to Lender's approval, which may be given or withheld in Lender's sole
discretion and which may be conditioned on, INTER ALIA, a letter from the
Rating Agency confirming that any rating issued by the Rating Agency in
connection with a Securitization will not, as a result of the proposed change
of Manager, be downgraded from the then current ratings thereof, qualified or
withdrawn. Borrower may from time to time appoint a successor manager to
manage the Mortgaged Property with Lender's prior written consent which
consent shall not be unreasonably withheld or delayed, provided that, any
such successor manager shall be a reputable management company having a
senior executive with at least seven (7) years experience in the management
of retail shopping centers, shall be the manager of at least 1,000,000 square
feet, including, without limitation certain complexes which contain more than
100,000 square feet, and shall be reasonably acceptable to Lender. Borrower
further covenants and agrees that Borrower shall require the Manager (or any
successor managers) to maintain at all times during the term of the Loans
worker's compensation insurance as required by Governmental Authorities.
ARTICLE VIII
MAINTENANCE AND REPAIR
Section 8.01 MAINTENANCE AND REPAIR OF THE MORTGAGED PROPERTY;
ALTERATIONS; REPLACEMENT OF EQUIPMENT. Borrower hereby covenants and agrees:
(a) Borrower shall not (i) desert or abandon the Mortgaged
Property or any material portion thereof, (ii) change the use of the
Mortgaged Property in any material respect or
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cause or permit the use or occupancy of any material part of the Mortgaged
Property to be discontinued if such discontinuance or use change would
violate any zoning or other law, ordinance or regulation; (iii) consent to or
seek any lowering of the zoning classification, or greater zoning restriction
affecting the Mortgaged Property; or (iv) take any steps whatsoever to
convert the Mortgaged Property, or any portion thereof, to a condominium or
cooperative form of ownership.
(b) Borrower shall, at its expense, (i) take good care of
the Mortgaged Property in all material respects including grounds generally,
and utility systems and sidewalks, roads, alleys, and curbs therein, and
shall keep the same in good, safe and insurable condition and in compliance
with all applicable Legal Requirements, (ii) promptly make all reasonable and
necessary repairs to the Mortgaged Property, above grade and below grade,
interior and exterior, structural and nonstructural, ordinary and
extraordinary, unforeseen and foreseen, and maintain the Mortgaged Property
in a manner appropriate for the facility and (iii) not commit or suffer to be
committed any waste of the Mortgaged Property in any material respect or do
or suffer to be done anything which will materially impair the value thereof.
All repairs made by Borrower shall comply with all applicable Legal
Requirements and Insurance Requirements. To the extent any of the above
obligations are obligations of tenants under Space Leases or Pad Owners or
other Persons under Property Agreements, Borrower may fulfill its obligations
hereunder by causing such tenants, Pad Owners or other Persons, as the case
may be, to perform their obligations thereunder. As used herein, the terms
"REPAIR" and "REPAIRS" shall be deemed to include all necessary replacements.
(c) Borrower shall not demolish, remove, construct, or,
except as otherwise expressly provided herein, restore, or alter the
Mortgaged Property or any material portion thereof; nor consent to or permit
any such demolition, removal, construction, restoration, addition or
alteration which would materially diminish the value of the Mortgaged
Property without Lender's prior written consent in each instance, which
consent shall not be unreasonably withheld or delayed.
(d) Borrower represents and warrants to Lender that (i)
there are no material fixtures, machinery, apparatus, tools, equipment or
articles of personal property attached or appurtenant to, or located on, or
used in connection with the management, operation or maintenance of the
Mortgaged Property, except for the Equipment and equipment leased by Borrower
for the management, operation or maintenance of the Mortgaged Property in
accordance with the Loan Documents; (ii) the Equipment and the leased
equipment constitutes all of the fixtures, machinery, apparatus, tools,
equipment and articles of personal property necessary to the proper operation
and maintenance of the Mortgaged Property; and (iii) all of the Equipment is
free and clear of all liens, except for the lien of this Deed of Trust and
the Permitted Encumbrances. All rights, title and interest of Borrower in and
to all extensions, improvements, betterment, renewals, appurtenances to, the
Mortgaged Property hereafter acquired by, or released to, Borrower or
constructed, assembled or placed by Borrower in the Mortgaged Property, and
all changes and substitutions of the security constituted thereby, shall be
and, in each such case, without any further mortgage, conveyance, assignment
or other act by Lender or Borrower, shall become subject to the lien and
security interest of this Deed of Trust as fully and completely, and with the
same effect, as though now owned by Borrower and specifically described in
this Deed of Trust, but at any and all times Borrower shall
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execute and deliver to Lender any documents Lender may reasonably deem
necessary or appropriate for the purpose of specifically subjecting the same
to the lien and security interest of this Deed of Trust.
(e) Notwithstanding the provisions of this Deed of Trust to
the contrary, Borrower shall have the right, at any time and from time to
time, to remove and dispose of Equipment and other personal property which
may have become obsolete or unfit for use or which is no longer useful in the
management, operation or maintenance of the Mortgaged Property. Borrower
shall promptly replace any such Equipment and other personal property so
disposed of or removed with other Equipment and other personal property of
equal value and utility, free of any security interest or superior title,
liens or claims; except that, replacement of the Equipment and other personal
property so removed or disposed of is not necessary or desirable for the
proper management, operation or maintenance of the Mortgaged Property,
Borrower shall not be required to replace the same. All such replacements or
additional equipment shall be deemed to constitute "EQUIPMENT" and other
personal property and shall be covered by the security interest herein
granted.
ARTICLE IX
TRANSFER OR ENCUMBRANCE OF THE MORTGAGED PROPERTY
Section 9.01 OTHER ENCUMBRANCES. Borrower shall not further encumber
or permit the further encumbrance in any manner (whether by grant of a
pledge, security interest or otherwise) of the Mortgaged Property or any
material part thereof or interest therein, including, without limitation, of
the Rents therefrom. In addition, Borrower shall not further encumber and
shall not permit the further encumbrance in any manner (whether by grant of a
pledge, security interest or otherwise) of Borrower or any interest in
Borrower except as expressly permitted pursuant to this Deed of Trust.
Section 9.02 NO TRANSFER. Borrower acknowledges that Lender has
examined and relied on the expertise of Borrower and, if applicable, each
General Partner, in owning and operating properties such as the Mortgaged
Property in agreeing to make the Loans and will continue to rely on
Borrower's ownership of the Mortgaged Property as a means of maintaining the
value of the Mortgaged Property as security for repayment of the Debt and
Borrower acknowledges that Lender has a valid interest in maintaining the
value of the Mortgaged Property. Borrower shall not Transfer, nor permit the
Transfer of, (a) the Mortgaged Property or any part thereof, or any interest
therein or (b) except as permitted by the definition of Transfer, any or all
of the interests in Borrower, or if Borrower is a partnership or limited
liability company, of any General Partner, without the prior written consent
of Lender, which consent Lender may withhold in its sole and absolute
discretion. Lender shall not be required to demonstrate any actual impairment
of its security or any increased risk of default hereunder in order to
declare the Debt immediately due and payable upon a Transfer without Lender's
consent. This provision shall apply to every Transfer regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
Transfer.
Section 9.03 DUE ON SALE. Except as otherwise set forth herein,
Lender may declare the Debt immediately due and payable upon any Transfer
without Lender's consent without regard to whether any impairment of its
security or any increased risk of default hereunder can be demonstrated. This
provision shall apply to every Transfer of the Mortgaged Property or any part
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thereof or interest in the Mortgaged Property or in Borrower regardless of
whether voluntary or not, or whether or not Lender has consented to any
previous Transfer of the Mortgaged Property or interest in Borrower.
Section 9.04 PERMITTED TRANSFER. Except as otherwise set forth
herein and notwithstanding the foregoing provisions of this Article IX or
Article IX of the other Security Instruments, a one time sale, conveyance or
transfer of the Mortgaged Property and the other Properties in its entirety
(hereinafter, "SALE") shall be permitted hereunder provided that each of the
following terms and conditions are satisfied:
(a) No Event of Default is then continuing hereunder or
under any of the other Loan Documents;
(b) If the proposed Sale is to occur at any time after a
Securitization, each Rating Agency shall have delivered written confirmation
that any rating issued by such Rating Agency in connection with the
Securitization will not, as a result of the proposed Sale, be downgraded from
the then current ratings thereof, qualified or withdrawn;
(c) Borrower gives Lender written notice of the terms of
the proposed Sale not less than thirty (30) days before the date on which
such Sale is scheduled to close and, concurrently therewith, gives Lender (i)
all such information concerning the proposed transferee of the Property
(hereinafter, "BUYER") as Lender would require in evaluating an initial
extension of credit to a borrower and Lender determines, in its sole
discretion that the Buyer is acceptable to Lender in all respects and (ii) a
non-refundable application fee equal to $5,000;
(d) Borrower pays Lender, concurrently with the closing of
such Sale, a non-refundable assumption fee in an amount equal to one percent
(1%) of the then outstanding Principal Amounts together with all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by Lender in connection with the Sale;
(e) Buyer assumes and agrees to pay the Debt and, prior to
or concurrently with the closing of such Sale, Buyer executes, without any
cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate said assumption and delivers
such legal opinions as Lender may require;
(f) Borrower and Buyer execute, without any cost or expense
to Lender, new financing statements or financing statement amendments and any
additional documents reasonably requested by Lender;
(g) Borrower delivers to Lender, without any cost or
expense to Lender, such endorsements to Lender's title insurance policy,
hazard insurance policy endorsements or certificates and other similar
materials as Lender may deem necessary at the time of the Sale, all in form
and substance satisfactory to Lender, including, without limitation, an
endorsement or endorsements to
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Lender's title insurance policies insuring the lien of this Deed of Trust and
the other Security Instruments, extending the effective date of such policy
to the date of execution and delivery (or, if later, of recording) of the
assumption agreement referenced above in subparagraph (e) of this Section,
with no additional exceptions added to such policy, and insuring that fee
simple title to the Mortgaged Property is vested in Buyer;
(h) Borrower executes and delivers to Lender, without any
cost or expense to Lender, a release of Lender, its officers, directors,
employees and agents, from all claims and liability relating to the
transactions evidenced by the Loan Documents, through and including the date
of the closing of the Sale, which agreement shall be in form and substance
satisfactory to Lender and shall be binding upon Buyer;
(i) such Sale is not construed so as to relieve Borrower of
any personal liability under the Notes or any of the other Loan Documents for
any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale, and Borrower executes, without
any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate the ratification of said
personal liability;
(j) such Sale is not construed so as to relieve any
Guarantor of its obligations under any guaranty or indemnity agreement
executed in connection with the Loans and each such Guarantor executes,
without any cost or expense to Lender, such documents and agreements as
Lender shall reasonably require to evidence and effectuate the ratification
of each such guaranty agreement, provided that if Buyer or a party associated
with Buyer approved by Lender in its sole discretion assumes the obligations
of the current Guarantor under its guaranty and Buyer or such party
associated with Buyer, as applicable, executes, without any cost or expense
to Lender, a new guaranty in similar form and substance to the existing
guaranty and otherwise satisfactory to Lender, then Lender shall release the
current Guarantor from all obligations arising under its guaranty after the
closing of such Sale; and
(k) Buyer is a Single Purpose Entity and Lender receives a
non-consolidation opinion relating to Buyer from Buyer's counsel which is in
form and substance acceptable to Lender.
ARTICLE X
CERTIFICATES
Section 10.01 ESTOPPEL CERTIFICATES.
(a) After request by Lender, Borrower, within fifteen (15)
days and at its expense, will furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Notes, and the unpaid principal amount of the Notes,
(ii) the rate of interest of the Notes, (iii) the date payments of interest
and/or principal were last paid, (iv) any offsets or defenses to the payment
of the Debt, and if any are alleged, the nature thereof, (v) that the Notes
and this Deed of Trust have not been modified or if modified, giving
particulars of such modification and (vi) that there has occurred and is then
continuing no Default or if such Default exists, the nature thereof, the
period of time it has existed, and the action being taken to remedy such
Default.
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(b) Within fifteen (15) days after written request by
Borrower, Lender shall furnish to Borrower a written statement confirming the
amount of the Debt, the maturity date of the Notes, the date to which
interest has been paid, and whether any Event of Default or other Default has
occurred and is then continuing.
(c) Borrower shall use all reasonable efforts to obtain
estoppels from tenants that may be required hereunder or under the Loan
Documents.
ARTICLE XI
NOTICES
Section 11.01 NOTICES. Any notice, demand, statement, request or
consent made hereunder shall be in writing and delivered personally or sent
to the party to whom the notice, demand or request is being made by Federal
Express or other nationally recognized overnight delivery service, as follows
and shall be deemed given when delivered personally or one (1) Business Day
after being deposited with Federal Express or such other nationally
recognized delivery service:
If to Lender: To Lender, at the address first written above,
with a copy to: Womble Carlyle Sandridge & Rice, PLLC
3500 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: James H. Thompson, Esq.
If to Borrower: To Borrower, at the address first written above,
with a copy to: Horizon Group Properties, Inc.
77 West Wacker Drive, Suite 4200
Chicago, Illinois 60601
Attention: General Counsel
and to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Howard Kruse, Esq.
If to Deed Trustee: To Deed Trustee, at the address first written above,
or such other address as Deed Trustee, Borrower or Lender shall hereafter
specify by not less than ten (10) days' prior written notice as provided herein;
PROVIDED, HOWEVER, that notwithstanding any provision of this Article to the
contrary, such notice of change of address shall be deemed given only upon
actual receipt thereof. Rejection or other refusal to accept or the inability to
deliver because of changed addresses of which no notice was given as herein
required shall be deemed to be receipt of the notice, demand, statement, request
or consent.
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ARTICLE XII
INDEMNIFICATION
Section 12.01 INDEMNIFICATION COVERING MORTGAGED PROPERTY. In
addition, and without limitation, to any other provision of this Deed of
Trust or any other Loan Document, Borrower shall protect, indemnify and save
harmless Lender, Deed Trustee and their successors and assigns, and each of
their agents, employees, officers and directors, from and against all
liabilities, obligations, claims, damages, penalties, causes of action, costs
and expense (including, without limitation, reasonable attorneys' fees and
expenses, whether incurred within or outside the judicial process), imposed
upon or incurred by or asserted against Lender, Deed Trustee and their
assigns, or any of its agents, employees, officers or directors, by reason of
(a) ownership of this Deed of Trust, the Assignment, the Mortgaged Property
or any part thereof or any interest therein or receipt of any Rents; (b) any
accident, injury to or death of any person or loss of or damage to property
occurring in, on or about the Mortgaged Property or any part thereof or on
the adjoining sidewalks, curbs, parking areas, streets or ways; (c) any use,
nonuse or condition in, on or about, or possession, alteration, repair,
operation, maintenance or management of, the Mortgaged Property or any part
thereof or on the adjoining sidewalks, curbs, parking areas, streets or ways;
(d) any failure on the part of Borrower to perform or comply with any of the
terms of this Deed of Trust, the Assignment or the other Loan Documents; (e)
performance of any labor or services or the furnishing of any materials or
other property in respect of the Mortgaged Property or any part thereof; (f)
any claim by brokers, finders or similar Persons claiming to be entitled to a
commission in connection with any Lease or other transaction involving the
Mortgaged Property or any part thereof; (g) any Imposition including, without
limitation, any Imposition attributable to the execution, delivery, filing,
or recording of any Loan Document, Lease or memorandum thereof; (h) any lien
or claim arising on
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or against the Mortgaged Property or any part thereof under any Legal
Requirement or any liability asserted against Lender or Deed Trustee with
respect thereto; or (i) the claims of any lessee or any Person acting through
or under any lessee or otherwise arising under or as a consequence of any
Lease. Lender shall promptly notify Borrower in writing of any claim made
with respect to (a) through (i). Notwithstanding the foregoing provisions of
this Section 12.01 to the contrary, Borrower shall have no obligation to
indemnify Lender pursuant to this Section 12.01 for liabilities, obligations,
claims, damages, penalties, causes of action, costs and expenses relative to
the foregoing which result from Lender's, and its successors' or assigns',
willful misconduct or gross negligence. Any amounts payable to Lender by
reason of the application of this Section 12.01 shall constitute a part of
the Debt secured by this Deed of Trust and other Loan Documents and shall
become immediately due and payable and shall bear interest at the Default
Rate from the date the liability, obligation, claim, cost or expense is
sustained by Lender, as applicable, until paid. The provisions of this
Section 12.01 shall survive the termination of this Deed of Trust whether by
repayment of the Debt, foreclosure or delivery of a deed in lieu thereof,
assignment or otherwise.
ARTICLE XIII
DEFAULTS
Section 13.01 EVENTS OF DEFAULT. The Debt shall become immediately
due at the option of Lender upon any one or more of the following events
("EVENT OF DEFAULT"):
(a) if the final payment or prepayment premium, if any, due
under any of the Notes shall not be paid when due;
(b) if any monthly payment of interest and/or principal due
under the Notes (other than the sums described in (a) above) shall not be
fully paid within ten (10) days of the date upon which the same is due and
payable thereunder;
(c) if payment of any sum (other than the sums described in
(a) above or (b) above) required to be paid pursuant to the Notes, this Deed
of Trust or any other Loan Document shall not be paid within ten (10) days
after Lender delivers written notice to Borrower that same is due and payable
thereunder or hereunder;
(d) if Borrower, Guarantor or, if Borrower or Guarantor is
a partnership or limited liability company any General Partner of Borrower or
Guarantor shall institute or cause to be instituted any proceeding for the
termination or dissolution of Borrower, Guarantor or any such General Partner;
(e) if the insurance policies are not assigned and
delivered to Lender as herein provided within five (5) Business Days after
Lender delivers written notice to Borrower; or if the insurance policies
required hereunder are not kept in full force and effect;
(f) if Borrower or Guarantor attempts to assign its rights
under this Deed of Trust or any other Loan Document or any interest herein or
therein, or if any Transfer occurs other than in accordance with the
provisions hereof;
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(g) if any representation or warranty of Borrower or
Guarantor made herein or in any other Loan Document or in any certificate,
report, financial statement or other instrument or agreement furnished to
Lender shall prove false or misleading in any material respect;
(h) if Borrower, Guarantor or any General Partner of
Borrower or Guarantor shall make an assignment for the benefit of creditors
or shall admit in writing its inability to pay its debts generally as they
become due;
(i) if a receiver, liquidator or trustee of Borrower,
Guarantor or any General Partner of Borrower or Guarantor shall be appointed
or if Borrower, Guarantor or their respective General Partners shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any
similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower, Guarantor or their respective General Partners or
if any proceeding for the dissolution or liquidation of Borrower, Guarantor
or their respective General Partners shall be instituted; however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, Guarantor or their respective General Partners, as
applicable, upon the same not being discharged, stayed or dismissed within
sixty (60) days or if Borrower, Guarantor or their respective General
Partners shall generally not be paying its debts as they become due;
(j) if Borrower shall be in default beyond any notice or
grace period, if any, under any other mortgage or deed of trust or security
agreement covering any part of the Mortgaged Property without regard to its
priority relative to this Deed of Trust; PROVIDED, HOWEVER, this provision
shall not be deemed a waiver of the provisions of Article IX prohibiting
further encumbrances affecting the Mortgaged Property or any other provision
of this Mortgage;
(k) if Borrower fails to comply with SECTION 2.06 for ten
(10) days;
(l) if Borrower discontinues the operation of the Mortgaged
Property or any part thereof for reasons other than repair or restoration
arising from a casualty or condemnation for ten (10) days or more;
(m) except as permitted in this Deed of Trust, any material
alteration, demolition or removal of any of the Improvements without the
prior consent of Lender;
(n) if Borrower consummates a transaction which would cause
this Deed of Trust or Lender's rights under this Deed of Trust, the Notes or
any other Loan Document to constitute a nonexempt prohibited transaction
under ERISA or result in a violation of a state statute regulating government
plans subjecting Lender to liability for a violation of ERISA or a state
statute;
(o) if an Event of Default shall occur under any of the
other Security Instruments; or
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(p) if Borrower shall be in default under any of the other
terms, covenants or conditions of the Notes (other than as set forth in (a)
through (o) above), this Deed of Trust or any other Loan Document, other than
as set forth in (a) through (o) above, for ten (10) days after notice from
Lender in the case of any default which can be cured by the payment of a sum
of money, or for thirty (30) days after notice from Lender in the case of any
other default or an additional thirty (30) days if Borrower is diligently and
continuously effectuating a cure of a curable non-monetary default, other
than as set forth in (a) through (o) above.
Section 13.02 REMEDIES.
(a) Upon the occurrence and during the continuance of any
Event of Default, Lender may, in addition to any other rights or remedies
available to it hereunder or under any other Loan Document, at law or in
equity, take such action, without notice or demand, as it reasonably deems
advisable to protect and enforce its rights against Borrower and in and to
the Mortgaged Property or any one or more of the Properties or any one or
more of them, including, but not limited to, the following actions, each of
which may be pursued singly, concurrently or otherwise, at such time and in
such order as Lender may determine, in its sole discretion, without impairing
or otherwise affecting any other rights and remedies of Lender hereunder, at
law or in equity: (i) declare all or any portion of the unpaid Debt to be
immediately due and payable; PROVIDED, HOWEVER, that upon the occurrence of
any of the events specified in Section 13.01(i), the entire Debt will be
immediately due and payable without notice or demand or any other declaration
of the amounts due and payable; or (ii) bring, or instruct Deed Trustee to
bring, an action to foreclose this Deed of Trust and without applying for a
receiver for the Rents, but subject to the rights of the tenants under the
Leases, enter into or upon the Mortgaged Property or any part thereof, either
personally or by its agents, nominees or attorneys, and dispossess Borrower
and its agents and servants therefrom, and thereupon Lender may (A) use,
operate, manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Mortgaged Property and conduct the
business thereat, (B) make alterations, additions, renewals, replacements and
improvements to or on the Mortgaged Property or any part thereof, (C)
exercise all rights and powers of Borrower with respect to the Mortgaged
Property or any part thereof, whether in the name of Borrower or otherwise,
including, without limitation, the right to make, cancel, enforce or modify
leases, obtain and evict tenants, and demand, sue for, collect and receive
all earnings, revenues, rents, issues, profits and other income of the
Mortgaged Property and every part thereof, and (D) apply the receipts from
the Mortgaged Property or any part thereof to the payment of the Debt, after
deducting therefrom all expenses (including, without limitation, reasonable
attorneys' fees and disbursements) reasonably incurred in connection with the
aforesaid operations and all amounts necessary to pay the Impositions,
insurance and other charges in connection with the Mortgaged Property or any
part thereof, as well as just and reasonable compensation for the services of
Lender's third-party agents; or (iii) have an appraisal or other valuation of
the Mortgaged Property or any part thereof performed by an Appraiser (and
Borrower covenants and agrees it shall cooperate in causing any such
valuation or appraisal to be performed) and any cost or expense incurred by
Lender in connection therewith shall constitute a portion of the Debt and be
secured by this Deed of Trust and shall be immediately due and payable to
Lender with interest, at the Default Rate, until the date of receipt by
Lender; or
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(iv) sell or instruct Deed Trustee to sell, the Mortgaged Property or
institute proceedings for the complete foreclosure of this Deed of Trust, or
take such other action as may be allowed pursuant to Legal Requirements, at
law or in equity, for the enforcement of this Deed of Trust in which case the
Mortgaged Property or any part thereof may be sold for cash or credit in one
or more parcels; or (v) with or without entry, and to the extent permitted
and pursuant to the procedures provided by applicable Legal Requirements,
institute proceedings for the partial foreclosure of this Deed of Trust, or
take such other action as may be allowed pursuant to Legal Requirements, at
law or in equity, for the enforcement of this Deed of Trust for the portion
of the Debt then due and payable, subject to the lien of this Deed of Trust
continuing unimpaired and without loss of priority so as to secure the
balance of the Debt not then due; or (vi) sell or instruct Deed Trustee to
sell, the Mortgaged Property or any part thereof and any or all estate,
claim, demand, right, title and interest of Borrower therein and rights of
redemption thereof, pursuant to power of sale or otherwise, at one or more
sales, in whole or in parcels, in any order or manner, at such time and
place, upon such terms and after such notice thereof as may be required or
permitted by law, at the discretion of Lender, and in the event of a sale, by
foreclosure or otherwise, of less than all of the Mortgaged Property, this
Deed of Trust shall continue as a lien on the remaining portion of the
Mortgaged Property; or (vii) institute an action, suit or proceeding in
equity for the specific performance of any covenant, condition or agreement
contained in the Loan Documents, or any of them; or (viii) recover judgment
on the Notes or any guaranty either before, during or after (or in lieu of)
any proceedings for the enforcement of this Deed of Trust; or (ix) apply, or
direct Deed Trustee to apply, EX PARTE, for the appointment of a custodian,
trustee, receiver, liquidator or conservator of the Mortgaged Property or any
part thereof, irrespective of the adequacy of the security for the Debt and
without regard to the solvency of Borrower or of any Person liable for the
payment of the Debt, to which appointment Borrower does hereby consent and
such receiver or other official shall have all rights and powers permitted by
applicable law and such other rights and powers as the court making such
appointment may confer, but the appointment of such receiver or other
official shall not impair or in any manner prejudice the rights of Lender to
receive the Rent with respect to any of the Mortgaged Property pursuant to
this Deed of Trust or the Assignment; or (x) require, at Lender's option,
Borrower to pay monthly in advance to Lender, or any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupation of any portion of the Mortgaged Property occupied by Borrower and
may require Borrower to vacate and surrender possession to Lender of the
Mortgaged Property or to such receiver and Borrower may be evicted by summary
proceedings or otherwise; or (xi) without notice to Borrower (A) apply all or
any portion of the cash collateral in any reserve accounts, including any
interest and/or earnings therein, to carry out the obligations of Borrower
under this Deed of Trust and the other Loan Documents, to protect and
preserve the Mortgaged Property and for any other purpose permitted under
this Deed of Trust and the other Loan Documents and/or (B) have all or any
portion of such cash collateral immediately paid to Lender to be applied
against the Debt in the order and priority set forth in the Notes; or (xii)
pursue any or all such other rights or remedies as Lender or Deed Trustee may
have under applicable law or in equity; PROVIDED, HOWEVER, that the
provisions of this Section 13.02(a) shall not be construed to extend or
modify any of the notice requirements or grace periods provided for hereunder
or under any of the other Loan Documents. Borrower hereby waives, to the
fullest extent permitted by Legal Requirements, any defense Borrower might
otherwise raise or have by the failure to make any tenants parties defendant
to a foreclosure proceeding and to foreclose their rights in any proceeding
instituted by Lender or Deed Trustee.
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(b) Any time after an Event of Default, Deed Trustee at the
request of Lender shall have the power to sell the Mortgaged Property or any
part thereof at public auction, in such manner, at such time and place, upon
such terms and conditions, and upon such public notice as Lender may deem
best for the interest of Lender, or as may be required or permitted by
applicable law, consisting of advertisement in a newspaper of general
circulation in the jurisdiction and for such period as applicable law may
require and at such other times and by such other methods, if any, as may be
required by law to convey the Mortgaged Property in fee simple by Deed
Trustee's deed with special warranty of title to and at the cost of the
purchaser, who shall not be liable to see to the application of the purchase
money. The proceeds or avails of any sale made under or by virtue of this
Section 13.02, together with any other sums which then may be held by Lender
under this Deed of Trust, whether under the provisions of this Section 13.02
or otherwise, shall be applied as follows:
FIRST: To the payment of the third-party costs and expenses
reasonably incurred in connection with any such sale and to
advances, fees and expenses, including, without limitation,
reasonable fees and expenses of Lender's and Deed Trustee's legal
counsel as applicable, and of any judicial proceedings wherein the
same may be made, and of all expenses, liabilities and advances
reasonably made or incurred by Lender or Deed Trustee under this
Deed of Trust, together with interest as provided herein on all
such advances made by Lender, and all Impositions, except any
Impositions or other charges subject to which the Mortgaged
Property shall have been sold;
SECOND: To the payment of the whole amount then due, owing and
unpaid under the Notes for principal and interest thereon, with
interest on such unpaid principal at the Default Rate from the date
of the occurrence of the Event of Default that formed a basis for
such sale until the same is paid;
THIRD: To the payment of any other portion of the Debt required to
be paid by Borrower pursuant to any provision of this Deed of
Trust, the Notes, or any of the other Loan Documents; and
FOURTH: The surplus, if any, to Borrower unless otherwise required
by Legal Requirements.
Lender and any receiver or custodian of the Mortgaged Property or any part
thereof shall be liable to account for only those rents, issues, proceeds and
profits actually received by it.
(c) Lender and Deed Trustee may adjourn from time to time
any sale by it to be made under or by virtue of this Deed of Trust by
announcement at the time and place appointed for such sale or for such
adjourned sale or sales and, except as otherwise provided by any applicable
provision of Legal Requirements, Lender or Deed Trustee without further
notice or publication, may make such sale at the time and place to which the
same shall be so adjourned.
(d) Upon the completion of any sale or sales made by Lender
or Deed Trustee under or by virtue of this Section 13.02, Lender, or any
officer of any court empowered to do so, shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient instrument,
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or good and sufficient instruments, granting, conveying, assigning and
transferring all estate, right, title and interest in and to the property and
rights sold. Lender is hereby irrevocably appointed the true and lawful
attorney-in-fact of Borrower (coupled with an interest), in its name and
stead, to make all necessary conveyances, assignments, transfers and
deliveries of the property and rights so sold and for that purpose Lender
and/or Deed Trustee may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more Persons
with like power, Borrower hereby ratifying and confirming all that its said
attorney-in-fact or such substitute or substitutes shall lawfully do by
virtue hereof. Nevertheless, Borrower, if so requested by Lender, shall
ratify and confirm any such sale or sales by executing and delivering to
Lender, or to such purchaser or purchasers all such instruments as may be
advisable, in the sole judgement of Lender, for such purpose, and as may be
designated in such request. Any such sale or sales made under or by virtue of
this Section 13.02, whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or a judgment or decree of
foreclosure and sale, shall operate to divest all the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of
Borrower in and to the property and rights so sold, and shall, to the fullest
extent permitted under Legal Requirements, be a perpetual bar, both at law
and in equity against Borrower and against any and all Persons claiming or
who may claim the same, or any part thereof, from, through or under Borrower.
(e) In the event of any sale made under or by virtue of
this Section 13.02 (whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or a judg ment or decree of
foreclosure and sale), the entire Debt immediately thereupon shall, anything
in the Loan Documents to the contrary notwithstanding, become due and payable.
(f) Upon any sale made under or by virtue of this Section
13.02 (whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or a judgment or decree of foreclosure and
sale), Lender may bid for and acquire the Mortgaged Property or any part
thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Debt the net sales price after deducting
therefrom the expenses of the sale and the costs of the action.
(g) No recovery of any judgment by Lender and no levy of an
execution under any judgment upon the Mortgaged Property or any part thereof
or upon any other property of Borrower shall release the lien of this Deed of
Trust upon the Mortgaged Property or any part thereof, or any liens, rights,
powers or remedies of Lender hereunder, but such liens, rights, powers and
remedies of Lender shall continue unimpaired until all amounts due under the
Note, this Deed of Trust and the other Loan Documents are paid in full.
Section 13.03 PAYMENT OF DEBT AFTER DEFAULT. If following the
occurrence of any Event of Default, Borrower shall tender payment of an
amount sufficient to satisfy the Debt in whole or in part at any time prior
to a foreclosure sale of the Mortgaged Property, and if at the time of such
tender prepayment of the principal balance of the Notes is not permitted by
the Notes, Borrower shall, in addition to the entire Debt, also pay to Lender
a sum equal to interest which would have
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accrued on the principal balance of the Notes at the interest rate set forth
in the Notes from the date of such tender to the earlier of (a) the
Anticipated Repayment Date or (b) the first day of the period during which
prepayment of the principal balance of the Notes would have been permitted
together with a prepayment consideration equal to the prepayment
consideration which would have been payable as of the first day of the period
during which prepayment would have been permitted. If at the time of such
tender, prepayment of the principal balance of the Notes is permitted, such
tender by Borrower shall be deemed to be a voluntary prepayment of the
principal balance of the Notes, and Borrower shall, in addition to the entire
Debt, also pay to Lender the applicable prepayment consideration specified in
the Notes and this Deed of Trust.
Section 13.04 POSSESSION OF THE MORTGAGED PROPERTY. Upon the
occurrence of any Event of Default hereunder and the acceleration of the Debt
or any portion thereof, Borrower, if an occupant of the Mortgaged Property or
any part thereof, upon demand of Lender, shall immediately surrender
possession of the Mortgaged Property (or the portion thereof so occupied) to
Lender, and if Borrower is permitted to remain in possession, the possession
shall be as a month-to-month tenant of Lender and, on demand, Borrower shall
pay to Lender monthly, in advance, a reasonable rental for the space so
occupied and in default thereof Borrower may be dispossessed. The covenants
herein contained may be enforced by a receiver of the Mortgaged Property or
any part thereof. Nothing in this Section 13.04 shall be deemed to be a
waiver of the provisions of this Deed of Trust making the Transfer of the
Mortgaged Property or any part thereof without Lender's prior written consent
an Event of Default.
Section 13.05 INTEREST AFTER DEFAULT. If any amount due under the
Notes, this Deed of Trust or any of the other Loan Documents is not paid
within any applicable notice and grace period after same is due, whether such
date is the stated due date, any accelerated due date or any other date or at
any other time specified under any of the terms hereof or thereof, then, in
such event, Borrower shall pay interest on the amount not so paid from and
after the date on which such amount first becomes due at the Default Rate;
and such interest shall be due and payable at such rate until the earlier of
the cure of all Events of Default or the payment of the entire amount due to
Lender, whether or not any action shall have been taken or proceeding
commenced to recover the same or to foreclose this Deed of Trust. All unpaid
and accrued interest shall be secured by this Deed of Trust as part of the
Debt. Nothing in this Section 13.05 or in any other provision of this Deed of
Trust shall constitute an extension of the time for payment of the Debt.
Section 13.06 BORROWER'S ACTIONS AFTER DEFAULT. After the happening
of any Event of Default and immediately upon the commencement of any action,
suit or other legal proceedings by Lender to obtain judgment for the Debt, or
of any other nature in aid of the enforcement of the Loan Documents, Borrower
will (a) after receipt of notice of the institution of any such action, waive
the issuance and service of process and enter its voluntary appearance in
such action, suit or proceeding, and (b) if required by Lender, consent to
the appointment of a receiver or receivers of the Mortgaged Property or any
part thereof and of all the earnings, revenues, rents, issues, profits and
income thereof.
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Section 13.07 CONTROL BY LENDER AFTER DEFAULT. Notwithstanding the
appointment of any custodian, receiver, liquidator or trustee of Borrower, or of
any of its property, or of the Mortgaged Property or any part thereof, to the
extent permitted by Legal Requirements, Lender shall be entitled to obtain
possession and control of all property now and hereafter covered by this Deed of
Trust and the Assignment in accordance with the terms hereof.
Section 13.08 RIGHT TO CURE DEFAULTS.
(a) Upon the occurrence of any Event of Default, Lender or its
agents may, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any obligation hereunder, make
or do the same in such manner and to such extent as Lender may deem necessary to
protect the security hereof. Lender and its agents are authorized to enter upon
the Mortgaged Property or any part thereof for such purposes, or appear in,
defend, or bring any action or proceedings to protect Lender's interest in the
Mortgaged Property or any part thereof or to foreclose this Deed of Trust or
collect the Debt, and the cost and expense thereof (including reasonable
attorneys' fees to the extent permitted by law), with interest as provided in
this Section 13.08, shall constitute a portion of the Debt and shall be
immediately due and payable to Lender upon demand. All such costs and expenses
incurred by Lender or its agents in remedying such Event of Default or in
appearing in, defending, or bringing any such action or proceeding shall bear
interest at the Default Rate, for the period from the date so demanded to the
date of payment to Lender. All such costs and expenses incurred by Lender or its
agents together with interest thereon calculated at the above rate shall be
deemed to constitute a portion of the Debt and be secured by this Deed of Trust.
(b) If Lender makes any payment or advance that Lender is
authorized by this Deed of Trust to make in the place and stead of Borrower (i)
relating to the Impositions or tax liens asserted against the Mortgaged
Property, Lender may do so in good faith according to any bill, statement or
estimate procured from the appropriate public office without inquiry into the
accuracy of the bill, statement or estimate or into the validity of any of the
Impositions or the tax liens or claims thereof; (ii) relating to any adverse
title, lien, claim of lien, encumbrance, claim or charge; or (iii) relating to
any other purpose authorized by this Deed of Trust but not enumerated in this
Section 13.08, Lender may do so whenever, in its reasonable judgment and
discretion, the payment or advance seems necessary to protect the Mortgaged
Property and the full security interest intended to be created by this Deed of
Trust. In connection with any payment or advance made pursuant to this Section
13.08, Lender has the option and is authorized, but in no event shall be
obligated, to obtain a continuation report of title prepared by a title
insurance company. The payments and the advances made by Lender pursuant to this
Section 13.08 and the cost and expenses of said title report will be due and
payable by Borrower on demand, together with interest at the Default Rate, and
will be secured by this Deed of Trust.
Section 13.09 LATE PAYMENT CHARGE. If any portion of the Debt is not
paid in full within ten (10) days after the date on which it is due and payable
hereunder, Borrower shall pay to Lender an amount equal to five percent (5%) of
such unpaid portion of the Debt ("LATE CHARGE") to defray the expense incurred
by Lender in handling and processing such delinquent payment, and such amount
shall constitute a part of the Debt.
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Section 13.10 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender shall
have the right from time to time to take action to recover any sum or sums
which constitute a part of the Debt as the same become due and payable
hereunder (after the expiration of any grace period or the giving of any
notice herein provided, if any), without regard to whether or not the balance
of the Debt shall be due, and without prejudice to the right of Lender
thereafter to bring an action of foreclosure, or any other action, for a
default or defaults by Borrower existing at the time such earlier action was
commenced.
Section 13.11 MARSHALLING AND OTHER MATTERS. Borrower hereby waives, to
the fullest extent permitted by law, the benefit of all appraisement, valuation,
stay, extension, reinstatement, redemption (both equitable and statutory) and
homestead laws now or hereafter in force and all rights of marshalling in the
event of any sale hereunder of the Mortgaged Property or any part thereof or any
interest therein. Nothing herein or in any other Loan Document shall be
construed as requiring Lender to resort to any particular Property for the
satisfaction of the Debt in preference or priority to any other Property but
Lender may seek satisfaction out of all the Properties or any part thereof in
its absolute discretion. Further, Borrower hereby expressly waives any and all
rights of redemption from sale under any order or decree of foreclosure of this
Deed of Trust on behalf of Borrower, whether equitable or statutory and on
behalf of each and every Person acquiring any interest in or title to the
Mortgaged Property or any part thereof subsequent to the date of this Deed of
Trust and on behalf of all Persons to the fullest extent permitted by applicable
law.
Section 13.12 TAX REDUCTION PROCEEDINGS. After an Event of Default,
Borrower shall be deemed to have appointed Lender as its attorney-in-fact to
seek a reduction or reductions in the assessed valuation of the Mortgaged
Property for real property tax purposes or for any other purpose and to
prosecute any action or proceeding in connection therewith. This power, being
coupled with an interest, shall be irrevocable for so long as any part of the
Debt remains unpaid and any Event of Default shall be continuing.
Section 13.13 GENERAL PROVISIONS REGARDING REMEDIES.
(a) RIGHT TO TERMINATE PROCEEDINGS. Lender or Deed Trustee may
terminate or rescind any proceeding or other action brought in connection with
its exercise of the remedies provided in Section 13.02 at any time before the
conclusion thereof, as determined in Lender's sole discretion and without
prejudice to Lender.
(b) NO WAIVER OR RELEASE. The failure of Lender or Deed
Trustee to exercise any right, remedy or option provided in the Loan Documents
shall not be deemed a waiver of such right, remedy or option or of any covenant
or obligation contained in the Loan Documents. No acceptance by Lender of any
payment after the occurrence of an Event of Default and no payment by Lender of
any payment or obligation for which Borrower is liable hereunder shall be deemed
to waive or cure any Event of Default. No sale of all or any portion of the
Mortgaged Property, no forbearance on the part of Lender, and no extension of
time for the payment of the whole or any portion of the Debt or any other
indulgence given by Lender to Borrower or any other Person, shall operate to
release or in any manner affect the interest of Lender in the Mortgaged Property
or the liability of Borrower to pay the Debt. No waiver by Lender shall be
effective unless it is in writing and then only to the extent specifically
stated.
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(c) NO IMPAIRMENT; NO RELEASES. The interests and rights of
Lender under the Loan Documents shall not be impaired by any indulgence,
including (i) any renewal, extension or modification which Lender may grant
with respect to any of the Debt; (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution which Lender may grant with
respect to the Mortgaged Property or any portion thereof; or (iii) any
release or indulgence granted to any maker, endorser, guarantor or surety of
any of the Debt.
(d) EFFECT ON JUDGMENT. No recovery of any judgment by Lender
and no levy of an execution under any judgment upon any Mortgaged Property or
any portion thereof shall affect in any manner or to any extent the lien of the
other Security Instruments upon the remaining Properties or any portion thereof,
or any rights, powers or remedies of Lender hereunder or thereunder. Such lien,
rights, powers and remedies of Lender shall continue unimpaired as before.
ARTICLE XIV
COMPLIANCE WITH REQUIREMENTS
Section 14.01 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Borrower shall promptly comply with all present and future
Legal Requirements, foreseen and unforeseen, ordinary and extraordinary, whether
requiring structural or nonstructural repairs or alterations including, without
limitation, all zoning, subdivision, building, safety and environmental
protection, land use and development Legal Requirements, all Legal Requirements
which may be applicable to the curbs adjoining the Mortgaged Property or to the
use or manner of use thereof, and all rent control, rent stabilization and all
other similar Legal Requirements relating to rents charged and/or collected in
connection with the Leases. Borrower represents and warrants that the Mortgaged
Property is in compliance in all material respects with all Legal Requirements
as of the date hereof, no notes or notices of violations of any Legal
Requirements have been entered or received by Borrower.
(b) Borrower shall have the right to contest by appropriate
legal proceedings diligently conducted in good faith, without cost or expense to
Lender or Deed Trustee, the validity or application of any Legal Requirement and
to suspend compliance therewith if permitted under applicable Legal
Requirements, provided (i) failure to comply therewith may not subject Lender or
Deed Trustee to any civil or criminal liability, (ii) prior to and during such
contest, Borrower shall furnish to Lender security reasonably satisfactory to
Lender, in its discretion, against loss or injury by reason of such contest or
non-compliance with such Legal Requirement, (iii) no Default or Event of Default
shall exist during such proceedings and such contest shall not otherwise violate
any of the provisions of any of the Loan Documents, (iv) such contest shall not,
(unless Borrower shall comply with the provisions of clause (ii) of this Section
14.01(b)) subject the Mortgaged Property to any lien or encumbrance the
enforcement of which is not suspended or otherwise affect the priority of the
lien of this Deed of Trust; (v) such contest shall not affect the ownership, use
or occupancy of the Mortgaged Property; (vi) the Mortgaged Property or any part
thereof or any interest therein shall not be in any danger of being sold,
forfeited or lost by reason of such contest by Borrower; (vii) Borrower shall
give Lender prompt notice of the commencement of such proceedings and, upon
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request by Lender, notice of the status of such proceedings and/or
confirmation of the continuing satisfaction of the conditions set forth in
clauses (i)-(vi) of this Section 14.01(b); and (viii) upon a final
determination of such proceeding, Borrower shall take all steps necessary to
comply with any requirements arising therefrom.
Section 14.02 COMPLIANCE WITH RECORDED DOCUMENTS; NO FUTURE GRANTS.
Borrower shall promptly perform and observe or cause to be performed and
observed, all of the terms, covenants and conditions of all Property Agreements
and all things necessary to preserve intact and unimpaired any and all
appurtenances or other interests or rights affecting the Mortgaged Property
except where such failure to comply which would not have a Material Adverse
Effect.
ARTICLE XV
DEFEASANCE; RELEASE
Section 15.01 DEFEASANCE; RELEASE.
(a) Except as set forth in this Section 15.01, no defeasance
of the Debt may be made by or on behalf of Borrower in whole or in part.
(b) Borrower may defease the Loans at any time subsequent to
the earlier to occur of (x) the second (2nd) anniversary of a Securitization or
(y) the fourth (4th) anniversary of the Closing Date in whole or, from time to
time, an individual Loan, as of any Payment Date, in accordance with the
following provisions:
(i) Lender shall have received from
Borrower, not less than thirty (30) days', nor more than ninety (90) days',
prior written notice specifying the date proposed for such defeasance and the
amount which is to be defeased, which proposed date shall be a Payment Date.
(ii) Borrower shall also pay to Lender
all interest due through and including the last day prior to the Payment Date
in which such defeasance is being made, together with any and all other
amounts due and owing pursuant to the terms of the Notes, this Deed of Trust
or the other Loan Documents.
(iii) No Event of Default shall have occurred
and be continuing.
(iv) Borrower shall (A) pay the Defeasance
Deposit and (B) deliver to Lender (1) a security agreement, in form and
substance reasonably satisfactory to Lender, creating a first priority lien
on the Defeasance Deposit and the Federal Obligations purchased on behalf of
Borrower with the Defeasance Deposit in accordance with the terms of this
Section 15.01(b)(iv) (the "SECURITY AGREEMENT"); (2) deliver to Lender an
Officer's Certificate certifying that the requirements set forth in this
Section 15.01(b)(iv) have been satisfied; (3) deliver to Lender an opinion of
counsel for Borrower in form and substance reasonably satisfactory to Lender
stating, among other things, that Lender has a perfected security interest in
the Defeasance Deposit and a perfected security interest in the Federal
Obligations purchased by Lender on behalf of Borrower; (4) deliver to Lender
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such other certificates, documents or instruments as Lender may reasonably
request. Borrower hereby irrevocably appoints Lender as its agent and
attorney-in-fact, coupled with an interest, for the purpose of using the
Defeasance Deposit to purchase Federal Obligations which provide Scheduled
Defeasance Payments, and Lender shall, upon receipt of the Defeasance Deposit,
purchase such Federal Obligations on behalf of Borrower. Borrower, pursuant to
the Security Agreement or other appropriate document, shall authorize and direct
that the payments received from the Federal Obligations shall be made directly
to Lender and applied to satisfy the obligations of Borrower under the Note
being defeased.
(v) If required by Lender, the Rating
Agencies shall have confirmed in writing that any rating issued by the Rating
Agencies in connection with the Securitization will not, as a result of the
amount and type of the Defeasance Deposit and the structure of the entity
holding is the Defeasance Deposit, be downgraded, from the then current
ratings thereof, qualified or withdrawn.
(vi) In the event that Borrower desires to
defease less than all of the Loans, Borrower shall have included in the
notice required to be given pursuant to clause (i) of this Section 15.01(b) a
statement designating to which Property Borrower wishes to have such
Defeasance Deposit allocated.
(vii) Borrower shall have delivered to Lender
an opinion of a certified public accountant acceptable to Lender to the
effect that the Defeasance Deposit is adequate to provide payment on or prior
to, but as close as possible to, all successive scheduled payment dates after
the date of defeasance upon which interest and principal payments are
required under the Note or Notes being defeased (including the amount due on
the Anticipated Repayment Date) and in amounts equal to the scheduled
payments due on such dates under such Note or Notes.
Section 15.02 RELEASE OF PROPERTY. If (A) Borrower defeases all or a
portion of the Loans pursuant to Section 15.01(b) hereof to facilitate the
disposition of the Property or in connection with any other customary
transaction within the meaning of Treas. Reg. 1.860 G-(2)(a)(8)(iii), Lender
shall, promptly upon satisfaction of all the following terms and conditions
execute, acknowledge and deliver to Borrower a release of this Deed of Trust
(a "RELEASE") in recordable form with respect to the Mortgaged Property:
(a) If such defeasance is a defeasance in part, but not in
whole, Lender shall have received on the date proposed for such defeasance an
amount equal to the sum of (i) one hundred percent (100%) of the Allocated Loan
Amount of the Property being defeased, plus (ii) twenty-five percent (25%) of
the Initial Allocated Loan Amount of the Property being defeased (the "RELEASE
PRICE").
(b) In the event of a partial defeasance pursuant to Section
15.01(b) hereof, Lender shall have received from Borrower evidence in form and
substance reasonably satisfactory to Lender that the pro forma Aggregate Debt
Service Coverage of the Properties which will continue to secure the Debt for
the four fiscal quarter period immediately prior to the Release was at least
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equal to the greater of the Required Debt Service Coverage and the Aggregate
Debt Service Coverage for the four fiscal quarter period immediately prior to
effecting such Release, accompanied by an Officer's Certificate stating that
the statements, calculations and information comprising such evidence are
true, correct and complete in all respects.
(c) Borrower shall, at its sole expense, prepare any and
all documents and instruments necessary to effect the Release, all of which
shall be subject to the reasonable approval of Lender, and Borrower shall pay
all costs reasonably incurred by Lender (including, but not limited to,
reasonable attorneys' fees and disbursements, title search costs or
endorsement premiums) in connection with the review, execution and delivery
of the Release.
(d) No Event of Default has occurred and is continuing.
(e) In connection with a partial defeasance, title to the
Property being released shall be transferred to a Person other than Borrower.
(f) In connection with a total defeasance of the Loans,
upon the release of the Property in accordance with this Section 15.02,
Borrower shall, at Lender's request, assign all its obligations and rights
under the Notes, together with the pledged Defeasance Deposit, to a successor
entity designated by Borrower and approved by Lender in its sole discretion.
Such successor entity shall execute an assumption agreement in form and
substance satisfactory to Lender in its sole discretion pursuant to which it
shall assume Borrower's obligations under the Notes and the other Loan
Documents. In connection with such assignment and assumption, Borrower shall
(x) deliver to Lender an opinion of counsel in form and substance and
delivered by counsel satisfactory to Lender in its sole discretion stating,
among other things, that such assumption agreement is enforceable against
Borrower and such successor entity in accordance with its terms and that the
Notes and the other Loan Documents, as so assumed, are enforceable against
such successor entity in accordance with their respective terms, and (y) pay
all costs and expenses incurred by Lender or its agents in connection with
such assignment and assumption (including, without limitation, the review of
the proposed transferee and the preparation of the assumption agreement and
related documentation).
Section 15.03 SUBSTITUTION OF PROPERTY. Borrower may obtain the
release from this Deed of Trust and the other Loan Documents of an individual
Property upon substitution of another commercial retail property as
substitute collateral for the Debt and upon satisfaction of each of the
following conditions precedent:
(a) No Event of Default has occurred and is continuing.
(b) The Property that will be substituted (the "SUBSTITUTE
PROPERTY") shall be acceptable to Lender in all respects, including without
limitation, the following:
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(i) at least sixty (60) days prior to the
proposed date of substitution, Lender shall have obtained appraisals in form
and substance satisfactory to Lender and prepared by an appraiser selected by
Lender indicating that the fair market value for the proposed Substitute
Property is at least equal to the fair market value of the individual
Property proposed to be released, as of the date of such appraisal;
(ii) Lender shall have obtained a Phase I
environmental site assessment for the Substitute Property, and, if
recommended by such Phase I report, a Phase II environmental report, each in
form and substance reasonably satisfactory to Lender and prepared by a
consultant selected by Lender stating that the Substitute Property materially
complies with all environmental laws;
(iii) Lender shall have obtained a property
assessment report for the Substitute Property, in form and substance
reasonably satisfactory to Lender and prepared by an engineer selected by
Lender stating that the Substitute Property materially complies with all
applicable building laws and does not require performance of deferred
maintenance or if remedial steps are required to effect such compliance or
such deferred maintenance, identifying such steps and projecting the cost
thereof, in which case Borrower shall be required to deposit into escrow with
Lender an amount equal to 125% of such projected costs;
(iv) the Substitute Property shall be a
commercial retail project which meets all underwriting criteria of the
Lender; and
(v) The Substitute Property shall have a
Debt Service Coverage of at least the Required Debt Service Coverage of the
Property being released and the Aggregate Debt Service Coverage of all the
Properties, after giving effect to the substitution and release contemplated
hereby, shall not be less than the greater of (i) the Required Debt Service
Coverage and (ii) the Aggregate Debt Service Coverage of the original
Properties, all determined for the four (4) fiscal quarter period prior to
the release.
(c) Borrower shall provide Lender or Lender's counsel with
the following:
(i) a pro forma endorsement to the title
policies or a commitment for title insurance with respect to the Substitute
Property, in form and substance and underwritten by a title insurance company
reasonably satisfactory to Lender and Lender's counsel;
(ii) four surveys of the Substitute
Property, in form and substance satisfactory to Lender and Lender's counsel;
(iii) UCC, tax lien, litigation and
bankruptcy searches on the Borrower and the previous owner of the Substitute
Property; and
(iv) evidence of material compliance with
zoning and other laws.
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(d) Borrower shall execute and deliver such amendments to
the Loan Documents (including revisions to escrow and reserve requirements)
and additional documents and instruments as required by Lender to document
the substitution and to grant Lender a first priority, perfected lien on and
security interest in such Substitute Property and all related rents, personal
property, reserves and escrows on the same terms and conditions as the liens
and security interests granted to Lender in the Property on the date hereof.
(e) Borrower shall deposit with Lender any deposits required
for third party reports, and shall pay Lender such processing fees as are
reasonably required by Lender in connection with the evaluation of the
substitution.
(f) Borrower shall deliver to Lender all leases, rent rolls,
evidence of hazard and liability insurance, and other items of due diligence
with respect to the Substitute Property as Lender shall reasonably require.
(g) Borrower shall pay Lender's fees and expenses incurred in
evaluating and documenting the substitution of collateral and the Substitute
Property, including, without limitation, costs of all reports referred to in
subparagraph (b) above, attorneys' fees and filing fees.
(h) Borrower shall deliver to Lender an opinion of counsel to
Borrower in the form originally delivered in connection with the Loan covering
the Substitute Property, and any new documents or instruments or amendments to
existing documents or instruments executed in connection therewith, and
including after Securitization an opinion that the substitution will not cause
(A) any adverse tax consequences to the REMIC or any holders of any
Mortgage-Backed Pass-through Securities, (B) this Deed of Trust, as supplemented
to account for the substitution, to fail to be a Qualifying Security Instrument
under applicable federal law relating to REMIC's or (C) result in a taxation of
the income of the Loan to the REMIC or cause a loss of REMIC status.
(i) The person transferring the Substitute Property to the
Borrower (A) will be solvent and (B) shall be making such transfer on an arm's
length basis and for fair consideration, and Borrower and such person shall
deliver certifications and evidence to such effect and such other certifications
as Lender shall reasonably require to assure itself that the substitution does
not constitute a fraudulent conveyance on the part of any person (assuming such
person was not solvent at the time of substitution).
(j) The organizational documents of the Borrower shall, if
required, be modified to permit the ownership and operation of the Substitute
Property and shall be in form and substance reasonably acceptable to Lender.
(k) Borrower shall transfer title to the Property to be
released to a person other than Borrower.
(l) Each Rating Agency shall have delivered written
confirmation that any rating issued by such Rating Agency in connection with the
securitization of any securities will not, as a
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result of the proposed release and substitution of the Substitute Property, be
downgraded from the then current ratings thereof, qualified or withdrawn.
(m) Borrower shall comply with any terms and conditions as the
Rating Agencies shall require in connection with such substitution.
(n) Any other items or actions reasonably requested by
Lender or Lender's counsel.
Notwithstanding the foregoing, Borrower shall not have the right to
request the Borrower to substitute more than one (1) Substitute Property.
ARTICLE XVI
ENVIRONMENTAL COMPLIANCE
Section 16.01 COVENANTS, REPRESENTATIONS AND WARRANTIES.
(a) Borrower has not, at any time, and, to Borrower's best
knowledge after due inquiry and investigation, except as set forth in the
Environmental Report, no other Person has at any time, handled, buried,
stored, retained, refined, transported, processed, manufactured, generated,
produced, spilled, allowed to seep, leak, escape or leach, or pumped, poured,
emitted, emptied, discharged, injected, dumped, transferred or otherwise
disposed of or dealt with Hazardous Materials on, to or from the Premises or
any other real property owned and/or occupied by Borrower except in
compliance with all applicable Legal Requirements, and Borrower does not
intend to and shall not use the Mortgaged Property or any part thereof or any
such other real property for the purpose of handling, burying, storing,
retaining, refining, transporting, processing, manufacturing, generating,
producing, spilling, seeping, leaking, escaping, leaching, pumping, pouring,
emitting, emptying, discharging, injecting, dumping, transferring or
otherwise disposing of or dealing with Hazardous Materials, except for use
and storage for use of heating oil, cleaning fluids, pesticides and other
substances customarily used in the operation of properties that are being
used for the same purposes as the Mortgaged Property is presently being used,
provided such use and/or storage for use is in compliance with the
requirements hereof and the other Loan Documents and does not give rise to
liability under applicable Legal Requirements or Environmental Statutes or be
the basis for a lien against the Mortgaged Property or any part thereof. In
addition, without limitation to the foregoing provisions, Borrower represents
and warrants that, to the best of its knowledge, after due inquiry and
investigation, except as previously disclosed in writing to Lender or as
contained in the Environmental Reports, there is no asbestos in, on, over, or
under all or any portion of the fire-proofing or any other portion of the
Mortgaged Property.
(b) Borrower, after due inquiry and investigation, knows of
no seepage, leak, escape, leach, discharge, injection, release, emission,
spill, pumping, pouring, emptying or dumping of Hazardous Materials into
waters on, under or adjacent to the Mortgaged Property or any part thereof or
any other real property owned and/or occupied by Borrower, or onto lands from
which such Hazardous Materials might seep, flow or drain into such waters,
except as disclosed in the Environmental Report.
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(c) Borrower shall not permit any Hazardous Materials to be
handled, buried, stored, retained, refined, transported, processed,
manufactured, generated, produced, spilled, allowed to seep, leak, escape or
leach, or to be pumped, poured, emitted, emptied, discharged, injected,
dumped, transferred or otherwise disposed of or dealt with on, under, to or
from the Mortgaged Property or any portion thereof at any time, except for
use and storage for use of heating oil, ordinary cleaning fluids, pesticides
and other substances customarily used in the operation of properties that are
being used for the same purposes as the Mortgaged Property is presently being
used, provided such use and/or storage for use is in compliance with the
requirements hereof and the other Loan Documents and does not give rise to
liability under applicable Legal Requirements or be the basis for a lien
against the Mortgaged Property or any part thereof.
(d) Borrower represents and warrants that no actions, suits,
or proceedings have been commenced, or are pending, or to the best knowledge of
Borrower, are threatened against Borrower with respect to the use, manufacture,
storage, treatment, transportation, or processing of Hazardous Materials with
respect to the Mortgaged Property or any part thereof. Borrower has received no
notice of, and, except as disclosed in the Environmental Report, after due
inquiry, has no knowledge of any fact, condition, occurrence or circumstance
which with notice or passage of time or both would give rise to a claim under or
pursuant to any Environmental Statute pertaining to Hazardous Materials on, in,
under or originating from the Mortgaged Property or any part thereof or any
other real property owned or occupied by Borrower or arising out of the conduct
of Borrower, including, without limitation, pursuant to any Environmental
Statute.
(e) Borrower has not waived any Person's liability with regard
to the Hazardous Materials in, on, under or around the Mortgaged Property.
(f) In the event that there shall be filed a lien against the
Mortgaged Property or any part thereof pursuant to any Environmental Statute
pertaining to Hazardous Materials, Borrower shall, within sixty (60) days or, in
the event that the applicable Governmental Authority has commenced steps to
cause the Premises or any part thereof to be sold pursuant to the lien, within
fifteen (15) days, from the date that Borrower receives notice of such lien,
either (i) pay the claim and remove the lien from the Mortgaged Property, or
(ii) furnish (A) a bond satisfactory to Lender in the amount of the claim out of
which the lien arises, (B) a cash deposit in the amount of the claim out of
which the lien arises, or (C) other security reasonably satisfactory to Lender
in an amount sufficient to discharge the claim out of which the lien arises.
(g) Borrower represents and warrants that (i) except as
disclosed in the Environmental Report, Borrower has no knowledge of any
violation of any Environmental Statute or any Environmental Problem in
connection with the Mortgaged Property, nor has Borrower been requested or
required by any Governmental Authority to perform any remedial activity or other
responsive action in connection with any Environmental Problem and (ii) neither
the Mortgaged Property nor any other property owned by Borrower is included or,
to Borrower's best knowledge, after due inquiry and investigation, proposed for
inclusion on the National Priorities List issued pursuant to CERCLA by the
United States Environmental Protection Agency (the "EPA") or on the
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inventory of other potential "Problem" sites issued by the EPA and has not
otherwise been identified by the EPA as a potential CERCLA site or included or,
to Borrower's knowledge, after due inquiry and investigation, proposed for
inclusion on any list or inventory issued pursuant to any other Environmental
Statute, if any, or issued by any other Governmental Authority. Borrower
covenants that Borrower will comply with all Environmental Statutes affecting or
imposed upon Borrower or the Mortgaged Property.
(h) Borrower covenants that it shall promptly notify Lender of
the presence and/or release of such Hazardous Material and of any request for
information or any inspection of the Mortgaged Property or any part thereof by
any Governmental Authority with respect to any Hazardous Materials and provide
Lender with copies of such request and any response to any such request or
inspection. Borrower covenants that it shall, in compliance with applicable
Legal Requirements, conduct and complete all investigations, studies, sampling
and testing (and promptly shall provide Lender with copies of any such studies
and the results of any such test) and all remedial, removal and other actions
necessary to clean up and remove all Hazardous Materials in, on, over, under,
from or affecting the Mortgaged Property or any part thereof in accordance with
all such Legal Requirements applicable to the Mortgaged Property or any part
thereof to the satisfaction of Lender.
(i) Following the occurrence of an Event of Default
hereunder, and without regard to whether Lender shall have taken possession
of the Mortgaged Property or a receiver has been requested or appointed or
any other right or remedy of Lender has or may be exercised hereunder or
under any other Loan Document, Lender shall have the right (but no
obligation) to conduct such investigations, studies, sampling and/or testing
of the Mortgaged Property or any part thereof as Lender may, in its
discretion, determine to conduct, relative to Hazardous Materials. All costs
and expenses incurred in connection therewith including, without limitation,
consultants' fees and disbursements and laboratory fees, shall constitute a
part of the Debt and shall, upon demand by Lender, be immediately due and
payable and shall bear interest at the Default Rate from the date so demanded
by Lender until reimbursed.
(j) Borrower represents and warrants that, to the best of
its knowledge, except as disclosed in the Environmental Reports, all paint
and painted surfaces existing within the interior or on the exterior of the
Mortgaged Property do not contain lead or are maintained in a condition that
prevents exposure of young children to lead-based paint, as of the date
hereof, and that the current inspections, operation, and maintenance program
at the Mortgaged Property with respect to lead based paint is consistent with
FNMA guidelines and sufficient to ensure that all painted surfaces within the
Mortgaged Property shall be maintained in a condition that prevents exposure
of residents to lead-based paint. To Borrower's knowledge, there have been no
claims for adverse health effects from exposure on the Mortgaged Property to
lead-based paint or requests for the investigation, assessment or removal of
lead-based paint at the Mortgaged Property.
(k) Borrower represents and warrants that, to the
Borrower's knowledge, except in accordance with all applicable Environmental
Statutes and as disclosed in the Environmental Report, (i) no underground
treatment or storage tanks or pumps or water, gas, or oil wells are or have
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been located on the Mortgaged Property, (ii) no PCBs or transformers,
capacitors, ballasts or other equipment that contain dielectric fluid
containing PCBs are located on the Mortgaged Property, (iii) no insulating
material containing urea formaldehyde is located on the Mortgaged Property
and (iv) no asbestos-containing material is located on the Mortgaged Property.
Section 16.02 ENVIRONMENTAL INDEMNIFICATION. Borrower shall defend,
indemnify and hold harmless Lender and Deed Trustee, and their successors and
assigns, and their employees, agents, officers and directors from and against
any claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature, known or unknown, contingent or
otherwise, whether incurred or imposed within or outside the judicial process,
including, without limitation, reasonable attorneys' and consultants' fees and
disbursements and investigations and laboratory fees arising out of, or in any
way related to any Environmental Problem, including without limitation:
(a) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release or threat of release of any Hazardous
Materials in, on, over, under, from or affecting the Mortgaged Property or
any part thereof whether or not disclosed by the Environmental Report
relative to the Mortgaged Property;
(b) any personal injury (including wrongful death, disease
or other health condition related to or caused by, in whole or in part, any
Hazardous Materials) or property damage (real or personal) arising out of or
related to any Hazardous Materials in, on, over, under, from or affecting the
Mortgaged Property or any part thereof whether or not disclosed by the
Environmental Report relative to the Mortgaged Property;
(c) any action, suit or proceeding brought or threatened,
settlement reached, or order of any Governmental Authority relating to such
Hazardous Material whether or not disclosed by the Environmental Report
relative to the Mortgaged Property; and/or
(d) any violation of the provisions, covenants,
representations or warranties of Section 16.01 hereof or of any Legal
Requirement which is based on or in any way related to any Hazardous
Materials in, on, over, under, from or affecting the Mortgaged Property or
any part thereof including, without limitation, the cost of any work
performed and materials furnished in order to comply therewith whether or not
disclosed by the Environmental Report relative to the Mortgaged Property.
Notwithstanding the foregoing provisions of this Section 16.02 to the
contrary, Borrower shall have no obligation to indemnify Lender for liabilities,
claims, damages, penalties, causes of action, costs and expenses relative to the
foregoing which result directly from Lender's willful misconduct or gross
negligence. Any amounts payable to Lender by reason of the application of this
Section 16.02 shall be secured by this Deed of Trust and shall, upon demand by
Lender, become immediately due and payable and shall bear interest at the
Default Rate from the date so demanded by Lender until paid.
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This indemnification shall survive the termination of this Deed of
Trust whether by repayment of the Debt, foreclosure or deed in lieu thereof,
assignment, or otherwise. The indemnity provided for in this Section 16.02
shall not be included in any exculpation of Borrower or its principals from
personal liability provided for in this Deed of Trust or in any of the other
Loan Documents. Nothing in this Section 16.02 shall be deemed to deprive
Lender of any rights or remedies otherwise available to Lender, including,
without limitation, those rights and remedies provided elsewhere in this Deed
of Trust or the other Loan Documents.
ARTICLE XVII
ASSIGNMENTS
Section 17.01 PARTICIPATIONS AND ASSIGNMENTS. Lender shall have the
right to assign this Deed of Trust and/or any of the Loan Documents, and to
transfer, assign or sell participations and subparticipations (including blind
or undisclosed participations and subparticipations) in the Loan Documents and
the obligations hereunder to any Person; PROVIDED, HOWEVER, that no such
participation shall increase, decrease or otherwise affect either Borrower's or
Lender's obligations under this Deed of Trust or the other Loan Documents.
ARTICLE XVIII
MISCELLANEOUS
Section 18.01 RIGHT OF ENTRY. Lender and its agents shall have the
right to enter and inspect the Mortgaged Property or any part thereof at all
reasonable times, and, except in the event of an emergency, upon reasonable
notice and to inspect Borrower's books and records and to make abstracts and
reproductions thereof.
Section 18.02 CUMULATIVE RIGHTS. The rights of Lender under this Deed
of Trust shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Lender shall be construed as an
election to proceed under any one provision herein to the exclusion of any other
provision. Lender shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled, subject to the terms of this Deed of Trust,
to every right and remedy now or hereafter afforded by law.
Section 18.03 LIABILITY. If Borrower consists of more than one Person,
the obligations and liabilities of each such Person hereunder shall be joint and
several.
Section 18.04 EXHIBITS INCORPORATED. The information set forth on the
cover hereof, and the Exhibits annexed hereto, are hereby incorporated herein as
a part of this Deed of Trust with the same effect as if set forth in the body
hereof.
Section 18.05 SEVERABLE PROVISIONS. If any term, covenant or condition
of the Loan Documents including, without limitation, the Notes or this Deed of
Trust, is held to be invalid, illegal or unenforceable in any respect, such Loan
Document shall be construed without such provision.
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Section 18.06 DUPLICATE ORIGINALS. This Deed of Trust may be executed
in any number of duplicate originals and each such duplicate original shall be
deemed to constitute but one and the same instrument.
Section 18.07 NO ORAL CHANGE. The terms of this Deed of Trust,
together with the terms of the Notes and the other Loan Documents constitute
the entire understanding and agreement of the parties hereto and supersede
all prior agreements, understandings and negotiations between Borrower and
Lender with respect to the Loans. This Deed of Trust, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged
or terminated orally or by any act on the part of Borrower or Lender, but
only by an agreement in writing signed by the party against whom enforcement
of any modification, amendment, waiver, extension, change, discharge or
termination is sought.
Section 18.08 WAIVER OF COUNTERCLAIM, ETC. BORROWER HEREBY WAIVES
THE RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN
ANY ACTION OR PROCEEDING BROUGHT AGAINST IT BY LENDER OR ITS AGENTS, AND
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY
HERETO AGAINST THE OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE PERMITTED TO
ASSERT HEREUNDER OR WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS, AGAINST
BORROWER, OR IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED
WITH THIS DEED OF TRUST OR THE DEBT.
Section 18.09 HEADINGS; CONSTRUCTION OF DOCUMENTS; ETC. The table of
contents, headings and captions of various paragraphs of this Deed of Trust are
for convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof. Borrower
acknowledges that it was represented by competent counsel in connection with the
negotiation and drafting of this Deed of Trust and the other Loan Documents and
that neither this Deed of Trust nor the other Loan Documents shall be subject to
the principle of construing the meaning against the Person who drafted same.
Section 18.10 SOLE DISCRETION OF LENDER. Whenever Lender exercises any
right given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove or to
decide that arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Lender and shall be final and conclusive, except as
may be otherwise specifically provided herein.
Section 18.11 WAIVER OF NOTICE. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender except with respect to matters for
which this Deed of Trust specifically and expressly provides for the giving of
notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice.
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Section 18.12 COVENANTS RUN WITH THE LAND. All of the grants,
covenants, terms, provisions and conditions herein shall run with the
Premises, shall be binding upon Borrower and shall inure to the benefit of
Lender, subsequent holders of this Deed of Trust and their successors and
assigns. Without limitation to any provision hereof, the term "BORROWER"
shall include and refer to the Borrower named herein, any subsequent owner of
the Mortgaged Property, and its respective heirs, executors, legal
representatives, successors and assigns. The representations, warranties and
agreements contained in this Deed of Trust and the other Loan Documents are
intended solely for the benefit of the parties hereto, shall confer no rights
hereunder, whether legal or equitable, in any other Person and no other
Person shall be entitled to rely thereon.
Section 18.13 GOVERNING LAW; JURISDICTION. (A) THIS DEED OF TRUST
WAS NEGOTIATED IN THE STATE OF ILLINOIS, AND MADE BY BORROWER AND ACCEPTED BY
LENDER IN THE STATE OF ILLINOIS, AND THE PROCEEDS OF THE NOTES SECURED HEREBY
WERE DISBURSED IN THE STATE OF ILLINOIS, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS DEED OF TRUST AND THE OBLIGATIONS ARISING HEREUNDER SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT
REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE DEED OF TRUST, LIENS AND SECURITY
INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS
WITH RESPECT TO THE PROPERTY SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD
THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF
THE STATE OF ILLINOIS SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE
LAW OF ANY OTHER JURISDICTION GOVERNS THIS DEED OF TRUST OR THE OTHER LOAN
DOCUMENTS, AND THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS DEED OF TRUST MAY AT LENDER'S OPTION
BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF CHICAGO, COOK COUNTY,
ILLINOIS, AND BORROWER
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WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR
FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING.
Section 18.14 SECURITY AGREEMENT.
(a)
(i) This Deed of Trust is both a real
property mortgage and a "security agreement" within the meaning of the UCC.
The Mortgaged Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature, of Borrower
in the Mortgaged Property. This Deed of Trust is filed as a fixture filing
and covers goods which are or are to become fixtures on the Mortgaged
Property. Borrower by executing and delivering this Deed of Trust has granted
to Lender, as security for the Debt, a security interest in the Mortgaged
Property to the full extent that the Mortgaged Property may be subject to the
UCC of the State in which the Mortgaged Property is located (said portion of
the Mortgaged Property so subject to the UCC being called in this Section
18.14 the "COLLATERAL"). If an Event of Default shall occur, Lender, in
addition to any other rights and remedies which it may have, shall have and
may exercise immediately and without demand, any and all rights and remedies
granted to a secured party upon default under the UCC, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Lender may
deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Lender following an Event of Default, Borrower
shall, at its expense, assemble the Collateral and make it available to
Lender at a convenient place acceptable to Lender. Borrower shall pay to
Lender on demand any and all expenses, including reasonable legal expenses
and attorneys' fees, incurred or paid by Lender in protecting its interest in
the Collateral and in enforcing its rights hereunder with respect to the
Collateral. Any disposition pursuant to the UCC of so much of the Collateral
as may constitute personal property shall be considered commercially
reasonable if made pursuant to a public sale which is advertised at least
twice in a newspaper in which sheriff's sales are advertised in the county
where the Premises is located. Any notice of sale, disposition or other
intended action by Lender with respect to the Collateral given to Borrower in
accordance with the provisions hereof at least ten (10) days prior to such
action, shall constitute reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Lender
to the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper.
(ii) The mention in a financing statement
filed in the records normally pertaining to personal property of any portion
of the Mortgaged Property shall not derogate from or impair in any manner the
intention of this Deed of Trust. Lender hereby declares that all items of
Collateral are part of the real property encumbered hereby to the fullest
extent permitted by law, regardless of whether any such item is physically
attached to the Improvements or whether serial numbers are used for the
better identification of certain items. Specifically, the mention in any
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such financing statement of any items included in the Mortgaged Property shall
not be construed to alter, impair or impugn any rights of Lender as determined
by this Deed of Trust or the priority of Lender's lien upon and security
interest in the Mortgaged Property in the event that notice of Lender's priority
of interest as to any portion of the Mortgaged Property is required to be filed
in accordance with the UCC to be effective against or take priority over the
interest of any particular class of persons, including the federal government or
any subdivision or instrumentality thereof.
(b) Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Lender, as
secured party, in connection with the Collateral covered by this Deed of Trust.
Section 18.15 ACTIONS AND PROCEEDINGS. Lender has the right to appear
in and defend any action or proceeding brought with respect to the Mortgaged
Property in its own name or, if required by Legal Requirements or, if in
Lender's reasonable judgment, it is necessary, in the name and on behalf of
Borrower, which Lender believes will adversely affect the Mortgaged Property or
this Deed of Trust and to bring any action or proceedings, in its name or in the
name and on behalf of Borrower, which Lender, in its discretion, decides should
be brought to protect its interest in the Mortgaged Property.
Section 18.16 USURY LAWS. This Deed of Trust and the Notes are subject
to the express condition, and it is the expressed intent of the parties, that at
no time shall Borrower be obligated or required to pay interest on the principal
balance due under the Notes at a rate which could subject the holder of the
Notes to either civil or criminal liability as a result of being in excess of
the maximum interest rate which Borrower is permitted by law to contract or
agree to pay. If by the terms of this Deed of Trust or the Notes, Borrower is at
any time required or obligated to pay interest on the principal balance due
under the Notes at a rate in excess of such maximum rate, such rate of interest
shall be deemed to be immediately reduced to such maximum rate and the interest
payable shall be computed at such maximum rate and all prior interest payments
in excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of the principal balance of the Notes. No application to
the principal balance of the Notes pursuant to this Section 18.16 shall give
rise to any requirement to pay any prepayment premium due hereunder, if any,
including, without limitation, Yield Maintenance Premium.
Section 18.17 REMEDIES OF BORROWER. In the event that a claim or
adjudication is made that Lender has acted unreasonably or unreasonably delayed
acting in any case where by law or under the Notes, this Deed of Trust or the
Loan Documents, it has an obligation to act reasonably or promptly, Lender shall
not be liable for any monetary damages, and Borrower's remedies shall be limited
to injunctive relief or declaratory judgment.
Section 18.18 OFFSETS, COUNTERCLAIMS AND DEFENSES. Any assignee of this
Deed of Trust, the Assignment and the Notes shall take the same free and clear
of all offsets, counterclaims or defenses which are unrelated to the Notes, the
Assignment or this Deed of Trust which Borrower may otherwise have against any
assignor of this Deed of Trust, the Assignment and the Notes and no such
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unrelated counterclaim or defense shall be interposed or asserted by Borrower
in any action or proceeding brought by any such assignee upon this Deed of
Trust, the Assignment or the Notes and any such right to interpose or assert
any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrower.
Section 18.19 NO MERGER. If Borrower's and Lender's estates become the
same including, without limitation, upon the delivery of a deed by Borrower in
lieu of a foreclosure sale, or upon a purchase of the Mortgaged Property by
Lender in a foreclosure sale, this Deed of Trust and the lien created hereby
shall not be destroyed or terminated by the application of the doctrine of
merger and in such event Lender shall continue to have and enjoy all of the
rights and privileges of Lender as to the separate estates; and, as a
consequence thereof, upon the foreclosure of the lien created by this Deed of
Trust, any Leases or subleases then existing and created by Borrower shall not
be destroyed or terminated by application of the law of merger or as a result of
such foreclosure unless Lender or any purchaser at any such foreclosure sale
shall so elect. No act by or on behalf of Lender or any such purchaser shall
constitute a termination of any Lease or sublease unless Lender or such
purchaser shall give written notice thereof to such lessee or sublessee.
Section 18.20 RESTORATION OF RIGHTS. In case Lender shall have
proceeded to enforce any right under this Deed of Trust by foreclosure sale,
entry or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely, then, in every
such case, Borrower and Lender shall be restored to their former positions and
rights hereunder with respect to the Mortgaged Property subject to the lien
hereof.
Section 18.21 WAIVER OF STATUTE OF LIMITATIONS. The pleadings of any
statute of limitations as a defense to any and all obligations secured by this
Deed of Trust are hereby waived to the full extent permitted by Legal
Requirements.
Section 18.22 ADVANCES. This Deed of Trust shall cover any and all
advances made pursuant to the Loan Documents, rearrangements and renewals of the
Debt and all extensions in the time of payment thereof, even though such
advances, extensions or renewals be evidenced by new promissory notes or other
instruments hereafter executed and irrespective of whether filed or recorded.
Likewise, the execution of this Deed of Trust shall not impair or affect any
other security which may be given to secure the payment of the Debt, and all
such additional security shall be considered as cumulative. The taking of
additional security, execution of partial releases of the security, or any
extension of time of payment of the Debt shall not diminish the force, effect or
lien of this Deed of Trust and shall not affect or impair the liability of
Borrower and shall not affect or impair the liability of any maker, surety, or
endorser for the payment of the Debt.
Section 18.23 APPLICATION OF DEFAULT RATE NOT A WAIVER. Application of
the Default Rate shall not be deemed to constitute a waiver of any Default or
Event of Default or any rights or remedies of Lender under this Deed of Trust,
any other Loan Document or applicable Legal Requirements, or a consent to any
extension of time for the payment or performance of any obligation with respect
to which the Default Rate may be invoked.
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Section 18.24 INTERVENING LIEN. To the fullest extent permitted by
law, any agreement hereafter made pursuant to this Deed of Trust shall be
superior to the rights of the holder of any intervening lien.
Section 18.25 NO JOINT VENTURE OR PARTNERSHIP. Borrower and Lender
intend that the relationship created hereunder be solely that of Borrower and
Lender or borrower and lender, as the case may be. Nothing herein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy
relationship between Borrower and Lender nor to grant Lender any interest in the
Mortgaged Property other than that of mortgagee or lender.
Section 18.26 TIME OF THE ESSENCE. Time shall be of the essence in
the performance of all obligations of Borrower hereunder.
Section 18.27 BORROWER'S OBLIGATIONS ABSOLUTE. Borrower acknowledges
that Lender and/or certain Affiliates of Lender are engaged in the business of
financing, owning, operating, leasing, managing, and brokering real estate and
in other business ventures which may be viewed as adverse to or competitive with
the business, prospect, profits, operations or condition (financial or
otherwise) of Borrower. Except as set forth to the contrary in the Loan
Documents, all sums payable by Borrower hereunder shall be paid without notice
or demand, counterclaim, setoff, deduction or defense and without abatement,
suspension, deferment, diminution or reduction, and the obligations and
liabilities of Borrower hereunder shall in no way be released, discharged, or
otherwise affected (except as expressly provided herein) by reason of: (a) any
damage to or destruction of or any Taking of the Mortgaged Property or any
portion thereof or any other Property; (b) any restriction or prevention of or
interference with any use of the Mortgaged Property or any portion thereof or
any other Property; (c) any title defect or encumbrance or any eviction from the
Premises or any portion thereof by title paramount or otherwise; (d) any
bankruptcy proceeding relating to Borrower, any General Partner, or any
guarantor or indemnitor, or any action taken with respect to this Deed of Trust
or any other Loan Document by any trustee or receiver of Borrower or any such
General Partner, guarantor or indemnitor, or by any court, in any such
proceeding; (e) any claim which Borrower has or might have against Lender; (f)
any default or failure on the part of Lender to perform or comply with any of
the terms hereof or of any other agreement with Borrower; or (g) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Borrower shall have notice or knowledge of any of the foregoing.
Section 18.28 PUBLICITY. All promotional news releases, publicity or
advertising by Manager, Borrower or their respective Affiliates through any
media intended to reach the general public shall not refer to the Loan Documents
or the financing evidenced by the Loan Documents, or to Lender or to J.P. Morgan
or to any of their Affiliates without the prior written approval of Lender, as
applicable, in each instance, such approval not to be unreasonably withheld or
delayed. Lender shall be authorized to provide information relating to the
Mortgaged Property, the Loans and matters relating thereto to rating agencies,
underwriters, potential securities investors, auditors, regulatory authorities
and to any Persons which may be entitled to such information by operation of
law.
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Section 18.29 SECURITIZATION OPINIONS. In the event the Loans are
included as an asset of a Securitization by Lender or any of its Affiliates,
Borrower shall, within fifteen Business Days after Lender's written request
therefor, at Borrower's sole cost and expense, deliver opinions in form and
substance and delivered by counsel reasonably acceptable to Lender (which
counsel shall, if required by the Rating Agencies, be unaffiliated with Grantor)
and the Rating Agency, as may be reasonably required by Lender and/or the Rating
Agency in connection with such Securitization. Borrower's failure to deliver the
opinions required hereby within such fifteen (15) Business Day period shall
constitute an "Event of Default" hereunder.
Section 18.30 COOPERATION WITH RATING AGENCIES. Borrower covenants
and agrees that in the event the Loans are to be included as an asset of a
Securitization, Borrower shall (a) gather any environmental information
reasonably required by the Rating Agency in connection with such a
Securitization, (b) at Lender's request, meet with representatives of the
Rating Agency to discuss the business and operations of the Mortgaged
Property, and (c) cooperate with the reasonable requests of the Rating Agency
and Lender in connection with all of the foregoing and the preparation of any
offering documents with respect thereof.
Section 18.31 SECURITIZATION FINANCIALS. Borrower covenants and agrees
that, upon Lender's written request therefor in connection with a Securitization
in which the Loans are to be included as an asset, Borrower shall, at Borrower's
sole cost and expense, promptly deliver audited financial statements and related
documentation prepared by an Independent certified public accountant that
satisfy securities laws and requirements for use in a public registration
statement (which may include to the extent available up to three (3) years of
historical audited financial statements).
Section 18.32 REASONABLE ATTORNEYS' FEES. All references in this Deed
of Trust and the other Loan Documents to "reasonable attorneys' fees" or
"attorneys fees" shall mean reasonable disbursements and fees of attorneys
actually incurred.
Section 18.33 RETURN OF ESCROWS AND DEFEASANCE DEPOSIT. After the Debt
has been indefeasibly paid in full, and concurrently with the release of this
Mortgage, Lender shall return to Borrower any amounts remaining in escrow with
Lender, including without limitation excess defeasance deposits.
Section 18.34 BUSINESS LOAN RECITAL/STATUTORY EXEMPTION.
(a) Borrower acknowledges and agrees that (i) the proceeds
of the Loans will be used in conformance with subparagraph (1)(l) of Section
4 of "An Act in relation to the rate of interest and other charges in
connection with sales on credit and the lending of money," approved May 24,
1879, as amended (815 ILCS 205/4(1)(1)); (ii) that the indebtedness secured
hereby constitutes a business loan which comes within the purview of said
Section 4; and (iii) that the secured indebtedness is an exempted transaction
under the Truth-in-Lending Act, 15 U.S.C. Sec. 1601 et seq.
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<PAGE>
(b) Borrower acknowledges and agrees that the transaction
of which this Deed of Trust is a part is a transaction which does not include
either agricultural real estate (as defined in 735 ILCS 5/15-1201 (1992)) or
residential real estate (as defined in 735 5/15-1219 (1992)).
Section 18.35 CONCERNING THE DEED TRUSTEE. Deed Trustee shall be under
no duty to take any action hereunder except as expressly required hereunder or
by law, or to perform any act which would involve Deed Trustee in any expense or
liability or to institute or defend any suit in respect hereof, unless properly
indemnified to Deed Trustee's reasonable satisfaction. Deed Trustee, by
acceptance of this Deed of Trust, covenants to perform and fulfill the trusts
herein created, being liable, however, only for gross negligence or willful
misconduct, and hereby waives any statutory fee and agrees to accept reasonable
compensation, in lieu thereof, for any services rendered by Deed Trustee in
accordance with the terms hereof. Deed Trustee may resign at any time by written
instrument to that effect delivered to Lender. Lender may remove Deed Trustee at
any time or from time to time and select a successor trustee. In the event of
the death, removal, resignation, refusal to act, or inability to act of Deed
Trustee, or in its sole discretion for any reason whatsoever Beneficiary may,
without notice and without specifying any reasons therefor and without applying
to any court, select and appoint a successor trustee, by an instrument recorded
wherever this Deed of Trust is recorded, and all powers, rights, duties and
authority of Deed Trustee, as aforesaid, shall thereupon become vested in such
successor. Such substitute trustee shall not be required to give bond for the
faithful performance of the duties of Deed Trustee hereunder unless required by
Lender. The procedure provided for in this Section 18.35 for substitution of
Deed Trustee shall be in addition to an not in exclusion of any other provisions
for substitution, by law or otherwise
Section 18.36 DEED TRUSTEE'S FEES. Borrower shall pay all costs, fees
and expenses incurred by Deed Trustee and Deed Trustee's agents and counsel in
connection with the performance by Deed Trustee of Deed Trustee's duties
hereunder, and all such costs, fees and expenses shall be secured by this Deed
of Trust.
ARTICLE XIX
SPECIAL STATE OF NEBRASKA PROVISIONS
Section 19.01 EFFECTIVE AS A FINANCING STATEMENT. This Deed of Trust
will be effective as a financing statement filed as a fixture filing with
respect to all fixtures included within the Mortgaged Property and is to be
filed for record in the real estate records of each county where any part of
the Mortgaged Property (including said Fixtures) is situated. This Deed of
Trust covers crops to be grown, timber to be cut and minerals. This Deed of
Trust shall also be effective as a financing statement covering any other
premises and may be filed in any other appropriate filing or recording
office. A carbon, photographic or other reproduction of this Deed of Trust or
of any financing statement relating to this Deed of Trust shall be sufficient
as a financing statement for any of the purposes referred to in this Section.
Section 19.02 POWER OF SALE. Upon receipt of such notice of Lender
and at the direction of Lender, Deed Trustee shall cause to be recorded,
published and delivered such notices of default and notices of sale as may
then be required by law and by this Deed of Trust. Deed Trustee shall, only
91
<PAGE>
at the direction of Lender and without demand on Borrower, after such time as
may then be required by law and after recordation of such notice of default and
after notice of sale having been given as required by law, sell the Mortgaged
Property at the time and place of sale fixed by it in such notice of sale,
either as a whole or in separate lots or parcels or items as Lender shall deem
expedient, and in such order as it may determine, at public auction to the
highest bidder for cash in lawful money of the United States payable at the time
of sale, or as otherwise may then be required by law. Deed Trustee shall deliver
to such purchaser or purchasers thereof its good and sufficient deed or deeds
conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any person, including, without limitation,
Borrower, Deed Trustee or Lender, may purchase at such sale. Deed Trustee may in
the manner provided by law postpone sale of all or any portion of the Mortgaged
Property.
Section 19.03 REQUEST FOR NOTICE. Borrower, for itself and for each
party hereto, hereby requests a copy of any notice of default and a copy of any
notice of sale hereunder be mailed to them at the applicable addresses provided
herein.
Section 19.04 DEED TRUSTEE COMPENSATION. Deed Trustee shall not be
liable for any error of judgment or act done by Deed Trustee, or be otherwise
responsible or accountable under any circumstances whatsoever. Deed Trustee
shall not be personally liable in case of entry by it or anyone acting by virtue
of the powers herein granted it upon the Deed of Trust for debts contracted or
liability for damages incurred in the management or operation of the Mortgaged
Property. Deed Trustee shall have the right to rely on any instrument, document
or signature authorizing or supporting any action taken or proposed to be taken
by it hereunder or believed by it in good faith to be genuine. Deed Trustee
shall be entitled to reimbursement for expenses incurred by it in the
performance of its duties hereunder and to reasonable compensation for such of
its services hereunder as shall be rendered. Borrower will, from time to time,
pay compensation due Deed Trustee hereunder and reimburse Deed Trustee for and
save and hold it harmless from and against any and all loss, cost, liability,
damage and expense whatsoever incurred by it in the performance of its duties.
All moneys received by Deed Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but
need not be segregated in any manner from any other moneys (except to the extent
required by law), and Deed Trustee shall be under no liability for interest on
any moneys received by it hereunder.
ARTICLE XX
RELEASE PARCEL
Borrower may obtain the release (without any prepayment of Debt or
release fee other than the payment of expenses set forth below) from this
Deed of Trust, the Assignment of Leases and Rents and the UCC Financing
Statements of that part of the Mortgaged Property, more particularly
described on Exhibit D attached hereto (the "Release Parcel") upon
satisfaction of each of the following conditions precedent:
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(i) no Event of Default shall have occurred and be
continuing, nor shall have there occurred any event which
would, with the giving of notice or passage of time, or both,
constitute an Event of Default;
(ii) the Mortgaged Property, after giving effect to
the subdivision and conveyance of the Release Parcel, will (i)
comply with all zoning ordinances, including without
limitation those related to parking, lot size and density, or
a variance with respect thereto shall have been obtained, (ii)
be a separate tax parcel, and not be subject to any lien for
taxes due or not yet due attributable to the Release Parcel,
(iii) comply with all subdivision ordinances and regulations,
and (iv) have an appurtenant easement for utilities, parking
and access currently crossing or located on the Release
Parcel;
(iii) receipt by Lender of endorsements to the title
policy for the Mortgaged Property insuring each of the items
set forth in clause (ii) above;
(iv) Borrower shall convey the Release Parcel,
concurrently with the release, to an entity other than the
Borrower;
(v) payment to the Lender by Borrower of its fees and
expenses incurred in evaluating and documenting the release,
including, without limitation, reasonable attorneys' fees and
filing fees;
(vi) Lender, at its election, may obtain, at
Borrower's expense, after Securitization an opinion that the
release of the Release Parcel will not cause (A) any adverse
tax consequences to the REMIC or any holders of any
Mortgage-Backed Pass-through Securities, (B) this Deed of
Trust to fail to be a Qualifying Security Instrument under
applicable federal law relating to REMIC's or (C) result in a
taxation of the income of the Loans to the REMIC or cause a
loss of REMIC status;
(vii) if requested by Lender, each Rating Agency
shall have delivered written confirmation that any rating
issued by such Rating Agency in connection with the
securitization of any securities will not, as a result of the
proposed release of the Release Parcel, be downgraded from the
then current ratings thereof, qualified or withdrawn;
(viii) Borrower shall comply with any terms and
conditions as the Rating Agencies shall require in connection
with such release; and
(ix) Borrower shall deliver or take, as the case may
be, any other items or actions reasonably requested by Lender
or Lender's counsel.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
93
<PAGE>
IN WITNESS WHEREOF, the undersigned Borrower has caused this Deed of
Trust to be duly executed as of the day and year first above written.
BORROWER:
GRETNA, SEALY, TRAVERSE CITY OUTLET
CENTERS, L.L.C., a Delaware limited
liability company
By: GRETNA, SEALY, TRAVERSE CITY
FINANCE COMPANY, INC., a Delaware
corporation, its Managing Member
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
Tax I.D. No.:
--------------------------------
COMMONWEALTH/STATE OF __________________
COUNTY OF __________________________________
The foregoing instrument was acknowledged before me on this ____ day of
___________, 1999, by _______________________, the _____________ of GRETNA,
SEALY, TRAVERSE CITY FINANCE COMPANY, INC., a Delaware corporation and Managing
Member of GRETNA, SEALY, TRAVERSE CITY OUTLET CENTERS, L.L.C., on behalf of the
limited liability company.
------------------------------------
Notary Public
My Commission Expires:
- ------------------------------
94
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
A-1
<PAGE>
EXHIBIT B
FORM OF CASH FLOW STATEMENT
Property: _____________________________________
Location: _____________________________________
Cash Flow Statement for Month of: __________________ Year: _________
<TABLE>
<CAPTION>
Current Year to
Month Date
- --------------------------------------------------------------------------------
<S> <C> <C>
REVENUE
Net Rental Revenue
Other Revenue _________ _________
Effective Gross Income
OPERATING EXPENSES
Common Area Maintenance
Payroll
Administration
Leasing
Service
Clean & Decorate
Utilities
Repairs & Maintenance
Taxes
Insurance
Management Fees
Other
Total Operating Expenses ___________ __________
Net Operating Income _____________________
RECURRING EXPENSES
To Include Expenses for: Carpet
Replacement, Appliance Replacement,
HVAC/Water Heater Replacement;
Miniblinds/Drapes/Ceiling Fans: __________ ___________
NON-RECURRING EXPENSES
To Include Capital Expenses for:
Playground, Major Signage,
Lawns/Trees/Shrubs, Paving/Parking, Roof
Replacement, Exterior Paint, Major
Concrete/Sidewalks, Foundations,
Major Exterior, Boiler Replacement,
Major HVAC Replacement,
</TABLE>
B-1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Plumbing Replace, Electrical Replace,
Other Major, Fire & Storm, Ins. Loss
Recovery __________ _________
</TABLE>
Net Cash Flow
- --------------------------------------------------------------------------------
Certified By:
----------------------
Name:
----------------------
Title:
----------------------
Management Company:
----------------------
B-2
<PAGE>
EXHIBIT C
<TABLE>
<CAPTION>
PROPERTIES INITIAL ALLOCATED LOAN AMOUNT SECURITY INSTRUMENT
- ---------- ----------------------------- -------------------------
<S> <C> <C>
Gretna, Nebraska $ 7,485,000.00 This Deed of Trust and
Security Agreement
Sealy, Texas $11,115,000.00 Deed of Trust and Security
Agreement of even date
herewith
Traverse City, Michigan $ 5,205,000.00 Mortgages of even date
herewith
</TABLE>
C-1
<PAGE>
Pool II
Loan Nos. V_04078
V_03163
V_04071
GUARANTY
THIS GUARANTY ("GUARANTY") is executed as of July ___, 1999, by
HORIZON GROUP PROPERTIES, INC., a Maryland corporation (hereinafter referred
to as "GUARANTOR"), for the benefit of MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, a New York banking corporation ("LENDER").
A. Gretna, Sealy, Traverse City Outlet Centers, L.L.C., a Delaware
limited liability company ("BORROWER"), is indebted to Lender with respect to
(I) a loan (hereinafter referred to as the "GRETNA LOAN") to the Borrower in
the maximum principal sum of SEVEN MILLION FOUR HUNDRED EIGHTY-FIVE THOUSAND
AND NO/100 DOLLARS ($7,485,000.00), which Gretna Loan is evidenced by that
certain note, dated the date hereof (hereinafter referred to as the "GRETNA
NOTE") given by the Borrower, as maker, to Lender, as payee; (ii) a loan
(hereinafter referred to as the "SEALY LOAN") to the Borrower in the maximum
principal sum of ELEVEN MILLION ONE HUNDRED FIFTEEN THOUSAND AND NO/100
DOLLARS ($11,115,000.00), which Sealy Loan is evidenced by that certain note,
dated the date hereof (hereinafter referred to as the "SEALY NOTE") given by
the Borrower, as maker, to Lender, as payee; and (iii) a loan (hereinafter
referred to as the "TRAVERSE CITY LOAN") to the Borrower in the maximum
principal sum of FIVE MILLION TWO HUNDRED FIVE THOUSAND AND NO/100 DOLLARS
($5,205,000.00), which Traverse City Loan is evidenced by that certain note,
dated the date hereof (hereinafter referred to as the "TRAVERSE CITY NOTE")
given by the Borrower, as maker, to Lender, as payee. The Gretna Loan, Sealy
Loan and Traverse City Loan are collectively referred to herein as the
"LOANS," and the Gretna Note, the Sealy Note and the Traverse City Note,
together with all extensions, renewals, modifications, substitutions and
amendments thereof are collectively referred to herein as the "NOTES"). The
Notes are secured by the liens and security interests created by those
certain mortgages and deeds of trust, as more particularly described in the
Notes, of even date herewith (collectively, the "SECURITY INSTRUMENTS"), and
further evidenced, secured or governed by the other Loan Documents (as
defined in the Notes); and
B. Lender is not willing to make the Loans, or otherwise extend
credit, to Borrower unless Guarantor unconditionally guarantees payment and
performance to Lender of the Guaranteed Obligations (as hereinafter defined);
and
C. Guarantor is the owner of a direct or indirect interest in
Borrower, and Guarantor
<PAGE>
will directly benefit from Lender's making the Loans to Borrower.
NOW, THEREFORE, as an inducement to Lender to make the Loans to
Borrower thereunder, and to extend such additional credit as Lender may from
time to time agree to extend under the Loan Documents, and for other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
ARTICLE I
NATURE AND SCOPE OF GUARANTY
Section 1.1 GUARANTY OF OBLIGATIONS. Guarantor hereby absolutely,
irrevocably and unconditionally guarantees to Lender (and its successors and
assigns), jointly and severally, the payment and performance of the
Guaranteed Obligations as and when the same shall be due and payable, whether
by lapse of time, by acceleration of maturity or otherwise. Guarantor hereby
absolutely, irrevocably and unconditionally covenants and agrees that it is
liable, jointly and severally, for the Guaranteed Obligations as a primary
obligor, and that Guarantor shall fully perform, jointly and severally, each
and every term and provision hereof.
Section 1.2 DEFINITION OF GUARANTEED OBLIGATIONS. As used herein,
the term "GUARANTEED OBLIGATIONS" shall be deemed to include, and Guarantor
shall also be liable for, and shall indemnify, defend and hold Lender
harmless from and against, any and all Losses (as hereinafter defined)
incurred or suffered by Lender and arising out of or in connection with the
matters listed below:
the application or misappropriation of Rents (as defined in the
Security Instruments) not in accordance with the Loan Documents;
the application or misappropriation of insurance proceeds or
condemnation awards not in accordance with the Loan Documents;
Borrower's failure to return or to reimburse Lender for all
material personal property (as described in the Security Instruments) taken
from the Property (as defined in the Security Instruments) by or on behalf of
Borrower and not replaced with personal property of the same utility and of
the same or greater value;
any act of actual waste or arson by Borrower, any principal,
affiliate, general partner or member thereof or by any indemnitor (as
described in the Security Instruments) or any Guarantor;
any fees or commissions paid by Borrower to any principal,
affiliate, general partner or member of Borrower, any indemnitor or any
Guarantor in violation of the terms of this Guaranty, the Security
Instruments or the other Loan Documents; or
<PAGE>
Borrower's failure to comply with the provisions of SECTION
16.02 of the Security Instruments.
In addition, in the event (I) of any fraud, willful misconduct or
intentional material misrepresentation by Borrower, its general partners, if
any, its members, if any, any affiliated property manager or by any Guarantor
or Indemnitor in connection with the Loans, (ii) of Borrower's (excluding
actions taken by a trustee appointed during an involuntary bankruptcy) breach
or default under SECTIONS 2.02(g), 9.01, OR 9.02 of each of the Security
Instruments, or (iii) the Property or any part thereof becomes an asset in a
voluntary bankruptcy or voluntary insolvency proceeding, then the Guaranteed
Obligations shall also include the unpaid balance of the Debt (as defined in
the Security Instruments).
For purposes of this Guaranty, the term "LOSSES" includes any and
all claims, suits, liabilities (including, without limitation, strict
liabilities), actions, proceedings, obligations, debts, damages, losses,
costs, expenses, diminutions in value, fines, penalties, charges, fees,
expenses, judgments, awards, amounts paid in settlement, punitive damages,
foreseeable and unforeseeable consequential damages, of whatever kind or
nature (including but not limited to attorneys' fees and other costs of
defense).
Section 1.3 NATURE OF GUARANTY. This Guaranty is an irrevocable,
absolute, continuing guaranty of payment and performance, is joint and
several and is not a guaranty of collection. This Guaranty shall continue to
be effective with respect to any Guaranteed Obligations arising or created
after any attempted revocation by Guarantor and after (if Guarantor is a
natural person) Guarantor's death (in which event this Guaranty shall be
binding upon Guarantor's estate and Guarantor's legal representatives and
heirs). The fact that at any time or from time to time the Guaranteed
Obligations may be increased or reduced shall not release or discharge the
obligation of Guarantor to Lender with respect to Guaranteed Obligations.
This Guaranty may be enforced by Lender and any subsequent holder of the
Notes and shall not be discharged by the assignment or negotiation of all or
part of the Notes.
Section 1.4 GUARANTEED OBLIGATIONS NOT REDUCED BY OFFSET. The
Notes, the Guaranteed Obligations, and the liabilities and obligations of
Guarantor to Lender hereunder shall not be reduced, discharged or released
because or by reason of any existing or future offset, claim or defense of
Borrower, or any other party, against Lender or against payment of the
Guaranteed Obligations, whether such offset, claim or defense arises in
connection with the Guaranteed Obligations (or the transactions creating the
Guaranteed Obligations) or otherwise.
Section 1.5 PAYMENT BY GUARANTOR. If all or any part of the
Guaranteed Obligations shall not be punctually paid when due, whether at
maturity or earlier by acceleration or otherwise, Guarantor shall,
immediately upon demand by Lender, and without presentment,
<PAGE>
protest, notice of protest, notice of non-payment, notice of intention to
accelerate the maturity, notice of acceleration of the maturity, or any other
notice whatsoever, pay in lawful money of the United States of America, the
amount due on the Guaranteed Obligations to Lender at Lender's address as set
forth herein. Such demand(s) may be made at any time coincident with or after
the time for payment of all or part of the Guaranteed Obligations, and may be
made from time to time with respect to the same or different items of
Guaranteed Obligations. Such demand shall be deemed made, given and received
in accordance with the notice provisions hereof.
Section 1.6 NO DUTY TO PURSUE OTHERS. It shall not be necessary
for Lender (and Guarantor hereby waives any rights which Guarantor may have
to require Lender), in order to enforce this Guaranty against Guarantor,
first to (I) institute suit or exhaust its remedies against Borrower or
others liable on the Loans or the Guaranteed Obligations or any other person,
(ii) enforce Lender's rights against any collateral which shall ever have
been given to secure the Loans, (iii) enforce Lender's rights against any
other guarantors of the Guaranteed Obligations, (iv) join Borrower or any
others liable on the Guaranteed Obligations in any action seeking to enforce
this Guaranty, (v) exhaust any remedies available to Lender against any
collateral which shall ever have been given to secure the Loans, or (vi)
resort to any other means of obtaining payment of the Guaranteed Obligations.
Lender shall not be required to mitigate damages or take any other action to
reduce, collect or enforce the Guaranteed Obligations.
Section 1.7 WAIVERS. Guarantor agrees to the provisions of the
Loan Documents, and hereby waives notice of (I) any loans or advances made by
Lender to Borrower, (ii) acceptance of this Guaranty, (iii) any amendment or
extension of the Notes or of any other Loan Documents, (iv) the execution and
delivery by Borrower and Lender of any other loan or credit agreement or of
Borrower's execution and delivery of any promissory notes or other documents
arising under the Loan Documents or in connection with the Property, (v) the
occurrence of any breach by Borrower or Event of Default, (vi) Lender's
transfer or disposition of the Guaranteed Obligations, or any part thereof,
(vii) sale or foreclosure (or posting or advertising for sale or foreclosure)
of any collateral for the Guaranteed Obligations, (viii) protest, proof of
non-payment or default by Borrower, or (ix) any other action at any time
taken or omitted by Lender, and, generally, all demands and notices of every
kind in connection with this Guaranty, the Loan Documents, any documents or
agreements evidencing, securing or relating to any of the Guaranteed
Obligations and the obligations hereby guaranteed.
Section 1.8 PAYMENT OF EXPENSES. In the event that Guarantor
should breach or fail to timely perform any provisions of this Guaranty,
Guarantor shall, immediately upon demand by Lender, pay Lender all costs and
expenses (including court costs and reasonable attorneys' fees) incurred by
Lender in the enforcement hereof or the preservation of Lender's rights
hereunder. The covenant contained in this section shall survive the payment
and performance of the Guaranteed Obligations.
Section 1.9 EFFECT OF BANKRUPTCY. In the event that, pursuant to
any
<PAGE>
insolvency, bankruptcy, reorganization, receivership or other debtor relief
law, or any judgment, order or decision thereunder, Lender must rescind or
restore any payment, or any part thereof, received by Lender in satisfaction
of the Guaranteed Obligations, as set forth herein, any prior release or
discharge from the terms of this Guaranty given to Guarantor by Lender shall
be without effect, and this Guaranty shall remain in full force and effect.
It is the intention of Borrower and Guarantor that Guarantor's obligations
hereunder shall not be discharged except by Guarantor's performance of such
obligations and then only to the extent of such performance.
Section 1.10 DEFERMENT OF RIGHTS OF SUBROGATION, REIMBURSEMENT AND
CONTRIBUTION.
(a) Notwithstanding any payment or payments made by
Guarantor hereunder, Guarantor will not assert or exercise any right of
Lender or of such Guarantor against Borrower to recover the amount of any
payment made by such Guarantor to Lender by way of subrogation,
reimbursement, contribution, indemnity, or otherwise arising by contract or
operation of law, and Guarantor shall not have any right of recourse to or
any claim against assets or property of Borrower, whether or not the
obligations of Borrower have been satisfied, all of such rights being herein
expressly waived by Guarantor. Guarantor agrees not to seek contribution or
indemnity or other recourse from any other guarantor. If any amount shall
nevertheless be paid to Guarantor by Borrower or another guarantor prior to
payment in full of the Obligations (hereinafter defined), such amount shall
be held in trust for the benefit of Lender and shall forthwith be paid to
Lender to be credited and applied to the Obligations, whether matured or
unmatured. The provisions of this paragraph shall survive the termination of
this Guaranty, and any satisfaction and discharge of Borrower by virtue of
any payment, court order or any applicable law.
(b) Notwithstanding the provisions of SECTION 1.10(a), each
Guarantor shall have and be entitled to (1) all rights of subrogation
otherwise provided by applicable law in respect of any payment it may make or
be obligated to make under this Guaranty and (2) all claims it would have
against any other Guarantor in the absence of SECTION 1.10(a) and to assert
and enforce same, in each case on and after, but at no time prior to, the
date (the "SUBROGATION TRIGGER DATE") which is 91 days after the date on
which all sums owed to Lender under the Loan Documents (the "OBLIGATIONS")
have been paid in full, if and only if (x) no Event of Default of the type
described in SECTION 13.01(h) or SECTION 13.01(I) of the Security Instruments
with respect to Borrower or any other Guarantor has existed at any time on
and after the date of this Guaranty to and including the Subrogation Trigger
Date and (y) the existence of each Guarantor's rights under this SECTION 1.10(b)
would not make such Guarantor a creditor (as defined in the Bankruptcy Code,
as such term is hereinafter defined) of Borrower or any other Guarantor in
any insolvency, bankruptcy, reorganization or similar proceeding commenced on
or prior to the Subrogation Trigger Date.
1.11 BANKRUPTCY CODE WAIVER. It is the intention of the parties
that the Guarantor shall not be deemed to be a "creditor" or "creditors" (as
defined in Section 101 of the
<PAGE>
United States Bankruptcy Code [the "BANKRUPTCY CODE"]) of Borrower, or any
other guarantor, by reason of the existence of this Guaranty, in the event
that Borrower or any other guarantor, becomes a debtor in any proceeding
under the Bankruptcy Code, and in connection herewith, Guarantor hereby
waives any such right as a "creditor" under the Bankruptcy Code. This waiver
is given to induce Lender to make the Loans evidenced by the Notes to
Borrower. After the Loans are paid in full and there shall be no obligations
or liabilities under this Guaranty outstanding, this waiver shall be deemed
to be terminated.
1.12 "BORROWER." The term "Borrower" as used herein shall include
any new or successor corporation, association, partnership (general or
limited), joint venture, trust or other individual or organization formed as
a result of any merger, reorganization, sale, transfer, devise, gift or
bequest of Borrower or any interest in Borrower.
ARTICLE 2
EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTOR'S OBLIGATIONS
Guarantor hereby consents and agrees to each of the following, and
agrees that Guarantor's obligations under this Guaranty shall not be
released, diminished, impaired, reduced or adversely affected by any of the
following, and waives any common law, equitable, statutory or other rights
(including without limitation rights to notice) which Guarantor might
otherwise have as a result of or in connection with any of the following:
Section 2.1 MODIFICATIONS. Any renewal, extension, increase,
modification, alteration or rearrangement of all or any part of the
Guaranteed Obligations, Notes, Loan Documents, or other document, instrument,
contract or understanding between Borrower and Lender, or any other parties,
pertaining to the Guaranteed Obligations or any failure of Lender to notify
Guarantor of any such action.
Section 2.2 ADJUSTMENT. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by Lender to Borrower or any
Guarantor.
Section 2.3 CONDITION OF BORROWER OR GUARANTOR. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation, disability,
dissolution or lack of power of Borrower, Guarantor or any other party at any
time liable for the payment of all or part of the Guaranteed Obligations; or
any dissolution of Borrower or Guarantor, or any sale, lease or transfer of
any or all of the assets of Borrower or Guarantor, or any changes in the
shareholders, partners or members of Borrower or Guarantor; or any
reorganization of Borrower or Guarantor.
Section 2.4 INVALIDITY OF GUARANTEED OBLIGATIONS. The invalidity,
illegality or unenforceability of all or any part of the Guaranteed
Obligations, or any document or agreement executed in connection with the
Guaranteed Obligations, for any reason whatsoever,
<PAGE>
including without limitation the fact that (I) the Guaranteed Obligations, or
any part thereof, exceed the amount permitted by law, (ii) the act of
creating the Guaranteed Obligations or any part thereof, is ultra vires,
(iii) the officers or representatives executing the Notes or the other Loan
Documents or otherwise creating the Guaranteed Obligations acted in excess of
their authority, (iv) the Guaranteed Obligations violate applicable usury
laws, (v) Borrower has valid defenses, claims or offsets (whether at law, in
equity or by agreement) which render the Guaranteed Obligations wholly or
partially uncollectible from Borrower, (vi) the creation, performance or
repayment of the Guaranteed Obligations (or the execution, delivery and
performance of any document or instrument representing part of the Guaranteed
Obligations or executed in connection with the Guaranteed Obligations, or
given to secure the repayment of the Guaranteed Obligations) is illegal,
uncollectible or unenforceable, or (vii) the Notes or any of the other Loan
Documents have been forged or otherwise are irregular or not genuine or
authentic, it being agreed that Guarantor shall remain liable hereon
regardless of whether Borrower or any other person be found not liable on the
Guaranteed Obligations or any part thereof for any reason.
Section 2.5 RELEASE OF OBLIGORS. Any full or partial release of
the liability of Borrower on the Guaranteed Obligations, or any part thereof,
or of any co-guarantors, or any other person or entity now or hereafter
liable, whether directly or indirectly, jointly, severally, or jointly and
severally, to pay, perform, guarantee or assure the payment of the Guaranteed
Obligations, or any part thereof, it being recognized, acknowledged and
agreed by Guarantor that Guarantor may be required to pay the Guaranteed
Obligations in full without assistance or support of any other party, and
Guarantor has not been induced to enter into this Guaranty on the basis of a
contemplation, belief, understanding or agreement that other parties will be
liable to pay or perform the Guaranteed Obligations, or that Lender will look
to other parties to pay or perform the Guaranteed Obligations.
Section 2.6 OTHER COLLATERAL. The taking or accepting of any other
security, collateral or guaranty, or other assurance of payment, for all or
any part of the Guaranteed Obligations.
Section 2.7 RELEASE OF COLLATERAL. Any release, surrender,
exchange, subordination, deterioration, waste, loss or impairment (including
without limitation negligent, willful, unreasonable or unjustifiable
impairment) of any collateral, property or security, at any time existing in
connection with, or assuring or securing payment of, all or any part of the
Guaranteed Obligations.
Section 2.8 CARE AND DILIGENCE. The failure of Lender or any other
party to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or any
part of such collateral, property or security, including but not limited to
any neglect, delay, omission, failure or refusal of Lender (I) to take or
prosecute any action for the collection of any of the Guaranteed Obligations,
or (ii) to foreclose, or initiate any
<PAGE>
action to foreclose, or, once commenced, prosecute to completion any action
to foreclose upon any security therefor, or (iii) to take or prosecute any
action in connection with any instrument or agreement evidencing or securing
all or any part of the Guaranteed Obligations.
Section 2.9 UNENFORCEABILITY. The fact that any collateral,
security, security interest or lien contemplated or intended to be given,
created or granted as security for the repayment of the Guaranteed
Obligations, or any part thereof, shall not be properly perfected or created,
or shall prove to be unenforceable or subordinate to any other security
interest or lien, it being recognized and agreed by Guarantor that Guarantor
is not entering into this Guaranty in reliance on, or in contemplation of the
benefits of, the validity, enforceability, collectibility or value of any of
the collateral for the Guaranteed Obligations.
Section 2.10 MERGER. The reorganization, merger or consolidation
of Borrower into or with any other corporation or entity.
Section 2.11 PREFERENCE. Any payment by Borrower to Lender is held
to constitute a preference under bankruptcy laws, or for any reason Lender is
required to refund such payment or pay such amount to Borrower or someone
else.
Section 2.12 OTHER ACTIONS TAKEN OR OMITTED. Any other action
taken or omitted to be taken with respect to the Loan Documents, the
Guaranteed Obligations, or the security and collateral therefor, whether or
not such action or omission prejudices Guarantor or increases the likelihood
that Guarantor will be required to pay the Guaranteed Obligations pursuant to
the terms hereof, it is the unambiguous and unequivocal intention of
Guarantor that Guarantor shall be obligated to pay the Guaranteed Obligations
when due, notwithstanding any occurrence, circumstance, event, action, or
omission whatsoever, whether or not contemplated, and whether or not
otherwise or particularly described herein, which obligation shall be deemed
satisfied only upon the full and final payment and satisfaction of the
Guaranteed Obligations.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into the Loan Documents and extend credit
to Borrower, Guarantor represents and warrants to Lender as follows:
Section 3.1 BENEFIT. Guarantor is an affiliate of Borrower, is the
owner of a direct or indirect interest in Borrower, and has received, or will
receive, direct or indirect benefit from the making of this Guaranty with
respect to the Guaranteed Obligations.
Section 3.2 FAMILIARITY AND RELIANCE. Guarantor is familiar with,
and has independently reviewed books and records regarding, the financial
condition of Borrower and is familiar with the value of any and all
collateral intended to be created as security for the payment
<PAGE>
of the Notes or Guaranteed Obligations; provided, however, Guarantor is not
relying on such financial condition or the collateral as an inducement to
enter into this Guaranty.
Section 3.3 NO REPRESENTATION BY LENDER. Neither Lender nor any
other party has made any representation, warranty or statement to Guarantor
in order to induce Guarantor to execute this Guaranty.
Section 3.4 GUARANTOR'S FINANCIAL CONDITION. As of the date
hereof, and after giving effect to this Guaranty and the contingent
obligation evidenced hereby, Guarantor is, and will be, solvent, and has and
will have assets which, fairly valued, exceed its obligations, liabilities
(including contingent liabilities) and debts, and has and will have property
and assets sufficient to satisfy and repay its obligations and liabilities.
Section 3.5 LEGALITY. The execution, delivery and performance by
Guarantor of this Guaranty and the consummation of the transactions
contemplated hereunder do not, and will not, contravene or conflict with any
law, statute or regulation whatsoever to which Guarantor is subject or
constitute a default (or an event which with notice or lapse of time or both
would constitute a default) under, or result in the breach of, any indenture,
mortgage, deed of trust, charge, lien, or any contract, agreement or other
instrument to which Guarantor is a party or which may be applicable to
Guarantor. This Guaranty is a legal and binding obligation of Guarantor and
is enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the enforcement
of creditors' rights.
Section 3.6 SURVIVAL. All representations and warranties made by
Guarantor herein shall survive the execution hereof.
Section 3.7 REVIEW OF DOCUMENTS. Guarantor has examined the Notes
and all of the Loan Documents.
Section 3.8 LITIGATION. Except as otherwise disclosed to Lender,
there are no proceedings pending or, so far as Guarantor knows, threatened
before any court or administrative agency which, if decided adversely to
Guarantor, would materially adversely affect the financial condition of
Guarantor or the authority of Guarantor to enter into, or the validity or
enforceability of this Guaranty.
Section 3.9 TAX RETURNS. Guarantor has filed all required federal,
state and local tax returns and has paid all taxes as shown on such returns
as they have become due. No claims have been assessed and are unpaid with
respect to such taxes.
ARTICLE 4
SUBORDINATION OF CERTAIN INDEBTEDNESS
<PAGE>
Section 4.1 SUBORDINATION OF ALL GUARANTOR CLAIMS. As used herein,
the term "GUARANTOR CLAIMS" shall mean all debts and liabilities of Borrower
to Guarantor, whether such debts and liabilities now exist or are hereafter
incurred or arise, or whether the obligations of Borrower thereon are direct,
contingent, primary, secondary, several, joint and several, or otherwise, and
irrespective of whether such debts or liabilities be evidenced by note,
contract, open account, or otherwise, and irrespective of the person or
persons in whose favor such debts or liabilities may, at their inception,
have been, or may hereafter be created, or the manner in which they have been
or may hereafter be acquired by Guarantor. The Guarantor Claims shall
include, without limitation, all rights and claims of Guarantor against
Borrower (arising as a result of subrogation or otherwise) as a result of
Guarantor's payment of all or a portion of the Guaranteed Obligations to the
extent the provisions of SECTION 1.10 hereof are unenforceable. Any
indebtedness of Borrower to Guarantor now or hereafter existing (including,
but not limited to, any rights to subrogation Guarantor may have as a result
of any payment by Guarantor under this Guaranty), together with any interest
thereon, shall be, and such indebtedness is, hereby deferred, postponed and
subordinated to the prior payment in full of the Debt. Until payment in full
of the Debt (and including interest accruing on the Notes after the
commencement of a proceeding by or against Borrower under the Bankruptcy
Reform Act of 1978, as amended, 11 U.S.C. Sections 101 ET SEQ., and the
regulations adopted and promulgated pursuant thereto (collectively, the
"BANKRUPTCY CODE") which interest the parties agree shall remain a claim that
is prior and superior to any claim of Guarantor notwithstanding any contrary
practice, custom or ruling in cases under the Bankruptcy Code generally),
Guarantor agrees not to accept any payment or satisfaction of any kind of
indebtedness of Borrower to Guarantor and hereby assigns such indebtedness to
Lender, including the right to file proof of claim and to vote thereon in
connection with any such proceeding under the Bankruptcy Code, including the
right to vote on any plan of reorganization.
Section 4.2 CLAIMS IN BANKRUPTCY. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Guarantor as debtor, Lender shall have the right to
prove its claim in any such proceeding so as to establish its rights
hereunder and receive directly from the receiver, trustee or other court
custodian dividends and payments which would otherwise be payable upon
Guarantor Claims. Guarantor hereby assigns such dividends and payments to
Lender. Should Lender receive, for application upon the Guaranteed
Obligations, any such dividend or payment which is otherwise payable to
Guarantor, and which, as between Borrower and Guarantor, shall constitute a
credit upon the Guarantor Claims, then upon payment to Lender in full of the
Guaranteed Obligations, Guarantor shall become subrogated to the rights of
Lender to the extent that such payments to Lender on the Guarantor Claims
have contributed toward the liquidation of the Guaranteed Obligations, and
such subrogation shall be with respect to that portion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends
or payments upon the Guarantor Claims.
Section 4.3 PAYMENTS HELD IN TRUST. In the event that,
notwithstanding anything to the contrary in this Guaranty, Guarantor should
receive any funds, payment, claim or
<PAGE>
distribution which is prohibited by this Guaranty, Guarantor agrees to hold
in trust for Lender an amount equal to the amount of all funds, payments,
claims or distributions so received, and agrees that it shall have absolutely
no dominion over the amount of such funds, payments, claims or distributions
so received except to pay them promptly to Lender, and Guarantor covenants
promptly to pay the same to Lender.
Section 4.4 LIENS SUBORDINATE. Guarantor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon
Borrower's assets securing payment of the Guarantor Claims shall be and
remain inferior and subordinate to any liens, security interests, judgment
liens, charges or other encumbrances upon Borrower's assets securing payment
of the Guaranteed Obligations, regardless of whether such encumbrances in
favor of Guarantor or Lender presently exist or are hereafter created or
attach. Without the prior written consent of Lender, Guarantor shall not (I)
exercise or enforce any creditor's right it may have against Borrower, or
(ii) foreclose, repossess, sequester or otherwise take steps or institute any
action or proceedings (judicial or otherwise, including without limitation
the commencement of, or joinder in, any liquidation, bankruptcy,
rearrangement, debtor's relief or insolvency proceeding) to enforce any
liens, mortgages, deeds of trust, security interest, collateral rights,
judgments or other encumbrances on assets of Borrower held by Guarantor.
ARTICLE 5
MISCELLANEOUS
Section 5.1 WAIVER. No failure to exercise, and no delay in
exercising, on the part of Lender, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right. The
rights of Lender hereunder shall be in addition to all other rights provided
by law. No modification or waiver of any provision of this Guaranty, nor
consent to departure therefrom, shall be effective unless in writing and no
such consent or waiver shall extend beyond the particular case and purpose
involved. No notice or demand given in any case shall constitute a waiver of
the right to take other action in the same, similar or other instances
without such notice or demand.
Section 5.2 NOTICES. All notices or other written communications
hereunder shall be deemed to have been properly given (I) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged,
(ii) one (1) Business Day (hereinafter defined) after having been deposited
for overnight delivery with any reputable overnight courier service, or (iii)
three (3) Business Days after having been deposited in any post office or
mail depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, addressed as follows:
GUARANTOR: Horizon Group Properties, Inc.
77 West Wacker Drive, Suite 4200
<PAGE>
Chicago, Illinois 60601
Attention: General Counsel
WITH A COPY TO: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Howard Kruse, Esq.
LENDER: Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Nancy Alto, Commercial Mortgage
Finance Group Loan Servicing
Facsimile No.: (212) 648-5274
WITH A COPY TO: Womble Carlyle Sandridge & Rice, PLLC
3500 One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309
Attention: James H. Thompson, Esq.
Facsimile No.: (404) 888-7490
or addressed as such party may from time to time designate by written notice
to the other parties. For purposes of this Section 5.2, the term "BUSINESS
DAY" shall mean a day on which commercial banks are not authorized or
required by law to close in New York, New York.
Any party by notice to the other parties may designate additional or
different addresses for subsequent notices or communications.
Section 5.3 GOVERNING LAW; JURISDICTION.
(A) THIS GUARANTY WAS NEGOTIATED IN THE STATE OF ILLINOIS,
AND MADE BY GUARANTOR AND ACCEPTED BY LENDER IN THE STATE OF ILLINOIS, AND
THE PROCEEDS OF THE NOTES WERE DISBURSED IN THE STATE OF ILLINOIS, WHICH
STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO
THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS GUARANTY AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF ILLINOIS APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE
<PAGE>
(WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE
UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE
LAW OF ANY OTHER JURISDICTION GOVERNS THIS GUARANTY AND THIS GUARANTY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY MAY AT LENDER'S OPTION
BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF CHICAGO, COOK
COUNTY, ILLINOIS, AND GUARANTOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
Section 5.4. INVALID PROVISIONS. If any provision of this Guaranty
is held to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Guaranty, such provision shall be fully
severable and this Guaranty shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of
this Guaranty, and the remaining provisions of this Guaranty shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Guaranty, unless such
continued effectiveness of this Guaranty, as modified, would be contrary to
the basic understandings and intentions of the parties as expressed herein.
Section 5.5 AMENDMENTS. This Guaranty may be amended only by an
instrument in writing executed by the party or an authorized representative
of the party against whom such amendment is sought to be enforced.
Section 5.6 PARTIES BOUND; ASSIGNMENT. This Guaranty shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and legal representatives; provided, however,
that Guarantor may not, without the prior written consent of Lender, assign
any of its rights, powers, duties or obligations hereunder.
Section 5.7 HEADINGS. Section headings are for convenience of
reference only and shall in no way affect the interpretation of this Guaranty.
Section 5.8 RECITALS. The recital and introductory paragraphs
hereof are a part hereof, form a basis for this Guaranty and shall be
considered PRIMA FACIE evidence of the facts
<PAGE>
and documents referred to therein.
Section 5.9 COUNTERPARTS. To facilitate execution, this Guaranty
may be executed in as many counterparts as may be convenient or required. It
shall not be necessary that the signature or acknowledgment of, or on behalf
of, each party, or that the signature of all persons required to bind any
party, or the acknowledgment of such party, appear on each counterpart. All
counterparts shall collectively constitute a single instrument. It shall not
be necessary in making proof of this Guaranty to produce or account for more
than a single counterpart containing the respective signatures of, or on
behalf of, and the respective acknowledgments of, each of the parties hereto.
Any signature or acknowledgment page to any counterpart may be detached from
such counterpart without impairing the legal effect of the signatures or
acknowledgments thereon and thereafter attached to another counterpart
identical thereto except having attached to it additional signature or
acknowledgment pages.
Section 5.10 RIGHTS AND REMEDIES. If Guarantor becomes liable for
any indebtedness owing by Borrower to Lender, by endorsement or otherwise,
other than under this Guaranty, such liability shall not be in any manner
impaired or affected hereby and the rights of Lender hereunder shall be
cumulative of any and all other rights that Lender may ever have against
Guarantor. The exercise by Lender of any right or remedy hereunder or under
any other instrument, or at law or in equity, shall not preclude the
concurrent or subsequent exercise of any other right or remedy.
Section 5.11 ENTIRETY. THIS GUARANTY EMBODIES THE FINAL, ENTIRE
AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR'S GUARANTY OF THE
GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR
AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY,
AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF
THIS GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND
LENDER.
Section 5.12 WAIVER OF RIGHT TO TRIAL BY JURY. GUARANTOR HEREBY
AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY,
AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT
SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS GUARANTY, THE SECURITY
INSTRUMENTS, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER
ACTION ARISING IN CONNECTION
<PAGE>
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY GUARANTOR, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
GUARANTOR.
EXECUTED as of the day and year first above written.
GUARANTOR:
HORIZON GROUP PROPERTIES, INC., a
Maryland corporation
By:_________________________________________
Name:_______________________________________
Title:______________________________________
<PAGE>
FOR IMMEDIATE RELEASE CONTACT:
(INVESTORS) David R. Tinkham
Chief Financial Officer
(312) 917-4288
(MEDIA) Susan M. Crusoe
Senior Vice President,
Marketing
(312) 917-8877
HORIZON GROUP PROPERTIES COMPLETES REFINANCING
SECURED BY SIX FACTORY OUTLET CENTERS
--------------------------------------------------------
LOAN AGREEMENT WITH JP MORGAN
PROVIDES LONG-TERM STABILITY
CHICAGO, IL (JULY 12, 1999) -- Horizon Group Properties, Inc. (HGP)
(NASDAQ: HGPI), an owner, operator and developer of factory outlet and power
centers, today announced it has obtained a $46.655 million fixed rate loan
secured by six factory outlet centers. The refinancing covers two pools of
assets. The loan amount assigned to Pool 1 is $22.850 million and the
properties are located in Daleville, Indiana; Somerset, Pennsylvania; and
Tulare, California. The loan amount assigned to Pool 2 is $23.805 million and
properties are located in Gretna, Nebraska; Sealy, Texas; and Traverse City,
Michigan. The assets contained in each respective pool are
cross-collateralized.
-- MORE --
<PAGE>
HGP COMPLETES REFINANCING
PAGE TWO
The loan, funded by JP Morgan, matures on August 1, 2009, amortizes
based on a 25-year schedule, and is non-recourse to the Company. The net
proceeds from the loan were applied to the Company's existing debt facility
with Capital Company of America ("CCA"), successor to Nomura Asset Capital
Corporation. The CCA loan is a floating rate, LIBOR based obligation that
matures on July 11, 2001. The CCA loan is secured by the remaining six
factory outlet centers and a power center. The properties covered by the CCA
facility are cross-collateralized and recourse to the Company.
Commenting on the refinancing, Gary J. Skoien, HGP's Chairman,
President and Chief Executive Officer said, "When HGP was formed last year
following the spin-off from Prime Retail, we implemented repositioning
strategies that included aggressive marketing and capital improvements at
selected centers in our portfolio. Given our repositioning strategy, this
10-year fixed rate debt on these properties reduces HGP's exposure to
interest rate risk and gives the Company more flexibility to reposition the
assets secured by the loan."
Based in Chicago, Illinois, Horizon Group Properties, Inc. owns and
operates 13 factory outlet centers and one power center in 11 states, in
addition to managing two factory outlet centers, for a portfolio total of
more than 3.3 million square feet.
###
[SAFE HARBOR STATEMENT TO FOLLOW ON PAGE THREE]
<PAGE>
HGP COMPLETES REFINANCING
PAGE THREE
SAFE HARBOR STATEMENT: THE STATEMENTS CONTAINED HEREIN WHICH ARE NOT
HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS BASED UPON ECONOMIC
FORECASTS, BUDGETS, AND OTHER FACTORS WHICH, BY THEIR NATURE, INVOLVE KNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF HORIZON GROUP PROPERTIES, INC. TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS IMPLIED BY SUCH STATEMENTS. IN
PARTICULAR, AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY ARE THE FOLLOWING: BUSINESS CONDITIONS AND THE GENERAL ECONOMY,
COMPETITIVE FACTORS, INTEREST RATES AND OTHER RISKS INHERENT IN THE REAL
ESTATE BUSINESS. FOR FURTHER INFORMATION ON FACTORS WHICH COULD IMPACT THE
COMPANY AND THE STATEMENTS CONTAINED HEREIN, REFERENCE IS MADE TO THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
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Schedule of substantially similar Documents
The following documents are substantially similar to Exhibit 10.20
filed herewith except as noted with respect to material differences.
Fixed Rate Note dated as of July 9, 1999 between Gretna, Sealy,
Traverse City Outlet Centers, L.L.C. and Morgan Guaranty Trust
Company of New York related to the financing of the factory outlet
center in Sealy, Texas. Material differences:
Principal amount: $11,115,000
Monthly Payment of Principal and Interest: $89,201.58
Fixed Rate Note dated as of July 9, 1999 between Gretna, Sealy,
Traverse City Outlet Centers, L.L.C. and Morgan Guaranty Trust
Company of New York related to the financing of the factory outlet
center in Traverse City, Michigan. Material differences:
Principal amount: $5,205,000
Monthly Payment: $41,771.86
Fixed Rate Note dated as of July 9, 1999 between Daleville,
Sommerset, Tulare Outlet Centers, L.P. and Morgan Guaranty Trust
Company of New York related to the financing of the factory outlet
center in Daleville, Indiana. Material differences:
Borrower: Daleville, Sommerset, Tulare Outlet Centers, L.P.
Security Instruments: Mortgage and Security Agreements covering
borrower's interests in property located in Sommerset,
Pennsylvania and Daleville, Indiana and Deed of Trust and
Security Agreement covering borrower's interest in property
located in Tulare, California.
Principal amount: $10,875,000
Monthly Payment of Principal and Interest: $87,275.50
Fixed Rate Note dated as of July 9, 1999 between Daleville,
Sommerset, Tulare Outlet Centers, L.P. and Morgan Guaranty Trust
Company of New York related to the financing of the factory outlet
center in Somerset, Pennsylvania. Material differences:
Borrower: Daleville, Sommerset, Tulare Outlet Centers, L.P.
Security Instruments: Mortgage and Security Agreements covering
borrower's interests in property located in Sommerset,
Pennsylvania and Daleville, Indiana and Deed of Trust and
Security Agreement covering borrower's interest in property
located in Tulare, California.
Principal amount: $2,650,000
Monthly Payment of Principal and Interest: $21,267.13
Fixed Rate Note dated as of July 9, 1999 between Daleville,
Sommerset, Tulare Outlet Centers, L.P. and Morgan Guaranty Trust
Company of New York related to the financing of the factory outlet
center in Tulare, California. Material differences:
Borrower: Daleville, Sommerset, Tulare Outlet Centers, L.P.
Security Instruments: Mortgage and Security Agreements covering
borrower's interests in property located in Sommerset,
Pennsylvania and Daleville, Indiana and Deed of
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Trust and Security Agreement covering borrower's interest in
property located in Tulare, California.
Principal amount: $9,325,000
Monthly Payment of Principal and Interest: $74,836.23
The following documents are substantially similar to Exhibit 10.21
filed herewith except as noted with respect to material differences.
Deed of Trust and Security Agreement for the benefit of Morgan
Guaranty Trust Company of New York, as lender, from Gretna, Sealy,
Traverse City Outlet Centers, L.L.C., as borrower, related to the
financing of the factory outlet center in Sealy, Texas. Material
differences:
No material differences
Mortgage to Morgan Guaranty Trust Company of New York, as lender,
from Gretna, Sealy, Traverse City Outlet Centers, L.L.C., as
borrower, related to the financing of the factory outlet center in
Traverse City, Michigan. Material differences:
Form of Agreement: Mortgage
Mortgage and Security Agreement to Morgan Guaranty Trust Company of
New York, as lender, from Daleville, Sommerset, Tulare Outlet
Centers, L.P., as borrower, related to the factory outlet center in
Daleville, Indiana. Material differences:
Form of Agreement: Mortgage
Borrower: Daleville, Sommerset, Tulare Outlet Centers, L.P.
Obligations Secured: Daleville Note in the amount of
$10,875,000, Sommerset Note in the amount of $2,650,000
and Tulare Note in the amount of $9,325,000.
Mortgage and Security Agreement to Morgan Guaranty Trust Company of
New York, as lender, from Daleville, Sommerset, Tulare Outlet
Centers, L.P., as borrower, related to the factory outlet center in
Somerset, Pennsylvania. Material differences:
Form of Agreement: Mortgage
Borrower: Daleville, Sommerset, Tulare Outlet Centers, L.P.
Obligations Secured: Daleville Note in the amount of
$10,875,000, Sommerset Note in the amount of $2,650,000
and Tulare Note in the amount of $9,325,000.
Mortgage and Security Agreement for the benefit of Morgan Guaranty
Trust Company of New York, as lender, from Daleville, Sommerset,
Tulare Outlet Centers, L.P., as borrower related to the Factory
outlet center in Tulare, California. Material differences:
Form of Agreement: Mortgage
Borrower: Daleville, Sommerset, Tulare Outlet Centers, L.P.
Obligations Secured: Daleville Note in the amount of
$10,875,000, Sommerset Note in the amount of $2,650,000
and Tulare Note in the amount of $9,325,000.
The following document is substantially similar to Exhibit 10.22
filed herewith except as noted with respect to material differences.
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Guaranty for the benefit of Morgan Guaranty Trust Company of New York
by Horizon Group Properties, Inc. retaliated to the Daleville,
Sommerset and Tulare loans. Material differences:
Obligation Guaranteed: Guaranteed Obligations related to
Daleville Note in the amount of $10,875,000, Sommerset
Note in the amount of $2,650,000 and Tulare Note in the
amount of $9,325,000 and the security interests created by
the related mortgages and deeds of trusts.
