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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) February 27, 1997
KRANZCO REALTY TRUST
(Exact Name of Registrant as Specified in Charter)
Maryland 1-11478 23-2691327
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
128 Fayette Street, Conshohocken, Pennsylvania 19428
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (610) 941-9292
(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets.
On February 27, 1997, KRT Union Corp. ("KRT Union"), a
wholly-owned subsidiary of Kranzco Realty Trust (the "Company"),
consummated the merger (the "Merger") of Union Property
Investors, Inc. ("UPI"), a Delaware corporation, with and into
KRT Union. Immediately prior to the Merger, UPI engaged in the
business of owning and leasing nine shopping centers and seven
single tenant commercial properties (collectively, the "Acquired
Properties") having, in the aggregate, approximately 1,346,000
square feet of gross leasable area. The Company, through various
wholly-owned subsidiaries, intends to own, manage, operate and
lease the Acquired Properties. As a result of the Merger, the
Company now owns, directly or through wholly-owned subsidiaries
or affiliates, fifty-four properties containing approximately
7,000,000 square feet of gross leasable area located in sixteen
states. The Company currently intends to conduct its operations
substantially in the same manner as it operated them immediately
prior to the Merger.
Pursuant to the Merger, the Company issued (i)
approximately 1,184,116 shares of its Series B-1 Cumulative
Convertible Preferred Shares of Beneficial Interest (the "Series
B-1 Preferred Shares") and its Series B-2 Cumulative Convertible
Preferred Shares of Beneficial Interest (the "Series B-2
Preferred Shares"), having a collective liquidation preference of
$29,602,900, in exchange for UPI's issued and outstanding shares
of common stock and (ii) 356,400 shares of its Series C
Cumulative Redeemable Preferred Shares of Beneficial Interest
(the "Series C Preferred Shares"), having a collective
liquidation preference of $3,564,000, in exchange for UPI's
issued and outstanding shares of preferred stock. Holders of the
Series B-1 Preferred Shares and holders of the Series B-2
Preferred Shares are entitled to receive cumulative cash
distributions at a rate of 9.75% per annum on a liquidation
preference of $25 per share. Holders of the Series C Preferred
Shares are entitled to receive cumulative cash distributions at a
rate of 8.0% per annum on a liquidation preference of $10 per
share.
Pursuant to the Merger, KRT Union assumed an aggregate
amount of approximately $20,629,000 of indebtedness secured by
the seven following Acquired Properties: Bainbridge, Georgia;
Flint, Michigan; Livonia, Michigan; Columbus, Mississippi; Cary,
North Carolina; Spartanburg, South Carolina; and Columbia, South
Carolina. In addition, pursuant to the Merger, KRT Union assumed
an aggregate amount of approximately $9,606,000 of indebtedness,
all of which was paid at the time of the Merger.
Item 5. Other Events.
On February 27, 1997, KRT Union and 13 other wholly-
owned subsidiaries of the Company (collectively, the "Borrowers")
entered into a loan agreement with Salomon Brothers Realty Corp.
("Salomon Brothers"), pursuant to which Salomon Brothers has
provided the Borrowers with a line of credit (the "Line of
Credit") that enables the Borrowers to borrow amounts thereunder
from time to time provided that the aggregate amount at any one
time outstanding does not exceed $50,000,000. The Line of Credit
bears interest at a rate equal to 175 basis points above the one
month LIBOR rate and is payable monthly on the first day of each
month. The Line of Credit is prepayable in full at any time
without penalty but with a 1% repayment charge. The maturity
date of the Line of Credit is March 1, 1999 but the Borrowers may
extend this maturity date until March 1, 2000 upon payment of a
fee in the amount of 1% of the then outstanding balance of the
Line of Credit on March 1, 1999. The terms of the Line of Credit
contain customary representations, covenants and events of
default.
The Line of Credit is evidenced by a single promissory
note. Payment of principal of and interest on the Line of Credit
is secured by, among other things, first mortgages on the
shopping centers and single-tenant properties owned and/or leased
by the Borrowers. The shopping centers and single-tenant
properties that are subject to such first mortgages are:
1. Ames Department Store in Raynham, Massachusetts;
2. Baker's Square Restaurant in Minnetonka,
Minnesota;
3. Baker's Square Restaurant in Roseville, Minnesota;
4. The portion of the Barn Plaza Shopping Center
located in Doylestown, Pennsylvania, which is
leased to Regal Cinemas, Inc. for use as a
theater;
5. Bradford Mall in Bradford, Pennsylvania;
6. Brookway Village in Brookhaven, Mississippi;
7. The portion of The Mall at Cross Country in
Yonkers, New York which is leased to Circuit City;
8. Franklin Center in Chambersburg, Pennsylvania;
9. Harrodsburg Marketplace in Harrodsburg, Kentucky;
10. Magnolia Plaza in Morganton, North Carolina;
11. Parkway Plaza I in Hamden, Connecticut;
12. Sinclair Paint in Tucson, Arizona;
13. Valley Forge Mall in Valley Forge, Pennsylvania;
14. Wampanoag Plaza in East Providence, Rhode Island.
Each of the mortgages is cross-collateralized and
cross-defaulted with each of the other mortgages. The Company
has guaranteed the payment of the obligations of the Borrowers
under the Line of Credit. The proceeds of the Line of Credit are
to be used by the Company to refinance existing mortgage
indebtedness, for working capital, for general corporate purposes
and for acquisitions.
Item 7. Financial Statements, Pro Forma Financial Statements and
Exhibits.
(a) Financial Statements of Businesses Acquired.
(b) Pro Forma Financial Information.
The required financial statements will be filed on Form
8-K/A as soon as practicable, but in any event with 60 days after
this Current Report on Form 8-K is filed.
(c) Exhibits
2.1 Agreement and Plan of Merger, dated November 12, 1996,
among Kranzco Realty Trust, KRT Union Corp. and Union
Property Investors, Inc.*
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated
December 18, 1996.*
2.3 Amendment No. 2 to Agreement and Plan of Merger, dated
February 26, 1997.***
4.1 Articles Supplementary for the Company's Series B-1
Cumulative Convertible Preferred Shares of Beneficial
Interest.**
4.2 Articles Supplementary for the Company's Series B-2
Cumulative Convertible Preferred Shares of Beneficial
Interest.***
4.3 Articles Supplementary for the Company's Series C
Cumulative Redeemable Preferred Shares of Beneficial
Interest.***
10.1 Loan Agreement dated as of February 26, 1997 with Salomon
Brothers Realty Corp.***
10.2 Global Promissory Note dated February 26, 1997 in the
amount of $50,000,000 executed in favor of Salomon
Brothers Realty Corp.***
10.3 Unlimited Guaranty of Payment dated as of February 26,
1997 issued by Kranzco Realty Trust in favor of Salomon
Brothers Realty Corp.***
10.4 Exemplar Open End Fee and Leasehold Mortgage, Assignment
of Leases and Rents, Security Agreement and Fixture Filing
dated as of February 26, 1997 issued in connection with
the Line of Credit.***
23.1 Independent Auditors' Consent - Arthur Andersen & Co.****
27.1 Financial Data Schedule.****
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* Previously filed as an exhibit to the Registrant's
Registration Statement on Form S-4, Registration No. 333-
18249.
** Previously filed as an exhibit to the Registrant's
Registration Statement on Form 8-A dated February 27,
1997.
*** Filed herewith.
**** To be filed by amendment.
<PAGE>
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.
Date: March 13, 1997
KRANZCO REALTY TRUST
By: /s/ Robert H. Dennis
-----------------------
Name: Robert H. Dennis
Title: Vice President and
Chief Financial Officer
Exhibit 2.3
AMENDMENT NO. 2 TO
AGREEMENT AND PLAN OF MERGER
This Amendment No. 2 to that certain Agreement and Plan of
Merger dated November 12, 1996, as amended by Amendment No. 1 to
Agreement and Plan of Merger dated December 18, 1996 (the "Merger
Agreement"), is made and entered into this 26th day of February,
1997, by and among Union Property Investors, Inc., a Delaware
corporation ("UPI"), Kranzco Realty Trust, a Maryland real estate
investment trust ("Kranzco"), and KRT Union Corp., a Delaware
corporation and a wholly-owned subsidiary of Kranzco organized
solely for the purpose of consummating the transactions
contemplated by the Merger Agreement.
WHEREAS, the Board of Directors of each of UPI and KRT Union
Corp., and the Board of Trustees of Kranzco have determined that
it is in the best interests of their respective companies and
stockholders to modify and amend the Merger Agreement as set
forth below.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
Exhibits A-1 and A-2 to the Merger Agreement are amended and
restated in their entirety in the forms attached hereto as
Exhibits A-1 and A-2, respectively.
Upon the execution hereof, each reference in the Merger
Agreement to "this Agreement", "hereby", "hereunder", "herein" or
word of like import referring to the Merger Agreement shall mean
and refer to the Merger Agreement as amended by this Amendment
No. 2 to the Merger Agreement. All other provisions of the
Merger Agreement shall remain in full force and effect except and
to the extent explicitly amended hereby. This Amendment No. 2 to
the Merger Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard
to any applicable principles of conflicts of law.
This amendment may be executed in any number of
counterparts, each of which together shall constitute one and the
same amendment.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 2 to the Merger Agreement to be signed by their
respective officers thereunto duly authorized as of the date
first written above.
UNION PROPERTY INVESTORS, INC.
/s/ Robert A. Mandor
______________________________
Name: Robert A. Mandor
Title: President
KRANZCO REALTY TRUST
/s/ Norman M. Kranzdorf
______________________________
Name: Norman M. Kranzdorf
Title: President
KRT UNION CORP.
/s/ Norman M. Kranzdorf
______________________________
Name: Norman M. Kranzdorf
Title: President
Exhibit 4.2
KRANZCO REALTY TRUST
ARTICLES SUPPLEMENTARY CLASSIFYING
1,235,000 SHARES OF BENEFICIAL INTEREST
AS
9.75% SERIES B-2 CUMULATIVE CONVERTIBLE PREFERRED SHARES
OF
BENEFICIAL INTEREST
(Pursuant to Section 8-203(b) of the
Corporations and Associations Article
of the Annotated Code of Maryland)
Kranzco Realty Trust, a real estate investment trust
organized and existing under the laws of the State of Maryland
(the "Company"), and having its executive office at 128 Fayette
Street, Conshohocken, Pennsylvania 19428, hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested in
the Board of Trustees of the Company (the "Board of Trustees") in
accordance with the Amended and Restated Declaration of Trust of
the Company, dated November 4, 1992, as amended (the "Declaration
of Trust"), the Board of Trustees at a meeting duly convened and
held on November 7, 1996 and by unanimous written consent dated
as of December 18, 1996 adopted resolutions authorizing, creating
and classifying, out of the 100,000,000 authorized shares of
beneficial interest of the Company (the "Shares"), a separate
class of preferred shares of beneficial interest consisting of
1,235,000 preferred shares of beneficial interest to be known as
the "Series B-2 Cumulative Convertible Preferred Shares of
Beneficial Interest" (the "Series B-2 Preferred Shares"). The
Series B-2 Preferred Shares shall have a par value of $.01 per
share. The designation, preferences, conversion and other
rights, voting powers, restrictions, or limitations as to
dividends or other distributions of the Series B-2 Preferred
Shares, which shall be deemed to be part of Article VI of the
Declaration of Trust, are as follows:
9.75% SERIES B-2 CUMULATIVE CONVERTIBLE PREFERRED SHARES
OF BENEFICIAL INTEREST
The Series B-2 Preferred Shares shall be identical in all
respects to the 9.75% Series B-1 Cumulative Convertible Preferred
Shares of Beneficial Interest, $.01 par value per share, of the
Company (the "Series B-1 Preferred Shares", and, together with
the Series B-2 Preferred Shares, the "Series B Preferred
Shares"), and shall have the same rights, privileges and
preferences as the Series B-1 Preferred Shares in all
circumstances, except with respect to the conversion rights set
forth in Subparagraph D(1) herein.
A. Certain Definitions.
Unless the context otherwise requires, the terms defined in
this Paragraph (A) shall have, for all purposes of the provisions
of the Declaration of Trust in respect of the Series B-2
Preferred Shares, the meanings herein specified (with terms
defined in the singular having comparable meanings when used in
the plural):
Additional Common Equity. The term "Additional Common
Equity" shall have the meaning set forth in Subparagraph
(D)(6)(ii).
Adjustment Event. The term "Adjustment Event" shall mean
any event described in Subparagraph (D)(6).
Board of Trustees. The term "Board of Trustees" shall mean
the Board of Trustees of the Company.
Business Day. The term "Business Day" shall mean any day,
other than a Saturday or a Sunday, that is neither a legal
holiday nor a day on which banking institutions in New York City
are authorized or required by law to close.
Call Price. The term "Call Price" shall have the meaning
set forth in Subparagraph (G)(1).
Capital Gains Amount. The term "Capital Gains Amount" shall
have the meaning set forth in Subparagraph (B)(7).
Capital Lease. The term "Capital Lease" shall mean any
lease of property, real or personal, the obligations of the
lessee in respect of which are required in accordance with
generally accepted accounting principles to be capitalized on the
balance sheet of the lessee.
Code. The term "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
Common Equity. The term "Common Equity" shall mean all
shares now or hereafter authorized of any class or series of
common shares of beneficial interest of the Company, including
the Common Shares, and any other shares, howsoever designated,
which have the right (subject always to prior rights of any class
or series of preferred shares of beneficial interest) to
participate in the distribution of the assets and earnings of the
Company without limit as to per share amount.
Common Share Distribution. The term "Common Share
Distribution" shall have the meaning set forth in Subparagraph
(D)(1).
Common Share Distribution Period. The term "Common Share
Distribution Period" shall have the meaning set forth in
Subparagraph (D)(1).
Common Share Equivalent. The term "Common Share Equivalent"
shall have the meaning set forth in Subparagraph (D)(6)(ii).
Common Shares. The term "Common Shares" shall mean the
Common Shares of Beneficial Interest, $.01 par value per share,
of the Company.
Company Affiliate. The term "Company Affiliate" shall have
the meaning set forth in Subparagraph (D)(6)(ii).
Converted Series B-2 Preferred Share Distribution. The term
"Converted Series B-2 Preferred Share Distribution" shall have
the meaning set forth in Subparagraph (D)(1).
Convertible Securities. The term "Convertible Securities"
shall have the meaning set forth in Subparagraph (D)(6)(ii).
Current Market Price per Common Share. The term "Current
Market Price per Common Share" shall mean the average of the
closing prices for a Common Share for the thirty trading days
preceding the tenth trading day prior to the relevant date of
determination. The closing price for such days shall be the last
reported sale price regular way or, in case no such reported sale
takes place on such date, the average of the reported closing bid
and asked prices regular way, in either case on the New York
Stock Exchange, Inc., or if the Common Shares are not listed or
admitted to trading on the New York Stock Exchange, Inc., on the
principal national securities exchange on which the Common Shares
are listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the closing sale
price of the Common Shares or in case no reported sale takes
place, the average of the closing bid and asked prices, on NASDAQ
or any comparable system. If the Common Shares are not quoted on
NASDAQ or any comparable system, the Board of Trustees shall in
good faith determine the current market price on such basis as it
considers appropriate.
Distribution. The term "Distribution" or "Distributions"
shall mean any cash or other property paid or payable on or with
respect to any share of beneficial interest, common or preferred,
including, without limitation, any dividend or other
distribution, whether in liquidation or otherwise.
Distribution Payment Date. The term "Distribution Payment
Date" shall have the meaning set forth in Subparagraph (B)(2).
Distribution Period. The term "Distribution Period" shall
mean the period from and including the Initial Issue Date to, but
not including, the first Distribution Payment Date and
thereafter, each quarterly period from and including any
Distribution Payment Date to, but not including, the next
Distribution Payment Date.
Distributions Accrued and Accrued Distributions. The terms
"Distributions Accrued" and "Accrued Distributions" shall mean,
with respect to any class or series of preferred shares of
beneficial interest, an amount which shall be equal to
distributions thereon at the annual distribution rates per share
for the respective class or series thereof from the date or dates
on which such distributions commence to accrue to the end of the
then current distribution period for such preferred shares, less
the amount of all distributions paid, with respect to such
preferred shares for such period from the date such distributions
commenced to accrue.
Excess Amount. The term "Excess Amount" shall have the
meaning set forth in Subparagraph (D)(1).
Excess Shares. The term "Excess Shares" shall have the
meaning set forth in Subparagraph (F)(4).
Four Quarter Preferential Distribution Non-Payment. The
term "Four Quarter Preferential Distribution Non-Payment" shall
have the meaning set forth in Subparagraph (E)(2)(ii).
Initial Issue Date. The term "Initial Issue Date" shall
mean February 27, 1997.
Junior Shares. The term "Junior Shares" shall mean, as the
case may be, (i) the Common Equity and any other class or series
of Shares which is not entitled to receive any distributions in
any Distribution Period unless all distributions required to have
been paid or declared and set apart for payment on the Series B-2
Preferred Shares shall have been so paid or declared and set
apart for payment or (ii) the Common Equity and any other class
or series of Shares which is not entitled to receive any assets
upon liquidation, dissolution or winding up of the affairs of the
Company until the Series B-2 Preferred Shares shall have received
the entire amount to which such Class B Preferred Shares is
entitled upon such liquidation, dissolution or winding up.
Liquidation Preference. The term "Liquidation Preference"
shall mean $25.00 per share.
Notice of Redemption. The term "Notice of Redemption" shall
have the meaning set forth in Subparagraph (G)(2).
Overlapping Period. The term "Overlapping Period" shall
have the meaning set forth in Subparagraph (D)(1).
Parity Shares. The term "Parity Shares" shall mean, as the
case may be, (i) any class or series of Shares which is entitled
to receive payment of distributions on a parity with the Series
B-2 Preferred Shares or (ii) any class or series of Shares which
is entitled to receive assets upon liquidation, dissolution or
winding up of the affairs of the Company on a parity with the
Series B-2 Preferred Shares.
Person. The term "Person" shall mean an individual,
corporation, partnership, estate, trust (including a trust
classified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the
Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company, limited
liability company or other entity, and also includes a group as
that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, but does not include
an underwriter which participates in a public offering of the
Series B-2 Preferred Shares; provided, that such ownership by
such underwriter would not result in the Company being "closely
held" within the meaning of Section 856(h) of the Code, or
otherwise result in the Company failing to qualify as a REIT.
Preferential Distribution Non-Payment. The term
"Preferential Distribution Non-Payment" shall have the meaning
set forth in Subparagraph (E)(2)(ii).
Preferred Shares Trustee. The term "Preferred Shares
Trustee" shall have the meaning set forth in Subparagraph
(E)(2)(ii).
Record Date. The term "Record Date" shall mean the date
designated by the Board of Trustees at the time a distribution is
declared; provided, that such Record Date shall be the first day
of the calendar month in which the applicable Distribution
Payment Date falls or such other date designated by the Board of
Trustees for the payment of distributions that is not more than
ninety (90) days prior to such Distribution Payment Date.
Redemption Date. The term "Redemption Date" shall have the
meaning set forth in Subparagraph (G)(2).
Redemption Distributions. The term "Redemption
Distributions" shall have the meaning set forth in Subparagraph
(G)(1).
REIT. The term "REIT" shall mean a real estate investment
trust under Section 856 of the Code.
Senior Shares. The term "Senior Shares" shall mean, as the
case may be, (i) any class or series of Shares ranking senior to
the Series B-2 Preferred Shares in respect of the right to
receive distributions or (ii) any class or series of Shares
ranking senior to the Series B-2 Preferred Shares in respect of
the right to participate in any distribution upon liquidation,
dissolution or winding up of the affairs of the Company.
Series A Preferred Shares. The term "Series A Preferred
Shares" shall mean the Series A Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest, $.01 par
value per share, of the Company.
Series A-1 Preferred Shares. The term "Series A-1 Preferred
Shares" shall mean the Series A-1 Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest, $.01 par
value per share, of the Company.
Series A Preferred Share Conversion Limit. The term "Series
A Preferred Share Conversion Limit" shall have the meaning set
forth in Subparagraph (D)(6).
Series B-1 Excepted Person. The term "Series B-1 Excepted
Person" shall have the meaning set forth in Subparagraph (F)(5).
Series B-2 Conversion Price. The term "Series B-2
Conversion Price" shall have the meaning set forth in
Subparagraph (D)(1).
Series B-2 Excess Shares. The term "Series B-2 Excess
Shares" shall have the meaning set forth in Subparagraph (F)(4).
Series B-2 Excepted Person. The term "Series B-2 Excepted
Person" shall have the meaning set forth in Subparagraph (F)(5).
Series C Preferred Shares. The term "Series C Preferred
Shares" shall mean the Series C Cumulative Redeemable Preferred
Shares of Beneficial Interest, $.01 par value per share, of the
Company.
Shares. The term "Shares" shall mean any transferable
shares of beneficial interest of the Company of any class or
series.
Six Quarter Preferential Distribution Non-Payment. The term
"Six Quarter Preferential Distribution Non-Payment" shall have
the meaning set forth in Subparagraph (E)(2)(ii).
Special Conversion Event. The term "Special Conversion
Event" shall mean:
(i) Norman M. Kranzdorf ceasing to be any of the
following: (A) Chief Executive Officer, (B) Chief Operating
Officer or (C) any other senior executive officer of the
Company having an active role in such capacity in the
management of the business of the Company;
(ii) the merger or consolidation of the Company with or
into any Person, unless (A) immediately following such
merger or consolidation, more than 50% of the surviving
company's issued and outstanding voting securities are held
by the holders of the Company's issued and outstanding
voting securities immediately prior to such merger or
consolidation and (B) effective provision is made in the
charter documents of the surviving Person or otherwise for
the recognition, preservation and protection of the
preferences, conversion and other rights, voting powers,
restrictions and limitations as to dividends or other
distributions of the Series B-2 Preferred Shares;
(iii) the sale, lease, transfer, spin-off, or other
disposal or distribution of all or substantially all of the
assets of the Company;
(iv) a tender offer or other similar offer for at least
a majority of the voting shares of beneficial interest of
the Company by any Person or group of related Persons for
purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended, is commenced and completed, and as a
result thereof such Person or related group of Persons owns
or controls more than a majority of the issued and
outstanding voting securities of the Company;
(v) with respect to any agreements for, or notes or
other instruments evidencing, borrowed money of the Company
or any of the Subsidiaries for, individually or in the
aggregate, $10,000,000 or more (including as a result of any
cross-default provisions), if (A) the Company or any of the
Subsidiaries defaults in any payment of principal or
interest, (B) a non-monetary default by the Company or any
of the Subsidiaries occurs which is not contested by the
Company or the applicable Subsidiary and is not cured within
any applicable grace period or waived or (C) a non-monetary
default by the Company or any of the Subsidiaries occurs
which is contested by the Company or the applicable
Subsidiary and is not cured within 30 days after it is
determined by a court of competent jurisdiction that the
Company or the applicable Subsidiary has committed such
default, and, in any case, the holders (or trustees on
behalf of such holders) of any indebtedness for borrowed
money of the Company or any of the Subsidiaries for an
aggregate amount of $10,000,000 or more, pursuant to such
agreements, notes or instruments, or any cross-default
provisions contained in any agreements, notes or instruments
representing indebtedness for borrowed money, elect to
accelerate the stated maturity or payment dates of such
indebtedness;
(vi) with respect to any Capital Lease of the Company
or any of the Subsidiaries pursuant to which the Company or
any of the Subsidiaries has rental obligations in an
aggregate amount of $25,000,000 or more over the term of
such Capital Lease (including as a result of any cross-
default provisions), if (A) a default by the Company or any
of the Subsidiaries occurs in any payment of any rental
obligations, (B) a non-monetary default by the Company or
any of the Subsidiaries occurs which is not contested by the
Company or the applicable Subsidiary and is not cured within
any applicable grace period or waived or (C) a non-monetary
default by the Company or any of the Subsidiaries occurs
which is contested by the Company or the applicable
Subsidiary and is not cured within 30 days after it is
determined by a court of competent jurisdiction that the
Company or the applicable Subsidiary has committed such
default, and, in each case, if the lessors of Capital Leases
of the Company or any of the Subsidiaries pursuant to which
the Company or any of the Subsidiaries has rental
obligations in an aggregate amount of $25,000,000 or more
over the term of such Capital Leases, pursuant to such
Capital Leases, or any cross-default provisions contained in
any Capital Leases, elect to accelerate all remaining rental
obligations under such Capital Leases to become due prior to
the stated payment dates thereof;
(vii) the commencement by or against the Company of any
insolvency, bankruptcy, dissolution, liquidation or
receivership proceedings with respect to the Company;
(viii) the loss of the Company's status as a REIT; or
(ix) if the Company shall have failed to pay a
distribution on the outstanding Series B-2 Preferred Shares
for any quarterly Distribution Period within five days of
the Distribution Payment Date therefor.
Subsidiaries. The term "Subsidiaries" shall mean all
corporations, partnerships or other business entities of which
more than 50% of the total voting securities or equity securities
are owned or controlled by the Company.
Total Distributions. The term "Total Distributions" shall
have the meaning set forth in Subparagraph (B)(7).
B. Distributions.
1. The record holders of Series B-2 Preferred Shares shall
be entitled to receive from the Initial Issue Date, when, as and
if authorized by the Board of Trustees, out of assets legally
available for payment of distributions, cumulative cash
distributions at a rate of 9.75% per annum of the Liquidation
Preference per Series B-2 Preferred Share, computed on the basis
of a 360-day year consisting of twelve 30-day months.
2. Distributions on the Series B-2 Preferred Shares shall
accrue and be cumulative from the Initial Issue Date.
Distributions shall be payable quarterly in arrears for each
Distribution Period when, as and if authorized by the Board of
Trustees, on January 20, April 20, July 20 and October 20 of each
year (each, a "Distribution Payment Date"), commencing on the
first Distribution Payment Date following the Initial Issue Date.
If any Distribution Payment Date occurs on a day that is not a
Business Day, any accrued distributions otherwise payable on such
Distribution Payment Date shall be paid on the next succeeding
Business Day. The amount of distributions payable on Series B-2
Preferred Shares for each full Distribution Period shall be
computed by dividing by four the annual distribution rate set
forth in Subparagraph (B)(1). Distributions payable in respect
of any Distribution Period which is less than a full Distribution
Period in length will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Subject to Subparagraph
(D)(1), distributions shall be paid to the record holders of the
Series B-2 Preferred Shares as their names shall appear on the
share records of the Company at the close of business on the
Record Date for such distribution. Subject to Subparagraph
(D)(1), distributions in respect of any past Distribution Periods
that are in arrears may be authorized, declared, set apart for
payment and paid at any time to record holders on the Record Date
therefor. Any distribution payment made on Series B-2 Preferred
Shares shall be first credited against the earliest accrued but
unpaid distribution due which remains payable. Upon issuance,
the Series B-2 Preferred Shares will rank on a parity as to
distributions with the Series A-1 Preferred Shares, the Series B-
1 Preferred Shares and the Series C Preferred Shares.
3. Except as provided in the next sentence, if any Series
B-2 Preferred Shares are outstanding, no distributions (other
than in Junior Shares or Common Shares) shall be authorized,
declared, set apart for payment or paid on any class or series of
Junior Shares or Parity Shares unless all accrued distributions
on the Series B-2 Preferred Shares for all prior Distribution
Periods and the then current Distribution Period have been or
contemporaneously are authorized, declared, set apart for payment
or paid. When distributions are not so paid in full (or a sum
sufficient for such full payment is not so set apart for payment)
upon the Series B-2 Preferred Shares and any other class or
series of Parity Shares, all distributions authorized or declared
upon the Series B-2 Preferred Shares and any such class or series
of Parity Shares shall be authorized or declared pro rata so that
the amount of distributions authorized or declared per share on
the Series B-2 Preferred Shares and such class or series of
Parity Shares shall in all cases bear to each other the same
ratio that accrued and unpaid distributions per share on the
Series B-2 Preferred Shares and such class or series of Parity
Shares bear to each other.
4. Except as provided in Subparagraph (B)(3), unless all
accrued distributions on the Series B-2 Preferred Shares have
been or contemporaneously are authorized, declared, set apart for
payment or paid for all prior Distribution Periods and the then
current Distribution Period, no Junior Shares or Parity Shares
shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a
sinking fund for the redemption of any such Shares) by the
Company (except by conversion into or exchange for Junior Shares
or Common Shares). Holders of the Series B-2 Preferred Shares
shall not be entitled to any distributions, whether payable in
cash, property or Shares, in excess of accrued and cumulative
distributions as herein provided. No interest or sum of money in
lieu of interest shall be payable in respect of any distribution
payment or payments on the Series B-2 Preferred Shares that may
be in arrears.
5. No distribution on Series B-2 Preferred Shares shall be
required to be authorized, declared, set apart for payment or
paid by the Company to the extent such authorization,
declaration, setting apart for payment or payment shall be
restricted or prohibited by law. Notwithstanding that any
distributions on Series B-2 Preferred Shares are restricted or
prohibited by law, such distributions shall accrue and be
cumulative.
6. Distributions on the Series B-2 Preferred Shares, if not
paid on the applicable Distribution Payment Date, will accrue
whether or not distributions are authorized or declared for such
Distribution Payment Date, whether or not the Company has
earnings and whether or not there are assets legally available
for the payment of such distributions.
7. If, for any taxable year, the Board of Trustees elects
to designate as "capital gain dividends" (as defined in Section
857 of the Code) any portion (the "Capital Gains Amount") of the
distributions paid or made available for the year to holders of
all classes of Shares (the "Total Distributions"), then the
portion of the Capital Gains Amount that shall be allocable to
holders of the Series B-2 Preferred Shares shall be the Capital
Gains Amount multiplied by a fraction, the numerator of which
shall be the total distributions paid or made available to the
holders of the Series B-2 Preferred Shares for the year and the
denominator of which shall be the Total Distributions.
C. Distributions Upon Liquidation, Dissolution or Winding Up.
1. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, before
any distribution shall be made to the holders of any Junior
Shares, and subject to the payment or provision or reserve for
payment of the debts and liabilities (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) and the
preferences of Senior Shares, if any, of the Company, the holders
of Series B-2 Preferred Shares shall be entitled to receive, out
of the assets of the Company legally available for payment of
distributions, liquidating distributions in cash (or property at
its fair market value as determined in good faith by the Board of
Trustees (or a combination thereof)) in the amount of the
Liquidation Preference for each Series B-2 Preferred Share plus
an amount equal to all accrued and unpaid distributions pursuant
to Paragraph (B) (whether or not authorized or declared, and
whether or not there would be assets legally available for the
payment of such distributions) to the date of such liquidation,
dissolution or winding up. After payment of the full amount of
the liquidating distributions to which they are entitled pursuant
to this Subparagraph (C)(1), the holders of Series B-2 Preferred
Shares will have no right or claim to any of the remaining assets
of the Company and shall not be entitled to any other
distribution.
2. Notwithstanding any provision in Subparagraph (C)(1) to
the contrary, in the event that, upon any such voluntary or
involuntary liquidation, dissolution or winding up of the affairs
of the Company, the assets legally available for payment of
distributions are insufficient to pay (x) the full amount of the
liquidating distributions to which holders of Series B-2
Preferred Shares would otherwise be entitled pursuant to
Subparagraph (C)(1) and (y) the corresponding amounts of the
liquidating distributions to which holders of Parity Shares would
be entitled upon liquidation, dissolution or winding up of the
affairs of the Company, then the holders of the Series B-2
Preferred Shares and the holders of the Parity Shares shall share
ratably in any such distribution of assets in proportion to the
full liquidating distributions to which they otherwise would be
respectively entitled. Upon issuance, the Series B-2 Preferred
Shares will rank on a parity with the Series A-1 Preferred
Shares, the Series B-1 Preferred Shares and the Series C
Preferred Shares as to the distribution of assets upon any
liquidation, dissolution or winding up of the affairs of the
Company.
D. Conversion.
1. (a) Each outstanding Series B-2 Preferred Share shall,
without any action on the part of the holder thereof,
automatically be converted into one Series B-1 Preferred Share on
February 28, 2000 (unless otherwise converted earlier pursuant to
this Subparagraph (D)(1)).
(b) Holders of Series B-2 Preferred Shares shall have the
right, exercisable after February 28, 2000 (unless otherwise
exercisable earlier pursuant to this Subparagraph (D)(1), at any
time and from time to time, to convert all or any of their Series
B-2 Preferred Shares (except that upon any dissolution,
liquidation or winding up of the affairs of the Company the right
of conversion shall terminate at the close of business on the
Business Day fixed for payment of the liquidating distributions
to which holders of Series B-2 Preferred Shares are entitled)
into such number of fully paid Common Shares as is obtained by:
(i) multiplying the number of Series B-2 Preferred Shares to be
converted by $25.00 and (ii) dividing the result by the
conversion price listed below that will be in effect during the
corresponding date of conversion listed below:
Date of Conversion Conversion Price
------------------ ------------------
Prior to the occurrence of a
Special Conversion Event:
February 28, 2000 to and including
February 27, 2001. . . . . . . . . . . . . . . . .$ 18.2000
February 28, 2001 and thereafter . . . . . . . . .$ 17.7125
At any time after a Special Conversion Event
shall have occurred. . . . . . . . . . . . . . . .$ 17.7125
At any time after Notice of Redemption
pursuant to Paragraph (G) hereof . . . . . . . . .$ 16.2500
If, and each time, a conversion price listed above then in effect
(the "Series B-2 Conversion Price") shall be adjusted pursuant to
the terms of these Paragraphs (A) through (N), all of the
conversion prices listed above shall be so adjusted as though
such conversion prices were in effect on the date of adjustment.
The Series B-2 Conversion Price shall be the conversion price as
last adjusted and then in effect. Notwithstanding anything else
to the contrary, (x) after any Special Conversion Event under
clauses (i), (iv), (v), (vi), (vii), (viii) or (ix) of the
definition thereof and (y) immediately prior to any Special
Conversion Event under clauses (ii) or (iii) of the definition
thereof, each Series B-2 Preferred Share shall, without any
action on the part of the holder thereof, immediately and
automatically be converted into one Series B-1 Preferred Share
and, holders of Series B-2 Preferred Shares shall have the right,
exercisable at any time, to convert, in accordance with the terms
of this Paragraph (D), all or any such Series B-2 Preferred
Shares (except that upon any dissolution, liquidation or winding
up of the affairs of the Company the right of conversion shall
terminate at the close of business on the Business Day fixed for
payment of the liquidating distributions to which holders of
Series B-2 Preferred Shares are entitled) into such number of
fully paid Common Shares as is obtained by: (x) multiplying the
number of Series B-2 Preferred Shares to be converted by $25.00
and (y) dividing the result by $17.7125, as adjusted pursuant to
this Paragraph (D).
Notwithstanding anything to the contrary, during the period
from the date the Company resolves to take any action that would
constitute a Special Conversion Event under clauses (ii) or (iii)
of the definition thereof until the consummation of such Special
Conversion Event, the holders of Series B-2 Preferred Shares
shall have the right to make an election to convert all or any
Series B-2 Preferred Shares into Common Shares, conditional upon
approval of such Special Conversion Event by the holders entitled
to vote on such matter, in which case, if such Special Conversion
Event is approved, conversion of such Series B-2 Preferred Shares
to Common Shares as to which a conditional election has been made
shall occur immediately prior to such Special Conversion Event.
In the event that a tender offer or other similar offer shall
have been commenced which if consummated would result in a
Special Conversion Event under clause (iv) of the definition
thereof, holders shall have the right to convert their Series B-2
Preferred Shares pursuant to the terms hereof within the five
business day period prior to the consummation of such tender
offer or other similar offer; provided, however, if such tender
offer or other similar offer is not consummated or, if
consummated, does not result in a Special Conversion Event under
clause (iv) of the definition thereof, then the Company shall
have the right to redeem any and all Common Shares into which any
Series B-2 Preferred Shares were converted pursuant to such
clause (iv) for the same number of Series B-2 Preferred Shares
converted pursuant thereto, upon written notice from the Company
notifying such holder of the election of the Company to redeem
such Series B-2 Preferred Shares stating the number of Common
Shares to be surrendered, the number of Series B-2 Preferred
Shares to be issued therefor and the date and the place(s) where
the certificate(s) representing such Series B-2 Preferred Shares
are to be surrendered. On or after the date specified in such
notice, each such holder shall present and surrender his
certificate or certificates for such Common Shares to the Company
at the place designated in such notice for redemption and
thereupon such holder shall be issued the same number of Series
B-2 Preferred Shares converted and each surrendered certificate
shall be cancelled. From and after the date of issuance of the
number of Series B-2 Preferred Shares set forth in the notice,
(i) all distributions on the Common Shares to be redeemed shall
cease to accrue, and (ii) all rights of the holders thereof as
holders of Common Shares shall cease and terminate, except for
the right to receive the number of Series B-2 Preferred Shares
upon the surrender of Common Shares certificates as set forth in
the notice.
In addition to any other notice required to be given
hereunder, (i) if a Special Conversion Event shall have occurred,
or, (ii) if, prior to February 28, 1998, an Adjustment Event
shall have occurred, the Company shall, within five Business Days
of such occurrence, send notice to all holders of Series B-2
Preferred Shares (1) that the Series B-2 Preferred Shares are
convertible for Common Shares and not subject to any waiting
period with respect to the conversion thereof, (2) of the date as
of which the Series B-2 Preferred Shares became convertible for
Common Shares, (3) of the ratio at which the Series B-2 Preferred
Shares are convertible for Common Shares and (4) a description of
the nature of the Special Conversion Event or Adjustment Event,
as the case may be. The Company shall send notice to all holders
of Series B-2 Preferred Shares describing any action that would
constitute a Special Conversion Event under clauses (ii) or (iii)
of the definition thereof, together with a form of conversion
notice, at least 30 calendar days prior to any vote of holders of
the Common Shares required to approve such action, or, if no such
vote is so required, prior to the consummation of the
transaction.
Notwithstanding the surrender of Series B-2 Preferred Shares
for conversion into Common Shares, all accrued distributions with
respect to such Series B-2 Preferred Shares for any past
Distribution Periods that are in arrears at the time of such
conversion shall be paid to the registered holder of such Series
B-2 Preferred Shares in the same manner as if such registered
holder continued to be the registered holder of such converted
Series B-2 Preferred Shares following such conversion or, if upon
conversion of such Series B-2 Preferred Shares there will be no
more Series B-2 Preferred Shares outstanding, then at the time of
such conversion. In addition, if any holder surrenders Series B-
2 Preferred Shares for conversion into Common Shares, such holder
shall be entitled to receive a distribution on such Series B-2
Preferred Shares converted for the portion of the current
Distribution Period such holder owned the Series B-2 Preferred
Shares surrendered for conversion, notwithstanding that the
record date for the distribution payable for the current
Distribution Period may not have occurred, in an amount per
Series B-2 Preferred Share converted equal to the product of (i)
the distribution payable on each Series B-2 Preferred Share
converted for the current Distribution Period, multiplied by (ii)
a fraction, the numerator of which is the number of calendar days
in such Distribution Period elapsed to (but not including) the
date of conversion and the denominator of which is the total
number of calendar days in such Distribution Period.
If any holder surrenders Series B-2 Preferred Shares for
conversion into Common Shares and as a result thereof such holder
is or will be entitled to receive distributions with respect to
both such Series B-2 Preferred Shares converted and such Common
Shares into which such Series B-2 Preferred Shares were converted
for the same period of time (the "Overlapping Period"), then, at
the time of and as a condition precedent to such conversion (or,
if at the time of such conversion the amount of the distribution
with respect to such Common Shares has not yet been determined,
at the time of such determination), the Company shall withhold
from any distribution payable on such Series B-2 Preferred Shares
converted, an amount equal to the Excess Amount (defined below),
if any. If the amount of any distribution payable on such Series
B-2 Preferred Shares converted shall not be sufficient to pay any
Excess Amount, such holder hereby authorizes the Company to
withhold from any distribution payable to such holder on any
Series B-2 Preferred Shares owned by such holder or, to the
extent permissible, on any Common Shares owned by such holder, an
amount equal to the Excess Amount. "Excess Amount" shall mean an
amount equal to the product of (i) the sum of the distributions
payable on each Common Share into which such Series B-2 Preferred
Shares were converted for the distribution period relating to the
Common Shares in which the Overlapping Period occurs, multiplied
by (ii) a fraction, the numerator of which is the number of
calendar days in the Overlapping Period and the denominator of
which is the total number of calendar days in such distribution
period relating to the Common Shares in which the Overlapping
Period occurs.
2. Any holder of one or more Series B-2 Preferred Shares
electing to convert such Share or Shares shall deliver the
certificate or certificates therefor to the principal office of
the transfer agent for the Common Shares, with the form of notice
of election to convert prescribed by the Company fully completed
and duly executed and (if so required by the Company or any
conversion agent) accompanied by instruments of transfer in form
reasonably satisfactory to the Company and to any conversion
agent, duly executed by the registered holder or his duly
authorized attorney, and any payments (or evidence of payment)
required pursuant to Subparagraph (D)(4). The conversion right
with respect to any such Series B-2 Preferred Shares shall be
deemed to have been exercised on the date upon which the last of
the conditions for conversion provided in this Subparagraph
(D)(2) have been satisfied by the holder of such Series B-2
Preferred Shares, and the Person or Persons entitled to receive
the Common Shares issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such Common
Shares on such date.
3. No fractional Common Share or scrip representing a
fractional Common Share shall be issued upon conversion of Series
B-2 Preferred Shares. If more than one Series B-2 Preferred
Share shall be surrendered for conversion on any day by the same
holder, the number of full Common Shares which shall be issuable
upon conversion thereof shall be computed on the basis of the
aggregate number of Series B-2 Preferred Shares so surrendered by
such holder on such day. Instead of any fractional Common Share
which would otherwise be issuable upon conversion of any Series
B-2 Preferred Shares, the Company shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction
of the Current Market Price per Common Share.
4. If a holder converts Series B-2 Preferred Shares, the
Company shall pay, at the time of and as a condition precedent to
conversion, any documentary, stamp or similar issue or transfer
tax due on the issuance of Common Shares upon the conversion.
The holder, however, shall pay to the Company the amount of any
tax which is due (or shall establish to the satisfaction of the
Company payment thereof) if the shares are to be issued in a name
other than the name of the Person in whose name such Series B-2
Preferred Shares are registered.
5. The Company shall reserve and shall at all times keep
reserved out of its authorized but unissued Common Shares a
sufficient number of Common Shares to permit the conversion of
the then outstanding Series B-2 Preferred Shares that may then be
converted. All Common Shares which may be issued upon conversion
of Series B-2 Preferred Shares shall be validly issued and fully
paid, and not subject to preemptive or other similar rights. In
order that the Company may issue Common Shares upon conversion of
Series B-2 Preferred Shares, the Company will endeavor to comply
with all applicable Federal and State securities laws and will
endeavor to list such Common Shares to be issued upon conversion
on each securities exchange on which the Common Shares are
listed.
The Series B-2 Preferred Shares converted pursuant to the
provisions of this Paragraph (D) shall thereupon be retired and
may not be reissued as Series B-2 Preferred Shares but shall
thereafter have the status of authorized but unissued Shares.
6. The conversion rate in effect at any time shall be subject
to adjustment from time to time upon the happening of certain
events as follows:
(i) Distribution of Common Shares; Reclassification;
Subdivision; Combination. In case the Company shall (1) pay a
dividend payable in, effect a split up of, or make any other
distribution in, Common Shares to holders of the Common
Shares, (2) reclassify the outstanding Common Shares into
Shares of some other class or series of Shares, (3) subdivide
the outstanding Common Shares into a greater number of Common
Shares or (4) combine the outstanding Common Shares into a
smaller number of Common Shares, the conversion rate
immediately prior to such action shall be adjusted so that the
holder of any Series B-2 Preferred Shares thereafter
surrendered for conversion shall be entitled to receive the
number of Common Shares which he would have owned immediately
following such action had such Series B-2 Preferred Shares
been converted immediately prior thereto. An adjustment made
pursuant to this Subparagraph (D)(6)(i) shall become effective
immediately after the record date in the case of a
distribution and shall become effective immediately after the
effective date in the case of a reclassification, subdivision
or combination.
(ii) Issuance of Additional Common Equity. (A) If the
Company shall issue to a Person who is not a Company Affiliate
(as defined below) at the time of issuance any Additional
Common Equity (as defined below) at a price per share less
than 85% of the Current Market Price per Common Share then in
effect on the date of such issuance, then the number of Common
Shares into which each Series B-2 Preferred Share shall be
convertible shall be adjusted so that the same shall be equal
to the number determined by multiplying the number of Common
Shares into which such Series B-2 Preferred Share was
convertible immediately prior to such issuance by a fraction
of which the numerator shall be the number of shares of Common
Equity outstanding immediately prior to such issuance plus the
number of shares of Additional Common Equity offered, and of
which the denominator shall be the number of shares of Common
Equity outstanding immediately prior to such issuance plus the
number of shares of Common Equity which the aggregate offering
price of the Additional Common Equity offered would purchase
at such Current Market Price per Share. Such adjustments
shall become effective immediately after such issuance.
(B) If the Company shall issue to a Person who is a Company
Affiliate at the time of issuance, in any one or a series of
related transactions, any Additional Common Equity at a price
per share less than the Current Market Price per Common Share
then in effect on the date of such issuance, then the number
of Common Shares into which each Series B-2 Preferred Share
shall be convertible shall be adjusted so that the same shall
be equal to the number determined by multiplying the number of
Common Shares into which such Series B-2 Preferred Share was
convertible immediately prior to such issuance by a fraction
of which the numerator shall be the number of shares of Common
Equity outstanding immediately prior to such issuance plus the
number of shares of Additional Common Equity offered, and of
which the denominator shall be the number of shares of Common
Equity outstanding immediately prior to such issuance plus the
number of shares of Common Equity which the aggregate offering
price of the Additional Common Equity offered would purchase
at such Current Market Price per Share. Such adjustments
shall become effective immediately after such issuance.
"Additional Common Equity" shall mean all Common Equity issued
by the Company except: (1) the Common Shares issued upon
conversion of the Series B-2 Preferred Shares; (2) the Common
Equity issued upon conversion of any Senior Shares, Parity
Shares, Common Share Equivalents or any other shares of
beneficial interest which, by their terms, are convertible
into Common Equity and (a) which were outstanding on November
12, 1996, (b) for which no adjustment pursuant to this
Subparagraph (D)(6) was required at the time of issuance or
the time of any amendment or change thereto or (c) for which
an adjustment is provided for in another provision of this
Paragraph (D)(6); (3) up to an aggregate of 250,000 shares of
Common Equity and shares of Common Equity into which Common
Share Equivalents are exercisable, exchangeable or
convertible, in each case issued to Affiliates of the Company
from and after November 12, 1996, at a price per share less
than the Current Market Price per Common Share then in effect
on the date of such issuance, including, without limitation,
shares of Common Equity or Common Share Equivalents issued to
directors, officers, employees, or trustees of the Company or
any Subsidiary of the Company and those issued pursuant to
stock option, stock purchase, performance or other
remuneration plans adopted by the Board of Trustees from time
to time (including, without limitation, the Company's 1992
Employee Share Option Plan, 1992 Trustee Share Option Plan and
1995 Management Incentive Plan; (4) the issuance of shares of
Common Equity under any circumstances for which an adjustment
is provided in Subparagraph (D)(6)(i); or (5) Common Equity
issued pursuant to a dividend reinvestment plan or stock
purchase plan available to all holders of Common Equity.
"Company Affiliate" shall mean, with respect to any issuance
of Additional Common Equity, (i) any trustee, director,
officer or employee of the Company or of any subsidiary of the
Company, (ii) any Person that is the direct or indirect owner
of more than five percent of the issued and outstanding Common
Equity of the Company, (iii) any Person that controls, is
controlled by or is under common control with, the Company,
(iv) any trustee, director, officer, employee or family member
of any Person listed in clauses (i), (ii) or (iii) of this
definition or (v) any Person with respect to which any Person
listed in clauses (i) through (iv) of this definition is a
director, officer or the direct or indirect owner of more than
ten percent of the issued and outstanding equity securities of
such Person immediately prior to any such issuance.
"Common Share Equivalent" shall mean any evidence of
indebtedness, shares of stock or beneficial interest (other
than Series B-2 Preferred Shares) or other securities which
are or may be convertible into or exchangeable for Additional
Common Equity ("Convertible Securities"), or any warrant,
option or other right to subscribe for any Convertible
Securities or for any Additional Common Equity.
For purposes of this Subparagraph (D)(6)(ii), the number of
Common Equity at any time outstanding shall not include Common
Equity held in the treasury of the Company.
(iii) Issuance of Common Share Equivalents. (A) If the
Company shall issue to a Person who is not a Company Affiliate
at the time of issuance any Common Share Equivalent and the
aggregate of the price per Common Share Equivalent and the
price per share for which shares of Additional Common Equity
may be issuable thereafter pursuant to such Common Share
Equivalent shall be below an amount equal to 85% of the
Current Market Price per Common Share on the record date for
determination of the holders of the Common Shares entitled to
receive such issue, or, if, after any such issuance, the price
per share for which shares of Additional Common Equity may be
issuable thereafter is amended or changed and the aggregate of
such price, as so amended or changed, and the price per Common
Share Equivalent, shall be below an amount equal to 85% of the
Current Market Price per Common Share at the effective time of
such amendment or change, then the number of Common Shares
into which each Series B-2 Preferred Share shall be
convertible shall be adjusted so that the same shall be equal
to the number determined by multiplying the number of Common
Shares into which such Series B-2 Preferred Share was
convertible immediately prior to such record date by a
fraction of which the numerator shall be the number of Common
Shares outstanding on such record date plus the number of
Common Shares into which, or for which, the Common Share
Equivalents so offered are convertible or exercisable, and of
which the denominator shall be the number of Common Shares
outstanding on such record date plus the number of Common
Shares which the aggregate offering price of the Common Shares
into which, or for which, the Common Share Equivalents so
offered are convertible or exercisable would purchase at such
Current Market Price per Common Share. Such adjustments shall
become effective immediately after such record date.
(B) If the Company shall issue to a Person who is a Company
Affiliate at the time of issuance, in any one or a series of
related transactions, any Common Share Equivalents and the
aggregate of the price per Common Share Equivalent and the
price per share for which shares of Additional Common Equity
may be issuable thereafter pursuant to such Common Share
Equivalent shall be below an amount equal to the Current
Market Price per Common Share on the date of issue, or, if,
after any such issuance, the price per share for which shares
of Additional Common Equity may be issuable thereafter is
amended or changed and the aggregate of such price, as so
amended or changed, and the price per Common Share Equivalent,
shall be below an amount equal to the Current Market Price per
Common Share at the effective time of such amendment or
change, then the number of Common Shares into which each
Series B-2 Preferred Share shall be convertible shall be
adjusted so that the same shall be equal to the number
determined by multiplying the number of Common Shares into
which such Series B-2 Preferred Share was convertible
immediately prior to such record date by a fraction of which
the numerator shall be the number of Common Shares outstanding
on such record date plus the number of Common Shares into
which, or for which, the Common Share Equivalents so offered
are convertible or exercisable, and of which the denominator
shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares which the
aggregate offering price of the Common Shares into which, or
for which, the Common Share Equivalents so offered are
convertible or exercisable would purchase at such Current
Market Price per Common Share. Such adjustments shall become
effective immediately after such issuance.
(iv) Conversion of Series A Preferred Shares or Series A-1
Preferred Shares. Notwithstanding anything to the contrary
contained in this Subparagraph (D)(6), if the aggregate number
of Common Shares into which the Series A Preferred Shares or
Series A-1 Preferred Shares are converted exceeds 500,000
Common Shares, subject to adjustment pursuant to Subparagraph
(D)(6)(i) (the "Series A Conversion Limit"), then the number
of Common Shares into which each Series B-2 Preferred Share
shall be convertible shall be adjusted so that the holder of
any Series B-2 Preferred Shares thereafter surrendered for
conversion shall be entitled to receive such number of Common
Shares as would have been received by such holder of Series B-
2 Preferred Shares having the same percentage of the then
outstanding Common Shares upon such conversion as such holder
would have received upon conversion if the aggregate number of
Common Shares into which the Series A Preferred Shares or
Series A-1 Preferred Shares were converted equalled the Series
A Conversion Limit at the time of conversion of such Series B-
2 Preferred Shares.
(v) Additional Adjustments. In the event that the Company
shall issue to Affiliates of the Company in excess of an
aggregate of 250,000 shares of Common Equity and shares of
Common Equity into which Common Share Equivalents are
exercisable, exchangeable or convertible, in each case which
are issued from and after November 12, 1996, at a price per
share less than the Current Market Price per Common Share then
in effect on the date of such issuance, then the calculation
of the number of Common Shares into which each Series B-2
Preferred Share is convertible shall be adjusted pursuant to
the provisions of this Subparagraph (D)(6) for each such
shares of Common Equity and Common Share Equivalents to
Affiliates of the Company at a price per share less than the
Current Market Price per Common Share then in effect on the
date of such issuance.
(vi) Limitation of Adjustments. For purposes of this
Subparagraph (D)(6), the number of Common Shares or Common
Equity at any time outstanding shall not include Common Shares
or Common Equity held in the treasury of the Company. No
adjustment of the Series B-2 Conversion Price shall be made
under Subparagraph (D)(6)(iii), (1) upon the issuance of any
Convertible Security which is issued pursuant to the exercise
of any warrants or rights, if any adjustment shall previously
have been made in the Series B-2 Conversion Price then in
effect upon the issuance of such warrants or other rights
pursuant to Subparagraph (D)(6)(iii) or otherwise pursuant to
this Subparagraph (D)(6) or (2) upon the issuance of the
Series A-1 Preferred Shares in exchange for all or any of the
issued and outstanding Series A Preferred Shares.
(vii) Additional Distributions. If the Company shall make a
dividend or distribution of securities (other than Common
Shares or Common Share Equivalents) or other property to the
holders of Junior Shares and not to the holders of the Series
B-2 Preferred Shares, then, unless the holders of the Series
B-2 Preferred Shares are entitled to receive such distribution
at a later time upon conversion of the Series B-2 Preferred
Shares and such distribution has been set aside for such later
distribution, each holder of Series B-2 Preferred Shares shall
receive at the time of payment or issuance of such dividend or
distribution, without payment or any consideration therefor,
such securities or other property which he would have owned
immediately following such dividend or distribution had such
holder's Series B-2 Preferred Shares been converted
immediately prior thereto; and an appropriate provision
therefor shall be made a part of any such dividend or
distribution.
(viii) Computation of Consideration. In making adjustments
to the Series B-2 Conversion Price pursuant to this
Subparagraph (D)(6), the consideration received by the Company
shall be deemed to be the following: to the extent that any
Additional Common Equity, any Common Share Equivalents or
rights shall be issued for a cash consideration, the
consideration received by the Company therefor, or, if such
Additional Common Equity or Common Share Equivalents are
offered by the Company for subscription, the subscription
price paid to and received by the Company, or, if such
Additional Common Equity or Common Share Equivalents are sold
to underwriters or dealers for -public offering without a
subscription offering, the initial public offering price, in
each such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of
any compensation, discounts, commissions or expenses paid or
incurred by the Company for and in the underwriting of, or
otherwise in connection with, the issue thereof; to the extent
that such issuance shall be for a consideration other than
cash, then, except as herein otherwise expressly provided, the
consideration received by the Company shall be the fair market
value of such consideration at the time of such issuance as
determined in good faith by the Board of Trustees. The
consideration for any Additional Common Equity issuable
pursuant to any Common Share Equivalents shall be the
consideration received by the Company for issuing such Common
Share Equivalents, plus the additional consideration payable
to the Company upon the exercise, conversion or exchange of
such Common Share Equivalents. In the case of the issuance at
any time of any Additional Common Equity or Common Share
Equivalents in payment or satisfaction of any dividend upon
any class of stock other than Common Shares, the Company shall
be deemed to have received for such Additional Common Equity
or Common Share Equivalents a consideration equal to the
amount of such dividend so paid or satisfied. In any case in
which the consideration to be received or paid shall be other
than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value
of such consideration as determined in good faith by the Board
of Trustees, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Company in connection therewith.
7. No adjustment in the conversion rate shall be required
until cumulative adjustments result in a change of 1% or more of
the conversion price as in effect prior to the last adjustment of
the conversion rate; provided, that any adjustment which by
reason of this Subparagraph (D)(7) is not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Paragraph (D) shall be
rounded up to the nearest cent ($.01) or to the nearest one-
thousandth (1/1000) of a share, as the case may be. No
adjustment to the conversion rate shall be made for cash
dividends.
8. In the event that, as a result of an adjustment made
pursuant to Subparagraph (D)(6), the holder of any Series B-2
Preferred Shares thereafter surrendered for conversion shall
become entitled to receive any Shares other than Common Shares,
thereafter the number of such Shares so receivable upon
conversion of any Series B-2 Preferred Shares shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Common Shares contained in this Paragraph (D).
9. The Company may make such increases in the number of
Common Shares to be received upon the conversion of Series B-2
Preferred Shares, in addition to those required by Subparagraph
(D)(6), as is considered to be advisable by the Board of Trustees
in order that any event treated for Federal income tax purposes
as a distribution of shares or share rights shall not be taxable
to the recipients thereof.
10. Whenever the conversion rate is adjusted, the Company
shall, in addition to any notice required to be delivered
pursuant to Subparagraphs (D)(1) or (D)(11), promptly, but in no
event later than ten days following such adjustment, send notice
to all holders of Series B-2 Preferred Shares of the adjustment
and shall cause to be prepared a certificate signed by the
principal financial officer of the Company setting forth, in
reasonable detail, the adjusted conversion rate and a brief
statement of the facts requiring such adjustment and the
computation thereof (including a description of the basis on
which the Board of Trustees made any determination relating to
such adjustment); such certificate shall forthwith be filed with
each transfer agent for the Series B-2 Preferred Shares.
11. Each holder of Series B-2 Preferred Shares shall be
entitled to all notices, including notice of the record dates for
any votes with respect to the Common Shares, delivered to holders
of Common Shares. In addition, in the event that:
(i) the Company resolves to take any action which, if it
were to occur, would require an adjustment in the conversion
rate, or takes such action, or
(ii) the Company resolves to take any action which, if it
were to occur, would constitute a Special Conversion Event, or
a Special Conversion Event occurs,
a holder of Series B-2 Preferred Shares, if it has a right to
convert, may wish to convert, at the applicable conversion ratio,
some or all of such shares into Common Shares prior to the record
date for, or the effective date of, the transaction so that it
may receive the rights, warrants, securities or assets which a
holder of Common Shares on that date may receive. Therefore, the
Company shall, in addition to any notice required to be delivered
pursuant to Subparagraphs (D)(1) or (D)(10), send notice to all
holders of Series B-2 Preferred Shares stating the proposed
record or effective date of the transaction described in clauses
(ii) or (iii) of the definition of Special Conversion Event at
least 30 days before such date.
In the event (a) that the Company shall authorize the granting
to holders of Common Shares of rights to subscribe for or
purchase any shares of beneficial interest of any class or of any
other rights or (b) of any capital reorganization or
reclassification of the shares of beneficial interest of the
Company, then the Company shall provide to the holders of the
Series B-2 Preferred Shares prompt notice stating (i) the date on
which a record is to be taken for the purpose of such
distribution or subscription rights, or, if a record is not to be
taken, the date as of which the holders of Common Shares of
record would be entitled to such distribution or subscription
rights or (ii) the date on which a capital reorganization or
reclassification is expected to become effective.
12. In case of (i) any reclassification of outstanding Common
Shares issuable upon conversion of Series B-2 Preferred Shares,
or (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation
in which the Company is the surviving corporation and which does
not result in any reclassification of outstanding Common Shares
issuable upon such conversion), the rights of the holders of the
outstanding Series B-2 Preferred Shares shall be adjusted in the
manner described below:
(i) In the event that the Company is the surviving
corporation, each Series B-2 Preferred Share shall, without
payment of additional consideration therefor, be deemed
modified so as to provide that upon conversion of each Series
B-2 Preferred Share, the holder thereof shall receive, in lieu
of each Common Share theretofore issuable upon such
conversion, the kind and amount of shares of stock, other
securities, money and property receivable upon such
reclassification, consolidation or merger by the holder of one
Common Share issuable upon such conversion had such conversion
occurred immediately prior to such reclassification,
consolidation or merger. Such Series B-2 Preferred Share
shall be deemed to provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided for in this Subparagraph (D)(12). The provisions of
this Subparagraph (D)(12)(i) shall similarly apply to
successive reclassifications, consolidations and mergers.
(ii) In the event that the Company is not the surviving
corporation, (A) effective provision shall be made in the
charter documents of the surviving Person or otherwise for the
recognition, preservation and protection of the preferences,
conversion and other rights, voting powers, restrictions and
limitations as to dividends or other distributions of the
Series B-2 Preferred Shares or (B) the surviving corporation
shall, without payment of any additional consideration
therefor, issue new Series B-2 Preferred Shares providing
that, upon conversion thereof, the holder thereof shall
receive, in lieu of each Common Share theretofore issuable
upon conversion of the Series B-2 Preferred Shares, the kind
and amount of shares of stock, other securities, money and
property receivable upon such reclassification, consolidation
or merger by the holder of one Common Share issuable upon
conversion of the Series B-2 Preferred Shares had such
conversion occurred immediately prior to such
reclassification, consolidation or merger. Such new Series B-
2 Preferred Shares shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the
adjustments provided for in this Subparagraph (D)(12)(ii).
The provisions of this Subparagraph (D)(12)(ii) shall
similarly apply to successive reclassifications,
consolidations and mergers.
A change in par value, or from par value to no par value, or
from no par value to par value, or a change as a result of a
subdivision or combination, shall not be deemed a
reclassification for purposes of these Paragraphs (A) through
(N).
E. Voting Rights.
1. The holders of Series B-2 Preferred Shares shall not be
entitled to vote at, or participate in, any meeting of
shareholders of the Company, and shall have no other right to
vote, except (i) as provided in Paragraph (L), (ii) as provided
in Subparagraph (E)(2), or (iii) as required by law.
2. (i) (A) If (x) the Company shall have failed to pay the
distributions on the outstanding Series B Preferred Shares for
any two quarterly Distribution Periods (whether or not
consecutive) or (y) a Special Conversion Event shall have
occurred (notwithstanding that such Special Conversion Event at
any time thereafter no longer continues), the holders of the
Series B Preferred Shares shall immediately and at all times
thereafter vote together with the holders of the Common Shares as
a single class on all actions to be taken by the holders of the
Common Shares. Each holder of Series B Preferred Shares shall be
entitled to such number of votes as shall equal the number of
Common Shares into which his Series B Preferred Shares are then
convertible, and be entitled to notice of all shareholder
meetings with respect to which the holders of Common Shares are
then entitled.
(B) If the Company resolves to take any action that would
constitute a Special Conversion Event under clauses (ii) or (iii)
of the definition thereof, and if the holders of the Common
Shares are entitled to vote on such Special Conversion Event,
then the holders of the Series B Preferred Shares shall be
entitled to vote together with the holders of the Common Shares
as a single class on such Special Conversion Event. Each holder
of Series B Preferred Shares shall be entitled to such number of
votes as shall equal the number of Common Shares into which his
Series B Preferred Shares are then convertible, and be entitled
to notice of all shareholder meetings with respect to which the
holders of Common Shares are then entitled with respect to such
resolution.
(ii) If the Company shall have failed to authorize and pay or
declare and set apart for payment the distributions accumulated
on the outstanding Series B Preferred Shares (A) for any four
quarterly Distribution Periods (a "Four Quarter Preferential
Distribution Non-Payment"), the number of trustees of the Board
of Trustees shall be increased by one and the holders of the
outstanding Series B Preferred Shares, voting together as a
separate class, shall be entitled to elect one additional trustee
to the Board of Trustees (a "Preferred Shares Trustee") and (B)
for any six quarterly Distribution Periods (a "Six Quarter
Preferential Distribution Non-Payment"; each of a Six Quarter
Preferential Distribution Non-Payment and a Four Quarter
Preferential Distribution Non-Payment shall be referred to herein
as a "Preferential Distribution Non-Payment"), the number of
trustees of the Board of Trustees shall be increased by one
additional trustee and the holders of the outstanding Series B
Preferred Shares, voting together as a separate class, shall be
entitled to elect a second Preferred Shares Trustee, until the
full distributions accumulated on all outstanding Series B
Preferred Shares for such four or six, as the case may be,
quarterly Distribution Periods have been authorized and paid or
declared and set apart for payment
The right of the holders of Series B Preferred Shares to elect
a Preferred Shares Trustee may be exercised at any annual meeting
of shareholders, or, within the limitations hereinafter provided,
at a special meeting of holders of Series B Preferred Shares held
for such purpose. At any time after such voting power shall have
so vested in the holders of Series B Preferred Shares, the Board
of Trustees shall, at the request of holders of record of at
least 25% of the Series B Preferred Shares then outstanding, call
a special meeting of the holders of Series B Preferred Shares for
the election of the Preferred Shares Trustee to be elected by the
holders of Series B Preferred Shares, to be held within 90 days
after such call and at the place and upon the notice provided by
law and in the By-laws for the holding of meetings of
shareholders; provided, however, that the Board of Trustees shall
not be required to call such special meeting in the case of any
such request received less than 90 days before the date fixed for
any annual meeting of shareholders. At any meeting so called or
at any annual meeting, (a) holders of a majority of the
outstanding Series B Preferred Shares, voting together as a
separate class, in person or by proxy, shall be sufficient to
constitute a quorum for the election of a Preferred Shares
Trustee as provided in this Subparagraph (E)(2)(ii), and (b)
holders of a plurality of the outstanding Series B Preferred
Shares, voting together as a separate class, shall have the power
to elect a Preferred Shares Trustee. If any such special meeting
required to be called as above provided shall not be called by
the Board of Trustees within 90 days of a request pursuant to
this Subparagraph (E)(2)(ii), then the holders of record of at
least 25% of the Series B Preferred Shares then outstanding may
designate in writing one of their number to call such meeting,
and the person so designated may, at the Company's expense, call
such meeting to be held at the place and upon the notice above
provided. No such special meeting and no adjournment thereof
shall be held on a date later than 30 days before the annual
meeting of the shareholders or a special meeting held in place
thereof next succeeding the time when the holders of Series B
Preferred Shares become entitled to elect a Preferred Shares
Trustee as above provided. No Preferred Shares Trustee elected
by the holders of the Series B Preferred Shares may be removed
except by the vote of the holders of a majority of the
outstanding Series B Preferred Shares, voting together as a
separate class, in person or by proxy, at a meeting called for
such purpose. So long as a Preferential Distribution Non-Payment
shall continue, if a Preferred Shares Trustee who has been
elected by the holders of Series B Preferred Shares to serve on
the Board of Trustees shall no longer serve on the Board of
Trustees by reason of resignation, death or removal, such vacancy
shall be filled by holders of a plurality of the outstanding
Series B Preferred Shares, voting together as a separate class,
at a meeting called in accordance with the provisions of this
Subparagraph (E)(2)(ii).
If and when all accumulated distributions on the Series B
Preferred Shares have been authorized and paid or declared and
set apart for payment, the holders of the Series B Preferred
Shares shall be divested of the special voting rights provided by
this Subparagraph (E)(2), subject to revesting in the event of
each and every subsequent Four Quarter Preferential Distribution
Non-Payment or Six Quarter Preferential Distribution Non-Payment,
as the case may be. Upon termination of such special voting
rights attributable to all holders of the Series B Preferred
Shares, the term of office of the Preferred Shares Trustee or
Trustees shall forthwith terminate and the number of trustees
constituting the entire Board of Trustees shall be reduced by one
or two, as the case may be.
3. So long as any Series B Preferred Shares are outstanding,
the number of trustees constituting the entire Board of Trustees
shall at all times be such that the exercise, by the holders of
the Series B Preferred Shares of the right to elect a Preferred
Shares Trustee under the circumstances provided for in
Subparagraph (E)(2) will not contravene any provision of the
Declaration of Trust restricting the number of trustees which may
constitute the entire Board of Trustees.
4. A Preferred Shares Trustee elected pursuant to
Subparagraph (E)(2) shall serve until the earlier of (x) the next
annual meeting of the shareholders of the Company and the
election (by the holders of the Series B Preferred Shares) and
qualification of his successor or (y) the termination of the
special voting rights as provided for in Subparagraph (E)(2).
F. Trustees' Right to Refuse to Transfer Series B-2 Preferred
Shares; Limitation on Holdings.
1. The terms and provisions of this Paragraph (F) shall apply
in addition to, and not in limitation of, the terms and
provisions of Section 6.6 of the Declaration of Trust.
2. Each Person who owns directly or indirectly more than five
percent in number or value of the total Shares outstanding shall,
by January 30 of each year, give written notice to the Company
stating the Person's name and address, the number of Shares
directly or indirectly owned by such Person, and a description of
the capacity in which such Shares are held. For purposes of this
Paragraph (F), the number and value of the total Shares
outstanding shall be determined by the Board of Trustees in good
faith, which determination shall be conclusive for all purposes
hereunder. In addition, each direct or indirect holder of
Shares, irrespective of such shareholder's percentage "ownership"
of outstanding Shares, shall upon demand disclose to the Company
in writing such information with respect to the direct or
indirect ownership of Shares as the Board of Trustees deems
reasonably necessary from time to time to enable the Board of
Trustees to determine whether the Company complies with the REIT
Provisions of the Code (as defined in Section 1.5 of the
Declaration of Trust), to comply with the requirements of any
taxing authority or governmental agency or to ensure or ascertain
compliance with this Paragraph (F). For purposes of this
Paragraph (F), "ownership" shall be as defined in Subparagraph
(F)(11).
3. If, in the opinion of the Board of Trustees, which shall
be binding upon any prospective acquiror of Series B-2 Preferred
Shares, any proposed transfer or issuance would jeopardize the
status of the Company as a REIT under the REIT Provisions of the
Code, the Board of Trustees shall have the right, but not the
duty, to refuse to permit such transfer or issuance or refuse to
give effect to such transfer or issuance and to take any action
to cause any such transfer not to occur or to void any such
issuance.
4. As a condition to any transfer and/or registration of
transfer on the books of the Company of any Series B-2 Preferred
Shares which could result in direct or indirect ownership of
Shares exceeding 9.8% of the lesser of the number or the value of
the total Shares (such excess shares, the "Excess Shares") by a
Person other than a Series B-2 Excepted Person, such prospective
transferee shall give written notice to the Company of the
proposed transfer and shall furnish such opinions of counsel,
affidavits, undertakings, agreements and information as may be
required by the Board of Trustees no later than the 15th day
prior to any transfer which, if consummated, would result in such
ownership. On each date of determination, the calculation of the
number of the total Shares outstanding on such date shall be made
assuming the conversion or exercise of all Series B-2 Preferred
Shares, Common Share Equivalents and Convertible Securities of
such transferee on the date of determination in accordance with
the terms of these Paragraphs (A) through (N).
5. Any transfer or issuance of Series B-2 Preferred Shares
that would (i) create a direct or indirect owner of Excess Shares
other than a Series B-2 Excepted Person; or (ii) result in the
Company being "closely held" within the meaning of Section 856(h)
of the Code, shall be void ab initio and the prospective acquiror
shall not be entitled to any rights afforded to owners of Series
B-2 Preferred Shares hereunder and shall be deemed never to have
had an interest therein.
"Series B-2 Excepted Person" shall mean (i) any Person defined
as an "Excepted Person" pursuant to the Declaration of Trust,
(ii) any Person approved prior to the Initial Issue Date by the
Board of Trustees, (iii) any Person approved after the Initial
Issue Date by the Board of Trustees, at its option and in its
sole discretion, and (iv) each Person listed below, for so long
as its direct or indirect ownership of Shares, individually or in
the aggregate, in any combination, with those of any or all other
Persons listed below, do not and could not exceed, the number of
Shares or the percentage set forth below of the lesser of the
number or the value of the Shares outstanding. Notwithstanding
anything contained in these Paragraphs (A) through (N) to the
contrary, the Board of Trustees shall not grant approval to any
Person, and no Person shall be or be deemed a Series B-2 Excepted
Person, if such Person's direct or indirect ownership of Series
B-2 Excess Shares would or could result, directly, indirectly or
as a result of attribution of ownership, in termination of the
status of the Company as a REIT under the REIT provisions of the
Code.
Aggregate Number of Shares or
Names of Series B-2 Percentage For All Such
Excepted Persons Excepted Persons Combined
- ------------------------- ------------------------------
Robert A. Mandor, The maximum number of shares of
Leonard S. Mandor, Mill Neck beneficial interest of the
Associates, B. & L. Associates, Company, into which such L.L.C.
L.L.C. and/or holders' Series B-1 Preferred
Mountain View Mall, Inc. Shares and Series B-2 Preferred
and/or their affiliates Shares are then convertible,
plus 33,200 Common Shares, less
any shares of beneficial
interest of the Company
transferred by any such holders
to any Person who is not one of
the Series B-2 Excepted Persons
listed herein, but in no event
less than 9.8%.
6. The Company, by notice to the holder, transferor or
transferee thereof, as the case may be, may purchase any or all
Excess Shares (i) that are or proposed to be transferred in
violation of any of the provisions hereof or (ii) that are or
proposed to be transferred pursuant to a transfer which, in the
opinion of the Board of Trustees (which shall be binding upon any
proposed transferor or transferee of Series B-2 Preferred
Shares), would result in any Person acquiring Series B-2 Excess
Shares, or would otherwise jeopardize the status of the Company
as a real estate investment trust under the REIT Provisions of
the Code. The Company shall have the power, by lot or other
means deemed equitable by the Board of Trustees in its sole
discretion, to purchase such Series B-2 Excess Shares. The
purchase price for each Series B-2 Excess Share shall be equal to
the greatest of (i) the average of the closing prices for a
Series B-2 Preferred Share for the thirty trading days preceding
the day on which notice of such proposed transfer is sent, (ii)
the product of (x) the average of the closing prices for a Common
Share for the thirty trading days preceding the day on which
notice of such proposed transfer is sent and (y) the number
(including fractions) of Common Shares into which such Series B-2
Preferred Share may be converted on such day and (iii) the sum of
(x) the Liquidation Preference for such Series B-2 Preferred
Share and (y) the accrued and unpaid distributions on such Series
B-2 Preferred Share. The closing price for such days shall be
the last reported sale price regular way or, in case no such
reported sale takes place on such date, the average of the
reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange, Inc., or if the Series B-2
Preferred Shares or Common Shares, as the case may be, are not
listed or admitted to trading on the New York Stock Exchange,
Inc., on the principal national securities exchange on which the
Series B-2 Preferred Shares or Common Shares, as the case may be,
are listed or admitted to trading or, if not listed or admitted
to trading on any national securities exchange, the closing sale
price of the Series B-2 Preferred Shares or Common Shares, as the
case may be, or in case no reported sale takes place, the average
of the closing bid and asked prices, on NASDAQ or any comparable
system. If the Series B-2 Preferred Shares or Common Shares, as
the case may be, are not quoted on NASDAQ or any comparable
system, the Board of Trustees shall in good faith determine the
current market price on such basis as it considers appropriate.
Prompt payment of the purchase price shall be made in cash by the
Company in such manner as may be determined by the Board of
Trustees, but in no event later than twenty Business Days after
the Board of Trustees elects to make such purchase. From and
after the date fixed for purchase by the Board of Trustees, and
so long as payment of the purchase price for the Series B-2
Preferred Shares to be so purchased shall have been made or duly
provided for, the holder of any Series B-2 Excess Shares so
called for purchase shall cease to be entitled to dividends,
distributions, voting rights and other benefits with respect to
such Series B-2 Preferred Shares, excepting only the right to
payment of the purchase price fixed as aforesaid. Any dividend
or distribution paid to a proposed transferee of Series B-2
Excess Shares prior to the discovery by the Company that the
Series B-2 Preferred Shares have been transferred in violation of
this Paragraph (F) shall be repaid to the Company upon demand.
The Series B-2 Preferred Shares purchased pursuant to the
provisions of this Subparagraph (F)(6) shall thereupon be retired
and may not be reissued as Series B-2 Preferred Shares but shall
thereafter have the status of authorized but unissued Shares.
7. If Subparagraph (F)(5), (6), (7) or (8) is determined to be
void or invalid by virtue of any legal decision, statute, rule or
regulation, then the acquiror of Series B-2 Preferred Shares in
violation of such subparagraphs shall be deemed, at the option of
the Company, to have acted as agent on behalf of the Company in
acquiring such Series B-2 Preferred Shares on behalf of the
Company. The Company, by notice to the acquiror thereof, may
purchase any or all Series B-2 Preferred Shares so acquired in
the manner designated by Subparagraph (F)(6).
8. Subject to Subparagraph (F)(12), notwithstanding any other
provision in these Paragraphs (A) through (N) to the contrary,
any purported transfer, sale or acquisition of Series B-2
Preferred Shares (whether such purported transfer, sale or
acquisition results from the direct or indirect ownership, or
attribution of ownership, of Series B-2 Preferred Shares) which
would result in the termination of the status of the Company as a
REIT under the REIT Provisions of the Code shall be null and void
ab initio. Any such Series B-2 Preferred Shares may be treated
by the Board of Trustees in the manner prescribed for Series B-2
Excess Shares in Subparagraph (F)(6).
9. Subject to Subparagraph (F)(12), nothing contained in this
Paragraph (F) or in any other provision of these Paragraphs (A)
through (N) shall limit the authority of the Board of Trustees to
take such other action as it deems necessary or advisable to
protect the Company and the interests of the Shareholders by
preservation of the Company's status as a REIT under the REIT
Provisions of the Code.
10. If any provision of this Paragraph (F) or any application
of any such provision is determined to be invalid by any federal
or state court having jurisdiction over the issues, the validity
of the remaining provisions shall not be affected and other
applications of such provision shall be affected only to the
extent necessary to comply with the determination of such court.
To the extent this Paragraph (F) may be inconsistent with any
other provision in these Paragraphs (A) through (N), this
Paragraph (F) shall be controlling.
11. For purposes of these Paragraphs (A) through (N), Series B-
2 Preferred Shares not owned directly shall be deemed to be owned
indirectly by a Person if that Person or a group of which he is a
member would be the beneficial owner of such Series B-2 Preferred
Shares, as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended, and/or would be considered to own such
Series B-2 Preferred Shares by reason of the REIT Provisions of
the Code.
12. Notwithstanding any other provision of Paragraph (F),
nothing in these Paragraphs (A) through (N) shall preclude the
settlement of transactions entered into through the facilities of
the New York Stock Exchange, Inc. The fact that the settlement of
any transaction is permitted shall not negate the effect of any
other provision of this Paragraph (F) and any transferee in such
a transaction shall be subject to all of the provisions and
limitations set forth in this Paragraph (F).
G. Redemption at the Option of the Board of Trustees.
1. After the fifth anniversary of the Initial Issue Date,
if the aggregate Liquidation Preferences of all of the
outstanding Series B-2 Preferred Shares shall at any time be less
than $3,000,000, the Board of Trustees may, at its option and in
its sole discretion, redeem the Series B-2 Preferred Shares in
whole, subject to the limitations set forth below, at a
redemption price equal to $25.00 per share (the "Call Price"),
plus (i) all distributions accrued and unpaid on such Series B-2
Preferred Shares for past Distribution Periods and (ii) the pro
rata portion of the distributions on such Series B-2 Preferred
Shares for the current Distribution Period through the Redemption
Date (together, the "Redemption Distributions"), upon giving
notice as provided below.
2. At least 30 days but not more than 90 days prior to the
date fixed for the redemption of the Series B-2 Preferred Shares
(the "Redemption Date"), the Company shall mail a written notice
(a "Notice of Redemption") to each holder of record of the Series
B-2 Preferred Shares in a postage prepaid envelope addressed to
such holder at his address as shown on the records of the
Company, notifying such holder of the election of the Company to
redeem such Series B-2 Preferred Shares, stating the Redemption
Date, the Call Price, the number of Series B-2 Preferred Shares
then outstanding and to be redeemed and the place(s) where the
certificate(s) representing such Series B-2 Preferred Shares are
to be surrendered for payment.
3. On or after the Redemption Date each holder of the
Series B-2 Preferred Shares shall present and surrender his
certificate or certificates for such Series B-2 Preferred Shares
to the Company at the place designated in such notice for
redemption and thereupon the Call Price and the Redemption
Distributions for such Series B-2 Preferred Shares shall be paid
to or on the order of the person whose name appears on such
certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled. From and after the
Redemption Date (unless default shall be made by the Company in
payment of the Call Price or the Redemption Distributions), (i)
all distributions on the Series B-2 Preferred Shares shall cease
to accrue, and all rights of the holders thereof as shareholders
of the Company shall cease and terminate, except for the right
(x) to surrender their Series B-2 Preferred Shares for conversion
into Common Shares as provided for, and in accordance with, the
provisions of these Paragraphs (A) through (N) (including,
without limitation, Paragraph (D) hereof) at any time prior to
the Redemption Date or (y) to receive the Call Price and the
Redemption Distributions with respect to such Series B-2
Preferred Shares upon the surrender of certificates representing
the same, (ii) the Series B-2 Preferred Shares shall no longer be
deemed to be outstanding for any purpose whatsoever and (iii) the
Series B-2 Preferred Shares redeemed pursuant to the provisions
of this Paragraph (G) shall thereupon be retired and may not be
reissued as Series B-2 Preferred Shares but shall thereafter have
the status of authorized but unissued Shares.
4. If a Notice of Redemption has been given pursuant to
Subparagraph (G)(2) above and any holder of Series B-2 Preferred
Shares shall, prior to the close of business on the last Business
Day preceding the Redemption Date, give written notice to the
Company pursuant to Paragraph (D) of the conversion of any or all
of the Series B-2 Preferred Shares to be redeemed held by such
holder (accompanied by a certificate or certificates for such
shares, duly endorsed or assigned to the Company), then such
redemption shall not become effective as to such Series B-2
Preferred Shares to be converted, such conversion shall become
effective as provided in Paragraph (D).
H. Exclusion of Other Rights.
Except as may otherwise be required by law, the Series B-2
Preferred Shares shall not have any preferences, conversion or
other rights, voting powers, restrictions or limitations as to
dividends or other distributions other than as specifically set
forth in the Declaration of Trust.
I. Headings of Subdivisions.
The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
J. Severability of Provisions.
If any of the preferences, conversion or other rights,
voting powers, restrictions, or limitations as to dividends or
other distributions of the Series B-2 Preferred Shares set forth
in the Declaration of Trust is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all
other preferences, conversion or other rights, voting powers,
restrictions, or limitations as to distributions of Series B-2
Preferred Shares set forth in the Declaration of Trust which can
be given effect without the invalid, unlawful or unenforceable
provision thereof shall, nevertheless, remain in full force and
effect and no preferences, conversion or other rights, voting
powers, restrictions, or limitations as to dividends or other
distributions of the Series B-2 Preferred Shares herein set forth
shall be deemed dependent upon any other provision thereof unless
so expressed therein.
K. Ranking.
With regard to rights to receive distributions and amounts
payable upon liquidation, dissolution or winding up of the
Company, the Series B-2 Preferred Shares shall rank senior to any
Junior Shares, the Common Shares and any Common Share Equivalent
and on a parity with any other preferred shares issued by the
Company, unless the terms of such other preferred shares provide
otherwise and, if applicable, the requirements of Paragraph (L)
hereof have been complied with. However, the Company may
authorize or increase any class or series of Parity Shares or
Junior Shares, or both, without the vote or consent of the
holders of the Series B-2 Preferred Shares.
L. Limitations.
In addition to any other rights provided to the holders of
the Series B-2 Preferred Shares by applicable law, so long as any
Series B-2 Preferred Shares are outstanding, the Company shall
not, without the affirmative vote of the holders of at least a
majority of the total number of outstanding Series B Preferred
Shares, voting together as a separate class,
(i) authorize, create or issue, or increase the par
value or authorized or issued amount of, any class or series
of Senior Shares, or rights to subscribe to or acquire, any
security convertible into, any class or series of Senior
Shares, or reclassify any shares of beneficial interest into
any such Senior Shares or reclassify any Junior Shares into
Parity Shares;
(ii) amend, alter or repeal, whether by merger,
consolidation or otherwise, any of the provisions of the
Declaration of Trust (including these Paragraphs (A) through
(N)) so as to adversely affect the preferences, right to
convert, conversion price adjustments, notice rights,
special conversion rights, distribution and liquidation
rights, preferences, restrictions or limitations, redemption
rights or privileges, or voting powers or rights of the
Series B-2 Preferred Shares; or
(iii) modify an express contract right of the Series B-
2 Preferred Shares;
but (except as otherwise provided in these Paragraphs (A) through
(N) or required by applicable law) nothing herein contained shall
require such a vote or consent (i) in connection with any
increase in the total number of authorized Common Shares, or (ii)
in connection with the authorization or increase of any class or
series of Parity Shares or Junior Shares. The Company with the
written consent or affirmative vote of the holders of a majority
of the Series B Preferred Shares shall have the right to amend,
alter or repeal any of the provisions of these Paragraphs (A)
through (N) without the approval, consent or vote of any other
class of shares of beneficial interest of the Company.
M. No Preemptive Rights.
No holder of Series B-2 Preferred Shares shall be entitled
to any preemptive rights to subscribe for or acquire any unissued
Shares (whether now or hereafter authorized) or securities of the
Company convertible, including securities into or carrying a
right to subscribe to or acquire Shares.
N. Notices.
Except as may otherwise be provided in the Declaration of
Trust, all notices to holders of Series B-2 Preferred Shares
shall be written, and delivered by first class mail, postage
prepaid, addressed to record holders of the Series B-2 Preferred
Shares as their names shall appear on the share records of the
Company on the applicable record date, or, if no record date has
been set, then on the date of delivery of such notice.
SECOND: The Series B-2 Preferred Shares have been classified
by the Board of Trustees under a power contained in the
Declaration of Trust.
THIRD: These Articles Supplementary have been approved by
the Board of Trustees in the manner and by the vote required by
law.
FOURTH: Each of the undersigned acknowledges these Articles
Supplementary to be the act of the Company and as to all matters
or facts required to be verified under oath, the undersigned
acknowledges that to the best of his knowledge, information and
belief, these matters and facts are true in all material respects
and that this statement is made under the penalties for perjury.
FIFTH: These Articles Supplementary and all documents,
agreements, understandings and arrangements relating hereto have
been entered into or executed on behalf of the Company by the
undersigned in his capacity as a trustee of the Company, which
has been formed as a Maryland real estate investment trust
pursuant to a declaration of trust of the Company dated July 20,
1992, as amended and restated, and not individually, and neither
the trustees, officers nor shareholders of the Company shall be
bound or have any personal liability hereunder or thereunder.
Holders of the Series B-2 Preferred Shares shall look solely to
the assets of the Company for satisfaction of any liability of
the Company in respect of these Articles Supplementary and all
documents, agreements, understandings and arrangements relating
hereto and will not seek recourse or commence any action against
any of the trustees, officers or shareholders of the Company or
any of their personal assets for the performance or payment of
any obligation hereunder or thereunder. The foregoing shall also
apply to any future documents, agreements, understandings,
arrangements or transactions between the Company and holders of
the Series B-2 Preferred Shares.
* * *
[The remainder of this page has been intentionally left blank]
<PAGE>
These Articles Supplementary are executed on behalf of the
Company by its Board of Trustees this 18th day of February, 1997.
KRANZCO REALTY TRUST
/s/ Norman M. Kranzdorf
______________________________
Norman M. Kranzdorf
/s/ Robert H. Dennis
______________________________
Robert H. Dennis
/s/ Peter D. Linneman
______________________________
Dr. Peter D. Linneman
/s/ James B. Selonick
______________________________
James B. Selonick
/s/ E. Donald Shapiro
______________________________
E. Donald Shapiro
/s/ Edmond Barrett
______________________________
Edmund Barrett
Exhibit 4.3
ARTICLES SUPPLEMENTARY CLASSIFYING
395,834 SHARES OF BENEFICIAL INTEREST
AS
SERIES C CUMULATIVE REDEEMABLE PREFERRED SHARES
OF
BENEFICIAL INTEREST OF KRANZCO REALTY TRUST
(Pursuant to Section 8-203(b) of the
Corporations and Associations Article
of the Annotated Code of Maryland)
Kranzco Realty Trust, a real estate investment trust
organized and existing under the laws of the State of Maryland
(the "Company"), and having its executive office at 128 Fayette
Street, Conshohocken, Pennsylvania 19428, hereby certifies to the
State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to the authority granted to and vested
in the Board of Trustees of the Company (the "Board of Trustees")
in accordance with the Amended and Restated Declaration of Trust
of the Company, dated November 4, 1992, as amended (the
"Declaration of Trust"), the Board of Trustees at a meeting duly
convened and held on November 7, 1996 adopted resolutions
authorizing and establishing a separate class of preferred shares
of beneficial interest, out of the 100,000,000 authorized shares
of beneficial interest of the Company (the "Shares"), consisting
of 395,834 preferred shares of beneficial interest to be known
as the "Series C Cumulative Redeemable Preferred Shares of
Beneficial Interest" (the "Series C Preferred Shares"). The
Series C Preferred Shares shall have a par value of $.01 per
share. The preferences, rights, voting powers, restrictions,
limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption of the
Series C Preferred Shares, which shall be deemed to be part of
Article VI of the Declaration of Trust, are as follows:
"Series C Cumulative Redeemable Preferred Shares of Beneficial
Interest:
A. Dividends.
1. The holders of the Series C Preferred Shares shall be
entitled to receive dividends, as and when declared by the Board
of Trustees, out of funds legally available for the purpose, at
the rate of eight percent (8%) per annum of the Liquidation
Preference, payable in quarterly installments on the last day of
January, April, July and October of each year (each such date
being a "Dividend Payment Date") with respect to the immediately
preceding calendar quarter. The first Dividend Payment Date
shall be April 30, 1997. If any Dividend Payment Date shall
fall on a Saturday, Sunday or legal holiday, then such dividend
shall be paid on the next business day following such Dividend
Payment Date.
2. Each dividend shall be fully cumulative and shall
accrue (whether or not declared), on a daily basis without
compounding and without interest, from February 27, 1997.
3. Dividends on the Series C Preferred Shares shall be
paid in cash at the close of business on each Dividend Payment
Date to the holders of record on the last day of the immediately
preceding month (i.e., the last day of March, June, September and
December of each year). All dividends on the Series C Preferred
Shares shall be paid to each holder entitled thereto pro rata
based on the number of Series C Preferred Shares held by such
holder.
4. The holders of shares of the Series C Preferred Shares
shall be entitled to receive dividends provided for in this
Paragraph (A) in preference to and with priority over any
dividends on and other distributions in respect of the Common
Shares of Beneficial Interest of the Company or any other class
or series of shares or equity securities of the Company
heretofore or hereafter authorized which by its terms ranks
junior to the Series C Preferred Shares in respect of dividend
rights and rights of liquidation, dissolution and winding up of
the affairs of the Company (the "Junior Securities"). So long as
any shares of the Series C Preferred Shares are outstanding, the
Company shall not declare, pay or set apart for payment any
dividend on account of, or set apart for payment money for a
sinking or other similar fund for the purchase, redemption or
other retirement of any Junior Securities or any warrants,
rights, calls or options exercisable for or convertible into any
Junior Security, or make any distribution in respect thereof,
either directly or indirectly, and whether in cash, obligations
or shares of the Company or other property (other than
distributions or dividends in Junior Securities to the holders of
Junior Securities), unless full dividends on all outstanding
shares of the Series C Preferred Shares shall have been paid in
full or a sum set apart sufficient for the full payment thereof.
5. Upon issuance, the Series C Preferred Shares will rank
on a parity as to distributions with (i) the Series A Increasing
Rate Cumulative Convertible Preferred Shares of Beneficial
Interest of the Company (the "Series A-1 Preferred Shares"),
(ii) the Series B-1 Cumulative Convertible Preferred Shares of
Beneficial Interest of the Company (the "Series B Preferred
Shares"), and (iii) Series B-2 Cumulative Convertible Preferred Shares
of Beneficial Interest of the Company (the "Series B-2 Preferred Shares,"),
and, together with the Series B-1 Preferred Shares, the "Series B Preferred
Shares").
B. Voting Rights. Except as required by law, the holders of
the Series C Preferred Shares shall have no right to vote at any
meeting of shareholders of the Company. Except as required by
law, holders of the Series C Preferred Shares shall not be
entitled to receive notice of any meeting of shareholders at
which they are not entitled to vote on or consent to any matter.
C. Liquidation Preference.
1. In the event of a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, the
holders of shares of the Series C Preferred Shares then
outstanding shall be entitled to receive, out of the assets of
the Company, $10.00 per share (the "Liquidation Preference") plus
an amount per share equal to all accrued and unpaid dividends
thereon, if any, up to the date of liquidation, dissolution or
winding up of the affairs of the Company, before any distribution
or payment is made on the Common Shares of Beneficial Interest of
the Company or any other class of Junior Securities. If upon any
liquidation, dissolution or winding up of the affairs of the
Company, the assets distributable among the holders of Series C
Preferred Shares and all other classes and series of shares of
beneficial interest which by their terms rank (as to any such
distribution of assets) on a parity with the Series C Preferred
Shares are insufficient to permit the payment in full to the
holders of all such shares of all preferential amounts payable to
all such holders, then the entire assets of the Company thus
distributable shall be distributed ratably among the holders of
Series C Preferred Shares and such other classes and series of
shares of beneficial interest which by their terms rank (as to
any such distribution of assets) on a parity with the Series C
Preferred Shares in proportion to the respective amounts that
would be payable per share if such assets were sufficient to
permit payment in full.
2. Neither the sale, lease or exchange (for cash, shares
of stock, securities or other consideration) of all or
substantially all of the property and assets of the Company, nor
the merger or consolidation of the Company into or with any
corporation, nor the merger of any corporation with or into the
Company, shall be deemed to be a dissolution, liquidation or
winding up of the affairs of the Company within the meaning of
this Paragraph (C), unless such sale, lease or conveyance shall
be in connection with a plan of liquidation, dissolution or
winding up of the affairs of the Company.
3. Upon issuance, the Series C Preferred Shares will rank
on a parity with the Series A-1 Preferred Shares and the Series B
Preferred Shares as to the distribution of assets upon any
liquidation, dissolution or winding up of the affairs of the
Company.
D. Redemption.
1. Mandatory Redemption. The Company shall, to the extent
that funds are legally available therefor, redeem in eight equal
quarterly installments on the last day of January, April, July
and October of each calendar year, beginning April 30, 1997,
until all outstanding shares of the Series C Preferred Shares
have been redeemed, at a redemption price per Series C Preferred Share
(the "Redemption Price per Series C Preferred Share") equal
to the Liquidation Preference plus an amount equal to the
accrued and unpaid dividends, if any, allocable to such Series C Preferred
Share. All shares to be so redeemed shall be redeemed from each holder
of Series C Preferred Shares pro rata based on the number of
Series C Preferred Shares held by such holder. Notwithstanding
the immediately preceding sentence, if (i) the Company shall fail
to discharge any mandatory redemption obligation contained in
this Subparagraph (D)(1) for any reason, (ii) the Company shall
have failed to pay a distribution on the outstanding Series C
Preferred Shares for any quarter within five days of the
distribution payment date therefor or (iii) the Company merges or
consolidates with or into any entity, unless (A) immediately
following such merger or consolidation, more than 50% of the
surviving company's issued and outstanding voting securities are
held by the holders of the Company's issued and outstanding
voting securities immediately prior to such merger or
consolidation and (B) effective provision is made in the charter
documents of the surviving person or entity or otherwise for the
recognition, preservation and protection of the preferences,
conversion and other rights, voting powers, restrictions and
limitations as to dividends or other distributions of the Series
C Preferred Shares, then (x) no dividends or other distributions
shall be paid on the Common Shares of Beneficial Interest of the
Company, any other class of Junior Securities or any class or
series of shares or equity securities of the Company heretofore
or hereafter authorized which by its terms ranks on a parity with
the Series C Preferred Shares in respect of dividend rights and
rights of liquidation, dissolution and winding up of the affairs
of the Company and (y) the Company shall immediately redeem all
outstanding shares of the Series C Preferred Shares at the
Redemption Price per Series C Preferred Share.
If the Company shall fail to discharge any mandatory
redemption obligation due to the fact that funds are not legally
available, such mandatory redemption obligation shall be
discharged as soon as the Company has funds legally available
therefor to discharge such obligation.
2. Optional Redemption. The Board of Trustees shall have
the right, but not the obligation, to redeem an unlimited number
of shares of the Series C Preferred Shares at the Redemption
Price per Series C Preferred Share at any time, and from time to
time. In the event of the redemption of only a part of the
outstanding shares of the Series C Preferred Shares, the shares
to be redeemed shall be redeemed from each holder of Series C
Preferred Shares pro rata based on the number of Series C
Preferred Shares held by such holder. In the event of an
optional redemption of Series C Preferred Shares pursuant to
these Articles Supplementary, the Company shall have the right to
apply any such optionally redeemed Series C Preferred Shares in
satisfaction of its mandatory redemption obligations pursuant to
these Articles Supplementary, in such order as the Company shall
determine in its sole discretion.
3. Redemption Procedures.
(a) In the event of any redemption of shares of the
Series C Preferred Shares, written notice of such redemption (a
"Redemption Notice") shall be given by the Company to the holders
of record of such shares at such holders' addresses as the same
appear on the share register of the Company, by certified or
registered mail, postage prepaid; provided, however, that neither
the failure to give a Redemption Notice nor any defect therein
shall affect the validity of the proceeding for the redemption of
any shares of the Series C Preferred Shares except as to the
holder to whom the Company has failed to give a Redemption Notice
or except as to the holder whose Redemption Notice was defective.
Each such Redemption Notice shall state (i) the proposed date of
redemption; (ii) the number of shares of the Series C Preferred
Shares owned by the shareholder receiving such notice to be
redeemed; (iii) the Redemption Price per Series C Preferred Share
for such shares; and (iv) the place where certificates for such
shares are to be surrendered for payment of such redemption
price.
(b) Upon surrender of the certificates representing
the Series C Preferred Shares in accordance with the Redemption
Notice, such shares shall be redeemed by the Company at the
applicable Redemption Price as provided for herein.
(c) The Company shall have the right, on the date on
which the Redemption Notice has been given as above provided or
any subsequent date, to deposit in trust an amount equal to the
aggregate Redemption Price of the shares of the Series C
Preferred Shares to be redeemed and in the event of such deposit,
notwithstanding that any certificates for shares of the Series C
Preferred Shares so called for redemption shall not have been
surrendered for cancellation, all rights of the holders of shares
of the Series C Preferred Shares to be redeemed shall cease from
and after the date of such deposit, other than the right to
receive the redemption price as aforesaid.
Any moneys deposited by the Company pursuant to this
Paragraph (D) which shall not be required for such redemption
because of the exercise of any right subsequent to the date of
such deposit shall be returned to the Company forthwith. Any
interest accrued on any funds so deposited shall belong to the
Company and be paid to it from time to time. Any funds so
deposited and unclaimed at the end of four years from the date of
redemption, shall be paid to the Company, after which repayment
the holders of shares of the Series C Preferred Shares so called
for redemption shall look only to the Company for the payment
thereof, without interest.
E. Status of Reacquired Shares. All shares of the Series C
Preferred Shares that have been issued and reacquired or redeemed
in any manner by the Company shall not be reissued or resold, but
shall be cancelled, and the Company may from time to time cause
all such shares to be retired in the manner provided by law."
F. Limitations. So long as any Series C Preferred Shares are
outstanding, the Company shall not, without the affirmative vote
of the holders of at least a majority of the total number of
outstanding Series C Preferred Shares, voting as a class,
authorize, create or issue any class or series of, or rights to
subscribe to or acquire, any security convertible into, any class
or series of shares of beneficial interest having mandatory
redemption obligations on the part of the Company senior to the
Series C Preferred Shares, or reclassify any shares of beneficial
interest into any such senior shares.
In addition to any other rights provided to the holders
of the Series C Preferred Shares by applicable law, so long as
any Series C Preferred Shares are outstanding, the Company shall
not, without the affirmative vote of the holders of at least a
majority of the total number of outstanding Series C Preferred
Shares, voting together as a separate class,
(i) amend, alter or repeal, whether by merger,
consolidation or otherwise, any of the provisions of
its Declaration of Trust (including, without
limitation, these Paragraphs (A) through (F)) so as to
adversely affect the preferences, notice rights,
distribution and liquidation rights, preferences,
restrictions and limitations, redemption rights and
privileges or voting powers or rights of the Series C
Preferred Shares; or
(ii) modify an express contract right of the Series C
Preferred Shares.
The Company with the written consent of the holders of a majority
of the Series C Preferred Shares shall have the right to amend,
alter or repeal any of the provisions of these Paragraphs (A)
through (F) without the approval, consent or vote of any other
class of shares of beneficial interest of the Company.
SECOND: The Series C Preferred Shares have been
classified by the Board of Trustees under a power contained in
the Declaration of Trust.
THIRD: These Articles Supplementary have been
approved by the Board of Trustees in the manner and by the vote
required by law.
FOURTH: Each of the undersigned acknowledges these
Articles Supplementary to be the act of the Company and as to all
matters or facts required to be verified under oath, that to the
best of his knowledge, information and belief, these matters and
facts are true in all material respects and such statement is
made under the penalties for perjury.
FIFTH: These Articles Supplementary and all docu-
ments, agreements, understandings and arrangements relating
hereto have been entered into or executed on behalf of the Com-
pany by the undersigned in his capacity as a trustee of the
Company, which has been formed as a Maryland real estate invest-
ment trust pursuant to a declaration of trust of the Company
dated July 20, 1992, as amended and restated, and not
individually, and neither the trustees, officers nor shareholders
of the Company shall be bound or have any personal liability
hereunder or thereunder. Holders of the Series C Preferred
Shares shall look solely to the assets of the Company for
satisfaction of any liability of the Company in respect of these
Articles Supplementary and all documents, agreements,
understandings and arrangements relating hereto and will not seek
recourse or commence any action against any of the trustees,
officers or shareholders of the Company or any of their personal
assets for the performance or payment of any obligation hereunder
or thereunder. The foregoing shall also apply to any future
documents, agreements, understandings, arrangements or
transactions between the Company and holders of the Series C
Preferred Shares.
* * *
[The remainder of this page has been intentionally left blank]
These Articles Supplementary are executed on behalf of
the Company by its Board of Trustees this 18th day of February,
1997.
KRANZCO REALTY TRUST (SEAL)
/s/ Norman M. Kranzdorf
_________________________________
Norman M. Kranzdorf
/s/ Robert H. Dennis
_________________________________
Robert H. Dennis
/s/ Irving B. Maizlish
_________________________________
Irving B. Maizlish
/s/ Peter D. Linneman
_________________________________
Dr. Peter D. Linneman
/s/ James B. Selonick
_________________________________
James B. Selonick
/s/ E. Donald Shapiro
_________________________________
E. Donald Shapiro
/s/ Edmund Barrett
_________________________________
Edmund Barrett
Exhibit 10.1
LOAN AGREEMENT
Dated as of February 26, 1997
by and among
EACH OF THE ENTITIES IDENTIFIED ON SCHEDULE 1 HERETO,
as Borrower,
SALOMON BROTHERS REALTY CORP.
as Agent and initial Lender,
BANK LEUMI TRUST COMPANY OF NEW YORK
as Collateral Agent,
KRANZCO REALTY TRUST
as Guarantor,
and
Each Lender Signatory Hereto
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . 2
ARTICLE II
GENERAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.1. The Loan. . . . . . . . . . . . . . . . . . . . 25
Section 2.2. Use of Proceeds . . . . . . . . . . . . . . . . 26
Section 2.3. Security for the Loan . . . . . . . . . . . . . 26
Section 2.4. Borrowers' Global Note. . . . . . . . . . . . . 26
Section 2.5. Interest. . . . . . . . . . . . . . . . . . . . 27
Section 2.6. Voluntary Prepayment. . . . . . . . . . . . . . 28
Section 2.7. Mandatory Prepayment Upon Release . . . . . . . 28
Section 2.8. Application of Payments After Event of Default. 29
Section 2.9. Method and Place of Payment . . . . . . . . . . 29
Section 2.10. Taxes. . . . . . . . . . . . . . . . . . . . . 29
Section 2.11. Release of Collateral. . . . . . . . . . . . . 29
Section 2.12. Central Cash Management. . . . . . . . . . . . 30
Section 2.13. Repair Reserve Account . . . . . . . . . . . . 34
Section 2.14. Security Agreement . . . . . . . . . . . . . . 34
Section 2.15. Mortgage Recording Taxes . . . . . . . . . . . 36
Section 2.16. General Collateral Agent Provisions. . . . . . 37
Section 2.17. Extension Options. . . . . . . . . . . . . . . 39
ARTICLE III
CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . 40
Section 3.1. Conditions Precedent to Effectiveness . . . . . 40
Section 3.2. Execution and Delivery of Agreement . . . . . . 42
Section 3.3. Procedure for Disbursement of an Advance. . . . 42
Section 3.4. Information Delivery Requirements . . . . . . . 43
Section 3.5. Conditions Precedent to Each Disbursement of an
Advance. . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.6. Conditions Precedent to Disbursement of an
Advance on an Advance Closing Date on Which a Mortgaged
Property Will be Added to Collateral . . . . . . . . . . . 47
Section 3.7. Acceptance of Borrowings. . . . . . . . . . . . 49
Section 3.8. Form of Loan Documents and Related Matters. . . 49
ARTICLE IV
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 49
Section 4.1. Representations . . . . . . . . . . . . . . . . 49
Section 4.2. Advance Closing Date Representations. . . . . . 54
Section 4.3. Survival of Representations . . . . . . . . . . 59
ARTICLE V
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 59
Section 5.1. Borrower Covenants. . . . . . . . . . . . . . . 59
ARTICLE VI
NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 72
Section 6.1. Borrower Negative Covenants . . . . . . . . . . 72
ARTICLE VII
DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 7.1. Event of Default. . . . . . . . . . . . . . . . 74
Section 7.2. Remedies. . . . . . . . . . . . . . . . . . . . 76
Section 7.3. Remedies Cumulative . . . . . . . . . . . . . . 77
Section 7.4. Default Administration Fee. . . . . . . . . . . 77
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.1. Survival. . . . . . . . . . . . . . . . . . . . 78
Section 8.2. Lenders' Discretion . . . . . . . . . . . . . . 78
Section 8.3. Governing Law . . . . . . . . . . . . . . . . . 78
Section 8.4. Modification, Waiver in Writing.. . . . . . . . 79
Section 8.5. Delay Not a Waiver. . . . . . . . . . . . . . . 79
Section 8.6. Notices . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.7. TRIAL BY JURY . . . . . . . . . . . . . . . . . 80
Section 8.8. Headings. . . . . . . . . . . . . . . . . . . . 80
Section 8.9. Assignment. . . . . . . . . . . . . . . . . . . 80
Section 8.10. Severability . . . . . . . . . . . . . . . . . 81
Section 8.11. Preferences. . . . . . . . . . . . . . . . . . 81
Section 8.12. Waiver of Notice . . . . . . . . . . . . . . . 81
Section 8.13. Remedies of Borrowers. . . . . . . . . . . . . 81
Section 8.14. Exhibits Incorporated. . . . . . . . . . . . . 81
Section 8.15. Offsets, Counterclaims and Defenses. . . . . . 81
Section 8.16. No Joint Venture or Partnership. . . . . . . . 82
Section 8.17. Waiver of Marshalling of Assets Defense. . . . 82
Section 8.18. Waiver of Counterclaim . . . . . . . . . . . . 82
Section 8.19. Conflict; Construction of Documents. . . . . . 82
Section 8.20. Brokers and Financial Advisors . . . . . . . . 82
Section 8.21. Counterparts . . . . . . . . . . . . . . . . . 83
Section 8.22. Estoppel Certificates. . . . . . . . . . . . . 83
Section 8.23. Payment of Expenses. . . . . . . . . . . . . . 83
Section 8.24. Non-Recourse . . . . . . . . . . . . . . . . . 83
Section 8.25. Confidentiality. . . . . . . . . . . . . . . . 84
ARTICLE IX
AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.1. Appointment, Powers and Immunities. . . . . . . 85
Section 9.2. Reliance by Agent . . . . . . . . . . . . . . . 85
Section 9.3. Defaults. . . . . . . . . . . . . . . . . . . . 85
Section 9.4. Rights as a Lender. . . . . . . . . . . . . . . 86
Section 9.5. Indemnification . . . . . . . . . . . . . . . . 86
Section 9.6. Non-Reliance on Agent and Other Lenders . . . . 86
Section 9.7. Failure to Act. . . . . . . . . . . . . . . . . 87
Section 9.8. Resignation or Removal of Agent . . . . . . . . 87
Section 9.9. Agency Fee. . . . . . . . . . . . . . . . . . . 87
Section 9.10. Consents under Lender Loan Documents . . . . . 87
Section 9.11. Notices, Reports and Other Communications. . . 87
<PAGE>
Exhibits
A - Assignment of Contracts, Licenses, Permits,
Agreements, Warranties and Approvals (Form)
B - Global Note (Form)
C - Mortgage (Deed of Trust), Assignment of Leases and
Rents, Security Agreement and Fixture Filing (Form)
D - Management Agreement
E - Manager's Consent and Subordination of Management
Agreement (Form)
F-1 - Closing Date Opinion of Ballard Spahr Andrews &
Ingersoll
(Guarantor matters)
F-2 - Closing Date Opinion of Robinson Silverman Pearce
Aronsohn & Berman LLP
(Loan Document enforceability)
G - Registered Note (Form)
H - Financing Statements (Form)
I - Lien Search Jurisdictions
J - Guaranty (Form)
K - Assignment of Rents and Leases (Form)
L - Pledge Agreement (Form)
Schedules
1 - Borrowers
2 - Appraisers
3 - Ground Leases
4 - Rights of First Refusal, etc.<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT, made as of February 26, 1997, is
by and among SALOMON BROTHERS REALTY CORP., a New York
corporation, having an address at Seven World Trade Center, New
York, New York 10048, as agent for Lender (in such capacity,
together with its successors and assigns in such capacity,
"Agent"), each of the financial institutions signatory hereto
that is identified as a "Lender" on the signature pages hereto or
that, pursuant to Section 8.9 hereof shall become a "Lender"
hereunder (individually, a "Lender" and collectively, the
"Lenders"), each of the entities named on Schedule 1 hereto or
which join this Agreement after the date of execution of this
Agreement, each having an address at c/o Kranzco Realty Trust,
128 Fayette Street, Conshohocken, Pennsylvania 19428 (each
borrowing entity is hereinafter referred to individually as a
"Borrower" and collectively as "Borrowers"), BANK LEUMI TRUST
COMPANY OF NEW YORK, a New York corporation, having an address at
562 Fifth Avenue, Fifth Floor, New York 10036, as collateral
agent for Agent ("Collateral Agent") and KRANZCO REALTY TRUST, a
Maryland real estate investment trust, having an office at 128
Fayette Street, Conshohocken, PA 19428 ("Guarantor").
RECITALS
WHEREAS, Borrowers desire to obtain a series of loans
(each, an "Advance" and collectively, the "Loan") from Lender in
an aggregate amount at any time outstanding of up to $50,000,000
(the "Loan Amount") in order to provide Borrowers and/or
Affiliates of Borrowers with funds, among other things, (i) to
acquire real property, (ii) for working capital, (iii) to pay
certain fees and expenses associated with the Loan, and (iv) for
other general corporate purposes;
WHEREAS, Agent is unwilling to make the Loan unless (i)
Borrowers join in the execution and delivery of this Agreement
and the Loan Documents (hereinafter defined) which shall
establish the terms and conditions of the Loan and of each
Advance and (ii) Guarantor joins in the execution and delivery of
the Guaranty (hereinafter defined) which shall establish the
terms and conditions of the Guaranty;
WHEREAS, Borrowers have agreed to establish certain
accounts and to grant to Collateral Agent on behalf of, and for
the benefit of, Lender a security interest therein upon the terms
and conditions of the security agreement set forth in Section
2.14;
WHEREAS, Bank Leumi Trust Company of New York, in its
capacity as Collateral Agent, is willing to join in the security
agreement set forth in Section 2.14 by execution and delivery of
this Agreement in that capacity.
NOW, THEREFORE, in consideration of the making of the
Loan by the initial Lender and for other good and valuable
consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the parties hereby covenant, agree,
represent and warrant as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions. For all purposes of this
Agreement: (1) the capitalized terms defined in this Article I
have the meanings assigned to them in this Article I, and include
the plural as well as the singular; (2) all accounting terms have
the meanings assigned to them in accordance with GAAP; (3) the
words "herein", "hereof", and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section, or other subdivision; and (4) the
following terms have the following meanings:
"Accepted Practices" means such general practices as
commercial mortgage collateral agents or banks would follow in
the normal course of their business in performing administrative
and custodial duties with respect to collateral which is
generally similar to the Account Collateral; provided, however,
that "Accepted Practices" shall not be deemed to include any
custodial practices now followed by Collateral Agent for any such
collateral held for its own account to the extent that such
practices are more stringent than the practices followed by
commercial collateral agents or banks generally.
"Account Collateral" has the meaning provided in
Section 2.14(a).
"Accounts" means all accounts (as defined in the UCC),
now owned or hereafter acquired by Borrowers, and arising out of
or in connection with, the operation of the Mortgaged Property
and all other accounts described in the Management Agreement and
all present and future accounts receivable, inventory accounts,
contract rights, chattel paper, notes, acceptances, insurance
policies, Instruments, Documents or other rights to payment and
all forms of obligations owing at any time to Borrowers
thereunder, whether now existing or hereafter created or
otherwise acquired by or on behalf of Borrowers, and all Proceeds
thereof and all liens, security interests, guaranties, remedies,
privileges and other rights pertaining thereto, and all rights
and remedies of any kind forming the subject matter of any of the
foregoing. Without limiting the generality of the foregoing, the
term "Accounts" shall include all of Borrowers' right, title and
interest in and to:
(i) all income, Rents, issues, profits, revenues,
deposits and other benefits from the Mortgaged Property;
(ii) all receivables and other obligations now existing
or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of
the use and occupancy of property or rendering of services
by Borrowers or any operator or manager of the Mortgaged
Property (arising out of or in connection with, directly or
indirectly, the Mortgaged Property) or other commercial
space located at the Mortgaged Property or acquired from
others (including, without limitation, from rental of space,
halls, stores, and offices, and deposits securing
reservations of such space, exhibit or sales space of every
kind, license, lease, sublease and concession fees and
rentals, health club membership fees, food and beverage
wholesale and retail sales of merchandise, service charges,
vending machine sales and proceeds, if any, from business
interruption or other loss of income insurance);
(iii) all sums of money, and all instruments, documents
and securities held in any accounts of Borrowers in
connection therewith, or any demand, time, savings or other
account maintained by Borrowers with any bank or certificate
of deposit issued by any bank with the proceeds of such
account;
(iv) all of the records and books of account now or
hereafter maintained by or on behalf of Borrowers or Manager
in connection with the operation of the Mortgaged Property;
and
(v) the Collection Account and the Repair Reserve
Account.
"Activity Statement" and "Activity Statement Date" have
the meaning provided in Section 2.12(d).
"Adjusted Operating Expenses" means, as of any date of
calculation, the accrued Operating Expenses with respect to the
Mortgaged Property (calculated on an individual Mortgaged
Property basis and aggregated) during the most recent twelve (12)
month period for which such information was furnished to Agent
pursuant to Section 2.12(e) hereof, adjusted by Agent to reflect
(i) expenses for management fees equal to the greater of actual
management fees and 3% of Gross Revenues, (2) an annual minimum
replacement reserve in an amount reasonably determined by Agent,
(3) a normalized annual TI Costs and Leasing Commissions reserve
as reasonably determined by Agent and (4) material increases in
future Operating Expenses as reasonably projected by Agent.
"Adjusted Operating Revenue" means, as of any date of
calculation, the sum of (A) the Operating Revenues reasonably
projected to be received with respect to the Mortgaged Property
during the twelve (12) month period beginning on the first day of
the following month and ending on the last day of the month in
which such calculation is being made in the following year on a
pro forma basis, based solely upon the base rent portion of the
Rents due pursuant to executed Leases for part or all of such
period, for tenants which either are in occupancy from a current
rent roll or have yet to occupy the related space and in any such
case are not in monetary or other material default under such
Leases as of such date of calculation and (B) the lesser of (i)
the actual recoveries and other recurring income which were
received with respect to the Mortgaged Property during the prior
twelve (12) month period for which such information was furnished
to Agent pursuant to Section 2.12(e) hereof and (ii) the amount
of recoveries and other recurring income reasonably projected to
be received with respect to the Mortgaged Property during the
period referred to in clause (A) above on a pro forma basis based
solely on executed Leases for part or all of such period, for
tenants which either are in occupancy from a current rent roll or
have yet to occupy the related space and in any such case are not
in monetary or other material default under such Leases as of
such date of calculation, as the same are adjusted by Agent to
reflect (1) a credit loss/vacancy allowance equal to the greatest
of 5%, actual vacancy or comparable market vacancy as reasonably
determined by Agent, and (2) with respect to the projected
Operating Revenues described in (A) above only, reduction of
above market rents to market, as reasonably determined by Agent.
Adjusted Operating Revenue shall be calculated on an individual
Mortgaged Property basis and in aggregate.
"Adjusted Property Net Cash Flow" for any period shall
mean the amount by which Adjusted Operating Revenue exceeds
Adjusted Operating Expenses for such period.
"Advance" has the meaning provided in the Recitals
hereto.
"Advance Closing Date" means the Closing Date and each
other date on which an Advance is made pursuant to Section 3.3(c)
hereunder.
"Affiliate" of any specified Person means any other
Person controlling or controlled by or under 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 or other beneficial interests, by contract or
otherwise; and the terms "controlling" and "controlled" have the
meanings correlative to the foregoing.
"Agent" has the meaning provided in the first paragraph
of this Agreement.
"Agreement" means this Loan Agreement, together with
any Schedules and Exhibits hereto, as the same may from time to
time hereafter be modified, supplemented or amended.
"Allocated Loan Amount" means the portion of the Loan
Amount allocated to each Mortgaged Property as of the Advance
Closing Date on which such Mortgaged Property becomes subject to
the Lien of the related Mortgage, as such amounts may be adjusted
by Agent on behalf of Lender from time to time, such adjustments
to be based upon, without limitation, revised Adjusted Property
Net Cash Flow, Appraisals and a Material Adverse Effect.
"Application Letter" means the letter dated January 17,
1997 entered into between Kranzco Realty Trust and the initial
Lender.
"Appraisal" means an appraisal with respect to a
Mortgaged Property prepared by an Appraiser in accordance with
the Uniform Standards of Professional Appraisal Practice of the
Appraisal Foundation, in compliance with the requirements of
Title 11 of the Financial Institution Reform, Recovery and
Enforcement Act and using customary valuation methods such as the
income, sales/market and cost approaches, as any of the same may
be updated by recertification from time to time by the Appraiser
performing the appraisal.
"Appraiser" means any of the MAI appraisers set forth
on Schedule 2 to this Agreement.
"Assignment" has the meaning provided in
Section 5.1(V).
"Assignment of Rents and Leases" means, with respect to
each Mortgaged Property, an Assignment of Rents and Leases, in
the form attached hereto as Exhibit K, dated as of the date
hereof, granted by the respective Borrower to the initial Lender
with respect to the Leases, as same may hereafter from time to
time be supplemented, amended, modified or extended.
"Basic Carrying Costs" means the following costs with
respect to the Mortgaged Property: (i) Impositions and
(ii) insurance premiums for policies of insurance required to be
maintained pursuant to this Agreement or the other Loan Documents
(including the allocable portion of any insurance premiums under
policies covering properties in addition to the Mortgaged
Property).
"Borrower" and "Borrowers" have the meanings provided
in the first paragraph of this Agreement and such terms shall be
deemed to include any Leasehold Borrower.
"Business Day" means any day other than a Saturday and
a Sunday and a day on which federally insured depository
institutions in the State of New York or Pennsylvania are
authorized or obligated by law, governmental decree or executive
order to be closed. When used with respect to an Interest
Determination Date, "Business Day" shall mean a day on which
banks are open for dealing in foreign currency and exchange in
London and New York City.
"Capital Event Proceeds" means, with respect to any
Mortgaged Property which has been the subject of a Transfer, the
excess of Liquidation Proceeds received by Borrower with respect
to such Mortgaged Property over Liquidation Expenses incurred
with respect thereto.
"Capital Improvement Costs" means costs incurred by
Borrower in connection with replacements and capital repairs
required to be made to the Mortgaged Property (including, without
limitation, repairs to the structural components, roofs, building
systems, parking lots, TI Costs and Leasing Commissions).
"Change of Control" means (i) the sale or transfer by
Guarantor of a majority of the direct or indirect right to
distributions from a Borrower in the aggregate to a Person or
Persons who are not controlled, directly or indirectly, by the
Guarantor or (ii) the sale or transfer by Guarantor of a majority
of the direct or indirect voting rights in a Borrower to a Person
or Persons who are not controlled, directly or indirectly, by the
Guarantor.
"Closing Date" means the date on which this Agreement
shall become effective pursuant to Section 3.1, such date being
February 27, 1997.
"Code" means the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any
successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or
final form.
"Collateral" means, collectively, the Ground Leases,
Land, Improvements, Contracts, Documents, Trademarks, Equipment,
Leases, Rents, Accounts, General Intangibles, Instruments,
Inventory, Money and rights to payment from Persons arising from
the operation of the Mortgaged Property and all Proceeds, and (to
the full extent assignable) Permits, all whether now owned or
hereafter acquired and all other property which is or hereafter
may become subject to a Lien in favor of Agent or in favor of
Collateral Agent on behalf of Lender as security for the Loan.
"Collateral Agent" means Bank Leumi Trust Company of
New York or such Person's successor in interest or other
successor.
"Collateral Security Instrument" means any right,
document or instrument, other than a Mortgage, given as security
for the Loan (including, without limitation, the Pledge
Agreement, the Management Subordination and the Contract
Assignment, as same may be amended or modified from time to
time).
"Collection Account" has the meaning provided in
Section 2.12(a).
"Collection Period" means, with respect to any Payment
Date, the period beginning on the immediately preceding Payment
Date and ending on the day prior to such Payment Date; provided,
however, that in the case of the first Payment Date, the
"Collection Period" shall be the period from the Closing Date to
the day prior to such Payment Date.
"Commitment Fee" has the meaning provided in the
Application Letter.
"Condemnation Proceeds" means, in the event of a Taking
with respect to the Mortgaged Property, the proceeds in respect
of such Taking.
"Contingent Obligation" means, as used in the
definition of Other Borrowings, any obligation of a Borrower
guaranteeing any indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner. Without limiting the
generality of the foregoing, the term "Contingent Obligation"
shall include any obligation of such Borrower, whether or not
contingent:
(i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor;
(ii) to advance or supply funds (x) for the purchase or
payment of any such primary obligation or (y) to maintain
working capital or equity capital of the primary obligor;
(iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation; or
(iv) otherwise to assure or hold harmless the owner of
such primary obligation against loss in respect thereof.
The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Borrower
is required to perform thereunder) as determined by Agent in good
faith.
"Contract Assignment" means, with respect to each
Mortgaged Property, the Assignment of Contracts, Licenses,
Permits, Agreements, Warranties and Approvals in the form
attached hereto as Exhibit A, dated as of the Closing Date and
executed by the related Borrower.
"Contracts" means the Management Agreement and all
other agreements to which a Borrower is a party, of which such
Borrower is a beneficiary or which are assigned to such Borrower
by Manager in the Management Agreement and which are executed in
connection with the construction, operation and management of the
Mortgaged Property (including, without limitation, agreements for
the sale, lease or exchange of goods or other property and/or the
performance of services by it, in each case whether now in
existence or hereafter arising or acquired), as any such
agreements have been or may be from time to time amended,
supplemented or otherwise modified.
"Debt Service Coverage" means the ratio, expressed as a
percentage to two decimal places, of Adjusted Property Net Cash
Flow to Loan Debt Service.
"Debt Service Coverage Test" means a test which shall
be satisfied if the Adjusted Property Net Cash Flow at the time
of determination is at least equal to the product of 1.50 and the
Loan Debt Service.
"Debt Service Coverage/Property Release Test Date"
means the twenty-fifth (25th) day of each month (or, if such day
is not a Business Day, the next succeeding Business Day) until
the Loan is repaid in full.
"Debt Service Deposit Amount" means, as of any Payment
Date, the sum of (i) the interest payments that are due and
payable in accordance with the Global Note on such Payment Date,
(ii) the principal payments, if any, that are due and payable
pursuant to Section 2.7(b) on such Payment Date and (iii) any
other amounts under this Agreement, the Global Note, the Loan
Documents or the Fee Letter due on such Payment Date.
"Default" means the occurrence of any event which, but
for the giving of notice or the passage of time, or both, would
be an Event of Default.
"Default Administration Fee" means an amount equal to
the product of (x) 1% and (y) the Principal Indebtedness as of
the date the Default Administration Fee becomes payable;
provided, that the Default Administration Fee shall not be
payable in the circumstance described in Section 7.4.
"Default Rate" means the per annum interest rate equal
to 5.0% per annum in excess of the rate otherwise applicable
hereunder.
"Deposit Account" has the meaning provided in Section
2.12(a).
"Deposit Bank" has the meaning provided in Section
2.12(a).
"Documents" means all "documents" as defined in the UCC
or other receipts covering, evidencing or representing goods now
owned or hereafter acquired by a Borrower.
"Eligible Account" means a separate and identifiable
account from all other funds held by the holding institution that
is: (i) an account maintained with a federal or state chartered
depository institution or trust company whose (1) commercial
paper, short-term debt obligations or other short-term deposits
(or, in the case of a depository institution or trust company
that is the principal subsidiary of a holding company, the
commercial paper, short-term debt obligations or other short-term
deposits of such holding company) are rated by the Rating
Agency(ies) not less than "A-1" (or the equivalent), if the
deposits are to be held in the account for less than thirty (30)
days or (2) long-term unsecured debt obligations are rated at
least "AA-" (or the equivalent), if the deposits are to be held
in the account more than thirty (30) days, (ii) an account the
deposits in which are fully insured by the FDIC or (iii) a
segregated trust account maintained with the corporate trust
department of a federal or state chartered depository institution
or trust company subject to regulations regarding fiduciary funds
on deposit similar to Title 12 of the Code of Federal Regulations
Section 9.10(b) which, in either case, has corporate trust
powers, acting in its fiduciary capacity. An Eligible Account
shall not be evidenced by a certificate of deposit, passbook or
other instrument. Following a downgrade, withdrawal,
qualification or suspension of such institution's rating, each
account must promptly (and in any case within not more than
thirty (30) calendar days) be moved to a qualifying institution
or to one or more segregated trust accounts in the trust
department of such institution, if permitted.
"Engineer" means Edward H. Kuljian Associates, Inc. and
EMG or such other independent Engineer as shall be approved by
Agent.
"Engineering Report" means the structural engineering
reports with respect to the Mortgaged Property prepared by an
Engineer and delivered to Agent in connection with the Loan and
any amendments or supplements thereto delivered to Agent.
"Environmental Auditor" means EMG or such other
independent environmental auditor as shall be approved by Agent.
"Environmental Claim" means any notice, notification,
request for information, claim, administrative, regulatory or
judicial action, suit, judgment, demand or other communication
(whether written or oral) by any Person or Governmental Authority
alleging or asserting liability with respect to a Borrower,
Manager or the Mortgaged Property (whether for damages,
contribution, indemnification, cost recovery, compensation,
injunctive relief, investigatory, response, remedial or cleanup
costs, damages to natural resources, personal injuries, fines or
penalties) arising out of, based on or resulting from (i) the
presence, Use or Release into the environment of any Hazardous
Substance at any location (whether or not owned, managed or
operated by such Borrower or Manager), (ii) any fact,
circumstance, condition or occurrence forming the basis of any
violation, or alleged violation, of any Environmental Law or
(iii) any alleged injury or threat of injury to health, safety or
the environment.
"Environmental Laws" means any and all present and
future federal, state or local laws, statutes, ordinances or
regulations, any judicial or administrative orders, decrees or
judgments thereunder, and any permits, approvals, licenses,
registrations, filings and authorizations, in each case as now or
hereafter in effect, relating to the environment, human health or
safety, or the Release or threatened Release of Hazardous
Substances or otherwise relating to the Use of Hazardous
Substances.
"Environmental Reports" means a "Phase I Environmental
Site Assessment" (and, if necessary, a "Phase II Environmental
Site Assessment") as referred to in the ASTM Standard Practice
for Environmental Site Assessments: Phase 1 Environmental Site
Assessment Process, E 1527-94 and an asbestos survey, with
respect to the Mortgaged Property, prepared by an Environmental
Auditor and delivered to Agent and any amendments or supplements
thereto delivered to Agent.
"Equipment" means all "equipment" as defined in the
UCC, now or hereafter owned by a Borrower or in which such
Borrower has or shall acquire an interest, now or hereafter
located on, attached to or contained in or used in connection
with the Mortgaged Property, and shall also mean and include all
building materials, construction materials, personal property
constituting furniture, fittings, appliances, apparatus,
leasehold improvements, machinery, devices, interior
improvements, appurtenances, equipment, plant, furnishings,
fixtures, computers, electronic data processing equipment,
telecommunications equipment and other fixed assets now owned or
hereafter acquired by such Borrower and now or hereafter used in
the operation of the business conducted at the Mortgaged
Property, and all Proceeds thereof and as well as all additions
to, substitutions for, replacements of or accessions to any of
the items recited as aforesaid and all attachments, components,
parts (including spare parts) and accessories, whether installed
thereon or affixed thereto, and wherever located, now or
hereafter owned by such Borrower and used in connection with, or
with the operation of, the Mortgaged Property or the buildings,
structures, or other improvements now or hereafter located at the
Mortgaged Property, or in connection with any construction being
conducted or which may be conducted thereon, all regardless of
whether the same are located on the Mortgaged Property or are
located elsewhere (including, without limitation, in warehouses
or other storage facilities or in the possession of or on the
premises of a bailee, vendor or manufacturer) for purposes of
manufacture, storage, fabrication or transportation and all
extensions and replacements to, and proceeds of, any of the
foregoing, but exclusive of those items which are property of
tenants of the Mortgaged Property.
"ERISA" means 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 Agreement and, as of the
relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means any corporation or trade or
business that is a member of any group of organizations (i)
described in Section 414(b) or (c) of the Code of which Borrower
is a member and (ii) 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 is a member.
"Event of Default" has the meaning provided in
Section 7.1.
"Exchange Act" has the meaning provided in
Section 5.1(R)(iv).
"Extended Maturity Date" has the meaning provided in
Section 2.17.
"Extension Conditions" has the meaning provided in
Section 2.17.
"Extension Fee" has the meaning provided in
Section 2.17.
"Extension Notice" has the meaning provided in
Section 2.17.
"Extension Option" has the meaning provided in
Section 2.17.
"Fee Letter" means the letter entered into by and among
Guarantor and Collateral Agent, with respect to the fees of
Collateral Agent under this Agreement.
"Financial Covenants" has the meaning provided in the
Guaranty.
"Fiscal Year" means the 12-month period ending on
December 31st of each year (or, in the case of the first fiscal
year, such shorter period from the Closing Date through such
date) or such other fiscal year of Borrowers as Borrowers may
select from time to time upon notice to Agent on behalf of
Lenders.
"Fund" has the meaning provided in the definition of
"Permitted Investments."
"GAAP" means generally accepted accounting principles
in the United States of America as of the date of the applicable
financial report.
"General Intangibles" means all "general intangibles"
as defined in the UCC, now owned or hereafter acquired by a
Borrower. Without limiting the generality of the foregoing, the
term "General Intangibles" shall include:
(i) all obligations or indebtedness owing to such
Borrower from whatever source arising (other than Accounts,
Rents, Instruments, Inventory, Money, Contracts, Documents,
Trademarks and Permits);
(ii) all unearned premiums accrued or to accrue under
all insurance policies for the Mortgaged Property obtained
by such Borrower, all proceeds of the conversion, voluntary
or involuntary, of any of the foregoing into cash or
liquidated claims (including, without limitation, proceeds
of insurance, condemnation awards, and all rights of such
Borrower to refunds of real estate taxes and assessments);
(iii) all royalties and license fees;
(iv) all trademark licenses, trademarks, rights in
intellectual property, goodwill, trade names, service marks,
trade secrets, copyrights, permits and licenses, together
with the registrations therefor and the goodwill appurtenant
thereto;
(v) all rights or claims in respect of refunds for
taxes paid; and
(vi) all rights in respect of any pension plan or
similar arrangement maintained for employees of such
Borrower.
"Global Note" means the global note, substantially in
the form of Exhibit B hereto, made by Borrowers to the initial
Lender pursuant to this Agreement, as such note may be modified,
amended, supplemented or extended.
"Governmental Authority" means any national or federal
government, any state, regional, local or other political
subdivision thereof with jurisdiction and any Person with
jurisdiction exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Gross Revenue" means, for any period, the total dollar
amount of all income and receipts received in the ordinary course
of business with respect to the Mortgaged Property (including,
without limitation, all Rents, Money and Proceeds of any
Accounts), but excluding Loss Proceeds and Proceeds from any
Transfer of the Mortgaged Property.
"Ground Lease" means each of those ground leases
described on Schedule 3 hereto between the applicable landlord,
and the applicable Leasehold Borrower, as tenant, as the same may
be supplemented, amended, modified, renewed or extended.
"Ground Lease Impairment" means with respect to a
Ground Lease: (i) any termination, cancellation or surrender
affecting any Ground Lease (in each case in whole or in part and
whether or not pursuant to an express right contained in the
Ground Lease); (ii) any modification, amendment, supplementation,
or other change materially and adversely affecting any Ground
Lease; (iii) any subordination, or consent to the subordination
of, any Ground Lease to any mortgage or other Lien encumbering
(or that may in the future encumber) the estate of the lessor
under the Ground Lease in any premise(s) demised to a Leasehold
Borrower under a Ground Lease; or (iv) a Leasehold Borrower's
delivery of any notice to any lessor under a Ground Lease that
impairs or is reasonably projected to impair, or purports to
limit the exercise of, Lender's rights and remedies under the
related leasehold Mortgage or the applicable Ground Lease in any
material respect, whether caused by a Leasehold Borrower or
suffered or permitted to occur by a Leasehold Borrower.
"Ground Rent" means any and all payments required of a
Leasehold Borrower under a Ground Lease, including base rent,
fixed rent, additional rent, and any other payments, sums or
charges payable or required to be paid, whether to the ground
lessor or to a third party, under a Ground Lease.
"Guaranty" means, with respect to the Loan, the
Guaranty Agreement in the form attached hereto as Exhibit J,
dated as of the Closing Date and executed by Guarantor.
"Hazardous Substance" means, collectively, (i) any
petroleum or petroleum products or waste oils, explosives,
radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls ("PCBs"), lead in drinking
water, and lead-based paint, (ii) any chemicals or other
materials or substances which are now or hereafter become defined
as or included in the definitions of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous
wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "contaminants", "pollutants" or words of
similar import under any Environmental Law and (iii) any other
chemical or any other material or substance, exposure to which is
now or hereafter prohibited, limited or regulated under any
Environmental Law.
"Impositions" means 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, privilege or
license or similar taxes), assessments (including, without
limitation, all assessments for public improvements or benefits,
whether or not commenced or completed within the term of the
Mortgage), 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, foreseen or unforeseen, of
every character in respect of the Mortgaged Property, including
any Rents and Accounts (including all interest and penalties
thereon), which at any time prior to, during or in respect of the
term hereof may be assessed or imposed on or in respect of or be
a lien upon (i) a Borrower (including, without limitation, all
income, franchise, single business or other taxes imposed on such
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 Loan, is
located) or Lender, (ii) the Mortgaged Property, or any other
collateral delivered or pledged to Lender in connection with the
Loan, or any part thereof or any Rents therefrom or any estate,
right, title or interest therein, or (iii) any occupancy,
operation, use or possession of, or sales from, or activity
conducted on, or in connection with the Mortgaged Property 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 by such Borrower; provided, that "Impositions" shall not
include sales tax on sales by tenants or income taxes of tenants
at the Mortgaged Property.
"Improvements" means all buildings, structures,
fixtures and improvements of every nature whatsoever situated on
the Land on the Closing Date or thereafter (including, without
limitation, all gas and electric fixtures, radiators, heaters,
engines and machinery, boilers, ranges, elevators and motors,
plumbing and heating fixtures, carpeting and other floor
coverings, water heaters, awnings and storm sashes, and cleaning
apparatus which are or shall be attached to the Land or said
buildings, structures or improvements and including any
additions, enlargements, extensions, modifications, repairs or
replacements thereto, but exclusive of those items which are the
property of the tenants (other than Leasehold Borrowers) of the
Mortgaged Property).
"Indebtedness" means the Principal Indebtedness,
together with all other obligations and liabilities due or to
become due to Lender pursuant hereto, under the Global Note, the
Mortgage or in accordance with any of the other Loan Documents,
and all other amounts, sums and expenses paid by or payable to
Lender hereunder or pursuant to the Global Note or any of the
other Loan Documents.
"Indemnified Liabilities" has the meaning set forth in
Section 5.1(J).
"Indemnified Parties" has the meaning set forth in
Section 5.1(I).
"Independent" means, when used with respect to any
Person, a Person who (i) does not have any direct financial
interest or any material indirect financial interest in any
Borrower or in any Affiliate of any Borrower, and (ii) is not
connected with any Borrower or any Affiliate of any Borrower as
an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions; provided, that,
notwithstanding the foregoing, the shareholders of Guarantor
shall be deemed "Independent" of Borrowers under this Agreement.
"Index Maturity" has the meaning set forth in the
definition of LIBOR.
"Instruments" means (i) all "instruments" as defined in
the UCC, "chattel paper" as defined in the UCC, or letters of
credit, evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the
payment of, any of the Collateral (including, without limitation,
promissory notes, drafts, bills of exchange and trade
acceptances) and chattel paper obtained by a Borrower in
connection with the Mortgaged Property (including, without
limitation, all ledger sheets, computer records and printouts,
data bases, programs, books of account and files of such Borrower
relating thereto) and (ii) notes or other obligations of
indebtedness owing to such Borrower from whatever source arising,
in each case now owned or hereafter acquired by such Borrower.
"Insurance Proceeds" means, in the event of a casualty
with respect to the Mortgaged Property, the proceeds received
under any insurance policy.
"Insurance Requirements" means all material terms of
any insurance policy required pursuant to this Agreement or the
Mortgages and all material regulations and then current standards
applicable to or affecting the Mortgaged Property or any part
thereof or any use or condition thereof, which may, at any time,
be recommended by the Board of Fire Underwriters, if any, having
jurisdiction over the Mortgaged Property, or such other body
exercising similar functions.
"Interest Accrual Period" means, in connection with the
calculation of interest accrued with respect to any Payment Date,
the period from and including the preceding Payment Date to but
excluding such Payment Date; provided, however, that the first
Interest Accrual Period for the Loan shall be from the initial
Advance Closing Date to but excluding the first Payment Date.
"Interest Determination Date" means, in connection with
the calculation of interest accrued for any Interest Accrual
Period, the second Business Day preceding the first day of such
Interest Accrual Period.
"Inventory" means all "inventory" as defined in the
UCC, whether now or hereafter existing or acquired, and which
arises out of or is used in connection with, directly or
indirectly, the ownership and operation of the Mortgaged
Property, all Documents representing the same and all Proceeds
and products of such Inventory. Without limiting the generality
of the foregoing, the term "Inventory" shall include, without
limitation:
(i) all goods, merchandise, raw materials, work in
process and other personal property, wherever located, now
or hereafter owned or held by a Borrower for manufacture,
processing, the providing of services or sale, use or
consumption in the operation of the Mortgaged Property
(including, without limitation, fuel, supplies and similar
items and all substances commingled therewith or added
thereto); and
(ii) all rights and claims of such Borrower against
anyone who may store or acquire the Inventory for the
account of such Borrower, or from whom such Borrower may
purchase the Inventory.
"Land" has the meaning provided in the Mortgages.
"Leasehold Borrower" means each of the Borrowers
identified as such on Schedule 3 hereto.
"Leases" means all leases, subleases, lettings,
occupancy agreements, tenancies and licenses by a Borrower as
landlord or sublandlord of the related Mortgaged Property or any
part thereof now or hereafter entered into, and all amendments,
extensions, renewals and guarantees thereof, and all security
therefor.
"Leasing Commissions" means leasing commissions
incurred by a Borrower in connection with leasing or subleasing
the related Mortgaged Property.
"Legal Requirements" means all governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees
and injunctions of Governmental Authorities (including, without
limitation, Environmental Laws) affecting either the Mortgaged
Property or any part thereof or the construction, use, alteration
or operation thereof, or any part thereof (whether now or
hereafter enacted and in force), and all permits, licenses and
authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in
any instruments, at any time in force affecting the Mortgaged
Property or any part thereof (including, without limitation, any
which may (i) require repairs, modifications or alterations in or
to the Mortgaged Property or any part thereof, or (ii) in any way
limit the use and enjoyment thereof).
"Lender" has the meaning provided in the first
paragraph of this Agreement.
"LIBOR" means the rate per annum calculated as set
forth below:
(i) On each Interest Determination Date, LIBOR will be
determined on the basis of the offered rate for deposits of
not less than U.S. $1,000,000 for a period of one month (the
"Index Maturity"), commencing on such Interest Determination
Date, which appears on Telerate Page 3750 as of 11:00 a.m.,
London time (or such other page as may replace the Telerate
Page on that service for the purposes of displaying London
interbank offered rates of major banks). If no such offered
rate appears, LIBOR with respect to the relevant Interest
Accrual Period will be determined as described in (ii)
below.
(ii) With respect to an Interest Determination Date on
which no such offered rate appears on Telerate Page 3750 as
described in (i) above, LIBOR shall be the arithmetic mean,
expressed as a percentage, of the offered rates for deposits
in U.S. dollars for the Index Maturity which appears on the
Reuters Screen LIBO Page as of 11:00 a.m., London time, on
such date. If, in turn, such rate is not displayed on the
Reuters Screen LIBO Page at such time, then LIBOR for such
date will be obtained from the preceding Business Day for
which the Reuters Screen LIBO Page displayed a rate for the
Index Maturity.
(iii) If on any Interest Determination Date Agent is
required but unable to determine LIBOR in the manner
provided in paragraphs (i) and (ii) above, LIBOR for the
next Interest Accrual Period shall be LIBOR as determined on
the previous Interest Determination Date or, in the case of
the first Interest Determination Date, 5.38%.
All percentages resulting from any calculations of LIBOR referred
to in this Agreement will be rounded to the nearest multiple of
1/100 of 1% (with one-half of 1/100 of 1% or more being rounded
upwards) and all U.S. dollar amounts used in or resulting from
such calculations will be rounded to the nearest cent (with one-
half cent or more being rounded upwards).
"Lien" means any mortgage, deed of trust, lien
(statutory or other), pledge, hypothecation, assignment,
preference, priority, security interest, or any other encumbrance
or charge on or affecting the Mortgaged Property or any portion
thereof or a Borrower, or any interest therein (including,
without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any
financing statement or similar instrument under the UCC or
comparable law of any other jurisdiction, domestic or foreign,
and mechanic's, materialmen's and other similar liens and
encumbrances).
"Liquidation Expenses" means the following expenses
paid directly by a Borrower to Persons who are generally in the
business of providing goods and services of the type provided and
who are not Affiliates of any Borrower incurring such expenses:
(a) sales brokerage expenses; (b) other costs of conveyance
customarily paid by a seller of commercial properties of the type
sold in the applicable geographic area (including, any applicable
state and local transfer or franchise taxes); and (c) other
expenses approved in writing by Agent as costs reasonably
incurred in connection with such sale or conveyance; provided, in
each case that such expenses are reasonable for the types of
goods and services provided in the applicable geographical area.
"Liquidation Proceeds" means the aggregate cash amount
received by any Borrower or its designee (i) in connection with a
sale or refinancing of all or any portion of a Mortgaged
Property, or (ii) in any other manner with respect to the
liquidation of all or any portion of a Mortgaged Property
(including, without limitation, the proceeds of the disposition
of any non-cash consideration received in connection with such
liquidation).
"Loan" means the loan made by initial Lender to
Borrowers pursuant to the terms of this Agreement.
"Loan Amount" has the meaning provided in the Recitals
to this Agreement.
"Loan Debt Service" means the product of the Market
Constant and the outstanding Principal Indebtedness.
"Loan Documents" means this Agreement, the Global Note,
any Registered Note, the Guaranty, the Mortgages, the Management
Agreement, the Management Subordinations, the Contract
Assignments, the Pledge Agreement, the Assignments of Leases and
Rents and all other agreements, instruments, certificates and
documents delivered by or on behalf of Borrowers, Guarantor,
Manager or an Affiliate to evidence or secure the Loan or
otherwise in satisfaction of the requirements of this Agreement,
the Mortgages or the other documents listed above as same may be
amended or modified from time to time.
"Loss Proceeds" means Condemnation Proceeds and/or
Insurance Proceeds.
"Management Agreement" means, with respect to each
Mortgaged Property, each Management Agreement entered into
between the related Borrower and Manager, in the form attached
hereto as Exhibit D, or in such other form as may be approved by
Agent, as such agreement may be amended, modified or supplemented
and in effect from time to time.
"Manager" means Kranzco Realty Trust or its successor
in interest.
"Management Subordination" means each Manager's Consent
and Subordination of Management Agreement attached hereto as
Exhibit E, dated as of the Closing Date, executed by Manager,
each Borrower and Agent.
"Managing Entity" means, with respect to any Borrower
that is a limited partnership or limited liability company, the
general partner or the managing member, respectively, of such
Borrower.
"Market Constant" means the highest of (a) the current
annual interest rate on the Loan adjusted to reflect amortization
on a twenty-five (25) year schedule, (b) 10% and (c) the U.S.
Treasury Rate plus 220 basis points adjusted to reflect
amortization on a twenty-five (25) year schedule.
"Material Adverse Effect" means a material adverse
effect upon (i) the business operations, properties, assets or
condition (financial or otherwise) of Borrowers taken as a whole,
(ii) the ability of Borrowers to perform, or of Lender to
enforce, any of the Loan Documents or (iii) the value of the
Mortgaged Property taken as a whole or the operation thereof.
"Maturity Date" means the earlier of (a) the Original
Maturity Date, or if such date has been extended pursuant to the
provisions of Section 2.17 hereof, the Extended Maturity Date, or
(b) any earlier date on which the entire Loan is required to be
paid in full, by acceleration or otherwise, under this Agreement
or any of the other Loan Documents.
"Money" means all moneys, cash, rights to deposit or
savings accounts or other items of legal tender obtained from or
for use in connection with the operation by any Borrower of the
related Mortgaged Property.
"Monthly Statement" has the meaning provided in Section
2.12(d).
"Mortgage" means, with respect to any Mortgaged
Property, a first priority Mortgage (or Deed of Trust),
Assignment of Leases and Rents, Security Agreement and Fixture
Filing, in the form attached hereto as Exhibit C, dated as of the
applicable Advance Closing Date, granted by the related Borrower
to Lender with respect to such Mortgaged Property as security for
the Loan, as same may hereafter from time to time be
supplemented, amended, modified or extended.
"Mortgaged Property," individually and in the
aggregate, means, at any time, the Ground Leases, the Land, the
Improvements, the Personalty, the Leases, the Rents, the Property
Agreements and the Equipment (to the extent the same shall be
deemed to be fixtures), and all rights, titles, interests and
estates appurtenant thereto, encumbered by, and more particularly
described in, the applicable Mortgage.
"Multiemployer Plan" means a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have
been, or were required to have been, made by Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Proceeds" means either (x) the purchase price (at
foreclosure or otherwise) actually received by Agent from a third
party purchaser with respect to the Mortgaged Property, as a
result of the exercise by Agent of its rights, powers, privileges
and other remedies after the occurrence of an Event of Default or
(y) in the event that Agent is the purchaser at foreclosure of
the Mortgaged Property, the higher of (i) the amount of Agent's
credit bid or (ii) such amount as shall be determined in
accordance with applicable law, and in either case minus all
customary and reasonable out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys' fees and
disbursements and any brokerage fees, if applicable) incurred by
Agent in connection with the exercise of such remedies; provided,
however, that such costs and expenses shall not be deducted to
the extent such amounts previously have been added to the
Indebtedness in accordance with the terms of the Mortgage or
applicable law.
"New Ground Lease" means, after the termination or
expiration of any Ground Lease, any new, replacement or
substitute Ground Lease issued to or obtained by Lender or its
designees with respect to or in place of the terminated Ground
Lease, whether pursuant to any provision of the terminated Ground
Lease or otherwise.
"New Mortgaged Property" means any Ground Lease, Land,
Improvements, Personalty, Leases, Rents, Property Agreements and
Equipment (to the extent the same shall be deemed fixtures), and
all rights, titles, interests and estates appurtenant thereto,
which a Borrower proposes to encumber by a Mortgage at any time
after the initial Advance Closing Date.
"Officer's Certificate" means a certificate delivered
to Agent by a Borrower which is signed by an authorized officer
of the Managing Entity of such Borrower or by an authorized
officer of such Borrower, as the case may be.
"Operating Budget" means, with respect to any Fiscal
Year, the operating budget for the Mortgaged Property reflecting
Borrowers' projections of Gross Revenues, property expenses and
Capital Improvement Costs (separately identifying TI Costs and
Leasing Commissions) for the Mortgaged Properties for such Fiscal
Year on an annual and monthly basis and submitted by Borrowers to
Agent in accordance with the provisions of Section 5.1(R)(vii).
"Operating Expenses" means, for any period of
calculation, all expenditures incurred by Borrowers and required
to be expensed under GAAP during such period in connection with
the ownership, operation, maintenance, repair and/or leasing of
the Mortgaged Property. Notwithstanding the foregoing, Operating
Expenses shall not include (a) Capital Improvement Costs, (b) any
extraordinary items (unless Agent and Borrowers approve of the
inclusion of such items), (c) depreciation, amortization and
other non-cash charges, (d) Ground Rent to the extent any Ground
Lease is subordinate to the Lien of the related Mortgage or (e)
any payments made by Borrowers in connection with the
Indebtedness. Operating Expenses shall be calculated on the
accrual basis of accounting.
"Operating Revenues" means, for any period, all regular
ongoing income during such period from the operation of the
Mortgaged Property which, in accordance with GAAP, is included in
Borrowers' annual financial statements as operating income.
Notwithstanding the foregoing, Operating Revenues shall not
include (a) any Loss Proceeds (other than business interruption
proceeds or Condemnation Proceeds in connection with a temporary
Taking and, in either case, only to the extent allocable to such
period or other applicable reporting period), (b) any proceeds
resulting from the sale, exchange, transfer, financing or
refinancing of the Mortgaged Property, (c) any Rent attributable
to a Lease either prior to the date on which the actual payment
of Rent is required to be made thereunder or to the extent such
Rent would not qualify as Operating Revenues under the cash basis
of accounting, (d) any interest income from any source, or (e)
any other extraordinary items. Operating Revenues shall be
calculated on the accrual basis of accounting.
"Organizational Documents" means, with respect to each
Borrower that is a limited partnership or limited liability
company, the partnership agreement, or operating or limited
liability company agreement, of such Borrower, and with respect
to each Borrower that is a corporation, the articles or
certificate of incorporation and the by-laws of such Borrower, as
such documents may be amended and restated from time to time.
"Original Maturity Date" has the meaning provided in
Section 2.17.
"Origination Fee" means 1.50% of the amount of an
Advance, which Origination Fee shall be payable on the Advance
Closing Date with respect to such Advance; provided, however that
Borrower shall receive a credit against the first Origination
Fees due and payable hereunder in an aggregate amount equal to
the Commitment Fee paid by Borrower to Lender on the Closing
Date.
"Other Borrowings" means, with respect to any Borrower,
without duplication (but not including the Indebtedness) (i) all
indebtedness of such Borrower for borrowed money or for the
deferred purchase price of property or services, (ii) all
indebtedness of such Borrower evidenced by a note, bond,
debenture or similar instrument, (iii) the face amount of all
letters of credit issued for the account of such Borrower and,
without duplication, all unreimbursed amounts drawn thereunder,
(iv) all indebtedness of such Borrower secured by a Lien on any
property owned by such Borrower (whether or not such indebtedness
has been assumed), (v) all Contingent Obligations of such
Borrower, (vi) liabilities and obligations for the payment of
money relating to a capitalized lease obligation or
sale/leaseback obligation (other than the Ground Leases), (vii)
liabilities and obligations representing the balance deferred and
unpaid of the purchase price of any property or services, except
those incurred in the ordinary course of business that would
constitute ordinarily a trade payable to trade creditors and
(viii) all payment obligations of such Borrower under any
interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars or
similar agreements) and similar agreements.
"Participation" has the meaning provided in Section
5.1(V).
"Payment Date" has the meaning provided in Section 2.5.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Permits" means all licenses, permits, variances and
certificates used in connection with the ownership, operation,
use or occupancy of the Mortgaged Property (including, without
limitation, business licenses, state health department licenses,
licenses to conduct business and all such other permits, licenses
and rights, obtained from any Governmental Authority or private
Person concerning ownership, operation, use or occupancy of the
Mortgaged Property).
"Permitted Encumbrances" means, with respect to the
Mortgaged Property, collectively, (i) the Lien created by the
Mortgages or the other Loan Documents of record, (ii) all Liens
and other matters disclosed on the Title Insurance Policy
concerning the Mortgaged Property, (iii) Liens, if any, for
Impositions imposed by any Governmental Authority not yet
delinquent or being contested in good faith and by appropriate
proceedings in accordance with the Mortgages, (iv) mechanic's or
materialmen's Liens, if any, being contested in good faith and by
appropriate proceedings in accordance with the Mortgages, (v)
rights of existing and future tenants and residents as tenants
only pursuant to Leases and (vi) Liens permitted pursuant to
Section 6.1(C).
"Permitted Investments" means any one or more of the
following obligations or securities acquired at a purchase price
of not greater than par:
(i) obligations of, or obligations fully guaranteed as
to payment of principal and interest by, the United States
or any agency or instrumentality thereof provided such
obligations are backed by the full faith and credit of the
United States of America;
(ii) obligations of the following United States of
America government sponsored agencies: Federal Home Loan
Mortgage Corp. (debt obligations), the Farm Credit System
(consolidated systemwide bonds and notes), the Federal Home
Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the
Student Loan Marketing Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution
Funding Corp. (debt obligations);
(iii) federal funds, unsecured certificates of
deposit, time deposits, bankers' acceptances and repurchase
agreements with maturities of not more than 365 days of any
bank, the short-term obligations of which are rated in the
highest short-term rating category by the Rating
Agency(ies);
(iv) fully Federal Deposit Insurance Corporation-
insured demand and time deposits in or certificates of
deposit of, or bankers' acceptances issued by, any bank or
trust company, savings and loan association or savings bank,
the short-term obligations of which are rated in the highest
short-term rating category by the Rating Agency(ies);
(v) debt obligations with maturities of not more than
365 days and rated by the Rating Agency(ies) in its highest
long-term unsecured rating category;
(vi) commercial paper (including both non-interest-
bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with
maturities of not more than 270 days and that is rated by
the Rating Agency(ies) in their highest short-term unsecured
debt rating;
(vii) the Federated Prime Obligation Money Market Fund
(the "Fund") so long as the Fund is rated "AAA" by the
Rating Agency(ies); and
(viii) any other demand, money market or time deposit,
demand obligation or any other obligation, security or
investment, which Agent shall have approved in writing;
provided, however, that the investments described in clauses (i)
through (vi) above must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if such
investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (C)
such investments must not be subject to liquidation prior to
their maturity; and provided, further, that, in the judgment of
Agent, such instrument continues to qualify as a "cash flow
investment" pursuant to Code Section 860G(a)(6) earning a passive
return in the nature of interest and that no instrument or
security shall be a Permitted Investment if such instrument or
security evidences (x) a right to receive only interest payments
or (y) the right to receive principal and interest payments
derived from an underlying investment at a yield to maturity in
excess of 120% of the yield to maturity at par of such underlying
investment.
"Person" means 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.
"Personalty" means all right, title and interest of a
Borrower in and to all goods, accounts, general intangibles,
instruments, documents, chattel paper and all other personal
property of any kind or character (including such items of
personal property as defined in the UCC), now owned or hereafter
acquired by such Borrower and now or hereafter affixed to, placed
upon, used in connection with, arising from or otherwise related
to the Mortgaged Property or which may be used in or relating to
the planning, development, financing or operation of the
Mortgaged Property (including, without limitation, furniture,
furnishings, Equipment, machinery, money, insurance proceeds,
Accounts, contract rights, Trademarks, goodwill, chattel paper,
documents, trade names, licenses and/or franchise agreements,
rights of such Borrower under leases of fixtures or other
personal property or equipment, inventory, all refundable,
returnable or reimbursable fees, deposits or other funds or
evidences of credit or indebtedness deposited by or on behalf of
such Borrower with any Governmental Authorities, boards,
corporations, providers of utility services, public or private,
including specifically, but without limitation, all refundable,
returnable or reimbursable tap fees, utility deposits, commitment
fees and development costs).
"Plan" means an employee benefit or other plan
established or maintained by a Borrower or any ERISA Affiliate
during the five-year period ended prior to the date of this
Agreement or to which such Borrower or any ERISA Affiliate makes,
is obligated to make or has, within the five-year period ended
prior to the date of this Agreement, been required to make
contributions and that is covered by Title IV of ERISA or
Section 302 of ERISA or Section 412 of the Code, other than a
Multiemployer Plan.
"Pledge Agreement" means that certain Pledge Agreement,
in the form attached hereto as Exhibit L, dated as of the Closing
Date, by each of the principals of each Borrower, collectively as
pledgor, to the initial Lender, as pledgee, as the same may
thereafter from time to time be supplemented, amended, modified
or extended.
"Principal Indebtedness" means the principal amount of
the Loan outstanding from time to time.
"Proceeds" shall have the meaning given in the UCC and,
in any event, shall include, without limitation, all proceeds,
product, offspring, rents, profits or receipts, in whatever form,
arising from the Collateral. Without limiting the generality of
the foregoing, the term "Proceeds" shall include:
(i) cash, Instruments and other property received,
receivable or otherwise distributed in respect of or in
exchange for any or all of the Collateral or the Mortgaged
Property;
(ii) the collection, sale, lease, sublease, concession,
exchange, assignment, licensing or other disposition of, or
realization upon, any item or portion of the Collateral or
the Mortgaged Property (including, without limitation, all
claims of a Borrower against third parties for loss of,
damage to, destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in
respect of, any Collateral or the Mortgaged Property now
existing or hereafter arising);
(iii) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to a Borrower from time to time
with respect to any of the Collateral or the Mortgaged
Property;
(iv) any and all payments (in any form whatsoever) made
or due and payable to such Borrower from time to time in
connection with the requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral
or the Mortgaged Property by any Governmental Authority (or
any Person acting under color of Governmental Authority);
and
(v) any and all other amounts from time to time paid
or payable to or on behalf of such Borrower under or in
connection with any of the Collateral or the Mortgaged
Property.
"Property Release Test" means a test which shall be
satisfied if, after the release of a Mortgaged Property from the
Lien of the Mortgage encumbering said Mortgaged Property, with
respect to the remaining Mortgaged Property, (i) no individual
remaining Mortgaged Property's contribution to the aggregate
Adjusted Property Net Cash Flow exceeds 20%, (ii) the five (5)
largest remaining Mortgaged Properties' contribution (based on
Adjusted Property Net Cash Flow) to the aggregate Adjusted
Property Net Cash Flow does not exceed 50%, and (iii) the
remaining Mortgaged Properties in any single state do not
contribute more than 40% of the aggregate Adjusted Property Net
Cash Flow.
"Quarterly Statement" has the meaning provided in
Section 2.12(e).
"Rating Agencies" means at least two of Fitch Investors
Service, L.P., Moody's Investors Service, Inc., Duff & Phelps
Credit Rating Co. and Standard & Poor's Ratings Services.
"Registered Notes" has the meaning provided in Section
2.4(b).
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment
(including, without limitation, the movement of Hazardous
Substances through ambient air, soil, surface water, ground
water, wetlands, land or subsurface strata).
"Rents" means all income, rents, issues, profits,
revenues (including all oil and gas or other mineral royalties
and bonuses), deposits (other than security deposits) and other
benefits from the Mortgaged Property payable to or receivable by
a Borrower. Without limiting the generality of the foregoing,
the "Rents" shall include all receivables and other obligations
now existing or hereafter arising or created out of the sale,
lease, sublease, license, concession or other grant of the right
of the use and occupancy of property or rendering of services by
such Borrower and which are payable to or receivable by such
Borrower (including, without limitation, from the rental of any
office space, retail space, warehouse and manufacturing space or
other space, halls, and offices, and deposits securing
reservations of such space, exhibit or sales space of every kind,
license, lease, sublease and concession fees and rentals and
proceeds, if any, from business interruption or other loss of
income insurance relating to the use, enjoyment and occupancy of
the Mortgaged Property).
"Repair Reserve Account" has the meaning provided in
Section 2.13.
"Repair Reserve Amount" has the meaning provided in
Section 2.13.
"Repayment Fee" means 1% of the outstanding Principal
Indebtedness prepaid or repaid on any Payment Date (including the
Maturity Date), which Repayment Fee shall be due and payable on
the earlier to occur of (i) the Maturity Date and (ii) such other
date upon which the Indebtedness is repaid in full and this
Agreement is terminated; provided, however, that (a) in no event
shall the aggregate Repayment Fee payable hereunder exceed
$500,000, (b) the Repayment Fee shall not be payable in
connection with any payment of the Principal Indebtedness
pursuant to Section 2.7(b) hereunder, and (c) in the event
Borrowers obtain the funds for such prepayment or repayment
through a Salomon Transaction, then the Repayment Fee payable as
hereinbefore described shall be credited against any fees earned
by Salomon in such Salomon Transaction, unless such Salomon
Transaction is a transaction of the type described in clause (ii)
of such definition in which case in the event Salomon elects to
have co-underwriter(s) in the transaction, the Repayment Fee
shall be credited against the total underwriting fees for the
transaction, rather than only the portion of those fees earned by
Salomon.
"Required Work" has the meaning provided in Section
2.13(a).
"Salomon" means the initial Lender or any of its
Affiliates.
"Salomon Transaction" means (i) any transaction in
which Salomon is the lender and Borrowers or any of their
Affiliates are the borrower in connection with any or all of the
Mortgaged Properties and/or other properties owned by Borrowers
and/or such Affiliates, (ii) any commercial mortgaged-backed
securities issued by Borrowers or any of their Affiliates in
which Salomon is the sole underwriter or, at Salomon's election,
lead-underwriter and/or (iii) any equity offering by Guarantor in
which Salomon is a co-lead underwriter.
"SEC" has the meaning provided in Section 5.1(R)(iv).
"Single-Purpose Entity" means a Person, other than an
individual, which (i) is formed or organized solely for the
purpose of acquiring and directly holding an ownership interest
in a Mortgaged Property, (ii) does not engage in any business
unrelated to a Mortgaged Property, (iii) does not have any assets
other than those related to its interest in a Mortgaged Property
or any indebtedness other than as permitted by this Agreement,
the applicable Mortgage or the other Loan Documents, (iv) 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 (other than another Borrower), (v)
is subject to all of the limitations on powers set forth in the
Organizational Documentation of a Borrower (and, in the case of a
limited partnership or limited liability company, that of its
Managing Entity as such powers relate to the activities of the
limited partnership or limited liability company) as of the
Closing Date or applicable Advance Closing Date and (vi) holds
itself out as being a Person separate and apart from any other
Person.
"Survey" means a certified as-built title survey of the
Mortgaged Property prepared by a registered Independent surveyor
and in form and content satisfactory to the initial Lender and
the company issuing the Title Insurance Policy for the Mortgaged
Property.
"Taking" means a taking or voluntary conveyance during
the term hereof of all or part of the Mortgaged Property, or any
interest therein or right accruing thereto or use thereof, as the
result of, or in settlement of, any condemnation or other eminent
domain proceeding by any Governmental Authority affecting the
Mortgaged Property or any portion thereof whether or not the same
shall have actually been commenced.
"TI Costs" means tenant improvement costs incurred by a
Borrower in connection with renewing or extending existing Leases
or executing new Leases on the related Mortgaged Property.
"Title Insurance Policy" means a mortgagee's title
insurance policy or policies (a) issued by one or more title
companies satisfactory to Agent which policy or policies shall be
in form ALTA 1992 (with waiver of arbitration provisions) (with
co-insurance or reinsurance as Agent may require reasonably
satisfactory to Agent), naming Agent as the insured party, (b)
insuring the applicable Mortgage as being a first and prior lien
upon the related Mortgaged Property, (c) showing no encumbrances
against such Mortgaged Property (whether junior or superior to
such Mortgage) which are not acceptable to Agent other than
Permitted Encumbrances, (d) in an amount reasonably acceptable to
Agent, and (e) otherwise in form and content acceptable to Agent.
Such Title Insurance Policy shall include the following
endorsements or affirmative coverages in form and substance
reasonably acceptable to Agent: variable rate endorsement; survey
endorsement; comprehensive endorsement; first loss endorsement;
access coverage; tax parcel coverage; contiguity (if applicable)
coverage; and such other endorsements as Agent shall reasonably
require in order to provide insurance against specific risks
identified by Agent in connection with such Mortgaged Property.
"Trademark" means the trademark licenses, trademarks,
rights in intellectual property, trade names, service marks and
copyrights relating to the Mortgaged Property or the license to
use intellectual property such as computer software owned or
licensed by a Borrower or other proprietary business information
relating to such Borrower's policies, procedures, manuals and
trade secrets.
"Transaction" means the transaction contemplated by the
Loan Documents.
"Transaction Costs" means all costs and expenses paid
or payable by Borrowers relating to the Transaction (including,
without limitation, appraisal fees, legal fees and accounting
fees and the costs and expenses described in Section 8.23).
"Transfer" means any liquidation, transfer, sale,
assignment, conveyance or other disposition (other than a Lease)
of all or any portion of the Mortgaged Property or an interest
therein.
"UCC" means with respect to a Mortgaged Property, the
Uniform Commercial Code as in effect on the date hereof in the
state where such Mortgaged Property is located, as amended from
time to time; provided, that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or non-
perfection of the security interest in any item or portion of the
Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the state where such
Mortgaged Property is located, "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or
effect of perfection or non-perfection.
"UCC Searches" has the meaning specified in
Section 3.5(A).
"Use" means, with respect to any Hazardous Substance,
the generation, manufacture, processing, distribution, handling,
use, treatment, recycling or storage of such Hazardous Substance
or transportation of such Hazardous Substance.
"U.S. Treasury Rate" means the yield on the U.S.
Treasury issue (primary issue) with a maturity date closest to,
but not earlier than, the tenth (10th) anniversary of the date on
which such rate is calculated with such yield being based on the
bid price for such issue as published in The Wall Street Journal
in New York, New York on the date of calculation (or, if such bid
price is not published on that date, the next preceding date on
which such bid price is so published). In the event The Wall
Street Journal is no longer published or ceases to publish the
bid price for such U.S. Treasury issues, Agent shall select a
comparable publication to determine the U.S. Treasury Rate.
"Welfare Plan" means an employee welfare benefit plan
as defined in Section 3(1) of ERISA established or maintained by
Borrower or any ERISA Affiliate or that covers any current or
former employee of Borrower or any ERISA Affiliate.
ARTICLE II
GENERAL TERMS
Section 2.1. The Loan. (a) Subject to the terms and
conditions of this Agreement, from and including the Closing Date
to, but not including, the Maturity Date, the Lenders shall lend
to Borrowers in one or more Advances such amounts as Borrowers
may request in accordance herewith; provided, however, that the
outstanding Principal Indebtedness may in no event exceed the
Loan Amount. The proceeds of the Loan shall be used solely for
the purposes identified in Section 2.2 hereof.
(b) The Loan shall constitute one general obligation
of Borrowers to Lenders, shall be secured by the security
interest in, and Liens granted upon, all of the Collateral, and
by all other security interests and Liens at any time or times
hereafter granted by Borrowers to Lenders or to Collateral Agent
on behalf of Lenders and shall be guaranteed by Guarantor
pursuant to the Guaranty.
(c) On each Debt Service Coverage/Property Release
Test Date, Agent shall notify Borrowers in writing (or
telephonically promptly confirmed in writing) (1) if the Debt
Service Coverage Test and the Property Release Test have or have
not been satisfied as of such date and (2) if the Debt Service
Coverage Test has been satisfied, of the maximum amount which may
be advanced under the Loan, as of such date. In the event the
Agent does not notify the Borrower with respect to satisfaction
of the Debt Service Coverage Test on or prior to the Debt Service
Coverage/Property Release Test Date, the Debt Service Coverage
Test shall be deemed to have been satisfied with respect to such
Debt Service Coverage/Property Release Test Date. In the event
the Debt Service Coverage Test has been or is deemed to have been
satisfied, Borrowers may request up to two Advances in accordance
with the Advance disbursement procedures set forth in Section 3.3
in the period commencing on such Debt Service Coverage/Property
Release Test Date and ending on the day preceding the subsequent
Debt Service Coverage/Property Release Test Date. The maximum
principal amount of each Advance shall be determined as of the
applicable Advance Closing Date and shall, in any event, be in an
amount less than an amount which would cause Borrowers to be in
violation of the Debt Service Coverage Test and the Property
Release Test (assuming such Advance was made), as determined
pursuant to Section 3.3 of this Agreement in connection with the
related Advance; provided, that the foregoing restriction with
respect to the Property Release Test shall not apply unless and
until the Borrowers shall have consummated a release for the
first time pursuant to Section 2.7.
(d) On each Advance Closing Date, the Lenders shall
deduct from the principal amount of the Advance made available to
Borrowers on such date (i) the Origination Fee with respect to
the Advance, (ii) the reasonable fees, expenses and disbursements
of counsel to Agent for which Borrowers have been billed or
otherwise notified and which remain unpaid and (iii) if requested
by Borrowers or required by Lenders not later than the Business
Day prior to such Advance Closing Date, any amounts which are to
be deposited by Lenders in the Repair Reserve Account pursuant to
Section 2.13. Subject to the provisions of the last sentence of
Section 2.1(c), each Advance shall be in an amount equal to or
greater than $1,000,000.
Section 2.2. Use of Proceeds. Proceeds of each
Advance shall be used for the following purposes: (a) to fund
the acquisition price for real property being acquired by a
Borrower, an Affiliate of Borrowers or Guarantor, and the
reasonable costs and expenses directly related to such
acquisition, (b) to fund working capital of Guarantor and/or
Borrowers, (c) to pay to Lender the Origination Fee, (d) to pay
to Lenders the out-of-pocket expenses incurred by Lenders in
connection with the funding of the Advance, (e) to pay to counsel
to Agent its reasonable fees, expenses and disbursements, (f) to
fund the Repair Reserve Account, (g) to pay all fees and expenses
incurred by Borrowers and their Affiliates in connection with the
negotiation, preparation and consummation of this Agreement
and/or the funding of any Advances, and (h) to fund other general
corporate purposes of Borrowers, Affiliates of Borrowers or
Guarantor.
Section 2.3. Security for the Loan. The Global Note
and Borrowers' obligations hereunder and under the other Loan
Documents shall be secured by (a) the Mortgages, (b) the Contract
Assignments, (c) the Pledge Agreement, (d) the Management
Subordinations, (e) the Assignments of Rents and Leases, (f) the
Guaranty and (g) the security interest and Liens granted in this
Agreement and in the other Loan Documents.
Section 2.4. Borrowers' Global Note. (a) Borrowers'
obligation to pay the principal of and interest on the Loan and
all other amounts due under the Loan Documents shall be evidenced
initially by the Global Note, duly executed and delivered by
Borrowers and registered in the name of the initial Lender on the
initial Advance Closing Date. The Global Note shall be payable
as to principal, interest and all other amounts due under the
Loan Documents, as specified in this Agreement, with a final
maturity on the Maturity Date. Agent is hereby authorized to
endorse on the schedule attached to the Global Note (or on a
continuation of such schedule attached to the Global Note and
made a part thereof) an appropriate notation evidencing (i) the
date and amount of each payment of principal, interest or other
amounts due under the Loan Documents, in respect thereof, and
(ii) the date and amount of each Advance on each Advance Closing
Date. Such schedule shall, absent manifest error, constitute
prima facie evidence of the accuracy of the information contained
therein. The failure of Agent to make a notation on the schedule
to the Global Note as aforesaid shall not affect the obligations
of Borrowers hereunder or under the Global Note or any other Loan
Document in any respect. At no time shall the aggregate
principal amount of the Global Note exceed the Loan Amount.
(b) At any time or from time to time, upon request of
Agent, Agent may exchange interests in the Global Note, in whole
or in part, for notes in the form of registered notes
("Registered Notes") set forth in Exhibit G hereto. Registered
Notes shall be issued in the name of Agent in the initial
principal amount requested by Agent and Agent shall make
appropriate notations on the Global Note to reflect the reduced
aggregate principal amount of the Global Note in an amount equal
to such initial principal amount of such Registered Note. No
such exchange of a beneficial interest shall be effective absent
such notation. Upon delivery to Borrowers of Agent's request
referred to above and a copy of the Global Note containing such
notation, Borrowers shall deliver to Agent Registered Notes in
the form of Exhibit G. Registered Notes are not exchangeable for
interests in the Global Note. Until the Global Note is exchanged
in full, the Global Note shall in all respects be entitled to the
same benefits under, and subject to the same terms and conditions
of, this Agreement as Registered Notes delivered hereunder. All
Registered Notes issued upon any exchange of interests in the
Global Note for a Registered Note shall be the valid obligations
of Borrowers evidencing the same debt, and entitled to the same
benefits, as the Global Note under this Agreement.
Section 2.5. Interest. (a) Interest on the Global
Note shall accrue on the Principal Indebtedness commencing on the
initial Advance Closing Date and shall be payable in arrears on
the first (1st) day of the month following the month in which the
initial Advance Closing Date occurs and on the first (1st) day of
each and every month thereafter through the month in which the
Maturity Date occurs, unless, in any such case, such day is not a
Business Day, in which event such interest shall be payable on
the first (1st) Business Day following such date (such date for
any particular month, the "Payment Date"). Agent shall calculate
LIBOR on each Interest Determination Date for the related
Interest Accrual Period and communicate in writing to Borrowers
such rate for such period. The entire outstanding Principal
Indebtedness of the Loan and the Global Note, together with all
accrued but unpaid interest thereon and all other amounts due
under the Loan Documents (including, without limitation, the
Repayment Fee, if applicable), shall be due and payable by
Borrowers to Lender on the Maturity Date. Interest shall be
computed on the basis of a 360-day year and the actual number of
days elapsed.
(b) Each Advance shall bear interest during each
interest Accrual Period from and including its respective Advance
Closing Date at a rate per annum equal to LIBOR determined as of
the Interest Determination Date immediately preceding such
Interest Accrual Period plus 1.75%.
(c) After an Event of Default has occurred and is
continuing, Borrowers shall pay to Lenders interest at the
Default Rate on any amount owing to Lenders not paid when due
until such amount is paid in full.
Section 2.6. Voluntary Prepayment. (a) Borrowers may
voluntarily prepay the Loan in whole or in part on any Business
Day; provided, however, that, any such prepayment shall be
accompanied by an amount representing all accrued interest on the
portion of the Loan being prepaid and other amounts then due
under the Loan Documents (including, without limitation, the
Repayment Fee if the Indebtedness is being repaid in full and the
Agreement is being terminated).
(b) In the event of any such voluntary prepayment,
Borrowers shall give Agent written notice of their intent to
prepay, which notice shall be given at least five (5) Business
Days' prior to the date upon which prepayment is to be made and
shall specify the Business Day on which such prepayment is to be
made and the amount of such prepayment (which shall not be less
than, if such prepayment is being made on a Business Day other
than a Payment Date, the lesser of (i) $1,000,000 and (ii) the
then outstanding Principal Indebtedness). If any such notice is
given, the amount specified in such notice shall be due and
payable on the date specified therein (unless such notice is
revoked by Borrowers prior to the date specified therein in which
event Borrowers shall immediately reimburse Agent for any costs
reasonably incurred in connection with the giving of such notice
and its revocation).
Section 2.7. Mandatory Prepayment Upon Release. (a)
So long as no Event of Default has occurred and is continuing, at
any time a Borrower may request in writing that the Agent release
a Mortgaged Property from the Lien of the related Mortgage;
provided, that after giving effect to such release, the Borrowers
shall be in compliance with the Debt Service Coverage Test and
the Property Release Test. Notwithstanding the foregoing, if
after giving effect to such release, the Borrowers shall satisfy
the Debt Service Coverage Test but shall not satisfy the Property
Release Test, such Borrower may nonetheless obtain a release of
such Mortgaged Property from the Lien of the related Mortgage
(and Lenders shall release the individual Mortgaged Property from
the Lien of the related Mortgage) only if the Borrowers shall
have made a voluntary prepayment pursuant to Section 2.6 or
otherwise taken action such that, after giving effect to such
release, the Borrowers shall satisfy the Property Release Test.
(b) Unless after giving effect to a casualty or a
Taking of a Mortgaged Property Borrowers shall be in compliance
with the Debt Service Coverage Test and the Property Release Test
in which event Loss Proceeds are required to be made available
for restoration pursuant to the related Mortgage, in the event of
a casualty or a Taking of a Mortgaged Property, in whole or in
part, Borrowers shall deposit or cause to be deposited all Loss
Proceeds received by Borrowers with respect to such Mortgaged
Property into the Collection Account in accordance with Section
2.12(a), up to the amount necessary to cause Borrowers to be in
compliance with the Debt Service Coverage Test and the Property
Release Test and shall make any balance of such Loss Proceeds in
excess of such amount available for restoration pursuant to the
related Mortgage. On the Payment Date occurring on or
immediately following the receipt of the Loss Proceeds, Borrowers
shall apply such portion of the Loss Proceeds in the Collection
Account solely to make the payments required pursuant to clause
fourth of Section 2.12(b) of this Agreement.
(c) Upon payment or prepayment of the Loan in full,
Borrowers shall pay to Lenders, in addition to the amounts
specified in Section 2.6, Section 2.7 and Section 2.12, as
applicable, all other amounts then due and payable to Lenders
pursuant to the Loan Documents (including, without limitation,
the Repayment Fee).
Section 2.8. Application of Payments After Event of
Default. All proceeds relating to any repayments of the Loan
after the occurrence and during the continuance of an Event of
Default shall be applied to pay: first, any reasonable out-of-
pocket costs and expenses of Agent and Collateral Agent arising
as a result of such repayment; second, any accrued and unpaid
interest then payable with respect to the Loan or the portion
thereof being repaid; third, the Repayment Fee, if applicable,
and the outstanding principal amount of the Loan or the portion
thereof being repaid; and fourth, the Default Administration Fee.
Any remainder shall be paid to the Borrowers.
Section 2.9. Method and Place of Payment. (a) Except
as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Global Note shall be
made to Agent not later than 12:00 p.m., New York City time, on
the date when due and shall be made in lawful money of the United
States of America by wire transfer in federal or other
immediately available funds to its account at Mellon Bank,
Pittsburgh, Pennsylvania (ABA No. 043000261, Account No. 117-
7107, Reference: Kranzco Portfolio) and Agent shall disburse such
payments to the Person entitled thereto as soon as practical
after Agent's receipt of such payments to the account designated
by such Person in writing to Agent from time to time. Any funds
received by Agent after such time shall, for all purposes hereof,
be deemed to have been paid on the next succeeding Business Day.
Agent shall notify Borrowers in writing of any changes in the
account to which payments are to be made. All payments made by
Borrowers hereunder, or by Borrowers under the other Loan
Documents, shall be made irrespective of, and without any
deduction for, any set-offs or counterclaims.
(b) Except to the extent otherwise provided herein,
(i) each payment or prepayment of principal of the Loan by
Borrowers shall be made to Agent for the account of each Lender
pro rata in accordance with the respective unpaid portion of the
Loan held by such Lender and (ii) each payment of interest on the
Loan by Borrowers shall be made to Agent for the account of each
Lender pro rata in accordance with the amounts of interest on the
portion of the Loan held by such Lender then due and payable to
the respective Lender.
Section 2.10. Taxes. All payments made by Borrowers
under the Global Note and this Agreement shall be made free and
clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by
any Governmental Authority (other than taxes imposed on the
income of Lenders).
Section 2.11. Release of Collateral. (a) Notwith-
standing any other provision of this Agreement or any other Loan
Document, upon a Transfer or release of all or any portion of the
Mortgaged Property as permitted by Section 2.7(a) hereof, Agent
shall, simultaneously with such Transfer or release, release the
Lien of the related Mortgage and UCC-1 financing statements and
any other Liens in favor of Lenders relating to the Mortgaged
Property so Transferred or, at Borrowers' option, assign (without
representation or recourse) such Liens (and deliver the
documentation evidencing such Liens) to the Borrower's designee.
(b) If (i) the Agent receives Loss Proceeds with
respect to a Mortgaged Property in the event of a Taking or
casualty affecting a Mortgaged Property as described in
Section 2.7(b), and (ii) such Loss Proceeds are applied to reduce
the Indebtedness in accordance with Sections 2.7(b) and 2.12(b),
Agent shall simultaneously with such application release the Lien
of the related Mortgage and UCC-1 financing statements and any
other Liens in favor of Lenders relating to the Mortgaged
Property so affected or, at Borrowers' option, assign (without
representation or recourse) such Liens (and deliver the
documentation evidencing such Liens) to Borrower's designee.
(c) Upon repayment of the Loan and all other amounts
due hereunder and under the Loan Documents in full in accordance
with the terms hereof and thereof, Agent shall release its Liens
with respect to all Collateral or, at Borrowers' option, assign
(without representation or recourse) such Liens (and deliver the
documentation evidencing such Liens) to Borrower's designee.
Section 2.12. Central Cash Management.
(a) Collection Account and Deposit Accounts; Deposits
to and Withdrawals from the Collection Account.
(i) On or before the Closing Date, Borrowers shall
establish and maintain for the Mortgaged Properties with
Collateral Agent an Eligible Account with a separate and
unique identification number and entitled "Each of the
entities identified on Schedule 1 to the Loan Agreement as
Borrower for Bank Leumi Trust Company of New York (as
Collateral Agent for Salomon Brothers Realty Corp.) pursuant
to a Loan Agreement dated as of February 26, 1997 among
Salomon Brothers Realty Corp. as Agent and initial Lender,
such Borrowers and Bank Leumi Trust Company of New York, as
such Collateral Agent" (the "Collection Account"). So long
as Collateral Agent has not received written notice from
Agent, on behalf of Lenders, that an Event of Default has
occurred and is continuing, all Rents and Money received
from Accounts and under Leases for the Mortgaged Property
and all Proceeds thereof shall be payable to Borrowers or
Manager, at the election of Borrowers. The Borrowers shall
not have any right to withdraw Money from the Collection
Account. On or before the Closing Date, the Borrowers shall
establish and maintain with one or more financial
institutions acceptable to the Agent in its sole discretion
(each, a "Deposit Bank" and collectively, the "Deposit
Banks"), one or more accounts for the Mortgaged Properties
with a separate and unique identification number (each a
"Deposit Account" and collectively, the "Deposit Accounts").
The Agent acknowledges that CoreStates Bank, N.A. shall be
an acceptable Deposit Bank. Each Deposit Account shall be
an Eligible Account. The Borrowers shall cause each Deposit
Bank to deliver to the Agent on behalf of the Lenders a
Depository Acknowledgment. Subject to the following
sentence, each of the Borrowers shall deposit or shall cause
the Manager to deposit in the applicable Deposit Account,
all Rents and Money received from Accounts or under Leases
and derived from the applicable Mortgaged Property and all
Proceeds thereof, in each case no later than the Business
Day following its collection and receipt thereof. So long
as no Event of Default shall have occurred and be continuing
and the Indebtedness has not been accelerated, the Borrowers
and Manager shall be permitted to make withdrawals from the
Deposit Accounts for the payment of Property Expenses, to
make any payments or deposits to the Collection Account
required to be made by the Borrowers pursuant to this
Agreement and, upon the payment of, or setting aside of
sufficient funds in the Deposit Accounts for the payment of
the foregoing items, to make distributions to Affiliates of
the Borrowers or the Guarantor. Except as otherwise
provided in the preceding sentence, the Borrowers shall not
be permitted to make any withdrawals from the Deposit
Accounts. Each Depository Acknowledgment shall provide that
upon the Deposit Bank's receipt of written notice from the
Agent that an Event of Default has occurred and is
continuing, the Collateral Agent may make withdrawals from
the Deposit Accounts on behalf of the Lenders for the
payment of the Indebtedness pursuant to Section 2.8 of this
Agreement. After Collateral Agent has received written
notice from Agent, on behalf of Lenders, that an Event of
Default has occurred and is continuing, (w) all Rents and
Money received from accounts or under Leases and derived
from the Mortgaged Property and all Proceeds thereof shall
be payable to Agent, on behalf of Lenders, or as otherwise
directed by Agent, (x) Agent, on behalf of Lenders, shall
make deposits, or cause deposits to be made, of such Rents,
Money and Proceeds to the Collection Account, and Borrowers
and the Manager shall make such deposits (to the extent not
made by Agent) and cooperate with Agent in the making of
such deposits or causing such deposits to be made and (y)
Proceeds on deposit in the Collection Account may be applied
by Collateral Agent on behalf of Lenders for the payment of
the Indebtedness pursuant to Section 2.8 of this Agreement.
(ii) So long as no Event of Default shall have occurred
and be continuing, Borrowers shall deposit in the Collection
Account not later than the close of business on the Business
Day prior to each Payment Date, the Debt Service Deposit
Amount.
(b) Distribution of Cash. So long as no Event of
Default has occurred and is continuing, on each Payment Date,
Collateral Agent shall withdraw the funds on deposit in the
Collection Account on such Payment Date, and shall apply such
funds, in each case to the extent of the amounts set forth in the
related Payment Date Statement delivered by Borrower, as follows:
first, to the payment of the fees of Collateral
Agent payable pursuant to the Fee Letter;
second, to the payment of any indemnification to
which an Indemnified Party is entitled pursuant to
Sections 5.1(I) and 5.1(J);
third, to the payment to Agent for the account of
Lenders of the interest then due and payable on the
Global Note with respect to the related Interest
Accrual Period;
fourth, to the payment to Agent for the account of
Lenders of the Principal Indebtedness in an amount
equal to any additional amount to which Agent is
entitled pursuant to Section 2.7(b) of this Agreement;
and
fifth, to the Borrowers.
(c) Permitted Investments. Borrowers shall direct
Collateral Agent in writing to invest and reinvest any balance in
the Collection Account and the Repair Reserve Account, from time
to time in Permitted Investments; provided, however, that (i) the
maturity of the Permitted Investments on deposit therein shall be
at the discretion of Borrowers, but in any event no later than
the Business Day immediately preceding the date on which such
funds are required to be withdrawn therefrom pursuant to Section
2.12(b) of this Agreement, (ii) after Collateral Agent has
received written notice from Agent on behalf of Lenders that an
Event of Default has occurred and is continuing, Borrowers shall
not have any right to direct investment of the balance in the
Collection Account or the Repair Reserve Account, and (iii) all
such Permitted Investments shall be held in the name of
Collateral Agent on behalf of the Collection Account and the
Repair Reserve Account. Agent, Lenders and Collateral Agent
shall have no liability for any loss in investments of funds in
the Collection Account or the Repair Reserve Account that are
invested in Permitted Investments (unless, in the case of
Collateral Agent, invested contrary to Agent's direction) and no
such loss shall affect Borrowers' obligation to fund, or
liability for funding, the Collection Account or the Repair
Reserve Account. Borrowers shall include all earnings on the
Collection Account and the Repair Reserve Account as income of
Borrower for federal and applicable state tax purposes.
(d) Monthly and Payment Date Statements; Activity
Statements. With respect to each Collection Period, Borrower
shall prepare and deliver, or shall cause to be prepared and
delivered, to Agent a statement (each, a "Monthly Statement") no
later than five Business Days after the end of such Collection
Period setting forth the aggregate deposits to the Collection
Account and deposits to and withdrawals from the Deposit Account
and Repair Reserve Account and the opening and closing balances
in such accounts. With respect to each Payment Date and the
related Collection Period and Interest Accrual Period, Borrower
shall prepare and deliver, or shall cause to be prepared and
delivered to Collateral Agent and Agent, a statement (each, a
"Payment Date Statement") no later than the Business Day prior to
such Payment Date with respect to each of the items below,
setting forth the following:
(i) the aggregate deposits to the Collection Account
during the related Collection Period for each category of
deposits under this Agreement and the opening and closing
balances in the Collection Account and the Repair Reserve
Account;
(ii) the amount of interest then due and payable on the
Global Note with respect to the Interest Accrual Period
(including the applicable number of days and interest rate
which were applied in determining such amount);
(iii) the amount of any fees and expenses of Collateral
Agent pursuant to the Fee Letter;
(iv) any indemnification to which an Indemnified Party
is entitled under this Agreement and with respect to which
Borrowers have not less than five (5) Business Days advance
notice; and
(v) the following information with respect to the
Principal Indebtedness in a format acceptable to Agent:
(1) the Principal Indebtedness as of the preceding Payment
Date, (2) any principal paid to Lenders since the prior
Payment Date, (3) any principal payable to Lenders on such
Payment Date, and (4) the Principal Indebtedness on the
current Payment Date (taking into account such payments).
In addition, no later than the twentieth (20th) day of each
calendar month (the "Activity Statement Date"), Borrowers shall
prepare and deliver, or shall cause to be prepared and delivered
to the Collateral Agent and the Agent, a statement (each, an
"Activity Statement") with respect to the Collection Period and
Interest Accrual Period for the Payment Date immediately
preceding such Activity Statement Date setting forth the
following: (x) a cash flow report in a format reasonably
acceptable to the Agent describing on the basis of each
individual Mortgaged Property, the related Gross Revenue,
Property Expenses, Capital Improvement Costs (including TI Costs
and Leasing Commissions) and net operating income; (y) a
liquidation activity report in a format reasonably acceptable to
the Agent describing with respect to each Mortgaged Property that
has been the subject of a Transfer, the related Capital Event
Proceeds, if any; and (z) a summary report of Lease modifications
and similar proposals with respect to each Mortgaged Property.
No errors or inaccuracies in any information or data provided to
the Agent pursuant to this Section 2.12(d) in favor of the
Lenders shall act as an estoppel against the Borrowers; provided,
however, that, such errors or inaccuracies were made
inadvertently and in good faith and are promptly corrected by the
Borrowers upon obtaining knowledge thereof.
(e) Quarterly Statements. No later than the fifteenth
(15) day of May, August, November, and February, beginning with
May, 1997, Borrowers shall prepare and deliver to Agent and
Collateral Agent a statement (each a "Quarterly Statement"), in
hard copy and on diskette and/or a copy through electronic mail,
in form reasonably satisfactory to Agent, setting forth with
respect to the applicable Mortgaged Property (i) a cash flow
report detailing the historic accrued Operating Revenues and the
historic accrued Operating Expenses, in each case for the period
ending on the last day of the second month preceding the month in
which such calculation is being made in the preceding year, (ii)
the accrued Operating Revenues, the accrued Operating Expenses,
in each case, with respect to the most recent calendar quarter
(or in the case of the initial Quarterly Statement, the most
recent four (4) calendar quarters), (iii) a current property rent
roll and occupancy level report (expressing the level as a
percentage based upon rentable square footage) for the most
recent date available and a list of any tenants included on such
rent roll who are in monetary or other material default under the
applicable Leases, (iv) for any Leases entered into by Borrowers
since the delivery of the prior Quarterly Statement (or, in the
case of the first Quarterly Statement, since the Closing Date)
with a new or renewal tenant, any free Rent, TI Costs and Leasing
Commission paid in connection with such Leases, (v) a summary of
any notices or other correspondences received from any tenant at
the Mortgaged Property with respect to its vacating of leased
premises or its "going dark" or otherwise suspending business
operations therein, (vi) a list of Capital Improvement Costs
incurred and Required Work completed during the period covered by
such Quarterly Statement and any updates to local market studies
or reports in the Borrowers' possession and (vii) any additional
information reasonably requested by Agent to enable Agent to
calculate Adjusted Operating Expenses and Adjusted Operating
Revenues; provided, that the additional information referred to
in clause (vii) shall not be required unless Borrowers have not
less than five (5) Business Days' notice.
(f) Loss Proceeds. If Loss Proceeds are to be made
available for restoration pursuant to a Mortgage, such Loss
Proceeds shall be held by Collateral Agent in a segregated
interest-bearing escrow account in the name of Collateral Agent
on behalf of Lenders to be withdrawn by Collateral Agent for
delivery to the related Borrower from time to time to pay
restoration costs pursuant to a schedule reasonably acceptable to
Agent and such Borrower. If any Loss Proceeds are received by
Borrowers (other than from Collateral Agent pursuant to the
previous sentence), such Loss Proceeds shall be received in trust
for Lenders, shall be segregated from other funds of Borrowers,
and shall be forthwith paid to Collateral Agent to the extent
necessary to comply with this Agreement.
(g) Collateral Agent's Reliance. Collateral Agent may
rely and shall be protected in acting or refraining from acting
upon any written notice, instruction or request furnished to it
hereunder and believed by it to be genuine and to have been
signed or presented by the proper party or parties. Collateral
Agent may rely on notice from Agent as to the occurrence and
continuance of an Event of Default, without further written
notice by Lenders to the contrary.
Section 2.13. Repair Reserve Account.
(a) On or before the Closing Date, Borrowers shall
establish and maintain with Collateral Agent an Eligible Account
with the same title as the Collection Account and designated the
Repair Reserve Account (the "Repair Reserve Account"). On each
Advance Closing Date, if requested by Borrowers or to the extent
required by Lenders based upon the Engineering Reports, Lenders
shall fund into the Repair Reserve Account an amount (the "Repair
Reserve Amount") sufficient to pay for necessary capital
expenditures and structural repairs (the "Required Work") as
identified in the Engineering Reports related to the Mortgaged
Property or New Mortgaged Property added to the Collateral and
subjected to the Lien of a Mortgage on such date and satisfactory
to Lender.
(b) Any and all Moneys remitted to the Repair Reserve
Account, together with any Permitted Investments in which such
Moneys are or will be invested or reinvested during the term of
this Agreement, shall be held in the Repair Reserve Account (i)
to be withdrawn by Collateral Agent promptly upon written request
of a Borrower to reimburse a Borrower for the cost of any
Required Work incurred by such Borrower or (ii) for purposes
otherwise approved by Agent; provided, that if the Borrowers
shall not have satisfied the Property Release Test, any such
withdrawal pursuant to clause (i) shall require the prior written
consent of Agent. Not less than three (3) Business Days prior to
such Borrower's delivery of a request to Collateral Agent to
withdraw any funds from the Repair Reserve Account, such Borrower
shall provide Agent with written notice (with a copy to
Collateral Agent) of such request (including therein a statement
of the purpose for the withdrawal and copies of invoices and
other materials demonstrating the completion of items of the
Required Work for which reimbursement is so requested).
(c) After Collateral Agent has received written notice
from Agent that an Event of Default has occurred and is
continuing, Borrowers shall not be permitted to make any
withdrawals from the Repair Reserve Account and Agent may
liquidate any Permitted Investments of the amount on deposit in
the Repair Reserve Account and use such amount on deposit in the
Repair Reserve Account in immediately available funds to make
payments on account of the Loan in accordance with the priorities
set forth in Section 2.8.
Section 2.14. Security Agreement. (a) Pledge of
Account. To secure the full and punctual payment and performance
of all of the Indebtedness, Borrowers hereby assign, convey,
pledge and transfer to Lenders, to be held by Collateral Agent on
behalf of Lenders as agent/bailee, and grants a first and
continuing security interest in and to, the following property,
whether now owned or existing or hereafter acquired or arising
and regardless of where located (collectively, the "Account
Collateral"):
(i) all of Borrowers' right, title and interest in the
Collection Account, the Repair Reserve Account, and all
Money and Permitted Investments, if any, from time to time
deposited or held in the Collection Account and the Repair
Reserve Account;
(ii) all interest, dividends, Money, Instruments and
other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any of
the foregoing until such time as such items are disbursed
from the Collection Account and the Repair Reserve Account;
and
(iii) to the extent not covered by clause (i) or (ii)
above, all Proceeds of any or all of the foregoing.
(b) Covenants. So long as any portion of the
Indebtedness is outstanding and an Event of Default has occurred
and is continuing, Borrowers shall not open (or permit Manager to
open) any account other than the Deposit Accounts or Collection
Account for the deposit of Rents or Money received from Accounts
or under Leases and derived from the Mortgaged Property and all
Proceeds to pay amounts owing hereunder, other than any account
for amounts required by law to be segregated by Borrowers. The
Account Collateral shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the
Federal Reserve System and of any other banking authority or
Governmental Authority, as may now or hereafter be in effect, and
to the rules, regulations and procedures of Collateral Agent
relating to demand deposit accounts from time to time in effect.
(c) Financing Statements; Further Assurances. On the
Closing Date, Borrowers shall execute and deliver to the initial
Lender for filing a financing statement or statements in
connection with the Account Collateral in the form required to
properly perfect Collateral Agent's security interest on behalf
of Lender in the Account Collateral to the extent that it may be
perfected by such a filing. From time to time, at the expense of
Borrowers, Borrowers shall promptly execute and deliver all
further instruments, and take all further action, that Agent may
reasonably request, in order to perfect and protect the pledge
and security interest granted or purported to be granted hereby,
or to enable Collateral Agent to exercise and enforce Collateral
Agent's rights and remedies hereunder with respect to, any
Account Collateral. Collateral Agent shall not be responsible
for the determination of the financing statements and other
instruments necessary to perfect such security interest or for
the filing of such financing statements and other instruments at
the locations necessary to perfect such security interest.
(d) Transfers and Other Liens. Borrowers shall not
sell or otherwise dispose of any of the Account Collateral other
than pursuant to the terms hereof, or create or permit to exist
any Lien upon or with respect to all or any of the Account
Collateral, except for the Lien granted to Collateral Agent under
this Agreement.
(e) No Waiver. Every right and remedy granted to
Collateral Agent under this Agreement or by law may be exercised
by Collateral Agent at any time and from time to time, and as
often as Collateral Agent may deem it expedient. Any and all of
Collateral Agent's rights with respect to the pledge of and
security interest in the Account Collateral granted hereunder
shall continue unimpaired, and Borrowers shall be and remain
obligated in accordance with the terms hereof, notwithstanding
(i) any proceeding of Borrowers under the United States
Bankruptcy Code or any bankruptcy, insolvency or reorganization
laws or statutes of any state, (ii) the release or substitution
of Account Collateral at any time, or of any rights or interests
therein or (iii) any delay, extension of time, renewal,
compromise or other indulgence granted by Collateral Agent in the
event of any Default with respect to the Account Collateral or
otherwise hereunder. No delay or extension of time by Collateral
Agent in exercising any power of sale, option or other right or
remedy hereunder, and no notice or demand which may be given to
or made upon Borrowers by Collateral Agent, shall constitute a
waiver thereof, or limit, impair or prejudice Collateral Agent's
right, without notice or demand (except as set forth herein, in
any of the Collateral Security Instruments or as required by
Legal Requirements), to take any action against Borrowers or to
exercise any other power of sale, option or any other right or
remedy.
(f) Collateral Agent Appointed Attorney-In-Fact.
Borrowers hereby irrevocably constitute and appoint Collateral
Agent as Borrowers' true and lawful attorney-in-fact, with full
power of substitution, at any time after the occurrence and
during the continuation of an Event of Default, to execute,
acknowledge and deliver any instruments and to exercise and
enforce every right, power, remedy, option and privilege of
Borrowers with respect to the Account Collateral, and do in the
name, place and stead of Borrowers, all such acts, things and
deeds for and on behalf of and in the name of Borrowers with
respect to the Account Collateral, which Borrowers could or might
do in the absence of an Event of Default or which Agent may deem
necessary or desirable to more fully vest in Collateral Agent the
rights and remedies provided for herein with respect to the
Account Collateral and to accomplish the purposes of this
Agreement. The foregoing powers of attorney are irrevocable and
coupled with an interest.
(g) Continuing Security Interest; Termination. This
Section 2.14 shall create a continuing pledge of and security
interest in the Account Collateral and shall remain in full force
and effect until payment in full by Borrowers of the
Indebtedness. Upon payment in full by Borrowers of the
Indebtedness, Borrowers shall be entitled to the return, upon
their request and at their expense, of such of the Account
Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof. Agent shall promptly give notice
to Collateral Agent that the Indebtedness has been paid in full,
whereupon Collateral Agent shall immediately release any funds
then held by it in accounts established by Borrowers with
Collateral Agent pursuant to this Agreement and execute such
instruments and documents as may be reasonably requested by
Borrowers to evidence such termination and the release of the
pledge and lien hereof; provided, however, that Borrowers shall
pay on demand all of Collateral Agent's reasonable expenses in
connection therewith (including reasonable attorneys' fees and
disbursements).
(h) Right of Set-off. Collateral Agent waives any
and all rights it may have at law or otherwise to set off or make
any claim against the Account Collateral, except for the payment
of Collateral Agent's fees and expenses for the maintenance of
the Account Collateral.
Section 2.15. Mortgage Recording Taxes. The Lien to
be created by the Mortgages is intended to encumber the Mortgaged
Property described therein to the full extent of the Loan Amount
(or, in the case of any Mortgaged Property located in a State
which imposes a tax on the recordation of Mortgages, an amount
reasonably acceptable to Agent). On each Advance Closing Date,
Borrower shall have paid all state, county and municipal
recording and all other taxes imposed upon the execution and
recordation of each newly executed Mortgage, if any, and all
other Mortgages dated on or prior to the Advance Closing Date for
which any such taxes shall not have been paid, if any.
Section 2.16. General Collateral Agent Provisions.
(a) Appointment. Lenders hereby designate and
appoint Bank Leumi Trust Company of New York as Collateral Agent
of Lenders under this Agreement and the other Loan Documents, and
authorizes Bank Leumi Trust Company of New York as Collateral
Agent for Lenders, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly
delegated to Collateral Agent by the terms of this Agreement and
the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to
the contrary elsewhere in this Agreement, Collateral Agent shall
not have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with Lenders, and
no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against Collateral
Agent.
(b) Collateral Agent's Right to Perform. If Borrowers
fail to perform any covenant or obligation contained herein after
the expiration of any applicable notice and cure periods and such
failure shall continue for a period of five (5) Business Days (or
such longer period reasonably requested by Borrowers due to force
majeure) after Borrowers' receipt of written notice thereof from
Collateral Agent, Collateral Agent may, but shall have no
obligation to, itself perform, or cause performance of, such
covenant or obligation, and the reasonable expenses of Collateral
Agent incurred in connection therewith shall be payable by
Borrowers to Collateral Agent upon demand. Notwithstanding the
foregoing, Collateral Agent shall have no obligation to send
notice to Borrowers of any such failure unless directed to do so
by Agent, except that Collateral Agent shall not have the right
set forth in this Section 2.16(b) to perform unless such notice
has been sent.
(c) Standard of Care. Beyond the exercise of
reasonable care in the custody or disbursements thereof,
Collateral Agent shall not have any duty as to any Account
Collateral or any income thereon in its possession or control or
in the possession or control of any agents for, or of Collateral
Agent, or the preservation of rights against any Person or
otherwise with respect thereto. Collateral Agent shall be deemed
to have exercised reasonable care in the custody of the Account
Collateral in its possession if the Account Collateral is
accorded treatment in accordance with the Accepted Practices.
Collateral Agent shall not be liable for any action or failure to
act or mistake on the part of Collateral Agent's agents,
officers, employees or attorneys with respect to any transactions
relating to this Agreement or to the Collection Account, provided
that this sentence shall not protect Collateral Agent against any
liability that would otherwise be imposed by reason of
negligence.
(d) Exculpatory Provisions. Neither Collateral Agent
nor any of its officers, directors, employees, agents, attorneys-
in-fact or Affiliates shall be responsible in any manner to Agent
for any recitals, statements, representations or warranties made
by Borrowers or any officer thereof contained in this Agreement
or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or
received by Collateral Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the Global Note or any other Loan Document or for any
failure of Borrowers to perform its obligations hereunder or
thereunder. Collateral Agent shall not be under any obligation
to Lenders to ascertain or to inquire as to the agreements
contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of
Borrowers. Collateral Agent shall not be required to take any
discretionary actions hereunder except at the written direction
of Borrowers or Agent, it being understood and agreed that
Collateral Agent's duties hereunder shall be wholly ministerial
in nature. In connection with any discretionary action which
Borrowers are permitted hereunder to direct Collateral Agent to
take, if Collateral Agent shall follow Agent's directions and not
Borrowers' directions, it shall have no liability to Borrowers
(or to any other Person) for following any such directions of
Agent and for not following such directions of Borrowers (if
expressly permitted herein). Collateral Agent shall not be under
any obligation or duty to perform any act which, in Collateral
Agent's sole reasonable judgment, could involve it in expense or
liability or to institute or defend any suit in respect hereof,
or to advance any of its own monies, unless Lenders or Borrowers,
as the case may be, shall have offered to Collateral Agent
reasonable security or indemnity against such expense, liability,
suit or advance.
(e) Indemnification. Borrowers shall indemnify and
hold Collateral Agent, and its agents, employees and officers
harmless from and against any loss, cost or damage (including,
without limitation, reasonable attorneys' fees and disbursements)
incurred by Collateral Agent in connection with the transactions
contemplated hereby, excluding any loss, cost or damage arising
as a result of Collateral Agent's failure to adopt and follow
Accepted Practices, bad faith, willful misconduct or violation of
applicable law. The indemnification set forth in this paragraph
shall survive the satisfaction and payment of the Indebtedness
and the termination of this Agreement.
(f) Collateral Agent's Reliance. Collateral Agent
shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document
reasonably believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel and other experts
selected by Collateral Agent. Collateral Agent may deem and
treat the payee of the Global Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with Collateral Agent.
Collateral Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence
of Agent as it deems appropriate or it shall first be indemnified
to its satisfaction by Agent against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action. Collateral Agent shall in
all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in
accordance with a request of Agent, and such request and any
action taken or failure to act pursuant thereto shall be binding
upon Lenders and all future holders of the Global Note.
(g) Notice of Default. Collateral Agent shall not be
deemed to have knowledge or notice of the occurrence of any
Default or Event of Default hereunder unless Collateral Agent has
received notice from Agent referring to this Agreement,
describing such Default or Event of Default and stating that such
notice is a "notice of default". Collateral Agent shall take
such action with respect to such Default or Event of Default as
shall be directed by Agent, including any action under this
Agreement.
(h) Non-Reliance on Collateral Agent. Neither
Collateral Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates has made any
representations or warranties to Lenders and no act by Collateral
Agent hereinafter taken (including any review of the affairs of
Borrowers) shall be deemed to constitute any representation or
warranty by Collateral Agent to Lenders. Except for notices,
reports and other documents expressly required to be furnished to
Agent by Collateral Agent hereunder, Collateral Agent shall not
have any duty or responsibility to provide Agent with any credit
or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or
creditworthiness of Borrowers which may come into the possession
of Collateral Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
(i) Removal and Resignation. Collateral Agent shall
have the right to resign as collateral agent hereunder and Agent
or, so long as no Event of Default has occurred and is
continuing, Borrowers shall have the right to remove Collateral
Agent as collateral agent hereunder, in each case upon thirty
(30) days' written notice to the other parties to this Agreement.
In the event of such resignation or removal, Borrowers or, if an
Event of Default has occurred and is continuing, Agent shall
appoint a successor Collateral Agent with the consent of Agent
(if such appointment is made by Borrowers) (such consent not to
be unreasonably withheld or delayed). No such removal of or
resignation by Collateral Agent shall become effective until a
successor Collateral Agent shall have accepted such appointment
and executed an instrument by which it shall have assumed all of
the rights and obligations of Collateral Agent hereunder. If no
such successor Collateral Agent is appointed within sixty (60)
days after receipt of the resigning Collateral Agent's notice of
resignation or removal, the resigning Collateral Agent may
petition a court for the appointment of a successor Collateral
Agent. In connection with any removal of or resignation by
Collateral Agent, (A) the removed or resigning Collateral Agent
shall (1) duly assign, transfer and deliver to the successor
Collateral Agent this Agreement and all Money and Permitted
Investments held by it hereunder, (2) execute such financing
statements and other instruments as may be necessary to assign to
the successor Collateral Agent the security interest existing in
favor of the retiring Collateral Agent hereunder, and to
otherwise give effect to such succession and (3) take such other
actions as may be reasonably required by Borrowers, Agent or the
successor Collateral Agent in connection with the foregoing and
(B) the successor Collateral Agent shall establish in its name,
as agent for Lenders, as secured party, a Collection Account and
a Repair Reserve Account as Borrower is required to maintain
pursuant to the terms of this Agreement.
(j) Individual Capacity. Collateral Agent and its
Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with Borrowers or any Affiliate,
as though Collateral Agent were not Collateral Agent hereunder,
or under the other Loan Documents.
Section 2.17. Extension Options. (a) The Borrowers
shall have the option (an "Extension Option"), to extend the
Maturity Date of the Note from the Payment Date in March, 1999
(the "Original Maturity Date"), to the Payment Date in March,
2000 (the "Extended Maturity Date"), upon satisfaction of each of
the following conditions (the "Extension Conditions"):
(i) the Borrowers shall have given written notice (an
"Extension Notice") to the Agent and Collateral Agent not
less than ninety (90) days prior to the Original Maturity
Date of their election to exercise the Extension Option;
(ii) no Default or Event of Default shall have occurred and
be continuing on the date the Extension Notice is given and
on the Original Maturity Date (the Agent agreeing to provide
Borrowers written notice of any Default of which the Agent
has actual knowledge during the period between delivery of
the Extension Notice and the Original Maturity Date);
(iii) the Borrowers shall have paid to the Agent for the
benefit of the Lenders on the Original Maturity Date, a fee
(an "Extension Fee") equal to the product of 1.00% and the
Principal Indebtedness as of the Original Maturity Date
(taking into account any principal payments made on such
date);
(iv) the Borrowers shall have delivered to the Agent such
evidence of corporate and partnership authorization and
other documents relating to the Extension Option as the
Agent shall reasonably require; and
(v) the Borrowers shall be in compliance with the Debt
Service Coverage Test and the Property Release Test and the
Guarantor shall be in compliance with the Financial
Covenants.
(b) The Borrowers may revoke the Extension Notice by
written notice (or telephonic notice promptly confirmed in
writing) to the Agent on behalf of the Lenders and Collateral
Agent on or prior to the fifteenth (15th) Business Day preceding
the Original Maturity Date; provided, however, that the Borrowers
shall pay the reasonable costs incurred by the Agent and
Collateral Agent in connection with the giving of the Extension
Notice and its revocation.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Effectiveness.
This Agreement shall become effective on the date that all of the
following conditions shall have been satisfied (or waived in
accordance with Section 8.4) (the "Closing Date"):
(A) Loan Agreement. Borrowers, Guarantor, Agent and
initial Lender shall have executed and delivered this Agreement.
(B) Guaranty. Guarantor shall have executed and
delivered to the initial Lender the Guaranty.
(C) Opinions of Counsel. The initial Lender shall
have received from (i) counsel to Guarantor, its legal opinions
in substantially the form attached hereto as Exhibit F-1 with
respect to Guarantor matters, (ii) counsel to Borrowers and any
Managing Entity, its legal opinions in substantially the form
attached hereto as Exhibit F-2 with respect to corporate matters,
and (iii) real estate counsel to each Borrower, its legal opinion
in form acceptable to Lender with respect to the enforceability
of the Mortgage on each of the Mortgaged Properties. Such legal
opinions will be addressed to Agent and the Lenders, dated the
Closing Date, and in form and substance satisfactory to the
Agent.
(D) Organizational Documents. The initial Lender
shall have received with respect to each Borrower, the Managing
Entity of each partnership Borrower, and Guarantor, its
Organizational Documents, as applicable, as amended, modified or
supplemented to the Closing Date, as filed with the Secretary of
State or other appropriate Governmental Authority in the
jurisdiction of organization and in effect on the Closing Date
and certified to be true, correct and complete by the appropriate
Secretary of State as of a date not more than ten (10) days prior
to the Closing Date, together with a good standing certificate
from such Secretary of State or other appropriate Governmental
Authority and a good standing certificate from the Secretaries of
State or other appropriate Governmental Authority of each other
State in which Borrowers are required to be qualified to transact
business.
(E) Certified Resolutions, etc. The initial Lender
shall have received an Officer's Certificate of each Borrower or
the Managing Entity of each Borrower that is a limited
partnership, as the case may be, and Guarantor and Manager dated
the Closing Date, certifying (i) the names and true signatures of
its incumbent officers authorized to sign the Loan Documents to
which each Borrower, Guarantor or Manager is a party, (ii) the
Organizational Documents of each Borrower, the Managing Entity of
each Borrower that is a limited partnership, Guarantor and
Manager, in each case as in effect on the Closing Date, (iii) the
resolutions of the board of directors of each Borrower or the
Managing Entity of each Borrower that is a limited partnership,
as the case may be, Guarantor and Manager as applicable,
approving and authorizing the execution, delivery and performance
of the Loan Documents to which it is a party, and (iv) in the
case of each Borrower or the Managing Entity of each Borrower
that is a limited partnership, as the case may be, that there
have been no changes in the Organizational Documents since the
date of execution thereof.
(F) No Default or Event of Default. No Default with
respect to the payment of money or Event of Default shall have
occurred and be continuing on such date either before or after
the execution and delivery of this Agreement.
(G) No Injunction. No law or regulation shall have
been adopted, no order, judgment or decree of any Governmental
Authority shall have been issued, and no litigation shall be
pending or threatened, which in the good faith judgment of Agent
would enjoin, prohibit or restrain, or impose or result in the
imposition of any material adverse condition upon, the making or
repayment of the Loan or the consummation of the Transaction.
(H) Representations and Warranties. The
representations and warranties herein and in the other Loan
Documents shall be true and correct in all material respects on
such date both before and after the execution and delivery of
this Agreement.
(I) Transaction Costs. Borrowers shall have paid all
Transaction Costs then required to be paid hereunder and for
which bills have been submitted.
(J) Additional Matters. The initial Lender shall have
received such other certificates, opinions, documents and
instruments relating to the Loan as may have been reasonably
requested by the initial Lender. All corporate and other
proceedings, all other documents (including, without limitation,
all documents referred to herein and not appearing as exhibits
hereto) and all legal matters in connection with the Loan and the
Guaranty shall be reasonably satisfactory in form and substance
to the initial Lender.
Section 3.2. Execution and Delivery of Agreement. The
execution and delivery by Borrowers of this Agreement shall
constitute a representation and warranty by Borrowers to Agent
that all of the conditions required to be satisfied under Section
3.1 have been satisfied or waived in accordance with Section 8.4.
Section 3.3. Procedure for Disbursement of an Advance.
(a) Request for Advance. In the event a Borrower
wishes to receive an Advance on an Advance Closing Date, such
Borrower shall submit to Agent, on behalf of Lenders, a written
request for such Advance, including therein (A) the amount of the
proposed Advance; (B) with respect to each individual Mortgaged
Property comprising the Mortgaged Property as of the Advance
Closing Date occurring on the Closing Date or, if such Borrower
proposes to add a New Mortgaged Property to the Mortgaged
Property on the proposed Advance Closing Date occurring after the
Closing Date, with respect to the New Mortgaged Property only,
the items set forth in Section 3.4 below for such Mortgaged
Property or New Mortgaged Property; and (C) if a New Mortgaged
Property is proposed to be added to the Mortgaged Property on the
proposed Advance Closing Date, calculations and other backup
information demonstrating with respect to the New Mortgaged
Property, the Operating Revenues and recoveries information
specified in the definition of "Adjusted Operating Revenues," and
Operating Expenses incurred, in each case during the most recent
twelve-month period for which such information was furnished to
Agent in a Quarterly Statement (or, in connection with the
Closing Date, pursuant to Section 3.4), together with an
Officer's Certificate from an officer of Borrower stating that
such calculations and backup information are, to such officer's
knowledge, true, correct and complete in all material respects.
(b) Grant or Denial. If such Borrower does not
propose to add a New Mortgaged Property to the Mortgaged Property
on the proposed Advance Closing Date occurring after the Closing
Date, Agent shall confirm in writing its determination of whether
Borrowers shall satisfy the Debt Service Coverage Test and the
Property Release Test after the making of the proposed Advance or
shall deny such Borrower's request (including therein an
explanation for the failure to satisfy the Debt Service Coverage
Test or the Property Release Test) within five (5) Business Days
after its receipt of such information. If such Borrower proposes
to add a New Mortgaged Property to the Mortgaged Property on the
proposed Advance Closing Date occurring after the Closing Date,
Agent shall, in its sole discretion and subject to the terms of
this Agreement, grant or deny Borrower's request to add such New
Mortgaged Property and Agent, on behalf of Lenders, shall confirm
such decision in writing within twenty (20) Business Days after
its receipt of all the information delivered pursuant to Section
3.3(a).
(c) If Agent approves a request for an Advance, an
Advance shall be made on the date that the conditions set forth
in Section 3.5 and, if applicable, Section 3.6 below shall have
been satisfied (or waived in accordance with Section 8.4), which
date shall be at Borrower's option but not more than ten (10)
Business Days after Agent's approval has been given (each, an
"Advance Closing Date"). In the event on an Advance Closing Date
occurring after the Closing Date, a New Mortgaged Property will
not be added to the Mortgaged Property, Borrowers shall be
required to satisfy or cause to be satisfied only the conditions
set forth in Section 3.5 below. On the Advance Closing Date
occurring on the Closing Date and on each Advance Closing Date
occurring after the Closing Date on which a New Mortgaged
Property will be added to the Mortgaged Property, Borrower shall
be required to satisfy or cause to be satisfied, in addition to
the conditions set forth in Section 3.5, with respect to each
Mortgaged Property (including each New Mortgaged Property) being
added to the Mortgaged Property on such Advance Closing Date, the
conditions set forth in Section 3.6 below.
Section 3.4. Information Delivery Requirements. If a
Borrower proposes to add a Mortgaged Property (including a New
Mortgaged Property, if applicable) to the Mortgaged Property on
an Advance Closing Date, Borrower shall be required to satisfy
the following information delivery requirements with respect to
such Mortgaged Property:
(A) Survey. Agent shall have received the Survey with
respect to the Mortgaged Property which shall be in form and
substance satisfactory to Agent.
(B) Engineering Report. Agent shall have received the
Engineering Report with respect to the Mortgaged Property
prepared by the Engineer, which Engineering Report shall be
acceptable to Agent.
(C) Environmental Matters. Agent shall have received
an Environmental Report prepared by an Environmental Auditor with
respect to the Mortgaged Property, which Environmental Report
shall be acceptable to Agent.
(D) Financial Information. Agent shall have received
acceptable financial information relating to the Mortgaged
Property. Such information shall include the following, to the
extent reasonably available:
(i) operating statements for the current year
(including actual to date information, an annual budget and
trailing twelve month data in hard copy and on diskette) and
for not less than the three preceding years (including
tenant improvements costs, leasing commissions, capital
reserves, major repairs, replacement items and occupancy
rates in hard copy and on diskette);
(ii) copies of Leases with respect to tenants occupying
more than 10% of the rentable square footage of the
Mortgaged Property or contributing more than 10% of the
revenue for the Mortgaged Property, a copy of the standard
lease form and tenant lease abstracts, if available;
(iii) current property rent roll data on a tenant by
tenant basis in hard copy and on diskette (including name,
square footage, lease term, expiration date, renewal
options, base rent per square foot, sales volume psf,
percentage rent terms, additional rent clauses (including
stops, offsets, and other special provisions), escalation
clauses for increase in operating expense, maintenance,
insurance, real estate taxes and utilities, assignment,
sublet and cancellation provisions and purchase options);
(iv) current property leasing information (including
asking rent rates for available anchor and in-line space,
amount of current vacant space out for signature and under
negotiation, typical tenant improvement cost per square foot
(new versus renewal) and leasing concessions (free rent),
leasing commissions (new versus renewal) and historical
turnover ratio),
(v) current real estate tax bills and historical real
estate tax bills of record for the Mortgaged Property for
not less than the three preceding years,
(vi) insurance certificates indicating the type and
amount of coverage, and
(vii) the most recent annual consolidated financial
statements and unaudited quarterly consolidated financial
statements).
The annual consolidated financial statements relating to the
Mortgaged Property shall be either (x) audited by a "Big Six"
accounting firm or another firm of certified public accountants
acceptable to Agent in its sole discretion or (y) done in
accordance with agreed upon procedures reasonably acceptable to
Agent to be performed by a "Big Six" accounting firm or another
firm of certified public accountants acceptable to Agent in its
sole discretion to create similar information; provided, that if
the Mortgaged Property was not audited, but the operations of the
Mortgaged Property were included in the audited financial
statements of another entity, a certification from the certified
public accounting firm which performed the audit to the effect
that the financial statements of the Mortgaged Property are
consistent with the financial statements of the Mortgaged
Property included in the audited consolidated financial
statements of such entity is acceptable in lieu of audited
financial statements for the Mortgaged Property.
(E) Pro-Forma Financial Statement. Agent shall have
received (i) the initial pro forma financial statement for the
Mortgaged Property for the following twelve months (including on
an annual and monthly basis a break-down of projected revenues
and property expenses and Capital Improvement Costs (including
Leasing Commissions and TI Costs) and replacement reserve costs,
(ii) a financial statement that forecasts projected revenues and
operating expenses for not less than three to five years
(including the assumptions used in such forecast), and (iii) any
local retail market study and/or research and demographics report
prepared for Borrower and/or commercially available.
(F) Additional Real Estate Matters. Agent shall have
received such other real estate related certificates and
documentation relating to the Mortgaged Property as may have been
reasonably requested by Agent. Such documentation shall include
the following, to the extent reasonably available:
(i) certificates of occupancy issued by the appropriate
Governmental Authority of the jurisdiction in which the
Mortgaged Property is located reflecting the use of the
Mortgaged Property as of the Advance Closing Date,
(ii) at Borrower's option, letters from the appropriate
local Governmental Authority of the jurisdiction in which
the Mortgaged Property is located, certifying that the
Mortgaged Property is in compliance with all applicable
zoning laws, rules and regulations, or a zoning endorsement
to the applicable Title Insurance Policy with respect to the
Mortgaged Property or an opinion of zoning counsel to such
effect,
(iii) abstracts of all Leases in effect at the Mortgaged
Property and copies of such of the Leases as Agent may
request (in addition to the copies delivered above),
(iv) an estoppel certificate, in form and substance
acceptable to Agent or in a form substantially similar to
the form used in connection with any Ground Lease in effect
as of the Closing Date, from the lessor under any Ground
Lease on the Mortgaged Property;
(v) estoppel certificates in form and substance
acceptable to Agent in respect of all anchor-tenant Leases
and 70% of the in-line tenant Leases at the Mortgaged
Property;
(vi) a copy of the purchase agreement, if any, pursuant to
which a Borrower intends to acquire the Mortgaged Property,
and
(vii) graphics (including interior and exterior
photographs, rental brochures and a competitive properties
map).
(G) Site Inspection. Agent shall have performed, or
caused to be performed on its behalf, an on-site due diligence
review of the Mortgaged Property to be acquired or refinanced
with the Loan which inspection is satisfactory to Agent in its
sole discretion.
Section 3.5. Conditions Precedent to Each Disbursement
of an Advance. An Advance shall be made on an Advance Closing
Date only when each of the conditions set forth below shall have
been satisfied (or waived in accordance with Section 8.4),
together with the conditions set forth in Section 3.6 (if
applicable):
(A) Lien Search Reports. Not more often than once
every three (3) months (or more frequently in the event Agent has
reasonable grounds to believe any Liens may exist on the
Collateral) Agent shall have received satisfactory reports of UCC
(collectively, the "UCC Searches"), tax lien, judgment and
litigation searches and title updates conducted by search firms
and/or title companies acceptable to Agent with respect to the
Collateral and Borrowers, such searches to be conducted in each
of the locations set forth on Exhibit I attached hereto.
(B) Consents, Licenses, Approvals, etc. Agent shall
have received copies of all consents, licenses and approvals, if
any, required in connection with the execution, delivery and
performance by Borrowers and Manager, and the validity and
enforceability, of the Loan Documents, and such consents,
licenses and approvals shall be in full force and effect.
(C) Financial Statements. Agent shall have received
the audited consolidated financial statements of the Guarantor
for the most recent fiscal year, and the unaudited consolidated
financial statements of the Guarantor for the three-, six- and
nine-month periods ended on a date not more than three (3) months
prior to the Advance Closing Date. All audited financial
statements must have been prepared by a "Big Six" certified
public accounting firm or other firm reasonably acceptable to
Agent.
(D) Representations and Warranties. The
representations and warranties herein and in the other Loan
Documents shall be true and correct in all material respects on
such date both before and after giving effect to the making of
the Advance.
(E) No Default or Event of Default. No Default with
respect to the payment of money or Event of Default shall have
occurred and be continuing on such date either before or after
giving effect to the making of the Advance.
(F) No Injunction. No law or regulation shall have
been adopted, no order, judgment or decree of any Governmental
Authority shall have been issued, and no litigation shall be
pending or threatened, which in the good faith judgment of Agent
would enjoin, prohibit or restrain, or impose or result in the
imposition of any material adverse condition upon, the making or
repayment of the Advance or the Loan or the consummation of the
Transactions.
(G) Transaction Costs. Borrowers shall have paid all
Transaction Costs for which bills have been submitted and have
not been previously paid.
(H) Title Insurance Policy. With respect to each
Advance Closing Date after the initial Advance Closing Date with
respect to the Mortgaged Properties commonly known as
Ames/Raynham, Massachusetts and Wampanoag, Rhode Island, Agent
shall have received an endorsement to the existing Title
Insurance Policy (in form and substance satisfactory to Agent)
which amends the existing Title Insurance Policy by stating that
the amount of insurance is equal to one hundred twenty-five
percent (125%) of the then Allocated Loan Amount of such
Mortgaged Property; provided, however, that if a New Mortgaged
Property is being added to the Mortgaged Property on such Advance
Closing Date, then the conditions precedent set forth in Section
3.6 shall control with respect to the requirements of the Title
Insurance Policy and this Section 3.5(H) shall be of no force or
effect.
(I) Bring-Down Certificates. Agent shall have
received a certificate of the secretary or assistant secretary of
each Borrower or the Managing Entity of each Borrower that is a
limited partnership, as the case may be, and Guarantor dated the
Advance Closing Date, certifying that (i) the representations and
warranties herein are true and correct in all material respects
on such Advance Closing Date as if made on such date (subject to
any exceptions to such representations and warranties set forth
in an exhibit to such certificate which exceptions shall not have
a Material Adverse Effect), (ii) no Default with respect to the
payment of money or Event of Default shall have occurred and be
continuing on such Advance Closing Date, (iii) such Borrower, the
Managing Entity of each Borrower that is a limited partnership
and Guarantor are in good standing in their respective
jurisdictions of organization and (iv) there have been no changes
in the Organizational Documents of each Borrower, the Managing
Entity of each such Borrower that is a limited partnership or
Guarantor, respectively, since the date of the most recent
certification thereof (or if there have been changes, certifying
as to the changes).
Section 3.6. Conditions Precedent to Disbursement of
an Advance on an Advance Closing Date on Which a Mortgaged
Property Will be Added to Collateral. On each Advance Closing
Date on which a Mortgaged Property (including a New Mortgaged
Property) will be added to the Mortgaged Property, an Advance
shall be made on such date only when each of the conditions set
forth below shall have been satisfied (or waived in accordance
with Section 8.4), together with the conditions set forth in
Section 3.5:
(A) Loan Documents.
With respect to the initial Advance Closing Date only:
(i) Global Note. Borrowers shall have executed and
delivered to the Agent the Global Note.
(ii) Pledge Agreement. Each of the principals of
Borrowers shall have executed and delivered the Pledge
Agreement to the Agent.
(iii) Financing Statements. Borrowers shall have
executed and delivered to Agent all financing statements
specified on Exhibit H attached hereto and such financing
statements shall have been filed of record in the
appropriate filing offices in each of the appropriate
jurisdictions or irrevocably delivered to a title agent for
such recordation.
(iv) Mortgage; Assignment of Leases and Rents. Each
Borrower shall have executed and delivered to Agent the duly
executed (i) Mortgage and (ii) Assignments of Leases and
Rents in recordable form with respect to the related
Mortgaged Property and such Mortgages and Assignments of
Leases and Rents shall have been filed of record in the
appropriate filing office in the jurisdiction in which the
Mortgaged Property is located or irrevocably delivered to
the title insurance company issuing the Title Insurance
Policy for recordation.
(v) Title Insurance Policy. Agent shall have received
a marked commitment (in form and substance satisfactory to
Agent) to issue the Title Insurance Policy in respect of the
Mortgaged Property with the amount of the insurance equal to
one hundred twenty-five percent (125%) of the then Allocated
Loan Amount of each Mortgaged Property subject only to such
exceptions as are satisfactory to Agent for the Mortgaged
Property.
(vi) Management Agreement and Manager's Subordination.
Agent shall have received the executed Management Agreement.
Manager shall have executed and delivered each Manager's
Subordination to Agent.
(vii) Contract Assignment. Borrower shall have executed
and delivered to Agent a Contract Assignment with respect to
the Mortgaged Property being acquired, if applicable.
With respect to each Advance Closing Date subsequent to
the initial Advance Closing Date and with respect only to the
applicable Borrower joining this Agreement (or adding a Mortgaged
Property to the Collateral pledged by it) and the Mortgaged
Property being added to the Collateral securing the Loan:
(i) Mortgage; Assignment of Rents and Leases. Such
Borrower shall have executed and delivered to Agent a
Mortgage and an Assignment of Rents and Leases with respect
to each New Mortgaged Property being added to the Mortgaged
Property or, if approved by Agent, an amendment to an
existing Mortgage and Assignment of Rents and Leases and
such Mortgage and Assignment of Rents and Leases or
amendment shall have been filed of record in the appropriate
filing office in the jurisdiction in which such New
Mortgaged Property is located or irrevocably delivered to a
title agent for such recordation.
(ii) Loan Agreement, Global Note Signature Pages,
Pledge Agreement. To the extent that with respect to a New
Mortgaged Property, the Mortgage is executed and delivered
by a new Borrower joining this Agreement, such new Borrower
shall have executed and delivered to Agent a counterpart
signature page to this Agreement and the Global Note which,
from and after the date so executed and delivered by such
new Borrower and when taken together with the existing
signature pages for such documents, shall constitute the
signature pages to such documents and each of the principals
of such new Borrower shall have executed and delivered a
Pledge Agreement to the Agent.
(iii) Financing Statements. Such Borrower shall have
executed and delivered to Agent all financing statements
specified on Exhibit H attached hereto and such financing
statements shall have been filed of record in the
appropriate filing offices in each of the appropriate
jurisdictions or irrevocably delivered to a title agent for
such recordation.
(iv) Management Agreement and Manager's Subordination.
Agent shall have received the executed Management Agreement.
Manager shall have executed and delivered each Manager's
Subordination to Agent.
(v) Contract Assignment. Such Borrower shall have
executed and delivered to Agent a Contract Assignment with
respect to the New Mortgaged Property being pledged, if
applicable.
B. Opinions of Counsel. Agent shall have received
from real estate counsel to Borrower in each jurisdiction in
which a Mortgaged Property is located, its legal opinion in
substantially the form delivered to Lender on the Closing Date as
to the enforceability of the Mortgage and other matters referred
to therein. Each of such legal opinions will be addressed to
Agent and Lenders, dated the Advance Closing Date, and in form
and substance satisfactory to Agent and its counsel. Borrowers
hereby instruct such counsel to deliver to Agent and Lenders such
opinions addressed to Agent.
C. Insurance. Agent shall have received certificates
of insurance demonstrating insurance coverage in respect of the
Mortgaged Property of types, in amounts, with insurers and
otherwise in compliance with the terms, provisions and conditions
set forth in the Mortgage. Such certificates shall indicate that
Agent and Collateral Agent are named additional insureds as their
interests may appear and shall contain a loss payee endorsement
in favor of Agent and the Collateral Agent with respect to the
property policies required to be maintained under the Mortgage.
D. Title Insurance Policy. Agent shall have received
either (i) an unconditional commitment (in form and substance
reasonably satisfactory to Agent) to issue the Title Insurance
Policy covering the New Mortgaged Property with an amount of
insurance equal to one hundred twenty-five percent (125%) of the
then Allocated Loan Amount of such New Mortgaged Property, or
(ii) an endorsement to the existing Title Insurance Policy (in
form and substance satisfactory to Agent) which amends the
existing Title Insurance Policy by (x) adding the legal
description of the New Mortgaged Property to Schedule A thereof,
(u) adding Permitted Encumbrances to Schedule B thereof, if
applicable and (z) stating that the amount of insurance is equal
to the then outstanding principal balance of the Loan or such
other amount as shall be reasonably acceptable to Lender.
Section 3.7. Acceptance of Borrowings. The acceptance
by Borrowers of the proceeds of an Advance shall constitute a
representation and warranty by Borrowers to Agent that all of the
conditions to be satisfied under Section 3.4 through 3.6 in
connection with the making of the Advance have been satisfied or
waived in accordance with Section 8.4.
Section 3.8. Form of Loan Documents and Related
Matters. All of the Loan Documents, whether or not referred to
in this Article III, unless otherwise specified, shall be
delivered to Agent, and shall be satisfactory in form and
substance to Agent in its sole discretion (unless the form
thereof is prescribed herein).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties. Each
Borrower (for itself) and Guarantor, as applicable, represent and
warrant that, as of the Closing Date:
(A) Organization. Borrower (i) is duly incorporated
or organized (in the case of a corporation or limited
partnership, respectively), validly existing and in good standing
under the laws of the state of its incorporation or organization,
(ii) has the requisite power and authority to own in fee or lease
pursuant to a ground lease its properties (including, without
limitation, the Mortgaged Property) and to carry on its business
as now being conducted and is qualified to do business in the
jurisdiction in which the Mortgaged Property is located, and
(iii) has the requisite power to execute and deliver, and perform
its obligations under all of the Loan Documents to which it is a
party. Guarantor (i) is a duly organized and validly existing
real estate investment trust in good standing under the laws of
the State of Maryland, (ii) has the requisite power and authority
to carry on its business as now being conducted, and (iii) has
the requisite power to execute and deliver, and perform its
obligations under all of the Loan Documents to which it is a
party.
(B) Authorization; No Conflict; Consents and
Approvals. The execution and delivery by each Borrower and
Guarantor of this Agreement, and each of the other Loan Documents
to which it is a party, each Borrower's and Guarantor's
performance of its respective obligations hereunder and
thereunder and the creation of the security interests and liens
provided for in this Agreement and the other Loan Documents to
which it is a party (i) have been duly authorized by all
requisite action on the part of Borrower and Guarantor, as the
case may be, (ii) will not violate any provision of any Legal
Requirements, any order of any court or other Governmental
Authority, the Organizational Documents of Borrower or Guarantor,
respectively, or any indenture or material agreement or other
material instrument to which Borrower and/ or Guarantor is a
party or by which Borrower and/or Guarantor is bound, and (iii)
will not be in conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default
under, or result in the creation or imposition of any Lien of any
nature whatsoever upon any of the property or assets of Borrower
or Guarantor pursuant to any such indenture or material agreement
or instrument. Other than those obtained or filed on or prior to
the Closing Date, no Borrower or Guarantor 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 Agreement, or the
other Loan Documents executed and delivered by Borrower or
Guarantor on or prior to the Closing Date.
(C) Enforceability. This Agreement executed by
Borrower and Guarantor, the Global Note, each Registered Note,
the Mortgage and each other Loan Document executed by Borrower,
and the Guaranty executed by Guarantor in connection with the
Loan (including, without limitation, any Collateral Security
Instrument), are the legal, valid and binding obligations of
Borrower and/or Guarantor, as the case may be, enforceable
against Borrower and/or Guarantor, as the case may be, in
accordance with their terms, subject to bankruptcy, insolvency
and other limitations on creditors' rights generally and to
equitable principles. This Agreement, the Global Note, the
Guaranty, the Mortgage and such other Loan Documents are, as of
the Closing Date, not subject to any right of rescission, set-
off, counterclaim or defense by Borrower or Guarantor (including
the defense of usury), nor will the operation of any of the terms
of this Agreement, the Global Note, the Guaranty, the Mortgage
and such other Loan Documents, or the exercise of any right
thereunder, render the Mortgage unenforceable against Borrower,
in whole or in part, or subject to any right of rescission, set-
off, counterclaim or defense by Borrower, including the defense
of usury, and Borrower has not asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.
(D) Litigation. Except as disclosed in writing to
Lender, there are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority or other agency
now pending and served or, to the best knowledge of Borrower and
Guarantor, threatened against Borrower, Guarantor or the
Mortgaged Property which actions, suits or proceedings, if
determined against Borrower, Guarantor or the Mortgaged Property,
are reasonably likely to result in a Material Adverse Effect.
(E) Agreements. Neither Borrower nor Guarantor is in
default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which
Borrower or Guarantor is bound which is reasonably likely to have
a Material Adverse Effect. Neither Borrower nor Guarantor is a
party to any agreement or instrument or subject to any
restriction which is reasonably likely to have a Material Adverse
Effect.
(F) No Bankruptcy Filing. Neither Guarantor nor
Borrower is contemplating either the filing of a petition by it
under any state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property.
Neither Guarantor nor Borrower has knowledge of any Person
contemplating the filing of any such petition against it.
(G) Solvency. Giving effect to the transactions
contemplated hereby, the fair saleable value of Borrowers'
assets, taken as a whole, exceeds and will, immediately following
the making of the Loan, exceed Borrowers' total liabilities
(including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities). Giving effect to the
transactions contemplated hereby, the fair saleable value of
Guarantor's assets exceeds and will, immediately following the
making of the Loan, exceed Guarantor's total liabilities
(including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities). The fair saleable value of
Borrowers' assets, taken as a whole, is and will, immediately
following the making of the Loan, be greater than Borrowers'
probable liabilities (including the maximum amount of its
contingent liabilities on its debts as such debts become absolute
and matured). The fair saleable value of Guarantor's assets is
and will, immediately following the making of the Loan, be
greater than Guarantor's probable liabilities (including the
maximum amount of its contingent liabilities on its debts as such
debts become absolute and matured). Borrower's assets do not
and, immediately following the making of the Loan will not,
constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted. Guarantor's assets
do not and, immediately following the making of the Loan will
not, constitute unreasonably small capital to carry out its
business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur
debts and liabilities (including, without limitation, contingent
liabilities and other commitments) beyond its ability to pay such
debts as they mature (taking into account the timing and amounts
to be payable on or in respect of obligations of Borrower).
Guarantor does not intend to, and does not believe that it will,
incur debts and liabilities (including, without limitation,
contingent liabilities and other commitments) beyond its ability
to pay such debts as they mature (taking into account the timing
and amounts to be payable on or in respect of obligations of
Guarantor).
(H) Full and Accurate Disclosure. No statement of
fact made by or on behalf of Borrower or Guarantor in this
Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any
material fact necessary to make statements contained herein or
therein not misleading. There is no fact presently known to
Borrower or Guarantor which has not been disclosed to Agent which
is likely to result in a Material Adverse Effect.
(I) Financial Information. All financial data
concerning Borrower and Guarantor that has been delivered by
Borrower and Guarantor to Agent is true, complete and correct in
all material respects. Since the delivery of such data, except
as otherwise disclosed in writing to Agent, there has been no
change in the financial position of Borrower and Guarantor or in
the results of operations of Borrower or Guarantor which change
is reasonably likely to result in a Material Adverse Effect.
Neither Borrower nor Guarantor has incurred any obligation or
liability, contingent or otherwise, not reflected in such
financial data which is reasonably likely to result in a Material
Adverse Effect.
(J) Investment Company Act; Public Utility Holding
Company Act. Borrower is
not (i) an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of
either a "holding company" or a "subsidiary company" within the
meaning of the Public Utility Holding Company Act of 1935, as
amended, or (iii) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to
borrow money.
(K) Compliance. Borrower and Guarantor are in
compliance with all applicable Legal Requirements the
noncompliance with which is not reasonably likely to have a
Material Adverse Effect. Neither Borrower nor Guarantor is in
default or violation of any order, writ, injunction, decree or
demand of any Governmental Authority the violation of which is
reasonably likely to have a Material Adverse Effect.
(L) Single-Purpose Entity.
(i) Borrower at all times since its formation has been
duly formed and validly existing and (other than in the case
of KRT Union Corp.) a Single-Purpose Entity. If Borrower is
formed under the law of a State other than the State where
the Mortgaged Property owned by it is located, Borrower is
duly qualified as a foreign corporation or limited
partnership in the jurisdiction in which the Mortgaged
Property is located.
(ii) Borrower at all times since its formation has
complied with the provisions of its Organizational Document
since same was executed and delivered and the laws of the
State of its organization relating to corporations or
limited partnerships.
(iii) All customary formalities regarding the corporate
or limited partnership existence of Borrower have been
observed at all times since its organizational document was
executed and delivered.
(iv) Borrower has at all times since it began
maintaining such items accurately maintained its financial
statements, accounting records and other documents separate
from those of its shareholders or partners, as the case may
be, Affiliates of its shareholders or partners, as the case
may be, and any other Person. Borrower has not at any time
since its formation commingled its assets with those of its
shareholders or partners, as the case may be, any Affiliates
of its shareholders or partners, as the case may be, or any
other Person (other than other Borrowers). Borrower has at
all times since establishing its own bank accounts
accurately maintained its own bank accounts and separate
books of account.
(v) Borrower has at all times since receiving funds
paid its own liabilities from its own separate assets.
(vi) Borrower has at all times since its formation
identified itself in all dealings with the public, under
Borrower's own name and as a separate and distinct entity.
Borrower has not at any time since its formation identified
itself as being a division or a part of any other entity.
Borrower has not at any time since its formation identified
its shareholders or partners, as the case may be, or any
Affiliates of its shareholders or partners, as the case may
be, as being a division or part of Borrower.
(vii) Borrower is as of the date hereof adequately
capitalized in light of the nature of its business.
(viii) Borrower has not at any time since its formation
assumed or guaranteed the liabilities of its shareholders or
partners, as the case may be (or any predecessor
corporation, partnership or limited liability company), any
Affiliates of its shareholders or partners, as the case may
be, or any other Persons, except for liabilities relating to
the Mortgaged Property and except as permitted by or
pursuant to this Agreement. Borrower has not at any time
since its formation acquired obligations or securities of
its shareholders or partners, as the case may be (or any
predecessor corporation, partnership or limited liability
company), or any Affiliates of its shareholders or partners,
as the case may be. Borrower has not at any time since its
formation made loans to its shareholders or partners, as the
case may be (or any predecessor corporation, partnership or
limited liability company), or any Affiliates of its
shareholders or partners, as the case may be.
(ix) Borrower has not at any time since its formation
entered into and was not a party to any transaction with its
shareholders or partners, as the case may be (or any
predecessor corporation, partnership or limited liability
company), or any Affiliates of its shareholders or partners,
as the case may be, except for in the ordinary course of
business of Borrower on terms which are no less favorable to
Borrower than would be obtained in a comparable arm's length
transaction with an unrelated third party (other than in
connection with the execution by Borrower and Manager of the
Management Agreement).
(M) Plans and Welfare Plans. The assets of Borrower
are not treated as "plan assets" under regulations currently
promulgated under ERISA. Each Plan, and, to the best knowledge
of Borrower, each Multiemployer 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 federal or state law,
and no event or condition has occurred and is continuing as to
which Borrower would be under an obligation to furnish a report
to Agent under Section 5.1(U)(i). 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 or Welfare Plan. No
event has occurred, and there exists no condition or set of
circumstances, in connection with any Plan or Welfare Plan under
which Borrower or, to the best knowledge of Borrower, 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, or, to the best knowledge of Borrower, any ERISA
Affiliate beyond his or her retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii)
death or disability benefits that have been fully provided for by
fully paid up insurance or (iii) severance benefits.
(N) Location of Chief Executive Offices. The location
of Borrower's and Guarantor's principal place of business and
chief executive office is 128 Fayette Street, Conshohocken,
Pennsylvania 19428.
(O) Not Foreign Person. Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
(P) Labor Matters. Borrower is not a party to any
collective bargaining agreements.
(Q) Pre-Closing Date Activities. Borrower has not
conducted any business or other activity on or prior to the
Closing Date, other than in connection with the acquisition,
ownership and operations of the Mortgaged Property.
Section 4.2. Advance Closing Date Representations. As
of each Advance Closing Date, Borrower and Guarantor shall make
all of the foregoing representations and warranties and shall
additionally represent and warrant that:
(A) Title to the Mortgaged Property. Borrower owns
good, marketable and insurable fee simple title to the Mortgaged
Property (or, with respect to the Leasehold Borrowers, holds the
leasehold estate in the Mortgaged Property), free and clear of
all Liens, other than the Permitted Encumbrances applicable to
the Mortgaged Property. Except as set forth on Schedule 4, there
are no outstanding options to purchase or rights of first refusal
or restrictions on transferability affecting the Mortgaged
Property.
(B) Other Debt. Except for the debt permitted under
Section 6.1(C), Borrower has not borrowed or received other debt
financing whether unsecured or secured by the Mortgaged Property
or any part thereof.
(C) Condemnation. No Taking has been commenced or, to
Borrower's or Guarantor's knowledge, is contemplated with respect
to all or any portion of the Mortgaged Property or for the
relocation of roadways providing access to the Mortgaged Property
except to the extent set forth in any Title Insurance Policy.
(D) Use of Proceeds; Margin Regulations. Borrower
and/or Guarantor and/or their Affiliates will use the proceeds of
the Advance for the purposes described in Section 2.2. No part
of the proceeds of the Advance will be used for the purpose of
purchasing or acquiring any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System or for any other purpose which would be inconsistent with
such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements.
(E) Utilities and Public Access. Each Mortgaged
Property has adequate rights of access to public ways and is
served by water, electric, sewer, sanitary sewer and storm drain
facilities. Except as set forth in any Title Insurance Policy,
all public utilities necessary to the continued use and enjoyment
of the Mortgaged Property as presently used and enjoyed are
located in the public right-of-way abutting the premises, and all
such utilities are connected so as to serve the Mortgaged
Property without passing over other property except for land of
the utility company providing such utility service. All roads
necessary for the full utilization of the Mortgaged Property for
its current purpose have been completed and dedicated to public
use and accepted by all Governmental Authorities or are the
subject of access easements for the benefit of the Mortgaged
Property.
(F) Environmental Compliance. Except for matters set
forth in the Environmental Reports delivered to Agent in
connection with the Loan (true, correct and complete copies of
which have been provided to Agent by Borrower):
(i) Borrower and the Mortgaged Property are each in
compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession
by Borrower or Manager of all environmental, health and
safety permits, licenses and other governmental
authorizations required in connection with the ownership and
operation of the Mortgaged Property under all Environmental
Laws) except where the failure to comply with such laws is
not reasonably likely to result in a Material Adverse
Effect.
(ii) There is no Environmental Claim pending or, to the
best knowledge of Borrower, threatened, and no penalties
arising under Environmental Laws have been assessed, with
respect to the Mortgaged Property or otherwise, against
Borrower or Manager or, to the best knowledge of Borrower,
against any Person whose liability for any Environmental
Claim Borrower or Manager has or may have retained or
assumed either contractually or by operation of law, and no
investigation or review is pending or, to the best knowledge
of Borrower, threatened by any Governmental Authority,
citizens group, employee or other Person with respect to the
Mortgaged Property or any alleged failure by Borrower or
Manager or any Mortgaged Property to have any environmental,
health or safety permit, license or other authorization
required under, or to otherwise comply with, any
Environmental Law or with respect to any alleged liability
of Borrower or Manager for any Use or Release of any
Hazardous Substances.
(iii) There have been and are no past or present
Releases of any Hazardous Substance that are reasonably
likely to form the basis of any Environmental Claim against
Borrower, Manager, or, to Borrower's knowledge, against any
Person whose liability for any Environmental Claim Borrower
or Manager has or may have retained or assumed either
contractually or by operation of law.
(iv) Without limiting the generality of the foregoing,
there is not present at, on, in or under the Mortgaged
Property, PCB-containing equipment (to the best of
Borrower's knowledge), asbestos or asbestos containing
materials, underground storage tanks or surface impoundments
for Hazardous Substances, lead in drinking water (except in
concentrations that comply with all Environmental Laws), or,
to the best of Borrower's knowledge, lead based paint.
(v) No liens are presently recorded with the
appropriate land records under or pursuant to any
Environmental Law with respect to the Mortgaged Property
and, to Borrower's knowledge, no Governmental Authority has
been taking or is in the process of taking any action that
could subject the Mortgaged Property to Liens under any
Environmental Law.
(vi) There have been no environmental investigations,
studies, audits, reviews or other analyses conducted by or
that are in the possession of Borrower in relation to the
Mortgaged Property which have not been made available to
Agent.
(G) Mortgage and Other Liens. The Mortgage creates a
valid and enforceable first priority Lien on the Mortgaged
Property, as security for the repayment of the Indebtedness,
subject only to the Permitted Encumbrances. Each Collateral
Security Instrument establishes and creates a valid, subsisting
and enforceable Lien on and a security interest in, or claim to,
the rights and property described therein. All property covered
by any Collateral Security Instrument is subject to a UCC
financing statement filed and/or recorded, as appropriate (or
irrevocably delivered to an agent for such recordation or filing)
in all places necessary to perfect a valid first priority Lien
with respect to the rights and property that are the subject of
such Collateral Security Instrument to the extent governed by the
UCC.
(H) Assessments. There are no pending or proposed
special or other assessments for public improvements or otherwise
affecting the Mortgaged Property, nor are there any contemplated
improvements to the Mortgaged Property that may result in such
special or other assessments.
(I) No Joint Assessment; Separate Lots. Borrower has
not suffered, permitted or initiated the joint assessment of the
Mortgaged Property (i) (other than in the case of the leasehold
estate comprising a portion of the Mortgaged Property held by
Lilac New York Corp.) with any other real property constituting a
separate tax lot, and (ii) 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. The
Mortgaged Property is comprised of one or more parcels, each of
which constitutes a separate tax lot and none of which
constitutes a portion of any other tax lot (other than in the
case of the leasehold estate comprising a portion of the
Mortgaged Property held by Lilac New York Corp.).
(J) No Prior Assignment. Agent is the assignee of
Borrower's interest under the Leases. There are no prior
assignments of the Leases or any portion of the Rent due and
payable or to become due and payable which are presently
outstanding.
(K) Permits; Certificate of Occupancy. Borrower has
obtained all Permits necessary to the use and operation of the
Mortgaged Property, except where the failure to obtain such
Permits would not have a Material Adverse Effect. The use being
made of the Mortgaged Property is in conformity in all material
respects with the certificate of occupancy and/or Permits for the
Mortgaged Property and any other restrictions, covenants or
conditions affecting the Mortgaged Property.
(L) Flood Zone. Except as shown on the Survey, the
Mortgaged Property is not located in a flood hazard area as
defined by the Federal Insurance Administration.
(M) Physical Condition. Except as set forth in the
Engineering Report, the Mortgaged Property is free of structural
defects and all building systems contained therein are in good
working order subject to ordinary wear and tear.
(N) Security Deposits. Borrower and Manager are in
compliance with all Legal Requirements relating to all security
deposits with respect to the Mortgaged Property as to which
failure to comply is reasonably likely to have a Material Adverse
Effect.
(O) No Defaults. No Default or Event of Default
exists under or with respect to any Loan Document.
(P) Intellectual Property. All material trademarks,
trade names and service marks that Borrower or Guarantor owns or
has pending, or under which it is licensed, are in good standing
and uncontested. There is no right under any trademark, trade
name or service mark necessary to the business of Borrower or
Guarantor as presently conducted or as Borrower or Guarantor
contemplates conducting its business. Neither Borrower nor
Guarantor has infringed, is infringing, and has received notice
of infringement with respect to asserted trademarks, trade names
and service marks of others.
(Q) No Encroachments. Except as shown on the Survey,
all of the Improvements which were or would be included in
determining the appraised value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of
the Mortgaged Property, and no improvements on adjoining
properties encroach upon the Mortgaged Property, and no easements
or other encumbrances upon the Mortgaged Property encroach upon
any of the Improvements, so as to materially and adversely affect
the value or marketability of the Mortgaged Property except those
which are insured against by title insurance. All of the
Improvements comply with all requirements of any applicable
zoning and subdivision laws and ordinances, except where the
failure to comply is not reasonably likely to result in a
Material Adverse Effect.
(R) Management Agreement. Each Management Agreement
is in full force and effect. There is no default, breach or
violation existing thereunder by any party thereto and no event
(other than payments due but not yet delinquent) which, with the
passage of time or with notice and the expiration of any grace or
cure period, would constitute a default, breach or violation by
any party thereunder.
(S) Leases. The Mortgaged Property is not subject to
any Leases other than the Ground Leases and other than the Leases
described in the rent roll delivered to Agent in connection with
the making of the Loan. To the best of Borrower's knowledge, no
person has any possessory interest in the Mortgaged Property or
right to occupy the same except under and pursuant to the
provisions of the Leases or sub-leases granted thereunder.
Subject to any exceptions set forth in the estoppel certificates
and/or rent rolls delivered to Agent pursuant to this Agreement,
the current Leases are in full force and effect and there are no
material defaults thereunder by either party and no conditions
which with the passage of time and/or notice would constitute
material defaults thereunder.
(T) Compliance. Borrower, Guarantor, each Mortgaged
Property and Borrower's use thereof and operations thereat comply
with all applicable Legal Requirements (including, without
limitation, building and zoning ordinances and codes), except
where the failure to comply is not reasonably likely to result in
a Material Adverse Effect.
(U) Financial Information. All financial data
concerning Borrower, Guarantor and the Mortgaged Property that
has been delivered by or on behalf of Borrower to Agent is true,
complete and correct in all material respects and, in the case of
financial statements only, have been prepared in accordance with
GAAP. Since the delivery of such data, except as otherwise
disclosed in writing to Agent, there has been no change in the
financial position of Borrower, Guarantor and the Mortgaged
Properties which change is reasonably likely to result in a
Material Adverse Effect. Neither Borrower nor Guarantor has
incurred any obligation or liability, contingent or otherwise,
not reflected in such financial data which might materially
adversely affect its business operations or any Mortgaged
Property.
(V) Ground Leases. Other than the Ground Leases
described on Schedule 3 attached hereto and made a part hereof,
no Mortgaged Property consists of a leasehold estate in whole or
in part. With respect to the Ground Leases described on Schedule
3:
(i) each such Ground Lease or memorandum thereof,
including all amendments and modifications thereto, or a
separate agreement signed by the applicable lessor has been
duly recorded; each such Ground Lease by its terms permits
the interest of the Leasehold Borrower thereunder to be
encumbered by the applicable Mortgage; and there has been no
change in the terms of such Ground Lease since its
recordation other than as set forth in Schedule 3;
(ii) no Ground Lease is subject to any Liens or
encumbrances other than the related Mortgage, subject to the
Permitted Encumbrances, and each Ground Lease is prior to
all Liens (other than the Lien of the related Mortgage),
charges and encumbrances on the fee interest of the lessor
thereunder;
(iii) each such Ground Lease is valid and subsisting and
is in full force and effect in accordance with its terms and
no uncured event of default has occurred under such Ground
Lease;
(iv) the Mortgage encumbering each Ground Lease
conforms and complies with such Ground Lease, does not
constitute a violation or default under such Ground Lease,
and is and shall at all times constitute a valid Lien
(subject only to Permitted Encumbrances) on the applicable
Leasehold Borrower's entire estate under such Ground Lease;
(v) all Ground Rent due and payable through and
including the Closing Date has been paid; and
(vi) all terms, conditions, and agreements contained in
the Ground Leases have been performed to the extent they
apply to periods through and including the Closing Date.
Section 4.3. Survival of Representations. Borrowers
and Guarantor agree that (i) all of the representations and
warranties of Borrowers and Guarantor set forth in Section 4.1
and elsewhere in this Agreement (but not in Section 4.2) and in
the other Loan Documents delivered on the Closing Date are made
as of the Closing Date, (ii) all of the representations and
warranties of Borrowers and Guarantor set forth in Section 4.2
and elsewhere in this Agreement (including in Section 4.1) and in
the other Loan Documents are, except as set forth in Section
3.5(I), made as of each Advance Closing Date, and (iii) all
representations and warranties made by Borrowers and Guarantor
shall survive the delivery of the Global Note, any Registered
Note, the Guaranty and making of the Advances and shall continue
for so long as any amount remains owing to Lenders under this
Agreement, the Global Note or any of the other Loan Documents;
provided, however, that the representations set forth in
Section 4.2(F) shall survive in perpetuity. All representations,
warranties, covenants and agreements made in this Agreement or in
the other Loan Documents shall be deemed to have been relied upon
by Lenders notwithstanding any investigation heretofore or
hereafter made by Lenders or on their behalf.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.1. Borrower Covenants. Each Borrower (for
itself) covenants and agrees that, from the date hereof and until
payment in full of the Indebtedness:
(A) Existence; Compliance with Legal Requirements;
Insurance. Borrower shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect
its existence as a corporation or limited partnership, rights,
licenses, Permits and franchises necessary for the conduct of its
business and comply with all Legal Requirements and Insurance
Requirements applicable to it and the Mortgaged Property, the
failure to comply with which would have a Material Adverse
Effect. Borrower shall at all times maintain, preserve and
protect all franchises and trade names and preserve all the
remainder of its property necessary for the continued conduct of
its business and keep the Mortgaged Property in good repair,
working order and condition, except for reasonable wear and use,
and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and
improvements thereto. Borrower shall keep or shall cause Manager
to keep the Mortgaged Property insured at all times, by
financially sound and reputable insurers, to such extent and
against such risks, and maintain liability and such other
insurance.
(B) Basic Carrying Costs and Other Claims. Borrower
shall pay and discharge or cause Manager to pay and discharge all
Impositions, as well as all lawful claims for labor, materials
and supplies or otherwise, which could become a Lien, all as more
fully provided in, and subject to any rights to contest contained
in, the Mortgage. Borrower shall pay all Basic Carrying Costs
with respect to Borrower and the Mortgaged Property in accordance
with the provisions of the Mortgage, subject, however, to
Borrower's rights to contest payment of Impositions in accordance
with the Mortgage. Borrower's obligation to pay Basic Carrying
Costs pursuant to this Agreement shall include, to the extent
permitted by applicable law, Impositions resulting from future
changes in law which impose upon Lender an obligation to pay any
property taxes or other Impositions or which otherwise adversely
affect Lender's interests.
(C) Litigation. Borrower shall give prompt written
notice to Agent of any litigation or governmental proceeding
pending or threatened (in writing) against Borrower or Manager
which is reasonably likely to have a Material Adverse Effect.
(D) Environmental Remediation.
(i) If any investigation, site monitoring, cleanup,
removal, restoration or other remedial work of any kind or
nature is required of a Borrower pursuant to an order or
directive of any Governmental Authority or under any
applicable Environmental Law, because of or in connection
with the current or future presence, suspected presence,
Release or suspected Release of a Hazardous Substance on,
under or from the Mortgaged Property or any portion thereof
(collectively, the "Remedial Work"), Borrower shall promptly
commence and diligently prosecute to completion all such
Remedial Work. In all events, such Remedial Work shall be
commenced within forty-five (45) days after any demand
therefor by Agent or such shorter period as may be required
under any applicable Environmental Law; provided, however,
that Borrower shall not be required to commence such
Remedial Work within the above specified time periods: (x)
if prevented from doing so by any Governmental Authority,
(y) if commencing such Remedial Work within such time
periods would result in Borrower or such Remedial Work
violating any Environmental Law or (z) if Borrower, at its
expense and after prior notice to Agent, is contesting by
appropriate legal, administrative or other proceedings
conducted in good faith and with due diligence the need to
perform Remedial Work, as long as (1) Borrower is permitted
by the applicable Environmental Laws to delay performance of
the Remedial Work pending such proceedings, (2) neither the
Mortgaged Property nor any part thereof or interest therein
will be sold, forfeited or lost if Borrower does not perform
the Remedial Work being contested, and Borrower would have
the opportunity to do so, in the event of Borrower's failure
to prevail in the contest, (3) Lenders would not, by virtue
of such permitted contest, be exposed to any risk of any
civil liability for which Borrower has not furnished
additional security as provided in clause (4) below, or to
any risk of criminal liability, and neither the Mortgaged
Property nor any interest therein would be subject to the
imposition of any lien for which Borrower has not furnished
additional security as provided in clause (4) below, as a
result of the failure to perform such Remedial Work and (4)
Borrower shall have furnished to Lenders additional security
in respect of the Remedial Work being contested and the loss
or damage that may result from Borrower's failure to prevail
in such contest in such amount as may be reasonably
requested by Agent.
(ii) If requested by Agent, all Remedial Work under
clause (i) above shall be performed by contractors, and
under the supervision of a consulting Engineer, each
approved in advance by Agent which approval will not be
unreasonably withheld or delayed. All costs and expenses
reasonably incurred in connection with such Remedial Work
shall be paid by Borrower. If Borrower does not timely
commence and diligently prosecute to completion the Remedial
Work, Agent may (but shall not be obligated to), upon thirty
(30) days' prior written notice to Borrower of its intention
to do so, cause such Remedial Work to be performed.
Borrower shall pay or reimburse Agent on demand for all
expenses (including reasonable attorneys' fees and
disbursements), reasonably relating to or incurred by Agent
in connection with monitoring, reviewing or performing any
Remedial Work in accordance herewith.
(iii) Borrower shall not commence any Remedial Work
under clause (i) above, nor enter into any settlement
agreement, consent decree or other compromise relating to
any Hazardous Substances or Environmental Laws which is
reasonably likely to have a Material Adverse Effect.
Notwithstanding the foregoing, if the presence or threatened
presence of Hazardous Substances on, under or about the
Mortgaged Property poses an immediate threat to the health,
safety or welfare of any Person or the environment, or is of
such a nature that an immediate response is necessary or
required under applicable Environmental Law, Borrower may
complete all necessary Remedial Work. In such events,
Borrower shall notify Agent as soon as practicable and, in
any event, within three Business Days, of any action taken.
(E) Environmental Matters; Inspection.
(i) Borrower shall not permit a Hazardous Substance to
be present on, under or to emanate from the Mortgaged
Property, or migrate from adjoining property controlled by
Borrower onto or into the Mortgaged Property, except under
conditions permitted by applicable Environmental Laws and,
in the event that such Hazardous Substances are present on,
under or emanate from the Mortgaged Property, or migrate
onto or into the Mortgaged Property, Borrower shall cause
the removal or remediation of such Hazardous Substances, in
accordance with this Agreement and Environmental Laws.
Borrower shall use reasonable efforts to prevent, and to
seek the remediation of, any migration of Hazardous
Substances onto or into the Mortgaged Property from any
adjoining property.
(ii) Upon reasonable prior written notice, Agent shall
have the right, except as otherwise provided under Leases,
at all reasonable times to enter upon and inspect all or any
portion of the Mortgaged Property, provided that such
inspections shall not unreasonably interfere with the
operation or the tenants or occupants of the Mortgaged
Property. If Agent has reasonable grounds to suspect that
Remedial Work may be required, Agent shall notify Borrower
and, if Borrower is not complying with Section 5.1(D), may
select a consulting Engineer to conduct and prepare reports
of such inspections (with notice to Borrower prior to the
commencement of such inspection). Borrower shall be given a
reasonable opportunity to review any reports, data and other
documents or materials reviewed or prepared by the Engineer,
and to submit comments and suggested revisions or rebuttals
to same. The inspection rights granted to Agent in this
Section 5.1(E) shall be in addition to, and not in
limitation of, any other inspection rights granted to Agent
in this Agreement, and shall expressly include the right (if
Agent suspects that Remedial Work may be required) to
conduct soil borings, establish ground water monitoring
wells and conduct other customary environmental tests,
assessments and audits.
(iii) Borrower agrees to bear and shall pay or reimburse
Agent on demand for all sums advanced and expenses incurred
(including reasonable attorneys' fees and disbursements)
reasonably relating to, or incurred by Agent in connection
with, the inspections and reports described in this
Section 5.1(E) (to the extent such inspections and reports
relate to the Mortgaged Property) in the following
situations:
(x) If Agent has reasonable grounds to believe,
at the time any such inspection is ordered, that there
exists an occurrence or condition that could lead to an
Environmental Claim;
(y) If any such inspection reveals an occurrence
or condition that is reasonably likely to lead to an
Environmental Claim; or
(z) If an Event of Default with respect to the
Mortgaged Property exists at the time any such
inspection is ordered, and such Event of Default
relates to any representation, covenant or other
obligation pertaining to Hazardous Substances,
Environmental Laws or any other environmental matter.
(F) Environmental Notices. Borrower shall promptly
provide notice to Agent of:
(i) any Environmental Claim asserted by any
Governmental Authority with respect to any Hazardous
Substance on, in, under or emanating from the Mortgaged
Property, which might involve remediation cost or liability
greater than $25,000;
(ii) any proceeding, investigation or inquiry commenced
or threatened in writing by any Governmental Authority,
against Borrower, with respect to the presence, suspected
presence, Release or threatened Release of Hazardous
Substances from or onto, in or under any property owned by
Borrower (including, without limitation, proceedings under
the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq.), which
might involve remediation cost or liability greater than
$25,000;
(iii) all Environmental Claims asserted or threatened
against Borrower, against any other party occupying the
Mortgaged Property or any portion thereof which become known
to Borrower or against the Mortgaged Property, which might
involve remediation cost or liability greater than $25,000;
(iv) the discovery by Borrower of any occurrence or
condition on the Mortgaged Property or on any real property
adjoining the Mortgaged Property which could involve
Remedial Work greater than $25,000; and
(v) the commencement or completion of any Remedial
Work.
(G) Copies of Notices. Borrower shall transmit to
Agent copies of any citations, orders, notices or other written
communications received from any Person and any notices, reports
or other written communications submitted to any Governmental
Authority with respect to the matters described in
Section 5.1(F).
(H) Environmental Claims. Agent may join and
participate in, as a party if Agent so determines, any legal or
administrative proceeding or action concerning the Mortgaged
Property or any portion thereof under any Environmental Law, if,
in Agent's reasonable judgment, the interests of Lenders will not
be adequately protected by Borrower. Borrower shall pay or
reimburse Agent on demand for all reasonable sums advanced and
expenses incurred (including reasonable attorneys' fees and
disbursements) incurred by Agent in connection with any such
action or proceeding.
(I) Environmental Indemnification. Borrower shall
indemnify, reimburse, defend, and hold harmless each Lender,
Agent, Collateral Agent and each of its respective parents,
subsidiaries, Affiliates, directors, officers, employees,
representatives, agents, successors, assigns and attorneys
(collectively, the "Indemnified Parties") for, from, and against
all demands, claims, actions or causes of action, assessments,
losses, damages, liabilities, costs and expenses (including,
without limitation, interest, penalties, reasonable attorneys'
fees, disbursements and expenses, and reasonable consultants'
fees, disbursements and expenses) asserted against, resulting to,
imposed on, or incurred by any Indemnified Party, directly or
indirectly, in connection with any of the following (except to
the extent same are directly and solely caused by the fraud, bad
faith, gross negligence or willful misconduct of any Indemnified
Party and except that any Indemnified Party shall not be
indemnified against claims resulting from actions taken with
respect to the Mortgaged Property after Agent forecloses its Lien
or security interest upon the Mortgaged Property and is a so-
called "mortgagee-in-possession" unless and to the extent such
indemnification relates to any of the following which occurred
while Borrower owned the Mortgaged Property):
(i) events, circumstances, or conditions which are
alleged to, or do, form the basis for an Environmental
Claim;
(ii) any pollution or threat to human health or the
environment that is related in any way to Borrower's or any
previous owner's or operator's management, use, control,
ownership or operation of the Mortgaged Property (including,
without limitation, all on-site and off-site activities
involving Hazardous Substances), and whether occurring,
existing or arising prior to or from and after the date
hereof, and whether or not the pollution or threat to human
health or the environment is described in the Environmental
Reports;
(iii) any Environmental Claim against any Person whose
liability for such Environmental Claim Borrower has or may
have assumed or retained either contractually or by
operation of law; or
(iv) the breach of any representation, warranty or
covenant set forth in Section 4.1(Q) and Sections 5.1(D)
through 5.1(I), inclusive.
The provisions of and undertakings and indemnification
set forth in this Section 5.1(I) shall survive the satisfaction
and payment of the Indebtedness and termination of this
Agreement.
(J) General Indemnity. Borrower shall indemnify,
protect, and hold the Indemnified Parties harmless from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses
(including, without limitation, reasonable attorneys' fees and
legal expenses whether or not suit is brought and settlement
costs) and disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the
Indemnified Parties, in any way relating to or arising out of the
Loan Documents or any of the transactions contemplated in any
thereof (collectively, the "Indemnified Liabilities"), to the
extent that any of the Indemnified Liabilities results, directly
or indirectly, from any claim made (whether or not in connection
with any legal action, suit, or proceeding) by or on behalf of
any Person other than the parties to this Agreement; provided,
however, that no Indemnified Party shall have the right to be
indemnified hereunder for its own fraud, bad faith, gross
negligence or willful misconduct. The provisions of and
undertakings and indemnification set forth in this Section 5.1(J)
shall survive the satisfaction and payment of the Indebtedness
and termination of this Agreement.
(K) Access to Mortgaged Property. Borrower shall
permit or shall cause Manager to permit agents, representatives
and employees of Agent and each Lender to inspect the Mortgaged
Property or any part thereof at such reasonable times as may be
requested upon reasonable advance notice, subject, however, to
the rights of the tenants of the Mortgaged Property.
(L) Notice of Default. Borrower shall promptly advise
Agent of any change in Borrower's condition, financial or
otherwise, which is reasonably likely to have a Material Adverse
Effect, or of the occurrence of any Default or Event of Default.
(M) Cooperate in Legal Proceedings. Except with
respect to any claim by Borrower against Lenders, Borrower shall
cooperate fully with each Lender and/or Agent with respect to any
proceedings before any Governmental Authority which may in any
way affect the rights of Lenders hereunder or any rights obtained
by Lenders under any of the Loan Documents and, in connection
therewith, not prohibit Agent, at its election, from
participating in any such proceedings.
(N) Perform Loan Documents. Borrower shall observe,
perform and satisfy or cause Manager to observe, perform and
satisfy all the terms, provisions, covenants and conditions
required to be observed, performed or satisfied by it or Manager,
and shall pay when due all costs, fees and expenses required to
be paid by it or Manager, under the Loan Documents executed and
delivered by Borrower and Manager.
(O) Insurance Benefits. Borrower shall cooperate with
Agent in obtaining for Lenders the benefits of any Insurance
Proceeds lawfully or equitably payable to Lenders in connection
with the Mortgaged Property. Agent shall be reimbursed for any
expenses reasonably incurred in connection therewith (including
reasonable attorneys' fees and disbursements) out of such
Insurance Proceeds.
(P) Further Assurances. Borrower shall, at Borrower's
sole cost and expense:
(i) upon Lender's reasonable request therefor given
from time to time (without in any way limiting the Agent's
rights under Section 3.5, but not more frequently than once
every three (3) months), pay for (a) reports of UCC, tax
lien, judgment and litigation searches with respect to
Borrower and (b) searches of title to the Mortgaged
Property, each such search to be conducted by search firms
designated by Borrower and reasonably acceptable to Agent in
each of the locations designated by Agent;
(ii) furnish to Agent all instruments, documents,
boundary surveys, footing or foundation surveys,
certificates, plans and specifications, Appraisals, title
and other insurance reports and agreements, and each and
every other document, certificate, agreement and instrument
required to be furnished pursuant to the terms of the Loan
Documents or reasonably requested by Agent in connection
therewith;
(iii) execute and deliver to Agent such documents,
instruments, certificates, assignments and other writings,
and do such other acts necessary, to evidence, preserve
and/or protect the Collateral at any time securing or
intended to secure the Global Note, as Agent may reasonably
require (including, without limitation, an amended or
replacement Mortgage, UCC financing statements or Collateral
Security Instruments); and
(iv) do and execute all and such further lawful and
reasonable acts, conveyances and assurances for the better
and more effective carrying out of the intents and purposes
of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.
(Q) Management of Mortgaged Property. The Mortgaged
Property will be managed at all times by Manager pursuant to the
Management Agreement until terminated as herein provided.
Pursuant to the Manager's Subordination, Manager will agree that
the Management Agreement is subject and subordinate in all
respects to the Lien of the Mortgage. The Management Agreement
may be terminated by Agent upon thirty (30) days' prior written
notice to Borrower and Manager (a) upon the occurrence and
continuation of an Event of Default, or (b) if Manager commits
any act which would permit termination under the Management
Agreement, or (c) at any time after the capital stock of the
Guarantor ceases to be listed on a national securities exchange
in the United States, there is a change in the majority control
of Manager. Borrower may from time to time appoint a successor
manager to manage the Mortgaged Property with Agent's prior
written consent, such consent not to be unreasonably withheld or
delayed. Notwithstanding the foregoing, any successor manager
selected hereunder by Agent or Borrower to manage the Mortgaged
Property shall be a reputable management company having
experience in the management of real property of a similar type,
size and quality in the state in which the Mortgaged Property is
located. Borrower further covenants and agrees that Manager
(including any successor property manager serving as Manager)
shall at all times during the term of the Loan maintain worker's
compensation insurance as required by Governmental Authorities.
(R) Financial Reporting.
(i) Borrower shall keep and maintain or shall cause to
be kept and maintained on a Fiscal Year basis in accordance
with GAAP consistently applied, books, records and accounts
reflecting in reasonable detail all of the financial affairs
of Borrower and all items of income and expense in
connection with the operation of the Mortgaged Property and
in connection with any services, equipment or furnishings
provided in connection with the operation of the Mortgaged
Property, whether such income or expense may be realized by
Borrower or by any other Person whatsoever. Agent, on
behalf of Lenders, shall have the right from time to time at
all times during normal business hours upon reasonable prior
written notice to Borrower 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 Agent shall reasonably
desire. After the occurrence of an Event of Default with
respect to Borrower or the Mortgaged Property, Borrower
shall pay any costs and expenses incurred by Agent to
examine Borrower's accounting records with respect to the
Mortgaged Property, as Agent shall reasonably determine to
be necessary or appropriate in the protection of Lenders'
interest.
(ii) Borrower shall cause Guarantor to furnish to Agent
annually, within one hundred twenty (120) days following the
end of each Fiscal Year, a complete copy of Guarantor's
financial statement audited by Arthur Andersen LLP or such
other Independent certified public accountant reasonably
acceptable to Agent covering Guarantor's financial position
and results of operations, for such Fiscal Year and
containing a statement of revenues and expenses, a statement
of assets and liabilities and a statement of Guarantor's
equity, all of which shall be in form reasonably acceptable
to Agent. Agent shall have the right from time to time to
review the auditing procedures used in the preparation of
such annual financial statements and to request additional
procedures. Together with Guarantor's annual financial
statements, Guarantor shall furnish to Agent an Officer's
Certificate certifying as of the date thereof (x) that the
annual financial statements present fairly in all material
respects the results of operations and financial condition
of Guarantor all in accordance with GAAP consistently
applied, and (y) whether there exists an Event of Default,
and if such Event of Default exists, the nature thereof, the
period of time it has existed and the action then being
taken to remedy same.
(iii) Borrowers shall furnish to Lender, within forty-
five (45) days following the end of each Fiscal Year quarter
a true, complete and correct unaudited quarterly financial
statement with respect to each Mortgaged Property for that
quarter.
(iv) Borrower shall furnish to Agent (i) copies of all
filings with the Securities and Exchange Commission ("SEC")
by the Guarantor, other than Registration Statements on Form
S-8 and reports under Sections 13(d) and 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and (ii) copies of the Guarantor's annual reports and
quarterly reports within 15 days following each date on
which Guarantor is (or would have been, in the event
Guarantor ceases to be subject to Section 13 or 15(d) of the
Exchange Act) required to file with the SEC.
(v) Borrower shall furnish or shall cause Manager to
furnish to Agent, within fifteen (15) Business Days after
request, such further information with respect to the
operation of the Mortgaged Property and the financial
affairs of Borrower as may be reasonably requested by Agent,
including all business plans prepared for Borrower.
(vi) Borrower shall furnish to Agent, within fifteen
(15) Business Days after request, such further information
regarding any Plan or Multiemployer Plan and any reports or
other information required to be filed under ERISA as may be
reasonably requested by Agent.
(vii) Not later than the Closing Date and,
subsequently, at least thirty (30) days prior to the end of
each of Borrower's Fiscal Years, Borrower shall submit or
cause to be submitted to Agent an Operating Budget for
Borrower's property expenses, Capital Improvement Costs
(including Leasing Commissions and TI Costs) and replacement
reserve costs for the next Fiscal Year for the Mortgaged
Property.
(S) Conduct of Business. Borrower shall cause the
operation of the Mortgaged Property to be conducted at all times
in a manner consistent with at least the level of operation of
the Mortgaged Property as of the Closing Date, including, without
limitation, the following:
(i) to maintain or cause to be maintained the standard
of the Mortgaged Property at all times at a level not lower
than that maintained by prudent managers of similar
facilities or land in the region where the Mortgaged
Property is located;
(ii) to operate or cause to be operated the Mortgaged
Property in a prudent manner in compliance in all material
respects with applicable Legal Requirements and Insurance
Requirements relating thereto and maintain or cause to be
maintained all licenses, Permits and any other agreements
necessary for the continued use and operation of the
Mortgaged Property; and
(iii) to maintain or cause to be maintained sufficient
Inventory and Equipment of types and quantities at the
Mortgaged Property to enable Borrower or Manager to operate
the Mortgaged Property.
(T) Single-Purpose Entity.
(i) Borrower at all times will continue to be a duly
formed and validly existing corporation or limited
partnership under the laws of the State of its formation and
a Single-Purpose Entity.
(ii) Borrower shall at all times comply with the
provisions of its Organizational Documents and the laws of
the State of its formation relating to corporations or
limited partnerships.
(iii) Borrower shall observe all customary formalities
regarding its existence.
(iv) Borrower shall accurately maintain its financial
statements, accounting records and other corporate documents
separate from those of its shareholders or partners,
Affiliates of its shareholders or partners and any other
Person. Borrower shall not commingle its assets with those
of its shareholders or partners, any Affiliates of its
shareholders or partners, or any other Person (other than
another Borrower). Borrower shall continue to accurately
maintain its own bank accounts (together with other
Borrowers, if applicable) and separate books of account.
(v) Borrower shall continue to pay its own liabilities
from its own separate assets.
(vi) Borrower shall continue to identify itself in all
dealings with the public, under its own name or trade names
and as a separate and distinct entity. Borrower will not
identify itself as being a division or a part of any other
entity. Borrower will not identify its shareholders,
partners or any Affiliates of its shareholders or partners
as being a division or part of Borrower.
(vii) Borrower shall continue to be adequately
capitalized in light of the nature of its business.
(viii) Except as contemplated by this Agreement, Borrower
shall not assume or guarantee the liabilities of its
shareholders or partners (or any predecessor corporation),
any Affiliates of its shareholders or partners, or any other
Persons, except for liabilities relating to the Mortgaged
Property and except as permitted by or pursuant to this
Agreement. Borrower shall not acquire obligations or
securities of its shareholders or partners (or any
predecessor corporation, partnership or limited liability
company), or any Affiliates of its shareholders or partners.
Borrower shall not make loans to its shareholders or
partners (or any predecessor corporation), or any Affiliates
of its shareholders or partners.
(ix) Borrower shall not enter into or be a party to any
transaction with its shareholders or partners (or any
predecessor corporation, partnership or limited liability
company) or any Affiliates of its partners, except for in
the ordinary course of business on terms which are no less
favorable to Borrower than would be obtained in a comparable
arm's length transaction with an unrelated third party
(other than in connection with the execution by Borrower and
Manager of the Management Agreement).
(U) ERISA. Borrower shall deliver to Agent as soon as
possible, and in any event within ten days after Borrower knows
or has reason to believe that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan
has occurred or exists, a statement signed by a senior financial
officer of Borrower 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
by Borrower or an ERISA Affiliate with respect to such event or
condition):
(i) any reportable event, as defined in
Section 4043(b) 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 of Section 412 of the Code or
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 or
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;
(ii) 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;
(iii) 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 Borrower of a
notice from a Multiemployer Plan that such action has been
taken by PBGC with respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a
Multiemployer Plan by Borrower or any ERISA Affiliate of
Borrower that results in material 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 Borrower of notice from a Multiemployer 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;
(v) the institution of a proceeding by a fiduciary of
any Multiemployer Plan against Borrower or any ERISA
Affiliate of Borrower to enforce Section 515 of ERISA, which
proceeding is not dismissed within thirty (30) days;
(vi) 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 of Borrower fails to timely provide security to
the Plan in accordance with the provisions of said Sections;
and
(vii) the imposition of a lien or a security interest in
connection with a Plan.
(V) Assignment or Participation of Global Note. In
the event that Agent notifies Borrower that a secondary market
sale (an "Assignment") of, or a sale of a participation interest
(a "Participation") in, the Global Note to another party is a
desirable course of action with respect to the Loan, then
Borrower shall cooperate with Agent, in the preparation of any
information reasonably necessary or incidental to such Assignment
or Participation with respect to the Collateral which is
reasonably within the possession or control of Borrower or is
obtainable by Borrower without unreasonable expense or effort and
shall in good faith enter into any amendments to this Agreement
necessary to accomplish the Assignment or Participation;
provided, however, that Agent shall bear the cost of any third
party out-of-pocket fees and expenses (including reasonable fees
and disbursements of counsel) incurred by Borrower in
implementing any such amendments.
(W) Appraisal. Borrower shall furnish to Agent at
Borrower's expense upon request of Agent after the Closing Date
and prior to the Maturity Date one Appraisal from an Appraiser
selected by Agent with respect to the Mortgaged Property.
(X) Ground Leases.
(i) Each Leasehold Borrower shall pay, promptly when
due and payable (before the commencement of any "cure" or
"grace" period), all Ground Rent. With respect to the
Ground Leases affecting the Mortgaged Property commonly
referred to as the Bradford, Pennsylvania property and the
Yonkers, New York property, upon notice from Agent,
simultaneously with the making of each and every payment of
Ground Rent payable after the delivery of such notice, each
Leasehold Borrower shall simultaneously deliver to Agent a
copy of the check in the amount of such payment delivered to
the payee.
(ii) Each Leasehold Borrower shall perform and observe
(before the commencement of any "cure" or "grace" period)
all terms, covenants, and conditions that each such
Leasehold Borrower is required to perform and observe under
the applicable Ground Lease and do everything necessary to
preserve and to keep unimpaired and in full force and effect
the applicable Ground Lease. Leasehold Borrower shall not
permit any Ground Lease to go into default (whether or not
any cure period in the Ground Lease has expired).
(iii) Each Leasehold Borrower shall enforce the
obligations of the applicable lessor under each Ground Lease
so that such Leasehold Borrower may at all times enjoy all
its rights, benefits and privileges under the applicable
Ground Leases.
(iv) Leasehold Borrower shall not, without Agent
consent, cause, agree to, permit, or suffer to occur any
Ground Lease Impairment. Any Ground Lease Impairment made
without Agent consent shall be null, void, and of no force
or effect. Any party entering into or purportedly obtaining
the benefit of such a purported Ground Lease Impairment is
hereby placed on notice that Leasehold Borrower has no power
or authority to cause, consent, or agree to such Ground
Lease Impairment without Agent's consent.
(v) Leasehold Borrower shall not, without Agent
consent, such consent not to be unreasonably withheld or
delayed, refuse to consent or consent to any action that any
lessor under a Ground Lease or any third party takes or
desires to take under or with respect to any Ground Lease,
where Leasehold Borrower has such right.
(vi) Each Leasehold Borrower shall promptly deliver to
Agent a copy of any notice of default or termination, or
demand for performance (other than routine bills for current
Ground Rent) that it receives from any lessor under a Ground
Lease. Leasehold Borrower shall furnish to Agent all
information that Agent may reasonably request from time to
time concerning the Ground Leases and Leasehold Borrower's
compliance with the Ground Leases. Leasehold Borrower,
immediately upon learning that any lessor under a Ground
Lease has failed to perform any material terms and
provisions under any Ground Lease (including by reason of a
rejection or disaffirmance or purported rejection or
disaffirmance of such Ground Lease pursuant to any state or
federal bankruptcy law), shall notify Agent thereof.
Promptly after the Closing Date, and again promptly after
execution of any amendment to the related leasehold
Mortgage, each Leasehold Borrower shall notify the
applicable Ground Lessor of the execution and delivery of
the related leasehold Mortgage or such amendment. Such
notice shall set forth, verbatim, in a form satisfactory to
Agent, all provisions of the related leasehold Mortgage
relating to Ground Lease Impairments. Agent shall have the
right, but not the obligation, to give any lessor under a
Ground Lease at any time any notice described in this
paragraph or otherwise relating to the related leasehold
Mortgage or the Loan.
(vii) Leasehold Borrower shall promptly notify Agent
of any request that any party to a Ground Lease makes for
arbitration or other dispute resolution procedure pursuant
to such Ground Lease and of the institution of any such
arbitration or dispute resolution. Leasehold Borrower
hereby authorizes Agent to participate in any such
arbitration or dispute resolution. Leasehold Borrower shall
promptly deliver to Agent a copy of the determination of
each such arbitration or dispute resolution procedure.
(viii) If Agent or its designee shall acquire or
obtain a New Ground Lease, then Borrower shall have no
right, title or interest whatsoever in or to such New Ground
Lease, or any proceeds or income arising from the estate
arising under any such New Ground Lease, including from any
sale or other disposition thereof. Agent or its designee
shall hold such New Ground Lease free and clear of any right
or claim of Borrower, except that the proceeds thereof shall
be applied as set forth in Section 2.7(b).
(ix) Leasehold Borrower shall not amend, modify or
cancel any Ground Lease without the prior written consent of
Agent, which consent shall not be unreasonably withheld or
delayed.
(Y) Post-Closing Matters. With respect to the
Borrower as of the Closing Date named KR Bradford Mall, L.P., it
shall be understood and agreed that (i) the Agent shall have the
right after the initial Advance Closing Date (and on a subsequent
Advance Closing Date) to require that a deposit be made to the
Repair Reserve Account pursuant to Section 2.13(a) for the
related Mortgaged Property and (ii) such Borrower shall deliver
to the Agent within one hundred twenty (120) days following the
Closing Date either (i) evidence that the underground storage
tanks have been removed or sealed in accordance with all
applicable Legal Requirements or (ii) a Phase II Environmental
Report with respect thereto reasonably acceptable to the Agent.
With respect to the Borrowers named KR Barn, L.P. and Lilac New
York Corp., it shall be understood and agreed that upon
completion of the planned construction at the related Mortgaged
Properties, such Borrowers shall deliver to the Agent final
Engineering Reports reasonably acceptable to the Agent.
(Z) Miscellaneous Covenants.
(i) Notwithstanding anything in this Agreement to the
contrary, on the initial Advance Closing Date, Lilac New
York Corp. delivered, and the Agent accepted, (a) a Mortgage
securing $2,500,000 of the outstanding Principal
Indebtedness which Mortgage has been filed of record in the
appropriate filing office in the jurisdiction where the
related Mortgaged Property is located and (b) a second
priority mortgage (substantially similar in form to the
Mortgage except to the extent necessary to reflect such
priority) securing $1,600,000 of the outstanding Principal
Indebtedness, which second priority mortgage has not been
filed of record but is being held in escrow by Agent in
accordance with the provisions hereof. Such second priority
mortgage shall be held in escrow by Agent during the term of
the Loan, but may, at the option of the Agent, be released
from escrow and filed of record upon the occurrence of an
Event of Default hereunder. In the event such second
priority mortgage is not recorded, as aforesaid, same shall
be returned to the Borrowers upon the earlier to occur of
(x) the release of the Mortgage securing the same Mortgaged
Property pursuant to this Agreement and (y) repayment in
full of the Loan and termination of this Agreement. On the
initial Advance Closing Date, Lilac New York Corp. shall
deposit in the Repair Reserve Account, in addition to the
amounts referred to in Section 2.13(a), an amount sufficient
to pay all state, county and municipal recording taxes and
any other fees which would be imposed on the recordation of
such second priority mortgage, which amount shall only be
withdrawn by Agent in connection with such recordation
pursuant to this clause (Z)(i) or by the Borrowers upon the
earlier to occur of (x) the release of the Mortgage securing
the same Mortgaged Property pursuant to this Agreement and
(y) repayment in full of the Loan and termination of this
Agreement.
(ii) With respect to the Mortgaged Property leased by
Lilac New York Corp., such Borrower shall promptly deliver
to the Agent evidence of the payment of all Impositions with
respect to the tax lot of which such Mortgaged Property
constitutes a portion.
ARTICLE VI
NEGATIVE COVENANTS
Section 6.1. Borrower Negative Covenants. Each
Borrower, for itself, covenants and agrees that, until payment in
full of the Indebtedness, it will not do, directly or indirectly,
any of the following unless Agent consents thereto in writing:
(A) Liens on the Mortgaged Property. Incur, create,
assume, become or be liable in any manner with respect to, or,
except as expressly permitted by or pursuant to the Mortgage,
permit to exist, any Lien with respect to the Mortgaged Property,
except: (i) Liens in favor of Agent and (ii) the Permitted
Encumbrances.
(B) Transfer. Except as expressly permitted by or
pursuant to this Agreement or the Mortgage, own any real property
other than the Mortgaged Property or Transfer the Mortgaged
Property.
(C) Other Borrowings. Incur, create, assume, become
or be liable in any manner with respect to Other Borrowings,
except that Borrower may (i) incur secured or unsecured
indebtedness relating solely to financing or leasing of Equipment
used in the ordinary course of Borrower's business, to the extent
that such loans or leases are ordinary and customary in the
industry of operating properties similar to the Mortgaged
Property, and the proceeds of which are not distributed to
Borrower except as reimbursement for monies expended by Borrower
to fund the financing or leasing of such Equipment or (ii) incur
loans from its shareholders or partners or their Affiliates
(other than the Loan), provided that (a) such loans are
subordinate to the Loan and unsecured, (b) the terms of such
loans provide that the related shareholders or partners shall not
take any judicial or non-judicial action to commence any
foreclosure proceeding with respect thereto for so long as any of
the Indebtedness remains outstanding, (c) the proceeds of such
loans are used by Borrower to pay expenses (including property
expenses) or closing costs relating to the Mortgaged Property or
to make interest payments on the Loan, and (d) such loans are on
terms satisfactory to Agent.
(D) Dissolution; Merger or Consolidation. Dissolve,
terminate, liquidate, merge with or consolidate into another
Person (other than another Borrower).
(E) Change In Business. Cease to be a Single-Purpose
Entity, or make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or
participate in activities other than the continuance of its
present business.
(F) Debt Cancellation. Cancel or otherwise forgive or
release any material claim or debt owed to Borrower by any
Person, except for adequate consideration or in the ordinary
course of Borrower's business.
(G) Affiliate Transactions. Enter into, or be a party
to, any transaction with an Affiliate of Borrower, except in the
ordinary course of business and on terms which are no less
favorable to Borrower or such Affiliate than would be obtained in
a comparable arm's length transaction with an unrelated third
party (other than in connection with the execution by Borrower
and Manager of the Management Agreement).
(H) Creation of Easements. Except as expressly
permitted by or pursuant to the Mortgage or this Agreement,
create, or permit the Mortgaged Property or any part thereof to
become subject to, any easement, license or restrictive covenant,
other than a Permitted Encumbrance.
(I) Misapplication of Funds. Distribute any Rents or
Moneys received from Accounts in violation of the provisions of
Section 2.12, or fail to deliver any security deposit to Manager,
or misappropriate any security deposit or portion thereof.
(J) Certain Restrictions. Enter into any agreement
which expressly restricts the ability of Borrower to enter into
amendments, modifications or waivers of any of the Loan
Documents.
(K) Assignment of Licenses and Permits. Assign or
transfer any of its interest in any Permits pertaining to the
Mortgaged Property, or assign, transfer or remove or permit any
other Person to assign, transfer or remove any records pertaining
to the Mortgaged Property.
(L) Place of Business. Change its chief executive
office or its principal place of business without giving Agent at
least thirty (30) days' prior written notice thereof and promptly
providing Lender such information as Agent may reasonably request
in connection therewith.
(M) Leases. Enter into, amend or cancel Leases,
except as permitted by or pursuant to the Mortgage or this
Agreement.
(N) Management Agreement. (i) Surrender, terminate or
cancel the Management Agreement, (ii) reduce or consent to either
the reduction of the term of or the assignment of the Management
Agreement, (iii) increase or consent to the increase of the
amount of any charges under the Management Agreement, or (iv)
otherwise modify, change, supplement, alter or amend, or waive or
release any of its rights and remedies under, the Management
Agreement in any material respect; provided, however, that if
Borrower terminates the Management Agreement and does not appoint
a successor manager to manage the Mortgaged Property within three
(3) months of the date of termination, then Agent may appoint a
successor manager.
(O) Plans and Welfare Plans. Knowingly engage in or
permit any transaction in connection with which Borrower or any
ERISA Affiliate could be subject to either a material civil
penalty or 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 beyond his or her retirement or other
termination of service other than (i) coverage mandated by
applicable law, (ii) death or disability benefits that have been
fully provided for by paid up insurance or otherwise or (iii)
severance benefits (unless such coverage is provided after
notification of and with the reasonable approval of Agent),
permit the assets of Borrower 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 to adopt, amend (except as may be
required by applicable law) or increase the amount of any benefit
or amount payable under, any Plan or Welfare Plan, 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 or any ERISA
Affiliate.
(P) Transfer Ownership Interests. Permit any transfer
of a direct ownership interest or voting right in Borrower that
would cause a Change of Control to occur.
ARTICLE VII
DEFAULTS
Section 7.1. Event of Default. The occurrence of one
or more of the following events shall be an "Event of Default"
hereunder:
(i) if on any Payment Date the funds in the Collection
Account are insufficient to pay the accrued and unpaid
interest due on the Global Note on such Payment Date;
(ii) if any Borrower fails (a) to pay the outstanding
Indebtedness on the Maturity Date or (b) to deposit into the
Collection Account the amount required pursuant to Section
2.7(a) or 2.7(b), respectively;
(iii) if any Borrower or Guarantor fails to pay any
other amount payable pursuant to this Agreement, the
Guaranty or any other Loan Document when due and payable in
accordance with the provisions hereof or thereof, as the
case may be, and such failure continues for ten (10) days
after Agent delivers written notice thereof to such
Borrower;
(iv) if, as of any Debt Service Coverage/Property
Release Test Date, the Debt Service Coverage Test is not met
and such test continues to not be met for ten (10) days
after Agent delivers written notice thereof to Borrowers;
(v) if Guarantor breaches any of the Financial
Covenants contained in the Guaranty and such breach
continues for ten (10) days after Agent delivers written
notice thereof to Borrowers and Guarantor;
(vi) if any representation or warranty made herein or
in any other Loan Document, or in any report, certificate,
financial statement or other Instrument, agreement or
document furnished by Borrower, Guarantor or Manager in
connection with this Agreement, the Global Note, the
Guaranty or any other Loan Document executed and delivered
by Borrower, Guarantor or Manager, shall be false in any
material respect as of the date such representation or
warranty was made;
(vii) if any Borrower, Guarantor, or any Managing
Entity makes an assignment for the benefit of creditors;
(viii) if a receiver, liquidator or trustee shall be
appointed for any Borrower, Guarantor, or any Managing
Entity, or if any Borrower, Guarantor, or any Managing
Entity shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal
or state law, shall be filed by or against, consented to, or
acquiesced in by, any Borrower, Guarantor, or any Managing
Entity or if any proceeding for the dissolution or
liquidation of any Borrower, Guarantor, or any Managing
Entity shall be instituted; provided, however, that if such
appointment, adjudication, petition or proceeding was
involuntary and not consented to by such Borrower,
Guarantor, or such Managing Entity upon the same not being
discharged, stayed or dismissed within forty-five (45) days,
or if any Borrower, Guarantor, or any Managing Entity shall
generally not be paying its debts as they become due;
(ix) if any Borrower or Guarantor attempts to delegate
its obligations or assign its rights under this Agreement,
any of the other Loan Documents or any interest herein or
therein, or if any Transfer occurs other than in accordance
with this Agreement, the Mortgage or any other Loan Document
and such delegation or assignment of rights or impermissible
Transfer continues or is not corrected for ten (10) days
after Agent delivers written notice thereof to Borrower or
Guarantor, as the case may be;
(x) if any provision of the Organizational Documents
affecting the purpose for which any Borrower or Guarantor,
is formed is amended or modified in any material respect
which may adversely affect Agent or Collateral Agent, or if
any Borrower, Guarantor, or any Managing Entity fails to
perform or enforce the provisions of its Organizational
Documents or attempts to dissolve, or if any Borrower
breaches any of its representations, warranties or covenants
set forth in Section 4.1(L) or 6.1(E);
(xi) if an Event of Default as defined or described in
the Global Note, the Mortgage, the Guaranty or any other
Loan Document occurs, whether as to any Borrower, Guarantor
or all or any portion of the Mortgaged Property; or
(xii) if any Borrower, Guarantor, or any Managing Entity
shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement, the Global
Note, the Guaranty or the other Loan Documents, for ten (10)
days after notice to Borrowers from Agent or its successors
or assigns, in the case of any Default which can be cured by
the payment of a sum of money (other than Events of Default
pursuant to clauses (i) and (ii) above as to which the grace
period, if any, set forth therein is applicable), or for
forty-five (45) days after notice from Agent or its
successors or assigns, in the case of any other Default
(unless otherwise provided herein or in such other Loan
Document); provided, however, that if such non-monetary
Default is susceptible of cure but cannot reasonably be
cured within such forty-five (45) day period and such
Borrower, Guarantor, or such Managing Entity, as the case
may be, shall have commenced to cure such Default within
such forty-five (45) day period and thereafter diligently
and expeditiously proceeds to cure the same, such forty-five
(45) day period shall be extended for an additional forty-
five (45) days; or
(xiii) if a Change of Control has occurred;
then, upon the occurrence of any such Event of Default and at any
time thereafter, Lenders or their successors or assigns, may, in
addition to any other rights or remedies available to them
pursuant to this Agreement, the Global Note, the Mortgages, the
Guaranty and the other Loan Documents, or at law or in equity,
take such action, without further notice or demand, as Lenders or
their successors or assigns, deems advisable to protect and
enforce their rights against a Borrower and in and to all or any
portion of the Mortgaged Property (including, without limitation,
declaring the entire Indebtedness to be immediately due and
payable) and may enforce or avail themselves of any or all rights
or remedies provided in the Loan Documents against such Borrower,
Guarantor and/or the Mortgaged Property (including, without
limitation, all rights or remedies available at law or in
equity).
Section 7.2. Remedies. (a) Upon the occurrence of an
Event of Default, all or any one or more of the rights, powers,
other remedies available to Lenders against Borrower or Guarantor
under this Agreement, the Global Note, the Mortgages, the
Guaranty or any of the other Loan Documents executed by or with
respect to Borrowers, or at law or in equity may be exercised by
Lenders at any time and from time to time, whether or not all or
any portion of the Indebtedness shall be declared due and
payable, and whether or not Lenders shall have commenced any
foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect
to all or any portion of the Mortgaged Property. Any such
actions taken by Lenders shall be cumulative and concurrent and
may be pursued independently, singly, successively, together or
otherwise, at such time and in such order as Lenders may
determine in its sole discretion, to the fullest extent permitted
by law, without impairing or otherwise affecting the other rights
and remedies of Lenders permitted by law, equity or contract or
as set forth herein or in the other Loan Documents.
(b) In the event of the foreclosure or other action by
Lenders to enforce its remedies in connection with all or any
portion of the Mortgaged Property, Lenders shall apply all Net
Proceeds received to repay the Indebtedness in accordance with
Section 2.8, the Indebtedness shall be reduced to the extent of
such Net Proceeds and the remaining portion of the Indebtedness
shall remain outstanding and secured by the Mortgages, the
Guaranty and the other Loan Documents, it being understood and
agreed by Borrowers that Borrowers are liable for the repayment
of all the Indebtedness and that any "excess" foreclosure
proceeds are part of the cross-collateralized, cross-defaulted
security granted to Lenders pursuant to the Mortgages; provided,
however, that the Global Note shall be deemed to have been
accelerated only to the extent of the Net Proceeds actually
received by Lenders with respect to the Mortgaged Property and
applied in reduction of the Indebtedness evidenced by the Global
Note in accordance with the provisions of the Global Note, after
payment by Borrowers of all transaction costs and expenses and
costs of enforcement.
Section 7.3. Remedies Cumulative. The rights, powers
and remedies of Lenders under this Agreement shall be cumulative
and not exclusive of any other right, power or remedy which
Lenders may have against Borrowers or Guarantor pursuant to this
Agreement, the Guaranty or the other Loan Documents executed by
or with respect to Borrowers or Guarantor, or existing at law or
in equity or otherwise. Subject to applicable Legal
Requirements, Lenders' rights, powers and remedies may be pursued
singly, concurrently or otherwise, at such time and in such order
as Lenders may determine in Lenders' sole discretion. No delay
or omission to exercise any remedy, right or power accruing upon
an Event of Default shall impair any such remedy, right or power
or shall be construed as a waiver thereof, but any such remedy,
right or power may be exercised from time to time and as often as
may be deemed expedient. A waiver of any Default or Event of
Default shall not be construed to be a waiver of any subsequent
Default or Event of Default or to impair any remedy, right or
power consequent thereon. Notwithstanding any other provision of
this Agreement, Lenders reserve the right to seek a deficiency
judgment or preserve a deficiency claim, in connection with the
foreclosure of a Mortgage on any of the Mortgaged Property, to
the extent necessary to foreclose on other parts of the Mortgaged
Property.
Section 7.4. Default Administration Fee. At any time
after the occurrence of an Event of Default and the acceleration
of the Indebtedness, as reimbursement and compensation for the
additional internal expenditures, administrative expenses, fees
and other costs associated with actions to be taken in connection
with such Event of Default, and regardless of whether Agent shall
have commenced the exercise of any remedies pursuant to Section
7.2, the Default Administration Fee shall be payable by Borrowers
to Lenders upon demand; provided, that the Default Administration
Fee shall not be payable in connection with any repayment or
prepayment of the Principal Indebtedness in the event the
Borrowers shall be paying the Repayment Fee together with such
repayment or prepayment.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival. This Agreement and all
covenants, agreements, representations and warranties made herein
and in the certificates delivered pursuant hereto shall survive
the execution and delivery of this Agreement, the making by Agent
of the Loan hereunder and the execution and delivery by Borrowers
to Lenders of the Global Note, and shall continue in full force
and effect so long as any portion of the Indebtedness is
outstanding and unpaid. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party. All covenants,
promises and agreements in this Agreement contained, by or on
behalf of Borrowers or Guarantor, shall inure to the benefit of
the respective successors and assigns of Lenders. Nothing in
this Agreement or in any other Loan Document, express or implied,
shall give to any Person other than the parties and the holder of
the Global Note, the Guaranty, the Mortgages and the other Loan
Documents, and their legal representatives, successors and
assigns, any benefit or any legal or equitable right, remedy or
claim hereunder.
Section 8.2. Lenders' Discretion. Whenever pursuant
to this Agreement, Agent exercises any right given to it to
approve or disapprove, or any arrangement or term is to be
satisfactory to Agent, the decision of Agent to approve or
disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Agent
and shall be final and conclusive.
Section 8.3. Governing Law. (a) This Agreement was
negotiated in New York, and made by Lenders and accepted by
Borrowers in the State of New York, and the proceeds of the
Global Note delivered pursuant hereto were disbursed from New
York, 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
limitation, matters of construction, validity and performance),
this Agreement and the obligations arising hereunder shall be
governed by, and construed in accordance with, the laws of the
State of New York applicable to contracts made and performed in
such State and any applicable law of the United States of
America, except that at all times the provisions for the
creation, perfection and enforcement of the liens and security
interests created pursuant to the Mortgages and the other Loan
Documents shall be governed by and construed according to the law
of the State in which the applicable Mortgaged Property is
located, it being understood that, to the fullest extent
permitted by law of such States, the law of the State of New York
shall govern the validity and the enforceability of all Loan
Documents, and the Indebtedness or obligations arising hereunder
or thereunder.
(b) Any legal suit, action or proceeding against
Lenders or Borrowers arising out of or relating to this Agreement
shall be instituted in any federal or state court in New York,
New York. Borrowers hereby (i) irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they, or
any of them, may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in such a court and
any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum, and (ii) irrevocably
submit to the jurisdiction of any such court in any such suit,
action or proceeding. Borrowers do hereby designate and appoint
Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue of
the Americas, New York, New York 10104, Attention: Alan S.
Pearce, Esq. as their authorized agent to accept and acknowledge
on their behalf service of any and all process which may be
served in any such suit, action or proceeding in any federal or
state court in New York, New York, and agrees that service of
process upon said agent at said address (or at such other office
in New York, New York as may be designated by Borrower from time
to time in accordance with the terms hereof) with a copy to
Borrowers at their principal executive offices, and written
notice of said service of Borrowers mailed or delivered to
Borrowers in the manner provided herein shall be deemed in every
respect effective service of process upon Borrowers, in any such
suit, action or proceeding in the State of New York. Borrowers
(i) shall give prompt notice to Agent of any changed address of
their authorized agents hereunder, (ii) may at any time and from
time to time designate substitute authorized agents with offices
in New York, New York (which offices shall be designated as the
addresses for service of process), and (iii) shall promptly
designate such substitutes if their authorized agents cease to
have offices in New York, New York or are dissolved without
leaving successors.
Section 8.4. Modification, Waiver in Writing. No
modification, amendment, extension, discharge, termination or
waiver of any provision of this Agreement, the Global Note or any
other Loan Document, or consent to any departure by Borrowers
therefrom, shall in any event be effective unless the same shall
be in a writing signed by the party against whom enforcement is
sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given.
Except as otherwise expressly provided herein, no notice to or
demand on Borrowers shall entitle Borrowers to any other or
future notice or demand in the same, similar or other
circumstances.
Section 8.5. Delay Not a Waiver. Neither any failure
nor any delay on the part of Lenders in insisting upon strict
performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or
under the Global Note, or of any other Loan Document, or any
other instrument given as security therefor, shall operate as or
constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In
particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement,
the Global Note or any other Loan Document, Lenders shall not be
deemed to have waived any right either to require prompt payment
when due of all other amounts due under this Agreement, the
Global Note or the other Loan Documents, or to declare a default
for failure to effect prompt payment of any such other amount.
Section 8.6. Notices. Any notice, consent, approval
or request on behalf of the Borrowers given by a single Borrower
which states that it is given on behalf of all Borrowers shall
constitute action of all the Borrowers hereunder. All notices,
consents, approvals and requests required or permitted hereunder
or under any other Loan Document shall be given in writing and
shall be effective for all purposes if hand delivered (with
appropriate receipt) or sent by (a) certified or registered
United States mail, postage prepaid, return receipt requested or
(b) expedited prepaid delivery service, either commercial or
United States Postal Service, with proof of attempted delivery,
and by telecopier (with answer back acknowledged), addressed if
to Agent or initial Lender at its address set forth on the first
page hereof, Attention: MaryAnne Merola, if to Collateral Agent
at its address set forth on the first page hereof, and if to any
Borrower at its address set forth on the first page hereof, or at
such other address and Person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice
to the other parties hereto in the manner provided for in this
Section 8.6. A copy of all notices, consents, approvals and
requests directed to Agent or initial Lender shall be delivered
to Latham & Watkins, 885 Third Avenue, New York, New York 10022,
Attention: Brian Krisberg, Esq.; a copy of all notices,
consents, approvals and requests directed to Borrowers shall be
delivered to Robinson Silverman Pearce Aronsohn & Berman LLP,
1290 Avenue of the Americas, New York, New York 10104, Attention:
Jonathan Margolis, Esq., and a copy of all notices, consents,
approvals and requests directed to Collateral Agent shall be
delivered to Bank Leumi Trust Company of New York, 562 Fifth
Avenue, New York, New York 10036, Attention: Mr. Stuart Lifson.
A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or
certified mail or expedited prepaid delivery, when delivered; or
in the case of telecopy, on the Business Day the same was sent.
A party receiving a notice which does not comply with the
technical requirements for notice under this Section 8.6 may
elect to waive any deficiencies and treat the notice as having
been properly given.
SECTION 8.7. TRIAL BY JURY. EACH BORROWER, TO THE
FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY
IN ANY ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS
AGREEMENT, THE GLOBAL NOTE OR THE OTHER LOAN DOCUMENTS.
Section 8.8. Headings. The Article and
Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
Section 8.9. Assignment. No Borrower may sell, assign
or transfer any interest in the Loan Documents or any portion
thereof (including, without limitation, such Borrower's rights,
title, interests, remedies, powers and duties hereunder and
thereunder). Each Lender shall have the right to assign or
participate this Agreement and/or any of the other Loan Documents
and the obligations hereunder to any Person. In the case of an
Assignment by a Lender, (a) the assignee shall have, to the
extent of such Assignment, the same rights, benefits and
obligations as it would have if it were the original "Lender"
hereunder and (b) upon any such substitution of a Lender, a
replacement "Lender signature page" shall be executed and
attached to this Agreement and thereupon become a part of this
Agreement. Each potential assignee or participant lender shall
be required to sign a confidentiality agreement which shall
provide for protection of all proprietary and confidential
information of each Borrower and Guarantor. Such Lender shall
procure same and provide a copy to Guarantor and Borrower.
Subject to the preceding sentence, each participating lender
shall be entitled to receive all information received by Agent
under this Agreement. Borrowers shall keep confidential to the
same extent as such potential assignee or participant lender
shall have agreed in such confidentiality agreement all
information relating to such proposed Assignment or Participation
and the identity of such potential assignee or participant.
After the effectiveness of any Participation, Agent shall provide
notice to Borrowers of the identity, address and other pertinent
information pertaining to the participant lender.
Notwithstanding anything in this Agreement to the contrary, after
an Assignment by a Lender, "Lender" (prior to the Assignment)
shall continue to have the benefits of any rights or
indemnifications and shall continue to have the obligations
contained herein which such Agent had during the period such
party was "Lender" hereunder. Notwithstanding anything in this
Agreement to the contrary, Salomon Brothers Realty Corp. shall
remain as Agent for the Loan.
Section 8.10. Severability. Wherever possible, each
provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Agreement.
Section 8.11. Preferences. Lenders shall have no
obligation to marshal any assets in favor of Borrower or any
other party or against or in payment of any or all of the
obligations of Borrowers pursuant to this Agreement, the Global
Note or any other Loan Document. Lenders shall have the
continuing and exclusive right to apply or reverse and reapply
any and all payments by Borrowers to any portion of the
obligations of Borrowers hereunder. To the extent Borrowers make
a payment or payments to Lenders for Borrowers' benefit, which
payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, state or federal law, common law
or equitable cause, then, to the extent of such payment or
proceeds received, the obligations hereunder or part thereof
intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been
received by Lenders.
Section 8.12. Waiver of Notice. Borrowers shall not
be entitled to any notices of any nature whatsoever from Lenders
or Collateral Agent except with respect to matters for which this
Agreement or the other Loan Documents specifically and expressly
provide for the giving of notice by Lenders and/or Collateral
Agent to Borrowers and except with respect to matters for which a
Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice. Borrowers hereby
expressly waive the right to receive any notice from Lenders and
Collateral Agent with respect to any matter for which this
Agreement or the other Loan Documents does not specifically and
expressly provide for the giving of notice by Lenders or
Collateral Agent to Borrowers.
Section 8.13. Remedies of Borrowers. In the event
that a claim or adjudication is made that Lenders or its agents
have unreasonably delayed acting in any case where by law or
under this Agreement, the Global Note, the Mortgages or the other
Loan Documents, Lenders or such agent, as the case may be, have
an obligation to act promptly, each Borrower agrees that neither
Agent, any Lender nor its agents shall be liable for any monetary
damages, and each Borrower's sole remedies shall be limited to
commencing an action seeking injunctive relief or declaratory
judgment.
Section 8.14. Exhibits Incorporated. The information
set forth on the cover, heading and recitals hereof, and the
Exhibits attached hereto, are hereby incorporated herein as a
part of this Agreement with the same effect as if set forth in
the body hereof.
Section 8.15. Offsets, Counterclaims and Defenses.
Any assignee of Lenders' interest in and to this Agreement, the
Global Note, the Mortgages, the Guaranty and the other Loan
Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to this Agreement,
the Global Note, the Mortgages, the Guaranty and the other Loan
Documents which Borrowers and/or Guarantor may otherwise have
against any assignor of this Agreement, the Global Note, the
Mortgages, the Guaranty and the other Loan Documents, and no such
unrelated counterclaim or defense shall be interposed or asserted
by Borrowers and/or Guarantor in any action or proceeding brought
by any such assignee upon this Agreement, the Global Note, the
Mortgages, the Guaranty and other Loan Documents and any such
right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is
hereby expressly waived by Borrowers and/or Guarantor.
Section 8.16. No Joint Venture or Partnership.
Borrowers and Lenders intend that the relationship created
hereunder be solely that of borrower and lender. Nothing herein
is intended to create a joint venture, partnership, tenancy-in-
common, or joint tenancy relationship between Borrowers and
Lenders nor to grant Lenders any interest in the Mortgaged
Property other than that of mortgagee or lender.
Section 8.17. Waiver of Marshalling of Assets Defense.
To the fullest extent Borrowers may legally do so, Borrowers
waive all rights to a marshalling of the assets of Borrowers, and
others with interests in Borrowers, and of the Mortgaged
Property, or to a sale in inverse order of alienation in the
event of foreclosure of the interests hereby created, and agrees
not to assert any right under any laws pertaining to the
marshalling of assets, the sale in inverse order of alienation,
homestead exemption, the administration of estates of decedents,
or any other matters whatsoever to defeat, reduce or affect the
right of Agent under the Loan Documents to a sale of the
Mortgaged Property for the collection of the Indebtedness without
any prior or different resort for collection, or the right of
Agent to the payment of the Indebtedness out of the Net Proceeds
of the Mortgaged Property in preference to every other claimant
whatsoever.
Section 8.18. Waiver of Counterclaim. Borrowers and
Guarantor each hereby waives the right to assert a counterclaim,
other than compulsory counterclaim, in any action or proceeding
brought against it by Lenders or their agents.
Section 8.19. Conflict; Construction of Documents. In
the event of any conflict between the provisions of this
Agreement and the provisions of the Global Note, the Mortgages,
the Guaranty or any of the other Loan Documents, the provisions
of this Agreement shall prevail. The parties hereto acknowledge
that they were represented by counsel in connection with the
negotiation and drafting of the Loan Documents and that the Loan
Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.
Section 8.20. Brokers and Financial Advisors.
Borrowers, Guarantor and Lenders hereby represent that they have
dealt with no financial advisors, brokers, underwriters,
placement agents, agents or finders in connection with the
transactions contemplated by this Agreement. Borrowers,
Guarantor and Lenders hereby agree to indemnify and hold the
others and Collateral Agent harmless from and against any and all
claims, liabilities, costs and expenses of any kind in any way
relating to or arising from a claim by any Person that such
Person acted on behalf of the indemnifying party in connection
with the transactions contemplated herein. The provisions of
this Section 8.20 shall survive the expiration and termination of
this Agreement and the repayment of the Indebtedness.
Section 8.21. Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
Section 8.22. Estoppel Certificates. Borrowers and
Lenders each hereby agree at any time and from time to time upon
not less than fifteen (15) days prior written notice by the other
to execute, acknowledge and deliver to the party specified in
such notice, a statement, in writing, certifying that this
Agreement is unmodified and in full force and effect (or if there
have been modifications, that the same, as modified, is in full
force and effect and stating the modifications hereto), and
stating whether or not, to the knowledge of such certifying
party, any Default or Event of Default has occurred and is then
continuing, and, if so, specifying each such Default or Event of
Default; provided, however, that it shall be a condition
precedent to Agent's obligation to deliver the statement pursuant
to this Section 8.22, that Lenders shall have received, together
with such Borrower's request for such statement, an Officer's
Certificate stating that no Default or Event of Default exists as
of the date of such certificate (or specifying such Default or
Event of Default).
Section 8.23. Payment of Expenses. Borrowers shall
pay all Transaction Costs, which shall include, without
limitation, (a) reasonable out-of-pocket costs and expenses of
Lenders in connection with (i) the negotiation, preparation,
execution and delivery of the Loan Documents and the documents
and instruments referred to therein, (ii) the creation,
perfection or protection of Lenders' Liens in the Collateral
(including, without limitation, fees and expenses for title and
lien searches or amended or replacement Mortgages, UCC Financing
Statements or Collateral Security Instruments, title insurance
premiums and filing and recording fees, third party due diligence
expenses for the Mortgaged Property plus travel expenses,
accounting firm fees, costs of the Appraisals, Environmental
Reports (and an environmental consultant), and the Engineering
Reports), (iii) the negotiation, preparation, execution and
delivery of any amendment, waiver or consent relating to any of
the Loan Documents and (iv) the preservation of rights under and
enforcement of the Loan Documents and the documents and
instruments referred to therein, including any restructuring or
rescheduling of the Indebtedness, (b) the reasonable fees,
expenses and disbursements of counsel to Lenders in connection
with all of the foregoing, (c) all fees and expenses of
Collateral Agent and (d) Agent's reasonable out-of-pocket travel
expenses in connection with site visits contemplated in this
Agreement. Prior to retention of third parties, Lenders shall
consult with Borrowers regarding the services required, the
procurement of good faith estimates, and the third parties
selected to assure that costs will be reasonable in scope and
amount.
Section 8.24. Non-Recourse. Anything contained
herein, in the Global Note or in any other Loan Document to the
contrary notwithstanding, no recourse shall be had for the
payment of the principal or interest on the Global Note or for
any other Indebtedness hereunder or for any claim based hereon or
thereon or otherwise in respect hereof or thereof against (i) any
partner, agent, contractor, director, officer, member,
consultant, manager, stockholder, subscriber to capital stock,
incorporator, beneficiary, participant, trustee or advisor of any
Borrower, any partner or member in any Borrower, or any partner
or member therein; (ii) any trustee, officer or shareholder of
Kranzco Realty Trust, or any of their personal assets; (iii) any
legal representative, heir, estate, successor or assign of any
thereof; (iv) any corporation (or any officer, director, employee
or shareholder thereof), partnership (or any partner thereof),
individual or entity to which any ownership interest in any
Borrower shall have been transferred; (v) any purchaser of any
asset of any Borrower; or (vi) any other Person (except Borrowers
and Guarantor), for any deficiency or other sum owing with
respect to the Global Note or any other Indebtedness or arising
under this Agreement or any Loan Document. It is understood that
the Global Note and any other Indebtedness under or with respect
to this Agreement and any other Loan Document may not be enforced
against any Person described in clauses (i) through (v) above;
provided, however, that the foregoing provisions of this
paragraph shall not (i) prevent recourse to Borrowers, Guarantor,
the assets of Borrowers or Guarantor, any Mortgage, the Guaranty,
any Collateral Security Instrument or other instrument or
document which is pledged by Borrowers to Lenders pursuant to the
Loan Documents, (ii) in the event of any actual fraud,
misappropriation of funds or intentional misrepresentation, estop
Lender from instituting or prosecuting a legal action or
proceeding or otherwise making a claim against the Person or
Persons committing such actual fraud, misappropriating such
funds, or making such intentional misrepresentation, or the
recipient or beneficiary of such actual fraud, misappropriation
or intentional misrepresentation, whether or not such Person,
recipient or beneficiary, is any Person described in clauses (i)
through (iii) above for losses relating to or arising from such
actual fraud, misappropriation or intentional misrepresentation,
(iii) have any applicability whatsoever to the Pledge Agreement
or the liability of the principals thereunder, (iv) prevent
recourse to Borrowers (but not any of the Persons described in
clauses (i) through (iii) above) with respect to the breach of
any provision in this Agreement or the Environmental Indemnity
Agreement, concerning Environmental Laws, Hazardous Substances
and any indemnification of Lender with respect thereto contained
in either document, (v) prevent recourse to the Borrowers in the
event that any Borrower causes or permits a Ground Lease
Impairment to occur, and (vi) constitute a waiver, release or
discharge of any indebtedness or obligation evidenced by the
Global Note or secured by the Loan Documents, and the same shall
continue until paid or discharged in full. Notwithstanding the
foregoing, this Agreement and all other Loan Documents relating
to the Transaction which have been executed by Guarantor have
been executed by an officer or trustee of Guarantor which has
been formed as a Maryland real estate investment trust pursuant
to a Declaration of Trust of the Guarantor, dated June 17, 1992,
as amended and restated, and not individually, and none of the
trustees, officers or shareholders of the Guarantor or Borrowers
shall be bound or have any personal liability hereunder or
thereunder. Each party hereto shall look solely to the assets of
such Borrower for satisfaction of any liability of such Borrower
in respect of this Agreement and all other Loan Documents
relating to the Transaction (other than the assets of Guarantor
which shall be available for satisfaction of liability of
Guarantor in respect of the Guaranty), and shall not seek
recourse or commence an action against any of the trustees,
officers or shareholders of the Guarantor or any of their
personal assets for the performance or payment of any obligation
hereunder or thereunder. The foregoing shall also apply to any
future documents, agreements, understandings, arrangements and
transactions between the parties hereto. Nothing set forth in
the preceding two sentences shall limit the obligations of the
Borrowers and the Guarantor set forth in this Agreement and the
other Loan Documents.
Section 8.25. Confidentiality. The Lenders shall
exercise commercially reasonable efforts to keep any non-public
information delivered or made available to the Lenders pursuant
to this Agreement or the Loan Documents confidential from any
Person other than (a) Persons employed by or retained by the
Lenders who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loan and other
extensions of credit hereunder, (b) subject to Section 8.9, any
potential assignee or transferee of the Loan or participant in
the Loan, (c) any Governmental Authority or representative
thereof pursuant to Legal Requirements, or (d) in connection with
the exercise of any remedy under the Loan Documents.
ARTICLE IX
AGENT
Section 9.1. Appointment, Powers and Immunities. Each
Lender hereby irrevocably appoints and authorizes Agent to act as
its agent hereunder and under the other Loan Documents with such
powers as are specifically delegated to Agent by the terms of
this Agreement and of the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Agent
(which term as used in this sentence and in Section 9.5 and the
first sentence of Section 9.6 hereof shall include reference to
its Affiliates and its own and its Affiliates' officers,
directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this
Agreement and in the other Loan Documents, and shall not by
reason of this Agreement or any other Loan Document be a trustee
for any Lender; (b) shall not be responsible to any Lender for
any recitals, statements, representations or warranties contained
in this Agreement or in any other Loan Document, or in any
certificate or other document referred to or provided for in, or
received by any of them under, this Agreement or any other Loan
Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, any Note or any
other Loan Document or any other document referred to or provided
for herein or therein or for any failure by Borrowers or any
other Person to perform any of their obligations hereunder or
thereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other
Loan Document; and (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other
Loan Document or under any other document or instrument referred
to or provided for herein or therein or in connection herewith or
therewith, except for its own gross negligence or willful
misconduct. Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith.
Section 9.2. Reliance by Agent. Agent shall be
entitled to rely upon any certification, notice or other
communication (including, without limitation, any thereof by
telephone, telecopy, telex, telegram or cable) believed by it to
be genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other
experts selected by Agent. As to any matters not expressly
provided for by this Agreement or any other Loan Document, Agent
shall in all cases be fully protected in acting, or in refraining
from acting, hereunder or thereunder in accordance with the
instructions given by any Lender, and such instructions of such
Lender and any action taken or failure to act pursuant thereto
shall be binding on such Lender.
Section 9.3. Defaults. Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default or Event
of Default unless Agent has received written notice from a Lender
or Borrowers specifying such Default and stating that such notice
is a "Notice of Default". In the event that Agent receives such
a notice of the occurrence of a Default or Event of Default,
Agent shall give prompt notice thereof to Lenders. Agent shall
(subject to Section 9.7 hereof) take such action with respect to
such Default or Event of Default as shall be directed by Lender,
provided that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the
best interest of Lenders except to the extent that this Agreement
expressly requires that such action be taken, or not be taken,
only with the consent or upon the authorization of Lenders.
Section 9.4. Rights as a Lender. With respect to the
Loan made by it, Agent in its capacity as a Lender hereunder
shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as
Agent, and the term "Lender" shall, unless the context otherwise
indicates, include Agent in its individual capacity. Agent and
its Affiliates may (without having to account therefor to any
Lender) lend money to, make investments in and generally engage
in any kind of business with any Borrower or any of their
Affiliates as if it were not acting as Agent, and Agent and its
Affiliates may accept fees and other consideration from Borrowers
or their Affiliates for services in connection with this
Agreement or otherwise without having to account for the same to
Lenders.
Section 9.5. Indemnification. Lenders agree to
indemnify Agent (to the extent not reimbursed under Section 5.1
(J) hereof, but without limiting the obligations of Borrower
under said Section 5.1 (J)) ratably in accordance with its
respective portion of the Loan, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted
against Agent (including by any Lender) arising out of or by
reason of any investigation in or in any way relating to or
arising out of this Agreement or any other Loan Document or any
other documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby (including,
without limitation, the costs and expenses that any Borrower is
obligated to pay under Section 5.1 (J) hereof, but excluding,
unless a Default or Event of Default has occurred and is
continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such
other documents, provided that no Lender shall be liable for any
of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
Section 9.6. Non-Reliance on Agent and Other Lenders.
Each Lender agrees that it has, independently and without
reliance on Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its
own credit analysis of Borrowers and their Affiliates and
decision to enter into this Agreement and that it will,
independently and without reliance upon Agent or any other
Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis
and decisions in taking or not taking action under this Agreement
or under any other Loan Document. Agent shall not be required to
keep itself informed as to the performance or observance by
Borrowers of this Agreement or any of the other Loan Documents or
to inspect the properties or books of Borrowers or any of their
Affiliates. Except for notices, reports and other documents and
information expressly required to be furnished to any Lender by
Agent hereunder, Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of
Borrowers or any of their Affiliates that may come into the
possession of Agent or any of its Affiliates.
Section 9.7. Failure to Act. Except for action
expressly required of Agent hereunder and under the other Loan
Documents, Agent shall in all cases be fully justified in failing
or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction from Lenders of
their indemnification obligations under Section 9.5 hereof
against any and all liability and expense that may be incurred by
it by reason of taking or continuing to take any such action.
Section 9.8. Resignation or Removal of Agent. Subject
to the appointment and acceptance of a successor Agent as
provided below, Agent may resign with the consent of Borrowers
upon giving notice thereof to Lenders; provided, however, that
such resignation shall not be effective until such time as the
successor Agent is in place. Upon any such resignation, Lenders
shall have the right to appoint a successor Agent subject to the
reasonable approval of Borrowers. If no successor Agent shall
have been so appointed by Lenders and shall have accepted such
appointment within 30 days after the retiring Agent's giving of
notice of resignation and consent thereto by Borrowers, then the
retiring Agent may, on behalf of Lenders, and subject to the
reasonable approval of Borrowers, appoint a successor Agent, that
shall be a sophisticated financial institution. Upon the
acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Article IX shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was
acting as Agent.
Section 9.9. Agency Fee. Each Lender will pay to
Agent an agency fee as may be agreed upon between such Lender and
Agent. Borrowers shall not be liable for the payment of such
fee.
Section 9.10. Consents under Lender Loan Documents.
Agent may consent to any modification, supplement or waiver under
any of the Loan Documents, provided that, without the prior
consent of each Lender, Agent shall not release any Collateral or
otherwise terminate any Lien under any Loan Document providing
for collateral security, or agree to additional obligations being
secured by such collateral security (unless the Lien for such
additional obligations shall be junior to the Lien in favor of
the Obligations), except that no such consent shall be required,
and Agent is hereby authorized, to release any Lien covering
Collateral that is the subject of a disposition permitted
hereunder.
Section 9.11. Notices, Reports and Other
Communications. Agent shall provide, at its expense, copies of
each notice, report, document, correspondence or other written
communication delivered to Agent by Borrowers or any Affiliates
of Borrowers pursuant to any Loan Document, to each Lender
identified in such notice, report, document, correspondence or
other written communication or reasonably determined by Agent to
be entitled thereto or affected thereby, as soon as practicable
after Agent's receipt thereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized
representatives, all as of the day and year first above written.
AGENT:
SALOMON BROTHERS REALTY CORP. as
agent and initial lender, a New York
corporation
By:/s/ MaryAnne Merola
________________________
Name: MaryAnne Merola
Title: Authorized Agent
BORROWER:
KR BRADFORD MALL, L.P.,
a Pennsylvania limited partnership
By: KR BRADFORD MALL, INC.,
a Pennsylvania corporation, general
partner
By:/s/ Robert H. Dennis
________________________
Name: Robert H. Dennis
Title: Vice President
KR BARN, L.P.,
a Pennsylvania limited partnership
By: KR BARN, INC.,
a Pennsylvania corporation,
general partner
By:/s/ Robert H. Dennis
________________________
Name: Robert H. Dennis
Title: Vice President
KR VALLEY FORGE, L.P.,
a Pennsylvania limited partnership
By: KR VALLEY FORGE, INC.,
a Pennsylvania corporation,
general partner
By:/s/ Robert H. Dennis
________________________
Name: Robert H. Dennis
Title: Vice President
LILAC NEW YORK CORP.,
a New York corporation
KR PARKWAY PLAZA I, CORP.,
a Connecticut corporation
KR WAMPANOAG, INC.,
a Rhode Island corporation
KR BROOKHAVEN, INC.,
a Mississippi corporation
KR MORGANTON, INC.,
a North Carolina corporation
KR HARRODSBURG, INC.,
a Kentucky corporation
KRT UNION CORP.,
a Delaware corporation
KRANZCO RAYNHAM, INC.,
a Massachusetts corporation
KR MINNETONKA, INC.,
a Minnesota corporation
KR ROSEVILLE INC.,
a Minnesota corporation
KR TUCSON, INC.,
an Arizona corporation
By: /s/ Robert H. Dennis
________________________________
Name: Robert H. Dennis
Vice President
of each of the aforementioned
corporations
GUARANTOR:
KRANZCO REALTY TRUST,
a Maryland real estate investment trust
By: /s/ Robert H. Dennis
__________________________________
Name: Robert H. Dennis
Title: Vice President
<PAGE>
COLLATERAL AGENT:
Bank Leumi Trust Company of New York,
a New York corporation
(as Collateral Agent for Salomon
Brothers Realty Corp. only)
By:/s/ Stuart Lifson
_________________________________
Name: Stuart Lifson
Title: Vice President
<PAGE>
EXHIBIT A - Assignment of Contracts, Licenses,
Permits, Agreements, Warranties and
Approvals (Form attached hereto)
<PAGE>
EXHIBIT B - Global Note (Form attached hereto)
<PAGE>
EXHIBIT C - Mortgage (Deed of Trust), Assignment of
Leases and Rents, Security Agreement and
Fixture Filing (Form attached hereto)<PAGE>
EXHIBIT D - Management Agreement (Form attached hereto)
<PAGE>
EXHIBIT E - Manager's Consent and Subordination of
Management Agreement (Form attached hereto)
<PAGE>
EXHIBIT F-1 - Closing Date Opinion of Ballard Spahr
Andrews & Ingersoll (Guarantor matters)
(Form attached hereto)
<PAGE>
EXHIBIT F-2 - Closing Date Opinion of Robinson
Silverman Pearce Aronsohn & Berman LLP
(Loan Document enforceability) (Form
attached hereto)
<PAGE>
EXHIBIT G - Registered Note
NONE.
<PAGE>
EXHIBIT H - Financing Statements:
UCC-1 Financing Statements to be executed and delivered to
Lender (or its counsel) in form suitable for filing as
required in the Offices of the Secretary of State and in the
Offices of the Local Recorder (ie.: County, Town, City
Clerk, etc.), having attached thereto the collateral
descriptions substantially in the form attached hereto, with
respect to (i) Mortgage/Fixture Filings and (ii) Filings in
connection with Borrower's Accounts under the Loan
Agreement, respectively.
<PAGE>
EXHIBIT A TO UCC-1 FINANCING STATEMENT
DEBTOR:________________________________ ("DEBTOR")
SECURED PARTY: SALOMON BROTHERS REALTY CORP., a New York
corporation ("SECURED PARTY")
DATE: ___________________, 199___
This financing statement is filed pursuant to a certain
mortgage, assignment of leases and rents, security agreement and
fixture filing, dated as of the date hereof, made by Debtor in
favor of Secured Party (the "Mortgage"), covering the following
items of property:
All of Debtor's right, title and interest in and to the real
property described on Exhibit B attached hereto and made a part
hereof (the "Land"), and the buildings, structures and
improvements of every nature whatsoever now or hereafter located
thereon (including, but not limited to, all gas and electric
fixtures, radiators, heaters, docks and docking facilities,
engines and machinery, boilers, ranges, elevators and motors,
plumbing, heating and air conditioning fixtures, carpeting and
other floor coverings, water heaters, awnings and storm sashes,
and cleaning apparatus which are or shall be attached to the Land
or said buildings, structures or improvements) (the
"Improvements");
TOGETHER WITH: all right, title, interest and estate of
Debtor now owned, or hereafter acquired, in and to the following
property, rights, interest and estates (Debtor's interest in the
Land and the Improvements, together with the following property,
rights, interests and estates being hereinafter described are
collectively referred to herein as the "Mortgaged Property"):
(a) all easements, rights-of-way, strips and gores of
land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development
rights, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments and appurtenances of any
nature whatsoever, in any way belonging, relating to or
pertaining to the Land and the Improvements and the reversion and
reversions, remainder and remainders, and all land lying in the
bed of any street, road or avenue, opened or proposed, in front
of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower,
curtesy and rights of curtesy, property, possession, claim and
demand whatsoever, both at law and in equity, of Debtor of, in
and to the Land and the Improvements and every part and parcel
thereof, with the appurtenances thereto;
(b) all "equipment" as defined in the Uniform
Commercial Code, as adopted and enacted by the State or States
where any of the Mortgaged Property is located (the "Uniform
Commercial Code"), now or hereafter owned by Debtor or in which
Debtor has or shall acquire an interest, now or hereafter located
on, attached to or contained in or used or usable in connection
with the Mortgaged Property, and shall also mean and include all
building materials, construction materials, personal property
constituting furniture, fittings, appliances, apparatus,
leasehold improvements, machinery, devices, interior
improvements, appurtenances, equipment, plant, furnishings,
fixtures, computers, electronic data processing equipment,
telecommunications equipment and other fixed assets now owned or
hereafter acquired by Debtor which are used in the operation of
the business conducted at the Mortgaged Property; and all
proceeds thereof, as well as all additions to, substitutions for,
replacements of or accessions to any of the items recited as
aforesaid and all attachments, components, parts (including spare
parts) and accessories, whether installed thereon or affixed
thereto, and wherever located, now or hereafter owned by Debtor
and used or intended to be used in connection with, or with the
operation of, the Land or the Improvements, or in connection with
any construction being conducted or which may be conducted
thereon, all regardless of whether the same are located on the
Mortgaged Property or are located elsewhere (including without
limitation, in warehouses or other storage facilities or in the
possession of or on the premises of a bailee, vendor or
manufacturer) for purposes of manufacture, storage, fabrication
or transportation and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to, and
proceeds of, any of the foregoing (collectively, the
"Equipment"); provided, however, that with respect to any items
which are leased and not owned by Debtor, the Equipment shall
include the leasehold interest only of Debtor, together with any
options to purchase any of said items and any additional or
greater rights with respect to such items which Debtor may
hereafter acquire;
(c) all awards or payments, including interest
thereon, which may heretofore and hereafter be made with respect
to the Land and the Improvements, 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 rights), or for a change of grade, or for any other injury
to or decrease in the value of the Land and the Improvements;
(d) all leases, subleases, lettings, occupancy
agreements, tenancies and licenses by Debtor as landlord of the
Mortgaged Property or any part thereof now or hereafter entered
into, and all amendments, extensions, renewals and guarantees
thereof, and all security therefor (collectively, the "Leases")
and all income, rents, rent equivalents, issues, profits,
revenues (including all oil and gas or other mineral royalties
and bonuses), deposits and other benefits from the Land and the
Improvements (including, without limitation, all receivables, and
other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other
grant of the right of the use and occupancy of property or
rendering of services by Debtor or any operator or manager of the
Mortgaged Property or the commercial space located in the
Improvements or acquired from others (including, without
limitation, from the rental of any office space, retail space or
other space, halls, stores, and offices, and deposits securing
reservations of such space, exhibit or sales space of every kind,
license, lease, sublease and concession fees and rentals, health
club membership fees, food and beverage wholesale and retail
sales, service charges, vending machine sales and proceeds, if
any, from business interruption or other loss of income
insurance)) (collectively, 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 Obligations;
(e) all proceeds of and any unearned premiums on any
insurance policies covering the Mortgaged Property (including,
without limitation, the right to receive and apply the proceeds
of any insurance, judgments, or settlements made in lieu thereof,
for damage to the Mortgaged Property);
(f) the right, in the name and on behalf of Debtor, to
appear in and defend any action or proceeding brought with
respect to the Mortgaged Property and to commence any action or
proceeding to protect the interest of Secured Party in the
Mortgaged Property;
(g) all accounts (as defined in the Uniform Commercial
Code) now owned or hereafter acquired by Debtor, and arising out
of or in connection with, the operation of the Mortgaged Property
(including, without limitation, the Collection Account and the
Repair Reserve Account), and all other accounts described in the
Management Agreement (as such term is defined in the Mortgage)
and all present and future accounts receivable, inventory
accounts, contract rights, chattel paper, notes, acceptances,
insurance policies, Instruments (hereafter defined), Documents
(hereafter defined), or other rights to payment and all forms of
obligations owing at any time to Debtor thereunder, whether now
existing or hereafter created or otherwise acquired by Debtor,
and all proceeds thereof and all liens, security interests,
guaranties, remedies, privileges and other rights pertaining
thereto, and all rights and remedies of any kind forming the
subject matter of any of the foregoing (including, without
limitation, (i) all income, Rents, issues, profits, revenues,
deposits and other benefits from the Mortgaged Property, (ii) all
receivables and other obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy
of property or rendering of services by Debtor or any operator or
manager of the Mortgaged Property or other commercial space
located at the Mortgaged Property or acquired from others
(including, without limiting the generality of the foregoing,
from rental of space, halls, stores, and offices, and deposits
securing reservations of such space, exhibit or sales space of
every kind, license, lease, sublease and concession fees and
rentals, health club membership fees, food and beverage wholesale
and retail sales of merchandise, service charges, vending machine
sales and proceeds, if any, from business interruption or other
loss of income insurance), (iii) all sums of money, and all
instruments, documents and securities held in any accounts in
connection therewith, or any demand, time, savings or other
account maintained with any bank or certificate of deposit issued
by any bank with the proceeds of such account and (iv) all of the
records and books of account now or hereafter maintained by or on
behalf of Debtor in connection with the operation of the
Mortgaged Property) (collectively, the "Accounts");
(h) all proceeds (as defined in the Uniform Commercial
Code) thereof and, in any event, shall include, without
limitation, all proceeds, products, offspring, rents, profits or
receipts, in whatever form, arising from the Mortgaged Property
(including, without limitation, (i) cash, instruments and other
property received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Mortgaged Property, (ii)
the collection, sale, lease, sublease, concession, exchange,
assignment, licensing or other disposition of, or realization
upon, any item or portion of the Mortgaged Property (including,
without limitation, all claims of Debtor against third parties
for loss of, damage to, destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of
insurance in respect of, any the Mortgaged Property now existing
or hereafter arising), (iii) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Debtor from
time to time with respect to any of the Mortgaged Property, (iv)
any and all payments (in any form whatsoever) made or due and
payable to Debtor from time to time in connection with the
requisition, confiscation, condemnation, seizure or forfeiture of
all or any part of the Mortgaged Property by any Governmental
Authority (or any person acting under color of Governmental
Authority) and (v) any and all other amounts from time to time
paid or payable under or in connection with any of the Mortgaged
Property) (collectively, the "Proceeds");
(i) all agreements to which Debtor is a party or which
are assigned to debtor in the Management Agreement and which are
executed in connection with the construction, operation and
management of the Improvements located on the Mortgaged Property
(including, without limitation, the Management Agreement and the
agreements for the sale, lease or exchange of goods or other
property and/or the performance of services by it, in each case
whether now in existence or hereafter arising or acquired) as
any such agreements have been or may be from time to time
amended, supplemented or otherwise modified (collectively,
"Contracts");
(j) all "documents" as defined in the Uniform
Commercial Code or other receipts covering, evidencing or
representing goods now owned or hereafter acquired by Debtor
(collectively, "Documents");
(k) all trademark licenses, trademarks, rights in
intellectual property, trade names, service marks and copyrights
relating to the Mortgaged Property or the license to use
intellectual property such as computer software owned or licensed
by Debtor or other proprietary business information relating to
Debtor's policies, procedures, manuals and trade secrets
(collectively, "Trademarks");
(l) all "general intangibles" as defined in the
Uniform Commercial Code, now owned or hereafter acquired by
Debtor (including, without limitation, (i) all obligations or
indebtedness owing to Debtor from whatever source arising (other
than Accounts, Rents, Instruments, Inventory (as such term is
hereinafter defined), Contracts, Documents, Trademarks and
Permits (as such term is hereinafter defined)), (ii) all unearned
premiums accrued or to accrue under all insurance policies for
the Mortgaged Property obtained by Debtor, all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing
into cash or liquidated claims (including, without limitation,
proceeds of insurance, condemnation awards, and all rights of
Debtor to refunds of real estate taxes and assessments),
(iii) all royalties and license fees, (iv) all trademark
licenses, trademarks, rights in intellectual property, goodwill,
trade names, service marks, trade secrets, copyrights, permits
and licenses, together with the registrations therefor and the
goodwill appurtenant thereto, (v) all rights or claims in respect
of refunds for taxes paid and (vi) all rights in respect of any
pension plan or similar arrangement maintained for employees of
Debtor) (collectively, "General Intangibles");
(m) all (i) "instruments" as defined in the Uniform
Commercial Code, "chattel paper" as defined in the Uniform
Commercial Code, or letters of credit, evidencing, representing,
arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Collateral
(including, without limitation, promissory notes, drafts, bills
of exchange and trade acceptances) and chattel paper obtained by
Debtor in connection with the Mortgaged Property (including,
without limitation, all ledger sheets, computer records and
printouts, databases, programs, books of account and files of
Debtor relating thereto) and (ii) notes or other obligations of
indebtedness owing to Debtor from whatever source arising, in
each case now owned or hereafter acquired by Debtor
(collectively, "Instruments");
(n) all "inventory" as defined in the Uniform
Commercial Code, whether now or hereafter existing or acquired,
and which arises out of or is used in connection with, directly
or indirectly, the ownership and operation of the Mortgaged
Property, all Documents representing the same and all Proceeds
and products of the same (including, without limitation, all
goods, merchandise, raw materials, work in process and other
personal property, wherever located, now or hereafter owned or
held by Debtor for manufacture, processing, the providing of
services or sale, use or consumption in the operation of the
Mortgaged Property (including, without limitation, fuel, supplies
and similar items and all substances commingled therewith or
added thereto) and rights and claims of Debtor against anyone who
may store or acquire the same for the account of Debtor, or from
whom Debtor may purchase the same) (collectively, "Inventory");
and
(o) all licenses, permits, variances and certificates
used in connection with the ownership, operation, use or
occupancy of the Mortgaged Property (including, without
limitation, business licenses, state health department licenses,
food service licenses, liquor licenses, licenses to conduct
business and all such other permits, licenses and rights,
obtained from any Governmental Authority or private Person
concerning ownership, operation, use or occupancy of the
Mortgaged Property) (collectively, "Permits").
EXHIBIT B TO UCC-1 FINANCING STATEMENT
The "Land"
<PAGE>
EXHIBIT A TO UCC-1 FINANCING STATEMENT
DEBTOR: ________________________
("DEBTOR")
SECURED PARTY: SALOMON BROTHERS REALTY CORP., a New York
corporation ("SECURED PARTY")
DATE: __________________, 199___
I. This Financing Statement covers all of the Debtor's right,
title and interest in, to and under the following property
assigned to the Secured Party in accordance with the Loan
Agreement, dated of even date herewith, by and among, Debtor and
each of the other borrowers named on the signature page thereto,
as borrowers, Kranzco Realty Trust, as guarantor, Secured Party,
as initial Lender and Agent, and Bank Leumi, as collateral agent
(the "Loan Agreement") (all capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such
terms in the Loan Agreement), whether now owned or hereafter
acquired, now existing or hereafter arising and wherever located
(the "Collateral"):
(i) all of Debtor's right, title and interest in and
to Accounts, the Collection Account, the Deposit Account,
the Eligible Account and the Repair Reserve Account and all
Money and Permitted Investments, if any, from time to time
deposited or held in each such account;
(ii) all interest, dividends, Money, Instruments and
other property from time to time received, receivable or
otherwise payable in respect of, or in exchange for, any of
the foregoing until such time as such items are disbursed
from Accounts, the Collection Account, the Deposit Account,
the Eligible Account and the Repair Reserve Account; and
(iii) to the extent not covered by clause (i) or (ii)
above, all Proceeds of any or all of the foregoing.
II. As used in this Financing Statement, the following terms
shall have the following meanings:
"Accounts" means all accounts (as defined in the UCC), now
owned or hereafter acquired by Debtor, and arising out of or in
connection with, the operation of the Mortgaged Property and all
other accounts described in the Management Agreement and all
present and future accounts receivables, inventory accounts,
contract rights, chattel paper, notes, acceptances, insurance
policies, Instruments, Documents or other rights to payment and
all forms of obligations owing at any time to Debtor thereunder,
whether now existing or hereafter created or otherwise acquired
by or on behalf of Debtor, and all Proceeds thereof and all
liens, security interests, guaranties, remedies, privileges and
other rights pertaining thereto, and all rights and remedies of
any kind forming the subject matter of any of the foregoing.
Without limiting the generality of the foregoing, the term
"Accounts" shall include all of Debtor's right, title and
interest in and to:
(i) all income, Rents, issues, profits, revenues,
deposits and other benefits from the Mortgaged Property;
(ii) all receivables and other obligations now existing
or hereafter arising or created out of the sale, lease,
sublease, license, concession or other grant of the right of
the use and occupancy of property or rendering of services
by Debtor or any operator or manager of the Mortgaged
Property (arising out of or in connection with, directly or
indirectly, the Mortgaged Property) or other commercial
space located at the Mortgaged Property or acquired from
others (including, without limitation, from rental of space,
halls, stores, and offices, and deposits securing
reservations of such space, exhibit or sales space of every
kind, license, lease, sublease and concession fees and
rentals, health club membership fees, food and beverage
wholesale and retail sales of merchandise, service charges,
vending machine sales and proceeds, if any, from business
interruption or other loss of income insurance);
(iii) all sums of money, and all instruments, documents
and securities held in any accounts of Debtor in connection
therewith, or any demand, time, savings or other account
maintained by Debtor with any bank or certificate of deposit
issued by any bank with the proceeds of such account;
(iv) all of the records and books of account now or
hereafter maintained by or on behalf of Debtor or Manager in
connection with the operation of the Mortgaged Property; and
(v) the Collection Account and the Repair Reserve
Account.
"Collection Account" means the account established and
maintained by the Debtor pursuant to Section 2.12(a) of the Loan
Agreement.
"Deposit Account" means the account established and
maintained by the Debtor pursuant to Section 2.12(a) of the Loan
Agreement.
"Eligible Account" means a separate and identifiable account
from all other funds held by the holding institution that is:
(i) an account maintained with a federal or state chartered
depository institution or trust company whose (1) commercial
paper, short-term debt obligations or other short-term deposits
(or, in the case of a depository institution or trust company
that is the principal subsidiary of a holding company, the
commercial paper, short-term debt obligations or other short-term
deposits of such holding company) are rated by the Rating
Agency(ies) not less than "A-1" (or the equivalent), if the
deposits are to be held in the account for less than thirty (30)
days or (2) long-term unsecured debt obligations are rated at
least "AA-" (or the equivalent), if the deposits are to be held
in the account more than thirty (30) days, (ii) an account the
deposits in which are fully insured by the FDIC or (iii) a
segregated trust account maintained with the corporate trust
department of a federal or state chartered depository institution
or trust company subject to regulations regarding fiduciary funds
on deposit similar to Title 12 of the Code of Federal Regulations
Section 9.10(b) which, in either case, has corporate trust
powers, acting in its fiduciary capacity. An Eligible Account
shall not be evidenced by a certificate of deposit, passbook or
other instrument. Following a downgrade, withdrawal,
qualification or suspension of such institution's rating, each
account must promptly (and in any case within not more than
thirty (30) calendar days) be moved to a qualifying institution
or to one or more segregated trust accounts in the trust
department of such institution, if permitted.
"Instruments" means (i) all "instruments" as defined in the
UCC, "chattel paper" as defined in the UCC, or letters of credit,
evidencing, representing, arising from or existing in respect of,
relating to, securing or otherwise supporting the payment of, any
of the Collateral (including, without limitation, promissory
notes, drafts, bills of exchange and trade acceptances) and
chattel paper obtained by Debtor in connection with the Mortgaged
Property (including, without limitation, all ledger sheets,
computer records and printouts, data bases, programs, books of
account and files of such Debtor relating thereto), and (ii)
notes or other obligations of indebtedness owing to such Debtor
from whatever source arising, in each case now owned or hereafter
acquired by such Debtor.
"Money" means all moneys, cash, rights to deposit or savings
accounts or other items of legal tender obtained from or for use
in connection with the operation by Debtor of the related
Mortgaged Property.
"Mortgaged Property" means, individually and in the
aggregate, at any time, the Ground Leases, the Land, the
Improvements, the Personalty, the Leases, the Rents, the Property
Agreements, and the Equipment (to the extent the same shall be
deemed to be fixtures), and all rights, title, interests and
estates appurtenant thereto, encumbered by, and more particularly
described in, the applicable Mortgage, or Deed of Trust, as the
case may be.
"Permitted Investments" means any one or more of the
following obligations or securities acquired at a purchase price
of not greater than par:
(i) obligations of, or obligations fully guaranteed as
to payment of principal and interest by, the United States
or any agency or instrumentality thereof provided such
obligations are backed by the full faith and credit of the
United States of America;
(ii) obligations of the following United States of
America government sponsored agencies: Federal Home Loan
Mortgage Corp. (debt obligations), the Farm Credit System
(consolidated systemwide bonds and notes), the Federal Home
Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the
Student Loan Marketing Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution
Funding Corp. (debt obligations);
(iii) federal funds, unsecured certificates of
deposit, time deposits, bankers' acceptances and repurchase
agreements with maturities of not more than 365 days of any
bank, the short-term obligations of which are rated in the
highest short-term rating category by the Rating
Agency(ies);
(iv) fully Federal Deposit Insurance Corporation-
insured demand and time deposits in or certificates of
deposit of, or bankers' acceptances issued by, any bank or
trust company, savings and loan association or savings bank,
the short-term obligations of which are rated in the highest
short-term rating category by the Rating Agency(ies);
(v) debt obligations with maturities of not more than
365 days and rated by the Rating Agency(ies) in its highest
long-term unsecured rating category;
(vi) commercial paper (including both non-interest-
bearing discount obligations and interest-bearing
obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with
maturities of not more than 270 days and that is rated by
the Rating Agency(ies) in their highest short-term unsecured
debt rating;
(vii) the Federated Prime Obligation Money Market Fund
(the "Fund") so long as the Fund is rated "AAA" by the
Rating Agency(ies); and
(viii) any other demand, money market or time deposit,
demand obligation or any other obligation, security or
investment, which Secured Party shall have approved in
writing;
provided, however, that the investments described in clauses (i)
through (vi) above must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if such
investments have a variable rate of interest, such interest rate
must be tied to a single interest rate index plus a fixed spread
(if any) and must move proportionately with that index, and (C)
such investments must not be subject to liquidation prior to
their maturity; and provided, further, that, in the judgment of
Secured Party, such instrument continues to qualify as a "cash
flow investment" pursuant to Code Section 860G(a)(6) earning a
passive return in the nature of interest and that no instrument
or security shall be a Permitted Investment if such instrument or
security evidences (x) a right to receive only interest payments
or (y) the right to receive principal and interest payments
derived from an underlying investment at a yield to maturity in
excess of 120% of the yield to maturity at par of such underlying
investment.
"Rating Agencies" means at least two of Fitch Investors
Service, L.P., Moody's Investors Service, Inc., Duff & Phelps
Credit Rating Co. and Standard & Poor's Ratings Services.
"Repair Reserve Account" has the meaning provided in Section
2.13 of the Loan Agreement.
"UCC" means with respect to the Mortgaged Property, the
Uniform Commercial Code as in effect on the date hereof in the
state where the Mortgaged Property is located, as amended from
time to time; provided, that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or non-
perfection of the security interest in any item or portion of the
Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the state where the
Mortgaged Property is located, "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or
effect of perfection or non-perfection.
<PAGE>
EXHIBIT I - Lien Search Jurisdictions:
Maryland Secretary of State
Pennsylvania Secretary of State
Prothonotary of McKean County, PA
McKean County, PA
Prothonotary of Bucks County, PA
Bucks County, PA
Prothonotary of Chester County, PA
Chester County, PA
Prothonotary of Franklin County, PA
Franklin County, PA
Prothonotary of Montgomery County, PA
New York Secretary of State
Westchester County, NY
Connecticut Secretary of State
Town of Hamden, CT
Rhode Island Secretary of State
Town of East Providence
Mississippi Secretary of State
Lincoln County, MS
North Carolina Secretary of State
Burke County, NC
Kentucky Secretary of State
Mercer County
Massachusetts Secretary of State
Bristol County, MA
Town of Raynham, MA
Minnesota Secretary of State
Hennepin County, MN
Ramsey County, MN
Arizona Secretary of State
Pima County, AZ
<PAGE>
EXHIBIT J - Guaranty (Form attached hereto)
<PAGE>
EXHIBIT K - Assignment of Rents and Leases (Form attached
hereto)
<PAGE>
EXHIBIT L - Pledge Agreement (Form attached hereto)
<PAGE>
SCHEDULE 1 - Borrowers
KR BRADFORD MALL, L.P., a Pennsylvania limited partnership
KR BARN, L.P., a Pennsylvania limited partnership
KR VALLEY FORGE, L.P., a Pennsylvania limited partnership
LILAC NEW YORK CORP., a New York corporation
KR PARKWAY PLAZA I, CORP., a Connecticut corporation
KR WAMPANOAG, INC., a Rhode Island corporation
KR BROOKHAVEN, INC., a Mississippi corporation
KR MORGANTON, INC., a North Carolina corporation
KR HARRODSBURG, INC., a Kentucky corporation
KRT UNION CORP., a Delaware corporation
KRANZCO RAYNHAM, INC., a Massachusetts corporation
KR MINNETONKA, INC., a Minnesota corporation
KR ROSEVILLE INC., a Minnesota corporation
KR TUCSON, INC., an Arizona corporation
<PAGE>
SCHEDULE 2 - Appraisers
Appraisal Group International
111 Northfield Avenue
West Orange, New Jersey
<PAGE>
SCHEDULE 3 - Ground Leases
Bradford Mall, PA
Lease, dated September 24, 1979, made by and between
Lawrence Kadish, as lessor, and KR Bradford Mall, L.P., a
Pennsylvania limited partnership, by mesne assignment, as
lessee, a memorandum of which lease was recorded in the
records of the McKean County Clerk, PA on December 10, 1979
in Deed Book Volume 522, Page 821.
"Circuit City", NY
Lease, dated June, 1996, made by and between KRT Property
Holdings, Inc., a Maryland corporation, as lessor, and Lilac
New York Corporation, a New York corporation, as lessee,
recorded in the records of the Westchester County Clerk, NY
on July 29, 1996 in Liber 11485, Page 217.
Barn, PA
Lease, dated February 27, 1997, made by and between KRT
Realty Trust, a Maryland real estate investment trust, as
lessor, and KR Barn, L.P., a Pennsylvania limited
partnership, as lessee, which lease, or a memorandum of
which lease, is intended to be recorded in the records of
the Bucks County Clerk, PA.
"Parkway", CT
Lease, dated February 27, 1997, made by and between KRT
Realty Trust, a Maryland real estate investment trust, as
lessor, and KR Parkway Plaza I, Corp., a Connecticut
corporation, as lessee, which lease, or a memorandum of
which lease, is intended to be recorded in the records of
the Hamden Town Clerk, CT.
<PAGE>
SCHEDULE 4 - Rights of First Refusal, etc.
See annex hereto.
Exhibit 10.2
GLOBAL PROMISSORY NOTE
$50,000,000 February 26, 1997
New York, New York
FOR VALUE RECEIVED, EACH BORROWER identified on Annex A
attached hereto (collectively, "Borrowers"), hereby promises to
pay to SALOMON BROTHERS REALTY CORP. ("Salomon"), at its
principal office at 7 World Trade Center, 29th Floor, New York,
New York 10048, the sum of FIFTY MILLION DOLLARS ($50,000,000)
(or such portion thereof as may be outstanding from time to time)
in lawful money of the United States of America and in
immediately available funds, on the date provided in the Loan
Agreement (hereinafter defined), and to pay interest on the
unpaid Principal Indebtedness (as such term is defined in the
Loan Agreement), at such office, in like money and funds, for the
period commencing on the initial Advance Closing Date (as such
term is defined in the Loan Agreement) until such Principal
Indebtedness shall be paid in full, at the rates per annum and on
the dates provided in the Loan Agreement.
The date and amount of each Advance (as such term is defined
in the Loan Agreement) on each Advance Closing Date and the date
and amount of each payment of interest, principal and other
amounts due under the Loan Documents (as such term is defined in
the Loan Agreement), shall be recorded by Agent (as such term is
hereinafter defined) on the schedule attached hereto provided
that the failure of Agent to make any such recordation shall not
affect the obligations of the Issuer to make a payment when due
of any amount owing under the Loan Agreement or hereunder.
This Global Promissory Note is the Global Promissory Note
referred to in the Loan Agreement, dated as of the date hereof
(as modified and supplemented and in effect from time to time,
the "Loan Agreement") between Borrowers, Salomon (as initial
lender and as agent for administration of the Loan ("Agent")),
Kranzco Realty Trust, as guarantor, and Bank Leumi, as collateral
agent for Lender, and evidences the Principal Indebtedness loaned
thereunder.
The obligations under this Global Promissory Note are
recourse only to the extent and as limited by the Loan Agreement,
and the provisions of Section 8.24 of the Loan Agreement are
hereby incorporated herein by reference as if set forth herein in
their entirety.
The Loan Agreement provides for the acceleration of the
maturity of this Global Promissory Note upon the occurrence of
certain events and for prepayment of the Global Promissory Note
upon the terms and conditions specified therein.
This Global Promissory Note shall be governed by, and
construed in accordance with, the law of the State of New York.<PAGE>
KR BRADFORD
MALL, L.P.,
a Pennsylvania limited partnership
By: KR BRADFORD MALL, INC.
a Pennsylvania corporation, general partner
By:/s/ Robert H. Dennis
___________________________________
Name: Robert H. Dennis
Title: Vice President
KR BARN, L.P.,
a Pennsylvania limited partnership,
By: KR BARN, INC.,
a Pennsylvania corporation, general partner
By:/s/ Robert H. Dennis
___________________________________
Name: Robert H. Dennis
Title: Vice President
KR VALLEY FORGE, L.P.,
a Pennsylvania limited partnership,
By: KR VALLEY FORGE, INC.,
a Pennsylvania corporation, general partner
By:/s/ Robert H. Dennis
___________________________________
Name: Robert H. Dennis
Title: Vice President
LILAC NEW YORK CORP., a New York corporation
KR PARKWAY PLAZA I, CORP., a Connecticut corporation
KR WAMPANOAG, INC., a Rhode Island corporation
KR BROOKHAVEN, INC., a Mississippi corporation
KR MORGANTON, INC., a North Carolina corporation
KR HARRODSBURG, INC., a Kentucky corporation
KRT UNION CORP., a Delaware corporation
KRANZCO RAYNHAM, INC., a Massachusetts corporation
KR MINNETONKA, INC., a Minnesota corporation
KR ROSEVILLE, INC., a Minnesota corporation
KR TUCSON, INC., an Arizona corporation
By:/s/ Robert H. Dennis
_________________________________________
Name: Robert H. Dennis
Vice President of each of the aforementioned
corporations<PAGE>
SCHEDULE OF NOTES
This Global Promissory Note, together with any Registered
Note delivered in exchange for any portion of this Global
Promissory Note, evidences the aggregate principal amount of Loan
outstanding or which may be outstanding from time to time under
the Loan Agreement, subject to the payments and prepayments of
principal set forth below:
Date of Amount of Amount Paid Aggregate Unpaid Notation
Loan Advance Loan Advance or Prepaid Principal Amount Made By
<PAGE>
ANNEX A
KR BRADFORD MALL, L.P., a Pennsylvania limited partnership
KR BARN, L.P., a Pennsylvania limited partnership
LILAC NEW CORP., a New York corporation
KR PARKWAY PLAZA I CORP., a Connecticut corporation
KR VALLEY FORGE, L.P., a Pennsylvania limited partnership
KR WAMPANOAG, INC., a Rhode Island corporation
KR BROOKHAVEN, INC., a Mississippi corporation
KR MORGANTON, INC., a North Carolina corporation
KR HARRODSBURG, INC., a Kentucky corporation
KRT UNION CORP., a Delaware corporation
KRANZCO RAYNHAM, INC., a Massachusetts corporation
KR MINNETONKA, INC., a Minnesota corporation
KR ROSEVILLE, INC., a Minnesota corporation
KR TUCSON, INC., a Minnesota corporation
Exhibit 10.3
UNLIMITED GUARANTY OF PAYMENT
THIS DOCUMENT AFFECTS AND WAIVES
IMPORTANT RIGHTS OF THE PERSON SIGNING IT.
This UNLIMITED GUARANTY OF PAYMENT is made and entered into
by KRANZCO REALTY TRUST, a Maryland real estate investment trust,
whose address is 128 Fayette Street, Conshohocken, Pennsylvania
19428 ("Guarantor"), for the benefit of SALOMON BROTHERS REALTY
CORP., a New York corporation, whose address is Seven World Trade
Center, New York, New York 10048 ("Lender"). This Guaranty is
made with reference to the following facts:
A. Lender is considering making a loan or extending credit
accommodations (the "Loan") in the amount of Fifty Million and
No/100 Dollars ($50,000,000), to each of the entities identified
on Schedule 1 to the Loan Agreement (as defined below) (each a
"Borrower", and collectively "Borrowers") pursuant to the Loan
Agreement, dated as of February 26, 1997, among Borrowers, as
borrowers, Lender, as agent and initial lender, Guarantor, as
guarantor, and Bank Leumi, as Collateral Agent (the "Loan
Agreement").
B. The Loan is to be evidenced by, among other things, a
certain Global Promissory Note dated February 26, 1997, executed
by Borrowers (together with any modifications, extensions,
renewals or replacements thereof, the "Note").
C. Guarantor acknowledges that Lender has examined, among
other things, Borrowers' creditworthiness and ability to repay
its indebtedness under the Note and the other Loan Documents (as
defined in the Loan Agreement) and Guarantor's creditworthiness
and ability to perform the Obligations, as defined below.
D. Guarantor acknowledges that it will benefit if Lender
makes the Loan to Borrowers. Guarantor desires that Lender make
the Loan to Borrowers.
E. Lender would not make, and would not be obligated to
make, the Loan to Borrowers unless Guarantor executed this
Guaranty. This Guaranty is therefore delivered to Lender to
induce Lender to make the Loan.
NOW, THEREFORE, in exchange for good, adequate and valuable
consideration, the receipt of which Guarantor acknowledges,
Guarantor agrees as follows:
1. Definitions. For purposes of this Guaranty, the
following terms shall be defined as set forth below. In
addition, any capitalized term defined in the Loan Agreement but
not defined in this Guaranty shall have the same meaning in this
Guaranty as in the Loan Agreement.
1.1 "Borrowers." The term "Borrowers" shall refer to:
(a) the Borrowers as defined above, acting on their own behalf;
(b) any estate created by the commencement of an Insolvency
Proceeding affecting any Borrower; (c) any trustee, liquidator,
sequestrator or receiver of any Borrower or any Borrower's
property; and (d) any similar person duly appointed pursuant to
any law governing any Insolvency Proceeding.
1.2 "Insolvency Proceeding." An "Insolvency
Proceeding" means any case under Title 11 of the United States
Code or any successor statute or any other insolvency,
bankruptcy, reorganization, liquidation, or like proceeding,
whether brought under state, federal or foreign law.
1.3 "Legal Costs." Lender's "Legal Costs" shall mean
all reasonable costs and expenses incurred by Lender in any
Proceeding or in obtaining legal advice and assistance in
connection with any Proceeding or in connection with any default
by any Borrower under the Loan Documents or by Guarantor under
this Guaranty (including any breach of a representation or
warranty contained in this Guaranty), including but not limited
to reasonable attorneys' fees, disbursements and other charges
incurred by Lender's attorneys, court costs and expenses, and
charges for the services of paralegals, law clerks, and all other
personnel whose services are charged to Lender in connection with
Lender's receipt of legal services.
1.4 "Loan Documents." The "Loan Documents" are: (a)
the Note, this Guaranty, the Loan Agreement, and any other
document evidencing, or relating to any security for, the Loan or
this Guaranty, (b) any other documents or instruments relating to
any such documents executed by Borrowers or Guarantor, and (c)
any modifications, extensions, renewals or replacements of any of
the foregoing, whether or not consented to by Guarantor. If the
Loan Documents, as so defined, are modified pursuant to any
Insolvency Proceeding, then Lender may, at Lender's option, deem
the definition of Loan Documents to have been modified to reflect
any such modification, or to continue without regard to any such
modification.
1.5 "Obligations." The "Obligations" shall mean
Borrowers' obligations: (a) to fully and promptly pay all
principal, interest and other sums owed by Borrowers under the
Loan Documents at the times and according to the terms required
by the Loan Documents, without regard to any modification,
suspension or limitation of such terms not consented to by
Lender, such as a modification, suspension or limitation arising
in or pursuant to any Insolvency Proceeding affecting Borrowers
(even if any such modification, suspension or limitation causes
Borrowers' obligation to become discharged or unenforceable) and
(b) to pay all other reasonable sums expended by Lender or
Lender's designee or nominee acting on Lender's behalf in
exercising Lender's rights and remedies under the Loan Documents
with respect to the Loan, including Lender's Legal Costs relating
to the Loan and enforcement of remedies pursuant to the Loan
Documents.
1.6 "Proceeding." Any legal action, suit, arbitration
hearing or proceeding arising out of, or relating to the
interpretation or enforcement of, this Guaranty or the Loan
Documents, including: (a) an Insolvency Proceeding; and (b) any
proceeding in which Lender endeavors to realize upon any Security
or enforce any Loan Document(s) against any Borrower or
Guarantor.
1.7 "Security." The "Security" means any security or
collateral held by Lender or on Lender's behalf for the Note, the
Loan or this Guaranty, whether real or personal property,
including any mortgage, financing statement, security agreement,
and other security document or instrument of any kind securing
the Loan in whole or in part.
1.8 "State." The "State" means the State of New York.
2. Guaranty of Obligations. Guarantor unconditionally and
irrevocably guarantees Borrowers' prompt and complete payment of
all Obligations. Guarantor shall be personally liable for all
Obligations. Guarantor's liability under this Guaranty shall be
primary and not secondary. Guarantor's liability under this
Guaranty shall be in the full amount owed to Lender and any
designee or nominee acting on Lender's behalf, including any
interest, default interest, costs and fees (including, without
limitation, Legal Costs) that would have accrued under the Loan
Documents but for any Insolvency Proceeding affecting any
Borrower.
3. Changes in Loan Documents. Without notice to, or
consent by, Guarantor, and in Lender's sole and absolute
discretion and without prejudice to Lender or in any way limiting
or reducing Guarantor's liability under this Guaranty, Lender
may: (a) grant extensions of time, renewals or other indulgences
or modifications to any Borrower or any other party under any of
the Loan Documents, (b) change the rate of interest under the
Note, (c) change, amend or modify any Loan Documents, (d)
authorize the sale, exchange, release or subordination of any
Security, (e) accept or reject additional Security, (f) discharge
or release any party or parties liable under the Loan Documents,
(g) foreclose or otherwise realize on any Security, or attempt to
foreclose or otherwise realize on any Security, whether such
attempt is successful or unsuccessful, (h) accept or make
compositions or other arrangements or file or refrain from filing
a claim in any Insolvency Proceeding, (i) make other or
additional loans to any Borrower in such amount(s) and at such
time(s) as Lender may determine, (j) credit payments in such
manner and order of priority to principal, interest or other
obligations as Lender may determine in its discretion (to the
extent not otherwise dictated by the Loan Documents), and (k)
otherwise deal with any Borrower and any other party related to
the Loan or any Security as Lender may determine in its sole and
absolute discretion. Without limiting the generality of the
foregoing, Guarantor's liability under this Guaranty shall
continue even if Lender alters any obligations under the Loan
Documents in any respect or Lender's or Guarantor's remedies or
rights against any Borrower are in any way impaired or suspended
without Guarantor's consent. If Lender performs any of the
actions described in this paragraph, then Guarantor's liability
shall continue in full force and effect even if Lender's actions
impair, diminish or eliminate Guarantor's subrogation,
contribution or reimbursement rights (if any) against any
Borrower, or otherwise adversely affect Guarantor or expand
Guarantor's liability hereunder.
4. Nature of Guaranty. Guarantor's liability under this
Guaranty is a guaranty of payment of the Note and the Loan, and
is not a guaranty of collection or collectability. Guarantor's
liability under this Guaranty is not conditioned or contingent
upon the genuineness, validity, regularity or enforceability of
any of the Loan Documents. Guarantor's liability under this
Guaranty is a continuing, absolute, and unconditional obligation
under any and all circumstances whatsoever, without regard to the
validity, regularity or enforceability of any of the Obligations.
Guarantor acknowledges that Guarantor is fully obligated under
this Guaranty even if the Borrowers or any one of them had no
liability at the time of execution of the Loan Documents or later
cease to be liable under any Loan Document, whether pursuant to
Insolvency Proceedings or otherwise. Guarantor shall not be
entitled to claim, and irrevocably covenants not to raise or
assert, any defenses against the Obligations that would or might
be available to Borrowers, other than actual payment and
performance of the Obligations in full. Guarantor waives any
right to compel Lender to proceed first against Borrowers or any
Security before proceeding against Guarantor. Guarantor agrees
that if any of the Obligations are or become void or
unenforceable (because of inadequate consideration, lack of
capacity, Insolvency Proceedings, or for any other reason), then
Guarantor's liability under this Guaranty shall continue in full
force with respect to such Obligations as if they were and
continued to be legally enforceable. Guarantor also recognizes
and acknowledges that its liability under this Guaranty may be
more extensive in amount and more burdensome than that of
Borrowers. Guarantor waives any defenses to this Guaranty
arising or purportedly arising from the manner in which Lender
disburses the Loan to Borrowers or otherwise, or any waiver of
the terms of any Loan Document by Lender or other failure of
Lender to require full compliance with the Loan Documents.
Guarantor's liability under this Guaranty shall continue until
all sums due under the Loan Documents with respect to the Loan
have been paid in full. Guarantor's liability under this
Guaranty shall not be limited or affected in any way by any
impairment or any diminution or loss of value of any Security
whether caused by (a) hazardous substances, (b) Lender's failure
to perfect a security interest in any Security, (c) any
disability or other defense(s) of Borrowers or (d) any breach by
any Borrower of any representation or warranty contained in any
Loan Document. The liability of Guarantor hereunder shall in no
way be terminated, affected, modified, impaired or diminished by
reason of (v) any Borrower's and/or Guarantor's voluntary or
involuntary subjection to an Insolvency Proceeding, (w) sale of
all or substantially all of Guarantor's assets and liabilities,
(x) appointment of a trustee, receiver, liquidator, sequestrator
or conservator for all or any part of Guarantor's assets or (y)
the commencement of other similar Proceedings affecting Guarantor
or its assets, including, without limitation, the impairment,
limitation or modification of the liability of Guarantor in
bankruptcy, or of any remedy for the enforcement of the
Obligations, or Guarantor's liability under this Guaranty.
5. Waivers of Rights and Defenses. Guarantor waives any
right to require Lender to (a) proceed against Borrowers, (b)
proceed against or exhaust any Security, or (c) pursue any other
right or remedy for Guarantor's benefit. Guarantor waives, and
covenants and agrees that it will not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or
advantage of, any and all appraisal, valuation, stay, extension,
marshalling-of-assets or redemption laws, or right of homestead
or exemption, whether now or at any time hereafter in force, that
may delay, prevent or otherwise affect the performance by
Guarantor of its obligations under, or the enforcement by Lender
of, this Guaranty. Guarantor further covenants and agrees not to
set up or claim any defense, counterclaim, cross-claim, offset,
set-off, right of recoupment, or other objection of any kind to
any action, suit or proceeding in law, equity or otherwise, or to
any demand or claim that may be instituted or made by Lender
hereunder other than the defense of the actual timely performance
of the Obligations. Guarantor agrees that Lender may proceed
against Guarantor with respect to the Obligations without taking
any actions against any Borrower and without proceeding against
or exhausting any Security. Guarantor agrees that Lender may
unqualifiedly exercise in its sole discretion any or all rights
and remedies available to it against any Borrower without
impairing Lender's rights and remedies in enforcing this
Guaranty, under which Guarantor's liabilities shall remain
independent and unconditional. Guarantor agrees and acknowledges
that Lender's exercise of certain of such rights or remedies may
affect or eliminate Guarantor's right of subrogation or recovery
against Borrowers (if any) and that Guarantor may incur a
partially or totally nonreimbursable liability in performing
under this Guaranty. Without limiting the generality of any
other waivers in this Guaranty, Guarantor expressly waives any
statutory or other right that Guarantor might otherwise have to:
(i) limit Guarantor's liability after a nonjudicial foreclosure
sale to the difference between the Obligations and the fair
market value of the property or interests sold at such
nonjudicial foreclosure sale or to any other extent, (ii)
otherwise limit Lender's right to recover a deficiency judgment
after any foreclosure sale, or (iii) require Lender to exhaust
its Security before Lender may obtain a personal judgment for any
deficiency. Guarantor acknowledges and agrees that any
nonrecourse or exculpation provided for in any Loan Document, or
any other provision of a Loan Document limiting Lender's recourse
to specific Security or limiting Lender's right to enforce a
deficiency judgment against any Borrower, shall have absolutely
no application to Guarantor's liability under this Guaranty;
provided, however, that in no event shall any of the trustees,
officers or shareholders of Guarantor have any personal liability
hereunder. To the extent that Lender collects or receives any
sums or payments from any Borrower, Lender shall have the right,
but not the obligation, to apply such amounts first to that
portion of such Borrower's indebtedness and obligations to Lender
(if any) that is not covered by this Guaranty, regardless of the
manner in which any such payments and/or amounts are
characterized by the person making payment.
6. Additional Waivers. Guarantor waives diligence and all
demands, protests, presentments and notices of every kind or
nature, including notices of protest, dishonor, nonpayment,
acceptance of this Guaranty and the creation, renewal, extension,
modification or accrual of any of the Obligations. Guarantor
further waives the right to plead any and all statutes of
limitations as a defense to Guarantor's liability under this
Guaranty or the enforcement of this Guaranty. No failure or
delay on Lender's part in exercising any power, right or
privilege under this Guaranty shall impair or waive any such
power, right or privilege.
7. Full Knowledge. Guarantor acknowledges, represents and
warrants that Guarantor has had a full and adequate opportunity
to review the Loan Documents, the transaction contemplated by the
Loan Documents and all underlying facts relating to such
transaction. Guarantor represents and warrants that Guarantor
fully understands: (a) the remedies Lender may pursue against
Borrowers in the event of a default under the Loan Documents, (b)
the value (if any) of any Security, and (c) Borrowers' financial
condition and ability to perform under the Loan Documents.
Guarantor agrees that Lender has no duty, whether now or in the
future, to disclose to Guarantor any information pertaining to
any Borrower or any Security. If provided for in the Loan
Documents (including a later amendment to the Loan Documents),
then Guarantor acknowledges that its bankruptcy, insolvency or
other actions or events relating to Guarantor, as set forth in
the Loan Documents, may be events of default under the Loan
Documents.
8. Reimbursement and Subrogation Rights.
8.1 General Deferral of Reimbursement. From and
after an Event of Default under the Loan Documents (and during
the continuance thereof), Guarantor waives any right to be
reimbursed by Borrowers for any payment(s) made by Guarantor on
account of the Obligations, unless and until all Obligations have
been paid in full. Guarantor acknowledges that Guarantor has
received adequate consideration for execution of this Guaranty by
virtue of Lender's making the Loan (which benefits Guarantor),
and Guarantor does not require or expect, and is not entitled to,
any other right of reimbursement against Borrowers as
consideration for this Guaranty.
8.2 Deferral of Subrogation and Contribution.
Guarantor agrees it shall not exercise any right of subrogation
against Borrowers or Lender nor shall it exercise any right of
subrogation against any Security unless and until: (a) such right
of subrogation does not violate (or otherwise produce any result
adverse to Lender under) any applicable law, including any
bankruptcy or insolvency law; and (b) all amounts due under the
Loan Documents have been paid in full and all other performance
required under the Loan Documents has been rendered in full to
Lender (such deferral of Guarantor's subrogation and contribution
rights, the "Subrogation Deferral").
8.3 Effect of Invalidation. To the extent that a
court of competent jurisdiction determines that Guarantor's
Subrogation Deferral is void or voidable for any reason,
Guarantor agrees that Guarantor's rights of subrogation against
Borrowers or Lender and Guarantor's right of subrogation against
any Security shall at all times be junior and subordinate to
Lender's rights against Borrowers and to Lender's right, title
and interest in such Security.
8.4 Deferral After Commencement of Insolvency
Proceedings. Guarantor shall not file, assert or receive payment
on any claim, whether now existing or hereafter arising, against
any Borrower in the event of the commencement of an Insolvency
Proceeding by or against such Borrower.
9. Lender's Disgorgement of Payments. Upon payment of all
or any portion of the Obligations, Guarantor's obligations under
this Guaranty shall continue and remain in full force and effect
if all or any part of such payment is, pursuant to any Insolvency
Proceeding or otherwise, avoided or recovered directly or
indirectly from Lender as a preference, fraudulent transfer or
otherwise, irrespective of (a) any notice of revocation given by
Guarantor prior to such avoidance or recovery, or (b) payment in
full of the Loan. Guarantor's liability under this Guaranty
shall continue until all periods have expired within which Lender
could (on account of Insolvency Proceedings, whether or not then
pending, affecting any Borrower or any other person) be required
to return or repay any amount paid at any time on account of the
Obligations. If, in any Insolvency Proceeding affecting any
Borrower, any party seeks to require Lender to disgorge or repay
any payments previously made by such Borrower to Lender (a
"Disgorgement Motion"), then, within ten days after written
notice from Lender, Guarantor shall either agree to pay Lender an
amount equal to the amount sought to be disgorged or repaid (a
"Disgorgement Payment") or defend the Disgorgement Motion at
Guarantor's expense (including Legal Costs) on Lender's behalf,
all in a manner reasonably satisfactory to Lender, provided same
does not in Lender's judgment cause Lender to incur any cost,
expense, liability, or other detriment of any kind (including any
adverse effect on any other actions being taken by Lender in such
Borrower's Insolvency Proceeding).
10. Financial Information. Within five business days after
Lender's request made from time to time, Guarantor shall deliver
to Lender complete and current financial statements and tax
returns and such other financial information relating to
Guarantor as Lender may reasonably request and as have been made
public. Additionally, Guarantor represents and covenants as
follows:
(a) The sum of (i) the equity of the Guarantor as
reflected in the most recent annual report or quarterly report
filed with the Securities and Exchange Commission ("SEC") (any
such report, a "Financial Report"), (ii) depreciation and
amortization as reflected in such Financial Report and (iii) any
increase in equity from equity offerings of the Guarantor
consummated after the Closing Date, shall not be less than the
sum of (1) $133,000,000 (i.e., 95% of the current book net worth
of the Guarantor as of the Closing Date) and (2) any increase in
equity from equity offerings of the Guarantor consummated after
the Closing Date.
(b) The Guarantor shall not incur, nor permit any
Subsidiary to incur, any Debt if the ratio of Consolidated Income
Available for Debt Service to the Quarterly Service Charge for
the fiscal quarter most recently ended prior to the date on which
such additional Debt is to be incurred shall have been less than
1.75 to 1.00 on a pro forma basis after giving effect thereto and
to the application of the proceeds therefrom.
(c) The Guarantor shall not incur, nor permit any
Subsidiary to incur, any Debt if immediately after giving effect
to the incurrence of that additional Debt, the aggregate
principal amount of all outstanding Debt of the Guarantor and its
Subsidiaries, on a consolidated basis determined in accordance
with GAAP, is greater than 70% of the Guarantor's Market
Capitalization.
Set forth below are certain defined terms used in this
Section 10.
"Consolidated Income Available for Debt Service", for
any period, means Consolidated Net Income of the Guarantor and
its Subsidiaries (i) plus amounts which have been deducted for
(a) interest on Debt of the Guarantor and its Subsidiaries, (b)
provision for taxes of the Guarantor and its Subsidiaries based
on income, (c) amortization of debt discount, (d) depreciation
and amortization, (e) the effect of any non-cash charge resulting
from a change in accounting principles in determining
Consolidated Net Income for such period, (f) amortization of
deferred charges, (g) provisions for or realized losses on
properties and (h) extraordinary non-cash charges and (ii) less
amounts which have been included for gains on properties.
"Consolidated Net Income", for any period, means the
amount of consolidated net income (or loss) of the Guarantor and
its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.
"Debt" means any indebtedness, whether or not
contingent, in respect of (i) borrowed money evidenced by bonds,
notes, debentures or similar instruments, (ii) indebtedness
secured by any mortgage, pledge, lien, charge, encumbrance or any
security interest existing on property, (iii) the reimbursement
obligations, contingent or otherwise, in connection with any
letters of credit actually issued or amounts representing the
balance deferred and unpaid of the purchase price of any property
except any such balance that constitutes an accrued expense or
trade payable or (iv) any lease of property which would be
reflected on a consolidated balance sheet as a capitalized lease
in accordance with GAAP, in the case of items of indebtedness
under (i) through (iii) above to the extent that any such items
(other than letters of credit) would appear as a liability on a
consolidated balance sheet in accordance with GAAP, and also
includes, to the extent not otherwise included, any obligation to
be liable for, or to pay, as obligor, guarantor or otherwise
(other than for purposes of collection in the ordinary course of
business), indebtedness of another person.
"Market Capitalization", as of any date, means the sum
of (i) an amount equal to the product of (1) the outstanding
common stock of the Guarantor and (2) the current market price of
such common stock on the New York Stock Exchange, (ii) an amount
equal to the product of (a) the outstanding perpetual preferred
stock of the Guarantor and (b) the current market price of such
perpetual preferred stock and (iii) the aggregate principal
amount of Debt issued by the Guarantor and its Subsidiaries.
"Quarterly Service Charge" as of any date means the
amount which is expensed in any fiscal quarter for interest and
scheduled principal payments (but not balloon payments) on Debt.
"Subsidiary" means any entity of which the Guarantor or
one or more other Subsidiaries owns or controls, directly or
indirectly, more than 50% of the shares of Voting Stock;
provided, however, that notwithstanding the ownership of more
than 50% of the shares of Voting Stock of an entity, in the event
the Guarantor or a Subsidiary does not have the power to elect at
least a majority of the board of directors, managers or trustees
of such entity, then "Subsidiary" for purposes of the financial
statements and financial covenants shall refer only to the
portion of such entity's capitalization and results owned by the
Guarantor or such Subsidiary.
"Voting Stock" means stock having general voting power
under ordinary circumstances to elect at least a majority of the
board of directors, managers or trustees, provided that stock
that carries only the right to vote conditionally on the
happening of an event shall not be considered Voting Stock.
11. Representations and Warranties. Guarantor
acknowledges, represents and warrants as follows, and
acknowledges that Lender is relying upon the following
acknowledgements, representations and warranties by Guarantor in
making the Loan.
11.1 Incorporation; Valid Title; Liens. Guarantor is
a real estate investment trust, duly organized, validly existing
and in good standing under the laws of the State of Maryland.
Guarantor has good and marketable title to all its real property.
None of such property is subject to any lien whatsoever except as
disclosed or included as a liability in the most recent financial
statements delivered to Lender before Guarantor's execution of
this Guaranty or the title policies delivered to Lender at the
Closing.
11.2 Valid Obligation. This Guaranty constitutes a
legal, valid and binding obligation of Guarantor, enforceable in
accordance with its terms, subject to laws relating to
bankruptcy, insolvency, reorganization and creditors' rights and
to the general principles of equity.
11.3 Accuracy of Facts. To Guarantor's knowledge, the
Recitals of this Guaranty are true and correct.
11.4 Loan Documents. All Loan Documents executed by
Borrowers are fully valid, binding and enforceable against
Borrowers subject to laws relating to bankruptcy, insolvency,
reorganization and creditors' rights and to the general
principles of equity..
11.5 No Conflict. The execution, delivery and
performance of this Guaranty will not violate any provision of
any law, regulation, judgment, order, decree, determination or
award of any court, arbitrator or governmental authority, or of
any mortgage, indenture, loan or security agreement, lease,
contract or other agreement, instrument or undertaking to which
Guarantor is a party or that purports to be binding upon
Guarantor or any of Guarantor's property or assets.
11.6 No Third Party Consent Required. No consent of
any person (including, without limitation to, creditors or
stockholders or other owners of Guarantor) is required in
connection with Guarantor's execution of this Guaranty or
performance of its obligations under this Guaranty. Guarantor's
execution of, or obligations under, this Guaranty are not
contingent upon any consent, license, permit, approval or
authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental
authority, bureau or agency, whether local, state, federal or
foreign.
11.7 No Legal Action Pending. "Legal Action" means
any litigation, arbitration, investigation or administrative
proceeding of or before any court, arbitrator or governmental
authority, bureau or agency: (a) with respect to this Guaranty,
the Loan or any of the transactions contemplated by this Guaranty
or the Loan Agreement, or (b) against or affecting Guarantor's
property or assets. Guarantor represents and warrants that no
Legal Action is pending or, to the knowledge of Guarantor,
threatened, which, if determined adversely to Guarantor, would
have a Material Adverse Effect. Guarantor will promptly (and in
no event later than five (5) days after first becoming aware of
such Legal Action) furnish to Lender notice of any Legal Action
to which Guarantor may hereafter become a party.
11.8 Authority to Contract. Guarantor has full
corporate and/or trust power, authority and legal right to
execute, deliver and perform its obligations under this Guaranty.
Guarantor has taken all necessary corporate and legal action to
authorize this Guaranty.
11.9 Tax Returns. Guarantor has filed all tax returns
required to be filed by it except to the extent that any filing
deadline(s) have been extended in accordance with applicable law,
and has paid all taxes due on such returns and any assessments
made against it.
11.10 Guarantor's Financial Statements. Guarantor's
most recent financial statements, delivered to Lender prior to or
simultaneously with execution of this Guaranty, were prepared in
accordance with generally accepted accounting practices
consistently applied and correctly set forth the financial
condition (including, without limitation to, all material
obligations and liabilities) of Guarantor as at such date. Since
the date of such financial statements there has been no material
adverse change in the business, operations, assets or condition
of Guarantor.
11.11 Borrowers' Financial Condition. Guarantor is
fully aware of the financial condition of Borrowers. Guarantor
delivers this Guaranty based solely upon Guarantor's own
independent investigation and based in no part upon any
representation or statement by Lender. Guarantor is not relying
upon, nor expecting, Lender to furnish Guarantor any information
concerning the financial condition of Borrowers.
11.12 No Misstatements. No information, exhibit or
report furnished by Guarantor to Lender in connection with this
Guaranty contained as of the date thereof, or, if there is no
such date, the date of this Guaranty, any material misstatement
of fact or omitted to state a material fact or any fact necessary
to make the statements contained therein not materially
misleading.
11.13 No Counterclaims, Etc. As of the date hereof,
the Obligations are not subject to any counterclaims, cross-
claims, rights of recoupment, offsets or affirmative or other
defenses of any kind against Lender.
12. Consent to Jurisdiction. Guarantor agrees that any
Proceeding to enforce this Guaranty may be brought in any state
or federal court located in the State, as Lender may elect. By
executing this Guaranty, Guarantor irrevocably accepts and
submits to the nonexclusive personal jurisdiction of each of the
aforesaid courts, generally and unconditionally with respect to
any such Proceeding. Guarantor agrees not to assert any basis
for transferring jurisdiction of any such proceeding to another
court. Guarantor further agrees that a final judgment against
Guarantor in any Proceeding shall be conclusive evidence of
Guarantor's liability for the full amount of such judgment.
Guarantor hereby agrees that service of process against Guarantor
in any such action may be effected by any means permissible under
federal law or under the laws of the state in which such Action
is brought. Guarantor hereby agrees that insofar as is permitted
under applicable law, this consent to personal jurisdiction shall
be self-operative and no further instrument or action, other than
service of process in one of the manners specified in this
Guaranty, or as otherwise permitted by law, shall be necessary in
order to confer jurisdiction upon Guarantor.
13. Merger; No Conditions; Amendments. This Guaranty
contains the entire agreement among the parties with respect to
the matters set forth in this Guaranty. This Guaranty supersedes
all prior agreements among the parties with respect to the
matters set forth in this Guaranty. No course of prior dealings
among the parties, no usage of trade, and no parol or extrinsic
evidence of any nature shall be used to supplement, modify or
vary any terms of this Guaranty. This Guaranty is unconditional.
There are no unsatisfied conditions to the full effectiveness of
this Guaranty. No terms or provisions of this Guaranty may be
changed, waived, revoked or amended without Lender's prior
written consent. If any court of competent jurisdiction
determines that any provision of this Guaranty is unenforceable,
then all other provisions of this Guaranty shall remain fully
effective.
14. Legal Costs. In the event of any Proceeding between
any Borrower or Guarantor and Lender, including any Proceeding in
which Lender enforces or attempts to enforce this Guaranty,
Guarantor shall reimburse Lender for all Legal Costs of such
Proceeding.
15. Fundamental Changes. Guarantor shall not wind up,
liquidate, or dissolve its affairs or enter into any transaction
of merger or consolidation, or sell, lease, or otherwise dispose
of all or substantially all of its property or assets
("Transfer"), without repaying all indebtedness under the Loan in
full.
16. Further Assurances. Guarantor agrees to execute and
deliver such further documents, and perform such further acts, as
Lender may request to achieve the intent of the parties as
expressed in this Guaranty, provided in each case that any such
documentation is consistent with this Guaranty and with the Loan
Documents. Without limiting the requirements of this paragraph,
Guarantor agrees, upon Lender's request from time to time, to
deliver to Lender a certificate reconfirming the following (a
"Confirmation Certificate"): (a) the continued validity and
effectiveness of this Guaranty, (b) the application of this
Guaranty to specific Obligations of Borrowers, as identified by
Lender, (c) that any specified amendment(s) of the Loan Documents
do(es) not impair the continued validity and effectiveness of
this Guaranty, and (d) Guarantor has no defense, offset, claim,
counterclaim or other limitation on its liability under this
Guaranty in accordance with its terms. Nothing in this paragraph
shall be deemed to require Lender to request a Confirmation
Certificate as a condition to the continued effectiveness of this
Guaranty or of any waivers herein.
17. Supplemental Provisions.
17.1 Partnerships and Associations. If any Borrower
is a partnership or unincorporated association, then Guarantor's
liability shall not be impaired by changes in the name of such
entity or in its membership. If Guarantor is a partnership or
unincorporated association, then the withdrawal or removal of any
partner(s) or member(s) of any Borrower shall not diminish such
partner's or member's joint and several liability under this
Guaranty.
17.2 Status of Borrower. If this Guaranty defines
more than one person as Borrower, then any reference to Borrower
shall mean any one and all of them. All obligations of each such
Borrower to Lender of whatever nature are hereby guaranteed,
including each such Borrower's several as well as joint
obligations.
17.3 Maximum Guaranteed Amount. Notwithstanding
anything to the contrary in this Guaranty, if the obligations of
Guarantor under this Guaranty would otherwise be held or
determined (beyond further appeal) by a court of competent
jurisdiction in any Insolvency Proceeding or any other action or
proceeding involving any state corporate law or any state or
federal bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other law affecting the rights of
creditors generally to be void, invalid or unenforceable to any
extent on account of the amount of Guarantor's liability under
this Guaranty, then notwithstanding any other provision of this
Guaranty to the contrary, the amount of Guarantor's liability
under this Guaranty shall, without any further action by any
Guarantor, by Lender, or by any other person, be automatically
limited and reduced to the maximum amount that is valid and
enforceable as determined (beyond further appeal) in such action
or proceeding.
18. Miscellaneous.
18.1 Assignability. Lender may assign this Guaranty
together with any one or more of the Loan Documents, without in
any way affecting Guarantor's or Borrowers' liability. Upon
request in connection with any such assignment Guarantor shall
deliver a Confirmation Certificate to the transferee in a form
reasonably satisfactory to such transferee. This Guaranty shall
benefit Lender and its successors and assigns and shall bind
Guarantor and its heirs, executors, administrators, successors
and assigns.
18.2 Notices. All notices, requests and demands to be
made under this Guaranty shall be given in writing at the address
set forth on the first page hereof for each party by any of the
following means: (i) personal service; (ii) overnight delivery
service such as Federal Express (which delivery shall be deemed
complete if the delivery service attempts twice to deliver the
notice without success); or (iii) registered or certified, first
class mail, return receipt requested. A party's address may be
changed by notice to the other parties given in the same manner
as provided above. Any notice, request or demand shall be deemed
received upon personal service (or, in the case of "ii," upon
completion of two unsuccessful delivery attempts).
18.3 Governing Law. This Guaranty shall be enforced
and interpreted according to the laws of the State, disregarding
its rules on conflicts of laws.
19. Representation by Counsel. Guarantor acknowledges that
Guarantor has had the opportunity to review this document with an
attorney of Guarantor's choice before executing it. Guarantor
acknowledges that Guarantor has carefully read this Guaranty and
understood the meaning and effect of its terms before executing
it.
20. No Third-Party Beneficiaries. This Guaranty is
executed and delivered for the benefit of Lender and its heirs,
successors and assigns, and is not intended to benefit any third
party.
This Guaranty has been executed by the undersigned on behalf
of Guarantor in the capacity as an officer or trustee of
Guarantor which has been formed as a Maryland real estate
investment trust pursuant to a Declaration of Trust of Guarantor,
dated June 17, 1992, as amended and restated, and not
individually, and none of the trustees, officers or shareholders
of Guarantor shall be bound or have any personal liability
hereunder. Each party hereto shall look solely to the assets of
Guarantor for satisfaction of any liability of Guarantor, and
shall not seek recourse or commence an action against any of the
trustees, officers or shareholders of Guarantor or any of their
personal assets for the performance or payment of any obligation
hereunder. The foregoing shall also apply to any future
documents, agreements, understandings, arrangements and
transactions between the parties hereto. Nothing set forth in
the preceding two sentences shall limit the obligations of
Guarantor set forth in this Guaranty and the other Loan
Documents.
IN WITNESS WHEREOF, Guarantor has duly executed this
Guaranty as of the date indicated below.
GUARANTOR
KRANZCO REALTY TRUST
/s/ Robert H. Dennis
______________________________
Name: Robert H. Dennis
Title: Vice President
Date: February 26, 1997<PAGE>
Acknowledgment
STATE OF NEW YORK )
) ss
COUNTY OF NEW YORK )
On the 26th day of February, 1997, before me personally
came Robert H. Dennis to me known, who, being by me duly sworn,
did depose, acknowledge and say that he is the Vice President of
Kranzco Realty Trust, the real estate investment trust described
in and which executed the foregoing instrument; and that he
signed his name thereto by order of the trustees of said trust.
__________________________________
Notary Public
My commission expires:
_______________________
Exhibit 10.4
Sinclair Paint
EXECUTION COPY
____________________________________________________________
KR TUCSON, INC.,
Mortgagor
to
SALOMON BROTHERS REALTY CORP.,
Mortgagee
____________________________________
MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
____________________________________
Dated as of: February 26, 1997
RECORD AND RETURN TO:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Brian Krisberg, Esq.
____________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
1. Payment of Obligations and Incorporation of Covenants,
Conditions and Agreements. . . . . . . . . . . . . . 5
2. Warranty of Title. . . . . . . . . . . . . . . . . . 6
3. Insurance. . . . . . . . . . . . . . . . . . . . . . . 6
4. Payment of Taxes, etc. . . . . . . . . . . . . . . . 10
5. Condemnation. . . . . . . . . . . . . . . . . . . . . 10
6. Leases and Rents.. . . . . . . . . . . . . . . . . . . 12
7. Maintenance of Mortgaged Property. . . . . . . . . . 14
8. Transfer or Encumbrance of the Mortgaged Property. . . 14
9. Changes in the Laws Regarding Taxation. . . . . . . . 16
10. No Credits on Account of the Obligations. . . . . . . 16
11. Documentary Stamps. . . . . . . . . . . . . . . . . . 16
12. Controlling Agreement. . . . . . . . . . . . . . . . 16
13. Books and Records. . . . . . . . . . . . . . . . . . 16
14. Performance of Other Agreements. . . . . . . . . . . 17
15. Further Acts, etc. . . . . . . . . . . . . . . . . . 17
16. Recording of Mortgage, etc. . . . . . . . . . . . . . 17
17. Reporting Requirements. . . . . . . . . . . . . . . . 17
18. Events of Default. . . . . . . . . . . . . . . . . . 18
19. Late Payment Charge. . . . . . . . . . . . . . . . . 18
20. Right to Cure Defaults. . . . . . . . . . . . . . . . 18
21. Remedies.. . . . . . . . . . . . . . . . . . . . . . . 18
22. Right of Access. . . . . . . . . . . . . . . . . . . . 21
23. Reasonable Use and Occupancy.. . . . . . . . . . . . . 21
24. Security Agreement. . . . . . . . . . . . . . . . . . 22
25. Actions and Proceedings. . . . . . . . . . . . . . . 23
26. Waiver of Setoff and Counterclaim. . . . . . . . . . 23
27. Contest of Certain Claims. . . . . . . . . . . . . . 23
28. Recovery of Sums Required to Be Paid. . . . . . . . . 24
29. Marshalling, Waiver of Redemption and Other Matters. . 24
30. Hazardous Substances. . . . . . . . . . . . . . . . . 24
31. Handicapped Access.. . . . . . . . . . . . . . . . . . 24
32. Notice. . . . . . . . . . . . . . . . . . . . . . . . 25
33. Waiver of Notice. . . . . . . . . . . . . . . . . . . 25
34. Remedies of Mortgagor. . . . . . . . . . . . . . . . 25
35. Sole Discretion of Mortgagee. . . . . . . . . . . . . 25
36. Non-Waiver. . . . . . . . . . . . . . . . . . . . . . 25
37. No Oral Change. . . . . . . . . . . . . . . . . . . . 26
38. Successors and Assigns. . . . . . . . . . . . . . . . 26
39. Severability. . . . . . . . . . . . . . . . . . . . . 26
40. Headings, etc. . . . . . . . . . . . . . . . . . . . 26
41. Duplicate Originals. . . . . . . . . . . . . . . . . 26
42. Definitions. . . . . . . . . . . . . . . . . . . . . 26
43. Homestead. . . . . . . . . . . . . . . . . . . . . . 27
44. Assignments. . . . . . . . . . . . . . . . . . . . . 27
45. Waiver of Jury Trial. . . . . . . . . . . . . . . . . 27
46. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 27
47. SUBMISSION TO JURISDICTION.. . . . . . . . . . . . . . 28
48. Non-Recourse.. . . . . . . . . . . . . . . . . . . . . 28
<PAGE>
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (as the same may from time to time
be extended, renewed or modified, the "Mortgage"), made as of the
26th day of February, 1997, by KR Tucson, Inc., an Arizona
corporation ("Mortgagor"), having its principal place of business
c/o Kranzco Realty Trust, 128 Fayette Street, Conshohocken,
Pennsylvania 19428, to SALOMON BROTHERS REALTY CORP.
("Mortgagee"), having its principal place of business at Seven
World Trade Center, New York, New York 10048.
W I T N E S E T H:
To secure the payment of an indebtedness in the original
principal sum of up to FIFTY MILLION AND NO/100 DOLLARS
($50,000,000) as may be outstanding from time to time, lawful
money of the United States of America, to be paid with interest
according to a certain Loan Agreement, dated as of the date
hereof, among Mortgagor and each additional entity listed on
Schedule 1 thereto, as borrowers (collectively, the "Borrowers"),
Mortgagee, as initial lender and agent, Kranzco Realty Trust, as
guarantor, and Bank Leumi, as collateral agent (as the same may
be extended, renewed, supplemented or modified, the "Loan
Agreement"; capitalized terms used herein and not defined having
the meanings ascribed thereto in the Loan Agreement), as
evidenced by that certain Global Promissory Note executed and
delivered by the Borrowers pursuant to the Loan Agreement (as the
same may be extended, renewed, supplemented, exchanged,
substituted, replaced or modified, collectively, the "Note"; the
Loan Agreement, the Note, this Mortgage, the other Collateral
Security Instruments and any other documents executed and
delivered in connection with the Loan, collectively, the "Loan
Documents"), as security for the payment and performance of all
of the Borrowers' obligations hereunder and under the Loan
Documents (collectively, the "Obligations"), Mortgagor has
mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, warranted, pledged, assigned and
hypothecated and by these presents does hereby mortgage, give,
grant, bargain, sell, alienate, enfeoff, convey, confirm,
warrant, pledge, assign and hypothecate unto Mortgagee WITH
MORTGAGE COVENANTS, all of Mortgagor's right, title and interest
in and to the real property described in Exhibit A attached
hereto (the "Land") and the buildings, structures and
improvements of every nature whatsoever now or hereafter located
thereon (including, but not limited to, all gas and electric
fixtures, radiators, heaters, docks and docking facilities,
engines and machinery, boilers, ranges, elevators and motors,
plumbing, heating and air conditioning fixtures, carpeting and
other floor coverings, water heaters, awnings and storm sashes,
and cleaning apparatus which are or shall be attached to the Land
or said buildings, structures or improvements) (the
"Improvements");
TOGETHER WITH: all right, title, interest and estate of Mortgagor
now owned, or hereafter acquired, in and to the following
property, rights, interest and estates (Mortgagor's interest in
the Land and the Improvements, together with the following
property, rights, interests and estates being hereinafter
described are collectively referred to herein as the "Mortgaged
Property"):
(a) all easements, rights-of-way, strips and gores of land,
streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development
rights, and all estates, rights, titles, interests, privileges,
liberties, tenements, hereditaments and appurtenances of any
nature whatsoever, in any way belonging, relating to or
pertaining to the Land and the Improvements and the reversion and
reversions, remainder and remainders, and all land lying in the
bed of any street, road or avenue, opened or proposed, in front
of or adjoining the Land, to the center line thereof and all the
estates, rights, titles, interests, dower and rights of dower,
curtesy and rights of curtesy, property, possession, claim and
demand whatsoever, both at law and in equity, of Mortgagor of, in
and to the Land and the Improvements and every part and parcel
thereof, with the appurtenances thereto;
(b) all "equipment" as defined in the Uniform Commercial
Code, as adopted and enacted by the State or States where any of
the Mortgaged Property is located (the "Uniform Commercial
Code"), now or hereafter owned by Mortgagor or in which Mortgagor
has or shall acquire an interest, now or hereafter located on,
attached to or contained in or used or usable in connection with
the Mortgaged Property, and shall also mean and include all
building materials, construction materials, personal property
constituting furniture, fittings, appliances, apparatus,
leasehold improvements, machinery, devices, interior
improvements, appurtenances, equipment, plant, furnishings,
fixtures, computers, electronic data processing equipment,
telecommunications equipment and other fixed assets now owned or
hereafter acquired by Mortgagor which are used in the operation
of the business conducted at the Mortgaged Property; and all
proceeds thereof, as well as all additions to, substitutions for,
replacements of or accessions to any of the items recited as
aforesaid and all attachments, components, parts (including spare
parts) and accessories, whether installed thereon or affixed
thereto, and wherever located, now or hereafter owned by
Mortgagor and used or intended to be used in connection with, or
with the operation of, the Land or the Improvements, or in
connection with any construction being conducted or which may be
conducted thereon, all regardless of whether the same are located
on the Mortgaged Property or are located elsewhere (including
without limitation, in warehouses or other storage facilities or
in the possession of or on the premises of a bailee, vendor or
manufacturer) for purposes of manufacture, storage, fabrication
or transportation and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to, and
proceeds of, any of the foregoing (collectively, the
"Equipment"); provided, however, that with respect to any items
which are leased and not owned by Mortgagor, the Equipment shall
include the leasehold interest only of Mortgagor, together with
any options to purchase any of said items and any additional or
greater rights with respect to such items which Mortgagor may
hereafter acquire;
(c) all awards or payments, including interest thereon, which
may heretofore and hereafter be made with respect to the Land and
the Improvements, 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 rights), or
for a change of grade, or for any other injury to or decrease in
the value of the Land and the Improvements;
(d) all leases, subleases, lettings, occupancy agreements,
tenancies and licenses by Mortgagor as landlord of the Mortgaged
Property or any part thereof now or hereafter entered into, and
all amendments, extensions, renewals and guarantees thereof, and
all security therefor (collectively, the "Leases") and all
income, rents, rent equivalents, issues, profits, revenues
(including all oil and gas or other mineral royalties and
bonuses), deposits and other benefits from the Land and the
Improvements (including, without limitation, all receivables, and
other obligations now existing or hereafter arising or created
out of the sale, lease, sublease, license, concession or other
grant of the right of the use and occupancy of property or
rendering of services by Mortgagor or any operator or manager of
the Mortgaged Property or the commercial space located in the
Improvements or acquired from others (including, without
limitation, from the rental of any office space, retail space or
other space, halls, stores, and offices, and deposits securing
reservations of such space, exhibit or sales space of every kind,
license, lease, sublease and concession fees and rentals, health
club membership fees, food and beverage wholesale and retail
sales, service charges, vending machine sales and proceeds, if
any, from business interruption or other loss of income
insurance)) (collectively, 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 Obligations;
(e) all proceeds of and any unearned premiums on any
insurance policies covering the Mortgaged Property (including,
without limitation, the right to receive and apply the proceeds
of any insurance, judgments, or settlements made in lieu thereof,
for damage to the Mortgaged Property);
(f) the right, in the name and on behalf of Mortgagor, to
appear in and defend any action or proceeding brought with
respect to the Mortgaged Property and to commence any action or
proceeding to protect the interest of Mortgagee in the Mortgaged
Property;
(g) all accounts (as defined in the Uniform Commercial Code)
now owned or hereafter acquired by Mortgagor, and arising out of
or in connection with, the operation of the Mortgaged Property
(including, without limitation, the Collection Account and the
Repair Reserve Account), and all other accounts described in the
Management Agreement and all present and future accounts
receivable, inventory accounts, contract rights, chattel paper,
notes, acceptances, insurance policies, Instruments (hereafter
defined), Documents (hereafter defined), or other rights to
payment and all forms of obligations owing at any time to
Mortgagor thereunder, whether now existing or hereafter created
or otherwise acquired by Mortgagor, and all proceeds thereof and
all liens, security interests, guaranties, remedies, privileges
and other rights pertaining thereto, and all rights and remedies
of any kind forming the subject matter of any of the foregoing
(including, without limitation, (i) all income, Rents, issues,
profits, revenues, deposits and other benefits from the Mortgaged
Property, (ii) all receivables and other obligations now existing
or hereafter arising or created out of the sale, lease, sublease,
license, concession or other grant of the right of the use and
occupancy of property or rendering of services by Mortgagor or
any operator or manager of the Mortgaged Property or other
commercial space located at the Mortgaged Property or acquired
from others (including, without limiting the generality of the
foregoing, from rental of space, halls, stores, and offices, and
deposits securing reservations of such space, exhibit or sales
space of every kind, license, lease, sublease and concession fees
and rentals, health club membership fees, food and beverage
wholesale and retail sales of merchandise, service charges,
vending machine sales and proceeds, if any, from business
interruption or other loss of income insurance), (iii) all sums
of money, and all instruments, documents and securities held in
any accounts in connection therewith, or any demand, time,
savings or other account maintained with any bank or certificate
of deposit issued by any bank with the proceeds of such account
and (iv) all of the records and books of account now or hereafter
maintained by or on behalf of Mortgagor in connection with the
operation of the Mortgaged Property) (collectively, the
"Accounts");
(h) all proceeds (as defined in the Uniform Commercial Code)
thereof and, in any event, shall include, without limitation, all
proceeds, products, offspring, rents, profits or receipts, in
whatever form, arising from the Mortgaged Property (including,
without limitation, (i) cash, instruments and other property
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Mortgaged Property, (ii) the
collection, sale, lease, sublease, concession, exchange,
assignment, licensing or other disposition of, or realization
upon, any item or portion of the Mortgaged Property (including,
without limitation, all claims of Mortgagor against third parties
for loss of, damage to, destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of
insurance in respect of, any the Mortgaged Property now existing
or hereafter arising), (iii) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to Mortgagor
from time to time with respect to any of the Mortgaged Property,
(iv) any and all payments (in any form whatsoever) made or due
and payable to Mortgagor from time to time in connection with the
requisition, confiscation, condemnation, seizure or forfeiture of
all or any part of the Mortgaged Property by any Governmental
Authority (or any person acting under color of Governmental
Authority) and (v) any and all other amounts from time to time
paid or payable under or in connection with any of the Mortgaged
Property) (collectively, the "Proceeds");
(i) all agreements to which Mortgagor is a party or which are
assigned to Mortgagor in the Management Agreement and which are
executed in connection with the construction, operation and
management of the Improvements located on the Mortgaged Property
(including, without limitation, the Management Agreement and the
agreements for the sale, lease or exchange of goods or other
property and/or the performance of services by it, in each case
whether now in existence or hereafter arising or acquired) as
any such agreements have been or may be from time to time
amended, supplemented or otherwise modified (collectively,
"Contracts");
(j) all "documents" as defined in the Uniform Commercial Code
or other receipts covering, evidencing or representing goods now
owned or hereafter acquired by Mortgagor (collectively,
"Documents");
(k) all trademark licenses, trademarks, rights in
intellectual property, trade names, service marks and copyrights
relating to the Mortgaged Property or the license to use
intellectual property such as computer software owned or licensed
by Mortgagor or other proprietary business information relating
to Mortgagor's policies, procedures, manuals and trade secrets
(collectively, "Trademarks");
(l) all "general intangibles" as defined in the Uniform
Commercial Code, now owned or hereafter acquired by Mortgagor
(including, without limitation, (i) all obligations or
indebtedness owing to Mortgagor from whatever source arising
(other than Accounts, Rents, Instruments, Inventory, Contracts,
Documents, Trademarks and Permits), (ii) all unearned premiums
accrued or to accrue under all insurance policies for the
Mortgaged Property obtained by Mortgagor, all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing
into cash or liquidated claims (including, without limitation,
proceeds of insurance, condemnation awards, and all rights of
Mortgagor to refunds of real estate taxes and assessments),
(iii) all royalties and license fees, (iv) all trademark
licenses, trademarks, rights in intellectual property, goodwill,
trade names, service marks, trade secrets, copyrights, permits
and licenses, together with the registrations therefor and the
goodwill appurtenant thereto, (v) all rights or claims in respect
of refunds for taxes paid and (vi) all rights in respect of any
pension plan or similar arrangement maintained for employees of
Mortgagor) (collectively, "General Intangibles");
(m) all (i) "instruments" as defined in the Uniform
Commercial Code, "chattel paper" as defined in the Uniform
Commercial Code, or letters of credit, evidencing, representing,
arising from or existing in respect of, relating to, securing or
otherwise supporting the payment of, any of the Collateral
(including, without limitation, promissory notes, drafts, bills
of exchange and trade acceptances) and chattel paper obtained by
Mortgagor in connection with the Mortgaged Property (including,
without limitation, all ledger sheets, computer records and
printouts, databases, programs, books of account and files of
Mortgagor relating thereto) and (ii) notes or other obligations
of indebtedness owing to Mortgagor from whatever source arising,
in each case now owned or hereafter acquired by Mortgagor
(collectively, "Instruments");
(n) all "inventory" as defined in the Uniform Commercial
Code, whether now or hereafter existing or acquired, and which
arises out of or is used in connection with, directly or
indirectly, the ownership and operation of the Mortgaged
Property, all Documents representing the same and all Proceeds
and products of the same (including, without limitation, all
goods, merchandise, raw materials, work in process and other
personal property, wherever located, now or hereafter owned or
held by Mortgagor for manufacture, processing, the providing of
services or sale, use or consumption in the operation of the
Mortgaged Property (including, without limitation, fuel, supplies
and similar items and all substances commingled therewith or
added thereto) and rights and claims of Mortgagor against anyone
who may store or acquire the same for the account of Mortgagor,
or from whom Mortgagor may purchase the same) (collectively,
"Inventory"); and
(o) all licenses, permits, variances and certificates used in
connection with the ownership, operation, use or occupancy of the
Mortgaged Property (including, without limitation, business
licenses, state health department licenses, food service
licenses, liquor licenses, licenses to conduct business and all
such other permits, licenses and rights, obtained from any
Governmental Authority or private Person concerning ownership,
operation, use or occupancy of the Mortgaged Property)
(collectively, "Permits").
TO HAVE AND TO HOLD the above granted and described Mortgaged
Property unto and to the use and benefit of Mortgagee, and its
successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express
condition that, if Mortgagor shall pay to Mortgagee the
Obligations at the time and in the manner provided in the Loan
Agreement and this Mortgage and shall abide by and comply with
each and every covenant and condition set forth herein and in the
other Loan Documents in a timely manner, these presents and the
estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants
and agrees with Mortgagee as follows:
1. Payment of Obligations and Incorporation of Covenants,
Conditions and Agreements. Mortgagor will pay the Obligations at
the time and in the manner provided in the Loan Documents and in
this Mortgage. All the covenants, conditions and agreements of
Mortgagee contained in the Loan Documents are hereby made a part
of this Mortgage to the same extent and with the same force as if
fully set forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor has
good, marketable and insurable fee simple title to the Land and
Improvements and has the full power, authority and right to
execute, deliver and perform its obligations under this Mortgage
and to encumber, mortgage, give, grant, bargain, sell, alienate,
enfeoff, convey, confirm, warrant, pledge, assign and hypothecate
the same and that Mortgagor possesses an unencumbered fee estate
in the Land and the Improvements and that it owns the Mortgaged
Property free and clear of all liens, encumbrances and charges
whatsoever except for those exceptions shown on Schedule B to the
Title Insurance Policy insuring the lien of this Mortgage and
that this Mortgage is and will remain a valid and enforceable
first lien on and security interest in the Mortgaged Property,
subject only to the Permitted Encumbrances. Mortgagor shall
forever warrant, defend and preserve such title and the validity
and priority of the lien of this Mortgage and shall forever
warrant and defend the same to Mortgagee against the claims of
all persons whomsoever (except with respect to holders [or
beneficiaries] of a Permitted Encumbrance).
3. Insurance.
(a) Mortgagor, at its sole cost and expense, will keep the
Improvements and Equipment insured during the entire term of this
Mortgage with the coverage and in the amounts required hereunder
or under the Loan Agreement for the mutual benefit of Mortgagor
and Mortgagee against loss or damage by fire and against loss or
damage by other risks and hazards covered by a standard extended
coverage insurance policy (including, without limitation, riot
and civil commotion, vandalism, malicious mischief, burglary and
theft on the "Special Form" (formerly an "All Risk" form). Such
insurance shall be in an amount (i) equal to at least the then
full replacement cost of the Improvements and Equipment
(exclusive of the cost of foundations and footings), without
deduction for physical depreciation, and (ii) such that the
insurer would not deem Mortgagor a co-insurer under said
policies. The policies of insurance carried in accordance with
this paragraph shall be paid annually in advance and shall
contain the "Replacement Cost Endorsement" with a waiver of
depreciation.
(b) Mortgagor, at its sole cost and expense, for the mutual
benefit of Mortgagor and Mortgagee, shall also obtain and
maintain or cause to be obtained and maintained during the entire
term of this Mortgage the following policies of insurance:
(i) Flood insurance if any part of the Mortgaged
Property is located in an area identified by the Federal
Emergency Management Agency as an area having special flood
hazards and in which flood insurance has been made available
under the National Flood Insurance Act of 1968 (and any amendment
or successor act thereto) in an amount at least equal to the
maximum limit of coverage available with respect to the
Improvements and Equipment under said Act.
(ii) Comprehensive public liability insurance, including
broad form property damage, blanket contractual and personal
injuries (including death resulting therefrom) coverages and
containing minimum limits per occurrence of Two Million Dollars
($2,000,000).
(iii) Business interruption insurance (including rental
value) in an annual aggregate amount equal to the estimated gross
revenues from the Leases of the Mortgaged Property, including,
without limitation, the loss of all rents and additional rents
payable by all of the lessees under the Leases (whether or not
such Leases are terminable in the event of a fire or casualty),
such insurance to cover losses for a period of at least one year
after the date of the fire or casualty in question. The amount
of such insurance shall be increased from time to time during the
term of this Mortgage as and when the gross revenues from the
Leases of the Mortgaged Property increase, including, without
limitation, increases from new Leases and renewal Leases entered
into in accordance with the terms of this Mortgage, to reflect
all increased rent and increased additional rent payable by all
of the lessees under such renewal Leases and all rent and
additional rent payable by all of the lessees under such new
Leases.
(iv) Insurance against loss or damage from (x) leakage
of sprinkler systems and (y) explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter
installed in the Improvements (without exclusion for explosions),
in an amount (i) equal to at least the then full replacement cost
of the Improvements and Equipment (exclusive of the cost of
foundations and footings), without deduction for physical
depreciation, and (ii) such that the insurer would not deem
Mortgagor a co-insurer under said policies or such other amount
reasonably required by Mortgagee.
(v) Worker's compensation insurance coverage in amounts
not less than the statutory minimums for all persons employed by
Mortgagor or its tenants on the Mortgaged Property. Such
worker's compensation insurance shall comply with all
requirements of applicable local, state and federal law.
Mortgagor shall also maintain or cause to be maintained
"Employers Liability" insurance in amounts not less than required
by statute, except as may be unrestricted by law; and
(vi) Such other insurance as may from time to time be
reasonably required by Mortgagee in order to protect its
interests.
(c) All policies of insurance (the "Policies") required
pursuant to this Section 3 (i) shall be issued by an insurer
which has a claims paying ability rating of not less than "A" by
Standard & Poor's Corporation plus an equivalent rating as
established by one other nationally recognized statistical rating
organization satisfactory to Mortgagee or A:V or better as to
claims paying ability by AM Best, (ii) shall name Mortgagee as an
additional insured and contain a standard noncontributory
mortgagee clause naming Mortgagee (and/or such other party as may
be designated by Mortgagee) as the party to which all payments
made by such insurance company shall be paid, (iii) shall be
maintained throughout the term of this Mortgage without cost to
Mortgagee, (iv) shall contain such provisions as Mortgagee deems
reasonably necessary or desirable to protect its interest
(including, without limitation, endorsements providing that
neither Mortgagor, Mortgagee nor any other party shall be a
co-insurer under said Policies and that Mortgagee shall receive
at least thirty (30) days prior written notice of any
modification, reduction or cancellation), (v) shall contain a
waiver of subrogation against Mortgagee and (vi) shall be
reasonably satisfactory in form and substance to Mortgagee and
reasonably approved by Mortgagee as to amounts, form, risk
coverage, deductibles, loss payees and insureds. Mortgagor shall
pay the premiums for such Policies as the same become due and
payable. Copies of said Policies, certified as true and correct
by Mortgagor, or insurance certificates thereof, shall be
delivered to Mortgagee. Not later than fifteen (15) days prior
to the expiration date of each of the Policies, Mortgagor will
deliver to Mortgagee satisfactory evidence of the renewal of each
Policy. The insurance coverage required under Section 3(b) may
be effected under a blanket policy or policies covering the
Mortgaged Property and other property and assets not constituting
a part of the Mortgaged Property; provided that any such blanket
policy shall specify, except in the case of general liability
insurance, the portion of the total coverage of such policy that
is allocated exclusively to the Mortgaged Property, and any
sublimits in such blanket policy applicable to the Mortgaged
Property, which amounts shall not be less than the amounts
required pursuant to Section 3(b) and which shall in any case
comply in all other respects with the requirements of this
Section 3.
(d) If the Mortgaged Property shall be damaged or destroyed,
in whole or in part, by fire or other casualty, Mortgagor shall
give prompt notice thereof to Mortgagee.
(i) In case of loss covered by Policies, Mortgagee may
either (A) jointly with Mortgagor settle and adjust any claim
(unless at the time of the settlement of such claim a monetary
Event of Default has occurred, in which event Mortgagee may
settle and adjust such claim without the consent of Mortgagor) or
(B) allow Mortgagor to agree with the insurance company or
companies on the amount to be paid upon the loss; provided, that
Mortgagor may adjust losses aggregating not in excess of ten
percent (10%) of the Allocated Loan Amount but not in excess of
$500,000 if such adjustment is carried out in a competent and
timely manner, and provided that in any case Mortgagee shall and
is hereby authorized to collect and receipt for any such
insurance proceeds. The reasonable expenses incurred by
Mortgagee in the adjustment and collection of insurance proceeds
shall become part of the Obligations and be secured hereby and
shall be reimbursed by Mortgagor to Mortgagee upon demand
therefor.
(ii) In the event of any insured damage to or
destruction of the Mortgaged Property or any part thereof (herein
called an "Insured Casualty") (i) where the aggregate amount of
the loss, as reasonably determined by an independent insurance
adjuster, is less than ten percent (10%) of the Allocated Loan
Amount but not in excess of $500,000 (the "Restoration
Threshold", and if, in the reasonable judgment of Mortgagee, the
Mortgaged Property can be restored within six (6) months of
settlement of the claim to an economic unit not less valuable
(including an assessment of the impact of the termination of any
Leases due to such Insured Casualty) and not less useful than the
same was prior to the Insured Casualty, and after such
restoration will adequately secure the Obligations, (ii) if the
loss exceeds the Restoration Threshold but, after giving effect
to the damage or destruction, Mortgagor shall be in compliance
with the Debt Service Coverage Test and the Property Release
Test, or (iii) if Mortgagee otherwise elects to allow Mortgagor
to restore the Mortgaged Property, then, in any of such events,
if no Event of Default (as hereinafter defined) shall have
occurred and be then continuing, the proceeds of insurance (after
reimbursement of any reasonable expenses incurred by Mortgagee in
connection with the collection of any applicable insurance
proceeds) shall be made available to reimburse Mortgagor or to
pay for the cost of restoring, repairing, replacing or rebuilding
the Mortgaged Property or part thereof subject to the Insured
Casualty, as provided for below; and Mortgagor hereby covenants
and agrees forthwith to commence and diligently to prosecute such
restoring, repairing, replacing or rebuilding; provided always,
that Mortgagor shall pay all costs (and if required by Mortgagee,
Mortgagor shall deposit the total thereof with Mortgagee in
advance) of such restoring, repairing, replacing or rebuilding in
excess of the net proceeds of insurance made available pursuant
to the terms hereof (the "Deficient Amount").
(iii) Except as provided above, the proceeds of
insurance collected upon any Insured Casualty shall be held in an
Eligible Account by Mortgagee and shall, at the option of
Mortgagee in its sole discretion, be applied to the payment of
the Obligations as provided in Section 2.12(f) of the Loan
Agreement (provided that any such prepayment shall be without
Repayment Fee or prepayment penalty) or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or
rebuilding the Mortgaged Property or part thereof subject to the
Insured Casualty, in the manner set forth below.
(iv) In the event that proceeds of insurance (after
reimbursement of any reasonable expenses incurred by Mortgagee in
connection with the collection of any applicable insurance
proceeds), if any, shall be made available to Mortgagor for the
restoring, repairing, replacing or rebuilding of the Mortgaged
Property, Mortgagor hereby covenants to restore, repair, replace
or rebuild the same to be of at least equal value and of
substantially the same character as prior to such damage or
destruction, all to be effected in accordance with applicable law
and plans and specifications approved in advance by Mortgagee,
such approval not to be unreasonably withheld or delayed.
Mortgagor shall pay all costs (and if required by Mortgagee,
Mortgagor shall deposit the total thereof with Mortgagee in
advance) of such restoring, repairing, replacing or rebuilding in
excess of the net proceeds of insurance made available pursuant
to the terms hereof.
(v) In the event Mortgagor is entitled to use of or
reimbursement out of insurance proceeds held by Mortgagee, such
proceeds shall be disbursed from time to time upon Mortgagee (or
at Mortgagee's election, the Collateral Agent) being furnished
with (A) evidence reasonably satisfactory to it of the estimated
cost of completion of the restoration, repair, replacement and
rebuilding, (B) funds, or, at Mortgagee's option, assurances
reasonably satisfactory to Mortgagee that such funds are
available, sufficient in addition to the proceeds of insurance to
complete the proposed restoration, repair, replacement and
rebuilding, and (C) such architect's certificates, waivers of
lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of
cost, payment and performance as Mortgagee may reasonably require
and approve; and Mortgagee may, in any event, require that all
plans and specifications for such restoration, repair,
replacement and rebuilding be submitted to and approved by
Mortgagee prior to commencement of work such approval not to be
unreasonably withheld or delayed. All proceeds of rental or
business interruption insurance shall be deposited into the
Collection Account in accordance with Section 2.12(a) of the Loan
Agreement. Mortgagee may retain a construction consultant to
inspect such work and review Mortgagor's request for payments and
Mortgagor shall, on demand by Mortgagee, reimburse Mortgagee for
the reasonable fees and disbursements of such consultant. No
payment made prior to the final completion of the restoration,
repair, replacement and rebuilding shall exceed ninety percent
(90%) of the value of the work performed from time to time; funds
other than proceeds of insurance shall be disbursed prior to
disbursement of such proceeds; and at all times, the undisbursed
balance of such proceeds remaining in the hands of Mortgagee,
together with funds deposited for that purpose or irrevocably
committed to the repayment of Mortgagee by or on behalf of
Mortgagor for that purpose, shall be at least sufficient in the
reasonable judgment of Mortgagee to pay for the cost of
completion of the restoration, repair, replacement or rebuilding,
free and clear of all liens or claims for lien. Any surplus
which may remain out of insurance proceeds held by Mortgagee
after payment of such costs of restoration, repair, replacement
or rebuilding shall be paid to Mortgagor so long as no Event of
Default has occurred and is continuing.
(e) Mortgagor shall not carry separate insurance, concurrent
in kind or form or contributing in the event of loss, with any
insurance required under this Mortgage; provided, however, that
notwithstanding the foregoing, Mortgagor may carry insurance not
required under this Mortgage if any such insurance affecting the
Mortgaged Property shall be for the mutual benefit of Mortgagor
and Mortgagee, as their respective interests may appear, and
shall be subject to all other provisions of this paragraph.
4. Payment of Taxes, etc. Subject to the provisions of
Section 27 hereof and the applicable provisions of the Loan
Agreement, Mortgagor shall pay all Impositions (including,
without limitation, all taxes, assessments, water rates and sewer
rents, now or hereafter levied or assessed or imposed against the
Mortgaged Property or any part thereof and all ground rents,
maintenance charges, other governmental impositions and other
charges (including, without limitation, vault charges and license
fees for the use of vaults, chutes and similar areas adjoining
the Land), now or hereafter levied or assessed or imposed against
the Mortgaged Property or any part thereof) (the "Other
Charges"), as the same become due and payable. Subject to the
terms of the Loan Agreement, Mortgagor will deliver to Mortgagee
evidence satisfactory to Mortgagee that the Impositions and Other
Charges have been so paid or are not then delinquent no later
than thirty (30) days following the date on which the Impositions
and/or Other Charges would otherwise be delinquent if not paid.
Mortgagor shall not suffer and shall promptly cause to be paid
and discharged any lien or charge whatsoever (other than
Permitted Encumbrances) which may be or become a lien or charge
against the Mortgaged Property, and shall promptly pay for, or
cause to be paid, all utility services provided to the Mortgaged
Property.
5. Condemnation.
(a) Mortgagor shall promptly give Mortgagee written notice of
the actual or threatened commencement of any proceeding for a
Taking and shall deliver to Mortgagee copies of any and all
papers served in connection with such proceedings. Mortgagee is
hereby irrevocably appointed as Mortgagor's attorney-in-fact,
coupled with an interest, with exclusive power to collect,
receive and retain any Condemnation Proceeds for said Taking.
With respect to any compromise or settlement in connection with
such proceeding, Mortgagee will jointly with Mortgagor compromise
and reach settlement (unless at the time of such Taking a
monetary Event of Default has occurred, in which event Mortgagee
may compromise and reach settlement without the consent of
Mortgagor). Notwithstanding the foregoing provisions of this
Section 5(a), Mortgagor is authorized to negotiate, compromise
and settle, without participation by Mortgagee, Condemnation
Awards of up to 10% of the Allocated Loan Amount but not in
excess of $500,000 in connection with any Taking.
Notwithstanding any Taking, Mortgagor shall continue to pay the
Obligations at the time and in the manner provided for in the
Note, in this Mortgage and the other Loan Documents and the
Obligations shall not be reduced until any Condemnation Proceeds
therefor shall have been actually received after expenses of
collection and applied by Mortgagee to the discharge of the
Obligations. Mortgagee shall not be limited to the interest paid
on the Condemnation Proceeds by the condemning authority, but
shall be entitled to receive out of the Condemnation Proceeds
interest at the rate or rates provided in the Loan Documents.
(b) With respect to a total Taking, i.e., other than a Taking
in part for which the provisions of subparagraph (c) below shall
control, Mortgagor shall cause the Condemnation Proceeds to be
paid directly to Mortgagee as provided in Section 2.12(f) of the
Loan Agreement. If Mortgagor shall not be in compliance with the
Debt Service Coverage Test and the Property Release Test,
Mortgagee shall apply any such Condemnation Proceeds to the
reduction or discharge of the Obligations (whether or not then
due and payable) provided that any such prepayment shall be
without Repayment Fee or prepayment penalty. If Condemnation
Proceeds in respect of such Taking are applied to the payment of
the Obligations, Mortgagor shall be relieved of any duty to
restore, repair, replace or rebuild the Mortgaged Property. If
Mortgagor shall be in compliance with the Debt Service Coverage
Test and the Property Release Test, Mortgagee shall cause the
Condemnation Proceeds to be paid to Mortgagor.
(c) With respect to a Taking in part, which shall mean any
Taking which does not render the Mortgaged Property physically or
economically unsuitable in the commercially reasonable judgment
of Mortgagor for the use to which it was devoted prior to the
Taking, (i) if, after giving effect to the partial Taking,
Mortgagor shall be in compliance with the Debt Service Coverage
Test and the Property Release Test, Mortgagor shall cause the
Condemnation Proceeds to be paid to Mortgagee to be applied to
pay for or to reimburse Mortgagor for the cost of repairing,
replacing, restoring or rebuilding the Mortgaged Property as
follows or (ii) if Mortgagor shall not be in such compliance with
the Debt Service Coverage Test and the Property Release Test, the
Condemnation Proceeds shall be held by Mortgagee in an Eligible
Account and shall, at the option of Mortgagee, in its sole
discretion, be applied to the payment of the Obligations as
provided in Section 2.12(f) of the Loan Agreement (provided that
any such prepayment shall be without Repayment Fee or prepayment
penalty) or applied to reimburse Mortgagor for the cost of
restoring, repairing, replacing or rebuilding the Mortgaged
Property as follows:
(x) Provided that Condemnation Proceeds shall be made
available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants
to restore, repair, replace or rebuild the same to be of at least
equal value and of substantially the same character as prior to
the Taking, to the extent commercially practicable (i.e., what
other developers of other property similar to the Borrower and
the Mortgaged Property, respectively, and similarly situated
would construct under similar circumstances, all to be effected
in accordance with applicable law and plans and specifications
approved in advance by Mortgagee, such approval not to be
unreasonably withheld. Mortgagor shall pay all costs (and if
required by Mortgagee, Mortgagor shall deposit the total thereof
with Mortgagee in advance) of such restoring, repairing,
replacing or rebuilding in excess of the Condemnation Proceeds
made available pursuant to the terms hereof.
(y) The Condemnation Proceeds held by Mortgagee shall be
held in an Eligible Account by Mortgagee and shall be disbursed
from time to time upon Mortgagee (or at Mortgagee's election, the
Collateral Agent) being furnished with (A) evidence satisfactory
to it of the estimated cost of completion of the restoration,
repair, replacement and rebuilding, (B) funds, or, at Mortgagee's
option, assurances satisfactory to Mortgagee that such funds are
available, sufficient in addition to the Condemnation Proceeds to
complete the proposed restoration, repair, replacement and
rebuilding, and (C) such architect's certificates, waivers of
lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of
cost, payment and performance as Mortgagee may reasonably require
and approve; and Mortgagee may, in any event, require that all
plans and specifications for such restoration, repair,
replacement and rebuilding be submitted to and approved by
Mortgagee, which approval shall not be unreasonably withheld or
delayed, prior to commencement of work. Mortgagee may retain a
construction consultant to inspect such work and review
Mortgagor's request for payments and Mortgagor shall, on demand
by Mortgagee, reimburse Mortgagee for the reasonable fees and
disbursements of such consultant. No payment made prior to the
final completion of the restoration, repair, replacement and
rebuilding shall exceed ninety percent (90%) of the value of the
construction work performed from time to time; funds other than
Condemnation Proceeds shall be disbursed prior to disbursement of
such proceeds; and at all times, the undisbursed balance of such
proceeds remaining in the hands of Mortgagee, together with funds
deposited for that purpose or irrevocably committed to the
repayment of Mortgagee by or on behalf of Mortgagor for that
purpose, shall be at least sufficient in the reasonable judgment
of Mortgagee to pay for the cost of completion of the
restoration, repair, replacement or rebuilding, free and clear of
all liens or claims for lien. Any surplus which may remain out
of Condemnation Proceeds held by Mortgagee after payment of such
costs of restoration, repair, replacement or rebuilding shall be
paid to Mortgagor so long as no Event of Default has occurred and
is continuing.
(z) If the Mortgaged Property is sold, through
foreclosure or otherwise, prior to the receipt by Mortgagee of
any such Condemnation Proceeds, Mortgagee shall have the right,
whether or not a deficiency judgment on the Note shall have been
sought, recovered or denied, to have reserved in any Foreclosure
decree a right to receive said award or payment, or a portion
thereof sufficient to pay the Obligations. In no case shall any
such application reduce or postpone any payments otherwise
required pursuant to the Loan Agreement, other than the final
payment on the Note.
6. Leases and Rents.
(a) Mortgagor does hereby absolutely and unconditionally
assign to Mortgagee, Mortgagor's right, title and interest in all
current and future Leases and Rents, it being intended by
Mortgagor that this assignment constitutes a present, absolute
assignment and not an assignment for additional security only.
Such assignment to Mortgagee shall not be construed to bind
Mortgagee to the performance of any of the covenants, conditions
or provisions contained in any such Lease or otherwise impose any
obligation upon Mortgagee. Mortgagor agrees to execute and
deliver to Mortgagee such additional instruments, in form and
substance satisfactory to Mortgagee, as may hereafter be
requested by Mortgagee to further evidence and confirm such
assignment. Nevertheless, subject to the terms of this
paragraph, Mortgagee grants to Mortgagor a revocable license to
operate and manage the Mortgaged Property and to collect the
Rents. Any portion of the Rents held by Mortgagor shall be held
in trust for the benefit of Mortgagee for use in the payment of
the Obligations. Upon an Event of Default, the license granted
to Mortgagor herein shall automatically be revoked, and Mortgagee
shall immediately be entitled to possession of all Rents, whether
or not Mortgagee enters upon or takes control of the Mortgaged
Property. Mortgagee is hereby granted and assigned by Mortgagor
the right, at its option, upon revocation of the license granted
herein, to enter upon the Mortgaged Property in person, by agent
or by court-appointed receiver to collect the Rents. Any Rents
collected after the revocation of the license may be applied
toward payment of the Obligations in such priority and
proportions as Mortgagee in its discretion shall deem proper.
(b) Mortgagor shall not enter into any Leases or modify
existing Leases without the prior written consent of Mortgagee
which consent shall not be unreasonably withheld or delayed,
provided, that Mortgagee's consent shall be deemed to have been
given if Mortgagee fails to reject or consent to a proposed lease
within fifteen (15) business days' receipt thereof; and, further,
provided, that no such consent shall be required with respect to
Leases for space which constitute less than ten percent (10%) of
the net rentable square footage of the Mortgaged Property.
Mortgagor shall furnish Mortgagee with executed copies of all
Leases. All renewals or amendments of Leases shall provide for
rental rates comparable to then-existing local market rates and
terms and conditions commercially reasonable and consistent with
then-prevailing market terms and conditions. All renewals
(except pursuant to the terms of Leases then in effect) or
amendments of Leases which do not satisfy the requirements of the
preceding sentence shall be subject to the prior approval of
Mortgagee, not to be unreasonably withheld or delayed, provided,
that any such renewal or amendment shall be deemed approved if
Mortgagee fails to approve or disapprove any such renewal or
amendment within fifteen (15) business days' receipt thereof by
Mortgagee. All Leases executed after the date hereof shall
provide that they are subordinate to this Mortgage and that the
lessee agrees to attorn to Mortgagee. Mortgagee agrees, upon the
request of any anchor tenant under a Lease for space at the
Mortgaged Property and for all other tenants under a Lease for
space in excess of ten percent (10%) of the rentable square feet
of the Mortgaged Property, to execute and deliver a non-
disturbance agreement in form reasonably satisfactory to the
tenant. Mortgagor (i) shall observe and perform all the
obligations imposed upon the lessor under the Leases and shall
not do or permit to be done anything to impair the value of the
Leases as security for the Obligations; (ii) shall promptly send
copies to Mortgagee of all notices of default which Mortgagor
shall send or receive thereunder; (iii) shall enforce all of the
material terms, covenants and conditions contained in the Lease
upon the part of the lessee thereunder to be observed or
performed, short of termination thereof, except as set forth in
clause (vi) below; (iv) shall not collect any of the Rents more
than one (1) month in advance; (v) shall not execute any other
assignment of lessor's interest in the Leases or Rents; (vi)
shall not alter, modify or change the terms of the Leases without
the prior written consent of Mortgagee except as set forth in the
first sentence of this subsection (b), or, except if Tenant is in
default in its monetary obligations thereunder, cancel or
terminate the Leases or accept a surrender thereof; (vii) shall
not convey or transfer or suffer or permit a conveyance or
transfer of the Mortgaged Property 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 not alter, modify or change the terms of
any guaranty of the Leases or cancel or terminate such guaranty
without the prior written consent of Mortgagee; and (ix) shall
not consent to any assignment of or subletting under the Leases
not in accordance with their terms, without the prior written
consent of Mortgagee, which shall not be unreasonably withheld.
The provisions of the foregoing clauses (vi), (viii) and (ix)
shall not be applicable to leases for space which constitutes ten
percent (10%) or less of the net rentable square footage of the
Mortgaged Property.
(c) Mortgagor shall deposit security deposits of lessees into
a segregated account in accordance with applicable Legal
Requirements. Any bond or other instrument which Mortgagor is
permitted to hold in lieu of cash security deposits under any
applicable Legal Requirements shall be maintained in full force
and effect unless replaced by cash deposits as hereinabove
described, shall be issued by an institution reasonably
satisfactory to Mortgagee, shall, if permitted pursuant to any
Legal Requirements, name Mortgagee as payee or mortgagee
thereunder (or at Mortgagee's option, be fully assignable to
Mortgagee) and shall, in all respects, comply with any applicable
Legal Requirements and otherwise be reasonably satisfactory to
Mortgagee. Mortgagor shall, upon request, provide Mortgagee with
evidence reasonably satisfactory to Mortgagee of Mortgagor's
compliance with the foregoing. Following the occurrence and
during the continuance of any Event of Default, Mortgagor shall,
upon Mortgagee's request, if permitted by any applicable Legal
Requirements, turn over to Mortgagee the security deposits (and
any interest theretofore earned thereon) with respect to all or
any portion of the Mortgaged Property, to be held by Mortgagee
subject to the terms of the Leases.
7. Maintenance of Mortgaged Property. Mortgagor shall cause
the Mortgaged Property to be maintained in a good and safe
condition and repair. The Improvements and the Equipment shall
not be removed, demolished or materially altered (except for
normal replacement of the Equipment or pursuant to Leases in
effect from time to time) without the consent of Mortgagee which
shall not unreasonably be withheld or delayed. Subject to the
provisions of Section 27, Mortgagor shall promptly comply with
all Legal Requirements. Mortgagor shall or shall cause its
tenants to promptly repair, replace or rebuild any part of the
Mortgaged Property that becomes damaged, worn or dilapidated and
Mortgagor shall or shall cause its tenants to complete and pay
for any structure at any time in the process of construction or
repair on the Land. Mortgagor shall not initiate, join in, or
consent to any change in any private restrictive covenant, zoning
law or other public or private restriction, limiting or defining
the uses which may be made of the Mortgaged Property or any part
thereof without consent of Mortgagee which shall not be
unreasonable withheld or delayed. If under applicable zoning
provisions the use of all or any portion of the Mortgaged
Property is or shall become a nonconforming use, Mortgagor will
not cause or permit such nonconforming use to be discontinued or
abandoned without the express written consent of Mortgagee.
Mortgagor shall not (i) change the use of the Land in any
material respect, (ii) permit or suffer to occur any waste on or
to the Mortgaged Property or to any portion thereof or (iii) take
any steps whatsoever to convert the Mortgaged Property, or any
portion thereof, to a condominium or cooperative form of
management.
8. Transfer or Encumbrance of the Mortgaged Property.
(a) Mortgagor acknowledges that Mortgagee has examined and
relied on the creditworthiness and experience of Mortgagor in
owning and operating properties such as the Mortgaged Property in
agreeing to make the Loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged
Property as a means of maintaining the value of the Mortgaged
Property as security for repayment of the Obligations. Mortgagor
acknowledges that Mortgagee has a valid interest in maintaining
the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Obligations, Mortgagee
can recover the Obligations by a sale of the Mortgaged Property.
Mortgagor shall not, without the prior written consent of
Mortgagee, which consent may be granted or withheld in
Mortgagee's sole discretion, sell, convey, alienate, mortgage,
encumber, pledge or otherwise transfer the Mortgaged Property or
any part thereof, or permit the Mortgaged Property or any part
thereof to be sold, conveyed, alienated, mortgaged, encumbered,
pledged or otherwise transferred.
(b) A sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer within the meaning of this Section 8 shall be
deemed to include (i) an installment sales agreement wherein
Mortgagor agrees to sell the Mortgaged Property or any part
thereof for a price to be paid in installments; (ii) an agreement
by Mortgagor leasing all or a substantial part of the Mortgaged
Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the
grant of a security interest in, Mortgagor's right, title and
interest in and to any Leases or any Rents; and (iii) a transfer
of a direct or indirect ownership interest or voting right in the
Borrower that would cause a Change of Control to occur.
(c) Subject to the provisions of the Loan Agreement,
Mortgagee may predicate its decision to grant or withhold consent
hereunder on Mortgagee's satisfaction, in its sole and absolute
discretion, with all relevant factors (including, without
limitation, the creditworthiness of the proposed transferee and
such proposed transferee's management experience), and, in the
case of any transfer of title to the Mortgaged Property, upon the
execution of an assumption agreement in form and substance
acceptable to Mortgagee and the payment of all costs and expenses
incurred by Mortgagee in connection with the assumption
(including, without limitation, reasonable attorneys' fees).
Mortgagee shall not be required to demonstrate any actual
impairment of its security or any increased risk of default
hereunder in order to declare the Obligations immediately due and
payable upon Mortgagor's sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property without
Mortgagee's consent. Except as provided in the Loan Agreement,
this provision shall apply to every sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged
Property regardless of whether voluntary or not, or whether or
not Mortgagee has consented to any previous sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property.
(d) Mortgagee's consent to one sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged
Property shall not be deemed to be a waiver of Mortgagee's right
to require such consent to any future occurrence of same. Except
as provided in the Loan Agreement, any sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property made in contravention of this paragraph shall
be null and void and of no force and effect.
(e) Mortgagor agrees to bear and shall pay or reimburse
Mortgagee on demand for all reasonable expenses (including,
without limitation, reasonable attorney's fees and disbursements,
title search costs and title insurance endorsement premiums)
incurred by Mortgagee in connection with the review, approval and
documentation of any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer.
9. Changes in the Laws Regarding Taxation. If any law is
enacted or adopted or amended after the date of this Mortgage
which deducts the Obligations from the value of the Mortgaged
Property for the purpose of taxation or which imposes a tax,
either directly or indirectly, on the Obligations or Mortgagee's
interest in the Mortgaged Property, Mortgagor will pay such tax,
with interest and penalties thereon, if any. In the event
Mortgagee is advised by counsel chosen by it that the payment of
such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for
a defense of usury, then in any such event, Mortgagee shall have
the option, by written notice of not less than ninety (90) days,
to declare the Obligations immediately due and payable.
10. No Credits on Account of the Obligations. Mortgagor will
not claim or demand or be entitled to any credit or credits on
account of the Obligations for any part of the Impositions or
Other Charges assessed against the Mortgaged Property, or any
part thereof.
11. Documentary Stamps. If at any time the United States of
America, any State thereof or any subdivision of any such State
shall require revenue or other stamps to be affixed to the Note
or this Mortgage, or impose any other tax or charge on the same,
Mortgagor will pay for the same, with interest and penalties
thereon, if any.
12. Controlling Agreement. It is expressly stipulated and
agreed to be the intent of Mortgagor and Mortgagee at all times
to comply with applicable state law or applicable United States
federal law (to the extent that it permits Mortgagee to contract
for, charge, take, reserve, or receive a greater amount of
interest than under state law) and that this section shall
control every other covenant and agreement in this Mortgage and
the other Loan Documents. If the applicable law (state or
federal) is ever judicially interpreted so as to render usurious
any amount called for under the Note or under any of the other
Loan Documents, or contracted for, charged, taken, reserved, or
received with respect to the Obligations, or if Mortgagee's
exercise of the option to accelerate the maturity of the Note, or
if any prepayment by Mortgagor results in Mortgagor having paid
any interest in excess of that permitted by applicable law, then
it is Mortgagor's and Mortgagee's express intent that all excess
amounts theretofore collected by Mortgagee shall be credited on
the principal balance of the Note and all other Obligations (or,
if the Note and all other Obligations have been or would thereby
be paid in full, refunded to Mortgagor), and the provisions of
the Note and the other Loan Documents immediately be deemed
reformed and the amounts thereafter collectible hereunder and
thereunder reduced, without the necessity of the execution of any
new documents, so as to comply with the applicable law, but so as
to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder. All sums paid or agreed to be paid to
Mortgagee for the use, forbearance, or detention of the
Obligations shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full
stated term of the Obligations until payment in full so that the
rate or amount of interest on account of the Obligations does not
exceed the maximum rate of interest permitted by law from time to
time in effect and applicable to the Obligations for so long as
the Obligations are outstanding.
13. Books and Records. Mortgagor will maintain full and
accurate books of accounts and other records reflecting the
results of the operations of the Mortgaged Property and will fur-
nish, or cause to be furnished, to Mortgagee such information
with respect to the operation of the Mortgaged Property as
Mortgagee from time to time reasonably may request, all in
accordance with the provisions of the Loan Agreement.
14. Performance of Other Agreements. Mortgagor shall observe
and perform in all material respects the terms to be observed or
performed by Mortgagor under any agreement or recorded instrument
affecting or pertaining to the Mortgaged Property the failure to
perform which would have a Material Adverse Effect.
15. Further Acts, etc. Mortgagor will, at the cost of
Mortgagor, and without expense to Mortgagee, do, execute,
acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, assignments, notices of assignment,
Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from
time to time, reasonably require, for the better assuring,
conveying, assigning, transferring, and confirming unto Mortgagee
the property and rights hereby mortgaged, given, granted,
bargained, sold, alienated, enfeoffed, conveyed, confirmed,
warranted, pledged, assigned and hypothecated or intended now or
hereafter so to be, or which Mortgagor may be or may hereafter
become bound to convey or assign to Mortgagee, or for carrying
out the intention or facilitating the performance of the terms of
this Mortgage or for filing, registering or recording this
Mortgage. Mortgagor, on demand, will execute and deliver and,
Mortgagor hereby authorizes Mortgagee to execute in the name of
Mortgagor or without the signature of Mortgagor to the extent
Mortgagee may lawfully do so, one or more financing statements,
chattel mortgages or other instruments, to evidence more
effectively the security interest of Mortgagee in the Mortgaged
Property. Mortgagor grants to Mortgagee an irrevocable power of
attorney coupled with an interest for the purpose of exercising
the rights provided for in this Section 15.
16. Recording of Mortgage, etc. Mortgagor forthwith upon the
execution and delivery of this Mortgage and thereafter, from time
to time, will cause this Mortgage, 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 to protect the lien or
security interest hereof upon, and the interest of Mortgagee in,
the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Mortgage, 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 Mortgage, any
mortgage supplemental hereto, any security instrument with
respect to the Mortgaged Property or any instrument of further
assurance (other than income or franchise taxes imposed on
Mortgagee), except where prohibited by law so to do. Mortgagor
shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the
imposition of any tax on the making and recording of this
Mortgage.
17. Reporting Requirements. Mortgagor agrees to give prompt
notice to Mortgagee of the insolvency or bankruptcy filing of
Mortgagor.
18. Events of Default. The term "Event of Default" as used
herein shall mean the occurrence or happening, at any time and
from time to time, of an Event of Default under the Loan
Agreement as a result of which Mortgagee may, pursuant to the
Loan Agreement, exercise its rights and remedies against
Mortgagor, the Borrowers and/or the Mortgaged Property.
Mortgagor acknowledges and agrees that this Mortgage shall be
cross-collateralized and cross-defaulted with any and all other
mortgages, assignments of leases and rents, security agreements
and fixture filings executed by any of the Borrowers to secure
the Loan pursuant to the terms of the Loan Agreement.
19. Late Payment Charge. If any portion of the Obligations
is not paid within ten (10) days after the date on which it is
due, Mortgagor shall pay to Mortgagee upon demand an amount equal
to the amount applicable thereto as provided in the Loan
Agreement.
20. Right to Cure Defaults. Upon the occurrence of any Event
of Default, Mortgagee may, but without any obligation to do so
and without notice to or demand on Mortgagor and without
releasing Mortgagor from any obligation hereunder, make or do the
same in such manner and to such extent as Mortgagee may deem
necessary to protect the security hereof. Mortgagee is
authorized to enter upon the Mortgaged Property for such purposes
or appear in, defend, or bring any action or proceeding to
protect its interest in the Mortgaged Property or to foreclose
this Mortgage or collect the Obligations, and the cost and
expense thereof (including reasonable attorneys' fees to the
extent permitted by law), with interest at the Default Rate for
the period after notice from Mortgagee that such cost or expense
was incurred to the date of payment to Mortgagee, shall
constitute a portion of the Obligations, shall be secured by this
Mortgage and shall be due and payable to Mortgagee upon demand
therefor.
21. Remedies.
(a) Upon the occurrence of any Event of Default, Mortgagee
may take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Mortgagor and
in and to the Mortgaged Property, by Mortgagee itself or
otherwise, including, but not limited to, the following actions,
each of which may be pursued concurrently or otherwise, at such
time and in such order as Mortgagee may determine, in its sole
discretion, subject to the provisions of Section 48, without
impairing or otherwise affecting the other rights and remedies of
Mortgagee:
(i) declare the entire principal amount of the
indebtedness secured hereby with interest accrued thereon to be
immediately due and payable;
(ii) institute a proceeding or proceedings, judicial or
nonjudicial, by advertisement or otherwise, for the complete
foreclosure of this Mortgage in which case the Mortgaged Property
or any interest therein may be sold for cash or upon credit in
one or more parcels or in several interests or portions and in
any order or manner in accordance with the laws of the
jurisdiction in which such Mortgaged Property is located;
(iii) with or without entry, to the extent permitted,
and pursuant to the procedures provided by, applicable law,
institute proceedings for the foreclosure of this Mortgage for
the Obligations then due and payable subject to the continuing
lien of this Mortgage, in accordance with the laws of the
jurisdiction in which such Mortgaged Property is located, for the
balance of the Obligations not then due;
(iv) sell for cash or upon credit the Mortgaged Property
or any part thereof and all estate, claim, demand, right, title
and interest of Mortgagor therein and rights of redemption
thereof, pursuant to the power of sale contained herein or
otherwise, at one or more sales, as an entity or in parcels, at
such time and place, upon such terms and after such notice
thereof as may be required or permitted by the laws of the
jurisdiction in which such Mortgaged Property is located;
(v) institute an action, suit or proceeding in equity
for the specific performance of any covenant, condition or
agreement contained herein or in the other Loan Documents;
(vi) subject to Section 48 hereof, recover judgment on
the Note either before, during or after any proceedings for the
enforcement of this Mortgage;
(vii) apply for the appointment of a trustee, receiver,
liquidator or conservator of the Mortgaged Property, without
notice and without regard for the adequacy of the security for
the Obligations and without regard for the solvency of Mortgagor
or of any person, firm or other entity liable for the payment of
the Obligations;
(viii) enforce Mortgagee's interest in the Leases and
Rents and enter into or upon the Mortgaged Property, either
personally or by its agents, nominees or attorneys and dispossess
Mortgagor and its agents and servants therefrom, and thereupon
Mortgagee 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) complete any construction on the Mortgaged Property in such
manner and form as Mortgagee deems advisable; (C) make
alterations, additions, renewals, replacements and improvements
to or on the Mortgaged Property; (D) exercise all rights and
powers of Mortgagor with respect to the Mortgaged Property,
whether in the name of Mortgagor 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 (E)
apply the receipts from the Mortgaged Property to the payment of
the Obligations, after deducting therefrom all expenses
(including, without limitation, reasonable attorneys' fees)
incurred in connection with the aforesaid operations and all
amounts necessary to pay the taxes, assessments, insurance and
other charges in connection with the Mortgaged Property, as well
as just and reasonable compensation for the services of
Mortgagee, its counsel, agents and employees;
(ix) require Mortgagor to pay monthly in advance to
Mortgagee, 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 Mortgagor and
require Mortgagor to vacate and surrender possession to Mortgagee
of the Mortgaged Property or to such receiver and, in default
thereof, evict Mortgagor by summary proceedings or otherwise; or
(x) pursue such other rights and remedies as may be
available at law or in equity or under the Uniform Commercial
Code including the right to establish a lock box for all Rents
and other receivables of Mortgagor relating to the Mortgaged
Property.
In the event of a sale, by foreclosure or otherwise, of less than
all of the Mortgaged Property, this Mortgage shall continue as a
lien on the remaining portion of the Mortgaged Property.
(b) The proceeds of any sale made under or by virtue of this
Section 21, together with any other sums which then may be held
by Mortgagee under this Mortgage, whether under the provisions of
this section or otherwise, shall be applied by Mortgagee in
accordance with the provisions of the Loan Agreement.
(c) Upon any sale made under or by virtue of this Section 21,
whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, Mortgagee 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 Obligations the net sales price after deducting
therefrom the expenses of the sale and costs of the action and
any other sums which Mortgagee is authorized to deduct under this
Mortgage.
(d) To the extent allowed by law, recovery of any judgment by
Mortgagee and no levy of an execution under any judgment upon the
Mortgaged Property or upon any other property of Mortgagor shall
affect in any manner or to any extent the lien of this Mortgage
upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Mortgagee hereunder, but such
liens, rights, powers and remedies of Mortgagee shall continue
unimpaired as before.
(e) Mortgagee may terminate or rescind any proceeding or
other action brought in connection with its exercise of the
remedies provided in this Section 21 at any time before the
conclusion thereof, as determined in Mortgagee's sole discretion
and without prejudice to Mortgagee.
(f) Mortgagee may resort to any remedies and the security
given by this Mortgage or the other Loan Documents in whole or in
part, and in such portions and in such order as determined by
Mortgagee's sole discretion. No such action shall in any way be
considered a waiver of any rights, benefits or remedies evidenced
or provided by this Mortgage or the other Loan Documents. The
failure of Mortgagee to exercise any right, remedy or option
provided in this Mortgage or the other Loan Documents shall not
be deemed a waiver of such right, remedy or option or of any
covenant or obligation secured by this Mortgage or the other Loan
Documents. No right, power or remedy, including, without
limitation, remedies with respect to any security for the Note,
conferred upon or reserved to Mortgagee by this Mortgage or any
other Loan Document is exclusive of any other right, power or
remedy, but each and every such right, power and remedy shall be
cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or under any other Loan
Document, now or hereafter existing at law, in equity or by
statute, and Mortgagee shall be entitled to resort to such
rights, powers, remedies or security as Mortgagee shall in its
sole and absolute discretion deem advisable. No acceptance by
Mortgagee of any payment after the occurrence of any Event of
Default and no payment by Mortgagee of any obligation for which
Mortgagor is liable hereunder shall be deemed to waive or cure
any Event of Default with respect to Mortgagor, or Mortgagor's
liability to pay such obligation. No sale of all or any portion
of the Mortgaged Property, no forbearance on the part of
Mortgagee, and no extension of time for the payment of the whole
or any portion of the Obligations or any other indulgence given
by Mortgagee to Mortgagor, shall operate to release or in any
manner affect the interest of Mortgagee in the remaining
Mortgaged Property or, subject to the provisions of Section 48,
the liability of Mortgagor to pay the Obligations. No waiver by
Mortgagee shall be effective, unless it is in writing and then
only to the extent specifically stated.
(g) The interests and rights of Mortgagee under this Mortgage
or the other Loan Documents shall not be impaired by any
indulgence, including (i) any renewal, extension or modification
which Mortgagee may grant with respect to any of the Obligations,
(ii) any surrender, compromise, release, renewal, extension,
exchange or substitution which Mortgagee 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 Obligations.
(h) Mortgagor agrees to the full extent permitted by law that
if an Event of Default occurs, neither Mortgagor nor anyone
claiming through or under it shall or will set up, claim or seek
to take advantage of any appraisement, valuation, stay, extension
or redemption laws now or hereafter in force, in order to prevent
or hinder the enforcement or foreclosure of this Mortgage or the
absolute sale of the Mortgaged Property or any portion thereof or
the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereof, and
Mortgagor for itself and all who may at any time claim through or
under it, hereby waives, to the full extent that it may lawfully
do so, (i) the benefit of all such laws, (ii) all notices of any
Event of Default or of Mortgagee's election to exercise or actual
exercise of any right, remedy or recourse provided for under the
Loan Documents, and (iii) any and all right to have the assets
comprising the Mortgaged Property marshaled upon any foreclosure
of the lien hereof, and Mortgagor agrees that Mortgagee or any
court having jurisdiction to foreclose such lien may sell the
Mortgaged Property in part or as an entirety.
22. Right of Access. Mortgagee and its agents shall have the
right to enter and inspect the Mortgaged Property as provided in
Section 5.1(K) of the Loan Agreement.
23. Reasonable Use and Occupancy. In addition to the rights
which Mortgagee may have herein, upon the occurrence of any Event
of Default which shall remain uncured, Mortgagee, at its option,
may require Mortgagor to pay monthly in advance to Mortgagee, 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 occupied by Mortgagor or may
require Mortgagor to vacate and surrender possession of the
Mortgaged Property to Mortgagee or to such receiver and, in
default thereof, Mortgagor may be evicted by summary proceedings
or otherwise.
24. Security Agreement. This Mortgage is both a real
property mortgage/deed of trust and a "security agreement" within
the meaning of the Uniform Commercial Code. The Mortgaged
Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature,
of Mortgagor in the Mortgaged Property. Mortgagor by executing
and delivering this Mortgage has granted and hereby grants to
Mortgagee, as security for the Obligations, a security interest
in the Mortgaged Property to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code (said
portion of the Mortgaged Property so subject to the Uniform
Commercial Code being called in this paragraph the "Collateral").
Mortgagor hereby agrees with Mortgagee to execute and deliver to
Mortgagee, in form and substance satisfactory to Mortgagee, such
financing statements and such further assurances as Mortgagee may
from time to time, reasonably consider necessary to create,
perfect, and preserve Mortgagee's security interest herein
granted. This Mortgage shall also constitute a "fixture filing"
for the purposes of the Uniform Commercial Code and is to be
filed in the office where a mortgage on the Mortgaged Property
would be recorded. The respective addresses of the Mortgagor
(debtor) and the Mortgagee (secured party) are set forth in the
beginning of this Mortgage. All or part of the Mortgaged
Property is or is to become fixtures. Information concerning the
security interest herein granted may be obtained from the parties
at the addresses of the parties set forth in the first paragraph
of this Mortgage. If an Event of Default shall occur which shall
remain uncured, Mortgagee, 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 Uniform
Commercial Code, (including, without limitation, the right to
take possession of the Collateral or any part thereof, and to
take such other measures as Mortgagee may deem necessary for the
care, protection and preservation of the Collateral). Upon
request or demand of Mortgagee, Mortgagor shall at its expense
assemble the Collateral and make it available to Mortgagee at a
convenient place acceptable to Mortgagee. Mortgagor shall pay to
Mortgagee on demand therefor any and all expenses (including,
without limitation, reasonable legal expenses and attorneys'
fees, incurred or paid by Mortgagee in protecting the interest in
the Collateral and in enforcing the rights hereunder with respect
to the Collateral). Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Collateral sent
to Mortgagor in accordance with the provisions of the Loan
Agreement at least ten (10) Business Days prior to such action or
such notice as is otherwise required by law or the Loan
Agreement, shall constitute commercially reasonable notice to
Mortgagor. The proceeds of any disposition of the Collateral, or
any part thereof, may be applied by Mortgagee to the payment of
the Obligations in such priority and proportions as required by
the Loan Agreement. In the event of any change in name, identity
or structure of Mortgagor, Mortgagor shall notify Mortgagee
thereof and, promptly after request, shall execute, file and
record such Uniform Commercial Code forms as are necessary to
maintain the priority of Mortgagee's lien upon and security
interest in the Collateral, and shall pay all expenses and fees
in connection with the filing and recording thereof. If
Mortgagee shall require the filing or recording of additional
Uniform Commercial Code forms or continuation statements,
Mortgagor shall, promptly after request, execute, file and record
such Uniform Commercial Code forms or continuation statements as
Mortgagee shall deem necessary, and shall pay all expenses and
fees in connection with the filing and recording thereof, it
being understood and agreed, however, that no such additional
documents shall increase Mortgagor's obligations under this
Mortgage or the other Loan Documents. Mortgagor hereby
irrevocably appoints Mortgagee as its attorney-in-fact, coupled
with an interest, to file with the appropriate public office on
its behalf any financial or other statements signed only by
Mortgagee, as secured party, in connection with the Collateral
covered by this Mortgage.
25. Actions and Proceedings. Mortgagee has the right to
appear in and defend any action or proceeding brought with
respect to the Mortgaged Property and to bring any action or
proceeding, in the name and on behalf of Mortgagor, which
Mortgagee, in its discretion, decides should be brought to
protect its interest under this Mortgage in the Mortgaged
Property. Mortgagee shall, at its option, be subrogated to the
lien of any mortgage or other security instrument discharged in
whole or in part by the Obligations, and any such subrogation
rights shall constitute additional security for the payment of
the Obligations.
26. Waiver of Setoff and Counterclaim. Except as may be
permitted under the Loan Agreement, all amounts due under this
Mortgage, the Note and the other Loan Documents shall be payable
without setoff, counterclaim or any deduction whatsoever. Except
as may be permitted under the Loan Agreement, Mortgagor hereby
waives the right to assert a counterclaim in any action or
proceeding brought against it by Mortgagee, or arising out of or
in any way connected with this Mortgage and the other Loan
Documents, or the Obligations.
27. Contest of Certain Claims. Notwithstanding the
provisions of Section 4 and Section 7, Mortgagor shall not be in
default for failure to pay or discharge Impositions, Other
Charges or mechanic's or materialman's liens asserted against the
Mortgaged Property or for failure to comply with any Legal
Requirement if, and so long as, (a) Mortgagor shall have notified
Mortgagee of same within ten (10) days of obtaining knowledge
thereof; (b) Mortgagor shall diligently and in good faith contest
the same by appropriate legal proceedings which shall operate to
prevent the enforcement or collection of the same and the sale of
the Mortgaged Property or any part thereof, to satisfy the same;
(c) unless funds are otherwise reserved, Mortgagor shall furnish
to Mortgagee a cash deposit, or an indemnity bond satisfactory to
Mortgagee with a surety reasonably satisfactory to Mortgagee, in
the amount of the Impositions, Other Charges, or mechanic's or
materialman's lien claim or penalties or fines relating to the
failure to comply with any Legal Requirement, plus a reasonable
additional sum to pay all costs, interest and penalties that may
be imposed or incurred in connection therewith, to assure payment
of the matters under contest and to prevent any sale or
forfeiture of the Mortgaged Property or any part thereof; (d)
Mortgagor shall timely upon final determination thereof pay the
amount of any such Impositions, Other Charges, claim, fine or
penalty so determined, together with all costs, interest and
penalties which may be payable in connection therewith; (e) the
failure to pay the Impositions, Other Charges or mechanic's or
materialman's lien claim does not constitute a default under any
other deed of trust, mortgage or security interest covering or
affecting any part of the Mortgaged Property; and (f)
notwithstanding the foregoing, Mortgagor shall immediately upon
request of Mortgagee pay (and if Mortgagor shall fail so to do,
Mortgagee may, but shall not be required to, pay or cause to be
discharged or bonded against) any such Impositions, Other Charges
or claim notwithstanding such contest, if in the reasonable
opinion of Mortgagee, the Mortgaged Property or any part thereof
or interest therein may be in danger of being sold, forfeited,
foreclosed, terminated, cancelled or lost. Mortgagee may pay
over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the judgment of Mortgagee,
the entitlement of such claimant is established.
28. Recovery of Sums Required to Be Paid. Mortgagee shall
have the right from time to time to take action to recover any
sum or sums which constitute a part of the Obligations as the
same become due and owing, without regard to whether or not the
balance of the Obligations shall be due, and without prejudice to
the right of Mortgagee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by
Mortgagor existing at the time such earlier action was commenced.
29. Marshalling, Waiver of Redemption and Other Matters.
Mortgagor hereby waives, to the extent permitted by law, the
benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption 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. Further, Mortgagor hereby expressly waives any and all
rights of redemption from sale under any order or decree of
foreclosure of this Mortgage on behalf of Mortgagor, and on
behalf of each and every person acquiring any interest in or
title to the Mortgaged Property subsequent to the date of this
Mortgage and on behalf of all persons to the extent permitted by
applicable law.
30. Hazardous Substances. Mortgagor and the Mortgaged
Property shall comply with all provisions of the Loan Documents
relating to Environmental Laws, Environmental Claims and
Hazardous Substances.
31. Handicapped Access.
(a) Mortgagor agrees that the Mortgaged Property shall at all
times comply to the extent applicable with the requirements of
the Americans with Disabilities Act of 1990, all state and local
laws and ordinances related to handicapped access and all rules,
regulations, and orders issued pursuant thereto (including,
without limitation, the Americans with Disabilities Act
Accessibility Guidelines for Buildings and Facilities)
(collectively, the "Access Laws").
(b) Notwithstanding any provisions set forth herein
(including the provisions of Section 7) or in any other document
regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any
manner which would materially increase Mortgagor's
responsibilities for compliance with the applicable Access Laws
without the prior written approval of Mortgagee which approval
shall not unreasonably be withheld provided that Mortgagor can
demonstrate the availability of funding sources adequate to
comply with such requirements. The foregoing shall apply to
tenant improvements constructed by Mortgagor or by any of its
tenants. Mortgagee may condition any such approval upon receipt
from Mortgagor of a certificate of Access Law compliance from an
architect, engineer, or other person acceptable to Mortgagee or
other reasonably satisfactory evidence of compliance. Provided
Mortgagor has delivered to Mortgagee the certificate described
in, or otherwise complied with the provisions of, the foregoing
sentence, approval by Mortgagee of tenant improvements as part of
the approval of a new Lease shall also constitute approval of
Mortgagor's compliance with Access Laws applicable to such
improvements.
(c) Mortgagor agrees to give prompt notice to Mortgagee of
the receipt by Mortgagor of any complaints related to violations
of any Access Laws received from governmental authorities or
involving a threat of litigation and of the commencement of any
proceedings or investigations which relate to compliance with
applicable Access Laws.
(d) Mortgagor shall protect, defend, indemnify and save
harmless Mortgagee from and against all liabilities, obligations,
claims, demands, damages, penalties, causes of action, losses,
fines, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against Mortgagee by reason of any
failure of the Mortgaged Property to comply with any Access Laws.
32. Notice. All notices, demands, statements, requests or
consents (collectively, "notices") made hereunder shall be in
writing and given in the manner specified in the Loan Agreement.
33. Waiver of Notice. Mortgagor shall not be entitled to any
notices of any nature whatsoever from Mortgagee except with
respect to matters for which this Mortgage or any other Loan
Document specifically and expressly provides for the giving of
notice by Mortgagee to Mortgagor and except with respect to
matters for which Mortgagee is required by applicable law to give
notice, and Mortgagor hereby expressly waives the right to
receive any notice from Mortgagee with respect to any matter for
which this Mortgage or any other Loan Document does not
specifically and expressly provide for the giving of notice by
Mortgagee to Mortgagor.
34. Remedies of Mortgagor. In the event that a claim or
adjudication is made that Mortgagee or its agents have
unreasonably delayed acting in any case where by law or under
this Mortgage or the other Loan Documents, Mortgagee or such
agent, as the case may be, has an obligation to act promptly,
Mortgagor agrees that neither Mortgagee nor its agents shall be
liable for any monetary damages, and Mortgagor's sole remedies
shall be limited to commencing an action seeking injunctive
relief or declaratory judgment.
35. Sole Discretion of Mortgagee. Wherever pursuant to this
Mortgage, Mortgagee exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to
Mortgagee, the decision of Mortgagee to approve or disapprove or
to decide that arrangements or terms are satisfactory or not
satisfactory shall be in the sole discretion of Mortgagee and
shall be final and conclusive, except as may be otherwise
expressly and specifically provided herein.
36. Non-Waiver. The failure of Mortgagee to insist upon
strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Mortgage. Mortgagor shall not be
relieved of Mortgagor's Obligations hereunder by reason of (a)
the failure of Mortgagee to comply with any request of Mortgagor
to take any action to foreclose this Mortgage or otherwise
enforce any of the provisions hereof or of the other Loan
Documents, (b) the release, regardless of consideration, of the
whole or any part of the Mortgaged Property, or of any person
liable for the Obligations or any portion thereof, or (c) any
agreement or stipulation by Mortgagee extending the time of
payment or otherwise modifying or supplementing the terms of this
Mortgage or the other Loan Documents. Mortgagee may resort for
the payment of the Obligations to any other security held by
Mortgagee in such order and manner as Mortgagee, in its
discretion, may elect. Mortgagee may take action to recover the
Obligations, or any portion thereof, or to enforce any covenant
hereof without prejudice to the right of Mortgagee thereafter to
foreclose this Mortgage. The rights and remedies of Mortgagee
under this Mortgage shall be separate, distinct and cumulative
and none shall be given effect to the exclusion of the others.
No act of Mortgagee shall be construed as an election to proceed
under any one provision herein to the exclusion of any other
provision. Mortgagee shall not be limited exclusively to the
rights and remedies herein stated but shall be entitled to every
right and remedy now or hereafter afforded at law or in equity.
37. No Oral Change. This Mortgage, and any provisions
hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act
on the part of Mortgagor or Mortgagee, 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.
38. Successors and Assigns. Subject to the provisions hereof
requiring Mortgagee's consent to any transfer of the Mortgaged
Property, this Mortgage shall be binding upon and inure to the
benefit of Mortgagor and Mortgagee and their respective
successors and assigns forever.
39. Severability. If any term, covenant or condition of this
Mortgage or the Loan Documents is held to be invalid, illegal or
unenforceable in any respect, this Mortgage and any such other
Loan Document shall be construed without such provision.
40. Headings, etc. The headings and captions of various
paragraphs of this Mortgage 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.
41. Duplicate Originals. This Mortgage may be executed in
any number of duplicate originals and each such duplicate
original shall be deemed to be an original.
42. Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein,
words used in this Mortgage may be used interchangeably in
singular or plural form and the word "Mortgagor" shall mean "each
Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word
"Mortgagee" shall mean "Mortgagee and any subsequent holder of
the Note," the word "person" shall include an individual,
corporation, partnership, trust, unincorporated association,
government, governmental authority, and any other entity, and the
words "Mortgaged Property" shall include any portion of the
Mortgaged Property and any interest therein and the words
"attorneys' fees" shall include any and all attorneys' fees,
paralegal and law clerk fees (including, without limitation, fees
at the pre-trial, trial and appellate levels incurred or paid by
Mortgagee in protecting its interest in the Mortgaged Property
and Collateral and enforcing its rights hereunder). Whenever the
context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and
vice versa.
43. Homestead. Mortgagor hereby waives and renounces all
homestead and exemption rights provided by the constitution and
the laws of the United States and of any state, in and to the
Land as against the collection of the Obligations, or any part
hereof.
44. Assignments. Consistent with the applicable provisions
of the Loan Agreement, Mortgagee shall have the right to assign
or transfer its rights under this Mortgage without limitation.
Any assignee or transferee shall be entitled to all the benefits
afforded Mortgagee under this Mortgage.
45. Waiver of Jury Trial. MORTGAGOR 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 NOTE,
THIS MORTGAGE, OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM,
COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY MORTGAGOR, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT
TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. MORTGAGEE IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER BY MORTGAGOR.
46. GOVERNING LAW. THE LOAN AGREEMENT AND THE NOTE PROVIDE
THAT THEY ARE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS
MORTGAGE SHALL ALSO BE CONSTRUED UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK. NOTWITHSTANDING THE PARTIES' CHOICE OF
NEW YORK LAW, HOWEVER, (i) THE TERMS AND PROVISIONS OF THIS
MORTGAGE PERTAINING TO THE PRIORITY, ENFORCEMENT OR REALIZATION
BY MORTGAGEE OF ITS RESPECTIVE RIGHTS AND REMEDIES UNDER THIS
MORTGAGE WITH RESPECT TO THE MORTGAGED PROPERTY SHALL BE GOVERNED
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAW OF
THE STATE IN WHICH THE LAND IS LOCATED (THE "STATE") WITHOUT
GIVING EFFECT TO THE CONFLICTS-OF-LAW RULES AND PRINCIPLES OF THE
STATE; (ii) MORTGAGOR AGREES THAT TO THE EXTENT DEFICIENCY
JUDGMENTS ARE AVAILABLE UNDER THE LAWS OF THE STATE AFTER A
FORECLOSURE (JUDICIAL OR NONJUDICIAL) OF THE MORTGAGED PROPERTY,
OR ANY PORTION THEREOF, OR ANY OTHER REALIZATION THEREON BY
MORTGAGEE, MORTGAGEE SHALL HAVE THE RIGHT TO SEEK SUCH A
DEFICIENCY JUDGMENT AGAINST MORTGAGOR IN THE STATE; AND (iii)
MORTGAGOR AGREES THAT IF MORTGAGEE OBTAINS A DEFICIENCY JUDGMENT
IN ANOTHER STATE, THEN MORTGAGEE SHALL HAVE THE RIGHT TO ENFORCE
SUCH JUDGMENT IN THE STATE TO THE EXTENT PERMITTED UNDER THE LAWS
OF THE STATE, AS WELL AS IN OTHER STATES.
47. SUBMISSION TO JURISDICTION. MORTGAGOR HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR THE PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS MORTGAGE, ANY OF
THE OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. MORTGAGOR HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY
CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
48. Non-Recourse. The provisions of this Mortgage are
subject to the provisions of Section 8.24 of the Loan Agreement
which are incorporated herein in reference as if herein set forth
in full.
IN WITNESS WHEREOF, Mortgagor has executed this instrument
the day and year first above written.
MORTGAGOR:
KR Tucson, Inc.,
an Arizona corporation
By:/s/ Robert H. Dennis
________________________
Name: Robert H. Dennis
Title: Vice President<PAGE>
[ACKNOWLEDGEMENTS]
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
(See Annex attached hereto)
