SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. For the fiscal year ended December 31, 1995 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ---- to ----
Commission File Number 1-11478
KRANZCO REALTY TRUST
(Exact name of registrant as specified in its charter)
MARYLAND
(State of incorporation)
23-2691327
(I.R.S. employer identification no.)
128 FAYETTE STREET, CONSHOHOCKEN, PA 19428
(Address of principal executive offices)
(610) 941-9292
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
COMMON SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE
(Title of Class)
NEW YORK STOCK EXCHANGE
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $168
million based on the closing price on the New York Stock Exchange for such stock
on March 24, 1997.
The number of shares of the Registrant's Common Shares of Beneficial Interest
outstanding was 10,333,914 as of March 24, 1997.
DOCUMENTS INCORPORATED BY REFERENCE.
Portions of the 1997 Kranzco Realty Trust Proxy Statement to be filed with the
Securities and Exchange Commission within 120 days after the year covered by
this Form 10-K with respect to the Annual Meeting of Shareholders to be held on
June 4, 1997 are incorporated by reference into Part III.
<PAGE>
TABLE OF CONTENTS
Form 10-K
Item No. Report Page
PART I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 9
4. Submission of Matters to a Vote of Security Holders . . . . . . . 9
PART II
5. Market for the Registrant's Common Equity and Related
Shareholder Matters . . . . . . . . . . . . . . . . . . . . . 9
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 10
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . 12
8. Financial Statements and Supplementary Data . . . . . . . . . . 16
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures . . . . . . . . . . . . . 16
PART III
10. Director and Executive Officers of the Registrant . . . . . . . 17
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . 17
12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . 17
13. Certain Relationships and Related Transactions . . . . . . . . . 17
PART IV
14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K ,
Property Table . . . . . . . . . . . . . . . . . . . . . . . 17
<PAGE>
PART I
This Form 10-K, together with other statements and information publicly
disseminated by the Company, contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
are based on assumptions and expectations which may not be realized and are
inherently subject to risks and uncertainties, many of which cannot be predicted
with accuracy and some of which might not even be anticipated. Future events
and actual results, financial and otherwise, may differ materially from the
results discussed in the forward-looking statements. Risks and other factors
that might cause such a difference include, but are not limited to, the effect
of economic and market conditions; risks that the Company's acquisition and
development projects will fail to perform as expected; financing risks, such as
the inability to obtain debt or equity financing on favorable terms; the level
and volatility of interest rates; loss or bankruptcy of one or more of the
Company's major retail tenants; failure of the Company's properties to generate
additional income to offset increases in operating expenses, as well as other
risks listed herein under Item 1. Business and from time to time in the
Company's reports filed with the Securities and Exchange Commission or otherwise
publicly disseminated by the Company.
ITEM 1. BUSINESS
(a) General Development of Business
Kranzco Realty Trust (the "Trust") was formed on June 17, 1992 as a Maryland
real estate investment trust ("REIT").
On November 19, 1992, the Trust consummated an initial public offering (the
"IPO") of 6,400,000 of its common shares of beneficial interest (the "Shares").
On December 15, 1992, the Trust sold an additional 361,900 Shares as a result of
the exercise of the over-allotment option granted to the underwriters in
connection with the IPO.
On October 7, 1993, the Trust consummated a second public offering (the "Second
Offering") of 2,200,000 Shares. On November 3, 1993, the Trust sold an
additional 50,000 Shares as a result of the exercise of the over-allotment
option granted to the underwriters in connection with the Second Offering.
The Trust and its consolidated subsidiaries are hereinafter referred to as the
"Company".
(b) Developments During the 1996 Fiscal Year
In June 1996, the Company successfully completed the refinancing of
substantially all of its variable rate debt and a portion of its fixed rate
debt. The Company entered into a seven year, fixed rate real estate mortgage
loan secured by mortgages on 27 of the Company's properties in the principal
amount of $181,700,000 (the "Mortgage Loan"), at a weighted average interest
rate of 7.96% which includes trustee and servicer fees. The net proceeds of the
transaction were used to repurchase the $100 million adjustable rate mortgage
loan issued in conjunction with the Company's initial public offering in
November 1992 and pay off virtually all of the Company's $60 million of
additional adjustable rate debt. The Company recognized an extraordinary loss
of $11,052,000 primarily due to the write off of unamortized deferred financing
costs as well as premiums paid to repurchase the original REMIC certificates
related to the $100 million adjustable rate mortgage loan.
In November 1996, the Company entered into an agreement to acquire, through a
merger, Union Property Investors, Inc. ("UPI"). UPI owned sixteen properties
located in eleven states that have a total of approximately 1.3 million square
feet of gross leasable area and were approximately 99% leased. The Company
completed this acquisition in the first quarter of 1997. The total purchase
price of approximately $65 million was satisfied by the assumption of
approximately $30.2 million of existing debt, issuance of approximately $29.6
million of convertible preferred stock, approximately $3.6 million of redeemable
preferred stock and approximately $1.6 million of cash.
During 1996, four of the Company's anchor tenants, Bradlees, Rickels, Caldor and
Jamesway , were in bankruptcy under Chapter 11 of the bankruptcy code. In
general, in a Chapter 11 proceeding, the tenant is required to pay the full
rental to the landlord for the store on a current basis unless the lease is
disaffirmed.
The Bradlees stores are located in Bethlehem, Pennsylvania, Whitehall,
Pennsylvania and Groton, Connecticut and are approximately 85,899, 85,120 and
85,120 square feet, respectively. Stop & Shop Companies, Inc. is primarily
liable under all three leases. The Company believes that these three leases are
at or below market rental rates and, therefore, the Company would not have
significant difficulty in leasing these stores if the leases were rejected. The
average rent paid by Bradlees for these locations is approximately $6.50 per
square foot.
The Rickels stores are located in Phillipsburg, New Jersey and Yonkers, New York
and both are approximately 50,000 square feet. Rickels disaffirmed the lease
for the store located at Phillipsburg on November 30, 1996. The rental for this
store amounted to approximately $300,000 per year including reimbursements for
operating expenses. The Company is actively pursuing a replacement tenant for
the vacant Phillipsburg location. Rickels affirmed the lease at the Yonkers
location. Rental for this store is approximately $1.1 million including
reimbursements for operating expenses.
The Caldor stores are located in Towson, Maryland, Bristol, Pennsylvania and
Hamilton Township, New Jersey and are approximately 94,600, 113,160 and 119,935
square feet, respectively. The Towson lease is guaranteed by The May Company.
Effective November 1, 1996, the Company entered into an agreement to reduce the
common area maintenance and real estate tax reimbursements at one of the Caldor
locations by approximately $230,000 for each year in a five year period. The
Company believes that these three leases are at or below market rental rates
and, therefore, the Company would not have significant difficulty in leasing
these stores if the leases were rejected. The average rent paid by Caldor for
these locations is approximately $6.15 per square foot.
Effective February 29, 1996, Jamesway disaffirmed their leases at the two
locations in which they had operated. The Jamesway stores were located in
Phoenixville, Pennsylvania and Bradford, Pennsylvania and were approximately
60,138 and 76,000 square feet, respectively. The Company has leased the
Phoenixville, Pennsylvania location to Ames Department store, who is also
leasing an additional 4,000 square feet at that location. The Company believes
that the Jamesway lease at Bradford was below market rental rates (the rent paid
at the location was approximately $2.50 per square foot) and, therefore, the
Company will not have significant difficulty in leasing the available store.
(c) Financial Information About Industry Segments
The Company is in the business of owning, managing, operating, leasing,
acquiring, developing, investing in and disposing of neighborhood and community
shopping centers and free-standing properties. See the Consolidated Financial
Statements and Notes thereto included in Item 8 of this Annual Report on Form
10-K for certain financial information required by Item 1.
(d) Narrative Description of Business
General At March 24, 1997, the Company owned and operated 54 neighborhood and
community shopping centers and free-standing properties (the "Properties")
aggregating approximately 7.0 million square feet of GLA located in Arizona,
Connecticut, Georgia, Kentucky, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island,
South Carolina and Virginia.
The Company is self-administered and self-managed and does not engage or pay a
REIT advisor because the Company provides management, leasing, accounting,
legal, design and construction expertise through its own personnel or, where
appropriate, through outside professionals.
The Company's executive offices are located at 128 Fayette Street, Conshohocken,
Pennsylvania 19428 and its telephone number is (610) 941-9292.
Operating Strategies The Company's operating strategies are to: (i) focus on
the neighborhood and community shopping center business and, to a lesser extent,
the free-standing retail property business; (ii) actively manage its properties
(in a manner consistent with the REIT tax rules) for long-term cash flow growth
and capital appreciation; (iii) increase occupancy at its properties by
capitalizing on management's reputation and long-standing relationships with
national tenants and extensive experience in marketing to local tenants, as well
as the negotiating leverage inherent in a large portfolio of properties; (iv)
maintain, renovate, expand and reconfigure its properties; (v) optimize the mix
of tenants in each shopping center as that center's lease expiration schedule,
physical configuration, changing competitive position and trade area dictate;
(vi) develop or ground lease the parcels ("Out-Parcels") of vacant land existing
at its properties for use as restaurants, banks, auto centers, cinemas or other
facilities; (vii) benefit from economies of scale by spreading overhead
expenses over a larger asset base; and (viii) manage and/or lease real estate
properties for third parties to generate additional income (within the
limitations of REIT income requirements) and to provide opportunities to acquire
other real estate properties.
Acquisition Strategies/Investment Strategies The Company intends to make
acquisitions in a manner consistent with the requirements of the Internal
Revenue Code of 1986, as amended (the "Code") applicable to REITs and related
regulations with respect to the composition of the Company's portfolio and the
derivation of income unless, because of circumstances or changes in the Code (or
any related regulation), the trustees (the "Trustees") of the Company determine
that it is no longer in the best interests of the Company to qualify as a REIT.
The Company's acquisition strategies are to: (i) exploit today's favorable
climate for the purchase of neighborhood and community shopping centers by
buyers, such as the Company, which, due to their low level of existing
indebtedness, anticipated high ratio of cash flows to debt service and expected
access to the public equity and debt markets, have access to capital; and (ii)
acquire quality properties which have been over-leveraged or need replacement
anchor stores where the Company's expected ability to obtain financing to fund
tenant and other necessary improvements, and its management's leasing expertise
can enhance value. The Company does not intend to invest in excess of 15% of
its assets in any single property.
The Company will generally acquire 100% fee simple or leasehold interests in
real property consistent with the Company's acquisition strategies set forth
above. However, the Company may make equity investments through joint ventures
with developers, owners or other persons which may provide for, among other
terms, (i) a cumulative preference as to cash distributions; (ii) a
participation in net cash flows from operations; and (iii) a participation in
the appreciation of the value of the underlying real property. The Company
contemplates that it would maintain at least equal control over the underlying
real property to be operated by any joint venture (including possibly the
day-to-day management of the real property) and additional investments in or
sale or financing of such underlying real property. The Company may also
acquire investments in real property through issuance of debt or equity
securities in exchange for investments or by such other methods as the Trustees
deem to be in the best interests of the Company.
Financing Strategies The Company intends to maintain a conservative ratio of
debt to estimated value of the Company's real estate assets (as determined by
the Trustees, taking into consideration the tenants in occupancy, gross rental
revenues, geographic location and other factors affecting the value of the
Company's properties) ("Debt Ratio") of generally not more than 50%. At
December 31, 1996, the Company had a Debt Ratio of approximately 53% and a ratio
of debt to total market capitalization, based upon the closing price of the
Company's stock on the New York Stock Exchange as of December 31, 1996, of
approximately 54%. The Company intends to finance acquisitions with the most
appropriate sources of capital, as determined by the Trustees, which may include
available cash flows from operations, the issuance of equity securities, the
sale of investments and, within the debt guidelines described above, bank and
other institutional borrowings and the issuance of debt securities. Future
borrowings by the Company for acquisitions may be either on a secured or
unsecured basis.
In this regard, in addition to the Mortgage Loan, the Company has obtained
several credit facilities as described below.
In 1995, the Company obtained a $1.0 million unsecured credit facility from
Corestates Bank, N.A. (the "Corestates Facility"). Amounts borrowed under the
line of credit bear interest at the bank's prime rate. As of December 31, 1996,
there were no borrowings outstanding under the Corestates Facility. The facility
was extended in 1996 through December 31, 1997.
In November 1996, the Company obtained a $3.0 million secured line of credit
facility from Bank Leumi Trust Company of New York (the "Bank Leumi Facility").
Amounts borrowed under the Bank Leumi Facility will bear interest at 50 basis
points above that bank's reference rate. Borrowings under the Bank Leumi
Facility are secured by a first mortgage lien on the Golfland Shopping Center in
Orange, Connecticut. There were no outstanding borrowings under this facility
as of December 31, 1996. The expiration date of the Bank Leumi Facility is
October 31, 1997.
In February 1997, the Company obtained a secured first mortgage loan facility of
up to $50 million from Salomon Brothers Realty Corp.(the "Salomon Facility").
Fourteen of the Company's properties secure the Salomon Facility. Amounts
borrowed under the Salomon Facility will bear interest at a rate equal to the
one month London Interbank Offering Rate ("LIBOR") plus a spread of 175 basis
points. The term of the Salomon Facility is for two years, with an option for a
one year renewal. As of March 24, 1997, the Compnay had $13 million of
outstanding borrowings under this facility.
Operating Practices Virtually all operating and administrative functions, such
as leasing, data processing, maintenance, finance, accounting, construction and
legal, are centrally managed at the Company's headquarters. In addition, the
Company maintains regional offices at The Mall at Cross County in Yonkers, New
York and Marumsco Plaza, in Woodbridge, Virginia. On-site functions such as
security, maintenance, landscaping, sweeping, plumbing, electrical and other
similar activities are either performed by the Company or subcontracted. The
cost of these functions will be passed through to tenants to the extent
permitted by their respective leases.
The Company has proprietary sophisticated computer software systems designed to
support its operating and administrative functions and to optimize management's
ability to own, operate and manage additional properties without significant
increase in its general and administrative expenses. The Company's systems
allow instant access to floor plans, store availability, lease data, tenants'
sales history, cash flows and budgets. The Company believes its systems to be
as advanced as any in the industry.
Competition All of the Company's properties are located in developed retail
and commercial areas. There are generally numerous other neighborhood and
community shopping centers within a five-mile radius of a Property. In
addition, with respect to some of the Company's properties there are one or more
regional malls within a 10-mile radius. The amount of rentable space in the
area could have a material effect on the Company's ability to rent space and the
rents charged. In addition, the Company will be competing with others who may
have greater financial resources and experience than the Company and its
officers and Trustees for tenants and acquisitions.
Employees As of December 31, 1996, the Company had approximately 60 full and
part-time employees. None of the Company's employees are subject to a
collective bargaining agreement and the Company has experienced no labor-related
work stoppages. The Company considers its relations with its personnel to be
good.
Business Issues As the owner of real estate, the Company is subject to risks
arising in connection with the underlying real estate, including defaults under
or nonrenewal of tenant leases, tenant bankruptcies, competition, inability to
rent unleased space, failure to generate sufficient income to meet operating
expenses, including debt service, capital expenditures and tenant improvements,
environmental matters, financing availability and costs, and changes in real
estate and zoning laws. The success of the Company also depends upon certain
key personnel, its ability to maintain its qualification as a REIT, compliance
with the terms and conditions of the Mortgage Loan and the credit facilities and
trends in the national and local economy, including income tax laws,
governmental regulations and legislation and population trends.
Tax Status The Company has elected to be taxed as a REIT under Sections 856
through 860 of the Code, commencing with its taxable year ending December 31,
1992. So long as the Company qualifies for taxation as a REIT, the Company
generally will not be subject to Federal income tax to the extent it distributes
at least 95% of its REIT taxable income to its shareholders. If the Company
fails to qualify as a REIT in any taxable year, the Company will be subject to
Federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. Even if the Company qualifies for
taxation as a REIT, the Company may be subject to certain state and local taxes
on its income and property and to federal income and excise taxes on its
undistributed income.
ITEM 2.PROPERTIES
Shopping Center Properties The Company owns and operates 54 neighborhood and
community shopping centers and free-standing properties located in Arizona,
Connecticut, Georgia, Kentucky, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island,
South Carolina and Virginia. The Properties were designed to attract local area
customers and are typically anchored by a supermarket, discount department store
or drugstore, and are diversified in size, ranging from 387,000 square feet of
gross leasable area to a free-standing restaurant of only 4,000 square feet of
gross leasable area. Typical tenants are A & P SuperFresh Supermarkets (at 3
Properties), Bradlees (3), Pathmark Supermarkets (5), Discovery Zone (2), The
Sports Authority (2), Kmart (5), Caldor (3), Food Lion (3), Goody's (3),
Wal-Mart (2), Home Depot (1), Fashion Bug (12), Marshalls (3), Cato (7), Thrift
Drug (7), Drug Emporium (3), Radio Shack (9) Toys "R" Us (1) and Kids "R" Us
(3). At 27 of the Properties, free-standing restaurants, retail stores or
banks, such as McDonalds, Ponderosa, Pizza Hut, Signet Bank, Auto Zone, Tire
America and Somerset Tire Service, are tenants located on Out-Parcels. Three of
the Properties are community malls of 287,000 square feet, 218,000 square feet
and 173,000 square feet, respectively. One is anchored by Kmart while another is
anchored by Kids "R" Us, The Sports Authority and TJ Maxx. The third was
anchored by Jamesway and A & P SuperFresh Supermarkets. Jamesway closed in
December 1995 and Superfresh closed in February 1996. The Company leased the
Jamesway space to Ames Department Stores, which expects to open in April 1997.
Twenty of the Properties contain additional land for expansion of existing
stores and sixteen of the Properties have Out-Parcels available for development
of free-standing buildings for use as restaurants, banks, auto centers, cinemas
and other operations.
The Properties are smaller than regional malls, depend less on long travel times
and the sale of major consumer goods and focus on everyday purchases from a
smaller customer base. Discount stores and supermarkets attract convenience
goods shoppers and bring customers to the smaller satellite shops. Shopping
centers of this kind are typically less vulnerable to shifts in population and
traffic patterns and rely heavily on weekly advertising by the anchor tenants.
Consistent with its intention to retain its shopping centers for long-term
investment, the Company intends to continue to pursue a program of regular
physical maintenance, together with major renovations and refurbishing, to
preserve and increase the value of the Properties. These projects usually
include or will include renovating existing facades, installing uniform signage,
resurfacing parking lots and increasing parking lot lighting.
A substantial portion of the income from the Properties consists of rent
received under long-term leases. Most of the leases provide for the payment of
fixed minimum rent monthly in advance and for the payment by tenants of a pro
rata share of the real estate taxes, insurance, utilities and common area
maintenance of the shopping center. Certain of the major tenant leases provide
that the landlord is obligated to pay certain of these expenses above or below
specific levels. Except for Pathmark Supermarkets, Caldor and Bradlees, which
represented approximately 6%, 5% and 4%, respectively, no tenant represented
more than 4% of the aggregate minimum rent of the Properties as of December 31,
1996. Minimum rent revenues and operating expense reimbursements accounted for
approximately 97% of the total revenues of the Company for the year ended
December 31, 1996. A majority of the leases associated with the Properties also
provide for the payment of percentage rent calculated as a percentage of a
tenant's gross sales above predetermined thresholds. Percentage rent accounted
for appoximately 2% of the total revenues of the Company for the year ended
December 31, 1996.
The leases of space at the Properties typically require the landlord to provide
maintenance of a shopping center's common areas, including cleaning, lighting,
paving, security, landscaping and insurance, the costs of which are typically
reimbursed to the landlord by the tenants. The landlord is also typically
required to make roof and structural repairs as needed, which in some cases are
without reimbursement. The leases for larger shopping center tenants often
restrict the ability of tenants to assign or sublet their spaces and require
tenants to use the space they lease for the purposes designated in the leases
and to operate their businesses on a continuous basis. However, certain of the
leases with major tenants contain modifications of these provisions as a result
of the financial condition, stability or desirability of such tenants. If a
tenant assigns or subleases its space, the original tenant generally will remain
liable for the payment of rent under the lease.
Three of the Properties and a portion of another are subject to long-term ground
leases where a third party owns and has leased the underlying land to the
Company to operate a shopping center. The Company pays rent for the use of the
land and generally is responsible for all costs and expenses associated with the
building and improvements. At the end of the lease term, unless extended, the
land, together with all improvements thereon, will revert to the land owner
without compensation to the Company.
As of March 1, 1997, the occupancy rate for the Properties was approximately
91%. The property table set forth below gives more specific information with
respect to each of the Properties as of March 1, 1997.
<TABLE>
The following table sets forth certain information as of March 1, 1996 relating
to the Shopping Center Properties owned by the Company:
<CAPTION>
Gross Percent
Shopping Center Location of Year Ownership Land Leasable Leased
Property Shopping Developed Interest/ Area Area <F1> Anchor Tenants (lease expiration
Center or Aquired (expiration) (acres) (Sq. Ft.) /option expiration)
<S> <C> <C> <C> <C> <C> <C> <C>
Arizona
Sinclair Paints Tuscon 1997 Fee 0.77 14,840 100.00% Sinclair Paints (2000/2020)
Connecticut
Golfland Orange 1984 Fee 6.20 60,580 100.00% Pathmark (2008/2038) <F1>
Groton Square Groton 1987 Fee 17.74 191,955 94.88% Bradlees (2007/2027),
Stop & Shop (2007/2027)
Manchester Kmart Plaza Manchester 1994 Fee 21.06 183,376 91.55% Kmart (1997/2022),
Stop & Shop (2018/2058)
Milford Milford 1966 Leasehold 3.00 25,200 100.00% Xpect Discount Drug (1999/2009)
(2020)
Orange Orange 1967 Leasehold 3.43 27,000 100.00% Pergament Express (2004/2004)
(2006)
Parkway Plaza I Hamden 1982 Fee 6.55 72,530 82.41% Pathmark (2007/2037) <F1>
Parkway Plaza II Hamden 1985 Fee 8.00 162,164 45.19% Kids R Us (2006/2026),
Rickels (2005/2035) <F1>
Stratford Square Stratford 1984 Fee 19.58 160,176 95.20% Pathmark (2009/2039) <F1>,
Marshalls (2000/2010)
Georgia
Bainbridge Town Center Bainbridge 1997 Fee 19.86 143,729 100.00% Kmart (2015/2065),
Food Lion (2010/2030)
Kentucky
Harrodsburg Marketplace Harrodsburg 1997 Fee 7.00 60,048 100.00% Kroger (2007/2027)
Maryland
Anneslie Baltimore 1993 Fee 9.26 175,744 100.00% Caldor (2011/2041)
Campus Village College Park 1995 Fee 1.89 25,529 80.59% None
Coral Hills Coral Hills 1995 Fee 7.00 86,050 96.05% Shoppers Food Warehouse (2004/2029)
Fox Run Prince Frederick 1994 Fee 40.87 288,278 98.79% Kmart (2016/2066),
Giant Foods (2021/2051),
Peebles (2012/2032),
Raley's Home Furnishings (2004/2014)
Hillcrest Plaza Frederick 1995 Fee 12.00 109,071 87.18% Shoppers Food Warehouse (1999/2024)
Massachusetts
Ames Center Raynham 1997 Fee 5.76 55,000 100.00% Ames (2011/2031)
Michigan
Builder's Square Flint 1997 Fee 8.20 80,000 100.00% Builder's Square (2006/2026)
Musicland Livonia 1997 Fee 8.83 80,000 100.00% Media Play (2005/2025)
Minnesota
Baker's Square Minnetonka 1997 Fee 1.30 3,881 100.00% Baker's Square (2001/2021)
Baker's Square Roseville 1997 Fee 1.30 5,067 100.00% Baker's Square (2001/2021)
Mississippi
Brookway Village Brookhaven 1997 Fee 6.00 47,587 100.00% Delchamps (2008/2028)
Towne Square Columbus 1997 Fee 9.77 116,153 96.56% Goody's (1998/2008),
Crafts Plus (1998/2008),
Gold's Gym (2000/2010)
New Jersey
Collegetown Glassboro 1989 Fee 23.00 250,234 97.24% Kmart (2001/2021),
Acme (1999/2044)
Hillcrest Mall Phillipsburg 1985 Fee 18.00 220,985 55.77% Superfresh (1998/2008),
Staples (2010/2025),
R&S Strauss (2010/2025)
Suburban Plaza Hamilton 1994 Fee 23.15 239,723 99.28% Caldor (2013/2033),
Shop Rite (2002/2020 )
New York
A & P Mamaroneck Mamaroneck 1976 Fee 2.17 24,978 100.00% A & P (2006/2016)
Cross County Square Yonkers 1986 Fee 10.07 216,058 97.68% Rickel Home Centers (2012/2032),
Kids R Us (2008/2018),
The Sports Authority (2010/2025),
T.J. Maxx (2004/2014)
High Ridge Yonkers 1977 Fee 8.90 88,501 94.75% Pathmark (2003/2027)
North Ridge New Rochelle 1971 Fee 2.80 43,105 96.06% Harmon Cosmetics (2007/2017),
NRHMC (2011/2016)
Port Washington Port Washington 1968 Leasehold 1.00 19,600 91.84% North Shore Farms (1998/2033)
(2067)
Village Square Larchmont 1981 Fee 0.93 17,126 53.25% None
North Carolina
Cary Plaza Cary 1997 Fee 8.32 62,102 95.49% Food Lion (2010/2030),
Revco Drugs (2001/2026)
Magnolia Plaza Morganton 1997 Fee 17.14 104,026 98.37% Ingles Supermarket (2007/2062),
Goody's (1997/2002)
Pennsylvania
69th Street Plaza Upper Darby 1994 Fee 2.96 42,500 100.00% Drug Emporium (2000/2000)
Barn Plaza Doylestown 1987 Fee 35.00 180,987 100.00% Acme (2007/2037),
Marshalls (2004/2019),
Toy Warehouse (2004/2014)
Bensalem Square Bensalem 1983 Fee 16.38 72,558 96.68% Pathmark (2009/2039)
Best Plaza Tredyffrin 1993 Fee 11.14 113,000 40.71% Staples (1998/2008)
Bethlehem Square Bethlehem 1987 Fee 48.00 386,820 99.51% Bradlees (2007/2025),
TJ Maxx (2006/2021),
Shop Rite (2010/2030),
Toy Works (2000/2015),
Home Depot (2010/2040)
Bradford Mall Bradford 1990 Fee <F2> 30.00 287,389 69.13% Kmart (2004/2049)
Bristol Commerce Park Bristol 1992 Fee 50.00 272,990 100.00% Superfresh (2008/2038),
Caldor (2013/2033)
Franklin Center Chambersburg 1997 Fee 25.02 174,892 94.45% Food Lion (2010/2030),
Big Lots (1998/2008)
MacArthur Road Whitehall 1993 Fee 4.74 50,856 97.81% Oak Works (2007/2017),
Frank's Nursery (2002/2032)
Park Hills Plaza Altoona 1985 Fee 24.00 279,856 99.02% Weis Market (2022/2037),
Dunham's Sporting Goods (2004/2014),
Carmlike Cinemas (2006/2016),
Toys R Us (2015/2035),
Staples (2010/2020),
Superpetz (2005/2015)
Pilgrim Gardens Drexel Hill 1986 Fee 5.00 83,358 100.00% Loehmann's (2003/2013),
QVC Network, Inc. (1999/1999)
Street Road Bensalem 1993 Fee 10.35 68,031 95.59% Drug Emporium (2002/2008),
Frank's Nursery (2007/2022)
Valley Forge Mall Phoenixville 1985 Fee 18.00 177,380 72.14% Thrift Drug (2000/2010),
Ames (2017/2025)
Whitehall Square Whitehall 1986 Fee 30.44 298,023 100.00% Bradlees (2006/2024),
Phar Mor (2001/2016),
The Sports Authority (2006/2036),
Kids R Us (2007/2027)
Rhode Island
Wampanoag Plaza East Providence 1989 Fee 18.00 252,782 84.02% Rx Drug (2001/2016),
Cherry&Webb (2000/2005),
Marshalls (2001/2001),
Savers/TVI, Inc. (2010/2025) <F1>
South Carolina
East Main Centre Spartanburg 1997 Fee 23.06 171,595 100.00% Wal Mart (2009/2039),
Goody's (1999/2009)
Park Centre Columbia 1997 Fee 20.64 190,695 97.75% Wal Mart (2009/2039),
Harris Teeter (2012/2015)
Virginia
Culpeper Town Mall Culpeper 1995 Fee 27.48 131,086 87.98% Central Tractor (2000/2010),
Schewel Furniture (2001/2006)
Marumsco-Jefferson Plz. Woodbridge 1995 Fee 36.00 331,000 74.67% Giant Food Store (2004/2024),
Peebles (1994/2004)
CVS (2002/2002),
Odd Lots (2002/2012)
Newbridge Square Richmond 1997 Fee 6.29 55,000 100.00% USA Auctions, Inc (1998/1998)
------ ---------
Total 783.34 7,081,194 90.59%
====== =========
<FN>
<F1>
Includes space for which rent is being paid but which is not presently occupied.
<F2>
84,692 square feet gross leasable area is subject to a ground lease which expires in 2004.
</FN>
</TABLE>
Corporate Headquarters The Company leases from Norman M. Kranzdorf and his wife
a three-story building containing approximately 20,000 square feet located at
128 Fayette Street, Conshohocken, Pennsylvania 19428, which serves as the
Company's headquarters. The lease for the Company's headquarters, which expires
on January 15, 1999, provides that the Company will pay a rental of $153,720 per
annum. The lease also provides that the Company will pay for all real estate
taxes, utilities, repairs and other costs and expenses in connection with the
use and occupancy of the building. The Company subleases a portion of the
building to Scotmar Property Associates, Inc., a real estate brokerage company,
which occupies 2,700 square feet at a per annum rental equal to 40% of the net
commissions received by such entity for leases obtained for the Company. During
the period from January 1, 1996 to June 30, 1996, the Company was paid an
aggregate rental amount of $23,568 in connection with the sublease. For the
period July 1, 1996 to June 30, 1997, the Compnay in entitled to receive a
minimum rental of $33,000 under the terms of the related lease which originally
expired June 30, 1995 but was renewed by the Company in June 1995 for an
additional two years. The Company has decided not to renew the sublease with
Scotmar Property Associates in 1997.
Other Properties The Company owned a 90% interest in a partnership which owned
a 39,900 square foot parcel of vacant land in Philadelphia, Pennsylvania. The
partnership disposed of the land parcel on March 13, 1996 and recorded a loss on
the sale of the land of approximately $63,000.
ITEM 3. LEGAL PROCEEDINGS
The Company is not presently involved in any material litigation nor, to its
knowledge, is any material litigation threatened against the Company or its
properties, other than routine litigation arising in the ordinary course of
business and which is expected to be covered by the Company's liability
insurance.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
(a)Market Information
The Shares have been listed on the New York Stock Exchange ("NYSE") since
November 19, 1992 under the symbol "KRT." On March 24, 1997, the last reported
sale price of the Shares on the NYSE was $16.625. The following table shows the
high and low closing price for the Shares for the fiscal periods indicated as
reported by the New York Stock Exchange Composite Tape and the cash
distributions per Common Share paid by the Company with respect to each such
period.
<TABLE>
<CAPTION>
1996 High Low Distributions
<S> <C> <C> <C>
First Quarter $16.25 $14.75 $.48
Second Quarter $16.00 $14.13 $.48
Third Quarter $16.13 $14.13 $.48
Fourth Quarter $17.13 $14.88 $.48
<CAPTION>
1995 High Low Distributions
<S> <C> <C> <C>
First Quarter $19.50 $17.13 $.48
Second Quarter $19.00 $16.63 $.48
Third Quarter $18.75 $16.75 $.48
Fourth Quarter $17.00 $14.00 $.48
</TABLE>
(b)Holders
The approximate number of holders of record of the Shares was 1,100 as of March
24, 1997.
(c)Recent Sales of Unregistered Securities
On April 1, 1996, July 1, 1996, October 1,1996 and January 1, 1997, 267, 276,
333 and 296 Common Shares (the "Trustee Shares"), respectively, were issued to
each of Peter Linneman, Irvin Maizlish, James Selonick and Donald Shapiro,
non-employee trustees of the Company. The Trustee Shares were issued to such
individuals in lieu of (i) their annual trustee fee of $12,000, and (ii) a fee
of $1,000 for each regular Board meeting attended. The Trustee Shares were
valued based on the closing price of the Common Shares on the New York Stock
Exchange on the last business day of the fiscal quarter preceding the date of
grant. No underwriter was used in connection with the issuance of the Trustee
Shares. For the fiscal year 1996, the non-employee trustees received an
aggregate of 4,688 Common Shares having an aggregate value of $72,000 at the
date of grant.
The issuance of the Trustee Shares to the trustees were exempt from registration
under the Securities Act of 1993, as amended (the "Act"), as transactions by an
issuer not involving any public offering in accordance with Section 4(2) of the
Act.
(d)Distributions
The Company declared distributions to common shareholders aggregating $1.92 per
Common Share during the fiscal year ended December 31, 1996. Of these
distributions, it was determined that the entire distribution of $1.92 per
Common Share is return of capital.
The Company has paid regular quarterly cash distributions on the Common Shares
since it commenced operations as a REIT in November 1992.
Future distributions paid by the Company will be at the discretion of the
Trustees and will depend on the actual cash flow of the Company, its financial
condition, capital requirements, the annual distribution requirements under the
REIT provisions of the Code and such other factors as the Trustees deem
relevant.
The Company has adopted a dividend reinvestment plan pursuant to which
shareholders may elect to automatically reinvest their distributions in Shares.
To fulfill its obligations under this dividend reinvestment plan, the Company
will, from time to time, repurchase Shares in the open market or issue new
Shares.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth on a historical basis Selected Financial Data for
(a) the Company and (b) the net assets of Kranzco Realty, Inc., a general
commercial real estate management and brokerage business, Barn Plaza, Bradford
Mall, Hillcrest Mall, Loehmann's Plaza at Pilgrim Gardens and Wampanoag Plaza
(collectively, the "Kranzco Controlled Properties"), which, for accounting
purposes only, are considered the predecessor entity to the Company. This
information should be read in conjunction with the financial statements of the
Company and the Kranzco Controlled Properties (including the related notes
thereto) and Management's Discussion and Analysis of the Financial Condition and
Results of Operations. The historical Selected Financial Data for Kranzco
Realty Trust as of December 31, 1996, 1995, 1994, 1993 and 1992 and for the
years ended December 31, 1996, 1995, 1994 and 1993 and the period from June 17,
1992 to December 31, 1992, have been derived from the audited financial
statements. The historical Selected Financial Data for the Kranzco Controlled
Properties as of November 18, 1992 and for the period from January 1, 1992 to
November 18, 1992 has been derived from the audited financial statements.
<TABLE>
KRANZCO
CONTROLLED
KRANZCO REALTY TRUST PROPERTIES
-------------------- ----------
<CAPTION>
Year Ended December 31-- Period Ended Period Ended
December 31, November 18,
1996 1995 1994 1993 1992 1992
---- ---- ---- ---- ---- ----
(In thousands except share and per share data)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue
Minimum rent $41,665 $40,259 $33,166 $27,688 $3,151 $3,988
Percentage rent 1,042 1,044 1,000 695 642 52
Expense reimbursements 11,732 10,988 9,455 7,759 720 1,048
Interest income 624 902 985 948 26 0
Other income 117 277 434 2,619 162 949
------- ------- ------- ------- ------ ------
Total Revenue 55,180 53,470 45,040 39,709 4,123 6,237
Operating expenses, exclusive
of interest, depreciation and
amortization 18,445 16,482 15,638 13,252 1,451 3,166
Interest expense 17,069 16,208 10,469 8,877 1,064 2,512
Depreciation and amortization 11,194 10,903 9,066 7,636 782 1,097
------- ------- ------- ------- ------ ------
Operating income (loss) before
extraordinary items 8,472 9,877 9,867 9,944 826 (538)
Extraordinary loss on debt
refinancing 11,052 0 0 0 0 0
------- ------- ------- ------- ------ ------
Net income (loss) (2,580) 9,877 9,867 9,944 826 (538)
Preferred share distributions 695 485 0 0 0 0
Net income (loss) for common
shareholders ($3,275) $9,392 $9,867 $9,944 $826 $21
------- ------- ------- ------- ------ ------
Net income (loss) per
common share ($0.32) $0.91 $0.96 $1.16 $0.11 $21
------- ------- ------- ------- ------ ------
Weighted average number of
Common Shares
outstanding 10,327,795 10,319,464 10,315,497 8,590,850 7,840,464 1,000
BALANCE SHEET DATA:
Real estate, before accumulated
depreciation $370,491 $368,073 $318,870 $258,166 $225,596 $41,515
Total assets $359,157 $372,983 $331,779 $298,813 $251,720 $40,481
Total mortgages and
notes payable $212,590 $204,247 $160,771 $118,566 $119,798 $32,620
</TABLE>
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996 the Company had $5,301,000 of cash on hand. In addition to
its cash reserve, unused capacity under credit facilities totaled $4,000,000 at
year end. As of February 1997, this unused capacity increased to $13,000,000
due to the additional funds available from the secured first mortgage loan
facility of up to $50 million (the "Salomon Facility").
As of December 31, 1996 the Company had total mortgages and notes payable of
$212,590,000 of which $207,023,000 bear interest at fixed rates ranging from
7.96% to 10.5%. As of December 31, 1996, the Company is required to make
principal payments of $521,000 in 1997, $552,000 in 1998, $7,012,000 in 1999,
$565,000 in 2000 and $600,000 in 2001.
In June 1996, the Company successfully completed the refinancing of
substantially all of its variable rate debt and a portion of its fixed rate
debt. The Company entered into a seven year, secured, fixed rate real estate
mortgage loan in the principal amount of $181,700,000 (the "Mortgage Loan"), at
a weighted average interest rate of 7.96%, which is inclusive of trustee and
servicer fees. The entire principal balance of the Mortgage Loan is due in June
2003. The net proceeds of the refinancing transaction of $177,662,000, after
net costs of $4,038,000, were used to retire the short-term funds borrowed to
repurchase the $100 million adjustable rate mortgage loan issued in conjunction
with the Company's initial public offering in November 1992 and pay off
virtually all of the $60 million of additional adjustable rate debt. As a
result of the refinancing, 97% of the Company's debt is at fixed rates with a
weighted average interest rate of 8.17%. The Company recognized an
extraordinary loss of $11,052,000 in the second quarter of 1996, primarily due
to the write off of unamortized deferred costs as well as premiums paid to
repurchase the original REMIC certificates related to the $100 million
adjustable rate mortgage loan.
As a condition of the Mortgage Loan, the Company was required to establish a
Sinking Fund Account and a Capital and TI Reserve Account. On a monthly basis,
$11,000 is deposited into a Sinking Fund Account maintained with the Collateral
Agent until the aggregate amount in the account equals or exceeds $786,000. All
funds in the Sinking Fund Account are to be returned to the Company on the
earlier of the repayment in full of the Mortgage Loan and the date of release or
substitution of a property for the mortgaged property located in Orange, CT.
The balance in the Sinking Fund Account was $66,000 as of December 31, 1996. On
a monthly basis, an amount equal to 1/12th of $0.25 per square foot of the gross
leasable area of the Mortgaged Properties is deposited into the Capital and TI
Reserve Account. All funds in the Capital and TI Reserve Account may be used on
a current basis to fund capital improvements, repairs, alterations, tenant
improvements and leasing commissions at the Mortgaged Properties. The balance
in the Capital and TI Reserve Account was $263,000 as of December 31, 1996.
As of December 31, 1996, the Company has one floating rate mortgage with
principal outstanding of $5,567,000. The interest rate on the mortgage is the
prime rate plus 50 basis points with the principal balance being amortized at
the rate of $200,000 per year. The prime rate was 8.25% at December 31, 1996.
In November 1996, the Company obtained a $3.0 million secured line of credit
from Bank Leumi Trust Company of New York. Amounts borrowed under the line will
bear interest at 50 basis points above that bank's reference rate. There were
no outstanding borrowings under this facility as of December 31, 1996.
In 1995 the Company obtained a $1.0 million unsecured line of credit from
Corestates Bank, N.A. Amounts borrowed under the line will bear interest at the
bank's prime rate, which was 8.25% at December 31, 1996. The outstanding
borrowings under the facility were $500,000 as of December 31, 1995 and the
weighted average interest rate was 8.73% for the year ended December 31, 1995.
The facility was extended through December 31, 1997, and there were no
borrowings outstanding under this facility as of December 31, 1996.
In February 1997, the Company obtained a secured first mortgage loan facility of
up to $50 million from Salomon Brothers Realty Corp. Fourteen of the Company's
properties secure the mortgage loan facility. Amounts borrowed under the
Salomon Facility will bear interest at a rate equal to the one-month London
Interbank Offering Rate("LIBOR") plus a spread of 175 basis points. The term of
the Salomon Facility is for two years, with an option for a one year renewal.
The proceeds of the Salomon Facility will be used by the Company for funding
property acquisitions, general corporate purposes and capital needs.
In February 1997, the Company acquired, in a merger, Union Property Investors,
Inc. ("UPI") for approximately $65 million. UPI owned sixteen properties
located in eleven states that have a total of approximately 1.3 million square
feet of gross leasable area. The UPI portfolio was approximately 99% leased as
of December 31, 1996. The Company funded this purchase through the assumption
of approximately $30.2 million of existing debt and provided the balance of the
purchase price through the issuance of approximately $29.6 million of Kranzco
Series B-1 and Series B-2 Cumulative Convertible Preferred Shares (together the
"Kranzco Series B Preferred Shares"), approximately $3.6 million of Kranzco
Series C Redeemable Preferred Shares and approximately $1.6 million of cash.
The Kranzco Series B Preferred Shares and the Kranzco Series C Redeemable
Preferred Shares have distribution rates of 9.75% and 8.0%, respectively. The
Kranzco Series C Redeemable Preferred Shares are required to be redeemed in
eight equal quarterly installments commencing in April 1997. The merger with
UPI resulted in a 22% increase in the Company's gross leasable square feet and
enabled the Company to expand into nine additional states and diversify their
geographic presence and tenant base.
Effective January 1, 1996, The National Association of Real Estate Investment
Trusts (NAREIT) revised the definition of funds from operations to income
before depreciation and amortization of real estate assets and significant
non-recurring events, less gains on sale of real estate (the "new definition").
Funds from operations does not represent cash flows from operations as defined
by generally accepted accounting principles and is not necessarily indicative as
a measure of liquidity of the Company. Also, funds from operations should not be
construed as an alternative to net income as defined by generally accepted
accounting principles as an indicator of the Company's operating performance.
Funds from operations for common shareholders under the new definition decreased
$965,000 or 5% from $19,278,000 for the year ended December 31, 1995 to
$18,313,000 for the year ended December 31, 1996. Funds from operations for
common shareholders under the new definition increased $1,360,000 or 8% from
$17,918,000 for the year ended December 31, 1994 to $19,278,000 for the year
ended December 31, 1995.
The Company has several tenants who are operating under Chapter 11 of the United
States Bankruptcy code. Among the tenants are Bradlee's (three stores
representing approximately $2.2 million or 4.0% of the Company's annual
revenues) and Caldor (three stores representing approximately $2.5 million or
4.5% of the Company's annual revenues). To date Bradlee's and Caldor have not
taken any action to reject these leases and continue to pay current rent and
operate their stores located in the Company's centers. Effective November 1,
1996, the Company entered into an agreement to reduce common area maintenance
and real estate tax reimbursements at one of the Caldor locations for a five
year period. Rickel's disaffirmed the lease for the store located at the
Hillcrest Mall in Phillipsburg, NJ on November 30, 1996. The rental for this
store amounted to approximately $300,000 per year including reimbursements for
operating expenses. Rickel's has affirmed the lease for The Mall at Cross
County. The rental for this store amounts to approximately $1.1 million per year
including reimbursements for operating expenses. Effective February 29, 1996,
Jamesway disaffirmed their leases at the two locations in which they had
operated. The Jamesway stores were approximately 60,000 and 76,000 square feet,
respectively, and the average rent paid by Jamesway for these locations was
approximately $2.60 per square foot, which represented less than 1% of revenues
in 1995. The Company has leased the approximately 60,000 square foot store to
Ames Department store, who is also leasing an additional 4,000 square feet at
that location. Other tenants in the Company's portfolio that continue to pay
current rent and operate their stores under Chapter 11 are individually less
than 1% of annual revenues but in the aggregate are approximately 2.6% of the
Company's annual revenues. The Company believes that it is adequately reserved
for these tenants.
During the year ended December 31, 1996, the Company invested approximately
$2,418,000 in the expansion and improvement of existing shopping center
properties. The Company expects to meet its short-term liquidity requirements
through net cash flow provided from operations, existing cash, long-term or
short-term borrowings and the Capital and TI Reserve account. The Capital and
TI Reserve account may be utilized by the Company for the funding of costs
related to capital improvements, repairs, alterations, tenant improvements and
leasing commissions in the centers secured by the Mortgage Loan. To meet its
long-term liquidity requirements, such as refinancing its balloon mortgages,
financing acquisitions and major capital improvements, the Company intends to
either utilize long-term borrowings, issue debt securities and/or offer
additional equity securities.
Management believes it has adequate access to capital to continue to meet its
short-term and long-term requirements and objectives.
RESULTS OF OPERATIONS
Year ended December 31, 1996 versus the year ended December 31, 1995
Net income (loss) for common shareholders decreased $12,667,000 from $9,392,000
or $0.91 per common share in 1995 to ($3,275,000) or ($0.32) per common share
in 1996. Excluding the extraordinary loss on refinancing, the net income for
common shareholders decreased $1,615,000 or 17% from $9,392,000, or $0.91 per
common share in 1995 to $7,777,000, or $0.75 per common share in 1996.
Excluding the extraordinary loss on refinancing, the decrease was primarily due
to the unusually high snow removal costs incurred in the first quarter of 1996
as a result of the severe winter weather experienced in the Northeastern portion
of the United States and a loss of tenants at the Company's properties resulting
in a reduction in the leased percentage of the portfolio from 93% at December
31, 1995 to 90% at December 31, 1996. The Company also recognized a loss of
$63,000 on the sale of real estate in the first quarter of 1996 in connection
with the sale of a 3.4 acre parcel of land located in Philadelphia,
Pennsylvania.
Minimum rent increased $1,406,000 or 4% from $40,259,000 for the year ended
December 31, 1995 to $41,665,000 for the year ended December 31, 1996. The
increase was primarily due to the additional rents from a full year of
operations for the five centers purchased by the Company in April 1995
($1,450,000).
Expense reimbursements increased $744,000 or 7% from $10,988,000 for the year
ended December 31, 1995 to $11,732,000 for the year ended December 31, 1996.
The increase was primarily due to the additional reimbursements from a full year
of operations for the five centers purchased by the Company during April 1995
combined with an increase in operating expenses at the centers and the increased
recovery of additional common area maintenance expenses due to the snow removal
costs.
Interest income decreased $278,000 or 31% from $902,000 for the year ended
December 31, 1995 to $624,000 for the year ended December 31, 1996. The
decrease was primarily due to the sale of the Series A-2 Commercial Mortgage
Modified Pass - Through Interest Only Certificates (the "Series A-2
Certificates"). The Series A-2 Certificates provided for payment of interest
only at 65 basis points calculated on a notional amount of $100,000,000. The
Series A-2 Certificates were sold in connection with the debt refinancing in
June 1996.
Interest expense increased $861,000 or 5% from $16,208,000 for the year ended
December 31, 1995 to $17,069,000 for the year ended December 31, 1996. The
increase is primarily due to a full year of interest expense being recorded on
the centers purchased in 1995. In addition, interest expense was reduced by
capitalized interest on projects under construction and land under development
in the amount of $320,000 and $252,000 during 1995 and 1996, respectively.
Depreciation and amortization increased $291,000 or 3% from $10,903,000 for the
year ended December 31, 1995 to $11,194,000 for the year ended December 31,
1996. The increase was primarily due to the additional depreciation for a full
year of operations for the five centers purchased by the Company during 1995.
Real estate taxes increased $125,000 or 2% from $5,948,000 for the year ended
December 31, 1995 to $6,073,000 for the year ended December 31, 1996. The
increase was primarily due to the additional real estate taxes for a full year
of operations for the five centers purchased by the Company during 1995. The
increase was offset by the capitalization of real estate taxes on projects under
construction of $144,000 and $124,000 during the years 1995 and 1996,
respectively.
Operations and maintenance expenses increased $1,868,000 or 25% from $7,605,000
for the year ended December 31, 1995 to $9,473,000 for the year ended December
31, 1996. The increase was primarily due to the unusually high snow removal
costs incurred as a result of the severe winter experienced in the first quarter
of 1996 in the Northeast portion of the United States (approximately $1
million), as well as the additional costs incurred at the five centers acquired
in 1995.
General and administrative expenses decreased $93,000 or 3% from $2,929,000 for
the year ended December 31, 1995 to $2,836,000 for the year ended December 31,
1996. The decrease is primarily due to capitalization of certain direct labor
costs in 1996 related to the merger of the Company with UPI.
Year ended December 31, 1995 versus the year ended December 31, 1994
Net income for common shareholders decreased $475,000, or 5%, to $9,392,000 or
$0.91 per common share, in 1995 from $9,867,000 or $0.96 per common share, in
1994. This decrease was due to a combination of factors as described below.
Minimum rent increased $7,093,000 or 21% from $33,166,000 for the year ended
December 31, 1994 to $40,259,000 for the year ended December 31, 1995. The
increase was primarily due to the additional rents from a full year of
operations for the four centers purchased by the Company during 1994
($1,737,000) and the additional rent generated by the five centers purchased in
1995 ($3,478,000). The balance of the increase ($1,878,000) or 6% was due to
the leasing of previously vacant space and higher renewal rates for existing
leases at centers owned for the entire years of 1994 and 1995.
Percentage rent increased $44,000 or 4% from $1,000,000 for the year ended
December 31, 1994 to $1,044,000 for the year ended December 31, 1995. The
change was due to the acquisition of the centers purchased in 1995.
Expense reimbursements increased $1,533,000 or 16% from $9,455,000 for the year
ended December 31, 1994 to $10,988,000 for the year ended December 31, 1995.
The increase was primarily due to the additional reimbursements from a full year
of operations for the four centers purchased by the Company during 1994 and the
additional reimbursements generated by the five centers purchased in 1995, which
was offset by the decrease in snow removal cost reimbursement from 1994 to 1995.
Interest expense increased $5,739,000 or 55% from $10,469,000 for the year ended
December 31, 1994 to $16,208,000 for the year ended December 31, 1995. The
increase is primarily due to the interest on mortgages related to centers
purchased in 1994 and an increase in interest rates on the Company's $100
million adjustable rate mortgage loan, which was partially offset by payments
related to the Company's interest rate protection agreements, as previously
described, in the amount of $390,000 and $1,310,000 in 1994 and 1995,
respectively. In addition, interest expense was reduced by capitalized interest
on projects under construction and land under development in the amount of
$943,000 and $320,000 during 1994 and 1995, respectively.
Depreciation and amortization increased $1,837,000 or 20% from $9,066,000 for
the year ended December 31, 1994 to $10,903,000 for the year ended December 31,
1995. The increase was primarily due to the additional depreciation for a full
year of operations for the four centers purchased by the Company during 1994 and
the additional depreciation for the five centers purchased during 1995.
Real estate taxes increased $1,048,000 or 21% from $4,900,000 for the year ended
December 31, 1994 to $5,948,000 for the year ended December 31, 1995. The
increase was primarily due to the additional real estate taxes for a full year
of operations for the four centers purchased by the Company during 1994 and the
additional real estate taxes for the five centers purchased in 1995. The
increase was offset by the capitalization of real estate taxes on projects under
construction of $240,000 and $144,000 during the year 1994 and 1995,
respectively.
Operations and maintenance expenses decreased $122,000 or 2% from $7,727,000 for
the year ended December 31, 1994 to $7,605,000 for the year ended December 31,
1995. The decrease was primarily due to the reduction in snow removal costs from
1994 to 1995 which was offset by the additional expenses for a full year of
operations of the four centers purchased by the Company during 1994 and the
expenses relating to the centers purchased during 1995.
General and administrative expenses decreased $82,000 or 3% from $3,011,000 for
the year ended December 31, 1994 to $2,929,000 for the year ended December 31,
1995. The decrease is primarily due to a decrease in state capital stock and
franchise taxes and to a lesser degree a decrease in use of outside
professionals.
INFLATION
Most of the retail tenant leases at the shopping center properties contain
provisions which will entitle the Company to receive percentage rents based on
the tenants' gross sales. Such percentage rents minimize the risk to the Company
of the adverse effects of inflation. Most of the leases at the shopping center
properties require the tenants to pay a substantial share of operating expenses,
such as real estate taxes, insurance and common area maintenance costs, and
thereby reduce the Company's exposure to increased costs. In addition, many of
the leases at the shopping center properties are for terms of less than ten
years, which may enable the Company to seek increased rents upon renewal of
existing leases.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item 8 is included as a separate section of this Annual
Report on Form 10-K.
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
PART III
ITEM 10.DIRECTOR AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with the Securities and Exchange Commission within 120 days after the
year covered by this Form 10-K with respect to its Annual Meeting of
Shareholders to be held on June 4, 1997.
ITEM 11.EXECUTIVE COMPENSATION
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with the Securities and Exchange Commission within 120 days after the
year covered by this Form 10-K with respect to its Annual Meeting of
Shareholders to be held on June 4, 1997.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with the Securities and Exchange Commission within 120 days after the
year covered by this Form 10-K with respect to its Annual Meeting of
Shareholders to be held on June 4, 1997.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to the Company's definitive proxy statement to
be filed with the Securities and Exchange Commission within 120 days after the
year covered by this Form 10-K with respect to its Annual Meeting of
Shareholders to be held on June 4, 1997.
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a)(1)Financial Statements
Kranzco Realty Trust
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements Of Operations for the years ended December 31, 1996,
1995 and 1994
Consolidated Statements Of Beneficiaries' Equity for the years ended December
31, 1996, 1995 and 1994
Consolidated Statements Of Cash Flows for the years ended December 31, 1996,
1995 and 1994
Notes To Consolidated Financial Statements
(2)Financial Statement Schedule
Kranzco Realty Trust
Report of Independent Public Accountants
Schedule III - Real Estate and Accumulated Depreciation - December 31, 1996
Notes to Schedule III
(3)Exhibits
2.1 Agreement and Plan of Merger, dated November 12, 1996, among Kranzco
Realty Trust, KRT Union Corp. and Union Property Investors, Inc. (Incorporated
by reference to Exhibit 2.1 of the Company's Registration Statement on Form S-4
No. 333-18249.)
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated December 18, 1996.
(Incorporated by reference to Exhibit 2.2 of the Company's Registration
Statement on Form S-4 No. 333-18249.)
2.3 Amendment No. 2 to Agreement and Plan of Merger, dated February 26, 1997.
(Incorporated by reference to Exhibit 2.3 of the Company's Current Report on
Form 8-K filed March 14, 1997.)
3.1 Amended and Restated Declaration of Kranzco Realty Trust. (Incorporated
by reference to Exhibit 3.4 of the Company's Registration Statement
No.33-49434.)
3.2 Bylaws, as amended. (Incorporated by reference to Exhibit 3.2 of the
Company's Registration Statement No.33-49434.)
3.3 Amendment of Amended and Restated Declaration of Trust.
4.1 Specimen certificate for Common Shares of Beneficial Interest.
(Incorporated by reference to Exhibit 4.1 of the Company's Registration
Statement No.33-49434.)
4.2 Warrant to purchase 170,000 Common Shares of Kranzco Realty Trust, dated
November 19, 1992, issued to the Chapter 11 Estate of Bernard J. Rosenhein and
the subsequently consolidated entities. (Incorporated by reference to Exhibit
4.2 of the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.)
4.3 Warrant to purchase 21,429 Common Shares of Kranzco Realty Trust, dated
November 19, 1992 issued to David Goldman. (Incorporated by reference to
Exhibit 4.3 of the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.)
4.4 Article Supplementary for the Series A Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest. (Incorporated by reference
to the Company's Report on Form 8-K dated May 4, 1995.)
4.5 Articles Supplementary Classifying 11,155 Shares of Beneficial Interest as
Series A-1 Increasing Rate Cumulative Convertible Preferred Shares of Beneficial
Interest. (Incorporated by reference to Exhibit 4.5 of the Company's
Registration Statement on Form S-4 No. 333-18249.)
4.6 Articles Supplementary for the Company's Series B-1 Cumulative Convertible
Preferred Shares of Beneficial Interest. (Incorporated by reference to Exhibit
3.4 of the Company's Registration Statement on Form 8-A dated February 27,
1997.)
4.7 Articles Supplementary for the Company's Series B-2 Cumulative Convertible
Preferred Shares of Beneficial Interest. (Incorporated by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-4 No. 333-18249.)
4.8 Articles Supplementary for the Company's Series C Cumulative Redeemable
Preferred Shares of Beneficial Interest. (Incorporated by reference to Exhibit
4.3 of the Company's Registration Statement on Form S-4 No. 333-18249.)
10.1 Kranzco Realty Trust 1992 Employees Share Option Plan, as amended.
(Incorporated by reference to Exhibit 10.10 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992.)
10.2 Kranzco Realty Trust 1992 Employees Share Option Plan, amended.
(Incorporated by reference to Exhibit 10.11 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992.)
10.3. Loan Agreement, dated as of November 19, 1992, between KRT Mortgage
Securities Trust and KRT Property Holdings, Inc. (Incorporated by reference to
Exhibit 28.1 of the Company's Report on Form 8-K dated December 17, 1992.)
10.4 Mortgage Promissory Note, dated November 19, 1992, made by KRT Property
Holdings, Inc., in favor of KRT Mortgage Securities Trust. (Incorporated by
reference to Exhibit 28.2 of the Company's Report on Form 8-K dated December 17,
1992.)
10.5 Collection Account and Reserve Account Agreement, dated as of November
19, 1992, by and among KRT Property Holdings, Inc., Norwest Bank Minnesota,
National Association, as account agent, Kranzco Realty Trust, KRT Mortgage
Securities Trust and Norwest Bank Minnesota, National Association, as trustee.
(Incorporated by reference to Exhibit 28.3 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.6 Environmental Indemnity Agreement, dated as of November 19, 1992, by and
among KRT Property Holdings, Inc., KRT Mortgage Securities Trust and Norwest
Bank Minnesota, National Association, as trustee. (Incorporated by reference
to Exhibit 28.4 of the Company's Report on Form 8-K dated December 17, 1992.)
10.7 Representations Agreement, dated as of November 19, 1992, by and among
KRT Mortgage Securities Trust, Cargill Financial Services Corporation and KRT
Property Holdings, Inc. (Incorporated by reference to Exhibit 28.5 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.8 Interest Rate and Currency Exchange Agreement, dated as of November 10,
1992, between Societe Generale, New York Branch, and KRT Property Holdings, Inc.
(Incorporated by reference to Exhibit 28.6 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.9 Letter Agreement, dated November 12, 1992, between Societe Generale, New
York Branch, and KRT Property Holdings, Inc. regarding rate caps. (Incorporated
by reference to Exhibit 28.7 of the Company's Report on Form 8-K dated December
17, 1992.)
10.10 Letter Agreement, dated October 1, 1993, between Morgan Guaranty Trust
Company of New York and KRT Property Holdings, Inc., regarding rate caps.
(Incorporated by reference to Exhibit 10.10 of the Company's Annual Report on
Form 10-K dated March 17, 1994.)
10.11 Subordination Agreement, dated as of November 19, 1992, by and among KRT
Mortgage Securities Trust, Kranzco Realty Trust, KRT Property Holdings, Inc. and
Cargill Financial Services Corporation. (Incorporated by reference to Exhibit
28.8 of the Company's Report on Form 8-K dated December 17, 1992.)
10.12 Security Agreement, dated as of November 19, 1992, KRT Property
Holdings, Inc., Norwest Bank Minnesota, National Association, as trustee of KRT
Mortgage Securities Trust. (Incorporated by reference to Exhibit 28.9 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.13 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Barn Plaza. (Incorporated by reference to Exhibit 28.10
of the Company's Report on Form 8-K dated December 17, 1992.)
10.14 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bradford Mall. (Incorporated by reference to Exhibit
28.11 of the Company's Report on Form 8-K dated December 17, 1992.)
10.15 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bristol Commerce Park. (Incorporated by reference to
Exhibit 28.12 of the Company's Report on Form 8-K dated December 17, 1992.)
10.16 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Park Hills Plaza. (Incorporated by reference to Exhibit
28.13 of the Company's Report on Form 8-K dated December 17, 1992.)
10.17 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Valley Forge Mall. (Incorporated by reference to
Exhibit 28.14 of the Company's Report on Form 8-K dated December 17, 1992.)
10.18 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bensalem Square Shopping Center. (Incorporated by
reference to Exhibit 28.15 of the Company's Report on Form 8-K dated December
17, 1992.)
10.19 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bethlehem Square Shopping Center. (Incorporated by
reference to Exhibit 28.16 of the Company's Report on Form 8-K dated December
17, 1992.)
10.20 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Whitehall Shopping Center. (Incorporated by reference
to Exhibit 28.17 of the Company's Report on Form 8-K dated December 17, 1992.)
10.21 Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Financing Statement from KRT Property
Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with
respect to Wampanoag Plaza. (Incorporated by reference to Exhibit 28.18 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.22 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Golfland Shopping Center. (Incorporated by reference to Exhibit 28.19 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.23 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Groton Square Shopping Center. (Incorporated by reference to Exhibit 28.20 of
the Company's Report on Form 8-K dated December 17, 1992.)
10.24 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Milford Shopping Center. (Incorporated by reference to Exhibit 28.21 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.25 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Parkway Plaza I Shopping Center. (Incorporated by reference to Exhibit 28.22 of
the Company's Report on Form 8-K dated December 17, 1992.)
10.26 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Stratford Square Shopping Center. (Incorporated by reference to Exhibit 28.23
of the Company's Report on Form 8-K dated December 17, 1992.)
10.27 Fee and Leasehold Mortgage Consolidation and Spreader Agreement,
Assignment of Leases and Rents, Security Agreement and Fixture Financing
Statement from KRT Property Holdings, Inc. to KRT Mortgage Securities Trust,
dated November 19, 1992, with respect to A&P Mamaroneck Shopping Center, Cross
County Shopping Center, High Ridge Shopping Center, North Ridge Shopping Center,
Port Washington Shopping Center and Village Square Shopping Center.
(Incorporated by reference to Exhibit 28.24 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.28 Loan Agreement, dated as of November 19, 1992, by and between KRT
Property Holdings, Inc. and Parkway Plaza II Corp. (Incorporated by reference
to Exhibit 28.25 of the Company's Report on Form 8-K dated December 17, 1992.)
10.29 Mortgage Promissory Note, dated November 19, 1992, made by Parkway Plaza
II Corp. in favor of KRT Property Holdings, Inc. (Incorporated by reference to
Exhibit 28.26 of the Company's Report on Form 8-K dated December 17, 1992.)
10.30 Environmental Indemnity Agreement, dated as of November 19, 1992, by and
between KRT Property Holdings, Inc. and Parkway Plaza II Corp. (Incorporated by
reference to Exhibit 28.27 of the Company's Report on Form 8-K dated December
17, 1992.)
10.31 Security Agreement, dated as of November 19, 1992, by and between KRT
Property Holdings, Inc. and Parkway Plaza II Corp. (Incorporated by reference
to Exhibit 28.28 of the Company's Report on Form 8-K dated December 17, 1992.)
10.32 Mortgage Deed, Leasehold Mortgage Deed, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from Parkway Plaza II Corp.
to KRT Property Holdings, Inc. dated November 19, 1992, with respect to Parkway
Plaza II Shopping Center. (Incorporated by reference to Exhibit 28.29 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.33 Collateral Assignment Agreement, dated as of November 19, 1992, by and
between KRT Property Holdings, Inc. and KRT Mortgage Securities Trust.
(Incorporated by reference to Exhibit 28.30 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.34 Trust and Servicing Agreement, dated November 19, 1992, by and among the
parties listed on Schedule A thereto, KRT Property Holdings, Inc. and Norwest
Bank Minnesota, National Association. (Incorporated by reference to Exhibit
28.31 of the Company's Report on Form 8-K dated December 17, 1992.)
10.35 Note Purchase Agreement dated February 15, 1994 among Nomura Asset
Capital Corporation, KR Suburban, L.P., KR 69th Street, L.P. and Kranzco Realty
Trust. (Incorporated by reference to Exhibit 10.35 of the Company's Annual
Report on Form 10-K dated March 17, 1994.)
10.36 Repurchase Agreement dated February 15, 1994 between Kranzco Realty
Trust and Nomura Asset Capital Corporation. (Incorporated by reference to
Exhibit 10.36 of the Company's Annual Report on Form 10-K dated March 17, 1994.)
10.37 $50 Million Senior Secured Floating Rate Note due 1996 issued by KR
Suburban, L.P. and KR 69th Street, L.P. in favor of Nomura Asset Capital
Corporation. (Incorporated by reference to Exhibit 10.37 of the Company's
Annual Report on Form 10-K dated March 17, 1994.)
10.38 Kranzco Realty Trust 1995 Incentive Plan. (Incorporated by reference to
Exhibit 4.4 of the Company's Registration Statement on Form S-8 No. 33-94294.)
10.39 Loan Agreement dated as of February 26, 1997 with Salomon Brothers
Realty Corp. (Incorporated by reference to Exhibit 10.1 of the Company's
Current Report on Form 8-K filed March 14, 1997.)
10.40 Global Promissory Note dated February 26, 1997 in the amount of
$50,000,000 executed in favor of Salomon Brothers Realty Corp. (Incorporated by
reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed
March 14, 1997.)
10.41 Unlimited Guaranty of Payment dated as of February 26, 1997 issued by
Kranzco Realty Trust in favor of Salomon Brothers Realty Corp. (Incorporated by
reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed
March 14, 1997.)
10.42 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. (Incorporated by reference to
Exhibit 10.4 of the Company's Current Report on Form 8-K filed March 14, 1997.)
10.43 Trust and Servicing Agreement, dated as of June 18, 1996, among KRT
Origination Corp., GE Capital Management Corporation and State Street Bank and
Trust Company.
10.44 Cash Collateral Account, Security, Pledge and Assignment Agreement,
dated as of June 18, 1996, among the Borrowers, State Street Bank and Trust
Company, as Agent, and KRT Origination Corp., as Lender.
10.45 Cash Collateral Agreement, dated June 18, 1996, among the Borrowers, and
State Street Bank and Trust Company, as Agent.
10.46 $123,700,000.00 Class A Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.47 $20,600,000.00 Class B Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.48 $28,900,000.00 Class C Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.49 $8,500,000.00 Class D Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.50 Form of Indenture of Mortgage, Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security
Deposits made by the Borrowers, as grantor, for the benefit of KRT Origination
Corp., as mortgagee, and filed in Connecticut, Maryland, New Jersey, New York
and Pennsylvania with respect to Groton Square in Groton, Connecticut,
Manchester Kmart in Manchester, Connecticut, Milford in Milford, Connecticut,
Orange in Orange, Connecticut, Fox Run in Prince Frederick, Maryland, Hillcrest
Plaza in Frederick, Maryland, Anneslie in Baltimore, Maryland, Suburban Plaza in
Hamilton, New Jersey, Collegetown in Glassboro, New Jersey, Hillcrest Mall in
Phillipsburg, New Jersey, The Mall at Cross County in Yonkers, New York,
Highridge Plaza in Yonkers, New York, North Ridge in New Rochelle, New York,
Village Square in Larchmont, New York, A&P Mamaroneck in Mamaroneck, New York,
Port Washington in Port Washington, New York, Bethlehem Square in Bethlehem,
Pennsylvania, Whitehall Square in Whitehall, Pennsylvania, Bristol Commerce Park
in Bristol, Pennsylvania, Park Hills Plaza in Altoona, Pennsylvania, Barn Plaza
in Doylestown, Pennsylvania, Best Plaza in Tredyffrin, Pennsylvania, Bensalem
Square in Bensalem, Pennsylvania, Street Road in Bensalem, Pennsylvania, Pilgrim
Gardens, Drexel Hill, Pennsylvania, 69th Street Plaza in Upper Darby,
Pennsylvania, and MacArthur Road in Whitehall, Pennsylvania, (the "Properties").
10.51 Form of Unrecorded Indenture of Mortgage, Deed of Trust, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents
and Security Deposits made by the Borrowers, as grantor, for the benefit of KRT
Origination Corp., and held in escrow with respect to the Properties located in
Maryland and in New York.
10.52 Escrow Agreement made among KRT Origination Corp., the Borrowers and
Robinson Silverman Pearce Aronsohn & Berman LLP, as escrow agent, with respect
to the unrecorded second mortgages covering the Properties located in New York
and Maryland and referred to in Exhibit 10.51 above.
21.1 Subsidiaries of Kranzco Realty Trust.
23.1 Consent of Arthur Andersen LLP.
(4)Reports on Form 8-K
No Reports on Form 8-K were filed by the Company with the Securities and
Exchange Commission during the three months ending December 31, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
KRANZCO REALTY TRUST
(Registrant)
By: /s/ Norman M. Kranzdorf
Norman M. Kranzdorf
Chief Executive Officer
Dated: March 24, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Norman M. Kranzdorf President, Chief Executive March 24, 1997
Norman M. Kranzdorf Officer and Trustee (Principal
Executive Officer)
/s/ Robert H. Dennis Chief Financial Officer, March 24, 1997
Robert H. Dennis Treasurer and Trustee (Principal
Financial and Accounting Officer)
/s/ Edmund Barrett Chief Operating Officer, Executive March 24, 1997
Edmund Barrett Vice President and Trustee
/s/ Dr. Peter D. Linneman Trustee March 24, 1997
Dr. Peter D. Linneman
/s/ E. Donald Shapiro Trustee March 24, 1997
E. Donald Shapiro
/s/ James B. Selonick Trustee March 24, 1997
James B. Selonick
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
FINANCIAL STATEMENTS
Kranzco Realty Trust
* Report of Independent Public Accountants F-1
* Consolidated Balance Sheets as of December 31, 1996 and 1995 F-2
* Consolidated Statements Of Operations for the years ended
December 31, 1996, 1995 and 1994 F-3
* Consolidated Statements Of Beneficiaries' Equity for the years
ended December 31, 1996, 1995 and 1994 F-4
* Consolidated Statements Of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 F-5
* Notes To Consolidated Financial Statements F-6
FINANCIAL STATEMENT SCHEDULES
Kranzco Realty Trust
* Report of Independent Public Accountants S-1
* Schedule III - Real Estate and Accumulated Depreciation -
December 31, 1996 S-2
* Notes to Schedule III S-5
<PAGE>
<AUDIT-REPORT>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of
Kranzco Realty Trust:
We have audited the accompanying consolidated balance sheets of Kranzco Realty
Trust (a Maryland trust) and subsidiaries as of December31, 1996 and 1995, and
the related consolidated statements of operations, beneficiaries equity and
cash flows for each of the three years in the period ended December31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Kranzco Realty Trust and
subsidiaries as of December31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December31, 1996 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Philadelphia, Pa.
February 28, 1997
</AUDIT-REPORT>
<PAGE>
<TABLE>
Kranzco Realty Trust and Subsidiaries
Consolidated Balance Sheets
<CAPTION>
December 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS:
Shopping center properties owned, at cost (Notes 1, 9 and 10)
Buildings and improvements $294,293,000 $292,687,000
Land 76,198,000 75,386,000
----------- -----------
370,491,000 368,073,000
Less-accumulated depreciation 35,287,000 25,152,000
----------- -----------
335,204,000 342,921,000
Cash and cash equivalents (Note 1 ) 5,301,000 6,129,000
Marketable securities - 273,000
Restricted cash (Note 2) 329,000 216,000
Rents and other receivables, net of allowance of
$1,245,000 and $831,000, December 31,1996 and 1995 (Notes 1, 3 and 4) 9,661,000 8,282,000
Prepaid expenses 1,729,000 1,875,000
Deferred financing costs, net of accumulated amortization of $203,000
and $7,633,000, December 31,1996 and 1995 (Notes 1 and 2) 1,893,000 10,071,000
Deferred costs, net of accumulated amortization of $888,000
and $496,000, December 31,1996 and 1995 (Note 1) 1,793,000 1,688,000
Other assets 3,247,000 1,528,000
----------- -----------
Total assets $359,157,000 $372,983,000
=========== ===========
LIABILITIES:
Mortgages and notes payable (Notes 2 and 12) $212,590,000 $204,247,000
Tenant security deposits 1,136,000 1,129,000
Accounts payable and accrued expenses 2,785,000 1,875,000
Other liabilities 527,000 756,000
Distributions payable (Note 5) 5,106,000 5,094,000
----------- -----------
Total liabilities 222,144,000 213,101,000
COMMITMENTS AND CONTINGENCIES (Notes 3, 7 and 12)
BENEFICIARIES' EQUITY(Notes 5, 6, 10 and 11):
Preferred shares of beneficial interest, $0.01 par value; 11,155 shares,
December 31, 1996 and 1995 1,000 1,000
Common shares of beneficial interest, $0.01 par value; authorized
100,000,000 shares; issued and outstanding, 10,332,784 and
10,322,858 as of December 31, 1996 and 1995, respectively 103,000 103,000
Capital in excess of par value 187,177,000 186,914,000
Cumulative net income available for common shareholders 26,754,000 30,029,000
Cumulative distributions on common shares of beneficial interest (76,891,000) (57,061,000)
----------- -----------
137,144,000 159,986,000
Unearned compensation on restricted shares of beneficial interest (Note 6) (131,000) (104,000)
----------- -----------
Total beneficiaries' equity 137,013,000 159,882,000
Total liabilities and beneficiaries' equity $359,157,000 $372,983,000
=========== ===========
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
Kranzco Realty Trust and Subsidiaries
Consolidated Statements of Operations
<CAPTION>
For the year ended December 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES:
Minimum rent (Notes 1, 3 and 4) $41,665,000 $40,259,000 $33,166,000
Percentage rent (Note 1) 1,042,000 1,044,000 1,000,000
Expense reimbursements 11,732,000 10,988,000 9,455,000
Interest income 624,000 902,000 985,000
Other 117,000 277,000 434,000
----------- ----------- -----------
Total revenues 55,180,000 53,470,000 45,040,000
----------- ----------- -----------
EXPENSES:
Interest (Note 2) 17,069,000 16,208,000 10,469,000
Depreciation and amortization (Note 1) 11,194,000 10,903,000 9,066,000
Real estate taxes 6,073,000 5,948,000 4,900,000
Operations and maintenance 9,473,000 7,605,000 7,727,000
General and administrative (Notes 7 and 8) 2,836,000 2,929,000 3,011,000
----------- ----------- -----------
Total expenses 46,645,000 43,593,000 35,173,000
----------- ----------- -----------
INCOME BEFORE LOSS ON SALE OF REAL ESTATE AND
EXTRAORDINARY ITEM 8,535,000 9,877,000 9,867,000
Loss on sale of real estate 63,000 0 0
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 8,472,000 9,877,000 9,867,000
Extraordinary loss on debt refinancing (Note 2) 11,052,000 0 0
----------- ----------- -----------
NET INCOME (LOSS) (2,580,000) 9,877,000 9,867,000
Preferred Share Distributions 695,000 485,000 0
----------- ----------- -----------
NET INCOME (LOSS) FOR COMMON SHAREHOLDERS (3,275,000) 9,392,000 9,867,000
=========== =========== ===========
Income Before Extraordinary Item Per Common Share of Bene 0.75 0.91 0.96
Extraordinary Loss on Debt Refinancing Per Common Share
of Beneficial Interest (1.07) 0.00 0.00
=========== =========== ===========
Net Income (Loss) Per Common Share of Beneficial Interest (0.32) 0.91 0.96
----------- ----------- -----------
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Kranzco Realty Trust and Subsidiaries
Consolidated Statements of Beneficiaries' Equity
For the years ended December 31, 1996, 1995 and 1994
<CAPTION>
Unearned
Cumulative Cumulative Compensation
Common Preferred Net Distributions on
Shares Preferred Shares of Capital Income on Common Restricted
of Shares of Beneficial In Excess Available Shares of Shares of
Beneficial Par Beneficial Interest of Par for Common Beneficial Beneficial
Interest Value Interest Par Value Value Shareholders Interest Interest
---------- -------- ------ ------ ------------ ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1994 10,315,497 $103,000 0 $0 $178,712,000 $10,770,000 $(17,648,000) $0
Net income - - - - - 9,867,000 - -
Distributions ($1.90 per share) - - - - - - (19,600,000) -
---------- -------- ------ ------ ------------ ----------- ------------- ---------
BALANCE, DECEMBER 31, 1994 10,315,497 $103,000 0 $0 $178,712,000 $20,637,000 $(37,248,000) $0
Issuance of shares 8,062 - - - 145,000 - - (104,000)
Forfeiture of common shares (701) - - - (14,000) - - -
Issuance of Preferred Shares, net - - 11,155 1,000 7,976,000 - - -
Accretion of Discount on Preferred
shares of beneficial interest - - - - 95,000 (95,000) - -
Net income - - - - - 9,877,000 - -
Distributions on Preferred Shares - - - - - (390,000) - -
Distributions on Common Shares
of Beneficial Interest
($1.92 per share) - - - - - - (19,813,000) -
---------- -------- ------ ------ ------------ ----------- ------------- ---------
BALANCE, December 31, 1995 10,322,858 $103,000 11,155 $1,000 $186,914,000 $30,029,000 $(57,061,000 $(104,000)
Issuance of shares 9,949 - - - 145,000 - - (93,000)
Forfeiture of common shares (23) - - - - - - -
Accretion of discount on preferred
shares of beneficial interest - - - - 118,000 (118,000) - -
Accretion of unearned compensation on
restricted shares of beneficial
interest - - - - - - - 66,000
Net loss - - - - - (2,580,000) - -
Distributions on preferred shares - - - - - (577,000) - -
Distributions on common shares
of beneficial interest
($1.92 per share) - - - - - - (19,830,000) -
---------- -------- ------ ------ ------------ ----------- ------------- ---------
BALANCE, December 31, 1996 10,332,784 $103,000 11,155 $1,000 $187,177,000 $26,754,000 $(76,891,000) $(131,000)
========== ======== ====== ====== ============ =========== ============= =========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Kranzco Realty Trust and Subsidiaries
Consolidated Statements of Cash Flows
<CAPTION>
For the year ended December 31,
1996 1995 1994
------------ ---------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($2,580,000) $9,877,000 $9,867,000
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 11,194,000 10,903,000 9,066,000
Amortization of deferred interest costs 674,000 1,787,000 1,788,000
Amortization of unearned compensation on
restricted shares of beneficial interest 66,000 0 0
Loss on sale of real estate 63,000 0 0
Extraordinary loss on debt refinancing 11,052,000 0 0
Changes in assets and liabilities:
(Increase) decrease in-
Rents and other receivables (1,379,000) (1,930,000) (2,955,000)
Prepaid expenses 146,000 16,000 (275,000)
Other assets 23,000 (111,000) (211,000)
Increase (decrease) in-
Accounts payable and accrued expenses (578,000) (398,000) (153,000)
Tenant security deposits 7,000 185,000 109,000
Other liabilities (229,000) 120,000 332,000
------------ ----------- ------------
Net cash provided by operating activities 18,459,000 20,449,000 17,568,000
------------ ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in shopping center properties (2,418,000) (4,261,000) (60,255,000)
Increase in other assets (2,329,000) (161,000) (329,000)
Increase in accrued acquisition costs 1,500,000 0 0
Proceeds from sale of real estate 524,000 0 0
Decrease (increase) in marketable securities 273,000 (29,000) 13,795,000
(Increase)decrease in restricted cash (113,000) 552,000 2,030,000
Increase in deferred costs (496,000) (625,000) (924,000)
------------ ----------- ------------
Net cash used in investing activities (3,059,000) (4,524,000) (45,683,000)
------------ ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions paid on common shares of beneficial interest (19,830,000) (19,810,000) (19,394,000)
Distributions paid on preferred shares of beneficial
interest (577,000) (251,000) 0
Issuance of common shares of beneficial interest, net 52,000 131,000 0
Proceeds from sale of interest rate protection agreements 3,935,000 0 0
Proceeds of mortgages and notes payable 181,700,000 8,000,000 42,632,000
Repayments of mortgages and notes payable (179,500,000) (1,490,000) (427,000)
Increase in deferred financing costs (2,008,000) (300,000) (524,000)
------------ ----------- ------------
Net cash (used in) provided by financing activities (16,228,000) (13,720,000) 22,287,000
------------ ----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (828,000) 2,205,000 (5,828,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 6,129,000 3,924,000 9,752,000
------------ ----------- ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $5,301,000 $6,129,000 $3,924,000
============ =========== ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Accretion of discount on increasing rate preferred shares $118,000 $95,000 -
============ =========== ============
Preferred shares issued as part of the purchase price for the
acquisition of real estate:
Fair value of assets acquired - $44,969,000 -
Liabilities assumed - 36,993,000 -
------------ ----------- ------------
Preferred shares issued - $7,976,000 -
============ =========== ============
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
KRANZCO REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 , 1995 and 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BUSINESS AND NATURE OF OPERATIONS
Kranzco Realty Trust (a Maryland real estate investment trust) and its
subsidiaries ("KRT" or the "Company") are engaged in the ownership, management,
leasing, operation, acquisition, development, investment and disposition of
neighborhood and community shopping centers. The Company completed its initial
public offering of shares of beneficial interest and commenced operations on
November 19, 1992. In addition to its own properties, the Company may
provide management services for shopping centers owned by third parties. As of
December 31, 1996, the Company owned 38 properties in seven Northeastern and
Mid-Atlantic states.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of KRT
and its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and
reported amounts of revenues and expenses during the reporting periods. The
ultimate results could differ from those estimates.
REAL ESTATE
Real estate assets and improvements or replacements are carried at the lower of
depreciated cost or net realizable value. Depreciation is computed using the
straight-line method over the estimated useful life of thirty years for
buildings and the lesser of the useful life or lease term of the improvements.
Maintenance and repairs are charged to expense, as incurred. The Company
adopted Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets to Be Disposed Of" ("SFAS No. 121") as of
January 1, 1996. This statement provides guidance for determining when
impairment losses should be recognized and how they should be measured. No
adjustment was necessary as a result of adopting SFAS No. 121.
CAPITALIZED CHARGES
Carrying charges, principally interest and taxes, of land under development and
buildings under construction are capitalized by the Company. Interest is
capitalized using an interest rate which equals a weighted average interest rate
on the Company's indebtedness. The Company capitalizes certain direct labor
charges on identifiable projects, such as acquisitions. Capitalization ceases
when construction activities are completed and the property is available for
occupancy by tenants and the costs are then depreciated over the estimated
useful life of the property.
DEFERRED COSTS
Deferred costs relate to the organization of the Company, amounts related to
the placement of debt and costs of leasing the shopping centers. Organization
costs are amortized on a straight-line basis over five years. Deferred
financing costs are amortized using the effective interest method over the term
of the related debt. Leasing costs are amortized on a straight-line basis over
the term of the related lease.
REVENUE RECOGNITION
Minimum rental income is recognized on a straight-line basis over the term of
the lease agreements regardless of when payments are due and accrued rents are
included in rents receivable. Certain lease agreements contain provisions which
provide for additional rents based on tenants' sales volume and
reimbursement of the tenants' share of real estate taxes and certain common area
maintenance costs. These additional rents are reflected on the accrual basis.
PER SHARE DATA
Net income (loss) per share is based on the weighted average number of common
shares of beneficial interest outstanding adjusted to give effect to common
share equivalents. The weighted average number of shares outstanding used in
the computations was 10,327,795, 10,319,464 and 10,315,497 in 1996, 1995 and
1994, respectively.
STATEMENTS OF CASH FLOWS
Cash and cash equivalents include all cash and liquid investments with original
maturities of three months or less, primarily consisting of money market
accounts and government investments. Cash paid for interest was $16,870,000,
$14,532,000, and $9,386,000 for the years ended December 31, 1996, 1995 and
1994, respectively.
INCOME TAXES
The Company and its subsidiaries file a consolidated Federal income tax return.
KRT intends to maintain its election to be taxed as a Real Estate Investment
Trust ("REIT") under Sections 856 to 860 of the Internal Revenue Code.
Accordingly, no provision for Federal income taxes has been reflected in the
financial statements.
The Company is subject to a Federal excise tax computed on a calendar year
basis. The excise tax equals 4% of the excess, if any, of 85% of the Company's
ordinary income plus 95% of any capital gain income for the calendar year over
cash distributions during the calendar year, as defined. No provision for
excise tax has been reflected in the financial statements as no tax was due.
Earnings and profits, which will determine the taxability of distributions to
shareholders, will differ from net income reported for financial reporting
purposes due to the differences in the cost basis for Federal income tax
purposes and in the estimated useful lives used to compute depreciation. The
cost basis of the shopping center properties for Federal income tax purposes
was $388,454,000 as of December 31, 1996.
RECLASSIFICATIONS
Certain amounts in the 1995 and 1994 financial statements have been
reclassified to conform to the 1996 presentation.
2. INDEBTEDNESS:
At December 31, 1996 and 1995, the Company had mortgages and notes payable
outstanding of $212,590,000 and $204,247,000, respectively.
In June 1996, the Company completed a refinancing of substantially all of its
variable rate debt and a portion of its fixed rate debt with a new fixed rate
secured financing. The Company entered into a seven year, secured, fixed rate
real estate mortgage loan in the principal amount of $181,700,000 (the
"Mortgage Loan"), at a weighted average interest rate of 7.96%, which is
inclusive of trustee and servicer fees. The Mortgage Loan is secured by twenty
seven shopping center properties (the "Mortgaged Properties"). The net proceeds
of the refinancing transaction of $177,662,000, after net costs of $4,038,000,
were used to retire the short-term funds borrowed to repurchase the $100 million
adjustable rate mortgage loan (the "$100 million REMIC") issued in conjunction
with the Company's initial public offering in November 1992 and to pay off the
$60 million of additional adjustable rate debt. The entire outstanding
principal balance of the Mortgage Loan is due in June 2003. The Company
recorded an extraordinary loss on refinancing of $11,052,000 including the
write off of approximately $8,844,000 of unamortized deferred finance costs
related to the debt instruments repaid, as well as other costs including
prepayment fees, premiums paid on repurchase of the $100 million REMIC
certificates and professional fees. In connection with the repayment of the
$100 million REMIC, the Company sold its interest rate protection agreements.
The proceeds received on the sale of the agreements of approximately $3,935,000
reduced the extraordinary loss on debt refinancing. Interest expense for the
years ended December 31 1996, 1995 and 1994 on the accompanying statements of
operations is shown net of reimbursements of $275,000, $1,310,000 and $390,000,
respectively, relating to the interest rate protection agreements and
capitalized interest of $252,000, $320,000 and $943,000, respectively.
As a condition of the Mortgage Loan, the Company was required to establish a
Sinking Fund Account and a Capital and TI Reserve Account. On a monthly basis,
$11,000 is deposited into the Sinking Fund Account maintained with a Collateral
Agent until the aggregate amount in the account equals or exceeds $786,000. All
funds in the Sinking Fund Account are to be returned to the Company on the
earlier of the repayment in full of the Mortgage Loan and the date of release or
substitution of the mortgaged property located in Orange, CT. The balance in
the Sinking Fund Account as of December 31, 1996 was $66,000. The Company
deposits on a monthly basis, an amount equal to 1/12th of $0.25 per square foot
of the gross leasable area of the Mortgaged Properties into the Capital and TI
Reserve Account. All funds in the Capital and TI Reserve Account may be used by
the Company to fund capital improvements, repairs, alterations, tenant
improvements and leasing commissions at the Mortgaged Properties. The balance
in the Capital and TI Reserve Account was $263,000 as of December 31, 1996.
In addition, the Company has four mortgages outstanding as of December 31, 1996
which were assumed in 1995 in connection with the acquisition of certain
shopping centers. These mortgages have maturity dates ranging from 1999 through
2004. Three of the four mortgages assumed have fixed interest rates ranging
from 8.0% to 10.5%. The outstanding principal balance on these mortgages at
December 31, 1996 was approximately $25,323,000. The other mortgage has an
interest rate payable at prime plus 1/2%. The outstanding principal balance on
this mortgage at December 31, 1996 was approximately $5,567,000. The
outstanding principal balance on these mortgages at December 31, 1995 was
approximately $10,557,000, which included a $4,790,000 mortgage that had an
interest rate of prime plus 1% which was subsequently refinanced as part of the
Mortgage Loan.
Aggregate principal payments on all outstanding indebtedness are due, as
follows:
<TABLE>
<S> <C>
1997 $ 521,000
1998 552,000
1999 7,012,000
2000 565,000
2001 600,000
Thereafter 203,340,000
------------
$212,590,000
------------
</TABLE>
In November 1996, the Company obtained a $3.0 million secured line of credit
from Bank Leumi Trust Company of New York. Amounts borrowed under the line will
bear interest at 50 basis points above that bank's reference rate. There were
no outstanding borrowings under this facility as of December 31, 1996.
In 1995, the Company obtained a $1.0 million unsecured line of credit from
Corestates Bank, N.A. Amounts borrowed under the line will bear interest at
that bank's prime rate. There were no outstanding borrowings under this
facility as of December 31, 1996 and the facility was extended through
December 31, 1997. The outstanding borrowing under the facility was $500,000
as of December 31, 1995 and the weighted average interest rate was 8.73% for the
year ended December 31, 1995.
During 1995, one of the Company's subsidiaries, KRT Property Holdings, Inc., had
outstanding a $100,000,000 nonrecourse mortgage (the "$100 million REMIC").
Interest was payable monthly at the 90-day London Interbank Offering Rate
("LIBOR") plus 200 basis points. The rate was reset quarterly on February 10,
May 10, August 10 and November 10 of each year. The Company had purchased
interest rate protection agreements to limit its exposure to increases in LIBOR,
resulting in interest rates limited to 6.75% through December 31, 1995. The
effective interest rate payable on the $100 million REMIC was 6.75% at December
31, 1995. This facility was repaid from the net proceeds of the Mortgage Loan
in June 1996.
During 1995, the Company had fully utilized a $7,000,000 secured line of credit
to fund improvements at various centers and to acquire a parcel of land adjacent
to the Barn Plaza Shopping Center. Interest was payable at 30-day LIBOR plus
250 basis points. The Company had an additional secured line of credit for
$50,000,000 with the same interest terms as the $7,000,000 line. The
outstanding principal balance of this line was $23,000,000 at December 31, 1995.
The weighted average interest rates on these lines were 8.49% for the year
ended December 31, 1995. The principal balances on both lines were repaid from
the net proceeds of the Mortgage Loan in June 1996.
The carrying values of the long-term debt at December 31, 1996 and 1995 were
approximately equal to their respective fair values, as determined by using
year-end interest rates and market conditions. The fair value at December 31,
1995 of the unamortized balance of the $5,245,000 in interest rate protection
agreements was approximately $2,483,000.
3. RISKS AND UNCERTAINTIES:
The retailing industry has had numerous entities file for bankruptcy protection
in recent months. The Company has been affected by the bankruptcy filing of
four anchor tenants , Bradlees, Caldor, Jamesway and Rickels and several smaller
tenants at various properties in the portfolio.
The Company monitors each situation closely and believes that it maintains
adequate reserves against the risk of uncollectable amounts associated with
pre-petition rent, straight line rental income and expense reimbursements for
certain of these tenants. The Company's releasing assumptions provide for the
related capital costs of retenanting including capital improvements, tenant
allowances and leasing commissions. Bradlees and Caldor each operates three
stores representing approximately $2.2 and $2.5 million, respectively, of the
Company's annual revenues. To date Bradlees and Caldor have not taken any
action to reject these leases and continue to pay current rent and operate their
stores located in the Company's centers. Effective November 1, 1996, the
Company entered into an agreement to reduce common area maintenance and real
estate tax reimbursements at one of the Caldor locations by approximately
$230,000 per year for a five year period. Effective February 29, 1996,
Jamesway disaffirmed their leases at the two locations for approximately 60,000
and 76,000 square feet, respectively, and the average rent paid by Jamesway for
these locations was approximately $2.60 per square foot. The Company has leased
the 60,000 square foot store to Ames Department store, who is leasing an
additional 4,000 square feet at that location. As of November 30, 1996,
Rickels disaffirmed their lease at Hillcrest Mall and affirmed their lease at
the Mall at Cross County. The Rickels at Hillcrest Mall was approximately
50,000 square feet and the minimum annual rent paid was $4.50 per square foot.
The Company believes that in the event certain leases are disaffirmed by the
anchor tenants, the existing lease terms are at or below market rental rates
and could be relet.
4. OPERATING LEASES:
The Company's shopping centers are leased to tenants under operating leases with
expiration dates extending to the year 2022. Future minimum rentals under
noncancellable operating leases, excluding tenant reimbursements of operating
expenses and additional contingent rentals based on tenants' sales
volume as of December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997 $38,977,000
1998 $37,081,000
1999 $34,612,000
2000 $33,018,000
2001 $33,018,000
Thereafter $172,281,000
</TABLE>
The revenue resulting from straight-line rental income adjustments for the years
ended December 31, 1996, 1995 and 1994 was $1,149,000, $1,214,000 and
$1,703,000, respectively. No tenant represented more than 10% of the minimum
rental revenues for 1996, 1995 or 1994.
5. DISTRIBUTIONS:
On December 4, 1996, the Trustees declared a cash distribution of $0.48 per
share, payable to shareholders of record on December 24, 1996. The
distribution of $4,960,000 was paid on January 20, 1997. The Company declared
distributions of $1.92 per share for the year ended December 31, 1996. The
Company determined that the entire distribution represented a return of
capital in 1996.
In December 1995, the Trustees declared a cash distribution of $0.48 per share,
payable to shareholders of record on December 28, 1995. The distribution of
$4,955,000 was paid on January 17, 1996. The Company declared distributions of
$1.92 per share for the year ended December 31, 1995. The Company determined
that $1.10 per share of the distributions represented ordinary income to the
recipient and $0.82 per share represented a return of capital in 1995.
In December 1994, the Trustees declared a cash distribution of $0.48 per share,
payable to shareholders of record on December 28, 1994. The distribution of
$4,951,000 was paid on January 12, 1995. The Company declared distributions of
$1.90 per share for the year ended December 31, 1994. The Company determined
that $1.05 per share of the distributions represented ordinary income to the
recipient and $0.85 per share represented a return of capital in 1994.
The Company accrued the quarterly distribution on the preferred shares of
beneficial interest of $146,000 and $139,000 as of December 31, 1996 and 1995,
respectively. These distributions were paid on January 1, 1997 and 1996,
respectively.
6. SHARE OPTION PLANS, INCENTIVE PLAN AND WARRANTS:
The Company has established share option plans for the employees and trustees of
the Company. The employees' plan has a maximum of 300,000 shares available for
issuance and the trustees' plan has a maximum of 700,000 shares available for
issuance. The options are exercisable at a price not less than fair market
value at the date of grant and expire ten years after the date of grant.
On June 6, 1995 the shareholders approved the Company's 1995 Incentive Plan.
The purpose of the Incentive Plan is to align the interests of the Company's
trustees, executive officers, key employees, advisors and consultants with those
of the shareholders and to enable the Company to attract, compensate and retain
trustees, executive officers, key employees, advisors and consultants and
provide them with appropriate incentives and rewards for performance. Awards
under the Incentive Plan may take the form of share options ("Options"),
including corresponding share appreciation rights ("SARs") and reload options,
and in the case of employees, restricted share awards, and share purchase
awards. Awards under the Incentive Plan may be granted in combination with other
awards. The maximum number of Common Shares that may be the subject of awards
under the Incentive Plan is 1,000,000 Common Shares. The Incentive Plan
provides that in any given year, the maximum number of Common Shares with
respect to which Options or SARs may be granted to any employee is 100,000
Common Shares. During 1996 and 1995, 6,445 and 7,361 restricted shares,
respectively, were issued to employees and officers of the Company at the then
market price of $14.50 and $17.875 per share, respectively. The shares will
vest and be recorded as compensation expense with the employees over various
periods of time.
The following tables show the activity and balances for each share option plan
and the incentive plan:
<TABLE>
Trustee Plan Employee Plan
1996 1995 1994 1996 1995 1994
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 381,800 663,800 642,800 133,200 151,200 151,200
Granted at
$21.50 per share - - 6,000 - - -
$17.875 per share - - 15,000 - - -
$18.375 per share - 3,000 - - - -
Retired - (285,000) - - (18,000) -
------- ------- ------- ------- ------- -------
Outstanding, end of year 381,800 381,800 663,800 133,200 133,200 151,200
------- ------- ------- ------- ------- -------
</TABLE>
<TABLE>
Incentive Plan
1996 1995
------- -------
<S> <C> <C>
Outstanding, beginning of year 285,000 0
Granted at
$20.00 per share - 282,000
$17.125 per share - 3,000
$15.25 per share 12,000 -
$15.125 per share 3,000 -
$15.50 per share 3,000 -
------- -------
Outstanding, end of year 303,000 285,000
------- -------
</TABLE>
In connection with the acquisition of certain unaffiliated shopping center
properties, the Company issued 191,429 warrants in November 1992 to purchase
common shares of beneficial interest. These warrants are exercisable within
five years after issuance at $26 per share. No such warrants have been
exercised through December 31, 1996.
During 1996, the Company adopted a new stock-based compensation accounting
standard, "Accounting for Stock-Based Compensation"("SFAS No. 123"). SFAS No.
123 encourages a fair value method of accounting for employee stock options and
similar equity instruments. The statement also allows an entity to continue to
account for stock-based compensation using the intrinsic value based method in
APB Opinion No. 25. As provided for in the statement, the Company elected to
continue the intrinsic value methodof expense recognition. If compensation cost
for these plans had been determined using the fair value method prescribed by
SFAS No. 123, the Company's net income (loss) would have reflected the pro forma
amounts indicated below.
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Net income (loss) ($2,600,000) $9,475,000
Net income (loss) per share ($0.25) $0.92
</TABLE>
The pro forma effect on results may not be representative of the impact in
future years because the fair value method was not applied to options granted
before 1995.
The fair value of each option was estimated on the grant date using the
Black-Scholes option pricing model and the assumptions presented below.
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Expected life in years 2.33 2.75
Risk-free interest rate 5.28% 5.68%
Volatility 22.07% 22.07%
Dividend yield 9.34% 9.34%
</TABLE>
The weighted average fair value of options granted was $1.13 per option in 1996
and $1.41 per option in 1995.
7. COMMITMENTS AND CONTINGENCIES:
The Company rents office space in Conshohocken, Pennsylvania, under the terms of
a net lease from two officers of the Company. The minimum annual rental under
the lease is $154,000 and the lease expires January 15, 1999. During 1996, 1995
and 1994, the Company paid $154,000 in annual rent, respectively.
8. 401 (k) PLAN:
During 1993, the Company adopted a 401(k) Plan covering substantially all of the
officers and employees of the Company and subsidiaries which permits
participants to defer up to a maximum of 10% of their compensation. The Company,
at its discretion, may match up to 50% of the initial five percent of the
employees' contributions and may also make an additional discretionary
contribution. The employees' contributions, together with contributions from the
Company are generally fully
vested and are fully funded as of December 31, 1996 and 1995. The Company's
contributions to the Plan for the years ended December 31, 1996, 1995 and
1994 were $67,000, $60,000 and $61,000, respectively.
9. ACQUISITIONS:
The Company acquired five shopping centers during the year ended December 31,
1995 for approximately $49,300,000 which were accounted for by the purchase
method. The results of operations of each center were included from the
respective purchase date. The pro forma financial information presented below
may not be indicative of results that would have been reported if the
acquisitions had occurred on January 1, 1995 and 1994, respectively.
<TABLE>
Year ended December 31,1995(Unaudited) Year ended December 31,1994(Unaudited)
<S> <C> <C>
Pro forma total revenues $55,156,000 $50,883,000
Pro forma net income available
for common shareholders $9,048,000 $8,611,000
Pro forma net income per common
share $0.88 $0.83
</TABLE>
In 1994, the Company acquired four shopping centers for approximately
$48,792,000 which were accounted for by the purchase method. The results of
operations of each center were included from the respective purchase date. The
pro forma financial information presented below may not be indicative of results
that would have been reported if the acquisitions had occurred on January 1,
1994.
<TABLE>
Year ended December 31, 1994(Unaudited)
<S> <C>
Pro forma total revenues $46,918,000
Pro forma net income available
for common shareholders $9,908,000
Pro forma net income per common
share $0.96
</TABLE>
10. PREFERRED SHARES OF BENEFICIAL INTEREST:
In connection with the purchase of five shopping centers in April 1995, the
Company issued 11,155 shares of Series A-1 Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share,
of Kranzco Realty Trust (the "Preferred Shares") at a face amount of
$11,155,000. The Preferred Shares were valued for accounting purposes based
on the fair value of the assets acquired and recorded at approximately
$7,976,000, net of issuance costs. The Preferred Shares have an initial
distribution rate of 5.0% per annum with increases of 0.25% per annum up to a
maximum rate of 6.5% per annum. As of December 31, 1996, the distribution rate
on the Preferred Shares is 5.25%. The Company recorded a discount of
approximately $467,000 at the time of issuance which represents the present
value of the difference between the total distributions to be paid in the seven
year period prior to commencement of the perpetual distribution and the
perpetual distribution amount for that same seven year period. This amount is
accreted on an effective interest method over the seven years through a charge
to cumulative net income available for common shareholders. The Preferred
Shares are redeemable by the Company at any time at their liquidation preference
and are convertible into the Company's Common Shares of Beneficial Interest (the
"Common Shares"), at a rate of 16.67% annually commencing in the fifth year,
with a maximum of 50% convertible in any one year. The Preferred Shares are
convertible into that number of Common Shares as would result in the holder
receiving the same amount of distributions from the Common Shares at the
applicable conversion dates as they received as a holder of the Preferred
Shares, up to a maximum of the greater of 500,000 Common Shares or 5% of the
then outstanding Common Shares.
11. INTERIM RESULTS (Unaudited):
The following presents a summary of the unaudited quarterly financial
information for the years ended December 31, 1996 and 1995:
<TABLE>
Net Income (Loss) Net Income (Loss)
For Common Per Common
Revenues Shareholders Share
----------- ----------------- -----------------
Year ended December 31, 1996
<S> <C> <C> <C>
First Quarter $14,578,000 $1,856,000 $0.18
Second Quarter $13,559,000 ($9,072,000) ($0.88)
Third Quarter $13,317,000 $1,877,000 $0.18
Fourth Quarter $13,726,000 $2,064,000 $0.20
<CAPTION>
Year ended December 31, 1995
<S> <C> <C> <C>
First Quarter $12,257,000 $2,482,000 $0.24
Second Quarter $13,172,000 $2,248,000 $0.22
Third Quarter $13,710,000 $2,275,000 $0.22
Fourth Quarter $14,331,000 $2,387,000 $0.23
</TABLE>
Per share amounts are based on weighted average shares outstanding each quarter
and may not equate to the full year amounts due to increases in shares
outstanding.
12. SUBSEQUENT EVENTS:
On February 26, 1997, the Company merged with Union Property Investors, Inc.
("UPI"). UPI owned 16 properties located in 11 states that have a total of
approximately 1.3 million square feet of gross leasable area and were
approximately 99% leased as of December 31, 1996. The Company assumed
approximately $30.2 million of existing debt and provided the balance of the
purchase price through the issuance of approximately $29.6 million of
convertible preferred stock, approximately $3.6 million of preferred stock and
approximately $1.6 million of cash.
The pro forma financial information presented below may not be indicative of
results that would have been reported if the acquisitions had occurred on
January 1, 1996 and 1995, respectively. The extraordinary loss of $11,052,000
on refinancing recorded in the second quarter of 1996 and the loss of $63,000 on
the sale of real estate recorded in the first quarter of 1996 by Kranzco have
been excluded from the pro forma presentation.
<TABLE>
Year ended December 31, 1996(Unaudited)
<S> <C>
Pro forma total revenues $63,364,000
Pro forma net income
for common shareholders $6,198,000
Pro forma net income per
common share $0.60
<CAPTION>
Year ended December 31, 1995(Unaudited)
<S> <C>
Pro forma total revenues $61,572,000
Pro forma net income
for common shareholders $8,165,000
Pro forma net income per
common share $0.79
</TABLE>
In February 1997, the Company obtained a $50 million secured first mortgage
loan facility (the "Salomon Facility") from Salomon Brothers Realty Corp.
Fourteen of the Company's shopping centers secure the Salomon Facility. Amounts
borrowed under the Salomon Facility will bear interest at a rate equal to the
one-month London Interbank Offering Rate ("LIBOR") plus a spread of 175 basis
points. The term of the Salomon Facility is for two years, with an option for
a one year renewal.
<AUDIT-REPORT>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To the Shareholders and Trustees of
Kranzco Realty Trust:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Kranzco Realty Trust and subsidiaries
included in this Form 10-K, and have issued our report thereon dated February
28, 1997. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The financial statement schedule referred to in
Item 14 is the responsibility of the Company's management and is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. The financial statement schedule
has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
February 28, 1997
</AUDIT-REPORT>
<PAGE>
<TABLE>
Kranzco Realty Trust
Real Estate and Accumulated Depreciation- December 31, 1996
Schedule III
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G Column I
& H
Encumbrances
-------------------------------- Cost of Amount at
Balance at Initial Improvements Which Carried Date
Description Interest Maturity December 31, Cost Net of December 31, Accumulated Constructed Depreciable
Rate Date 1996 to Trust Retirements 1996 Depreciation or Acquired Life (Yrs)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Shopping Centers:
A & P Mamaroneck
Land <F1> <F1> 1,061,000 287,710 0 287,710
Buildings and improvements 1,150,837 65,731 1,216,568 159,743 11/19/92 30
Anneslie Shopping Center
Land <F1> <F1> 5,859,000 1,348,713 0 1,348,713
Buildings and improvements 5,394,854 505,643 5,900,497 676,345 6/29/93 30
Barn Plaza Shopping Center
Land <F1> <F1> 9,164,000 1,284,790 386,187 1,670,977
Buildings and improvements 6,808,226 3,544,875 10,353,101 1,426,870 11/19/92 10-30
Bensalem Square
Land <F1> <F1> 4,281,000 1,185,101 160,806 1,345,907
Buildings and improvements 4,532,826 37,730 4,570,556 628,878 11/19/92 30
Best Plaza
Land <F1> <F1> 5,747,000 1,693,227 531 1,693,758
Buildings and improvements 6,772,906 2,123 6,775,029 735,765 9/28/93 30
Bethlehem Square
Land <F1> <F1> 16,249,000 4,816,318 145 4,816,464
Buildings and improvements 19,265,294 1,200,850 20,466,144 2,913,034 11/19/92 10-30
Bradford Mall
Land 0 1,518,627 119,325 1,637,952
Buildings and improvements 5,954,606 637,562 6,592,168 941,233 11/19/92 30
Bristol Commerce Park
Land <F1> <F1> 12,994,000 3,092,633 0 3,092,633
Buildings and improvements 13,959,722 1,373,735 15,333,457 2,049,556 11/19/92 10-30
Campus Village
Land 8% 12/1/02 2,741,000 951,663 1,762 953,425
Buildings and improvements 3,013,600 6,797 3,020,397 170,792 4/19/95 30
Collegetown Shopping Center
Land <F1> <F1> 5,487,000 1,901,831 9,704 1,911,535
Buildings and improvements 7,609,275 1,318,715 8,927,990 1,305,115 11/19/92 5-30
Coral Hills
Land 10.5% 8/1/99 6,567,000 3,086,879 6,104 3,092,983
Buildings and improvements 5,732,775 12,553 5,745,328 324,866 4/19/95 30
Cross County Mall
Land <F1> <F1> 20,283,000 5,330,148 0 5,330,148
Buildings and improvements 21,320,590 6,177,804 27,498,394 3,269,691 11/19/92 15-30
Culpeper
Land Prime+.05% 11/1/04 5,567,000 1,172,766 125,470 1,298,236
Buildings and improvements 3,518,299 78,259 3,596,558 201,491 4/19/95 30
Fox Run
Land <F1> <F1> 14,069,000 7,945,202 157,057 8,102,259
Buildings and improvements 16,663,137 379,159 17,042,296 1,821,778 7/21/94 30
Golfland
Land Note 2 Note 2 0 997,368 0 997,368
Buildings and improvements 3,989,469 40,308 4,029,777 562,263 11/19/92 5-30
Groton Square
Land <F1> <F1> 12,174,000 3,490,394 0 3,490,394
Buildings and improvements 13,986,580 361,604 14,348,184 2,062,458 11/19/92 4-30
High Ridge Plaza
Land <F1> <F1> 7,242,000 1,564,430 0 1,564,430
Buildings and improvements 6,057,721 321,691 6,379,412 857,564 11/19/92 30
Hillcrest Mall
Land <F1> <F1> 5,384,000 1,415,066 0 1,415,066
Buildings and improvements 4,416,833 267,638 4,684,471 622,350 11/19/92 30
Hillcrest Plaza
Land <F1> <F1> 3,832,000 1,134,826 2,056 1,136,882
Buildings and improvements 5,957,835 56,717 6,014,552 342,167 4/19/95 30
Lilac New York
Land 0 205,935 0 205,935
Buildings and improvements 0 0 0 0 -- 30
Marumsco
Land 0.09375 7/1/04 16,015,000 5,487,073 10,785 5,497,858
Buildings and improvements 16,461,219 453,313 16,914,532 971,983 4/19/95 30
MacArthur Plaza
Land <F1> <F1> 2,308,000 682,696 (264) 682,432
Buildings and improvements 2,727,666 21 2,727,687 296,203 9/28/93 30
Manchester Kmart Plaza
Land <F1> <F1> 2,522,000 1,051,958 58,924 1,110,882
Buildings and improvements 3,092,778 306,453 3,399,231 280,658 5/24/94 30
Milford
Land <F1> <F1> 1,470,000 0 0 0
Buildings and improvements 2,123,804 8,813 2,132,617 292,315 11/19/92 30
North Ridge Shopping Center
Land <F1> <F1> 2,597,000 590,343 0 590,343
Buildings and improvements 2,361,369 182,852 2,544,221 345,098 11/19/92 10-30
Orange
Land <F1> <F1> 786,000 0 0 0
Buildings and improvements 105,724 439 106,163 14,552 11/19/92 30
Park Hills Plaza
Land <F1> <F1> 9,602,000 2,752,903 4,516 2,757,419
Buildings and improvements 9,976,436 1,436,275 11,412,711 1,402,186 11/19/92 30
Parkway Plaza I
Land 0 1,213,750 0 1,213,750
Buildings and improvements 4,854,998 108,929 4,963,927 687,098 11/19/92 30
Parkway Plaza II
Land 0 1,032,538 0 1,032,538
Buildings and improvements 3,930,151 20,593 3,950,744 541,363 11/19/92 30
Pilgrim Gardens
Land <F1> <F1> 4,058,000 1,056,600 0 1,056,600
Buildings and improvements 4,083,178 450,975 4,534,153 614,707 11/19/92 5-30
Port Washington
Land <F1> <F1> 446,000 50,000 0 50,000
Buildings and improvements 600,026 2,697 602,723 82,606 11/19/92 30
69th Street Drug Emporium Plaza
Land <F1> <F1> 2,479,000 730,424 3,542 733,966
Buildings and improvements 2,921,696 33,054 2,954,750 287,547 2/15/94 30
Stratford Square
Land 0 3,057,993 241,273 3,299,266
Buildings and improvements 12,231,971 77,016 12,308,987 1,687,768 11/19/92 10-30
Street Road Plaza
Land <F1> <F1> 4,127,000 1,796,172 32,963 1,829,135
Buildings and improvements 5,159,488 849,448 6,008,936 632,041 9/28/93 30
Suburban Plaza
Land <F1> <F1> 10,453,000 3,277,322 4,784 3,282,106
Buildings and improvements 13,109,289 18,736 13,128,025 1,276,148 2/15/94 30
Valley Forge Mall
Land 0 972,663 113,789 1,086,452
Buildings and improvements 4,006,745 93,185 4,099,930 550,980 11/19/92 30
Village Square
Land <F1> <F1> 1,850,000 371,566 0 371,566
Buildings and improvements 1,486,265 57,709 1,543,974 218,470 11/19/92 30
Wampanoag Plaza
Land 0 1,583,670 230 1,583,900
Buildings and improvements 8,606,897 1,277,633 9,884,530 1,501,456 11/19/92 5-30
Whitehall Square
Land <F1> <F1> 15,176,000 4,522,056 105,082 4,627,138
Buildings and improvements 18,088,227 492,066 18,580,293 2,532,208 11/19/92 30
----------- ----------- ---------- ----------- ----------
212,590,000 346,686,669 23,804,470 370,491,139 35,287,346
=========== =========== ========== =========== ==========
<FN>
<F1>
Total REMIC of $181,700,000 with interest rate of 7.960% and maturity date 6/2003.
<F2>
Property secures $3,000,000 line of credit with Bank Leumi Trust Company of New York, with
an interest rate of 50 basis points above that bank's reference rate.
<F3>
The aggregate cost for Federal income tax purposes is $388,454,000.
<F4>
Reconciliation of amount shown in column E:
Balance at beginning of period, December 31, 1995 $368,073,375
Additions during period:
Land $606,157
Buildings and improvements 1,811,607
---------
2,417,764
Deductions during the period
Retirements 0
Properties sold 0
---------
0
------------
Balance December 31, 1996 $370,491,139
============
<F5>
Reconciliation of amount shown in column F:
Balance at beginning of period, December 31, 1995 $25,151,911
Additions during period:
Buildings and improvements $10,135,435
---------
10,135,435
Deductions during the period
Retirements 0
Properties sold 0
---------
0
------------
Balance December 31, 1996 $35,287,346
============
</FN>
</TABLE>
<PAGE>
EXHIBIT INDEX
Sequentially
Numbered
Page
Exhibit
No. Description
2.1 Agreement and Plan of Merger, dated November 12, 1996, among Kranzco
Realty Trust, KRT Union Corp. and Union Property Investors, Inc. (Incorporated
by reference to Exhibit 2.1 of the Company's Registration Statement on Form S-4
No. 333-18249.)
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated December 18, 1996.
(Incorporated by reference to Exhibit 2.2 of the Company's Registration
Statement on Form S-4 No. 333-18249.)
2.3 Amendment No. 2 to Agreement and Plan of Merger, dated February 26, 1997.
(Incorporated by reference to Exhibit 2.3 of the Company's Current Report on
Form 8-K filed March 14, 1997.)
3.1 Amended and Restated Declaration of Kranzco Realty Trust. (Incorporated
by reference to Exhibit 3.4 of the Company's Registration Statement
No.33-49434.)
3.2 Bylaws, as amended. (Incorporated by reference to Exhibit 3.2 of the
Company's Registration Statement No.33-49434.)
3.3 Amendment of Amended and Restated Declaration of Trust.
4.1 Specimen certificate for Common Shares of Beneficial Interest.
(Incorporated by reference to Exhibit 4.1 of the Company's Registration
Statement No.33-49434.)
4.2 Warrant to purchase 170,000 Common Shares of Kranzco Realty Trust, dated
November 19, 1992, issued to the Chapter 11 Estate of Bernard J. Rosenhein and
the subsequently consolidated entities. (Incorporated by reference to Exhibit
4.2 of the Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.)
4.3 Warrant to purchase 21,429 Common Shares of Kranzco Realty Trust, dated
November 19, 1992 issued to David Goldman. (Incorporated by reference to
Exhibit 4.3 of the Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.)
4.4 Article Supplementary for the Series A Increasing Rate Cumulative
Convertible Preferred Shares of Beneficial Interest. (Incorporated by reference
to the Company's Report on Form 8-K dated May 4, 1995.)
4.5 Articles Supplementary Classifying 11,155 Shares of Beneficial Interest as
Series A-1 Increasing Rate Cumulative Convertible Preferred Shares of Beneficial
Interest. (Incorporated by reference to Exhibit 4.5 of the Company's
Registration Statement on Form S-4 No. 333-18249.)
4.6 Articles Supplementary for the Company's Series B-1 Cumulative Convertible
Preferred Shares of Beneficial Interest. (Incorporated by reference to Exhibit
3.4 of the Company's Registration Statement on Form 8-A dated February 27,
1997.)
4.7 Articles Supplementary for the Company's Series B-2 Cumulative Convertible
Preferred Shares of Beneficial Interest. (Incorporated by reference to Exhibit
4.2 of the Company's Registration Statement on Form S-4 No. 333-18249.)
4.8 Articles Supplementary for the Company's Series C Cumulative Redeemable
Preferred Shares of Beneficial Interest. (Incorporated by reference to Exhibit
4.3 of the Company's Registration Statement on Form S-4 No. 333-18249.)
10.1 Kranzco Realty Trust 1992 Employees Share Option Plan, as amended.
(Incorporated by reference to Exhibit 10.10 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992.)
10.2 Kranzco Realty Trust 1992 Employees Share Option Plan, amended.
(Incorporated by reference to Exhibit 10.11 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992.)
10.3. Loan Agreement, dated as of November 19, 1992, between KRT Mortgage
Securities Trust and KRT Property Holdings, Inc. (Incorporated by reference to
Exhibit 28.1 of the Company's Report on Form 8-K dated December 17, 1992.)
10.4 Mortgage Promissory Note, dated November 19, 1992, made by KRT Property
Holdings, Inc., in favor of KRT Mortgage Securities Trust. (Incorporated by
reference to Exhibit 28.2 of the Company's Report on Form 8-K dated December 17,
1992.)
10.5 Collection Account and Reserve Account Agreement, dated as of November
19, 1992, by and among KRT Property Holdings, Inc., Norwest Bank Minnesota,
National Association, as account agent, Kranzco Realty Trust, KRT Mortgage
Securities Trust and Norwest Bank Minnesota, National Association, as trustee.
(Incorporated by reference to Exhibit 28.3 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.6 Environmental Indemnity Agreement, dated as of November 19, 1992, by and
among KRT Property Holdings, Inc., KRT Mortgage Securities Trust and Norwest
Bank Minnesota, National Association, as trustee. (Incorporated by reference
to Exhibit 28.4 of the Company's Report on Form 8-K dated December 17, 1992.)
10.7 Representations Agreement, dated as of November 19, 1992, by and among
KRT Mortgage Securities Trust, Cargill Financial Services Corporation and KRT
Property Holdings, Inc. (Incorporated by reference to Exhibit 28.5 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.8 Interest Rate and Currency Exchange Agreement, dated as of November 10,
1992, between Societe Generale, New York Branch, and KRT Property Holdings, Inc.
(Incorporated by reference to Exhibit 28.6 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.9 Letter Agreement, dated November 12, 1992, between Societe Generale, New
York Branch, and KRT Property Holdings, Inc. regarding rate caps. (Incorporated
by reference to Exhibit 28.7 of the Company's Report on Form 8-K dated December
17, 1992.)
10.10 Letter Agreement, dated October 1, 1993, between Morgan Guaranty Trust
Company of New York and KRT Property Holdings, Inc., regarding rate caps.
(Incorporated by reference to Exhibit 10.10 of the Company's Annual Report on
Form 10-K dated March 17, 1994.)
10.11 Subordination Agreement, dated as of November 19, 1992, by and among KRT
Mortgage Securities Trust, Kranzco Realty Trust, KRT Property Holdings, Inc. and
Cargill Financial Services Corporation. (Incorporated by reference to Exhibit
28.8 of the Company's Report on Form 8-K dated December 17, 1992.)
10.12 Security Agreement, dated as of November 19, 1992, KRT Property
Holdings, Inc., Norwest Bank Minnesota, National Association, as trustee of KRT
Mortgage Securities Trust. (Incorporated by reference to Exhibit 28.9 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.13 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Barn Plaza. (Incorporated by reference to Exhibit 28.10
of the Company's Report on Form 8-K dated December 17, 1992.)
10.14 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bradford Mall. (Incorporated by reference to Exhibit
28.11 of the Company's Report on Form 8-K dated December 17, 1992.)
10.15 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bristol Commerce Park. (Incorporated by reference to
Exhibit 28.12 of the Company's Report on Form 8-K dated December 17, 1992.)
10.16 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Park Hills Plaza. (Incorporated by reference to Exhibit
28.13 of the Company's Report on Form 8-K dated December 17, 1992.)
10.17 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Valley Forge Mall. (Incorporated by reference to
Exhibit 28.14 of the Company's Report on Form 8-K dated December 17, 1992.)
10.18 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bensalem Square Shopping Center. (Incorporated by
reference to Exhibit 28.15 of the Company's Report on Form 8-K dated December
17, 1992.)
10.19 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Bethlehem Square Shopping Center. (Incorporated by
reference to Exhibit 28.16 of the Company's Report on Form 8-K dated December
17, 1992.)
10.20 Open-End Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of
Leases and Rents, Security Agreement and Fixture Financing Statement from KRT
Property Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19,
1992, with respect to Whitehall Shopping Center. (Incorporated by reference
to Exhibit 28.17 of the Company's Report on Form 8-K dated December 17, 1992.)
10.21 Mortgage, Mortgage Deed, Leasehold Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Financing Statement from KRT Property
Holdings, Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with
respect to Wampanoag Plaza. (Incorporated by reference to Exhibit 28.18 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.22 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Golfland Shopping Center. (Incorporated by reference to Exhibit 28.19 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.23 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Groton Square Shopping Center. (Incorporated by reference to Exhibit 28.20 of
the Company's Report on Form 8-K dated December 17, 1992.)
10.24 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Milford Shopping Center. (Incorporated by reference to Exhibit 28.21 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.25 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Parkway Plaza I Shopping Center. (Incorporated by reference to Exhibit 28.22 of
the Company's Report on Form 8-K dated December 17, 1992.)
10.26 Mortgage Deed, Leasehold Mortgage, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from KRT Property Holdings,
Inc. to KRT Mortgage Securities Trust, dated November 19, 1992, with respect to
Stratford Square Shopping Center. (Incorporated by reference to Exhibit 28.23
of the Company's Report on Form 8-K dated December 17, 1992.)
10.27 Fee and Leasehold Mortgage Consolidation and Spreader Agreement,
Assignment of Leases and Rents, Security Agreement and Fixture Financing
Statement from KRT Property Holdings, Inc. to KRT Mortgage Securities Trust,
dated November 19, 1992, with respect to A&P Mamaroneck Shopping Center, Cross
County Shopping Center, High Ridge Shopping Center, North Ridge Shopping Center,
Port Washington Shopping Center and Village Square Shopping Center.
(Incorporated by reference to Exhibit 28.24 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.28 Loan Agreement, dated as of November 19, 1992, by and between KRT
Property Holdings, Inc. and Parkway Plaza II Corp. (Incorporated by reference
to Exhibit 28.25 of the Company's Report on Form 8-K dated December 17, 1992.)
10.29 Mortgage Promissory Note, dated November 19, 1992, made by Parkway Plaza
II Corp. in favor of KRT Property Holdings, Inc. (Incorporated by reference to
Exhibit 28.26 of the Company's Report on Form 8-K dated December 17, 1992.)
10.30 Environmental Indemnity Agreement, dated as of November 19, 1992, by and
between KRT Property Holdings, Inc. and Parkway Plaza II Corp. (Incorporated by
reference to Exhibit 28.27 of the Company's Report on Form 8-K dated December
17, 1992.)
10.31 Security Agreement, dated as of November 19, 1992, by and between KRT
Property Holdings, Inc. and Parkway Plaza II Corp. (Incorporated by reference
to Exhibit 28.28 of the Company's Report on Form 8-K dated December 17, 1992.)
10.32 Mortgage Deed, Leasehold Mortgage Deed, Assignment of Leases and Rents,
Security Agreement and Fixture Financing Statement from Parkway Plaza II Corp.
to KRT Property Holdings, Inc. dated November 19, 1992, with respect to Parkway
Plaza II Shopping Center. (Incorporated by reference to Exhibit 28.29 of the
Company's Report on Form 8-K dated December 17, 1992.)
10.33 Collateral Assignment Agreement, dated as of November 19, 1992, by and
between KRT Property Holdings, Inc. and KRT Mortgage Securities Trust.
(Incorporated by reference to Exhibit 28.30 of the Company's Report on Form 8-K
dated December 17, 1992.)
10.34 Trust and Servicing Agreement, dated November 19, 1992, by and among the
parties listed on Schedule A thereto, KRT Property Holdings, Inc. and Norwest
Bank Minnesota, National Association. (Incorporated by reference to Exhibit
28.31 of the Company's Report on Form 8-K dated December 17, 1992.)
10.35 Note Purchase Agreement dated February 15, 1994 among Nomura Asset
Capital Corporation, KR Suburban, L.P., KR 69th Street, L.P. and Kranzco Realty
Trust. (Incorporated by reference to Exhibit 10.35 of the Company's Annual
Report on Form 10-K dated March 17, 1994.)
10.36 Repurchase Agreement dated February 15, 1994 between Kranzco Realty
Trust and Nomura Asset Capital Corporation. (Incorporated by reference to
Exhibit 10.36 of the Company's Annual Report on Form 10-K dated March 17, 1994.)
10.37 $50 Million Senior Secured Floating Rate Note due 1996 issued by KR
Suburban, L.P. and KR 69th Street, L.P. in favor of Nomura Asset Capital
Corporation. (Incorporated by reference to Exhibit 10.37 of the Company's
Annual Report on Form 10-K dated March 17, 1994.)
10.38 Kranzco Realty Trust 1995 Incentive Plan. (Incorporated by reference to
Exhibit 4.4 of the Company's Registration Statement on Form S-8 No. 33-94294.)
10.39 Loan Agreement dated as of February 26, 1997 with Salomon Brothers
Realty Corp. (Incorporated by reference to Exhibit 10.1 of the Company's
Current Report on Form 8-K filed March 14, 1997.)
10.40 Global Promissory Note dated February 26, 1997 in the amount of
$50,000,000 executed in favor of Salomon Brothers Realty Corp. (Incorporated by
reference to Exhibit 10.2 of the Company's Current Report on Form 8-K filed
March 14, 1997.)
10.41 Unlimited Guaranty of Payment dated as of February 26, 1997 issued by
Kranzco Realty Trust in favor of Salomon Brothers Realty Corp. (Incorporated by
reference to Exhibit 10.3 of the Company's Current Report on Form 8-K filed
March 14, 1997.)
10.42 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. (Incorporated by reference to
Exhibit 10.4 of the Company's Current Report on Form 8-K filed March 14, 1997.)
10.43 Trust and Servicing Agreement, dated as of June 18, 1996, among KRT
Origination Corp., GE Capital Management Corporation and State Street Bank and
Trust Company.
10.44 Cash Collateral Account, Security, Pledge and Assignment Agreement,
dated as of June 18, 1996, among the Borrowers, State Street Bank and Trust
Company, as Agent, and KRT Origination Corp., as Lender.
10.45 Cash Collateral Agreement, dated June 18, 1996, among the Borrowers, and
State Street Bank and Trust Company, as Agent.
10.46 $123,700,000.00 Class A Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.47 $20,600,000.00 Class B Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.48 $28,900,000.00 Class C Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.49 $8,500,000.00 Class D Mortgage Note dated June 18, 1996 made by the
Borrowers in favor of KRT Origination Corp., as Lender.
10.50 Form of Indenture of Mortgage, Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases, Rents and Security
Deposits made by the Borrowers, as grantor, for the benefit of KRT Origination
Corp., as mortgagee, and filed in Connecticut, Maryland, New Jersey, New York
and Pennsylvania with respect to Groton Square in Groton, Connecticut,
Manchester Kmart in Manchester, Connecticut, Milford in Milford, Connecticut,
Orange in Orange, Connecticut, Fox Run in Prince Frederick, Maryland, Hillcrest
Plaza in Frederick, Maryland, Anneslie in Baltimore, Maryland, Suburban Plaza in
Hamilton, New Jersey, Collegetown in Glassboro, New Jersey, Hillcrest Mall in
Phillipsburg, New Jersey, The Mall at Cross County in Yonkers, New York,
Highridge Plaza in Yonkers, New York, North Ridge in New Rochelle, New York,
Village Square in Larchmont, New York, A&P Mamaroneck in Mamaroneck, New York,
Port Washington in Port Washington, New York, Bethlehem Square in Bethlehem,
Pennsylvania, Whitehall Square in Whitehall, Pennsylvania, Bristol Commerce Park
in Bristol, Pennsylvania, Park Hills Plaza in Altoona, Pennsylvania, Barn Plaza
in Doylestown, Pennsylvania, Best Plaza in Tredyffrin, Pennsylvania, Bensalem
Square in Bensalem, Pennsylvania, Street Road in Bensalem, Pennsylvania, Pilgrim
Gardens, Drexel Hill, Pennsylvania, 69th Street Plaza in Upper Darby,
Pennsylvania, and MacArthur Road in Whitehall, Pennsylvania, (the "Properties").
10.51 Form of Unrecorded Indenture of Mortgage, Deed of Trust, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Leases, Rents
and Security Deposits made by the Borrowers, as grantor, for the benefit of KRT
Origination Corp., and held in escrow with respect to the Properties located in
Maryland and in New York.
10.52 Escrow Agreement made among KRT Origination Corp., the Borrowers and
Robinson Silverman Pearce Aronsohn & Berman LLP, as escrow agent, with respect
to the unrecorded second mortgages covering the Properties located in New York
and Maryland and referred to in Exhibit 10.51 above.
21.1 Subsidiaries of Kranzco Realty Trust.
23.1 Consent of Arthur Andersen LLP.
EXHIBIT 3.3
3.3 AMENDMENT OF AMENDED AND RESTATED DECLARATION OF TRUST
KRANZCO REALTY TRUST
AMENDMENT OF DECLARATION OF TRUST
THIS IS TO CERTIFY THAT:
First:Section 2.2 of Article II of the Amended and Restated Declaration of
Trust, dated November 4, 1992, as amended (the "Declaration"), of Kranzco Realty
Trust, a Maryland real estate investment trust (the "Company"), is hereby
amended by (i) deleting the following name and address:
Name Address
Marvin Williams c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, PA 19428;
and (ii) inserting in lieu thereof the following name and address:
Name Address
Edmund Barrett c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, PA 19428
SECOND: The foregoing amendment to the Declaration has been duly approved by
the Board of Trustees of the Company by at least a two-thirds vote as required
by law.
THIRD: Each of the undersigned acknowledges this amendment to be the trust act
of the Company and, as to all matters or facts required to be verified under
oath, each of 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.
IN WITNESS WHEREOF, the Company has caused this amendment to be signed in its
name and on its behalf by at least a majority of the entire Board of Trustees of
the Company this 31st day of December, 1995.
/s/ Norman N. Kranzdorf (SEAL)
Norman M. Kranzdorf, Trustee
/s/ Peter D. Linneman (SEAL)
Dr. Peter D. Linneman, Trustee
/s/ Irvin B. Maizlish (SEAL)
Irvin B. Maizlish, Trustee
/s/ James B. Selonick (SEAL)
James B. Selonick, Trustee
/s/ Edmund Barrett (SEAL)
Edmund Barrett, Trustee
/s/ E. Donald Shapiro (SEAL)
E. Donald Shapiro, Trustee
/s/ Robert H. Dennis (SEAL)
Robert H. Dennis, Trustee
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT AS OF DECEMBER 31, 1996
<TABLE>
Kranzco Realty Trust is the sole shareholder of the following entities:
<CAPTION>
NAME JURISDICTION OF INCORPORATION
<S> <C>
1. KRT Property Holdings, Inc. Maryland
2. Parkway Plaza II Corp. Maryland
3. KR Trust One, Inc. Maryland
4. KR Best Associates, Inc. Pennsylvania
5. KR Street, Inc. Pennsylvania
6. KR MacArthur, Inc. Pennsylvania
7. KR 69th Street, Inc. Pennsylvania
8. KR Suburban, Inc. New Jersey
9. Lilac Connecticut Corp. Connecticut
10. KR Manchester, Inc. Connecticut
11. KR Fox Run, Inc. Maryland
12. KR Hillcrest, Inc. Maryland
13. KR Coral Hills, Inc. Maryland
14. KR Culpeper, Inc. Maryland
15. KR Culpeper II, Inc. Maryland
16. KR Campus, Inc. Maryland
17. KR Campus II, Inc. Maryland
18. KR Marumsco, Inc. Maryland
19. KR Marumsco II, Inc. Maryland
20. Lilac New York Corp. New York
21. KRT Union Corp. Delaware
22. KR Hillcrest Mall, Inc. New Jersey
23. KR Collegetown, Inc. New Jersey
24. KR Orange, Inc. Connecticut
25. KR Bradford Mall, Inc. Pennsylvania
26. KR Valley Forge, Inc. Pennsylvania
27. KR Pilgrim, Inc. Pennsylvania
28. KRT Origination Corp. Delaware
</TABLE>
<TABLE>
Kranzco Realty Trust is the 99% limited partner of the following entities:
<CAPTION>
JURISDICTION OF
NAME FORMATION
<S> <C>
1.KR Best Associates, L.P. (KR Best Associates, Inc. is sole
general partner) Pennsylvania
2.KR Street Associates, L.P. (KR Street, Inc. is sole general
partner) Pennsylvania
3.KR MacArthur Associates, L.P. (KR MacArthur, Inc. is sole
general partner) Pennsylvania
4.KR 69th Street, L.P. (KR 69th Street, Inc. is sole general
partner) Pennsylvania
5.KR Suburban, L.P. (KR Suburban, Inc. is sole general partner) New Jersey
6.Fox Run Limited Partnership (KR Fox Run, Inc. is sole general
partner) Alabama
7.Hillcrest Plaza Limited Partnership (KR Hillcrest, Inc. is sole
general partner) Maryland
8.Coral Hills Associates Limited Partnership (KR Coral Hills, Inc.
is sole general partner) Maryland
9.Culpeper Shopping Center Joint Venture (KR Culpeper, Inc. is
99% general partner and KR Culpeper II, Inc. is 1% general
partner) Maryland
10.Campus Village Shopping Center Joint Venture (KR Campus, Inc. is
99% general partner and KR Campus, II, Inc. is 1% general
partner) Maryland
11.Marumsco-Jefferson Joint Venture (KR Marumsco, Inc. is 99%
general partner and KR Marumsco II, Inc. is 1% general partner) Virginia
12.KR Bradford Mall, L.P. (KR Bradford Mall, Inc. is sole
general partner) Pennsylvania
13.KR Valley Forge, L.P. (KR Valley Forge, Inc. is sole general
partner) Pennsylvania
14.KR Pilgrim, L.P. (KR Pilgrim, Inc. is sole general partner) Pennsylvania
<FN>
Kranzco Realty Trust is 90% general partner of Germantown Associates, L.P., a
Pennsylvania limited patnership.
</FN>
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated February 28, 1997 included in this Form 10-K, into the Company's
previously filed: Form S-3 Registration Statements File Nos. 33-75554 and
33-72076 and Form S-8 Registration Statements File Nos. 33-56990 and 33-94294.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
March 24, 1997
KRT ORIGINATION CORP.,
Depositor
GE CAPITAL ASSET MANAGEMENT CORPORATION,
Servicer and Special Servicer
and
STATE STREET BANK AND TRUST COMPANY,
Trustee
TRUST AND SERVICING AGREEMENT
Dated as of June 18, 1996
----------------------------
KRT ORIGINATION CORP.
Commercial Mortgage Pass-Through Certificates
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . .2
Section 1.2 Calculations. . . . . . . . . . . . . . . . . . 21
Section 1.3 Interpretation. . . . . . . . . . . . . . . . . 21
ARTICLE II
DECLARATION OF TRUST FUND;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.1 Creation and Declaration of Trust Fund; Conveyance
of Mortgage
Loan; Conveyance of Other Collateral . . . . . . . . 21
Section 2.2 Acceptance by Trustee . . . . . . . . . . . . . 24
Section 2.3 Representations and Warranties of the Servicer,
the Depositor and the
Borrowers. . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOAN
Section 3.1 Servicer to Act as Servicer . . . . . . . . . . 29
Section 3.2 Sub-Servicing Agreements. . . . . . . . . . . . 30
Section 3.3 Collection of Certain Mortgage Loan Payments;
Distribution Account;
Certificate Account; Default Interest Amount . . . . 31
Section 3.4 Escrow Account; Collection of Impositions, etc. 35
Section 3.5 Maintenance of Insurance and Errors and Omissions
and Fidelity Coverage . . . . . . . . . . . . . 36
Section 3.6 "Due-on-Sale" Clauses; Releases; Assumptions. . 37
Section 3.7 Realization Upon Mortgaged Properties; Extension
of Balloon Payments
on Mortgage Loan; Modification, Amendment or Waiver of
Mortgage Loan. . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.8 Trustee to Cooperate; Release of Items in Mortgage
File. . . . . . . . . . . . . . . . . . . . . . 41
Section 3.9 Title and Management of Foreclosed Property . . 42
Section 3.10 Sale of Foreclosed Properties . . . . . . . . . 43
Section 3.11 Servicing Compensation. . . . . . . . . . . . . 44
Section 3.12 Reports to the Trustee; Distribution and Other
Account Statements. . . . . . . . . . . . . . . 45
Section 3.13 Annual Statement as to Compliance . . . . . . . 46
Section 3.14 Annual Independent Public Accountants' Servicing
Report. . . . . . . . . . . . . . . . . . . . . 46
Section 3.15 Access to Certain Documentation Regarding the
Mortgage Loan . . . . . . . . . . . . . . . . . 47
Section 3.16 Inspections . . . . . . . . . . . . . . . . . . 47
Section 3.17 Advances. . . . . . . . . . . . . . . . . . . . 48
Section 3.18 Reports of Foreclosures of Mortgaged Property . 49
Section 3.19 Realization on Mortgage Collateral Security . . 49
ARTICLE IV
PAYMENTS AND STATEMENTS TO THE CERTIFICATEHOLDERS
Section 4.1 Distributions . . . . . . . . . . . . . . . . . 50
Section 4.2 Statements to Certificateholders. . . . . . . . 52
Section 4.3 Rule 144A Information . . . . . . . . . . . . . 55
Section 4.4 Additional Information. . . . . . . . . . . . . 55
ARTICLE V
THE CERTIFICATES
Section 5.1 The Certificates. . . . . . . . . . . . . . . . 56
Section 5.2 Registration of Transfer and Exchange of
Certificates. . . . . . . . . . . . . . . . . . 57
Section 5.3 Mutilated, Destroyed, Lost or Stolen Certificates62
Section 5.4 Person Deemed Owners. . . . . . . . . . . . . . 63
Section 5.5 Maintenance of Office or Agency . . . . . . . . 63
Section 5.6 Appointment of Paying Agent . . . . . . . . . . 63
Section 5.7 Book-Entry Certificates . . . . . . . . . . . . 63
Section 5.8 Notices to Clearing Agency. . . . . . . . . . . 65
Section 5.9 Definitive Certificates . . . . . . . . . . . . 65
Section 5.10 Lists of Certificateholders . . . . . . . . . . 65
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
Section 6.1 Respective Liabilities of the Depositor and the
Servicer. . . . . . . . . . . . . . . . . . . . 66
Section 6.2 Merger or Consolidation of the Servicer or the
Depositor . . . . . . . . . . . . . . . . . . . 66
Section 6.3 Limitation on Liability of the Depositor, the
Servicer and Others . . . . . . . . . . . . . . 66
Section 6.4 Servicer Not to Resign; Eligibility Requirement
for Servicer. . . . . . . . . . . . . . . . . . 68
Section 6.5 Rights of the Trustee and the Depositor in Respect
of the Servicer . . . . . . . . . . . . . . . . 69
ARTICLE VII
DEFAULT
Section 7.1 Events of Default . . . . . . . . . . . . . . . 70
Section 7.2 Remedies of Trustee . . . . . . . . . . . . . . 72
Section 7.3 Directions by Certificateholders and Duties of
Trustee During
Event of Default . . . . . . . . . . . . . . . . . . 72
Section 7.4 Action upon Certain Failures of the Servicer and
upon Event of Default . . . . . . . . . . . . . 73
Section 7.5 Trustee to Act; Appointment of Successor. . . . 73
Section 7.6 Notification to Certificateholders. . . . . . . 74
Section 7.7 Waiver of Past Events of Default. . . . . . . . 74
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 Duties of Trustee . . . . . . . . . . . . . . . 74
Section 8.2 Certain Matters Affecting the Trustee . . . . . 76
Section 8.3 Trustee Not Required to Make Investigation. . . 77
Section 8.4 Trustee Not Liable for Certificates or Mortgage
Loan. . . . . . . . . . . . . . . . . . . . . . 77
Section 8.5 Trustee May Own Certificates. . . . . . . . . . 78
Section 8.6 Trustee's Fees and Expenses . . . . . . . . . . 79
Section 8.7 Eligibility Requirements for Trustee. . . . . . 79
Section 8.8 Resignation and Removal of Trustee. . . . . . . 80
Section 8.9 Successor Trustee . . . . . . . . . . . . . . . 81
Section 8.10 Merger or Consolidation of Trustee. . . . . . . 81
Section 8.11 Appointment of Co-Trustee, Separate Trustee or
Mortgage Custodian. . . . . . . . . . . . . . . 81
Section 8.12 Authenticating Agents . . . . . . . . . . . . . 83
Section 8.13 Compliance with Withholding Requirements. . . . 84
Section 8.14 Massachusetts Filings . . . . . . . . . . . . . 84
ARTICLE IX
TERMINATION
Section 9.1 Termination . . . . . . . . . . . . . . . . . . 84
Section 9.2 Additional Termination Requirements . . . . . . 86
Section 9.3 Trusts Irrevocable. . . . . . . . . . . . . . . 87
ARTICLE X
REMIC ADMINISTRATION
Section 10.1 REMIC Administration. . . . . . . . . . . . . . 87
Section 10.2 Foreclosed Property . . . . . . . . . . . . . . 91
Section 10.3 Modifications of Mortgage Loan. . . . . . . . . 92
Section 10.4 Prohibited Transactions and Activities. . . . . 92
Section 10.5 Indemnification with Respect to Certain Taxes and
Loss of REMIC Status. . . . . . . . . . . . . . 93
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Amendment . . . . . . . . . . . . . . . . . . . 94
Section 11.2 Recordation of Agreement. . . . . . . . . . . . 95
Section 11.3 Limitation on Rights of Certificateholders. . . 95
Section 11.4 Actions of Certificateholders . . . . . . . . . 96
Section 11.5 Governing Law . . . . . . . . . . . . . . . . . 97
Section 11.6 Notices . . . . . . . . . . . . . . . . . . . . 97
Section 11.7 Notices to the Rating Agency. . . . . . . . . . 97
Section 11.8 Severability. . . . . . . . . . . . . . . . . . 97
Section 11.9 Streit Act. . . . . . . . . . . . . . . . . . . 97
Section 11.9a Notice Under Escrow Agreement . . . . . . . . . 98
Section 11.10 Counterparts. . . . . . . . . . . . . . . . . . 99
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Class C Certificate
Exhibit D - Form of Class D Certificate
Exhibit R - Form of Class R Certificate
Exhibit E - Form of Securities Legend
Exhibit F - Form of Rule 144A Transfer Certificate
Exhibit G - Form of Regulation S Certificate
Exhibit H - Form of Rule 144A Exchange Certificate
Exhibit I - Form of Transferee's Letter for
Institutional Accredited Investors
Exhibit J-1(a) - Form of R Certificateholder Affidavit (US
Holder)
Exhibit J-1(b) - Form of R Certificateholder Affidavit
(Foreign Holder)
Exhibit J-2(a) - Form of R Certificateholder Transferee's
Letter (US Holder)
Exhibit J-2(b) - Form of R Certificateholder Transferee's
Letter (Foreign Holder)
Exhibit K - Form of Trust Receipt
Exhibit L - Form of Document Request
Exhibit M - Form of Mortgage Custodian Final
Certificate
Exhibit N - Form of Mortgage Custodian Initial
Certificate
Exhibit O - Form of Information Request
Exhibit P - Form of ERISA Transfer Affidavit
Exhibit Q - Form of ERISA Legend
Exhibit R - Form of Ownership Evidence
Schedule 1 - Mortgage Loan Schedule
THIS TRUST AND SERVICING AGREEMENT (this "Agreement"), is
dated as of June 18, 1996, and is among KRT ORIGINATION CORP., a
Delaware corporation, as depositor (the "Depositor"), GE CAPITAL
ASSET MANAGEMENT CORPORATION, a Delaware corporation, as servicer
(the "Servicer"), and STATE STREET BANK AND TRUST COMPANY, a
banking corporation organized under the laws of the Commonwealth of
Massachusetts, as trustee (the "Trustee").
PRELIMINARY STATEMENT
On the Closing Date, the Depositor will convey the
Mortgage Loan and the other assets constituting the Trust Fund to
the trust created by this Agreement in exchange for the
Certificates which will evidence the entire beneficial ownership
interest in (i) a segregated pool of assets of the Trust Fund, for
which a REMIC election will be made and (ii) the right to receive
Default Interest, to the extent collected from the Borrowers, on
the Mortgage Notes. The Trustee, on behalf of the trust created by
this Agreement, will elect to treat the segregated pool of assets,
consisting of (a) the Mortgage Loan (excluding any Default
Interest), (b) the amount from time to time in the Distribution
Account and the Certificate Account, (c) any property which secures
the Mortgage Loan and which is acquired by foreclosure, deed-in-
lieu of foreclosure or otherwise and (d) certain other rights set
forth herein, as a REMIC (the "Trust REMIC") for federal income tax
purposes. The Trust REMIC will issue four classes of "regular
interests," each in the principal amount and bearing interest at
the rate, set forth below for the corresponding Class of
Certificates (but excluding any right to Default Interest). The
Class R Certificates will be designated the "residual interest" in
the Trust REMIC. Holders of each Class of Certificates (other than
the Class R Certificates) will also be entitled to receive, to the
extent collected from the Borrowers, Default Interest on the
corresponding Class of Mortgage Note. Capitalized terms not
otherwise defined in this Preliminary Statement shall have the
respective meanings set forth below.
The Class A, Class B, Class C and Class D Certificates
have been offered for sale pursuant to the Offering Memorandum,
dated June 13, 1996.
The following sets forth the Class designation, the
original Certificate Balance and the Certificate Rate for each
Class of Certificates:
Original Default
Class Certificate Certificate Interest
Designation Balance Rate Rate
Class A $123,700,000 7.76% 3.0%
Class B 20,600,000 7.98% 3.0%
Class C 28,900,000 8.28% 3.0%
Class D 8,500,000 8.92% 3.0%
Class R N/A(1) 0.00% 0.00%
- ---------------
(1) Other than the right to receive on each Distribution Date
interest earned on the funds on deposit in the Distribution
Account, the Class R Certificates will be entitled only to any
amounts remaining in the Trust REMIC after all distributions
have been made on the Class A, Class B, Class C and Class D
Certificates.
In consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used herein, the
following words and phrases, unless the context otherwise requires,
shall have the meanings specified in this Article:
Accepted Servicing Practices: As defined in Section 3.1.
Account: As defined in the Mortgage and the Cash
Collateral Agreement.
Accredited Investor: A Person which is an institution
and is an "accredited investor" as defined in Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act.
Acquisition Date: The date upon which, under the Code
(and in particular the REMIC Provisions and Section 856(e) of the
Code), the Trust REMIC is deemed to have acquired a Mortgaged
Property.
Advance: An Interest Advance, a Servicing Advance or a
Mortgage Recording Tax Advance. Each reference to the payment or
reimbursement of an Advance shall be deemed to include, whether or
not specifically referred to, payment or reimbursement of interest
thereon at the Advance Rate to, but not including, the date of
payment or reimbursement. Such interest thereon shall in all
events be paid first prior to repayment of the Advance.
Advance Interest Amount: Interest at the Advance Rate on
the aggregate amount of Interest Advances, Servicing Advances,
Mortgage Recording Tax Advances, Servicing Compensation, Trustee
Fees and other reimbursable amounts for which the Servicer or the
Trustee has not been timely paid or reimbursed for the number of
days from the date on which such Advance was made or Servicing
Compensation, Trustee Fees or reimbursement was due, less the
amount of interest previously paid thereon to, but not including,
the date of payment or reimbursement of the related Advance,
Servicing Compensation or other amount.
Advance Rate: For any period, a rate per annum equal to
the Prime Rate (as most recently published in The Wall Street
Journal on or before the related Record Date) plus 100 basis
points, compounded monthly.
Affiliate: With respect to any specified Person, 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, by contract, relation to individuals or otherwise and
the terms "controlling" and "controlled" have meanings correlative
to the foregoing.
Aggregate Certificate Balance: The aggregate of the
Certificate Balances of the Certificates at any time of
determination.
Agreement: This Trust and Servicing Agreement and all
amendments and supplements hereto.
ALTA: American Land Title Association, or any successor
thereto.
Allocated Loan Amount: As defined in the Mortgage.
A Note: As defined in the Mortgage.
Appraiser: An Independent appraiser who is a member of
the Appraisal Institute with a national practice and which has at
least five years experience with real estate of the same property
type and in the geographic area of the property to be appraised.
Assignment of Leases: The Assignment of Leases, Rents
and Security Deposits, dated as of June 18, 1996, from the
Borrowers, as assignors, to the Depositor, as assignee, with
respect to the Mortgaged Property, including any leases, rents or
other property pledged pursuant thereto.
Authenticating Agent: Any authenticating agent appointed
pursuant to Section 8.12, which initially shall be the Trustee.
Balloon Payment: The outstanding principal amount of a
Mortgage Note as of the Scheduled Maturity Date.
Bankruptcy Code: Title 11 of the United States Code, 11
U.S.C. Section 101 et seq.
B Note: As defined in the Mortgage.
Book-Entry Certificates: Certificates evidencing a
beneficial interest in a Class of Certificates, ownership and
transfer of which shall be made through book entries by a Clearing
Agency as described in Section 5.7.
Borrowers: KRT Property Holdings, Inc., a Maryland
corporation; Hillcrest Plaza Limited Partnership, a Maryland
limited partnership; KR Suburban, L.P., a New Jersey limited
partnership; Fox Run, Limited Partnership, an Alabama limited
partnership; KR MacArthur Associates, L.P., a Pennsylvania limited
partnership; KR Best Associates, L.P., a Pennsylvania limited
partnership; KR 69th Street, L.P., a Pennsylvania limited
partnership; KR Trust One, Inc., a Maryland corporation; KR
Manchester, Inc. a Connecticut corporation; KR Street Associates,
L.P., a Pennsylvania limited partnership; KR Orange, Inc., a
Connecticut corporation; KR Collegetown, Inc., a New Jersey
corporation; KR Hillcrest Mall, Inc., a New Jersey corporation; and
KR Pilgrim, L.P., a Pennsylvania limited partnership.
Business Day: Any day other than (i) a Saturday or a
Sunday or (ii) a day on which commercial banks in the State of New
York, the Commonwealth of Massachusetts or the Commonwealth of
Pennsylvania are authorized or obligated by law, governmental
decree or executive order to be closed.
Capital and TI Reserve Account: As defined in the Cash
Collateral Agreement.
Cash Collateral Agreement: The Cash Collateral Account,
Security, Pledge and Assignment Agreement dated as of June 18,
1996, among the Borrowers, the Depositor and the Collateral Agent.
Certificate: Any one of the KRT Origination Corp.
Commercial Mortgage Pass-Through Certificates, Class A, Class B,
Class C, Class D or Class R, executed by the Trustee and
authenticated by the Authenticating Agent in substantially the form
set forth in Exhibit A, B, C, D or R hereto, respectively;
provided, however, that with respect to any Book-Entry Certificate,
Certificate means such Book-Entry Certificate and, when appropriate
within the context of any Section of this Agreement, any interest
in a Book-Entry Certificate in the authorized denomination as
provided herein of any Person as shown on the records of the
Clearing Agency.
Certificate Account: The separate Eligible Account
established by and maintained with the Paying Agent on behalf of
the Trustee for the benefit of the Certificateholders, pursuant to
Section 3.3(f), which account shall be entitled "Certificate
Account c/o State Street Bank and Trust Company, as trustee, in trust
for the Holders of KRT Organization Corp. Commercial Mortgage
Pass-Through Certificates." Funds in the Certificate Account shall
be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
Certificate Balance: As to any Class of the Certificates
and as of any date of determination, the original Certificate
Balance of such Class as set forth in the Preliminary Statement
hereof less the sum of all distributions of principal distributed
to Holders of such Class on all Distribution Dates occurring prior
to such date of determination.
Certificate Owner: With respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such
Book-Entry Certificate, as may be reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant),
in accordance with the rules of such Clearing Agency, and, with
respect to any Definitive Certificate, the Certificateholder. Each
of the Trustee and the Servicer shall have the right to require, as
a condition to acknowledging the status of any Person as a
Certificate Owner under this Agreement, that such Person provide
evidence at its expense of its qualification as a Certificate Owner
hereunder.
Certificate Rates: As to any Class of Certificates, for
each Interest Accrual Period, the rate per annum shown as the
Certificate Rate for such Class of Certificates in the Preliminary
Statement hereto.
Certificate Register and Certificate Registrar: The
register maintained pursuant to and the registrar provided for in
Section 5.2.
Certificateholder or Holder: The Person in whose name a
Certificate is registered in the Certificate Register.
Class: Certificates bearing one of the Class
designations set forth in the Preliminary Statement to this
Agreement the form of which is identical except for variations in
Percentage Interest.
Clearing Agency: An organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act. The
initial Clearing Agency shall be The Depository Trust Company.
Clearing Agency Participant: A broker, dealer, bank,
other financial institution or other Person for whom from time to
time a Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
Closing Date: June 18, 1996.
C Note: As defined in the Mortgage.
Code: The Internal Revenue Code of 1986, as amended, any
successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or final
form and proposed regulations thereunder, to the extent that, by
reason of their proposed effective date, such proposed regulations
would apply to the Trust Fund or the Trust REMIC.
Collateral Agent: State Street Bank and Trust Company,
a banking corporation organized under the laws of the Commonwealth
of Massachusetts, as collateral agent under the Cash Collateral
Agreement and any successor thereto.
Collection Period: With respect to a Distribution Date,
the related Interest Accrual Period.
Condemnation Proceeds: Any awards resulting from the
full or partial condemnation or any eminent domain proceeding or
any conveyance in lieu or in anticipation thereof with respect to
a Mortgaged Property by or to any governmental or
quasi-governmental authority, other than amounts to be applied to
the restoration, preservation or repair of such Mortgaged Property
or released to a Borrower or to a Tenant in accordance with the
terms of the Mortgage, provided that whenever the Trustee is
required to make an election under Section 6 of the Mortgage, the
Trustee may consult with the Servicer and may conclusively rely on
the Servicer's determination.
Corporate Trust Office: The principal office of the
Trustee in Boston, Massachusetts at which at any particular time
its corporate trust business shall be principally administered,
which office at the date of the execution of this instrument is
located at Two International Place, Boston, Massachusetts 02110,
Attention: Corporate Trust.
Curtailment: As to any Collection Period, an amount
equal to the aggregate of all Condemnation Proceeds, Insurance
Proceeds and Foreclosure Proceeds received in respect of the
Mortgaged Property during such Collection Period to the extent
applied or to be applied to reduce principal in accordance with the
terms of the Mortgage Loan and the Cash Collateral Agreement.
D Note: As defined in the Mortgage.
Debt Service Coverage Ratio: With respect to the
Mortgaged Properties and the Mortgage Loan for any period, the
ratio (a) of Net Operating Income for the Mortgaged Properties
during such period to (b) the amount of interest and principal
payments due and payable in accordance with the Mortgage Loan
during such period (based on a debt service constant on the
Mortgage Notes of the greater of 10.09% per annum and the actual
average debt service constant on the Mortgage Notes for a twelve-
month period during the previous four calendar quarters).
Default Interest: Interest accruing on any Mortgage Note
at a rate in excess of the usual rate of interest thereon as a
result of a Mortgage Event of Default.
Default Interest Account: The separate Eligible Account
established by and maintained with the Paying Agent on behalf of
the Trustee for the benefit of the Certificateholders, pursuant to
Section 3.3(k), which account shall be entitled "Default Interest
Account c/o State Street Bank and Trust Company, as Trustee, in trust
for the Holders of KRT Origination Corp. Commercial Mortgage Pass-
Through Certificates." Funds in the Default Interest Account shall
be held in trust for each class of Certificateholders for the uses
and purposes set forth in this Agreement and shall not be property
of, or otherwise subject to, the Trust REMIC.
Defaulted Mortgage Loan: The Mortgage Loan if it is in
default in respect of any required payment of principal or
interest.
Definitive Certificates: Certificate of any Class issued
in definitive, fully registered, certificated form without interest
coupons in minimum denominations of $250,000 and integral multiples
of $1,000 in excess of such minimum amount with respect to the
Class A, Class B, Class C and Class D Certificates and in the
denomination of 100% Percentage Interest with respect to the Class
R Certificates.
Depositor: KRT Origination Corp., a Delaware
corporation, or any successor thereto.
Depository Agreement: With respect to any Class of Book-
Entry Certificates, the agreement among the Depositor, the
Servicer, the Paying Agent, the Certificate Registrar, the
Authenticating Agent and the Clearing Agency.
Directly Operate: With respect to any Foreclosed
Property, the furnishing or rendering of services to the tenants
thereof, the management or operation of such Foreclosed Property,
the holding of such Foreclosed Property primarily for sale, the
performance of any construction work thereon, or any use of such
Foreclosed Property in a trade or business conducted by the Trust
Fund or the Trust REMIC, in each case other than through an
Independent Contractor; provided, however, that the Trust Fund or
the Trust REMIC (or the Servicer on behalf of the Trust Fund or the
Trust REMIC) shall not be considered to Directly Operate a
Foreclosed Property solely because the Trust Fund or the Trust
REMIC (or the Servicer on behalf of the Trust Fund) establishes
rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such Foreclosed Property or
undertakes any ministerial action incidental thereto.
Disqualified Organization: Either (i) the United States,
(ii) any state or political subdivision thereof, (iii) any foreign
government, (iv) any international organization, (v) any agency or
instrumentality of any of the foregoing, (vi) any tax-exempt
organization (other than a cooperative described in Section 521 of
the Code) which is exempt from the tax imposed by Chapter 1 of the
Code unless such organization is subject to the tax imposed by
Section 511 of the Code, (vii) any organization described in
Section 1381(a)(2)(C) of the Code, or (viii) any other entity
designated as a Disqualified Organization by relevant legislation
amending the REMIC Provisions and in effect at or proposed to be
effective as of the time of the determination. In addition, a
corporation will not be treated as an instrumentality of the United
States or of any state or political subdivision thereof if all of
its activities are subject to tax and a majority of its board of
directors is not selected by such governmental unit. The terms
"United States" and "international organization" shall have the
meanings set forth in Section 7701 of the Code.
Distribution Account: The separate Eligible Account
established and maintained by the Servicer at the Servicer's
expense on behalf of the Trustee for the benefit of the
Certificateholders pursuant to Section 3.3(b), entitled
"Distribution Account c/o State Street Bank and Trust Company, as
trustee, in trust for the Holders of KRT Origination Corp.
Commercial Mortgage Pass-Through Certificates." Funds in the
Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this
Agreement.
Distribution Date: The 20th day of each calendar month,
beginning in July 1996 or, if such 20th day is not a Business Day,
the next succeeding Business Day.
Due Date: With respect to each Distribution Date, the
date on which the Monthly Interest Payment is due on the Mortgage
Notes, which shall be the fourth Business Day prior to the date on
which such Distribution Date occurs.
Effective Gross Income: The rents and other income
derived from any Mortgaged Property (including base and percentage
rents, CAM reimbursements and other recoveries of expenses).
Eligible Account: An account, including an account
maintained with the Trustee or Paying Agent if otherwise meeting
this definition, that is either: (a) maintained with a depository
institution or trust company the long-term unsecured debt
obligations of which (or, in the case of a depository institution
or trust company that is the principal subsidiary of a holding
company, the long-term unsecured debt obligations of which) have
been rated by the Rating Agency in one of its two highest rating
categories or the short-term deposits or commercial paper of which
are rated by the Rating Agency in its highest rating category at
the time of any deposit therein; (b) a trust account or accounts
maintained with a federal or state chartered depository institution
or trust company with trust powers acting in its fiduciary
capacity, which in the case of any state chartered depository
institution or trust company is subject to regulations or has
established internal guidelines regarding fiduciary funds on
deposit substantially similar to 12 CFR 9.10(b); or (c) such other
account reasonably acceptable to the Servicer and the Trustee as
will not result in the withdrawal, qualification or downgrading of
the then current ratings of the Rating Agency assigned to the
Certificates. The title of each Eligible Account maintained
pursuant to this Agreement shall include "KRT Origination Corp.
Commercial Mortgage Pass-Through Certificates" and shall clearly
indicate that funds held therein are held in trust pursuant hereto.
Environmental Law: Any present or future federal, state
or local law, statute, regulation or ordinance, and any judicial or
administrative order or judgment thereunder, pertaining to health,
industrial hygiene, hazardous substances or the environment,
including, but not limited to, each of the following, as enacted as
of the date hereof or as hereafter amended: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601-9657 et seq; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Section 6901-6991i et seq; the Toxic Substance
Control Act, 15 U.S.C. Section 2601-2629 et seq; the Water Pollution
Control Act (also known as the Clean Water Act), 33 U.S.C. 1251
et seq.; the Clean Air Act, 42 U.S.C. 7401 et seq.; and the
Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq.
Environmental Report: The environmental audit report or
reports with respect to each Mortgaged Property prepared and
delivered to the Depositor in connection with the Mortgage.
ERISA: The Employee Retirement Income Security Act of
1974, as amended.
ERISA Plans: As defined in Section 5.2(h).
Escrow Account: An account established and maintained by
the Servicer as provided in Section 3.4 hereof.
Escrow Agreement: The Escrow Agreement, dated as of June
18, 1996, among the Depositor, as mortgagee, the Borrowers, as
mortgagor, and Robinson Silverman Pearce Aronsohn & Berman LLP, as
escrow agent.
Event of Default: As defined in Section 7.1.
Exchange Act: The Securities Exchange Act of 1934, as
amended.
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHA: The Federal Housing Administration, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or
any successor thereto.
Final Distribution Date: The Distribution Date on which
the final distribution in respect of the Certificates will be made
pursuant to Section 9.1.
Final Certificate Distribution Date: June 20, 2006.
FNMA: The Federal National Mortgage Association, or any
successor thereto.
Foreclosed Property: Any Mortgaged Property acquired by
the Trust Fund or the Trust REMIC by foreclosure or acceptance of
a deed in lieu of foreclosure or other legal process in connection
with a default, or with respect to which the Acquisition Date has
occurred.
Foreclosure Proceeds: Proceeds, net of any related,
reasonable out-of-pocket expenses incurred by the Servicer,
received in respect of any Foreclosed Property (including, without
limitation, proceeds from the rental of such Foreclosed Property)
prior to the final liquidation of such Foreclosed Property.
Foreign Holder Letter: As defined in Section 5.2(h).
Holder or Certificateholder: The Person in whose name a
Certificate is registered in the Certificate Register.
Impositions: As defined in the Mortgage.
Independent: When used with respect to any specified
Person means such a Person who (a) does not have any direct
financial interest or any material indirect financial interest in
the Depositor, the Borrowers, the Servicer or any Sub-Servicer or
in any of their respective Affiliates in excess of 5% of the
outstanding capital shares of or equity interest in any such
Person, and (b) is not connected with the Depositor, the Borrowers,
the Servicer or any Sub-Servicer as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing
similar functions.
Independent Contractor: Either (i) any Person (other
than the Servicer or Special Servicer) that would be an
"independent contractor" with respect to the Trust Fund or the
Trust REMIC within the meaning of Section 856(d)(3) of the Code if
the Trust Fund or the Trust REMIC were a real estate investment
trust (except that the ownership test set forth in that Section
shall be considered to be met by any Person that owns, directly or
indirectly, 35% or more of any Class of Regular Certificates, or
such other interest in any Class of Certificates as is set forth in
an Opinion of Counsel, which shall be at no expense to the Trustee
or the Trust Fund or the Trust REMIC, delivered to the Servicer,
the Special Servicer and the Trustee); provided that the Trust Fund
or the Trust REMIC does not receive or derive any income from such
Person and the relationship between such Person and the Trust Fund
or the Trust REMIC is at arm's length, all within the meaning of
Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person
(including the Servicer) if the Servicer, the Special Servicer and
the Trustee have received an Opinion of Counsel, which shall be at
no expense to the Trustee or the Trust Fund or the Trust REMIC, to
the effect that the taking of any action in respect of any
Foreclosed Property by such Person, subject to any conditions
therein specified, that is otherwise herein contemplated to be
taken by an Independent Contractor will not cause such Foreclosed
Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without
regard to the exception applicable for purposes of Section 860D(a)
of the Code), or cause any income realized in respect of such
Foreclosed Property to fail to qualify as Rents from Real Property.
Information Request: A request delivered pursuant to
Section 4.1, substantially in the form of Exhibit O, attached
hereto, by a Beneficial Owner of a Certificate, a Certificateholder
or a prospective purchaser of a Certificate or a beneficial
interest therein.
Institutional Accredited Investor: An Accredited
Investor that is not a QIB.
Insurance Proceeds: Proceeds paid to the Trustee, the
Servicer, or the Special Servicer for the benefit of the Trust Fund
by any insurer pursuant to (a) any hazard policy or other insurance
policy covering a Mortgaged Property, other than amounts to be
applied to the restoration, preservation or repair of such
Mortgaged Property in accordance with the terms of the Mortgage and
(b) any insurance policy required to be maintained by the Servicer
or the Special Servicer pursuant to Section 3.6(c), in each case,
net of any expenses incurred by the Trustee, the Servicer or the
Special Servicer in obtaining such proceeds.
Insured Expenses: Expenses covered by any insurance
policy.
Interest Accrual Period: With respect to each
Distribution Date, the period (other than with respect to the
initial Distribution Date in July 1996) commencing on (and
including) the 20th day of the calendar month preceding the month
of such Distribution Date and ending on (but excluding) the 20th
day of the calendar month of such Distribution Date. The Interest
Accrual Period with respect to the initial Distribution Date will
commence on the Closing Date and end on (but exclude) the 20th day
of July 1996.
Interest Advance: With respect to each Distribution
Date, an amount equal to the Monthly Interest Payment due on the
Mortgage Loan (reduced by the Servicing Fee allocable to such
Monthly Interest Payment) which was delinquent as of the close of
business on the related Due Date and not collected prior to the
related Servicer Advance Date.
Interest Shortfall: On any Distribution Date for any
Class of Certificates, (i) any shortfall in the amount of interest
required to be paid at the applicable Certificate Rate in respect
of such Certificates on such Distribution Date for any reason,
including such a shortfall resulting from a failure of the Servicer
or the Trustee to make an Interest Advance with respect to the
Mortgage Notes in the event of a delinquency in all or any portion
of the Monthly Interest Payment due on the Mortgage Loan on the
immediately preceding Due Date for any reason, including a
determination that such Interest Advance, if made, would be a
Nonrecoverable Advance, plus (ii) the cumulative amount of each
such shortfall as determined on any prior Distribution Date, plus
(iii) interest on the amount of each such shortfall from the date
the amount of such shortfall was due until (but not including) the
day such shortfall was paid in full at a rate per annum equal to
the Certificate Rate applicable to such Class of Certificates,
compounded monthly, less (iv) the aggregate amount of payments of
Interest Shortfall made prior to such time of determination with
respect to such Class of Certificates.
Interested Person: As of any date of determination, the
Servicer, the Special Servicer, any Holder of a Certificate, or, in
each such case, any of their respective Affiliates.
Internal Revenue Service: The Internal Revenue Service,
or any successor thereto.
Lease: A lease between the owner of any Mortgaged
Property, as landlord, and the respective Tenant thereunder, as
tenant, relative to all or a portion of a Mortgaged Property.
Legended Definitive Certificate: A Definitive
Certificate bearing the Securities Legend which initially shall be
all Definitive Certificates.
Liquidated Mortgaged Property: Any Mortgaged Property
(including any Foreclosed Property) which has been sold or
otherwise disposed of and as to which the Servicer has determined
that all amounts which it expects to recover from or on account of
such liquidated Mortgaged Property have been recovered.
Liquidation Expenses: Reasonable out-of-pocket expenses
(other than Insured Expenses to the extent recovered from the
insurer and retained by the Servicer or the Special Servicer for
its own account) incurred by the Servicer or Special Servicer on
behalf of the Trust Fund in connection with the liquidation of the
Defaulted Mortgage Loan or any Mortgaged Property (including any
Foreclosed Property), such expenses including, without limitation,
reasonable legal fees and expenses, appraisal fees, brokerage fees,
trustee and co-trustee, if any, fees and expenses in connection
with the maintenance and preservation of such Mortgaged Property or
the Mortgage Loan, any unreimbursed amount expended by the Servicer
or Special Servicer pursuant to Section 3.5(a) or 3.9 (to the
extent such amount is reimbursable under such Sections) and any
unreimbursed expenditures for real property taxes, insurance
premiums or for property restoration or preservation relating to
such Mortgaged Property. Liquidation Expenses shall not include
any expenses which have been previously reimbursed to the Servicer
or Special Servicer or which were netted against income from any
Foreclosed Property and were considered in the calculation of the
amount of Foreclosure Proceeds pursuant to the definition thereof.
Liquidation Proceeds: Cash received by the Trust Fund
(or the Servicer or Special Servicer on its behalf) (i) in
connection with the liquidation of any Mortgaged Property
(including any Foreclosed Property), whether through judicial
foreclosure, sale or otherwise, other than amounts required to be
paid to the Borrower that owned such Mortgaged Property pursuant to
law or the terms of the Mortgage, and (ii) in connection with the
sale of the Defaulted Mortgage Loan.
Loan Documents: The Mortgage Notes, the Mortgage, the
Assignment of Leases, the Cash Collateral Agreement, and all other
agreements, instruments, certificates and documents delivered by or
on behalf of the Borrowers or their Affiliates to evidence or
secure the Mortgage Loan or otherwise in satisfaction of the
requirements of the Mortgage or the other documents listed above.
Monetary Default: Any Mortgage Event of Default caused
by a failure of the Borrowers to make any payment under the
Mortgage Loan when due which has not been cured within the relevant
grace period.
Monthly Interest Payment: Each payment of interest due
on the Mortgage Loan on each Due Date in accordance with the terms
of the related Mortgage Note but not including any Default
Interest.
Mortgage: The Indenture of Mortgage, Deed of Trust,
Security Agreement, Financing Statement, Fixture Filing and
Assignment of Leases, Rents and Security Deposits dated as of June
18, 1996 from the Borrowers as grantor, to Ronald P. Fish, Esq. and
Thomas A. Hauser, Esq., as trustee for the benefit of the
Depositor, as beneficiary, with respect to all of the Mortgaged
Properties.
Mortgagee: As of any date, the holder of the Mortgage
Notes as of such date.
Mortgage Collateral Assignment: Each instrument or
instruments either assigning or otherwise transferring the
Depositor's right, title and interest in and to the Mortgage and/or
any Mortgage Collateral Security to the Trustee.
Mortgage Collateral Security: Any right, interest,
document, instrument or property given as security for or in
guaranty of the Mortgage Notes (including, without limitation, the
Mortgage, the Assignment of Leases, the Cash Collateral Agreement,
all accounts maintained under the Cash Collateral Account and the
cash and investments credited thereto and the rights of the
Originator under the Required Insurance Policies and Title
Insurance Policies), together with any supplement or amendment
thereto and as amended from time to time hereafter.
Mortgage Custodian: A Person appointed by the Trustee at
any time as its agent as mortgage custodian pursuant to Section
8.11(h) hereof which is unaffiliated with the Depositor, which
initially shall be the Trustee.
Mortgage Custodian Final Certificate: The Certificate of
the Mortgage Custodian in the form of Exhibit M hereto.
Mortgage Custodian Initial Certificate: The Certificate
of the Mortgage Custodian in the form of Exhibit N hereto.
Mortgage Event of Default: An "Event of Default" as
defined in the Mortgage.
Mortgage File: The mortgage documents listed in Section
2.1 pertaining to the Mortgage Loan and any additional documents
required to be added to such Mortgage File pursuant to this
Agreement. When used with respect to receipt and retention by the
Mortgage Custodian or the Trustee, the term Mortgage File shall
mean only those documents actually delivered to the Mortgage
Custodian, or the Trustee.
Mortgage Loan: The loan made by the Depositor to the
Borrowers secured by the Mortgage and evidenced by the A Note, the
B Note, the C Note and the D Note.
Mortgage Loan Principal Balance: At any time of
determination, the original aggregate principal balance of the
Mortgage Notes on the Closing Date (being $181,700,000), as
thereafter adjusted in accordance with the provisions hereof and of
the Mortgage Notes and the Mortgage, less any payments of principal
thereon. Notwithstanding the acquisition of any Mortgaged Property
as Foreclosed Property and the cancellation in whole or in part of
the Mortgage Loan, the Mortgage Loan shall be deemed to remain
outstanding for purposes of all calculations hereunder regarding
payments deemed to be due on the Mortgage Loan until such time as
the Foreclosed Property is sold and shall be reduced at such time
only by the portion of Net Liquidation Proceeds applied as a
recovery of principal on the Mortgage Loan.
Mortgage Notes or Notes: The A Note, the B Note, the C
Note and the D Note executed by the Borrowers in the original
principal amounts of $123,700,000, $20,600,000, $28,900,000 and
$8,500,000, respectively
Mortgage Rate: As to any Mortgage Note during any
Interest Accrual Period, the per annum rate at which interest
accrues on such Mortgage Note in accordance with the terms thereof,
as listed on Schedule 1, but not including any Default Interest.
Mortgage Recording Tax Advance: Any Advance made by the
Servicer for Mortgage Recording Taxes pursuant to Section 3.17(g).
Mortgage Recording Taxes: The mortgage recording taxes
required to be paid by the Borrowers pursuant to the terms of the
Escrow Agreement.
Mortgaged Property: Each of the individual Properties
(as defined in the Mortgage) encumbered by the Mortgage as security
for the Mortgage Notes.
Net Liquidation Proceeds: The amount derived by
subtracting from the Liquidation Proceeds of any Liquidated
Mortgaged Property the related Liquidation Expenses.
Net Operating Income: With respect to the Mortgaged
Property for any period, all Operating Income for such period less
all Operating Expenses for such period. The Depositor agrees that
the Net Operating Income for all the Mortgaged Properties for
calendar year 1995 was $30,052,840.
New Lease: Any lease of Foreclosed Property entered into
by the Trustee (or the Servicer or Special Servicer on its behalf)
on behalf of the Trust Fund, including any lease renewed, modified
or extended by the Servicer on behalf of the Trust Fund if the
Trust Fund has the right to renegotiate the terms of such lease.
Nondisqualification Opinion: An opinion of outside
counsel reasonably satisfactory to the Trustee or the Servicer,
which counsel shall be knowledgeable of the issues occurring in the
practice of securitization, that a contemplated action will neither
cause the Trust REMIC to fail to qualify as a REMIC at any time
that any Regular Interests are outstanding nor cause a "prohibited
transaction" or "prohibited contribution" tax to be imposed on the
Trust REMIC.
Nonrecoverable Advance: Any portion of an Advance
previously made or proposed to be made which has not been
previously reimbursed to the Servicer or the Trustee and which,
based on a good faith determination of the Servicer or the Trustee,
as the case may be, taking into account amounts that may be
collected or realized on a Mortgaged Property prior to final
liquidation, including Foreclosure Proceeds and Net Liquidation
Proceeds, will not or, in the case of a proposed advance, would not
be ultimately recoverable from amounts to be deposited into the
Distribution Account. The determination by the Servicer or the
Trustee, as the case may be, that it has made a Nonrecoverable
Advance or that any proposed advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by a certificate of a
Servicing Officer or Responsible Officer of the Trustee, delivered,
with respect to an Interest Advance, on the Servicer Advance Date
and, with respect to any other Advance, on the date such other
Advance would otherwise be made, to the Trustee (in the case of an
Advance by the Servicer) (and upon which the Trustee may
conclusively rely) and to the Depositor (in every case) detailing
the reasons for such determination, with copies of appraisals for
each Mortgaged Property performed within the last 12 months
prepared in accordance with MAI standards (which may be prepared by
the Servicer) and any engineers' reports, environmental surveys or
other information, selected by the Person making the
nonrecoverability determination in its good faith business
judgment, relevant thereto which were utilized by the Servicer or
the Trustee, as the case may be, in making its determination.
Offering Memorandum: The Offering Memorandum, dated June
13, 1996, relating to the Class A, Class B, Class C and Class D
Certificates, as amended and supplemented.
Officer's Certificate: With respect to the Depositor, a
certificate signed by any of the Chairman of the Board, the Vice
Chairman of the Board, the President, a Vice President, the
Treasurer, the Secretary, the Assistant Treasurer or an Assistant
Secretary of the Depositor and delivered to the Trustee. With
respect to the Servicer, a certificate signed by a Servicing
Officer and delivered to the Trustee.
Operating Expenses: As defined in the Mortgage.
Operating Income: As defined in the Mortgage.
Opinion of Counsel: A written opinion of counsel
reasonably acceptable to the Trustee and to any other party hereto
to whom such opinion is to be delivered pursuant to the applicable
terms of this Agreement, who may be counsel for the Servicer, the
Depositor, the Borrowers, the Mortgage Custodian or the Depositor,
as the case may be, except that any opinion of counsel relating to
the qualification of the Trust REMIC as a REMIC or compliance with
the REMIC Provisions must be an opinion of outside counsel
knowledgeable of the issues occurring in the practice of
securitization.
Ownership Evidence: A certificate (upon which the
Trustee may conclusively rely) in the form attached hereto as
Exhibit R.
Paying Agent: The paying agent appointed pursuant to
Section 5.6(a), which initially shall be the Trustee. If no such
paying agent has been appointed or if such paying agent has been so
appointed but the Trustee shall have terminated such appointment,
then the Trustee shall be the Paying Agent.
Percentage Interest: As to any Class A, Class B, Class
C or Class D Certificate, the percentage interest evidenced thereby
in distributions required to be made with respect to the related
Class. With respect to any Class A, Class B, Class C or Class D
Certificate, the percentage interest is derived by dividing the
denomination of such Certificate by the aggregate denominations of
all Certificates of the same Class as such Certificate.
Permitted Encumbrances: As defined in the Mortgage.
Permitted Investments: At any time, any one or more of
the following obligations and securities, including those issued by
the Servicer or the Trustee as long as the rating level described
in the applicable sub-paragraph, if any, is complied with:
(a) direct debt obligations of, and debt obligations
fully guaranteed as to timely payment of principal and interest by,
the United States, FNMA, FHLMC, or any agency or instrumentality
thereof, provided such obligations are backed by the full faith and
credit of the United States;
(b) general obligations of or debt obligations
guaranteed by any state of the United States, or the District of
Columbia, in each case receiving the highest long-term debt rating
of the Rating Agency, or such lower rating as will not result in
the downgrading or withdrawal of the ratings then assigned to the
Class A, Class B, Class C or Class D Certificates by the Rating
Agency as evidenced by a letter confirming such result by the
Rating Agency;
(c) commercial or finance company paper or demand notes
that constitute vehicles for commercial paper which are then rated
in the highest unsecured commercial or finance company paper rating
category of the Rating Agency (whether or not published by the
Rating Agency) or if such commercial or finance company paper is
not then rated by the Rating Agency, which is then rated in the
highest unsecured commercial or finance company paper rating
category by at least two other nationally recognized rating
agencies, or such lower category as will not result in the
downgrading or withdrawal of the ratings then assigned to the Class
A, Class B, Class C or Class D Certificates by the Rating Agency as
evidenced by a letter confirming such result by the Rating Agency;
(d) certificates of deposit, demand or time deposits,
federal funds or bankers' acceptances issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision
and examination by federal or state banking authorities, provided
that the short-term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution or trust company in a holding company
system, the short-term unsecured debt obligations of such holding
company) are rated F-1+ by the Rating Agency (whether or not
published by the Rating Agency) or, if not then rated by the Rating
Agency, are rated in the highest short-term rating category by at
least two other nationally recognized rating agencies, or such
lower or other rating category as will not result in the
downgrading or withdrawal of the ratings then assigned to the Class
A, Class B, Class C or Class D Certificates by the Rating Agency as
evidenced by a letter confirming such result by the Rating Agency;
(e) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation and providing for a
return in the nature of interest; provided that the short-term
unsecured debt obligations of such corporation (or in the case of
the principal depository institution or trust company in a holding
company system, the short-term unsecured debt obligations of such
holding company) are rated F-1+ by the Rating Agency (whether or
not published by the Rating Agency) or, if not then rated by the
Rating Agency, are rated in the highest short-term rating category
by at least two other nationally recognized rating agencies, or
such lower or other rating category as will not result in the
downgrading or withdrawal of the ratings then assigned to the Class
A, Class B, Class C or Class D Certificates by the Rating Agency as
evidenced by a letter confirming such result by the Rating Agency;
(f) repurchase obligations with respect to any security
described in clauses (a) and (b) of this definition and providing
for a return in the nature of interest, in each case entered into
with a depository institution or trust company (acting as
principal) described in clause (d) above or, on an overnight basis,
with the Trustee;
(g) securities (other than stripped bonds or stripped
coupons) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof, which are rated AA by the Rating Agency (whether or
not published by the Rating Agency) or, if not then rated by the
Rating Agency, are rated in the highest long-term rating category
by at least two other nationally recognized rating agencies, or in
such lower rating category as will not result in the downgrading or
withdrawal of the ratings then assigned to the Class A, Class B,
Class C or Class D Certificates by the Rating Agency as evidenced
by a letter confirming such result by the Rating Agency;
(h) such other investments bearing interest or sold at
a discount, or earning a return "in the nature of interest" within
the meaning of Treasury Regulations 1.860G-2(g) (1), (as
evidenced by an Opinion of Counsel delivered to the Trustee by the
Servicer at its own expense), as are acceptable to the Rating
Agency, and otherwise treated as a "permitted investment" under
Section 860(G)(a)(5) of the Code, as will not result in the
downgrading or withdrawal of the ratings then assigned to the Class
A, Class B, Class C or Class D Certificates by the Rating Agency as
evidenced by a letter confirming such result by the Rating Agency;
and
(i) money market funds investing in such obligations and
securities set forth in clause (a) above, which funds maintain a
constant net asset value and which are rated AAA by the Rating
Agency (whether or not published by the Rating Agency) or, if not
then rated by the Rating Agency, are rated in the highest long-term
rating category by at least two other nationally recognized rating
agencies, or in such lower rating category as will not result in
the downgrading or withdrawal of the ratings then assigned to the
Class A, Class B, Class C or Class D Certificates by the Rating
Agency as evidenced by a letter confirming such result by the
Rating Agency.
Unless otherwise specified herein, (i) any such Permitted
Investment must be available for withdrawal without penalty and
must mature no later than the Business Day immediately preceding
the next Distribution Date, (ii) no such instrument set forth above
shall constitute a Permitted Investment if such instrument
evidences either (a) a right to receive only interest payments with
respect to the obligations underlying such instrument, or (b) a
right to receive both principal and interest payments derived from
obligations underlying such instrument and the principal and
interest payments with respect to such instrument provide for a
yield to maturity of greater than 120% of the yield to maturity at
par of such underlying obligations; provided that if any such
instrument or security is redeemable by the issuer thereof, it
shall not be redeemable at less than par and if redeemable by any
party, such redemption must be without penalty or discount; and
(iii) no Permitted Investment shall be purchased at a price in
excess of the face amount thereof.
Person: Any individual, corporation, partnership, joint
venture, bank, joint-stock company, limited liability company,
trust, unincorporated organization or a government or any agency or
political subdivision thereof.
Placement Agent: Merrill Lynch, Pierce, Fenner & Smith
Incorporated.
Principal Prepayment: Any payment of principal by the
Borrowers or other recovery of principal on the Mortgage Loan which
is received or recovered in advance of the Scheduled Maturity Date
and is applied to reduce the Mortgage Loan Principal Balance in
advance of the Scheduled Maturity Date, excluding Net Liquidation
Proceeds and Curtailments.
QIB: A "qualified institutional buyer" as defined in
Rule 144A.
Rating Agency: Fitch Investors Service, L.P., or any
successor thereto.
Record Date: As to each Distribution Date, the last day
of the related Interest Accrual Period.
Regular Certificate: A Certificate other than a Class R
Certificate.
Regular Interest: An interest in the Trust REMIC
entitling the holder thereof to a specified amount of principal and
interest at a fixed rate thereon, as further described in Article
X hereof.
Regular Servicing Period: Any Interest Accrual Period
other than a Special Servicing Period.
Regulation D: Regulation D under the Securities Act.
Regulation S: Regulation S under the Securities Act.
Regulation S Certificate: A certificate substantially in
the form of Exhibit G hereto.
Release Prepayments: As to any Mortgage Note, any
Principal Prepayments made by the Borrowers pursuant to paragraphs
5 or 6 of such Mortgage Note.
REMIC: A "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax
law relating to real estate mortgage investment conduits, which
appear at Section 860A through 860G of Subchapter M of Chapter 1 of
the Code, and related provisions, and regulations and rulings
promulgated thereunder, as the foregoing may be in effect from time
to time and including any proposed legislation or regulation which,
as proposed, would have an effective date prior to enactment
thereof, to the extent not contradictory to existing legislation
and regulations.
Rents from Real Property: As to any Foreclosed Property,
gross income of the character described in Section 856(d) of the
Code.
REO Disposition Fee: An amount equal to 0.25% of (a) the
Liquidation Proceeds of any Foreclosed Property or (b) the proceeds
of any sale of the Mortgage Loan after a Mortgage Event of Default
and acceleration of the Mortgage Notes.
Required Insurance Policy: Any insurance policy which is
required to be maintained from time to time under the Mortgage in
respect of any of the Mortgaged Properties.
Residual Certificate: Any Class R Certificate.
Responsible Officer: When used with respect to (i) the
initial Trustee, any officer of the Trustee assigned to the
Trustee's Corporate Trust Department, (ii) any successor trustee,
the Depositor, the Servicer or the Mortgage Custodian, any officer
of such Person assigned by it to its corporate trust department or
similar group administering its responsibilities with respect to
this Agreement or, with respect to any particular matter, any such
person or any other officer of the Depositor, the Servicer, the
Trustee or the Mortgage Custodian assigned by it to administer such
matter.
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Certificate: A certificate substantially in
the form of Exhibit F hereto.
Rule 144A Information: The Offering Memorandum; copies
of the statements and reports distributed to Certificateholders in
respect of the next preceding Distribution Date pursuant to Section
4.2(a) and (c) hereof; and such other documents as the Borrowers
may, at the time of the Trustee's or the Servicer's receipt of a
request for information pursuant to Section 4.3, have most recently
furnished to the Trustee and the Servicer under a statement that
such documents are furnished for the purpose of responding to
requests for Rule 144A Information.
Scheduled Maturity Date: June 20, 2003 (or, if such date
is not a Business Day, the next succeeding Business Day).
Securities Act: The Securities Act of 1933, as amended,
and the rules, regulations and published interpretations of the
Securities and Exchange Commission promulgated thereunder from time
to time.
Securities Legend: The legend set forth in Exhibit E
hereto.
Servicer: GE Capital Asset Management Corporation, a
Delaware corporation, or its successor in interest, or any
successor Servicer appointed as herein provided. Servicer also
includes the Special Servicer except to the extent the context
otherwise requires.
Servicer Advance Date: With respect to each Distribution
Date, the Business Day immediately preceding such Distribution
Date.
Servicer Remittance Report: A report prepared by the
Servicer and the Special Servicer in such media as may be agreed
upon by the Servicer, the Special Servicer and the Trustee
containing such information regarding the Mortgage Loan as will
permit the Trustee to calculate the amounts to be distributed
pursuant to Section 4.1 and to furnish statements to
Certificateholders pursuant to Section 4.2(i)-(xi) and containing
such additional information as the Servicer and the Trustee may
from time to time agree.
Servicing Advance: An advance or other reimbursable
expense required or permitted to be made by the Servicer pursuant
to the terms of this Agreement that is identified herein as a
"Servicing Advance," including, without limitation, amounts
identified as Servicing Advances pursuant to Sections 2.3(b),
2.3(c), 3.4(b), 3.5(a), 3.7(b), 3.7(f), 3.7(g), 3.9(a), 3.9(b),
3.9(c), 3.10(d), 3.17(c) and 3.19 hereof. Servicing Advances shall
include Liquidation Expenses to the extent such expenditures were
advanced by the Servicer; provided, however, that the fact that an
expenditure may fall within the definition of both "Servicing
Advance" and "Liquidation Expense" shall not entitle the Servicer
to recover any such amount more than once.
Servicing Compensation: The Servicing Fee payable to the
Servicer hereunder and the Special Servicing Fee and the REO
Disposition Fee payable to the Special Servicer hereunder.
Servicing Fee: As to any Distribution Date, the product
of one-twelfth of the Servicing Fee Rate multiplied by the Mortgage
Loan Principal Balance as of the beginning of the related
Collection Period.
Servicing Fee Rate: 0.02% per annum.
Servicing Officer: Any individual involved in, or
responsible for, the administration and servicing of the Mortgage
Loan whose name and signature appear on a list of servicing
officers furnished to the Trustee signed by an officer of the
Servicer, as such list may from time to time be amended.
Single Certificate: As to any Class of Regular
Certificates, a Certificate of such Class that evidences a
denomination of $1,000. As to the Class R Certificates, a
Certificate evidencing the entire residual interest in the Trust
REMIC.
Sinking Fund Account: As defined in the Cash Collateral
Agreement.
Special Servicer: GE Capital Asset Management
Corporation, a Delaware corporations or its successor in interest,
or any successor Special Servicer appointed as herein provided.
Special Servicing Fee: As to any Interest Accrual Period
that is a Special Servicing Period, the product of one-twelfth of
the Special Servicing Fee Rate multiplied by the Mortgage Loan
Principal Balance as of the beginning of the related Collection
Period.
Special Servicing Fee Rate: A rate equal to 0.25% per
annum.
Special Servicing Period: Any Interest Accrual Period
during which any of the following have occurred:
(i) the Servicer has made an Advance which is not
reimbursed within 15 Business Days;
(ii) the Servicer makes two consecutive Interest
Advances whether or not reimbursed;
(iii) the Servicer has determined in good faith, as
evidenced by an Officer's Certificate delivered to the
Trustee, that a Monetary Default is reasonably foreseeable
within 45 days of the date of such certificate and is not
reasonably likely to be cured within 60 days thereafter
without the performance of extraordinary services by the
Servicer, acting as Special Servicer;
(iv) the Servicer has received notice that a Borrower
has become the subject of any bankruptcy, insolvency or
similar proceeding, admitted in writing its inability to pay
its debts as they come due or made an assignment for the
benefit of creditors;
(v) the Servicer has received notice of a
foreclosure or threatened foreclosure of any lien on a
Mortgaged Property;
(vi) a default under the Mortgage of which the
Servicer has notice (other than a failure by the Borrowers to
pay interest or principal) and which materially and adversely
affects the interests of the Certificateholders has occurred
and remains unremedied for the applicable grace period
specified in the Mortgage Loan (or, if no grace period is
specified, 30 days); provided a default requiring a Servicing
Advance will be deemed to materially and adversely affect the
interest of the Certificateholders; or
(vii) the Servicer proposes to commence foreclosure
or other Workout arrangements with respect to any Mortgaged
Property in connection with a Mortgage Event of Default.
A Special Servicing Period will end:
(a) with respect to the circumstances described in
clause (i) above, when the Borrowers have brought the Mortgage
Loan current (including reimbursement of all costs of the
Trust Fund incurred as a result of such Mortgage Event of
Default, including any expenses of the Servicer or the Special
Servicer directly reimbursable by the Borrowers pursuant to
the terms of the Mortgage) and thereafter have made two
consecutive full and timely Monthly Interest Payments;
(b) with respect to the circumstances described in
clause (ii) above, when all Interest Advances by the Servicer
have been reimbursed and no Interest Advances have been made
for two consecutive months;
(c) with respect to the circumstances described in
clauses (iii) and (iv) above, when such circumstances cease to
exist; and
(d) with respect to the circumstances described in
clause (vi) above, when such default is cured;
provided, however, that at that time no circumstance identified in
clauses (i) through (vi) above exists that would cause the Mortgage
Loan to continue to be characterized as in a Special Servicing
Period.
Sub-Servicer: Any Person with which the Servicer has
entered into a Sub-Servicing Agreement and which satisfies the
requirements set forth therein and herein.
Sub-Servicing Agreement: The written contract between
the Servicer and any Sub-Servicer relating to servicing and/or the
administration of the Mortgage Loan as provided in Section 3.2, in
such form as is approved by the Servicer, provided that the
sub-servicing of the Mortgage Loan pursuant to the terms of such
Sub-Servicing Agreement will not result in the downgrading or
withdrawal of the ratings then assigned to the Class A, Class B,
Class C or Class D Certificates by the Rating Agency as confirmed
in writing by the Rating Agency.
Tax Matters Person: The Person designated as the "tax
matters person" of the Trust REMIC pursuant to Treasury Regulations
Section 1.860F-4(d).
Tenant: The tenant under a Lease relating to a Mortgaged
Property.
Title Insurance Policies: As to each Mortgaged Property,
the ALTA form mortgagee title insurance policy or policies issued
with respect to such Mortgaged Property and insuring the first
priority deed of trust lien in favor of the Depositor pursuant to
the Mortgage, subject only to encumbrances permitted pursuant to
the Mortgage and containing such endorsements and affirmative
assurances as the Depositor shall require.
Trust Fund: The corpus of the trust created by this
Agreement, consisting of the Mortgage Loan, the Mortgage, the
Mortgage Notes, the other Loan Documents including, without
limitation, all payments on or collections in respect of the
Mortgage Loan due on or after the Closing Date, all Net Liquidation
Proceeds and Curtailments received after the Closing Date, the
Distribution Accounts, the Certificate Account, the Default
Interest Account, such amounts, including investments thereof, as
shall from time to time be held in the Distribution Account, the
Certificate Account and the Default Interest Account, all insurance
policies, if any, relating to the Mortgaged Property, all
Foreclosed Property, all rights under the Mortgage Collateral
Assignments and all proceeds of all of the foregoing.
Trustee: State Street Bank and Trust Company, a banking
corporation organized under the laws of the Commonwealth of
Massachusetts, or its successor in interest, or if any successor
trustee is appointed as herein provided, such successor trustee.
Trustee Fee: As to any Distribution Date, the product of
one-twelfth of the Trustee Fee Rate multiplied by the Mortgage Loan
Principal Balance as of the beginning of the related Collection
Period.
Trustee Fee Rate: A rate equal to 0.02% per annum.
Trust REMIC: The segregated pool of assets consisting of
(A) the Mortgage Loan (other than the right to receive Default
Interest), (B) such amounts as shall from time to time be held in
the Distribution Account and the Certificate Account, (C) any
property which secures the Mortgage Loan and which is acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise and (D)
certain other rights set forth herein, for which a REMIC election
has been made pursuant to Section 10.1 hereof.
Uninsured Cause: Any cause of damage to Property (as
defined in the Mortgage) such that the complete restoration of such
Property is not fully reimbursable (but without regard to any
applicable deductible provisions) by any insurance policy required
under the Mortgage to be maintained with respect thereto.
Unlegended Definitive Certificate: A Definitive
Certificate which does not bear the Securities Legend and which can
only be issued if the Depositor determines under applicable law
that the placement of the Securities Legend on such Definitive
Certificate is no longer required.
Unscheduled Payments: All principal payments on the
Mortgage Loan other than the Balloon Payments and Voluntary
Prepayments.
Voluntary Prepayments: As to any Mortgage Note, any
Principal Prepayments made by the Borrowers pursuant to paragraph
5 of such Mortgage Note.
Workout: Any modification of the Mortgage Loan or the
Mortgage Notes entered into between the Servicer and the Borrowers
in accordance with Section 3.8 hereof.
Section 1.2 Calculations. All calculations of interest
hereunder which are made in respect of the Regular Interests and
the Certificates shall be made monthly and calculated on the basis
of a 360-day year consisting of twelve 30-day months and shall be
carried out to seven decimal places, rounded up. All dollar
amounts calculated hereunder shall be rounded to the nearest penny.
Section 1.3 Interpretation. (a) Whenever the Agreement
refers to a Distribution Date and a "related" Collection Period,
Interest Accrual Period or Due Date, such reference shall be to the
Collection Period, Interest Accrual Period or Due Date, as
applicable, immediately preceding such Distribution Date.
(b) As used herein and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting
terms not defined in Section 1.1 shall have the respective meanings
given to them under generally accepted accounting principles or
regulatory accounting principles, as applicable.
(c) The words "hereof," "herein," and "hereunder" and
words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of
this Agreement, and Article, Section, Schedule and Exhibit
references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified. Definitions in Section 1.1 shall include both
the singular and the plural.
ARTICLE II
DECLARATION OF TRUST FUND;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.1 Creation and Declaration of Trust Fund;
Conveyance of Mortgage Loan; Conveyance of Other Collateral. The
Depositor, concurrently with the execution and delivery of this
Agreement, in exchange for the Certificates, does hereby
irrevocably sell, transfer, assign, set over and otherwise convey
to the Trustee, without recourse, all of the right, title and
interest of the Depositor, whether now owned or hereafter acquired
and wherever located, in and to the documents and interests
described in the following paragraph, to have and to hold, in
trust, and the Trustee declares that it accepts the trust created
hereby and acknowledges that it or the Mortgage Custodian on its
behalf has received, subject to the review provided for in Section
2.2, and shall hold such documents and instruments together with
any other property comprising the Trust Fund delivered to it
hereunder as Trustee, in trust, for the benefit and use of the
Holders of the Certificates which represent the entire beneficial
interest in the Trust Fund, and for the purposes and subject to the
terms and conditions set forth in this Agreement. Concurrently
with such receipt, the Authenticating Agent has caused to be
authenticated and delivered to or upon the order of the Depositor,
Certificates in the authorized denominations evidencing the entire
ownership in the Trust REMIC.
In connection with such sale, transfer and assignment,
the Depositor does hereby deliver to, and deposit with, the
Mortgage Custodian on behalf of the Trustee (with a copy to the
Servicer) the documents or instruments listed in clauses (a)
through (m) below (except that the documents listed in clauses (f),
(g), (h), (i) and (j) shall be delivered only to the Servicer):
(a) the original Mortgage Notes, endorsed by the
Depositor without recourse to the order of the Trustee in
substantially the following form: "Pay to the order of State Street
Bank and Trust Company, as the Trustee for the benefit of the
Holders of KRT Origination Corp. Commercial Mortgage Pass-Through
Certificates, and its successors and assigns, without recourse" and
signed in the name of the Depositor by an authorized officer;
(b) each counterpart of the original Mortgage, with
evidence of the delivery thereof for recording;
(c) each Mortgage Collateral Assignment, duly signed
and, in the case of assignments of the Mortgage and the Assignment
of Leases, in form suitable for recording in the applicable
jurisdictions, with evidence of the delivery thereof for recording;
(d) all Required Insurance Policies together with proof
of payment of premiums relating thereto (which may be in the form
of copies of such policies or certificates of insurance showing
such policies to be in effect on the Closing Date);
(e) the original Title Insurance Policies, or in the
event such original Title Insurance Policies are certified by the
Depositor as unavailable, copies of the marked-up original title
reports and the Depositor's recording instructions, with the
originals to be delivered by the Depositor as soon as available but
in no event later than 90 days after the Closing Date;
(f) a copy of the original surveys referred to in the
above referenced Title Insurance Policies made in connection with
the origination of the Mortgage Loan;
(g) a copy of the original engineer's report with
respect to the improvements on each Mortgaged Property obtained in
connection with the origination of the Mortgage Loan;
(h) copies of the original Environmental Reports of
each Mortgaged Property made in connection with the origination of
the Mortgage Loan;
(i) a copy of each of the management agreements between
Kranzco Realty Trust, as manager, and the Borrowers, as owners,
with respect to the Mortgaged Properties and the Manager's Consent
and Subordination of Management Agreement;
(j) a copy of each Ground Lease (as defined in the
Mortgage);
(k) an original of the Cash Collateral Agreement and
assignments thereof from the Depositor to the Trustee or the
Mortgage Custodian;
(l) an original of the Assignment of Leases, in form
suitable for recording or filing in the applicable jurisdictions,
and assignments thereof, in form suitable for recording or filing
in the applicable jurisdictions, from the Depositor to the Trustee
or the Mortgage Custodian, with evidence of the delivery thereof
for recording; and
(m) copies of the UCC-1 financing statements covering
the Mortgage Collateral Security, showing the Borrowers as debtors,
the Depositor as secured party and the Trustee, as assignee, each
with evidence of filing thereon; provided that if the Depositor
cannot deliver any such financing statements with evidence of
filing thereon because such financing statements have not yet been
returned by the public filing office where such financing
statements have been submitted for filing, then the Depositor shall
deliver or cause to be delivered a photocopy of such financing
statements (certified by the Depositor to be a true and complete
copy) together with an Officer's Certificate stating that such
financing statements have been dispatched to the appropriate public
filing office for filing.
The Depositor shall deliver or cause to be delivered to
the Mortgage Custodian, on behalf of the Trustee, the original
Mortgage and Mortgage Collateral Security, with evidence, if
applicable, of recording indicated thereon upon receipt thereof
from the public recording official, with a copy to the Servicer.
Concurrently with such sale, transfer and assignment, the
Depositor shall, at its expense, deliver each Mortgage Collateral
Assignment to be duly recorded in the name of the Trustee to the
appropriate records depository for the jurisdictions in which the
Mortgaged Properties are located and shall cause the receipt
evidencing submission for recording and each such Mortgage
Collateral Assignment after recordation to be delivered to the
Mortgage Custodian, on behalf of the Trustee. The Trustee shall
hold legal title to the Mortgage Loan as trustee for the benefit of
the Certificateholders.
Concurrently with such sale, transfer and assignment, the
Depositor shall (while delivering a copy thereof to the Mortgage
Custodian and the Servicer), at the expense of the Depositor, cause
each other item of Mortgage Collateral Security required to be
filed or recorded to be duly filed or recorded in the name of the
Mortgage Custodian on behalf of the Trustee in all places necessary
to perfect a valid first priority lien on the rights, interests and
properties that are the subject of the related Mortgage Collateral
Security and shall cause the receipt evidencing submission for
filing or recording and such Mortgage Collateral Security after
filing or recordation to be delivered to the Mortgage Custodian
promptly upon the release thereof. The Mortgage Custodian on
behalf of the Trustee shall be the secured party under the Mortgage
Collateral Security for the benefit of the Certificateholders. The
Servicer shall timely file such continuation statements or other
instruments as may be necessary to maintain the perfection of the
security interests in or granted by the Mortgage Collateral
Security. The cost of filing such confirmation statements and
other instruments shall be borne by the Borrowers.
The ownership of each Mortgage Note, the Mortgage, the
contents of the Mortgage File and any other Mortgage Collateral
Security is vested in the Trustee for the benefit of the
Certificateholders. The Depositor and the Servicer agree to take
no action inconsistent with the Trustee's ownership of the Mortgage
Loan and to promptly indicate to all inquiring parties that the
Mortgage Loan has been sold to and is owned by the Trustee for the
benefit of the Certificateholders and to claim no ownership
interest in the Mortgage Loan.
It is intended that the conveyance of the Depositor's
right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute, and shall be construed as, a purchase
and sale and not a loan. However, if such conveyance is deemed to
be a loan, it is intended that: the rights and obligations of the
parties to such loan shall be established pursuant to the terms of
this Agreement; the Depositor hereby grants to the Trustee a first
priority security interest in all of the Depositor's right, title
and interest in, to and under the Trust Fund, whether now existing
or hereafter acquired, and the accounts and funds established by
the Servicer, the Trustee and the Paying Agent pursuant hereto, all
payments of principal of or interest on the Mortgage Loan, all
other payments made in respect of the Mortgage Loan, and all
proceeds thereof for the benefit of the Certificateholders, to
secure payment of the Certificates; and this Agreement shall
constitute a security agreement under applicable law. If such
conveyance is deemed to be a loan and the trust created by this
Agreement terminates prior to the satisfaction of the claims of any
Person holding any Certificates, the security interest created
hereby shall continue in full force and effect and the Trustee
shall be the collateral agent for the benefit of such Person, and
all proceeds shall be distributed as herein provided.
Section 2.2 Acceptance by Trustee. (a) The Mortgage
Custodian on behalf of the Trustee shall, upon actual receipt,
acknowledge receipt by delivery of a Mortgage Custodian Initial
Certificate, subject to the provisions of Section 2.1 hereof and
the review procedures provided for in Section 2.2(b) hereof, of all
or part of the Mortgage File described in Section 2.1 hereof and
declares that the Mortgage Custodian on behalf of the Trustee
holds, and, upon actual receipt, will hold, the documents
constituting all or part of the Mortgage File on behalf of the
Trustee in trust, upon the trusts herein set forth, for the use and
benefit of all present and future Certificateholders. Neither the
Mortgage Custodian nor the Trustee has any actual knowledge of any
adverse claims, liens or encumbrances on any of the assets so
delivered, including without limitation, federal tax liens or liens
arising under ERISA.
(b) The Mortgage Custodian, on behalf of the Trustee,
agrees, for the benefit of Certificateholders, to review the
Mortgage File within 30 days after execution and delivery of this
Agreement (or, with respect to each document that is not delivered
on the Closing Date because of delivery to a public recording
office, within seven days after delivery thereof to the Mortgage
Custodian on behalf of the Trustee) to ascertain that all required
documents have been executed and received and shall, by delivery of
the Mortgage Custodian Final Certificate, acknowledge that it has
received the documents set forth in such certificate (subject to
any exception noted on the exception list attached thereto)
including the Mortgage, the Mortgage Collateral Assignment and the
Assignment of Leases and that such documents have been filed or
recorded and that such documents relate to the Mortgage Loan, and
in so doing the Mortgage Custodian, on behalf of the Trustee, may
rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon.
The Mortgage Custodian, on behalf of the Trustee, shall have no
responsibility for reviewing the Mortgage File except as expressly
set forth in this Section 2.2(b) hereof. Subject to Section 8.1
hereof, neither the Trustee nor the Mortgage Custodian shall be
under any duty or obligation to inspect, review or examine any such
documents, instruments or certificates to determine independently
that they are genuine, enforceable or appropriate for the
represented purpose, whether the text of any assignment or
endorsement is in proper or recordable form (except, if applicable,
to determine if the Trustee is the assignee or endorsee or if the
endorsement on the Mortgage Notes conforms to the requirements of
Section 2.1(a) hereof), whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction, or
to determine independently that any document has actually been
filed or recorded or that any document is other than what it
purports to be on its face. Neither the Trustee nor the Mortgage
Custodian, on behalf of the Trustee, shall be under any obligation
to review the Mortgage, this Agreement or any Sub-Servicing
Agreement to determine whether all Required Insurance Policies have
been received or whether any Title Insurance Policy meets the
definition thereof. If the Mortgage Custodian, on behalf of the
Trustee, in its review finds any document constituting a part of
the Mortgage File not to have been executed or received or to be
unrelated to the Mortgage Loan or to be otherwise missing or
defective (that is, mutilated, damaged, defaced, incomplete,
improperly dated, clearly forged or otherwise physically altered)
in any material respect, the Mortgage Custodian, on behalf of the
Trustee, shall notify the Depositor, the Servicer, the Trustee and
the Depositor thereof within the 30-day period (or the seven-day
period, as the case may be) set forth above in this Section 2.2(b)
hereof. In addition, the Mortgage Custodian, on behalf of the
Trustee, shall also notify the Depositor, the Trustee, the Servicer
and the Depositor if, in the examination of the Mortgage File as
specified in this Section 2.2(b) hereof, or through any other
means, a Responsible Officer of the Mortgage Custodian, on behalf
of the Trustee, obtains notice or knowledge (a) of any adverse
claim, lien or encumbrance against the Mortgaged Properties, (b)
that any of the Mortgage Notes is overdue or has been dishonored,
(c) of evidence on the face of any of the Mortgage Notes or the
Mortgage of any security interest or other right or interest
therein, or (d) of any defense against or claim to such Mortgage
Notes by any party.
Section 2.3 Representations and Warranties of the
Servicer, the Depositor and the Borrowers. (a) The Servicer
hereby represents and warrants to the other parties hereto that:
(i) The Servicer is a corporation, duly
organized, validly existing and in good standing, under
the laws of the State of Delaware, with full power and
authority to conduct its business as presently conducted
by it and is qualified to transact business in, and is in
good standing under, the laws of each state in which any
Mortgaged Property is located or is otherwise exempt
under applicable law from such qualification to the
extent necessary to perform its obligations under this
Agreement or is otherwise not required under applicable
law to effect such qualification and no demand for such
qualification has been made upon the Servicer by any such
state.
(ii) The execution and delivery of this
Agreement by the Servicer and its fulfillment of or
compliance with the terms and conditions of this
Agreement does not and shall not, in any manner which
would materially adversely affect its ability to perform
its obligations under this Agreement, conflict with,
result in a breach of, or constitute a default under (i)
any term, condition or provision of the Servicer's
charter or by-laws; (ii) any term or provision of any
material indenture, deed of trust, contract or other
agreement or instrument to which the Servicer is a party
or by which the Servicer is bound; or (iii) any law,
rule, regulation, order, judgment or decree of any court
or governmental authority having jurisdiction over the
Servicer.
(iii) This Agreement has been duly and validly
authorized, executed and delivered by the Servicer and,
assuming the due authorization, execution and delivery by
the other parties hereto, constitutes the legal, valid
and binding obligation of the Servicer, enforceable in
accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating
to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at
law).
(iv) No consent, approval, authorization or
order of, or registration or filing with, or notice to,
any court or governmental agency or body is required for
the execution, delivery and performance by the Servicer
of or compliance by the Servicer with this Agreement or
the consummation of the transactions contemplated by this
Agreement.
(v) The Servicer is not in default with
respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or
governmental agency, which default might have
consequences that would materially and adversely affect
the condition (financial or other) or operations of the
Servicer or its properties or might have consequences
that would materially and adversely affect its
performance hereunder.
(vi) There is no action, suit or proceeding
before or by any court or governmental agency or body now
pending or, to the Servicer's knowledge, threatened,
which, if determined adversely to the Servicer, would
result in a material adverse change in the condition,
financial or otherwise, or in the earnings, business
affairs or business prospects of the Servicer, or would
materially and adversely affect the execution, delivery
or enforceability of this Agreement or the ability of the
Servicer to service the Mortgage Loan under and in
accordance with the terms of this Agreement.
(vii) The Servicer has the full corporate power,
authority and legal right to execute and deliver, engage
in the transactions contemplated by, and perform and
observe the terms and conditions of, this Agreement.
(viii) No information, certificate of an officer,
statement furnished in writing or report delivered to the
Depositor, any Affiliate of the Depositor or the Trustee by
the Servicer contains any untrue statement of a material fact.
The representations and warranties of the Servicer set
forth in this Section 2.3(a) shall survive the transfer and
assignment of the Mortgage Loan to the Trustee. Within 60 days of
the earlier of discovery by the Servicer or receipt of notice by
the Servicer of the breach of any representation, warranty or
covenant of the Servicer set forth in this Section 2.3(a), the
Servicer shall cure such breach in all material respects. The
Servicer shall indemnify the Depositor and the Trustee and hold
them harmless against any loss, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments and other
costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of
the Servicer's representations and warranties contained in this
Section 2.3(a). It is understood and agreed that the enforcement
of the obligation of the Servicer set forth in this Section 2.3(a)
to indemnify the Depositor and the Trustee as provided in this
Section constitutes the sole remedy of the Depositor and the
Trustee respecting a breach by the Servicer of the representations
and warranties in this Section 2.3(a). Such indemnification shall
survive any termination, resignation or removal of the Servicer as
Servicer hereunder, and any termination of this Agreement.
(b) The Depositor hereby represents and warrants to the
Trustee and the Servicer that:
(i) the Depositor is a corporation duly
organized, validly existing and in good standing under
the laws of the State of Delaware and has full corporate
power and authority to originate the Mortgage Loan, to
own its property, to carry on its business as presently
conducted, to enter into and perform its obligations
under this Agreement, and to create the trust pursuant
hereto;
(ii) the origination of the Mortgage Loan and
the execution and delivery by the Depositor of this
Agreement have been duly authorized by all necessary
corporate action on the part of the Depositor; neither
the origination of the Mortgage Loan, the execution and
delivery of this Agreement, nor the consummation of the
transactions herein contemplated, nor compliance with the
provisions hereof, conflicts with or results in a breach
of, or constitutes a default under, (i) any of the
provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Depositor or its
properties; (ii) the certificate of incorporation or
bylaws of the Depositor; or (iii) the terms of any
indenture or other agreement or instrument to which the
Depositor is a party or by which it is bound; neither the
Depositor nor any of its Affiliates is a party to, bound
by, or in breach of or violation of any indenture or
other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any
court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which
materially adversely affects (A) the ability of the
Depositor to originate the Mortgage Loan or to perform
its obligations under this Agreement or (B) the business,
operations, financial condition, properties or assets of
the Depositor;
(iii) the origination of the Mortgage Loan and
the execution, delivery and performance by the Depositor
of this Agreement and the consummation of the
transactions contemplated hereby do not require the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in
respect of, any state, federal or other governmental
authority or agency (other than under state securities or
blue sky laws), except such as has been obtained, given,
effected or taken prior to the date hereof and except to
the extent that the failure to obtain such consent or
approval, give such notice, register with or take such
other action would not materially adversely affect (A)
the ability of the Depositor to originate the Mortgage
Loan or to perform its obligations under this Agreement
or (B) the business, operations, financial condition,
properties or assets of the Depositor;
(iv) this Agreement has been duly executed and
delivered by the Depositor and, assuming due
authorization, execution and delivery by the Trustee and
the Servicer, constitutes a valid and binding obligation
of the Depositor enforceable against it in accordance
with its terms;
(v) there are no legal or governmental
proceedings pending or, to the best of the Depositor's
knowledge, threatened or likely to be asserted against or
affecting the Depositor, before or by any court,
administrative agency, arbitrator or governmental body
(A) with respect to the origination of the Mortgage Loan
by Depositor, (B) with respect to any of the transactions
contemplated by this Agreement or (C) with respect to any
other matter which in the judgment of the Depositor will
be determined adversely to the Depositor and will, if
determined adversely to the Depositor, materially and
adversely affect it or its business, operations,
financial condition, properties or assets, or adversely
affect its ability to perform its obligations under this
Agreement;
(vi) immediately prior to the consummation of
the transactions contemplated in this Agreement, the
Depositor had good title to and was the sole owner of the
Mortgage Loan (and each Mortgage Note) free and clear of
any and all adverse claims, charges or security interests
arising as a result of its ownership of the Mortgage Loan
(including liens arising under the federal tax laws or
ERISA);
(vii) the Depositor has full corporate power and
authority to sell, assign and transfer the Mortgage Loan
and is transferring the Mortgage Loan (and each Mortgage
Note) free and clear of any and all liens, pledges,
charges or security interests of any nature encumbering
the Mortgage Loan, except as permitted hereby; and
(viii) the Mortgage Notes are the only notes
representing the indebtedness secured by the Mortgage.
It is understood and agreed that the representations and
warranties set forth in this Section 2.3(b) shall survive the
transfer and assignment of the Mortgage Loan to the Trustee. Upon
discovery by any Responsible Officer of any of the Depositor, the
Mortgage Custodian, the Servicer or the Trustee of the breach of
any representation or warranty of the Depositor herein which
materially adversely affects the interests of the
Certificateholders in the Mortgage Loan, the Servicer, the
Depositor, the Mortgage Custodian or the Trustee, as the case may
be, shall promptly notify the other parties hereto and the Rating
Agency. If, within 60 days after delivery of such notice to the
Depositor, the Depositor shall not have caused such breach to be
cured in all material respects, the Servicer on behalf of the
Trustee shall prosecute any legal action as may, in its judgment,
be necessary to protect the interest of the Trust Fund in
connection therewith. The Servicer shall be indemnified by funds
on deposit in the Distribution Account for any reasonable costs and
expenses incurred by it relating thereto only to the extent such
costs and expenses (1) are not paid by the Depositor as a result of
such legal action and (2) are not a result of the negligence, bad
faith or willful misconduct of the Servicer. Any such indemnified
cost or expense incurred by the Servicer shall constitute a
Servicing Advance. The Servicer shall not be required to expend
any funds hereunder to the extent such expenditure would be deemed
a Nonrecoverable Advance. Any action by the Servicer against the
Depositor pursuant to this Section 2.3(b) shall constitute the sole
recourse of the Trustee, the Servicer and the Certificateholders
against the Depositor in respect of such breach of any
representation or warranty, except as provided in Section 6.3.
(c) Upon discovery by any Responsible Officer of the
Depositor, the Mortgage Custodian, the Servicer or the Trustee of
a breach of any of the representations, warranties and covenants of
a Borrower in the Mortgage which adversely affects the value of the
Mortgage Loan or the interests of the Certificateholders in the
Mortgage Loan or potentially affects the status of the Trust REMIC
as a REMIC or that could result in a tax being imposed on the Trust
REMIC, the party discovering such breach shall give prompt written
notice to the other parties, the Borrowers and the Rating Agency.
The Servicer on behalf of the Trustee may prosecute any legal
action as may, in its judgment, be necessary to protect the
interest of the Trust Fund in connection therewith, subject to
Section 3.19 hereof. The Servicer shall be indemnified by funds on
deposit in the Distribution Account for any reasonable costs and
expenses incurred by it relating to actions taken by it in the
preceding sentences only to the extent such costs and expenses (i)
are not paid by the Borrowers as a result of such legal action and
(ii) are not a result from the negligence, bad faith or willful
misconduct of the Servicer. Any such cost or expense incurred by
the Servicer shall constitute a Servicing Advance. The Servicer
shall not be required to expend any funds hereunder to the extent
such expenditures would be deemed a Nonrecoverable Advance.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOAN
Section 3.1 Servicer to Act as Servicer. (a) The
Servicer, as an independent contract servicer, shall service and
administer the Mortgage Loan on behalf of the Trustee and in the
best interests of and for the benefit of the Certificateholders (as
determined by the Servicer in its reasonable judgment) in
accordance with the terms of this Agreement and the Mortgage Loan
and, in furtherance of and to the extent consistent with such
terms, giving due consideration to customary and usual standards of
practice of prudent institutional commercial mortgage loan
servicers and with a view to the maximization of timely recovery of
principal and interest on the Mortgage Loan and the preservation of
available remedies with respect to the Mortgage Loan and the
Mortgaged Properties but without regard to:
(i) any relationship (other than that created
by this Agreement) that the Servicer, any Sub-Servicer or
any Affiliate of the Servicer or any Sub-Servicer may
have with either Borrower or any Affiliate of the
Borrowers;
(ii) the ownership of any Certificate by the
Servicer or any Affiliate of the Servicer;
(iii) the Servicer's or any Sub-Servicer's
obligations to make Advances or to incur servicing
expenses with respect to the Mortgage Loan;
(iv) the adequacy of the Servicer's or any
Sub-Servicer's compensation for its services hereunder or
with respect to any particular transaction; or
(v) the Servicer's or any Sub-Servicer's ownership,
servicing or management for others of any other mortgage loans
or mortgages.
The Servicer's or Special Servicer's liability for
actions and omissions in its capacity as Servicer or Special
Servicer, as the case may be, hereunder is limited as provided
herein (including, without limitation, pursuant to Section 6.3
hereof), and nothing herein contained shall be construed as an
express or implied guarantee by the Servicer or Special Servicer of
the collectability of the Mortgage Loan.
Subject to the above-described servicing standards
(hereinafter referred to as "Accepted Servicing Practices") and the
terms of this Agreement (including specifically Article X) and of
the Mortgage Loan, the Servicer shall have full power and
authority, acting alone and/or through one or more Sub-Servicers as
provided in Section 3.2 hereof, to do or cause to be done any and
all things in connection with such servicing and administration
which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer in its own name or in the
name of any Sub-Servicer is hereby authorized and empowered by the
Trustee when the Servicer deems it appropriate in its best
judgment, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee or any of them, to the extent
consistent with the provisions of this Agreement (including
specifically Section 3.3(a)) hereof, any and all instruments of
satisfaction or cancellation, or of partial or full release or
discharge, any and all modifications, waivers, amendments, or
consents to or with respect to any documents contained in the
Mortgage File, subordination, nondisturbance, attornment
agreements, and all other comparable instruments, with respect to
the Mortgage Loan. The Servicer shall service and administer the
Mortgage Loan in accordance with applicable state and federal law.
Subject to Section 3.10 hereof, upon the written request of the
Servicer, the Trustee shall execute and deliver to the Servicer and
any Sub-Servicer any powers of attorney and other documents in the
form furnished to it by the Servicer as are necessary or
appropriate to enable the Servicer and any Sub-Servicer to carry
out their servicing and administrative duties hereunder and the
Trustee shall not be held responsible for any acts by either the
Servicer or any Sub-Servicer in their respective uses of any such
powers of attorney given.
(b) Any permissive right of the Servicer enumerated in
this Agreement shall not be construed as a duty. The Servicer
shall not be liable with respect to any action taken, suffered or
omitted to be taken by it in good faith in accordance with this
Agreement or by it at the direction of Certificateholders
evidencing not less than a majority of the Aggregate Certificate
Balance (unless this Agreement provides for a greater majority),
relating to the time, method and place of conducting any proceeding
for any remedy available to the Servicer, or exercising or omitting
to exercise any trust or power conferred upon the Servicer, under
this Agreement.
Section 3.2 Sub-Servicing Agreements. (a) The Servicer
may enter into Sub-Servicing Agreements (provided such agreements
would not result in the withdrawal, qualification or downgrade of
the then current ratings on the Class A, Class B, Class C or Class
D Certificates, as evidenced by a letter to such effect from the
Rating Agency delivered to the Trustee prior to entering into any
Sub-Servicing Agreement and provided such agreements require the
Sub-Servicer to comply with all of the conditions of this Agreement
applicable to the Servicer in respect of the duties delegated) with
Sub-Servicers acceptable to the Borrowers and the Rating Agency for
the servicing and administration of the Mortgage Loan. References
in this Agreement to actions taken or to be taken by the Servicer
in servicing the Mortgage Loan include actions taken or to be taken
by a Sub-Servicer on behalf of the Servicer. Each Sub-Servicer
shall be (i) authorized to transact business in the state or states
in which the Mortgaged Properties it is to service are situated, if
and to the extent required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder and under the
applicable Sub-Servicing Agreement, and (ii) a qualified
institutional commercial mortgage loan servicer. Each
Sub-Servicing Agreement shall be upon such terms and conditions as
are not inconsistent with this Agreement and as the Servicer and
the Sub-Servicer have agreed. For purposes of this Agreement, the
Servicer shall be deemed to have received any payment when the
Sub-Servicer receives such payment. The Servicer shall notify the
Trustee and the Depositor in writing promptly upon the appointment
of any Sub-Servicer and promptly furnish the Trustee with a copy of
the applicable Sub-Servicing Agreement.
(b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee and the
Certificateholders, shall enforce the obligations of each
Sub-Servicer under the related Sub-Servicing Agreement. Such
enforcement against a Sub-Servicer, including, without limitation,
the legal prosecution of claims, termination of Sub-Servicing
Agreements and the pursuit of other appropriate remedies, shall be
in such form and carried out by the Servicer at its own expense to
such an extent and at such time as the Servicer, in its good faith
business judgment, would require were it the owner of the Mortgage
Loan. The Servicer shall pay the costs of such enforcement at its
own expense and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement only to the
extent, if any, that such recovery exceeds all amounts due in
respect of the Mortgage Loan, or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
(c) Notwithstanding any Sub-Servicing Agreement, any
of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a Sub-Servicer or reference
to actions taken through a Sub-Servicer or otherwise, the Servicer
shall remain obligated and liable to the Depositor, the Trustee and
Certificateholders for the servicing and administering of the
Mortgage Loan in accordance with the provisions of Section 3.1
hereof without diminution of such obligation or liability by virtue
of such Sub-Servicing Agreement or arrangements or by virtue of
indemnification from a Sub-Servicer and to the same extent and
under the same terms and conditions as if the Servicer alone were
servicing and administering the Mortgage Loan.
Section 3.3 Collection of Certain Mortgage Loan
Payments; Distribution Account; Certificate Account; Default
Interest Amount. (a) Continuously from the Closing Date until the
principal and interest on the Mortgage Loan are paid in full, the
Servicer shall proceed diligently to collect in accordance with
Section 3.1 all payments called for under the terms and provisions
of the Mortgage Loan, and shall follow such collection procedures
as are consistent with this Agreement, including Accepted Servicing
Practices.
(b) On or before the Closing Date, the Servicer shall
establish a single Distribution Account. The Distribution Account
shall be an Eligible Account held in the name of the Servicer on
behalf of the Trustee for the benefit of the Holders of the
Certificateholders and funds in the Distribution Account shall not
be commingled with any other moneys. The Servicer shall notify the
Trustee, the Paying Agent and the Depositor in writing of the
location and account number of the Distribution Account and shall
not change such location or account number until prior written
notice of the new location or account number has been delivered to
the Trustee, the Paying Agent and the Depositor.
(c) Funds in the Distribution Account shall be invested,
at the risk of the Borrowers and at their written direction, in
Permitted Investments maturing or redeemable by the holder thereof
at par no later than three Business Days prior to the first
Servicer Advance Date after such investment. None of the
Depositor, the Servicer or the Trustee shall be liable for any
losses incurred on such Permitted Investments except to the extent
due to their negligence, willful misconduct or fraud in maintaining
custody of any such Permitted Investments or in determining whether
any investment is a Permitted Investment. The Holders of the Class
R Certificate shall be entitled, in accordance with the terms
hereof, to all interest on amounts on deposit in the Distribution
Account and income from Permitted Investments. Any losses realized
in connection with any such investment shall be for the account of
the Borrowers which shall deposit the amount of such loss (to the
extent not offset by income from other investments) in the
Distribution Account one Business Day after written notice of such
loss from the Servicer.
(d) The Servicer shall deposit into the Distribution
Account, no later than the Servicer Advance Date (with respect to
item (v) below), no later than the Business Day following receipt
of any such amounts (with respect to items (i), (ii), (iii) and
(iv) below), or, in the case of unscheduled remittances of
principal or interest, no later than the Business Day following
identification of the proper application of such amounts (unless
the Servicer determines, consistent with Accepted Servicing
Practices, that a particular item should not be deposited), the
following amounts received or Interest Advances made by it:
V all payments on account of Principal
Prepayments and Balloon Payments, on the Mortgage Loan;
(ii) all payments on account of interest (other
than Default Interest, which shall be treated in the
manner set forth in Section 3.3(k) hereof) on the
Mortgage Loan (net of Servicing Compensation and Trustee
Fees but only to the extent of the amount permitted to be
withdrawn or withheld from the Distribution Account in
accordance with this Agreement);
(iii) all Net Liquidation Proceeds and
Foreclosure Proceeds with respect to the Mortgaged
Properties (net of any unpaid Servicing Compensation and
Trustee Fees but only to the extent of the amount
permitted to be withdrawn or withheld from the
Distribution Account in accordance with this Agreement);
(iv) all other Curtailments and all amounts
paid by the Servicer pursuant to Section 3.5(b);
(v) all Interest Advances; and
(vi) all amounts paid to reimburse the
Servicer, as assignee of the Depositor in its capacity as
beneficiary under the Mortgage.
The foregoing requirements for deposit in the
Distribution Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing,
amounts received by the Servicer for the account of the Borrowers
for application towards the payment of Impositions, insurance
premiums and similar items, if any, need not be deposited by the
Servicer in the Distribution Account, nor shall any late payment
charges, assumption fees, extension fees, demand fees, modification
fees and similar items, if any, be deposited in the Distribution
Account (such items constituting additional compensation payable to
the Servicer). All funds deposited by the Servicer in the
Distribution Account shall be held in trust until disbursed or
withdrawn in accordance herewith. Except as expressly permitted,
provided or required hereunder, the Servicer shall not sell,
transfer or assign to any Person any interest (including any
security interest) in amounts credited or to be credited to the
Distribution Account or the Default Interest Account, or take any
action towards that end, and shall maintain such amounts free of
all liens, claims and encumbrances of any nature (other than liens
created pursuant to this Agreement).
(e) No later than two Business Days prior to each
Distribution Date, the Servicer shall make withdrawals from the
Distribution Account for the following purposes (the order set
forth below not constituting an order of priority for such
withdrawals):
(i) to withdraw any sums deposited in error in
the Distribution Account and pay such sums to the Persons
entitled thereto;
(ii) to reimburse the Servicer for the Mortgage
Recording Tax Advance plus the Advance Interest Amount;
(iii) to reimburse the Servicer or Special
Servicer, as applicable (as assignee of the Depositor in
its capacity as beneficiary under the Mortgage), for the
reasonable fees and expenses incurred by it pursuant to
Section 18 of the Mortgage, plus interest thereon as the
Advance Rate as if such amount were a Servicing Advance,
from (1) Net Liquidation Proceeds with respect to a
Liquidated Mortgaged Property or Foreclosed Property and
from Foreclosure Proceeds (it being understood, except as
set forth in the proviso to this sentence in the case of
any such reimbursement, that the right of the Servicer to
reimbursement shall be prior to the rights of the
Certificateholders and that the amount reimbursable shall
include interest on the amount advanced at the Advance
Rate) and (2) from distributions pursuant to Paragraph
Section 3(d)(ii) of the Cash Collateral Agreement,
provided that such fees and expenses shall not be
reimbursed from such Section 3(d)(ii) distributions with
respect to any Distribution Date to the extent that such
reimbursement would result in distributions to
Certificateholders being less than the amounts of
interest and principal due on the Certificates on such
Distribution Date;
(iv) to reimburse itself or the Trustee, as the
case may be, from payments made by the Borrowers in
respect of principal or interest due under the Mortgage
Loan, from Net Liquidation Proceeds with respect to a
Liquidated Mortgaged Property, Foreclosed Property or
Defaulted Mortgage Loan and from Foreclosure Proceeds,
for Interest Advances made by it or the Trustee,
respectively, not previously reimbursed, including any
Interest Advance previously made that the Servicer or the
Trustee, as the case may be, has determined to be a
Nonrecoverable Advance, plus the Advance Interest Amount,
provided that Interest Advances (other than those
determined to be Nonrecoverable Advances) and the Advance
Interest Amount shall not be reimbursed with respect to
any Distribution Date out of Monthly Interest Payments or
Interest Advances to the extent that such reimbursement
would result in distributions to Certificateholders being
less than the amounts of interest and principal due on
the Certificates on such Distribution Date (it being
understood, in the case of any such reimbursement, that
the right of the Trustee to reimbursement shall be prior
to the right of the Servicer, and that the right of the
Servicer shall be prior to the rights of the
Certificateholders and that the amount reimbursable shall
include interest on the amount advanced at the Advance
Rate);
(v) to reimburse itself or the Trustee, as the
case may be, from payments made by the Borrowers in
respect of defaulted payments due under the Mortgage Loan
(other than any such payments in respect of principal of
or interest on the Mortgage Loan), from Net Liquidation
Proceeds with respect to a Liquidated Mortgaged Property
or Foreclosed Property and from Foreclosure Proceeds, for
Servicing Advances made by it, the Special Servicer or
the Trustee, as the case may be, and not previously
reimbursed (it being understood, in the case of any such
reimbursement, that the right of the Trustee to
reimbursement shall be prior to the rights of the
Servicer, and the Servicer's right thereto shall be prior
to the rights of the Certificateholders and that the
amount reimbursable shall include interest on the amount
advanced at the Advance Rate);
(vi) to pay and reimburse the Trustee for its
reasonable fees and unanticipated expenses related to its
services hereunder, including but not limited to the
amounts set forth in Section 8.6(b) hereof and Section
10.1(c) and (e) hereof, and the Servicer the amounts
provided for in Section 6.3 hereof, in each case with
interest on the amount advanced at the Advance Rate (it
being understood that the Trustee's and the Servicer's
rights thereto shall be prior to the rights of the
Certificateholders);
(vii) to reimburse or pay itself, the Depositor
and the Trustee, other than from payments in respect of
principal of or interest on the Mortgage Loan unless such
amount would be a Nonrecoverable Advance, for any amounts
specifically reimbursable or payable pursuant to the
terms of this Agreement, including previously
unreimbursed Servicing Advances and for the reasonable
fees and expenses incurred by the Servicer pursuant to
Section 18 of the Mortgage (other than those amounts
provided for elsewhere in this Section 3.3(e) hereof), at
the time specified in connection with such right to
reimbursement or payment and not previously reimbursed or
paid pursuant hereto, together with any interest thereon
at the Advance Rate (it being understood that the
Servicer's, the Depositor's and the Trustee's rights
thereto shall be prior to the rights of the
Certificateholders);
(viii) to pay itself or the Special Servicer, as
applicable, the Servicing Compensation (to the extent
provided under Section 3.11 hereof) and unpaid Advance
Interest Amount; and to pay the Trustee the Trustee Fee,
together with interest on any portion of such amount that
is past due at the Advance Rate from the date such
outstanding amount was due to the date of payment
thereof;
(ix) to pay any and all taxes imposed on the
Trust REMIC by federal or state or local governmental
authorities to the extent such taxes have not been paid
pursuant to Section 10.5 hereof;
(x) to make any other payments for which
withdrawal from the Distribution Account is authorized
pursuant to this Agreement;
(xi) to make payment to the Paying Agent not
later than one Business Day prior to the Distribution
Date for deposit by the Trustee pursuant to
Section 3.3(f) into the Certificate Account of amounts to
be paid to Certificateholders, including any Interest
Advance, in the amounts directed by the Trustee; and
(xii) to clear and terminate the Distribution
Account pursuant to Section 9.1 hereof.
The Servicer shall keep and maintain separate accounting
for the purpose of justifying any withdrawal from the Distribution
Account.
(f) On or before the Closing Date, the Paying Agent,
on behalf of the Trustee for the benefit of the Certificateholders,
shall establish a single Certificate Account. The Certificate
Account shall at all times be an Eligible Account and shall relate
solely to the Certificates, and the Paying Agent, on behalf of the
Trustee, shall have the exclusive right to withdraw funds there-
from. The Paying Agent, on behalf of the Trustee, shall deposit
into the Certificate Account on the Business Day received all
moneys from the Distribution Account pursuant to Section 3.3(e)(x)
above. The Paying Agent shall make withdrawals from the Certifi-
cate Account only for the following purposes (the order set forth
below not constituting an order of priority for such withdrawals):
(i) to withdraw amounts deposited in the Cer-
tificate Account in error and pay such amounts to the
Persons entitled thereto;
(ii) to make distributions to the Certificate-
holders pursuant to Sections 4.1 (a) and (b); and
(iii) to clear and terminate the Certificate
Account pursuant to Section 9.1.
(g) On or before the Closing Date, the Paying Agent,
on behalf of the Trustee for the benefit of the Certificateholders,
shall establish the Default Interest Account, which shall at all
times be an Eligible Account and relate solely to the Class A,
Class B, Class C and Class D Certificates, and the Paying Agent, on
behalf of the Trustee, shall have the exclusive right to withdraw
funds therefrom. The Default Interest Account shall not be
property of the Trust REMIC. The Servicer, on behalf of the
Trustee, shall deposit into the Default Interest Account on the
Business Day received all Default Interest collected on the
Mortgage Notes and shall account separately for Default Interest
collected on each Mortgage Note. The Trustee and the Paying Agent
shall make withdrawals from the Default Interest Account only for
the following purposes (the order set forth below not constituting
an order of priority for such withdrawals):
(i) to withdraw amounts deposited in the
Default Interest Account in error and pay such amounts to
the Persons entitled thereto;
(ii) to make distributions of Default Interest
to the Certificateholders pursuant to Section 4.1(c)
hereof; and
(iii) to clear and terminate the Default
Interest Account pursuant to Section 9.1 hereof.
(h) Neither the Servicer, the Trustee nor the Paying
Agent shall be liable for any failure to withdraw and pay any
amounts pursuant to Section 3.3(e), (f) or (g), as the case may be,
resulting from any determination made by them as to the priority of
any payment in accordance with the terms of such Sections.
Section 3.4 Escrow Account; Collection of Impositions,
etc.. (a) If, under the terms of the Loan Documents, the Servicer
shall be required to establish escrow or impound accounts (other
than the Accounts), the Servicer shall, in addition to the
Distribution Account, establish and maintain one or more sub-
accounts, each of which shall be an Eligible Account and may be
maintained on a ledger entry basis (each, an "Escrow Account") and
shall deposit therein any collections of amounts received by the
Servicer with respect to costs due for the account of the
Borrowers. Subject to the terms of the Mortgage Notes and
Mortgage, and further subject to applicable law, any funds in any
Escrow Account shall be invested, at the risk of the Borrowers and
at their written direction, in Permitted Investments maturing or
redeemable by the holder thereof at par no later than the Business
Day next preceding the day on which payments are required to be
made out of such Escrow Account. None of the Depositor, the
Servicer nor the Trustee shall be liable for any losses incurred on
such Permitted Investments except to the extent due to their
negligence, willful misconduct or fraud in maintaining custody of
any such Permitted Investments or in determining whether any
investment is Permitted Investment. All interest on amounts on
deposit in any Escrow Account and income from such Permitted
Investments shall be the property of the Borrowers and may be
withdrawn therefrom at any time and from time to time in the
discretion of the Borrowers. Any losses realized in connection
with any such investment shall be for the account of the Borrowers
which shall deposit the amount of such loss (to the extent not
offset by income from other investments) in such Escrow Account one
Business Day after receipt of written notice of such loss from the
Servicer. Withdrawals from any Escrow Account may be made (to the
extent amounts have been escrowed for such purpose and to the
extent permitted by the Loan Documents) only (i) to effect timely
payment of such costs in connection with the Mortgage Loan or to
reimburse the Borrowers upon proof of payment of such costs, (ii)
to refund to the Borrowers any sums determined to be overages,
(iii) to pay interest and investment income on Permitted
Investments to the Borrowers to the extent permitted or required
hereunder or required by law or any Mortgage Note or the Mortgage
or (iv) to clear and terminate such Escrow Account on the
termination of this Agreement. Any provision of the Mortgage
regarding the accounts created pursuant thereto shall govern
notwithstanding any inconsistency with any provision of this
Section 3.4.
(b) The Servicer shall maintain accurate records with
respect to each Mortgaged Property reflecting the status of taxes,
assessments and other similar items that are or may become a lien
thereon and the status of insurance premiums payable in respect
thereof (to the extent owing by the Borrowers). The Servicer, on
behalf of the Trustee, shall effect payment of any items of expense
required by the Mortgage to be paid by the Trustee on behalf of the
Borrowers from the sources specified in the Mortgage. If not paid
from amounts on deposit in accounts created pursuant to the
Mortgage or the Cash Collateral Agreement or from amounts on
deposit in an Escrow Account or otherwise paid by the Borrowers,
the Servicer shall, subject to Section 3.1 hereof and Section
3.17(g) hereof, pay or cause to be paid all items referred to in
the preceding two sentences (which amounts shall be Servicing
Advances) when and as the same shall become due and payable, and
shall be reimbursed therefor pursuant to Section 3.3(e)(iv) hereof.
Section 3.5 Maintenance of Insurance and Errors and
Omissions and Fidelity Coverage. (a) The Servicer shall use
reasonable efforts to cause each Borrower to maintain, or cause the
related Tenant pursuant to the terms of its Lease to maintain, for
each Mortgaged Property all insurance required by the terms of the
Mortgage in the amounts set forth therein and with insurers of the
credit quality set forth therein. To the extent that the Borrowers
nevertheless fail to maintain any hazard insurance, including flood
insurance that the Borrowers are required to maintain, or in the
event that any Mortgaged Property is converted into a Foreclosed
Property, the Servicer, on behalf of the Trustee as Mortgagee,
shall maintain for each Mortgaged Property all insurance required
by the terms of the Mortgage in the amounts set forth therein to
the extent such insurance is obtainable, unless the expense
therefor would constitute a Nonrecoverable Advance. Any amounts
collected by the Servicer under any such policies (other than
amounts to be applied to the restoration or repair of the related
Mortgaged Property in accordance with the terms of the Mortgage)
shall be deposited in the Distribution Account, subject to
withdrawal pursuant to Section 3.3(e). The cost of any insurance
provided pursuant to this section shall be a Servicing Advance,
which shall be recoverable by the Servicer or the Trustee as a
Servicing Advance pursuant to Section 3.3(e)(iv). The Servicer may
reasonably rely on the information required in Section 5 of the
Mortgage and may reasonably assume that each Mortgaged Property
contains the average square footage and construction type as
specified. Unless and to the extent the Servicer has reason to
believe such information may be incorrect, the Servicer may use
such information in its assessment of the adequacy of the insurance
provided by the tenants and by the Borrowers using an appropriate
estimator for insurance or other reasonable means of determining
the adequacy of insurance. Any determination made by the Servicer
pursuant to the foregoing two sentences shall be deemed to be made
in accordance with Accepted Servicing Practices and the amount
covered by any policy approved based on such determination shall be
deemed to comply with this Section 3.5(a).
(b) In the event that the Servicer shall obtain and
maintain any policy of insurance pursuant to Section 3.5(a), such
policy may contain a deductible clause, provided that if there is
a loss which would have been covered by a policy complying with
Section 3.5(a) hereof, the Servicer shall deposit in the
Distribution Account the lesser of the amount by which the cost of
repair exceeds available insurance proceeds and the amount not
otherwise payable under the policy obtained and maintained by the
Servicer because of such deductible clause to the extent such
deductible exceeds the deductible under a policy which would have
been maintained pursuant to Section 3.5(a) hereof. Any such
deposit by the Servicer shall be made on the Servicer Advance Date
next preceding the Distribution Date upon which the proceeds
represented by such deposit are required to be distributed to
Certificateholders. In connection with its activities as
administrator and servicer of the Mortgage Loan, the Servicer
agrees to present, on behalf of itself, the Trustee and
Certificateholders, claims under any such policy. If the Servicer
fails to obtain and maintain any insurance required to be obtained
and maintained by it pursuant to Section 3.5(a) hereof, then in the
event of a loss which would have been covered by such insurance,
the Servicer shall restore the Mortgaged Property affected by such
loss at its own cost and expense and the cost of such restoration
shall not constitute a Servicing Advance or otherwise be
recoverable from the Trust to the extent that such cost would have
been recoverable under a policy required to be obtained and
maintained by it pursuant to Section 3.5(a) hereof.
(c) The Servicer shall obtain and maintain at its own
expense, and keep in full force and effect throughout the term of
this Agreement, a blanket fidelity bond and an errors and omissions
insurance policy covering the Servicer's officers and employees and
other persons acting on behalf of the Servicer in connection with
its activities under this Agreement. The amount of coverage shall
be at least equal to the coverage that would be required by a
prudent institutional commercial loan lender of its servicers. In
the event that any such bond or policy ceases to be in effect, the
Servicer shall obtain a comparable replacement bond or policy.
Coverage of the Servicer under a policy or bond obtained by an
Affiliate of the Servicer and providing the coverage required by
this Section shall satisfy the requirements of this Section.
Notwithstanding the foregoing, the Servicer shall be entitled to
provide self-insurance or insurance through its Affiliate with
respect to its obligation to maintain the blanket fidelity bond,
and, so long as the long term unsecured debt obligations of the
Servicer or such Affiliate are rated at least "A" by the Rating
Agency (or such self-insurance by the Servicer or such Affiliate is
otherwise acceptable to the Rating Agency), the Servicer shall be
entitled to provide self-insurance or insurance through its
Affiliate with respect to its obligation to secure an errors and
omissions insurance policy.
Section 3.6 "Due-on-Sale" Clauses; Releases;
Assumptions. (a) To the extent the Mortgage Loan contains
enforceable "due-on-sale" or "due-on-encumbrance" clauses, the
Servicer shall enforce such clauses. The Servicer, on behalf of
the Trustee, shall take the steps to release any Mortgaged Property
from the lien of the Mortgage if conditions to the release of
Mortgaged Property under Section 38(b) of the Mortgage have been
met. To the extent that the Mortgage Loan contains a provision
permitting the sale of the Mortgaged Property and the assumption of
the Mortgage Loan by the purchaser of the Mortgaged Property if the
consent of the Mortgagee is obtained, the Servicer, on behalf of
the Trustee, shall consent to such transfer and assumption if all
of the conditions to such sale and assumption set forth in the
Mortgage Loan are satisfied.
(b) Notwithstanding the foregoing or any other
provision of this Agreement, the Servicer shall not be deemed to be
in default, breach or any other violation of its obligations
hereunder by reason of any conveyance by a Borrower of a Mortgaged
Property or any assumption of the Mortgage Loan by contract or
operation of law which the Servicer in good faith determines it may
be restricted by law from preventing.
Section 3.7 Realization Upon Mortgaged Properties;
Extension of Balloon Payments on Mortgage Loan; Modification,
Amendment or Waiver of Mortgage Loan. (a) The Servicer shall,
consistent with Accepted Servicing Practices, the provisions of
Sections 3.7(c), (d) and (e) and the provisions of the Mortgage,
institute collection procedures and foreclose upon or otherwise
comparably convert the ownership of the Mortgaged Property upon the
occurrence of a Mortgage Event of Default, as permitted under the
Mortgage. In connection with such foreclosure or other conversion,
the Servicer shall employ Accepted Servicing Practices, including
preserving its rights to all available remedies.
Notwithstanding the preceding paragraph, (i) the
Servicer, upon an actual default by the Borrowers in making any of
the Balloon Payments on the Scheduled Maturity Date but prior to
commencement of foreclosure, shall in writing request that the
Trustee notify in writing the Certificateholders of such failure to
pay, (ii) within five Business Days of its receipt of such request,
the Trustee shall so notify the Certificateholders, including
notice that unless within 30 days of the mailing of the Servicer's
request to the Trustee the Trustee has received written instruction
from all of the Holders of Class A, Class B, Class C and Class D
Certificates affected by such failure to pay, instructing the
Servicer (1) to forebear from exercising such remedies and (2) to
extend the due date of the Balloon Payments, the Servicer shall
promptly commence foreclosure, and (iii) if within such 30-day
period the Trustee has received such written instruction from
Holders from each Class of Certificates affected by any extension
of a Balloon Payment and each Class junior in right to payment of
such Class, then in such case the Servicer shall forebear from
exercising such remedies, modify the Mortgage Notes, subject to
Section 3.7(d) hereof, to extend the Balloon Payments to a date
that is not more than one year after the Scheduled Maturity Date
and notify the Rating Agency in writing of such extension and the
date thereof.
During the period that the Trust Fund holds a Foreclosed
Property, Foreclosure Proceeds and any other amounts received with
respect to such Foreclosed Property (including any Liquidation
Proceeds received prior to the time the Mortgaged Property becomes
a Liquidated Mortgaged Property) shall be applied, after payment of
any related expenses (including any taxes owed pursuant to the
REMIC Provisions), first, to reimburse any Advance with respect to
such Mortgaged Property together with Advance Interest thereon,
second, to pay interest currently due or deemed to be due on the
Mortgage Loan Principal Balance and, third, to reduce the Mortgage
Loan Principal Balance.
(b) Notwithstanding the foregoing, the Servicer shall
not acquire for the benefit of the Trust Fund any personal property
pursuant to this Section 3.7(b) or otherwise unless either:
(i) such personal property is incidental to
real property (within the meaning of Section 856(e)(1) of
the Code) so acquired by the Servicer for the benefit of
the Trust Fund; or
(ii) the Servicer shall have requested and
received a Nondisqualification Opinion, at the expense of
the Trust Fund (provided such expense may be expended by
the Servicer subject to reimbursement as a Servicing
Advance pursuant to Section 3.3(e)(iv) hereof) with
respect to the holding of such property.
(c) Notwithstanding the provisions of Sections 3.8(a)
and 3.7(d) hereof, upon the occurrence of a Monetary Default due
solely to the failure by the Borrowers to pay interest (other than
Default Interest) on the Mortgage Loan on any Due Date, and a
determination in good faith by the Servicer (such determination to
be final, conclusive and binding on the Trustee and
Certificateholders) that any Interest Advance necessary to cover
the resultant shortfall would be a Nonrecoverable Advance, the
Servicer shall accelerate the Mortgage Loan and, if the Mortgage
Loan is not immediately paid in full, pursue foreclosure remedies
with respect to the Mortgaged Property in accordance with
applicable law.
(d) In the event that a material Monetary Default with
respect to the Mortgage Loan has occurred, if the Servicer
determines that a modification, waiver or amendment of the terms of
the Mortgage Loan is reasonably likely to produce a greater
recovery on a present value basis than foreclosure or other
liquidation of the Mortgaged Properties, then, the Servicer may,
but is not required to, agree to a modification, waiver or
amendment of any of the terms of the Mortgage Loan; provided,
however, that the Servicer agrees not to permit any modification
with respect to the Mortgage Loan that would (i) change the rate of
interest on the related Mortgage Notes, (ii) extend, except as
otherwise provided in Section 3.7(a) hereof, the maturity date of
such Mortgage Loan, (iii) defer payment of interest due on the
related Mortgage Notes, (iv) forgive any principal or interest
thereof or (v) affect the priority of the Mortgage or any other
Loan Documents, unless the Servicer has notified the Trustee and
directed the Trustee in writing to notify the Certificateholders of
such proposed modification and the Trustee has notified the
Servicer that such modification has been approved by all of the
Holders of each Class of Certificates affected by such modification
and each Class junior in right of payment of such Class; and
provided, that no such modification shall release, or affect the
priority of, the lien of the Mortgage or any Loan Documents on any
Mortgaged Property or substitute a property for a Mortgaged
Property unless the Servicer has obtained a Nondisqualification
Opinion with respect to such modification, which opinion shall be
obtained at the expense of the Trust Fund (provided such expense
may be expended by the Servicer as a Servicing Advance subject to
reimbursement pursuant to Section 3.3(e)(iv) hereof).
Subject in all respects to the provisions of the
preceding paragraph, (1) upon the occurrence of a Mortgage Event of
Default (including non-payment of any amount due under the Mortgage
Loan on the Scheduled Maturity Date) or (2) upon the notification
by the Borrowers to the Servicer within 90 days of the Scheduled
Maturity Date that they will not make the Balloon Payments in full
when due and the determination by the Servicer that default on the
Mortgage Notes is imminent, if the Servicer determines that a
modification, waiver or amendment of the terms of the Mortgage Loan
is reasonably likely to produce a greater recovery on a present
value basis than foreclosure or other liquidation of one, some or
all of the Mortgaged Property, then the Servicer shall in writing
request that the Trustee notify the Holders of the Class A, Class
B, Class C and Class D Certificates to such effect. The Trustee
shall, within five Business Days of receiving such request, so
notify such Certificateholders, which notice shall include
notification that written consent is required by Holders of in
excess of 50% in the case of clause (1) above and 100% in the case
of clause (2) above of the Aggregate Certificate Balance of each
Class of Certificates (other than the Class R Certificates)
affected by such modification, waiver or amendment (and in the case
of clause (2) above, each Class junior in right to payment of such
Class), for the Servicer to effect such proposed waiver,
modification or amendment, and that the Certificateholders who fail
to respond in writing within 40 days of the date of the Servicer's
notice to the Trustee shall be deemed to have declined such
proposed modification, amendment or waiver. The Trustee, having so
notified such Certificateholders in writing and having obtained the
consent thereto of the Holders of in excess of 50% in the case of
clause (1) above and 100% in the case of clause (2) above, of the
Aggregate Certificate Balance of each Class of Certificates (other
than the Class R Certificate) affected by such modification, waiver
or amendment (and, in the case of clause (2) above, each Class
junior in right to payment of such Class), may permit such
modification, waiver or amendment; provided that if any of such
Certificateholders fails to respond in writing within 40 days from
the date the Servicer so notifies the Trustee, such
Certificateholder shall be deemed to have declined to allow such
proposed modification, waiver or amendment. Notwithstanding
anything to the contrary set forth above, (A) the Balloon Payments
may not be extended to a date that is more than one year after the
Scheduled Maturity Date and (B) no modification, waiver or
amendment shall release the lien, or affect the priority of, the
Mortgage or any Loan Documents on any of the Mortgaged Property or
substitute a property for a Mortgaged Property or alter in any
material respect any provision of the Mortgage or any other Loan
Document unless with respect to this clause (B), (i) the Trustee
has obtained, at the expense of the Borrowers, a
Nondisqualification Opinion with respect to such modification,
waiver or amendment or (ii) the consent of all of the
Certificateholders affected by such modification, waiver or
amendment and each Class junior in right to payment of such Class
is obtained. The Servicer shall notify in writing the Rating
Agency promptly upon effecting such modification, waiver or
amendment.
(e) Notwithstanding the provisions of Section 3.7(a)
hereof, the Servicer shall not, on behalf of the Trust Fund, obtain
title to a Mortgaged Property as a result or in lieu of foreclosure
or other legal process in connection with a default, and shall not
otherwise acquire possession of, or take other action with respect
to, any Mortgaged Property, if, as a result of any such action, the
Trustee, on behalf of the Trust Fund, would be considered to hold
title to, to be a "mortgagee-in-possession" of, or to be an "owner"
or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Responsibility Cleanup and Liability
Act of 1980, as amended from time to time, or any applicable
comparable federal, state or local law, or a "discharger" or
"responsible party" thereunder, unless the Servicer has also
previously determined in accordance with Accepted Servicing
Practices, based on a report prepared in accordance with Section
3.7(f) hereof (a copy of which report, which shall include an
estimate of the cost of remediation to the extent that cost of
remediation can be estimated, shall be delivered to the Trustee),
that:
(i) such Mortgaged Property is in compliance
with applicable Environmental Laws or, if not, that
taking such actions as are necessary to bring the
Mortgaged Property in compliance therewith is reasonably
likely to produce a greater recovery on a present value
basis than not taking such actions;
(ii) there are no circumstances present at such
Mortgaged Property relating to the use, management or
disposal of any hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials
for which investigation, testing, monitoring,
containment, clean-up or remediation could be required
under any federal, state or local law or regulation, or
that, if any such materials are present for which such
action could be required, taking such actions with
respect to the affected Mortgaged Property is reasonably
likely to produce a greater recovery on a present value
basis than not taking such actions; and
(iii) if the Servicer has so determined and has
so certified to the Trustee, based on satisfaction of the
criteria in clauses (i) and (ii) above, that it would be
in the best economic interest of the Trust Fund to take
any of the actions specified in clauses (i) or (ii)
above, and if the cost of taking such actions would be in
excess of $100,000, the Servicer has notified the
Trustee, setting forth in reasonable detail the reasons
for its determination, which, in turn, shall notify the
Holders of the Class A, Class B, Class C and Class D
Certificates of such proposed action, and the Trustee has
received and delivered to the Servicer written
instructions from all of the Holders of such Certificates
directing it to take such action and the Trustee has not
given the Servicer directions not to take such action
based upon the Trustee's reasonable opinion that there
would be a likelihood of its individual liability
resulting from such action against which the Trustee
would not receive indemnification hereunder, or, if
indemnified, that there would not be sufficient assets
available to fully pay the Trustee's damages, losses,
costs and expenses.
The cost of any such compliance, containment, clean-up or
remediation may be withdrawn from the Distribution Account by the
Servicer as an expense of the Trust Fund to the extent not
otherwise provided for under the Loan Documents. The Servicer,
consistent with Accepted Servicing Practices, shall pursue any
remedies available under the Loan Documents and any recoveries in
connection therewith shall be deposited in the Distribution
Account. The Servicer shall have no obligation hereunder to expend
any of its own funds to pursue any such remedies.
(f) The environmental site assessments contemplated by
Section 3.7(e) hereof shall be prepared by any Independent Person
who regularly conducts environmental site assessments for
purchasers of comparable properties and who has had not less than
five years experience in such matters, as determined by the
Servicer in a manner consistent with Accepted Servicing Practices.
The cost of preparation of any environmental assessment shall be
reasonable for such reports and shall be advanced by the Servicer
as an expense of the Trust Fund, unless the Servicer determines
that such Advance would be a Nonrecoverable Advance and the
Servicer shall be reimbursed therefor as a Servicing Advance
pursuant to Section 3.3(e)(iv) hereof.
(g) If the Servicer determines, pursuant to Section
3.7(e) hereof, that taking such actions as are necessary to bring
any Mortgaged Property with respect to which foreclosure is
contemplated into compliance with applicable Environmental Laws, or
taking such actions with respect to the containment, clean-up,
removal or remediation of hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials affecting
any such Mortgaged Property, is not reasonably likely to produce a
greater recovery on a present value basis than not taking such
actions, and the Servicer has not received contrary directions from
Certificateholders or the Trustee as set forth in Section
3.7(e)(iii) directing the Servicer not to take such actions, then
the Servicer shall take such actions consistent with Accepted
Servicing Practices as it deems to be in the best economic
interests of the Trust Fund, including without limitation releasing
the lien of the Mortgage with respect to the affected Mortgaged
Property if it shall have either (i) obtained a Nondisqualification
Opinion or (ii) if such opinion cannot be obtained, the consent
from all of the Holders of Class A, Class B, Class C and Class D
Certificates (in connection with which the Trustee shall forward to
such Certificateholders written notice from the Servicer that the
Nondisqualification Opinion could not be obtained). Any
expenditure made by the Servicer pursuant to this paragraph (g)
shall constitute a Servicing Advance. Neither the Trustee nor the
Servicer shall be obligated to take any action or not take any
action pursuant to this paragraph (g) at the direction of such
Certificateholders unless such Certificateholders agree to
indemnify the Trustee or the Servicer, as the case may be, with
respect to such action or inaction.
Section 3.8 Trustee to Cooperate; Release of Items in
Mortgage File. From time to time and as appropriate for the
servicing or foreclosure of any Mortgaged Property, the Trustee (or
the Mortgage Custodian unless otherwise notified by the Trustee)
shall, upon request of the Servicer and delivery to the Trustee (or
the Mortgage Custodian) of a trust receipt in the form of Exhibit
K hereto, release or cause to be released any items from the
Mortgage File to the Servicer. Upon receipt of written
instructions executed by a Servicing Officer, substantially in the
form of Exhibit L hereto, the Trustee shall execute such documents
furnished to it as are set forth in such instructions as necessary
to the prosecution of any such proceedings. Such trust receipt
shall obligate the Servicer to return such items to the Trustee (or
the Mortgage Custodian) when the need therefor by the Servicer no
longer exists.
Section 3.9 Title and Management of Foreclosed Property.
(a) In the event that title to any Mortgaged Property is acquired
by the Servicer for the benefit of Certificateholders in
foreclosure or by deed-in-lieu of foreclosure or other legal
process in connection with a default, the deed or certificate of
sale shall be taken in the name of the Trustee, or its nominee, on
behalf of the Certificateholders. The Servicer shall consult with
counsel to determine when an Acquisition Date shall be deemed to
occur under the REMIC Provisions with respect to any Mortgaged
Property. The Servicer, on behalf of the Trust Fund, shall sell
any Foreclosed Property as expeditiously as possible, but in all
events within the time period, and subject to the conditions, set
forth in Section 10.2. Subject to Section 10.2, the Servicer shall
manage, conserve, protect and operate each Foreclosed Property for
the Certificateholders solely for the purpose of its prompt
disposition and sale. Any expenditure made by the Servicer
pursuant to this Section 3.9(a) shall constitute a Servicing
Advance.
(b) If the Trust Fund acquires any Foreclosed Property,
the Servicer shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement, to do
any and all things in connection therewith as are consistent with
Accepted Servicing Practices and the REMIC Provisions and,
consistent therewith, shall advance from its own funds, which
amounts shall be Servicing Advances, to the extent that Foreclosure
Proceeds are insufficient for such purpose:
(i) all insurance premiums due and payable in
respect of such Foreclosed Property;
(ii) all Impositions in respect of such
Foreclosed Property that could result or have resulted in
the imposition of a lien thereon;
(iii) all ground rental payments, if applicable,
with respect to the Foreclosed Property; and
(iv) all costs and expenses necessary to
maintain, operate (on an interim basis), and sell such
Foreclosed Property;
if, but only if, the Servicer would make such an advance if it
owned such Foreclosed Property, and if such advance would not be a
Nonrecoverable Advance.
(c) The Servicer may, and shall, to the extent required
pursuant to Article X hereof, contract with any Independent
Contractor for the operation and management of any Foreclosed
Property, provided that:
(i) the terms and conditions of any such
contract shall not be inconsistent with this Agreement;
(ii) any such contract shall require, or shall
be administered to require, that the Independent
Contractor (A) pay all costs and expenses incurred in
connection with the operation and management of such
Foreclosed Property and otherwise comply with the
provisions of Section 856 of the Code (and the
regulations thereunder, and in particular Treasury
Regulation Section 1.856-4(b)(5)) and (B) deposit on a
daily basis all amounts payable to the Trust Fund in
accordance with the contract between the Servicer on
behalf of the Trustee and the Independent Contractor in
an Eligible Account;
(iii) none of the provisions of this Section
3.9(c) relating to any such contract or to actions taken
through any such Independent Contractor shall be deemed
to relieve the Servicer of any of its duties and
obligations to the Trustee on behalf of
Certificateholders with respect to the operation and
management of any such Foreclosed Property; and
(iv) the Servicer shall be obligated with
respect thereto to the same extent as if it alone was
performing all duties and obligations in connection with
the operation and management of such Foreclosed Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its
duties and obligations hereunder for indemnification of the
Servicer by such Independent Contractor, and nothing in this
Agreement shall be deemed to limit or modify such indemnification.
Any expenditure made by the Servicer pursuant to this Section
3.9(c) shall constitute a Servicing Advance.
Section 3.10 Sale of Foreclosed Properties. (a) The
Servicer may offer to sell to any Person any Foreclosed Property if
and when the Servicer determines, consistent with Accepted
Servicing Practices, that such a sale would be in the best economic
interests of the Trust Fund, but shall, in any event, so offer to
sell any Foreclosed Property no later than the time determined by
the Servicer to be sufficient to result in the sale of such
Foreclosed Property on or prior to the date specified in Section
10.2 hereof. The Servicer shall give the Trustee not less than
five days' prior written notice of its intention to sell any
Foreclosed Property, and shall accept the highest cash bid received
from any Person (which Person shall certify in its bid as to
whether it is an Interested Person) for any Foreclosed Property in
an amount at least equal to the sum of:
(i) the Allocated Loan Amount allocated to the
Foreclosed Property;
(ii) all unpaid interest accrued thereon,
including Default Interest; and
(iii) all unpaid Servicing Compensation,
Advances and expenses.
In the absence of any such bid, the Servicer shall accept the
highest cash bid received from any Person other than the Trustee
that is determined to be a fair price for such Foreclosed Property
by the Servicer, if the highest bidder is a Person other than an
Interested Person, or by the Trustee (as set forth in Section
3.10(b) hereof), if the highest bidder is an Interested Person. In
the absence of any cash bid determined to be fair as aforesaid, the
Servicer shall offer the affected Foreclosed Property for sale to
any Person, other than an Interested Person, in a commercially
reasonable manner for a period of not less than 10 or more than 30
days, and shall accept the highest cash bid received therefor in
excess of the highest bid previously submitted. If no such bid is
received, any Interested Person may resubmit its original bid, and
the Servicer shall accept the highest outstanding cash bid,
regardless of from whom received, provided that, if an Interested
Person is the Servicer, a bid by such Interested Person shall be
subject to the provisions of Section 3.10(b) hereof. No Interested
Person shall be obligated to submit a bid to purchase any
Foreclosed Property, and notwithstanding anything to the contrary
herein, neither the Trustee, in its individual capacity, nor any of
its Affiliates may bid for or purchase any Foreclosed Property
pursuant hereto. Neither the Borrowers nor the Depositor shall be
permitted to purchase any Foreclosed Property.
The Servicer shall not be obligated by the foregoing
paragraph or otherwise to accept the highest cash bid if the
Servicer determines, in accordance with Accepted Servicing
Practices, that rejection of such bid would be in the best
interests of the Certificateholders. In addition, the Servicer may
accept a lower bid if it determines, in accordance with Accepted
Servicing Standards, that the prospective buyer making the lower
bid is more likely to perform its obligations, or the terms offered
by the prospective buyer making the lower bid are more favorable.
The Servicer shall in no event sell a Foreclosed Property other
than for cash. In the event that the Servicer determines with
respect to any Foreclosed Property that the bids that are being, or
that are likely to be, made with respect thereto are not or would
not be in the best interests of the Certificateholders and that the
end of the two-year period referred to in Section 10.2(b) hereof
with respect to such Foreclosed Property is approaching, the
Servicer shall seek an extension of such two-year period in the
manner described in Section 10.2(b) hereof.
(b) In determining whether any bid received from an
Interested Person represents a fair price for any Foreclosed
Property, the Trustee shall rely on the opinion of an Appraiser
retained by the Trustee at the expense of the Trust Fund (as a
Liquidation Expense). In determining whether any bid constitutes
a fair price for any Foreclosed Property, the Trustee shall take
into account, and any Appraiser shall be instructed to take into
account, as applicable, among other factors, the period and amount
of any delinquency on the Mortgage Loan, the financial standing of
the tenants of the affected Mortgaged Property, the physical
condition of the affected Mortgaged Property, the state of the
local economy and the Trust Fund's obligation to dispose of any
Foreclosed Property within the time period specified in Section
10.2 hereof.
(c) Subject to the provisions of Sections 3.10 and 10.2
hereof, the Servicer shall act on behalf of the Trust Fund in
negotiating and taking any other action necessary or appropriate in
connection with the sale of any Foreclosed Property, including the
collection of all amounts payable in connection therewith. Any
sale of any Foreclosed Property shall be without recourse to the
Trustee, the Depositor, the Servicer, the Trust Fund, or any other
Person, and if consummated in accordance with the terms of this
Agreement, neither the Servicer, the Depositor nor the Trustee
shall have any liability to any Certificateholder with respect to
the purchase price thereof or accepted by the Servicer or the
Trustee.
(d) Amounts expended by the Servicer pursuant to this
Section 3.10 hereof shall constitute Servicing Advances.
Section 3.11 Servicing Compensation. (a) The Servicer
shall be entitled to retain or, if not retained, to withdraw from
the Distribution Account (as an amount deposited therein in error)
as servicing compensation its Servicing Fee out of each payment on
the Mortgage Loan. To the extent that any Servicing Fee for any
month is not paid by the Servicer Remittance Date, such Servicing
Fee shall constitute an Interest Advance. In addition, the
Servicer shall be entitled to receive, as additional servicing
compensation, to the extent permitted by applicable law and the
Mortgage Notes, any late payment charges (other than Default
Interest), assumption fees, loan modification fees, extension fees,
loan service transaction fees, beneficiary statement charges, or
similar items. The Servicer shall be entitled to direct the Paying
Agent to pay on any Distribution Date the Servicing Fee and any
such other amounts payable to the Servicer by withdrawal from the
Certificate Account (as an amount deposited therein in error) to
the extent that payments have been received with respect to the
Mortgage Loan. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities
hereunder (including, but not limited to, the fees and expenses of
any Sub-Servicer required to be paid by the Servicer pursuant to
the related Sub-Servicing Agreement, bank transfer charges, and, if
applicable, the blanket fidelity bond and errors and omissions
policy required by Section 3.5 hereof) and shall not be entitled to
reimbursement therefor except as specifically provided in this
Agreement.
(b) The Special Servicer shall be entitled with respect
to each Special Servicing Period to the Special Servicing Fee,
which shall be payable from amounts on deposit in the Distribution
Account as set forth in Section 3.3(e)(vii) hereof. To the extent
that any Special Servicing Fee for any month is not paid by the
Servicer Remittance Date, such Special Servicing Fee shall
constitute a Servicing Advance. The Special Servicer shall pay all
expenses incurred by it in connection with its routine servicing
activities hereunder and shall not be entitled to reimbursement
therefor except as specifically permitted by this Agreement.
(c) In addition to other Servicer and Special Servicer
compensation provided for in this Agreement and not in lieu
thereof, the Special Servicer shall be entitled to the REO
Disposition Fee, payable out of the related Liquidation Proceeds or
proceeds of any sale of the Mortgaged Loan after a Mortgaged Event
of Default and acceleration of the Mortgage Notes.
(d) No transfer, sale, pledge or other disposition of
the Servicer's right to receive all or any portion of the Servicing
Compensation or other amounts which the Servicer is entitled to
receive hereunder shall be made, and any such attempted transfer,
sale, pledge or other disposition shall be void, unless such
transfer is made to a successor servicer or a successor Special
Servicer in connection with the assumption by such successor
servicer of the duties hereunder pursuant to Section 7.5 hereof and
all (and not a portion) of the Servicing Compensation are
transferred to such successor servicer.
(e) The Servicer, Special Servicer and Trustee shall
be entitled to reimbursement from the Trust Fund for the costs and
expenses incurred by them in the performance of their duties under
this Agreement which are "unanticipated expenses incurred by the
REMIC" within the meaning of Treasury Regulations Sections 1.860G-
1(b)(3)(iii) and 1.860G-2(c)(2). Such expenses shall include, by
way of example, environmental assessments and appraisals required
as a condition to foreclosure and expenses incurred in soliciting
Certificateholder input upon the occurrence and continuance of a
Mortgage Event of Default.
(f) Subject to the requirements of Section 3.17 hereof,
no provision of this Agreement or of the Certificates shall require
the Servicer, the Special Servicer or the Trustee to expend or risk
its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or thereunder, or in the
exercise of any of its rights or powers, if in the good faith
business judgment of the Servicer, the Special Servicer or the
Trustee, as the case may be, repayment of such funds would not be
ultimately recoverable from late payments, Insurance Proceeds, Net
Liquidation Proceeds and other collections on or in respect of the
Mortgage Loan, or from adequate indemnity against such risk or
liability from other assets comprising the Trust Fund.
Section 3.12 Reports to the Trustee; Distribution and
Other Account Statements. (a) Not later than 20 days after each
Distribution Date, the Servicer shall forward to the Trustee, the
Rating Agency and the Depositor a statement, setting forth the
status of the Distribution Account, the Default Interest Account
and of all Accounts established under the Mortgage and the Cash
Collateral Agreement (to the extent such information is received
from the Collateral Agent) as of the close of business on the
related Distribution Date or Due Date (as applicable) showing, for
the period covered by such statement, the aggregate of deposits
into and withdrawals from the Distribution Account and the Default
Interest Account and the aggregate of deposits into and withdrawals
from such Accounts in accordance with the Mortgage and the Cash
Collateral Agreement (to the extent such information is received
from the Collateral Agent). Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request to
the Trustee, provided the Trustee has received such statement.
(b) The Servicer shall deliver to the Trustee no later
than 11:00 a.m. two Business Days prior to each Distribution Date,
(i) the Servicer Remittance Report with respect to such
Distribution Date and (ii) a written statement of required Interest
Advances for such Distribution Date and total Advances outstanding
as of such Distribution Date. The Trustee shall be entitled to
rely conclusively on and shall not be responsible for the content
or accuracy of any information provided to it by the Servicer or
the Special Servicer pursuant to this Agreement. The Servicer and
the Special Servicer shall have no liability with respect to any
information contained in the Servicer Remittance Report to the
extent such information (A) was not prepared by the Servicer or the
Special Servicer or (B) was prepared by the Servicer based on
information provided by a third party (other than a Sub-Servicer or
other agent of the Servicer), provided that at the time of delivery
the Servicer had no actual knowledge that any such information was
incorrect in any material respect.
(c) The Servicer shall deliver to the Trustee no later
than 11:00 a.m. two Business Days after the occurrence of an Event
of Default (other than an Event of Default described in Section 7.1
(g) hereof) or a Mortgage Event of Default, written notice thereof
including the nature of such Event of Default or Mortgage Event of
Default.
Section 3.13 Annual Statement as to Compliance. The
Servicer will deliver to the Trustee and the Depositor, on or
before April 30 of each year, beginning April 30, 1997, an
Officer's Certificate stating as to each signer thereof, that (a)
a review of the activities of the Servicer during the preceding
calendar year (or during the period from the Closing Date until the
end of the preceding calendar year in the case of the first such
certificate) and of performance under this Agreement has been made
under such officer's supervision; (b) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all of
its obligations under this Agreement in all material respects
throughout such period, or if there has been a default in the
fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof; and (c)
whether the Servicer has received any notice regarding
qualification or challenging the status of the Trust REMIC as a
REMIC from the Internal Revenue Service or any other governmental
agency or body. Copies of such statement shall be provided by the
Servicer to the Rating Agency, the Trustee and to any Holder of
Certificates upon request, or by the Trustee at the Servicer's
expense if the Servicer shall fail to provide such copies and a
Responsible Officer of the Trustee is aware of such request and
that the Servicer has not so provided copies, provided the Trustee
has received such statement. If the long-term or short-term
unsecured debt obligations of the Servicer have been rated by the
Rating Agency, such statement shall be accompanied by a statement
of such rating or ratings, or if such obligations are not rated by
the Rating Agency, such statement shall be accompanied by a
statement of all the outstanding ratings of the Servicer's
obligations from any other rating agency.
Section 3.14 Annual Independent Public Accountants'
Servicing Report. On or before April 30 of each year, beginning
April 30, 1997, the Servicer, at its expense, shall cause a firm of
nationally recognized independent public accountants that is a
member of the American Institute of Certified Public Accountants to
furnish a statement to the Trustee, the Depositor and the Rating
Agency to the effect that such firm has examined certain documents
and records relating to the servicing of mortgage loans
substantially similar to the Mortgage Loan for the preceding
calendar year (or during the period from the Closing Date until the
end of the preceding calendar year in the case of the first such
certificate) and that, on the basis of such examination conducted
in all material respects substantially in compliance with generally
accepted auditing standards and the Uniform Single Audit Program
for Mortgage Bankers or the Audit Program for Mortgages serviced
for FHLMC, such firm is of the opinion that such servicing during
such period has been conducted in compliance with agreements
substantially similar to this Agreement except for such exceptions
that, in the opinion of such firm, generally accepted auditing
standards and the Uniform Single Audit Program for Mortgage Bankers
or the Audit Program for Mortgages serviced for FHLMC requires it
to report, in which case such exceptions shall be set forth in such
statement. Copies of such statement shall be provided by the
Trustee to Certificateholders upon written request.
Section 3.15 Access to Certain Documentation Regarding
the Mortgage Loan. Upon reasonable advance notice, the Servicer
will provide reasonable access during its normal business hours at
its offices to the Trustee to all information and documentation in
its possession with respect to the Trust Fund and to each
Certificateholder which is a savings and loan association, bank or
insurance company to certain reports and to information and
documentation (other than information or documentation which is
confidential or proprietary) regarding the Mortgage Loan sufficient
to permit such Certificateholder, the Office of Thrift Supervision,
the FDIC, the supervisory agents and the examiners of any such
entity to comply with applicable regulations of the Office of
Thrift Supervision or other regulatory authorities with respect to
investment in the Certificates. Any such reports, information or
documentation shall also be available to any other
Certificateholders who so request. The failure of the Servicer to
provide access pursuant to this Section 3.15 shall not constitute
a breach by the Servicer hereunder if the Servicer determines in
its reasonable discretion that such access would breach the
Servicer's confidentiality requirements or applicable securities
laws.
The Servicer shall provide any inquiring savings and loan
association, bank or insurance company desiring to purchase a
Certificate with information as to the location of the Mortgaged
Properties and, at the reasonable request of such association, bank
or insurance company, shall, to the extent reasonably available to
the Servicer, furnish to such inquiring entity specific information
sufficient to enable it to determine the extent, if any, to which
the Mortgaged Properties (x) are outside such entity's regular
lending area or normal lending territory (as such terms are defined
in the applicable regulations of such entity's regulatory
authority) and (y) must be included in percentage of assets
limitations or other restricted investment categories to which such
entity may be subject. Any such information shall also be
available to any other Certificateholders who so request. The
requesting parties shall pay the reasonable fees of the Servicer
and out-of-pocket expenses incurred by the Servicer in connection
with any request under this Section 3.15. The Servicer and the
Special Servicer shall have no liability with respect to any such
information to the extent such information (i) was not prepared by
the Servicer or (ii) was prepared by the Servicer based on
information provided by a third party (other than a Sub-Servicer or
other agent of the Servicer), provided that at the time of delivery
the Servicer had no actual knowledge that any such information was
incorrect in any material respect.
Section 3.16 Inspections. The Servicer shall inspect or
cause to be inspected each Mortgaged Property at such times and in
such manner as are consistent with Accepted Servicing Practices.
Section 3.17 Advances. (a) On or before each Servicer
Advance Date, the Servicer shall make any necessary Interest
Advance by depositing in the Distribution Account pursuant to
Section 3.3(d)(v) hereof an amount equal to the amount of the
Interest Advance.
(b) It is understood that the obligation of the
Servicer to make Advances is mandatory and shall continue to apply
following any modification of the Mortgage Loan pursuant to Section
3.7(d) hereof to the extent that the payments due on the Mortgage
Loan, as modified, are not made, and through any court appointed
stay period or similar payment delay resulting from any insolvency
of a Borrower or related bankruptcy, notwithstanding any other
provision of this Agreement, other than the requirement of
recoverability pursuant to the definition of a Nonrecoverable
Advance, and shall continue, subject to such requirement of
recoverability until the earliest of (i) the Final Certificate
Distribution Date, (ii) the payment in full of the Mortgage Loan
upon prepayment or in accordance with the original terms thereof or
as amended or restructured in accordance herewith, in bankruptcy or
otherwise or (iii) the date on which all Mortgaged Properties
become Liquidated Mortgaged Properties; provided, however, that in
no event shall the Servicer be required to advance any
Nonrecoverable Advance.
(c) With respect to the Mortgage Loan (which, for this
purpose, shall not include any Foreclosed Property), the Servicer,
in addition to making Interest Advances, shall advance an amount,
which amount shall be a Servicing Advance, on behalf of the
Borrowers, if (i) the Borrowers have defaulted on an obligation to
pay such amount pursuant to the Mortgage Notes or Mortgage, (ii)
the Servicer has reasonably determined that payment of such amount
is reasonably necessary to protect the Trust Fund's security
interest in the Mortgaged Property and (iii) such amount will not
be a Nonrecoverable Advance. In the event that the Servicer
proposes to make a Servicing Advance pursuant to this Section 3.17
other than for taxes, insurance premiums required by the Mortgage
to be maintained by the Borrowers, or other expenses which, if not
paid, would directly and adversely affect the Mortgagee's security
interest in the Mortgaged Property, the Servicer shall obtain a
Nondisqualification Opinion (the cost of which shall be a Servicing
Advance) with respect to such Servicing Advance, and shall require
the Borrowers to reimburse the amount of such Servicing Advance.
(d) In the event that the Servicer fails to make an
Interest Advance required to be made pursuant to this Agreement on
or before 4:00 p.m., New York time, on the Servicer Advance Date,
such failure shall constitute an Event of Default. Upon such a
failure, the Trustee shall deposit the amount of such Interest
Advance in the Certificate Account no later than 10:00 am on the
Business Day next following such Servicer Advance Date.
Notwithstanding the foregoing, the Servicer has the right, which
shall be available no more than one time in any 12-month period, to
cure such an Event of Default if the Servicer notifies the Trustee
by facsimile transmission by 9:30 a.m. on the related Distribution
Date that it intends to make such Interest Advance by 10:00 a.m. on
such Distribution Date and makes such Interest Advance by such
time, and in the event that the Servicer fails to make such
Interest Advance by 10:00 a.m., the Trustee is required immediately
to make such Interest Advance and to notify the Servicer that its
failure constitutes an Event of Default hereunder. In addition, in
the event that the Servicer fails to make a Servicing Advance
required to be made pursuant to this Agreement, the Trustee shall
make such Servicing Advance promptly upon assuming the duties of
the Servicer in accordance with Section 7.5(a) hereof. The Trustee
shall be entitled to reimbursement for each Advance made by it from
the same sources as those from which the Servicer would have been
entitled to be reimbursed had the Servicer made such Advance (and
with priority over any and all amounts then or thereafter
reimbursable to the Servicer).
(e) In no event shall the Servicer (or, or as described
in clause (d) above, the Trustee) be obligated to make any Advance
with respect to Balloon Payments or to make any Advance which would
constitute a Nonrecoverable Advance; provided, however, at the
option of the Servicer and in the Servicer's sole discretion, the
Servicer may make a Servicing Advance notwithstanding that such
Servicing Advance would constitute a Nonrecoverable Advance, if the
Servicer provides to the Trustee an Officer's Certificate stating
that the Servicer has determined that in its good faith judgment
such Servicing Advance most likely would increase Liquidation
Proceeds over the amount of Liquidation Proceeds that would have
been realized if such expense were not incurred.
(f) Notwithstanding the foregoing obligations of the
Trustee to make any Advance required to have been made by the
Servicer but not so made, the Trustee shall have the same right,
subject to the same standard, as the Servicer to determine that
such Advance, if made, would constitute, or any Advance previously
made constitutes, a Nonrecoverable Advance, and the right to refuse
to make such a Nonrecoverable Advance and to reimbursement of any
such Nonrecoverable Advance (to the extent made) with interest
thereon at the Advance Rate.
(g) The Servicer hereby agrees that upon the failure
of the Borrowers to pay the Mortgage Recording Taxes, or any
portion thereof, the Servicer shall make the Mortgage Recording Tax
Advance within ten Business Days of receipt of notice from the
Trustee that such Mortgage Recording Tax Advance is required.
(h) The rights of the Servicer or the Trustee to be
reimbursed for all Advances and the Advance Interest Amount shall
be an obligation of the Trust Fund reimbursable in accordance with
Sections 3.3(e)(iii), 3.3(e)(iv) and 3.3(e)(v) hereof and shall,
subject to the limitations of this Agreement as to the timing and
source of such reimbursement, be prior to the rights of
Certificateholders to receive distributions on their Certificates.
Section 3.18 Reports of Foreclosures of Mortgaged
Property. Each year beginning in 1996, the Servicer shall prepare
and deliver to the Trustee in a timely manner the reports of
foreclosures and abandonments of any Mortgaged Property required by
Section 6050J, 6050P and 6050 of the Code.
Section 3.19 Realization on Mortgage Collateral
Security. In connection with the enforcement of the rights of the
Trustee, the Servicer and the Mortgage Custodian under the Mortgage
Notes and the Mortgage, the Servicer and the Trustee shall consult
with counsel to determine how best to enforce such rights in a
manner consistent with the REMIC Provisions and shall not, based on
a Nondisqualification Opinion addressed to the Trustee (the cost of
which shall be reimbursed pursuant to Section 3.3(e) hereof), take
any action that could result in the failure of the Trust REMIC to
qualify as a REMIC while any Regular Interests are outstanding,
unless such action has been approved by a vote of 100% of each
Class of Certificates in connection with which the possibility of
disqualification shall be disclosed. Any expenditure made by the
Servicer pursuant to this Section 3.19 shall constitute a Servicing
Advance.
ARTICLE IV
PAYMENTS AND STATEMENTS TO THE CERTIFICATEHOLDERS
Section 4.1 Distributions. (a) On each Distribution
Date, the Paying Agent shall make distributions in the following
order of priority, in each case to the extent of the amount
deposited by the Trustee in the Certificate Account pursuant to
Section 3.3 hereof, other than Voluntary Prepayments, which shall
be distributed in accordance with Sections 4.1(b) hereof:
(i) to the Holders of the Class A, any
outstanding Interest Shortfalls owed to Holders of such
Class;
(ii) to the Holders of the Class A
Certificates, interest accrued on the outstanding Class
A Certificate Balance (not including Default Interest on
the underlying Mortgage Note) during the related Interest
Accrual Period at the Class A Certificate Rate;
(iii) to the Holders of the Class B
Certificates, any outstanding Interest Shortfalls owed to
Holders of such Class;
(iv) to the Holders of the Class B
Certificates, interest accrued on the outstanding Class B
Certificate Balance (not including Default Interest on
the underlying Mortgage Note) during the related Interest
Accrual Period at the Class B Certificate Rate;
(v) to the Holders of the Class C
Certificates, any outstanding Interest Shortfalls owed to
Holders of such Class;
(vi) to the Holders of the Class C
Certificates, interest accrued on the outstanding Class C
Certificate Balance (not including Default Interest on
the underlying Mortgage Note) during the related Interest
Accrual Period at the Class C Certificate Rate;
(vii) to the holders of the Class D
Certificates, any outstanding Interest Shortfalls owed to
holders of such Class;
(viii) to the holders of the Class D
Certificates, interest accrued on the outstanding Class
D Certificate Balance (not including Default Interest on
the underlying Mortgage Note) during the related Interest
Accrual Period at the Class D Certificate Rate;
(ix) to the Holders of the Class R
Certificates, the interest earned on the funds on deposit
in the Distribution Account;
(x) to the Holders of the Class A
Certificates, principal equal to the lesser of (A) the
outstanding Class A Certificate Balance and (B) the sum
of the Balloon Payments, Unscheduled Payments and any
other amounts paid on or with respect to the Mortgage
Loan and available for distribution on such Distribution
Date;
(xi) after the Class A Certificate Balance has
been reduced to zero, to the Holders of the Class B
Certificates, principal equal to the lesser of (A) the
outstanding Class B Certificate Balance and (B) the sum
of the Balloon Payments, Unscheduled Payments and any
other amounts paid on or with respect to the Mortgage
Loan and available for distribution on such Distribution
Date;
(xii) after the Class B Certificate Balance has
been reduced to zero, to the Holders of the Class C
Certificates, principal equal to the lesser of (A) the
outstanding Class C Certificate Balance and (B) the sum
of the Balloon Payments, Unscheduled Payments and any
other amounts paid on or with respect to the Mortgage
Loan and available for distribution on such Distribution
Date; and
(xiii) after the Class C Certificate Balance has
been reduced to zero, to the holders of the Class D
Certificates, principal equal to the lesser of (A) the
outstanding Class D Certificate Balance and (B) the sum
of the Balloon Payments, Unscheduled Payments and any
other amounts paid on or with respect to the Mortgage
Loan and available for distribution on such Distribution
Date; and
(xiv) after the Class D Certificate Balance has
been reduced to zero, to the Holders of the Class R
Certificates, the balance, if any, including any interest
earned on the funds on deposit in the Distribution
Account.
(b) On each Distribution Date, the Paying Agent shall
make distributions of the amount of any Voluntary Prepayment paid
by the Borrowers on the Mortgage Loan and deposited in the
Certificate Account pursuant to Section 3.3(d)(i) hereof during the
related Collection Period, as follows: first, to the Holders of
the Class A Certificates until the Class A Certificate Balance has
been reduced to zero, then to the Holders of the Class B
Certificates until the Class B Certificate Balance has been reduced
to zero, then to the Holders of the Class C Certificates until the
Class C Certificate Balance has been reduced to zero, and then to
the Holders of the Class D Certificates until the Class D
Certificate Balance has been reduced to zero.
(c) On each Distribution Date, the Paying Agent shall
make distributions of the amount of any Default Interest paid by
the Borrowers on the Mortgage Notes and deposited in the Default
Interest Account pursuant to Section 3.3(k) hereof during the
related Collection Period, as follows: any such amount paid on the
A Note shall be distributed to the Holders of the Class A
Certificates; any such amount paid on the B Note shall be
distributed to the Holders of the Class B Certificates; any such
amount paid on the C Note shall be distributed to the Holders of
the Class C Certificates; and any such amount paid on the D Note
shall be distributed to the Holders of the Class D Certificates.
In each case, amounts distributed to Holders of a Class of
Certificates shall include income earned with respect to amounts
deposited in the Default Interest Account with respect to such
Class of Certificates.
(d) Distributions on the Certificates on each
Distribution Date shall be made to each Certificateholder of record
on the related Record Date (other than as provided in Section 9.1
hereof respecting the final distribution), by check mailed to such
Certificateholder at the address appearing in the Certificate
Register, or upon written request by a Certificateholder (other
than a Class R Certificateholder) holding Certificates exceeding
$5,000,000 initial Certificate Balance delivered at least five
Business Days prior to the related Record Date, by wire transfer to
a bank account maintained in the United States, or by such other
means of payment as such Certificateholder and the Paying Agent
shall agree. Distributions on each Class of Certificates shall be
made pro rata among all Holders of Certificates of such Class based
on each such Holder's Percentage Interest.
(e) If the Servicer receives notice of prepayment of
any Mortgage Note from the Borrowers in accordance with the
Mortgage Notes, the Servicer shall notify the Trustee and the
Trustee shall give notice of the intended prepayment of the
affected Certificates to the Holders thereof in accordance with
Section 11.6 hereof not less than 15 days before the Distribution
Date on which such prepayment, if received, will be distributed to
such Holders, specifying the amount of such prepayment.
Section 4.2 Statements to Certificateholders. (a)
Based on information provided to the Trustee by the Servicer and
the Collateral Agent pursuant to this Agreement (and with respect
to the information set forth in clauses (xii), (xiii) and (xiv)
below, to the extent received by the Trustee from the Borrowers),
no later than 9:00 a.m. two Business Days prior to each
Distribution Date, the Trustee shall prepare, or cause to be
prepared, and mail not later than each Distribution Date to the
Depositor, the Rating Agency, the Paying Agent, the Servicer, the
Borrowers, the Placement Agent and each Certificateholder of each
Class of Certificates a statement in respect of such Distribution
Date setting forth to the extent applicable to such Class:
(i) For each Class of Certificates, (A) the
amount of the distribution from the Certificate Account
allocable to principal and (B) separately identifying the
amount of Balloon Payments, Voluntary Prepayments, other
Principal Prepayments, prepayments resulting from events
of casualty or condemnation, Net Liquidation Proceeds or
Curtailments included therein and the amount of Default
Interest;
(ii) For each Class of Certificates, the amount
of the distribution from the Certificate Account
allocable to interest;
(iii) If the distribution to the
Certificateholders of any Class is less than the full
amount that would be distributable to such Holders if
there were sufficient amounts available therefor, the
amount of the shortfall, including Interest Shortfalls
allocable to such Class, and the allocation thereof
between interest and principal;
(iv) The amount of any Interest Advances by the
Servicer or the Trustee included in the amounts
distributed to the Certificateholders, the amount of any
Servicing Advances and Mortgage Recording Tax Advances by
the Servicer or the Trustee, and the aggregate amount of
unreimbursed Advances;
(v) The Class A, Class B, Class C and Class D
Certificate Balances after giving effect to the
distribution of principal on such Distribution Date;
(vi) The Mortgage Loan Principal Balance and
the Allocated Loan Amount as calculated by the Servicer
for each of the Mortgaged Properties as of such
Distribution Date;
(vii) The Class A, Class B, Class C and Class D
Percentage Interests for the following Distribution Date;
(viii) The number and aggregate Allocated Loan
Amount of Mortgaged Properties that have, during the
related Collection Period, been (A) the subject of any
event of default under the Mortgage (each such property
separately identified), and (B) in foreclosure, as of the
close of business on the last day of the immediately
preceding calendar month;
(ix) The amount of the Servicing Compensation
paid to the Servicer with respect to such Distribution
Date, showing separately the Servicing Fee, the Special
Servicing Fee and the REO Disposition Fee, for the most
recent period for which such information is available,
and the amount of the Trustee Fee paid to the Trustee;
(x) The book value of any Foreclosed Property
as of the close of business on the immediately preceding
Due Date;
(xi) The amount of funds in each of the
Accounts held under the Mortgage and the Cash Collateral
Agreement as of the end of the preceding month and the
amount of capital expenditures made during the preceding
month from funds in the Capital and TI Reserve Account;
(xii) The Net Operating Income (as defined in
the Mortgage) for each Mortgaged Property and for all of
the Mortgaged Properties on an aggregate basis during
each calendar quarter, and the Debt Service Coverage
Ratio with respect to the Mortgage Loan (and each Class
of Certificates) as of the last day of each calendar
quarter (in such form and to the extent that such
information has been provided to the Trustee by the
Borrowers) to be delivered on the third Distribution Date
following each such calendar quarter, except that with
respect to the fourth calendar quarter, to be delivered
on the fourth Distribution Date following such calendar
quarter;
(xiii) On the third Distribution Date during each
calendar quarter, a combined rent roll with respect to
the Mortgaged Properties, showing (in such form and to
the extent such information has been provided to the
Trustee by the Borrowers) the approximate percentage of
gross leasable area of each Mortgaged Property (and in
the aggregate) leased as of the last day of the preceding
calendar quarter, the approximate percentage of lease
roll-overs for each Mortgaged Property (and in the
aggregate) for the preceding calendar quarter, a summary
of new lease signings (including approximate square
footage occupied and designation of the tenant's
operations as national, regional or local) and lease
terminations for the preceding calendar quarter, the
current annual rent of each Mortgaged Property, the expi-
ration date of each lease, the various options, if any,
available to the tenant with respect to renewal
(including the amount of the rent in the event of
renewal), whether, to the Borrowers' knowledge, the
Mortgaged Property or any portion thereof has been sublet
and whether the Mortgaged Property or any portion thereof
is leased but vacant; and
(xiv) Notice of any material changes affecting
the operations or finances of any Mortgaged Property (in
such form and to the extent that such information has
been provided to the Trustee by the Borrowers).
Each amount set forth pursuant to clauses (i) and (ii) above shall
also be expressed as a dollar amount per Single Certificate. Each
such report to Certificateholders shall indicate if, and the extent
to which, to the knowledge of a Responsible Officer of the Trustee,
there exists an Event of Default or a Mortgage Event of Default.
The Trustee shall include copies of the Borrowers' quarterly
unaudited and annual audited financial statements with the reports
distributed by the Trustee next following delivery by the Servicer
to the Trustee of such financial statements.
(b) Each such statement referred to in clause (b) above
shall be mailed by the Trustee not later than each Distribution
Date to any beneficial owner of a Certificate that has previously
delivered to the Trustee of an Information Request executed by such
beneficial owner as well as Ownership Evidence. The Trustee shall
also mail a copy of such statement with respect to the immediately
preceding Distribution Date to any prospective purchaser of a
Certificate or beneficial interest therein that executes an
Information Request and is designated in writing by a
Certificateholder or beneficial owner. In addition to the
foregoing, upon the written request of a Certificateholder to the
Trustee (a) reports and other notices to Certificateholders (other
than holders of Certificated Certificates) under the Trust
Agreement will be delivered by the Trustee to such
Certificateholder at such address as set forth in such written
request, and (b) notices of (i) Events of Default and Mortgage
Events of Default will be delivered within two Business Days of the
occurrence of an Event of Default under Section 7.1(g), or within
two Business Days of receipt by the Trustee of written notice from
the Servicer pursuant to Section 3.12(c) or after a Responsible
Officer of the Trustee obtains actual knowledge of the occurrence
of an Event of Default or Mortgage Event of Default and (ii)
casualties, condemnations and Voluntary Prepayments by facsimile
transmission by the Trustee to such Certificateholder (including
holders of Certificated Certificates) at such facsimile number as
set forth in such written request.
(c) Each Information Request delivered pursuant to this
Section 4.2 shall be substantially in the form of Exhibit O hereto
and shall confirm that (i) the Person executing such Information
Request is either (A) a beneficial owner of a Certificate, (B) a
Holder of a Certificate or (C) a prospective purchaser of a
Certificate or a beneficial interest therein designated by a
beneficial owner or Certificateholder and (ii) the information
obtained as a result of such Information Request is to be used
solely in evaluating the investment by such Person in the
Certificate. The Person executing such Information Request shall
further agree that (i) it shall, and shall cause its directors,
officers and employees, agents, attorneys, accountants, financial
advisors and other representatives to, keep all materials obtained
as a result of such Information Request confidential and to use
reasonable efforts, if such material is not marked "Proprietary" or
"Confidential," and to use special efforts, if such material is so
marked, not, without the prior written consent of the Depositor and
the Borrowers, to disclose any information contained in such
materials in any manner whatsoever, in whole or in part; provided,
however, that the Person executing such an Information Request and
its representatives shall be permitted to disclose any such
information if required by law or any such information that is or
becomes generally available to the public and (ii) a monetary
remedy would not be adequate to compensate the Depositor and the
Borrowers for any violation of the agreement contained in clause
(i) of this sentence, and that the Depositor and the Borrowers
shall, in addition to any other remedies available to them at law
or in equity, be entitled to injunctive relief in connection with
any such violation.
(d) Additional information not otherwise distributed
to the Certificateholders under this Agreement regarding the Trust
Fund, including, without limitation, financial and property
information provided to the Servicer by the Borrowers, (i) shall
also be provided to the Rating Agency and (ii) shall be available
to the Certificateholders from the Servicer upon reasonable request
and upon payment by the Certificateholders of the Servicer's
reasonable fees and expenses in connection with providing such
information, provided that the Servicer shall not be required to
provide such additional information to the extent that it
reasonably believes that the provision thereof would expose it to
liability.
(e) Within 60 days following the end of each calendar
year, the Trustee shall prepare, or cause to be prepared, and mail
to each Person who at any time during the calendar year was a
Certificateholder (i) a statement containing the information set
forth in subclauses (a)(i)(A), (a)(ii), (a)(iii) and (a)(x) above,
for such calendar year or applicable portion thereof during which
such person was a Certificateholder, and (ii) such other customary
information as the Trustee deems necessary or desirable for
Certificateholders to prepare their federal, state and local income
tax returns. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any
requirements of the Code. Upon prior written request and the prior
payment of the costs and expenses to be incurred in connection
therewith, the Trustee will prepare such other reasonable reports
as may be requested in writing by any Holder of a Regular
Certificate.
Section 4.3 Rule 144A Information. Upon request of any
Holder of a Certificate or of any beneficial interest therein, if
the Trust Fund is at the time of such request not subject to the
reporting requirements of section 13 or 15(d) of the Exchange Act
with respect to the Trust Fund, the Trustee shall promptly furnish
Rule 144A Information to such Holder or to a prospective purchaser
of such Certificate designated by such Holder in order to permit
compliance by such Holder with Rule 144A in connection with the
resale of such Certificate by such Holder. The Trustee may place
a legend on any document included in such Rule 144A Information
stating that the Servicer and the Trustee are not responsible for
the contents of such document or for any error or misstatement made
therein. The Trustee may require payment by the Holder of such
Certificate of a reasonable fee for the furnishing of such Rule
144A Information.
Section 4.4 Additional Information. The specification
of information to be furnished by the Trustee to the
Certificateholders in Section 4.2 (and any other terms or
provisions of this Agreement requiring or calling for delivery or
reporting of information by the Trustee to Certificateholders)
shall not limit the Trustee in furnishing, and the Trustee is
hereby authorized to furnish, to Certificateholders and/or to the
public any other information (collectively, "Additional
Information") with respect to the Mortgage Loan, the Mortgaged
Properties or the Trust Fund as may be provided to it by the
Depositor or the Servicer or Special Servicer or gathered by the
Trustee in any investigation or other manner from time to time,
provided that (i) prior to any Event of Default, any such
Additional Information shall only be furnished with the consent or
at the request of the Depositor (except pursuant to clause (v)
below), (ii) the Trustee shall be entitled to indicate the source
of all information furnished by it, the Trustee may affix thereto
any disclaimer it deems appropriate in its sole discretion and
consistent with the terms of this Agreement, and may affix such
warnings as to the confidential nature and/or the uses of such
information as it may, in its sole discretion, determine, (iii) the
Trustee may notify Certificateholders of the availability of any
such information in any manner as it, in its sole discretion, may
determine, (iv) the Trustee shall be entitled (but not obligated)
to require payment from each recipient of a reasonable fee for, and
its out-of-pocket expenses incurred in connection with, the
collection and furnishing of any such Additional Information and
(v) provided that prior to an Event of Default, the Trustee shall
forward to the Depositor any requests for Additional Information
and shall not forward any such Additional Information without the
consent of the Depositor, the Trustee may, in its sole discretion,
furnish Additional Information to the Rating Agency, in any
instance, and to the Certificateholders and/or the public-at-large,
if it determines that the furnishing of such information would
assist in the valuation of Certificates or is required by
applicable law. Nothing herein shall be construed to impose upon
the Trustee any obligation or duty to furnish or distribute any
Additional Information to any Person in any instance, and the
Trustee shall neither have any liability for furnishing nor for
refraining from furnishing Additional Information in any instance.
The Trustee shall be entitled (but not required) to request and
receive direction from the Depositor as to the manner of delivery
of any such Additional Information, if and to the extent the
Trustee deems necessary or advisable, and to require that any
consent, direction or request given to it pursuant to this Section
4.4 be made in writing.
ARTICLE V
THE CERTIFICATES
Section 5.1 The Certificates. (a) The Preliminary
Statement hereto sets forth the Class designations, Certificate
Rates and original Certificate Balances for each Class of
Certificates. The Certificates shall be designated the "KRT
Origination Corp. Commercial Mortgage Pass-Through Certificates"
and shall in the aggregate evidence the entire beneficial ownership
of (i) the Trust REMIC and (ii) other than with respect to the
Class R Certificates, the right to receive Default Interest, to the
extent collected, on the related Mortgage Note.
(b) Interest on the Class A, Class B, Class C and Class
D Certificates shall accrue during each Interest Accrual Period at
the Class A, Class B, Class C and Class D Certificate Rates,
respectively, on the basis of a 360-day year consisting of twelve
30-day months, and shall be payable on the related Distribution
Date.
(c) The Class A, Class B, Class C and Class D
Certificates shall be issued in definitive, fully registered form
without coupons in substantially the respective forms set forth as
Exhibits A, B, C and D hereto. The Class A, Class B, Class C and
Class D Certificates shall be issuable and transferable in the
minimum denomination of $250,000 of original Certificate Balance
and integral multiples of $1,000 in excess thereof (except that one
Certificate in each such Class may be issued in a different
amount). The Class R Certificates shall be issued in definitive,
fully registered form without coupons in substantially the form set
forth as Exhibit R. The Class R Certificates shall each be
issuable as a single Certificate evidencing the entire residual
interest in the Trust REMIC.
(d) On the Closing Date, the Authenticating Agent or
the Trustee shall execute and deliver with respect to each Class of
Certificates (other than the Class R Certificates) (i) a Book-Entry
Certificate and/or (ii) Definitive Certificates, each having a
Certificate Balance as shall have been indicated to the Trustee by
the Depositor and having an aggregate Certificate Balance equal to
the initial Certificate Balance of such Class of Certificates.
(e) The Certificates shall be executed by manual or
facsimile signatures on behalf of the Authenticating Agent or the
Trustee by an authorized officer or signatory thereof.
Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Authenticating Agent
or the Trustee shall bind the Trust Fund, notwithstanding that such
individuals or any of them have ceased to be so authorized after
the execution and delivery of such Certificates or did not hold
such offices or positions prior to the execution and delivery of
such Certificates. Each Certificate shall, on original issue, be
authenticated by the Trustee or the Authenticating Agent upon the
order of the Depositor upon delivery to the Trustee or the Mortgage
Custodian of the Mortgage File described in Section 2.1. No
Certificate shall be entitled to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the
form provided for herein executed by an authorized officer of the
Trustee or the Authenticating Agent by manual signature, and such
certification upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. The Certificates executed
by the Authenticating Agent or the Trustee and authenticated and
delivered by the Trustee or the Authenticating Agent to or upon the
order of the Depositor on the Closing Date shall be dated the
Closing Date. All other Certificates that are authenticated after
the Closing Date shall be dated the date of their authentication.
Section 5.2 Registration of Transfer and Exchange of
Certificates. (a) The Certificate Registrar shall cause to be
maintained in accordance with the provisions of Section 5.5 hereof
a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of the Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee
shall serve as the initial Certificate Registrar for the purpose of
registering transfers and exchanges of Certificates as herein
provided.
(b) No restrictions to transfer shall apply to the
transfer or registration of transfer of an Unlegended Definitive
Certificate to a transferee that takes delivery in the form of a
Definitive Certificate. By acceptance of a Legended Definitive
Certificate, whether upon original issuance or subsequent transfer,
each Holder of such a Certificate acknowledges the restrictions on
the transfer of such Certificate set forth in the Securities Legend
and agrees that it will transfer such a Certificate only as
provided herein.
The following restrictions shall apply with respect to
the transfer and registration of transfer of a Legended Definitive
Certificate to a transferee that takes delivery in the form of a
Definitive Certificate:
(i) The Certificate Registrar shall register
the transfer of a Legended Definitive Certificate if the
requested transfer is (x) to an affiliate (as defined in
Rule 144(a)(1) under the Securities Act) of the Depositor
or the Placement Agent, such affiliation to be evidenced
by the certificate of the Depositor or the Placement
Agent or (y) being made by a transferor who has provided
the Certificate Registrar with a Rule 144A Certificate in
the form of Exhibit F hereto.
(ii) The Certificate Registrar shall register
the transfer of a Legended Definitive Certificate if the
transferor has provided the Trustee with a Regulation S
Certificate in the form of Exhibit G hereto.
(iii) The Certificate Registrar shall register
the transfer of a Legended Definitive Certificate if (x)
the transferor has advised the Depositor and the Trustee
in writing that the Certificate is being transferred to
an Institutional Accredited Investor; and (y) prior to
transfer the transferor furnishes to the Certificate
Registrar and the Depositor a letter of the transferee
substantially in the form of Exhibit I hereto. In
addition, the Depositor or the Certificate Registrar may
as a condition of the registration of any such transfer
require the transferor to furnish, at the transferor's
expense, an Opinion of Counsel that the proposed transfer
is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements
of the Securities Act and other applicable laws.
A transferee shall only be able to take delivery of an
Unlegended Definitive Certificate if and after the Trustee receives
an Opinion of Counsel, at the expense of the Person requesting
issuance of an Unlegended Definitive Certificate, stating that the
Securities Legend is not required on such Definitive Certificate
under applicable law. Upon receipt of such opinion submitting such
Officer's Certificate to the Trustee, the Holder of such
Certificate may submit such Certificate to the Trustee to exchange
such Certificate for an Unlegended Definitive Certificate and the
Trustee shall satisfy such request notwithstanding anything else
herein to the contrary, and delivery permitted herein of a Legended
Definitive Certificate may be made in the form of an Unlegended
Definitive Certificate.
(c) Transfers of beneficial interests in the Book-Entry
Certificates, or transfers by Holders of Definitive Certificates to
transferees that take delivery in the form of beneficial interests
in the Book-Entry Certificates, may be made only in accordance with
this Section 5.2(c) and in accordance with the rules of the
Clearing Agency.
(i) In the case of a beneficial interest in a
Book-Entry Certificate being transferred to an
Institutional Accredited Investor, such transferee shall
be required to take delivery in the form of a Definitive
Certificate or Certificates and the Trustee shall
register such transfer only upon compliance with the
provisions of Section 5.2(b)(iii) hereof, mutatis
mutandis.
(ii) In the case of a beneficial interest in a
Book-Entry Certificate being transferred to a transferee
that takes delivery in the form of a Definitive
Certificate or Certificates, except as set forth in
clause (i) above, the Trustee shall register such
transfer only upon compliance with the provisions of
Section 5.2(b)(i) or (ii) hereof, mutatis mutandis.
(iii) In the case of a Definitive Certificate
being transferred to a transferee that takes delivery in
the form of a beneficial interest in a Book-Entry
Certificate, the Trustee shall register such transfer if
the transferor has provided the Trustee with a Rule 144A
Certificate in the form of Exhibit F hereto.
(iv) No restrictions under this Agreement shall
apply with respect to the transfer or registration of
transfer of a beneficial interest in a Book-Entry
Certificate to a transferee that takes delivery in the
form of a beneficial interest in such Book-Entry
Certificate.
(d) An exchange of a beneficial interest in a
Book-Entry Certificate for a Definitive Certificate or
Certificates, an exchange of a Definitive Certificate or
Certificates for a beneficial interest in a Book-Entry Certificate
and an exchange of a Definitive Certificate or Certificates for
another Definitive Certificate or Certificates (in each case,
whether or not such exchange is made in anticipation of subsequent
transfer, and in the case of a Book-Entry Certificate, so long as
the Book-Entry Certificate remains outstanding and is held by or on
behalf of the Clearing Agency) may be made only in accordance with
this Section 5.2(d) and in accordance with the rules of the
Clearing Agency.
(i) A Holder of a beneficial interest in a
Book-Entry Certificate may at any time upon not less than
60 days' notice from The Depository Trust Company to the
Certificate Registrar exchange such beneficial interest
for a Definitive Certificate or Certificates of the same
Class and may, at its option, request separate
certificates representing its regular interest in the
Trust REMIC and the right to receive Default Interest.
Upon the occurrence of an Event of Default, the Clearing
Agency may exchange the Book-Entry Certificates for
Definitive Certificates.
(ii) A Holder of a Definitive Certificate may
exchange such Certificate for a beneficial interest in a
Book-Entry Certificate of the same Class if such Holder
furnishes to the Depositor and to the Trustee a
certificate substantially in the form of Exhibit G
hereto.
(iii) A Holder of a Definitive Certificate may
exchange such Certificate for an equal aggregate
principal amount of Definitive Certificates in different
authorized denominations without any certification.
(e) (i) Upon acceptance for exchange or transfer
of a Definitive Certificate for a beneficial interest in
a Book-Entry Certificate of the same Class as provided
herein, the Trustee shall cancel such Definitive
Certificate and shall request the Clearing Agency to
endorse on the schedule affixed to such Book-Entry
Certificate (or on a continuation of such schedule
affixed to such Book-Entry Certificate and made a part
thereof) an appropriate notation evidencing the date of
such exchange or transfer and an increase in the
principal amount of such Book-Entry Certificate equal to
the principal amount of such Definitive Certificate
exchanged or transferred therefor.
(ii) Upon acceptance for exchange or transfer of a
beneficial interest in a Book-Entry Certificate for a
Definitive Certificate of the same Class as provided herein,
the Trustee shall request the Clearing Agency to endorse on
the schedule affixed to such Book-Entry Certificate (or on a
continuation of such schedule affixed to such Book-Entry
Certificate and made a part thereof) an appropriate notation
evidencing the date of such exchange or transfer and a
decrease in the principal amount of such Book-Entry
Certificate equal to the principal amount of such Definitive
Certificate issued in exchange therefor or upon transfer
thereof.
(f) The following provisions shall apply to the
placement of the Securities Legend on any Definitive Certificate
issued in exchange for or upon transfer of another Definitive
Certificate or of a beneficial interest in a Book-Entry Certificate
and to the removal of the Securities Legend from any Legended
Definitive Certificate.
(i) Unless determined otherwise in accordance with
applicable law pursuant to Section 5.2(b) hereof, a Definitive
Certificate issued upon transfer of or exchange for a
beneficial interest in a Book-Entry Certificate shall bear the
Securities Legend.
(ii) Upon the transfer, exchange or replacement of
a Legended Definitive Certificate, or upon specific request of
a Holder of a Legended Definitive Certificate for removal of
the Securities Legend therefrom, the Trustee shall deliver an
Unlegended Definitive Certificate or Certificates if there is
provided to the Depositor and the Trustee evidence reasonably
satisfactory to the Depositor and the Trustee (which may
include an Opinion of Counsel) that neither the Securities
Legend nor the restrictions on transfer set forth therein are
required to ensure compliance with the Securities Act.
(iii) Upon the transfer, exchange or replacement of
an Unlegended Definitive Certificate, the Trustee shall
deliver a Legended or Unlegended Definitive Certificate or
Certificates, as the Holder may request.
(g) Each transferee of a Class B, Class C and Class D
Certificate shall be deemed to have agreed with and represented to
the Depositor and the Trustee that such Person either (i) is not an
employee benefit plan subject to ERISA or a plan or individual
retirement account subject to Section 4975 of the Code and is not
using any assets of any such plan or account to acquire such
Certificate or (ii) if it is such a plan or account or is otherwise
using assets of any such plan or account to acquire such
Certificate, a statutory or administrative exemption applies such
that its purchase and holding of such Certificate will not result
in a non-exempt prohibited transaction under ERISA and the Code.
The proposed transferee of such Class B, Class C or Class D
Certificate shall prior to the transfer deliver to the Servicer,
the Trustee, the Certificate Registrar and the Depositor an
affidavit substantially in the form attached hereto as Exhibit P
and an opinion of counsel which establishes to the satisfaction of
the Depositor, the Servicer, the Trustee and the Certificate
Registrar that the purchase or holding of the Class B, Class C or
Class D Certificate, as the case may be, will not result in the
assets of the Trust Fund being deemed to be "plan assets" and
subject to the fiduciary responsibility provisions of ERISA or the
prohibited transaction provisions of the Code, will not constitute
or result in a prohibited transaction within the meaning of Section
406 or Section 407 of ERISA or Section 4975 of the Code, and will
not subject the depositor, the Servicer, the Trustee or the
Certificate Registrar to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the
Code), which opinion of counsel shall not be an expense of the
Trust Fund, the Servicer, the Trustee, the Certificate Registrar or
the Depositor. Each such Certificate which is a Definitive
Certificate shall bear the legend set forth in Exhibit Q.
(h) Notwithstanding anything to the contrary contained
herein or in this Agreement, no Residual Certificate or any
percentage interest therein (whether or not a Certificate is
physically transferred) may be owned, pledged or transferred,
directly or indirectly, by or to a Disqualified Organization or to
an employee benefit plan subject to ERISA or an individual
retirement account or plan subject to Section 4975 of the Code
(such plans and individual retirement accounts, "ERISA Plans").
Prior to and as a condition of the registration of any transfer,
sale or other disposition of a Residual Certificate or any
percentage interest therein, the proposed transferee shall deliver
to the Certificate Registrar an affidavit upon which it may rely in
the absence of actual knowledge that the affidavit is incorrect, in
substantially the respective forms attached hereto as Exhibit
J-1(a) (for a U.S. Holder) or Exhibit J-1(b) (for a foreign Holder)
representing and warranting that such transferee is neither a
Disqualified Organization nor an ERISA Plan nor an agent or nominee
acting on behalf of a Disqualified Organization or an ERISA Plan
(any such transferee, a "Permitted Transferee"). In addition, the
Certificate Registrar shall require, prior to and as a condition of
any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, satisfactory in form and substance to the
Certificate Registrar, that such proposed transferee or, if the
proposed transferee is an agent or nominee, the proposed beneficial
owner, is not a Disqualified Organization or an ERISA Plan. Any
such Opinion of Counsel shall be obtained at the expense of the
prospective transferor or transferee and not at the expense of the
Trust Fund, the Depositor, the Borrowers, the Trustee, the Servicer
or the Certificate Registrar. Notwithstanding the registration in
the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate or any percentage interest
therein to a Disqualified Organization or an agent or nominee
acting on behalf of a Disqualified Organization, such registration
shall be deemed to be of no legal force or effect whatsoever and
such Disqualified Organization or an ERISA Plan (or such agent or
nominee) shall not be deemed to be a Certificateholder for any
purpose hereunder, including, but not limited to, the receipt of
distributions on such Residual Certificate. The Certificate
Registrar shall not be under any liability to any person for any
registration or transfer of a Residual Certificate to a
Disqualified Organization or an ERISA Plan or for any payments due
on such Residual Certificate to the Holder thereof or for taking
any other action with respect to such Holder under the provisions
of the Agreement, so long as the transfer was effected in
accordance with this Section 5.2(h), unless the Certificate
Registrar shall have actual knowledge at the time of such transfer
or the time of such payment or other action that the transferee is
a Disqualified Organization or an ERISA Plan (or an agent or
nominee thereof). The Certificate Registrar shall be entitled to
recover from any Holder of a Residual Certificate or any percentage
interest therein that was a Disqualified Organization or an ERISA
Plan (or an agent or nominee thereof) at the time it became a
Holder or any subsequent time it became a Disqualified Organization
all payments made on such Residual Certificate at and after either
such times (and all costs and expenses, including but not limited
to attorneys' fees, incurred in connection therewith). Any payment
(not including any such costs and expenses) so recovered by the
Certificate Registrar shall be paid and delivered to the last
preceding Holder of such Residual Certificate or interest therein.
Any percentage interest in a Residual Certificate shall be a pro
rata individual interest.
In addition to the foregoing restrictions on transfer of
a Residual Certificate or any percentage interest therein, the
Certificate Registrar shall not register the transfer of a Residual
Certificate unless (a) it has received a transferee letter either
in the form attached as Exhibit J-2(a) or Exhibit J-2(b) hereto and
(b) in the event that the transferee letter is in the form of
Exhibit J-2(b) (a "Foreign Holder Letter"), it has received written
evidence satisfactory to the Certificate Registrar that the
transferor has paid or provided for payment of all taxes (including
all accrued taxes on excess inclusion income) accrued on such
Residual Certificate in accordance with the provisions set forth in
Section 10.1(k) hereof, which written evidence shall include a copy
of the applicable Forms 1066Q (or other applicable form prescribed
by the Internal Revenue Service), to the extent that any such form
has been filed, evidencing the amount of excess inclusion income
for the periods during which the transferor held such Residual
Certificate or any percentage interest therein; (c) it has received
the calculations and certifications described in paragraph (4) of
Exhibit J-2(b) or paragraph (14) of Exhibit J-2(a), and in the
event that the transferee letter is in the form of Exhibit J-2(b),
the requirements set forth in paragraph 3(xi) thereof have been
complied with to the satisfaction of the Certificate Registrar.
Upon satisfaction of the foregoing requirements, the Certificate
Registrar shall register the Residual Certificate in the name of
the transferee for whose benefit the transferee letter is made and
delivered (and not in the name of any nominee thereof).
If any purported transferee shall become a registered
Holder of a Residual Certificate in violation of the provisions of
this Section 5.2(h), then, upon receipt of written notice to the
Certificate Registrar that the registration of transfer of such
Residual Certificate was not in fact permitted by this Section
5.2(h), the last preceding Permitted Transferee shall be restored
to all rights as Holder thereof retroactive to the date of such
registration of transfer of such Residual Certificate. The
Certificate Registrar shall be under no liability to any Person for
any registration of transfer of a Residual Certificate that is in
fact not permitted by this Section 5.2(h), for making any payment
due on such Certificate to the registered Holder thereof or for
taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was registered
upon receipt of the affidavit and the transferee letter described
in this Section 5.2(h).
Each Holder of a Residual Certificate or any interest
therein, by such Holder's acceptance thereof, shall be deemed for
all purposes to have consented to the provisions of this Section.
Each Residual Certificate shall bear a legend describing
the restrictions on transferability set forth in this Section
5.2(h).
(i) The provisions of this Section 5.2(i) shall be
subject in every respect to Sections 5.2(b) through (h) above. The
Holder of a beneficial interest in a Book-Entry Certificate may,
subject to the rules and procedures of the Clearing Agency, cause
the Clearing Agency to notify the Trustee in writing of a request
for transfer or exchange of such beneficial interest for a
Definitive Certificate or Certificates. Every Certificate
presented or surrendered for registration of transfer or exchange
shall (if so required by the Borrowers, the Certificate Registrar
or the Trustee) be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Certificate
Registrar duly executed by, the Holder thereof or its attorney duly
authorized in writing. Upon surrender for registration of transfer
of any Certificate at any office or agency of the Depositor
maintained for such purpose pursuant to Section 5.5 hereof, the
Authenticating Agent or the Trustee shall execute and the Trustee
or the Authenticating Agent shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Certificates of a like aggregate Certificate Balance of the same
Class. The Trustee may decline to accept any request for an
exchange or registration of transfer of any Certificate during the
period of five calendar days preceding any Distribution Date. At
the option of the Certificateholders, Certificates may be exchanged
for other Certificates of a like aggregate Certificate Balance of
the same Class upon surrender of the Certificates to be exchanged
at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Authenticating Agent or the Trustee
shall execute and the Trustee or the Authenticating Agent shall
authenticate, date and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive.
(j) No service charge shall be made to a
Certificateholder for any registration of transfer or exchange of
Certificates, but the Certificate Registrar may require payment of
a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any registration of transfer or
exchange of Certificates.
(k) All Certificates surrendered for registration of
transfer or exchange shall be cancelled by the Certificate
Registrar or the Trustee in accordance with their standard
procedures.
(l) The Certificate Registrar shall provide to the
Trustee (unless the Trustee is acting as Certificate Registrar) (i)
upon receipt of a written request from the Trustee, notice of each
registration of transfer of a Certificate, (ii) an updated copy of
the Certificate Register at the beginning of each calendar quarter
and (iii) upon receipt of a written request therefor, a list of
Holders of the Certificates.
Section 5.3 Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to
the Trustee or the Certificate Registrar or the Trustee or the
Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (b) there is
delivered to the Depositor, the Certificate Registrar and the
Trustee such security or indemnity as may be required by them to
save each of them and the Trust Fund harmless, then, in the absence
of notice to the Certificate Registrar or the Trustee that such
Certificate has been acquired by a bona fide purchaser, the
Authenticating Agent or the Trustee shall execute and the Trustee
or the Authenticating Agent shall authenticate and deliver in
exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage
Interest of the same Class. Upon the issuance of any new
Certificate under this Section, the Trustee or the Certificate
Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of
the Trustee and the Certificate Registrar) connected therewith.
Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the
Trust Fund, as if originally issued, whether or not the mutilated,
lost, stolen or destroyed Certificate shall be found at any time.
Section 5.4 Person Deemed Owners. Prior to the due
presentation of a Certificate for registration of transfer, the
Servicer, the Depositor, the Trustee, the Certificate Registrar,
the Paying Agent and any agent of any of them may treat the Person
in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to
Section 4.1 hereof, and for all other purposes whatsoever, and
neither the Servicer, the Depositor, the Trustee, the Certificate
Registrar, the Paying Agent nor any agent of any of them shall be
affected by notice to the contrary.
Section 5.5 Maintenance of Office or Agency. The
Depositor shall maintain in The City and State of New York an
office or agency where the Certificates may be surrendered for
registration of transfer or exchange and presented for final
distribution and where notices and demands to or upon the Trust
Fund in respect of the Certificates and this Agreement may be
served. The Depositor initially appoints the office of State
Street Bank and Trust Company, N.A., 61 Broadway, New York, New
York, as the presenting agent for said purposes. The Certificate
Registrar will give prompt written notice to the Depositor, the
Servicer, the Trustee and the Certificateholders of any change in
the location of such office or agency.
Section 5.6 Appointment of Paying Agent. The Trustee
may appoint a Paying Agent (if the Trustee is not the Paying Agent)
for the purpose of making distributions to Certificateholders
hereunder. The Trustee shall cause such Paying Agent (unless such
Paying Agent is a party to this Agreement) to execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee that such Paying Agent will hold all sums held by
it for the payment to the Certificateholders in an Eligible Account
in trust for the benefit of the Certificateholders entitled thereto
until such sums shall be paid to the Certificateholders. All funds
remitted by the Trustee or the Servicer to any such Paying Agent
for the purpose of making distributions shall be paid to the
Certificateholders on each Distribution Date and any amounts not so
paid shall be returned on such Distribution Date to the Trustee or
the Servicer, as applicable. The Servicer shall remit to the
Paying Agent on the Business Day prior to each Distribution Date,
by wire transfer in immediately available funds, the funds to be
distributed on such Distribution Date. Any Paying Agent shall be
either a bank or trust company or otherwise authorized under law to
exercise corporate trust powers and shall have a rating of at least
"A" by the Rating Agency unless the Paying Agent is the Trustee.
The Trustee shall serve as the initial Paying Agent hereunder.
Section 5.7 Book-Entry Certificates. (a) The
Book-Entry Certificates upon original issuance (i) shall be
delivered by the Trustee in typewritten form to the initial
Clearing Agency, (ii) shall initially be registered on the
Certificate Register in the name of Cede & Co., the nominee of the
initial Clearing Agency and (ii) shall bear a legend substantially
to the following effect:
"Unless this certificate is presented by an
authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Depositor
or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested
by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest
herein."
A Book-Entry Certificate may be deposited with such other
Clearing Agency as the Borrowers may from time to time designate,
and shall bear such legend as may be appropriate; provided that
such successor Clearing Agency maintains a book-entry system that
qualifies to be treated as "registered form" under Section
163(f)(3) of the Code.
(b) If at any time the Clearing Agency for the
Book-Certificates notifies the Depositor or the Trustee that it is
unwilling or unable to continue as Clearing Agency for the Book-
Entry Certificates or if at any time the Clearing Agency shall no
longer be eligible to act as such under this Section 5.7, the
Borrowers shall appoint a successor Clearing Agency with respect to
the Book-Entry Certificates. Any such successor Clearing Agency
must maintain a book-entry system that qualifies under Section
163(f)(3) of the Code. If a successor Clearing Agency for such
Book-Entry Certificate is not appointed by the Borrowers within 90
days after the Borrowers receive such notice or a copy thereof from
the Trustee or becomes aware of such ineligibility or
unwillingness, the Depositor's election pursuant to this Section
5.7 that such Certificates be represented by Book-Entry
Certificates shall no longer be effective and the Trustee and/or
the Authenticating Agent shall execute, authenticate and deliver
Definitive Certificates in any authorized denominations having an
aggregate Certificate Balance equal to the aggregate Certificate
Balance of such Book-Entry Certificates in exchange for such Book-
Entry Certificate.
If the Trustee has instituted or has been directed to
institute any judicial proceeding in a court to enforce the rights
of the Certificateholders under the Certificates, and the Trustee
has been advised by counsel that in connection with such proceeding
it is necessary or appropriate for the Trustee to obtain possession
of the Certificates, the Certificates represented by the Book-Entry
Certificates shall no longer be represented by such Book-Entry
Certificates. In such event, the Trustee and/or the Authenticating
Agent shall execute, authenticate and deliver, in exchange for the
Book-Entry Certificates, Definitive Certificates, in authorized
denominations, in an aggregate principal amount equal to the
principal amount of such Book-Entry Certificates.
(c) The Book-Entry Certificate shall in all respects
be entitled to the same benefits under this Agreement as Definitive
Certificates authenticated and delivered hereunder.
(d) Beneficial interests in the Book-Entry Certificate
will be sold in minimum denominations of $250,000 and integral
multiples of $1,000 above such minimum amount. Owners of a
beneficial interest in the Book-Entry Certificate will be entitled
to receive physical delivery of Definitive Certificates only as
provided herein. The Definitive Certificates will be sold in
minimum denominations of $250,000 and in integral multiples of
$1,000 above such minimum amount.
(e) The Depositor, the Servicer, the Paying Agent, the
Certificate Registrar and the Trustee may deal with the Clearing
Agency and the Clearing Agency Participants for all purposes
(including the making of distributions on the Certificates of each
such Class) as the authorized representatives of the Certificate
Owners;
(f) To the extent that the provisions of this Section
5.7 conflict with any other provisions of this Agreement, the
provisions of this Section 5.7 shall control with respect to each
affected Certificate.
(g) The rights of Certificate Owners of Book-Entry
Certificates shall be exercised only through the Clearing Agency
and the applicable Clearing Agency Participants and shall be
limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and/or the Clearing
Agency Participants. Pursuant to the Depository Agreement
applicable to each Class of Book-Entry Certificates, except to the
extent that Definitive Certificates of such Class are issued, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions
of principal and interest on such Book-Entry Certificates to such
Clearing Agency Participants.
Section 5.8 Notices to Clearing Agency. Whenever notice
or other communication to the Certificate Owners of Book-Entry
Certificates is required under this Agreement, except to the extent
that Definitive Certificates shall have been issued to Certificate
Owners, the Servicer or the Paying Agent shall give all such
notices and communications specified herein to be given to the
Certificate Owners of Book-Entry Certificates to the Clearing
Agency for distribution to the Certificate Owners of such Book-
Entry Certificates.
Section 5.9 Definitive Certificates. If (i) (A) the
Depositor advises the Trustee in writing that the Clearing Agency
is no longer willing or able to discharge properly its
responsibilities under the applicable Depository Agreement or the
Trustee is so advised by the Clearing Agency in writing, and (B)
the Depositor is unable to locate a qualified successor, or (ii)
Certificate Owners of a Class representing beneficial interests
aggregating not less than 50% of the Aggregate Certificate Balance
of such Class advise the Trustee and the applicable Clearing Agency
through the applicable Clearing Agency Participants in writing that
the continuation of a book-entry system through the applicable
Clearing Agency is no longer in the best interests of the
Certificate Owners of such Class, the Trustee shall notify all
Certificate Owners of such Class, through the applicable Clearing
Agency Participants, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of
such Class requesting the same. Upon surrender to the Certificate
Registrar of the Certificates of such Class by the applicable
Clearing Agency accompanied by registration instructions from the
applicable Clearing Agency for registration, the Certificate
Registrar shall issue the Definitive Certificates of such Class.
Neither the Depositor, the Borrowers, the Certificate Registrar nor
the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected
in relying on, such instructions. Upon the issuance of Definitive
Certificates of such Class, all references herein to obligations
imposed upon or to be performed by the applicable Clearing Agency
shall be deemed to be imposed upon and performed by the Paying
Agent and the Certificate Registrar, to the extent applicable with
respect to such Definitive Certificates, and the Trustee, the
Paying Agent and the Certificate Registrar shall recognize the
Holders of the Definitive Certificates of such Class as
Certificateholders of such Class hereunder.
Section 5.10 Lists of Certificateholders. At such time,
if any, as Book-Entry Certificates are no longer outstanding, if
three or more Certificateholders or any Certificateholder holding
25% or more of the Aggregate Certificate Balance (i) request in
writing from the Trustee a list of names and addresses of
Certificateholders, (ii) state that such Certificateholders desire
to communicate with other Certificateholders with respect to their
rights hereunder or under the Certificates, and (iii) provide a
copy of the communication which such Certificateholders propose to
transmit (for information purposes and not review), then the
Trustee shall, within 10 Business Days after the receipt of such
request, afford the requesting Certificateholders access during
normal business hours to the list of the Certificateholders held by
the Trustee, if any, as of the most recent Record Date. If such
Record Date list is as of a date more than 90 days prior to the
date of receipt of such Certificateholders' request, the Trustee
shall promptly prepare or cause to be prepared a current list and
promptly afford the requesting Certificateholders access to the new
list upon its receipt by the Trustee. The expense of providing any
such information requested by the requesting Certificateholders
shall be borne by such Certificateholders and shall not be borne by
the Trustee.
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
Section 6.v Respective Liabilities of the Depositor and
the Servicer. The Depositor and the Servicer shall each be liable
in accordance herewith only to the extent of the obligations
specifically and respectively imposed upon and undertaken by the
Depositor and the Servicer herein. By way of illustration and not
limitation, the Depositor is not liable for the servicing and
administration of the Mortgage Loan, nor is it obligated by Section
7.1 hereof or any other provision of this Agreement to assume any
obligations of the Servicer or to appoint a designee to assume such
obligations, nor is it liable for any other obligation hereunder
that it may, but is not obligated to, assume unless it elects to
assume such obligation in accordance herewith.
Section 6.2 Merger or Consolidation of the Servicer or
the Depositor. The Servicer and the Depositor will each keep in
full effect its existence, rights and franchises as a corporation
under the laws of the jurisdiction of its incorporation, and will
obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is
required, in each case to the extent necessary to protect the
validity and enforceability of this Agreement, the Certificates and
the Mortgage Loan and to perform its respective duties under this
Agreement.
Any Person into which the Servicer or the Depositor may
be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Servicer of the Depositor
shall be a party, or any Person succeeding to the business of the
Servicer or the Depositor related to its obligations under this
Agreement, shall be the successor of the Servicer or the Depositor,
as the case may be, hereunder, and shall be deemed to have assumed
all of the liabilities and obligations of the Servicer or the
Depositor, as applicable, hereunder without the execution or filing
of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Servicer
shall be qualified to service mortgage loans in accordance with
Accepted Servicing Practices and otherwise satisfy the requirements
of Section 7.5(b) hereof.
Section 6.3 Limitation on Liability of the Depositor,
the Servicer and Others. (a) None of the Depositor, the Servicer,
the Mortgage Custodian, the Paying Agent, the Authenticating Agent,
the Certificate Registrar nor any of their respective principals,
shareholders, policyholders, directors, officers, employees,
Affiliates or agents shall be under any liability to the Trust Fund
or the Certificateholders or to any other of such Persons for any
action taken or for refraining from the taking of any action in
good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the
Depositor, the Servicer or any such other Person against any breach
of warranties or representations made by it herein or any liability
which would otherwise be imposed by reason of willful misconduct,
bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties hereunder; and
provided, further, that notwithstanding anything to the contrary in
this Agreement, the Servicer shall have no liability for actions or
omissions that involve the exercise of judgment or discretion on
its part consistent with Accepted Servicing Practices. The
Depositor, the Servicer, the Mortgage Custodian, the Paying Agent,
the Authenticating Agent, the Certificate Registrar and any of
their respective principals, shareholders, policyholders,
directors, officers, employees or agents may rely in good faith on
any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
The Depositor and any of its principals, shareholders,
policyholders, directors, officers, employees, Affiliates or agents
shall be indemnified by the Trust Fund and held harmless against
any loss, liability or expense incurred in connection with any
legal action relating to this Agreement, the Mortgage Loan, the
Mortgaged Properties or the Certificates, other than any loss,
liability or expense related to any alleged violation of federal or
state securities laws in connection with the issuance and sale of
the Certificates (except as any such loss, liability or expense
shall be otherwise reimbursable and reimbursed pursuant to this
Agreement) and other than any loss, liability or expense incurred
by reason of the willful misconduct, bad faith or negligence of the
Depositor in the performance of its duties hereunder or by reason
of reckless disregard of its obligations and duties hereunder. The
Servicer, the Mortgage Custodian, the Paying Agent, the Certificate
Registrar and the Authenticating Agent, and any of their respective
principals, shareholders, policyholders, directors, officers,
employees, agents (including any Sub-Servicer) or Affiliates shall
be indemnified by the Trust Fund and held harmless against any
loss, liability or expense incurred in connection with any legal
action relating to this Agreement, the Mortgage Loan, the Mortgaged
Properties or the Certificates (except as any such loss, liability
or expense shall be otherwise reimbursable and reimbursed pursuant
to this Agreement), other than any loss, liability or expense
incurred by reason of willful misconduct, bad faith or negligence
in the performance of their respective duties hereunder or by
reason of reckless disregard of obligations and duties hereunder.
Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which
is not incidental to its respective duties under this Agreement and
which in its opinion may involve it in any expense or liability;
provided, however, that the Depositor or the Servicer may in its
discretion undertake any such action which it may deem necessary or
desirable with respect to enforcing or defending litigation
affecting the rights of Certificateholders pursuant to this
Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the
legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust
Fund, and the Depositor and the Servicer shall be entitled to be
reimbursed therefor out of amounts attributable to the Mortgage
Loan on deposit in the Distribution Account as provided by Section
3.3(e)(v) hereof. Notwithstanding anything in this Agreement to
the contrary, in no event shall the Depositor, the Servicer, the
Mortgage Custodian, the Paying Agent, the Authenticating Agent, the
Certificate Registrar or any of their respective principals,
shareholders, policyholders, directors, officers, employees,
Affiliates or agents be entitled to any indirect, punitive, special
or consequential damages pursuant to this Section 6.3(a) or
otherwise.
The Servicer shall not be obligated to incur any
liabilities, costs, charges, fees or other expenses which relate to
or arise from a breach of any representation, warranty or covenant
made by any of the Depositor in this Agreement or the Borrowers in
the Mortgage. The Trust Fund shall indemnify and hold harmless the
Servicer from any and all claims, liabilities, costs, charges, fees
or other expenses which relate to or arise from any such breach of
representation, warranty or covenant.
(b) Subject to the provisions of Section 6.3(a) above,
each of the Servicer, the Special Servicer, the Paying Agent, the
Mortgage Custodian, the Certificate Registrar and the
Authenticating Agent (for purposes of this paragraph, each,
severally, an "Indemnifying Person") agrees to indemnify the
Depositor and the Trustee, and hold them harmless against any and
all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, liabilities, fees
and expenses that the Depositor and/or the Trustee may sustain in
connection with this Agreement related to the willful misconduct,
bad faith and/or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and
duties hereunder by such Indemnifying Person (including, in the
case of the Servicer, the Sub-Servicer). The Depositor and/or the
Trustee shall immediately notify the applicable Indemnifying Person
if a claim is made by a third party with respect to this Agreement
or the Mortgage Loan entitling the Depositor and/or the Trustee to
indemnification hereunder, whereupon the applicable Indemnifying
Person shall assume the defense of any such claim (with counsel
reasonably satisfactory to the Depositor and/or the Trustee) and
pay all expenses in connection therewith, including counsel fees,
and promptly pay, discharge and satisfy any judgment or decree
which may be entered against it or them in respect of such claim,
and upon such assumption of such defense, such Indemnifying Party
shall not be obligated to pay the fees or expenses of any other
counsel retained by the Depositor and/or Trustee. Any failure to
so notify the applicable Indemnifying Person shall not affect any
rights the Depositor and/or Trustee may have to indemnification
under this Agreement or otherwise. Notwithstanding the foregoing,
in the case of indemnification of the Trustee, if the Trustee is
acting as an Indemnifying Person, then such Indemnifying Person
shall not be liable for any indemnity to the Trustee. The
indemnities provided hereunder shall survive the resignation or
termination of each Indemnifying Party or the Trustee and the
termination of this Agreement. Notwithstanding anything in this
Agreement to the contrary, in no event shall an Indemnifying Person
hereunder be liable for any indirect, punitive, special or
consequential damages pursuant to this Section 6.3(b) or otherwise.
(c) Subject to the provisions of Section 6.3(a) above,
each of the Trustee, the Paying Agent, the Mortgage Custodian, the
Certificate Registrar and the Authenticating Agent (for purposes of
this paragraph, each, severally, an "Indemnifying Person") agrees
to indemnify the Servicer and the Special Servicer (together, the
"Servicer Group"), and hold each of them harmless against any and
all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, liabilities, fees
and expenses that the Servicer Group may sustain in connection with
this Agreement related to the willful misconduct, bad faith and/or
gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder by
such Indemnifying Person. The Servicer shall promptly notify the
applicable Indemnifying Person if a claim is made by a third party
with respect to this Agreement or the Mortgage Loan entitling the
Servicer Group to indemnification hereunder, whereupon the
applicable Indemnifying Person shall assume the defense of any such
claim (with counsel reasonably satisfactory to the Servicer) and
pay all expenses in connection therewith, including counsel fees,
and promptly pay, discharge and satisfy any judgment or decree
which may be entered against it in respect of such claim, and upon
such assumption of such defense, such Indemnifying Party shall not
be obligated to pay the fees or expenses of any other counsel
retained by the Servicer Group. Any failure to so notify the
applicable Indemnifying Person shall not affect any rights the
Servicer Group may have to indemnification under this Agreement or
otherwise. Such indemnification shall survive the termination of
the applicable Indemnifying Person in its capacity as such
hereunder and the termination of this Agreement. Notwithstanding
anything in this Agreement to the contrary, in no event shall an
Indemnifying Person hereunder be liable for any indirect, punitive,
special or consequential damages pursuant to this Section 6.3(c) or
otherwise.
Section 6.4 Servicer Not to Resign; Eligibility
Requirement for Servicer. The Servicer may assign its rights and
delegate its duties and obligations under this Agreement, provided
that: (i) the purchaser or transferee accepting such assignment
and delegation (A) shall be satisfactory to the Trustee, (B) shall
be acceptable to the Rating Agency as evidenced by a letter from
the Rating Agency delivered to the Trustee and (C) shall execute
and deliver to the Trustee an agreement in form and substance
reasonably satisfactory to the Trustee, which contains an
assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or
observed by the Servicer under this Agreement from and after the
date of such agreement; (ii) as evidenced by a letter from the
Rating Agency delivered to the Trustee by the Servicer, the Rating
Agency's ratings of the Class A, Class B, Class C and Class D
Certificates in effect immediately prior to such assignment, sale
or transfer will not be qualified, downgraded or withdrawn as a
result of such assignment, sale or transfer, (iii) the Servicer
shall not be released from its obligations under this Agreement
that arose prior to the effective date of such assignment and
delegation under this paragraph; and (iv) the rate at which the
Servicing Compensation (or any component thereof) is calculated
shall not exceed the rate then in effect. Upon acceptance of such
assignment and delegation, the purchaser or transferee shall be the
successor Servicer hereunder.
Subject to the provisions of the preceding paragraph and
of Section 6.2 hereof, the Servicer shall not resign from its
obligations and duties hereby imposed on it, except (i) upon
determination that its duties hereunder are no longer permissible
under applicable law and (ii) the Servicer shall be deemed to have
resigned 30 days after written notice from the Rating Agency to the
Servicer and the Trustee that the Rating Agency's rating of the
Class A, Class B, Class C and Class D Certificates will be
qualified, downgraded or withdrawn if the Servicer shall not have
resigned within 30 days of delivery of such notice. Any such
determination permitting the resignation of the Servicer pursuant
to clause (i) above shall be evidenced by an Opinion of Counsel
(obtained at the resigning Servicer's expense) delivered to the
Trustee and the Depositor. No resignation by the Servicer under
this Agreement shall become effective until the Trustee, in
accordance with Section 7.5 hereof, or a successor servicer shall
have assumed the Servicer's responsibilities and obligations. The
resignation or deemed resignation of the Servicer hereunder shall
not release the Servicer from any of its obligations that arose
prior to the effective date of such resignation.
Section 6.5 Rights of the Trustee and the Depositor in
Respect of the Servicer. The Servicer shall afford the Depositor
and the Trustee, upon reasonable notice, during normal business
hours access to all records maintained by the Servicer in respect
of its rights and obligations hereunder and under the Mortgage
Loan, and access to officers of the Servicer responsible for such
obligations. The Servicer shall not deny access to the Trustee on
the grounds of ownership or confidentiality or otherwise to any
document or record, including any that might be in electronic form,
which would be reasonably necessary for the Trustee to determine if
an Event of Default or a Mortgage Event of Default has occurred
hereunder, to verify any amount set forth in any statement or
report required to be provided by the Servicer or Trustee under any
provision hereof, to prepare any tax return or otherwise to comply
with its obligations or to exercise its rights hereunder. Upon
request, the Servicer shall furnish the Depositor and the Trustee
with its most recent financial statements. The Trustee shall
enforce the obligations of the Servicer hereunder and may, but is
not obligated to, perform, or cause a designee to perform, any
defaulted obligation of the Servicer hereunder or exercise the
rights of the Servicer hereunder; provided that the Servicer shall
not be relieved of any of its obligations hereunder by virtue of
such performance by the Trustee or its designee. The Trustee shall
not have any responsibility or liability for any action or failure
to act by the Servicer and is not obligated to supervise the
performance of the Servicer under this Agreement or otherwise.
ARTICLE VII
DEFAULT
Section 7.1 Events of Default. In case one or more of
the following shall occur and be continuing, it shall be an "Event
of Default":
(a) any failure by the Servicer in making required
deposits to or payments from the Distribution Account (other than
an Advance referred to in Section 7.1(f) below) in the amount and
manner provided for herein so as to enable the Paying Agent to
distribute or cause to be distributed to the Certificateholders of
any Class any payment required to be made under the terms of the
Certificates and this Agreement;
(b) any failure on the part of the Servicer duly to
observe or perform in any material respect any other of the
covenants or agreements of the Servicer in the Certificates or in
this Agreement, which failure continues unremedied for a period of
30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by the
Holders of Certificates of any Class affected thereby evidencing,
as to such Class, Percentage Interests aggregating not less than
25%;
(c) the entry of a decree or order of a court or agency
or supervisory authority having jurisdiction in the premises for
the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings against the Servicer, or for the
winding-up or liquidation of the Servicer's affairs, and such
decree or order remains unstayed and in effect for a period of 60
days;
(d) the consent by the Servicer to the appointment of
a conservator or receiver or liquidator or liquidating committee in
any insolvency, readjustment of debt, marshalling of assets and
liabilities, voluntary liquidation or similar proceedings of or
relating to the Servicer or of or relating to all or substantially
all of its property;
(e) the admission by the Servicer in writing of its
inability to pay its debts generally as they become due, the filing
by the Servicer of a petition to take advantage of any applicable
insolvency or reorganization statute, the making by the Servicer of
an assignment for the benefit of its creditors or the voluntary
suspension by the Servicer of payment of its obligations;
(f) any failure of the Servicer, subject to Section
3.17(d), to make (i) any Interest Advance to the extent required by
the provisions of this Agreement on any Servicer Advance Date or
(ii) any Servicing Advance when due, which failure remains uncured
five Business Days after notice of such failure to make such
Servicing Advance is delivered to the Servicer by the Trustee; or
(g) the senior unsecured debt ratings of the Trustee
being at any time less than "AA-" by the Rating Agency (whether or
not such rating is published by the Rating Agency) (unless a
replacement trustee having a rating of not less than "AA" or unless
the Trustee or replacement Trustee is otherwise acceptable to the
Rating Agency) or, if not rated (either published or unpublished)
by the Rating Agency, an equivalent rating by any two of Moody's
Investors Service, Inc., Standard & Poor's Ratings Group or Duff &
Phelps Credit Rating Co.
If an Event of Default described in clauses (a) or (b) above shall
occur, then, and in each and every such case, subject to applicable
law, the Trustee may, and at the direction of the Holders of
Certificates evidencing not less than a majority by Certificate
Balance of the Certificates shall, by notice in writing to the
Servicer, terminate all of the rights and obligations of the
Servicer as servicer of the Mortgage Loan under this Agreement and
in and to the Mortgage Loan and the proceeds thereof, other than
its rights, if any, as a Certificateholder hereunder. If an Event
of Default described in clauses (c), (d) or (e) above shall occur,
the rights and obligations of the Servicer under this Agreement and
in and to the Mortgage Loan and the proceeds thereof, other than
its rights, if any, as a Certificateholder hereunder shall
automatically terminate without the requirement of giving notice or
the passage of time. Except as otherwise provided in Section
3.12(d) with respect to the right of the Servicer to cure an Event
of Default, if an Event of Default described in clause (f) above
shall have occurred or remains incurred as provided in Section
3.12(d), the Trustee shall, by notice in writing to the Servicer,
terminate all of the rights and obligations of the Servicer under
this Agreement and in and to the Mortgage Loan and the proceeds
thereof, other than its rights, if any, as a Certificateholder
hereunder; provided that, in the case of a termination of the
rights and obligations of the Servicer hereunder solely as a result
of the occurrence of an Event of Default described in clause (f)
above relating to an Interest Advance, if (x) the Trustee shall
receive from the Servicer on or prior to the Distribution Date with
respect to which such failure occurred the full amount of such
Interest Advance, together with interest thereon at the Advance
Rate from the Servicer Advance Date to the date of such payment by
the Servicer and (y) the Trustee shall have received written
affirmation from the Rating Agency that reinstatement of the
Servicer will not result in a qualification, downgrading or
withdrawal of the then current rating of any Class of Regular
Certificates, then the rights and obligations of such terminated
Servicer hereunder and in and to the Mortgage Loan and the proceeds
thereof shall be reinstated. If an Event of Default described in
clause (g) above shall have occurred, the Trustee shall resign
immediately in the manner and with the effect specified in Section
8.8.
If a Responsible Officer of the Trustee shall obtain
actual knowledge of any Event of Default hereunder, the Trustee
shall immediately notify the Servicer of the occurrence of such
Event of Default. Other than with respect to an Event of Default
described in clause (g) above, on or after the receipt by the
Servicer of such written notice, or on or after the date of such
automatic termination, all authority and power of the Servicer
under this Agreement (including the requirement to make Advances),
whether with respect to the Certificates or the Mortgage Loan
(other than its capacity, if any, as holder of a Certificate) or
otherwise, shall pass to and be vested in the Trustee pursuant to
and under this Section, and, without limitation, the Trustee is
hereby authorized and empowered to execute and deliver, on behalf
of the Servicer and at the Servicer's sole expense, as
attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to provide promptly (and in any
event no later than three Business Days subsequent to such notice)
the Trustee with all documents and records requested by it to
enable it to assume the Servicer functions hereunder, and to
cooperate with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer within one Business Day to the
Trustee or its duly appointed agent for administration by it of all
cash which shall at the time have been or should have been credited
by the Servicer to the Distribution Accounts and the Certificate
Account or thereafter be received with respect to the Mortgage Loan
(provided, however, that notwithstanding anything to the contrary
in this Section 7.1, the Servicer shall continue to be entitled to
receive all amounts accrued or owing to it under this Agreement on
or prior to the date of such termination, whether in respect of
Interest Advances or Servicing Advances or otherwise, less any sums
owed the Trust Fund in accordance with the terms hereof). Upon the
occurrence of any Event of Default hereunder known to a Responsible
Officer of the Trustee, the Trustee shall give the Rating Agency
written notice of the occurrence thereof. The Trustee shall not be
deemed to have breached any obligations hereunder as a result of a
failure to make or delay in making any distribution as and when
required hereunder caused by the failure of the Servicer to remit
any amounts received by it or to deliver any documents held by it
with respect to the Mortgage Loan. Upon the occurrence of an Event
of Default requiring the appointment of a replacement Servicer
hereunder, all reasonable costs and expenses (including attorneys'
fees and setup costs) incurred by the Trustee or the
Certificateholders in connection with the appointment of a
successor servicer, including, but not limited to, transferring the
Mortgage File to the successor servicer and, if applicable,
amending this Agreement to reflect such succession as Servicer
pursuant to this Section 7.1 shall be paid by the predecessor
servicer upon presentation of reasonable documentation of such
costs and expenses. The agreement set forth in the preceding
sentence shall survive termination of the predecessor servicer's
rights and obligations hereunder. If within a reasonable time
following the reasonable, good faith efforts of the Trustee to
recover such expenses from the predecessor servicer, the
predecessor servicer does not reimburse the Trustee for such
expenses, such expenses shall be reimbursed by the Trust Fund.
Section 7.2 Remedies of Trustee. During the continuance
of any Event of Default, so long as such Event of Default shall not
have been remedied, the Trustee, in addition to the rights
specified in Section 7.1 hereof, shall have the right, in its own
name as trustee of an express trust, to take all actions now or
hereafter existing at law, in equity or by statute to enforce its
rights and remedies and to protect the interests, and enforce the
rights and remedies of the Certificateholders (including the
institution and prosecution of all judicial, administrative and
other proceedings and the filing of proofs of claim and debt in
connection therewith). No remedy provided for by this Agreement
shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy and no
delay or omission to exercise any right or remedy shall impair any
such right or remedy or shall be deemed to be a waiver of any Event
of Default.
Section 7.3 Directions by Certificateholders and Duties
of Trustee During Event of Default. During the continuance of any
Event of Default, Holders of Certificates evidencing not less than
a majority of the Aggregate Certificate Balance may direct the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Agreement; provided, however,
that the Trustee shall be under no obligation to pursue any such
remedy, or to exercise any of the trusts or powers vested in it by
this Agreement (including, without limitation, (a) the conducting
or defending of any administrative action or litigation hereunder
or in relation hereto, and (b) the terminating of the Servicer or
any successor servicer from its rights and duties as Servicer
hereunder) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have
offered to the Trustee security or indemnification satisfactory to
the Trustee against the costs, expenses and liabilities which may
be incurred therein or thereby and, provided, further, that the
Trustee shall have the right to decline to follow any such
direction if the Trustee, in accordance with an Opinion of Counsel
(obtained at the expense of the Trust Fund), determines that the
action or proceeding so directed may not lawfully be taken or if
the Trustee in good faith determines that the action or proceeding
so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
The Trustee or any successor Servicer shall, upon gaining
access to the Accounts after termination of the Servicer's rights
and obligations pursuant to Section 7.1 hereof, apply the proceeds
of any Account to pay any portion of the required debt service
payment on the Mortgage Notes if the Servicer has not made a
Interest Advance with respect to such amount as required pursuant
to Section 3.17 hereof.
Section 7.4 Action upon Certain Failures of the Servicer
and upon Event of Default. In the event that a Responsible Officer
of the Trustee shall have actual knowledge of any failure of the
Servicer specified in Section 7.1(b) hereof which would become an
Event of Default upon the Servicer's failure to remedy the same
after notice, the Trustee shall give notice thereof to the
Servicer. For all purposes of this Agreement, in the absence of
actual knowledge by a Responsible Officer of the Trustee, the
Trustee shall not be deemed to have knowledge of any Event of
Default.
Section 7.5 Trustee to Act; Appointment of Successor.
(a) On and after the time (1) the Servicer receives a notice of
termination pursuant to Section 7.1 hereof, (2) the Servicer has
resigned or is deemed to have resigned pursuant to Section 6.4
hereof or (3) the Trustee receives the resignation of the Servicer
evidenced by an Opinion of Counsel pursuant to Section 6.4 hereof,
the Trustee shall immediately be the successor in all respects to
the Servicer in its capacity as Servicer under this Agreement and
the transactions set forth or provided for herein and shall have
all the rights and powers and be subject to all the
responsibilities, duties and liabilities relating thereto placed on
the Servicer hereunder and accruing after the Servicer's
termination or resignation, including the obligation to make
Interest Advances and Servicing Advances, other than (i) those
responsibilities of the Servicer with respect to its
representations and warranties under Section 2.3(a) hereof and (ii)
the Servicer's obligation to deposit amounts in respect of losses
arising prior to the termination or resignation of the Servicer
from investment of funds in any account as required pursuant to the
provisions of this Agreement; provided, however, that (x) the
Trustee, as successor Servicer, shall have the benefit of Sections
6.1, 6.2 and 6.3 hereof and (y) any failure to perform such duties
or responsibilities caused by the Servicer's failure to provide
information required by Section 7.1 hereof shall not be considered
a default by the Trustee hereunder. In its capacity as such
successor, the Trustee shall have the same limitation of liability
herein granted to the Servicer. As compensation therefor, the
Trustee shall be entitled to such compensation as the Servicer
would have been entitled to hereunder if no such notice of
termination or resignation had been given, including, without
limitation, the Servicing Fee.
(b) If pursuant to Section 7.5(a) above the Trustee
becomes successor Servicer, the Trustee shall, as soon as
practicable, but in any case within 90 days of its becoming
successor Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any established commercial mortgage
servicing institution which, as confirmed by the Rating Agency,
will not adversely affect the then current ratings of any Class of
Certificates, and having a combined capital and surplus of not less
than $50,000,000 (or such lower amount as acceptable to the Rating
Agency as evidenced in a writing to the Trustee) and meeting such
other standards for a successor Servicer as are set forth herein,
as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the
Servicer hereunder; provided, however, that until such appointment
and assumption, the Trustee will continue to perform the servicing
obligations pursuant to this Agreement, including the obligation to
make Interest Advances or Servicing Advances. In connection with
such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments
on the Mortgage Loan as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of
that permitted the Servicer hereunder. The Trustee shall negotiate
and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to a qualified party. The
Trustee shall deduct all costs and expenses of the sale, transfer
and assignment of the servicing rights and responsibilities
hereunder, and of termination and assumption of servicing by the
Trustee, from any sum received by the Trustee from the successor to
the Servicer in respect of such sale, transfer and assignment.
After such deductions, the remainder of such sum shall be paid by
the Trustee to the Servicer at the time of such sale, transfer and
assignment to the Servicer's successor, net of any amounts due from
the Servicer hereunder. In the event that such funds are not
sufficient to cover such costs and expenses, the Trustee shall be
entitled to be reimbursed for such shortfall under Section 8.6.
The Trustee, the Borrowers and such successor servicer shall take
such action, consistent with this Agreement, as shall be necessary
to effectuate any such succession. Neither the Trustee nor any
successor servicer shall be deemed to be in default of any of its
obligations under this Section 7.5 if such default arises from
failure of the Servicer to timely provide all applicable books,
records and other documents necessary to effectuate the sale,
transfer or assignment of servicing rights to the Trustee or a
successor servicer in accordance with this Section 7.5.
(c) Any successor, including the Trustee, to the
Servicer as servicer hereunder shall during the term of its service
as servicer maintain in force (i) a policy or policies of insurance
covering errors and omissions in the performance of its obligations
as servicer hereunder, and (ii) a fidelity bond in respect of its
officers, employees and agents to the same extent that the Servicer
is required pursuant to Section 3.6(c).
Section 7.6 Notification to Certificateholders. (a)
Upon any termination of the Servicer or appointment of a successor
to the Servicer, in each case as provided herein, the Trustee shall
as soon as practicable give written notice thereof to the Rating
Agency and to the Certificateholders at their respective addresses
appearing in the Certificate Register.
(b) Within 30 days after a Responsible Officer of the
Trustee obtains actual knowledge of the occurrence of any Event of
Default, the Trustee shall transmit by mail to all
Certificateholders and to the Rating Agency notice of such Event of
Default known to a Responsible Officer of the Trustee, unless,
prior thereto, such Event of Default shall have been cured or
waived.
Section 7.7 Waiver of Past Events of Default. The
Holders of Certificates evidencing not less than a majority of the
Aggregate Certificate Balance may, on behalf of all Holders of
Certificates, waive any default or extend the time to cure any
default by the Servicer or the Trustee in the performance of its
obligations hereunder and its consequences, except a default in
making any required deposits to or payments from the Distribution
Account in accordance with this Agreement which has not been cured
in the manner referred to in Section 3.17(d) or Section 7.1(f)
hereof. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement.
No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.1 Duties of Trustee. The Trustee, prior to
the occurrence of an Event of Default of which a Responsible
Officer of the Trustee has actual knowledge and after the curing or
waiver of all Events of Default which may have occurred or been
waived, undertakes to perform such duties and only such duties as
are specifically set forth in this Agreement. In case an Event of
Default of which a Responsible Officer of the Trustee has actual
knowledge shall have occurred (which has not been cured or waived),
the Trustee, subject to the provisions of Sections 7.1, 7.3, 7.4
and 7.5 hereof, shall exercise such of the rights and powers vested
in it by this Agreement, and use the same degree of care and skill
in its exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs. Any
permissive right of the Trustee enumerated in this Agreement shall
not be construed as a duty.
The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee which are specifically
required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they are on
their face in the form required by this Agreement. If any such
instrument is found on its face not to conform to the requirements
of this Agreement in a material manner, the Trustee shall take such
action as it deems appropriate to have the instrument corrected,
and if the instrument is not corrected to the Trustee's reasonable
satisfaction, the Trustee will provide notice thereof to the
Certificateholders.
Subject to Section 8.3 hereof, no provision of this
Agreement shall be construed to relieve the Trustee from liability
for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(a) The duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement and
the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Agreement;
(b) No implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(c) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with this Agreement or the direction of
Holders of Certificates evidencing not less than a majority of the
Aggregate Certificate Balance (or such greater percentage of the
Aggregate Certificate Balance as may be required by this
Agreement), relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising or omitting to exercise any trust or power conferred
upon the Trustee, under this Agreement;
(d) The Trustee shall not be personally liable for any
error of judgment made in good faith by any Responsible Officer,
unless it shall be proved that the Trustee or such Responsible
Officer was negligent in ascertaining the pertinent facts;
(e) The Trustee shall not be charged with knowledge of
any failure by the Servicer to comply with the obligations of the
Servicer referred to in Section 7.1 hereof or any other act,
failure, or breach of any Person upon the occurrence of which the
Trustee may be required to act, unless a Responsible Officer of the
Trustee obtains actual knowledge of such failure or the Trustee
receives written notice of such failure from the Servicer, the
Depositor or Holders of Certificates of any Class affected thereby
evidencing, as to such Class, Percentage Interests aggregating not
less than 25%; provided, however, that the Trustee shall be deemed
to have actual knowledge of any failure of it to be provided with
any schedule, report, certification or statement scheduled to be
provided to the Trustee by this Agreement; and
(f) The provisions of Sections 8.1 through 8.4 hereof
shall apply to the Trustee acting in each of its capacities
hereunder, including Trustee, Paying Agent, Certificate Registrar
and delegee of the duties of each Tax Matters Person.
None of the provisions contained in this Agreement shall
require the Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties as Trustee hereunder or, with respect to the Trustee, in the
exercise of any of its rights or powers if there is reasonable
ground for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured
to it, and none of the provisions contained in this Agreement shall
in any event require the Trustee to perform, or be responsible for
the manner of performance of, any of the obligations of the
Servicer under this Agreement, except during such time, if any, as
the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement. Notwithstanding
anything contained herein, the Trustee shall not be responsible and
shall have no liability in connection with duties assumed by the
Paying Agent, the Mortgage Custodian, the Authenticating Agent and
the Certificate Registrar hereunder, unless the Trustee is acting
in any such capacity hereunder.
Section 8.2 Certain Matters Affecting the Trustee. (a)
Except as otherwise provided in Section 8.1 hereof:
(i) The Trustee may request and conclusively rely
upon and shall be protected in acting or refraining from
acting upon any resolution, Officer's Certificate, certificate
of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel, and any
written advice or opinion of counsel shall be full and
complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion of counsel;
(iii) Neither the Trustee nor any of its directors,
officers, employees, Affiliates or agents shall be personally
liable for any action taken, suffered or omitted by the
Trustee in good faith and reasonably determined by the Trustee
to be authorized or within the discretion or rights or powers
conferred upon the Trustee by this Agreement;
(iv) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and shall not be
liable for the actions or omissions of any such agents or
attorneys selected with due care or the actions or omissions
of the Servicer, any Sub-Servicer or the Depositor;
(v) The Trustee shall be under no obligation to
institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of the
Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein
or thereby; and
(vi) The Trustee shall not be required to provide any
surety or bond of any kind in connection with the execution or
performance of its duties hereunder.
(b) Following the Closing Date, the Trustee shall not
accept any contribution of assets to the Trust Fund not
specifically contemplated by this Agreement (i) unless the Trustee
shall have received a Nondisqualification Opinion at the expense of
the Person desiring to contribute such assets with respect to such
contribution; and (ii) if such assets include real property, unless
the Servicer has delivered to it an Officer's Certificate to the
effect that it has determined in accordance with Accepted Servicing
Practices, based solely upon the Servicer's review of a report
prepared by an Independent Contractor who meets the qualifications
set forth below, that the report concludes that such property is in
compliance with applicable Environmental Laws and that there are no
circumstances present at such property relating to the use,
management or disposal of any hazardous substances, hazardous
materials, hazardous wastes or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law
or regulation. The environmental report to be reviewed by the
Servicer will be prepared at the expense of the Person desiring to
contribute such property. The Independent Contractor who prepares
the report shall be a Person who regularly conducts environmental
site assessments in accordance with then current standards imposed
by institutional commercial mortgage lenders and who has had not
less than five years experience in such matters.
(c) All rights of action under this Agreement or under
any of the Certificates, enforceable by the Trustee, may be
enforced by it without the possession of any of the Certificates,
or the production thereof at the trial or other proceeding relating
thereto, and any such suit, action or proceeding instituted by the
Trustee shall be brought in its name for the benefit of all the
Holders of such Certificates, subject to the provisions of this
Agreement.
Section 8.3 Trustee Not Required to Make Investigation.
Prior to the occurrence of an Event of Default hereunder known to
a Responsible Officer of the Trustee and after the curing or waiver
of all such Events of Default which may have occurred, the Trustee
shall not be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements
herein (except as specifically required by this Agreement) or to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, the Mortgage, the
Mortgage Notes or other paper or document, unless requested in
writing so to do by Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests aggregating not
less than 25%; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms
of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability as a condition to such
proceeding. The expense of any such investigation shall be paid by
the Trust Fund.
Section 8.4 Trustee Not Liable for Certificates or
Mortgage Loan. The recitals contained herein and in the
Certificates (other than the authentication on the Certificates if
made by the Trustee) and information contained in any offering
document for the Certificates, except to the extent provided by the
Trustee, shall be taken as the statements of the Depositor or the
Servicer, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of the
Certificates or of the Mortgage Loan or related documents. The
Trustee shall not be liable for any action or failure of any action
by the Depositor or the Servicer hereunder. The Trustee shall not
at any time have any responsibility or liability for or with
respect to the legality, validity or enforceability of the Mortgage
or the Mortgage Loan, or the perfection and priority of the
Mortgage or the maintenance of any such perfection and priority, or
for or with respect to the efficacy of the Trust Fund or its
ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without
limitation, the existence, condition and ownership of any Mortgaged
Property; the existence and enforceability of any hazard insurance
thereon; the validity of the assignment of the Mortgage Loan to the
Trust Fund or of any intervening assignment; the completeness of
the Mortgage Loan, the performance or enforcement of the Mortgage
Loan (other than if the Trustee shall assume the duties of the
Servicer pursuant to Section 7.5 hereof); the compliance by the
Depositor, the Borrowers or the Servicer with any warranty or
representation made under this Agreement or in any related document
or the accuracy of any such warranty or representation made under
this Agreement or in any related document prior to the Trustee's
receipt of notice or other discovery of any noncompliance therewith
or any breach thereof; any investment of monies by or at the
direction of the Servicer or any loss resulting therefrom; the
failure of the Servicer or any Sub-Servicer to act or perform any
duties required of it on behalf of the Trustee hereunder; or any
action by the Trustee taken at the instruction of the Servicer
(other than if the Trustee shall assume the duties of the Servicer
pursuant to Section 7.5 hereof); provided, however, that the
foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. Except with respect to a
claim based on the failure of the Trustee to perform its respective
duties under this Agreement or based on the Trustee's negligence or
willful misconduct, no recourse shall be had for any claim based on
any provision of this Agreement, the Certificates, or the Mortgage
Loan or assignment thereof against the Trustee in its individual
capacity, the Trustee shall not have any personal obligation,
liability or duty whatsoever to any Certificateholder or any other
Person with respect to any such claim, and any such claim shall be
asserted solely against the Trust Fund or any indemnitor who shall
furnish indemnity as provided in this Agreement. The Trustee shall
not have any responsibility for filing any financing or
continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security
interest or lien granted to it hereunder (unless the Trustee shall
have become the successor Servicer) or to prepare or file any
Securities and Exchange Commission filing, if any, for the Trust
Fund or to record this Agreement. The Trustee shall not be
accountable for the use or application by the Depositor or the
Servicer of any of the Certificates or of the proceeds of such
Certificates or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loan deposited into the
Distribution Accounts or assets on deposit in the Escrow Accounts,
or for investment of any such amounts.
None of the Trustee or any of its respective directors,
officers, employees, Affiliates or agents shall be under any
liability to the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any action in
good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the
Trustee or any such person against any liability which would
otherwise be imposed by reason of willful misconduct, bad faith or
negligence in the performance of duties. The Trustee and any
director, officer, employee or agent of the Trustee shall be
indemnified by amounts on deposit in the Distribution Accounts and
the Certificate Account and held harmless against any loss,
liability or expense incurred in connection with or related to the
Trustee's performance of its powers and duties under this Agreement
(including, with respect to the Trustee, performance under Section
8.1 hereof), or any action relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by
any such Person by reason of willful misconduct, bad faith or
negligence in the performance of duties. The indemnification
provided hereunder shall survive the resignation or removal of the
Trustee and the termination of this Agreement.
Section 8.5 Trustee May Own Certificates. The Trustee
and any agent of the Trustee in its individual or any other
capacity may become the owner or pledgee of the Certificates and
may deal with the Depositor and the Servicer with the same rights
it would have if it were not Trustee or such agent.
Section 8.6 Trustee's Fees and Expenses. (a) The
Servicer shall disburse to the Trustee, and the Trustee or any
successor Trustee shall be entitled to receive from the
Distribution Account as contemplated by Section 3.3(e)(vii) hereof,
the Trustee Fee (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust) for
all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee. The Servicer shall not be
personally liable for the Trustee Fee.
(b) The Trustee shall each be paid or reimbursed upon
its request for all reasonable expenses, disbursements and advances
(except while acting in the capacity of successor Servicer in which
capacity it shall be entitled to the compensation pursuant to
Section 7.5(a)) incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable
compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ) as set forth in Section
3.3(e)(v) except any such expense, disbursement or advance as may
arise from its negligence or bad faith; provided, however, that the
Trustee shall not refuse to perform any of its duties hereunder
solely as a result of the failure of the Trust Fund to pay the
Trustee's fees and expenses. In no event shall the Trustee be
entitled to reimbursement with respect to any such expense,
disbursement or advances from the Trust Fund except to the extent
specifically permitted by the terms of this Agreement including
reimbursement to the Trustee in the capacity of successor Servicer.
(c) The Trustee shall pay the fees and expenses of the
Certificate Registrar, the Paying Agent, the Mortgage Custodian and
the Authenticating Agent. The Trustee shall pay all normal, on-
going expenses incurred by it in connection with its routine
activities hereunder. Neither the Servicer nor the Trustee shall
be entitled to reimbursement therefor except as specifically
provided in this Agreement including, if applicable, reimbursement
to the Trustee in the capacity of successor Servicer.
If the Servicer or the Trustee receives a request or
inquiry from a Borrower or any Certificateholder the response to
which would, in the Servicer's or the Trustee's good faith business
judgment require the assistance of Independent legal counsel to the
Servicer or the Trustee, the cost of which would not be an expense
of the Trust Fund hereunder, then the Servicer or the Trustee, as
the case may be, shall not be required to take any action in
response to such request or inquiry unless such Borrower or such
Certificateholder, as applicable, makes arrangements for the
payment of the Servicer's or the Trustee's expenses associated with
such counsel (including, without limitation, posting an advance
payment for such expenses) satisfactory to the Servicer or the
Trustee, as the case may be, in its sole discretion. Unless such
arrangements have been made, the Servicer or the Trustee, as the
case may be, shall have no liability to any Person for the failure
to respond to such request or inquiry.
(d) The Trust Fund shall indemnify the Trustee from,
and hold it harmless against, any and all losses, liabilities,
damages or claims incurred in connection with any legal action
relating to this Agreement or unanticipated "out-of-pocket" costs
and expenses (other than the expense of any employee's compensation
and any expense allocable to the Trustee's overhead, but including
reasonable attorneys' fees) arising in respect of this Agreement or
the Certificates other than those resulting from the willful
misconduct, bad faith or negligence of the Trustee.
(e) This Section shall survive the termination of this
Agreement or the resignation or removal of the Trustee as regards
rights accrued prior to such resignation or removal.
Section 8.7 Eligibility Requirements for Trustee. The
Trustee hereunder shall not be an Affiliate of the Servicer or any
Borrower (unless the Trustee succeeds to the obligations of the
Servicer pursuant to Article Seven) and shall at all times be a
corporation or association organized and doing business under the
laws of any State or the United States or a nationally chartered
bank, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least
$100,000,000 and subject to supervision or examination by federal
or state authority and which, as confirmed by the Rating Agency,
will not adversely affect the then current rating of any Class of
the Certificates; provided, however, that the senior unsecured debt
of the Trustee shall at all times be rated not less than "AA-" by
the Rating Agency (whether or not such rating is published by the
Rating Agency) (unless a replacement trustee having a rating of not
less than "AA" or unless the Trustee or such replacement Trustee is
otherwise acceptable to the Rating Agency) or, if not rated (either
published or unpublished) by the Rating Agency, an equivalent
rating by any two of Moody's Investors Service, Inc., Standard &
Poor's Rating Group or Duff & Phelps Rating Co. If such
corporation or association publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in
Section 8.8 hereof.
Section 8.8 Resignation and Removal of Trustee. The
Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the
Servicer, the Borrowers and the Depositor. Such notice also shall
be furnished to the Rating Agency and the Certificateholders. Upon
receiving such notice of resignation of the Trustee, the Borrowers
shall, with the written consent of the Servicer, appoint a
successor by written instrument, in quadruplicate, one copy of
which instrument shall be delivered to each of the resigning
Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.7 hereof and shall fail
to resign after written request for the Trustee's resignation, as
the case may be, by the Servicer or the Depositor or as required by
Section 8.7 hereof, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or
any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, with or without cause, the
Servicer may remove the Trustee and appoint a successor trustee by
written instrument, in quadruplicate, one copy of which instrument
shall be delivered to the Trustee so removed and one copy each to
the successor trustee and the successor fiscal agent.
Holders of Certificates evidencing not less than a
majority by Certificate Balance of the Certificates, may at any
time remove the Trustee and appoint a successor trustee by written
instrument or instruments, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which
instrument or instruments shall be delivered to each of the
Depositor and the Servicer, one complete set to the Trustee so
removed and one complete set to the successor trustee.
Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this
Section 8.8 shall become effective upon acceptance of appointment
by the successor trustee as provided in Section 8.9 hereof.
Section 8.9 Successor Trustee. Any successor trustee
appointed as provided in Section 8.8 hereof shall execute,
acknowledge and deliver to the Servicer, the Depositor and to its
predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective, and such successor
trustee, without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of
its predecessor hereunder, with like effect as if originally named
as trustee herein. The predecessor trustee shall deliver or cause
to be delivered to the successor trustee the Mortgage File and
related documents and statements held by it hereunder, and the
Servicer and the Depositor and the predecessor trustee shall
execute and deliver such instruments and do such other things as
may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties
and obligations.
No successor trustee agent shall accept appointment as
provided in this Section unless at the time of such acceptance such
successor trustee shall be eligible under the provisions of Section
8.7 hereof.
Upon acceptance of appointment by a successor trustee as
provided in this Section 8.9, the successor trustee shall mail
notice at the successor trustee's expense of the succession of such
trustee hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to the Rating Agency. If
the successor trustee fails to mail such notice within ten days
after acceptance of appointment by the successor trustee, the
Servicer shall cause such notice to be mailed at the expense of the
successor trustee.
Section 8. Merger or Consolidation of Trustee. Any
Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Trustee shall be
a party, or any Person succeeding to all or substantially all of
the corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided that such Person shall be
eligible under the provisions of Section 8.7 hereof, without the
execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 8.11 Appointment of Co-Trustee, Separate Trustee
or Mortgage Custodian. (a) Notwithstanding any other provisions
hereof, at any time, the Trustee, the Depositor or the Holders of
Certificates evidencing a majority of the Aggregate Certificate
Balance shall each have the power from time to time to appoint one
or more Persons to act either as co-trustees jointly with the
Trustee, or as separate trustees, or as custodians, for the purpose
of holding title to, foreclosing or otherwise taking action with
respect to any Mortgaged Property outside the state where the
Trustee has its principal place of business, where such separate
trustee or co-trustee is necessary or advisable (or the Trustee is
advised by the Servicer that such separate trustee or co-trustee is
necessary or advisable) under the laws of any state in which a
property securing the Mortgage Loan is located or for the purpose
of otherwise conforming to any legal requirement, restriction or
condition in any state in which a property securing the Mortgage
Loan is located or in any state in which any portion of the Trust
Fund is located. The Servicer shall advise the Trustee if the
Servicing Officers of the Servicer have actual knowledge that a
separate trustee or co-trustee is necessary or advisable as
aforesaid. The separate trustees, co-trustees, or custodians so
appointed shall be trustees or custodians for the benefit of all
the Certificateholders and shall have such powers, rights and
remedies as shall be specified in the instrument of appointment;
provided, however, that no such appointment shall, or shall be
deemed to, relieve the Trustee of any of its duties hereunder.
(b) Every separate trustee, co-trustee, and custodian
shall, to the extent permitted by law, be appointed and act subject
to the following provisions and conditions:
(i) all powers, duties, obligations and rights
conferred upon the Trustee in respect of the receipt,
custody and payment of moneys shall be exercised solely
by the Trustee;
(ii) all other rights, powers, duties and
obligations conferred or imposed upon the Trustee shall
be conferred or imposed upon and exercised or performed
by the Trustee and such separate trustee, co-trustee, or
custodian jointly, except to the extent that under any
law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder) the Trustee shall
be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and
obligations, including the holding of title to the Trust
Fund or any portion thereof in any such jurisdiction,
shall be exercised and performed by such separate
trustee, co-trustee, or custodian;
(iii) no trustee or custodian hereunder shall be
personally liable by reason of any act or omission of any
other trustee or custodian hereunder; and
(iv) the Trustee or the Holders of Certificates
evidencing a majority of the Aggregate Certificate
Balance may at any time accept the resignation of or
remove any separate trustee, co-trustee or custodian, so
appointed by it or them, if such resignation or removal
does not violate the other terms of this Agreement.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to
each of them. Every instrument appointing any separate trustee,
co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VIII. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may
be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall
be filed with the Trustee.
(d) Any separate trustee, co-trustee or custodian may,
at any time, constitute the Trustee its agent or attorney-in-fact
with full power and authority, to the extent not prohibited by law,
to do any lawful act under or in respect of this Agreement on its
behalf and in its name. If any separate trustee, co-trustee or
custodian shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor
trustee.
(e) No separate trustee, co-trustee or custodian
hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 8.7 hereunder and no notice to
Certificateholders of the appointment shall be required under
Section 8.9 hereof.
(f) The Trustee agrees to instruct the co-trustees, if
any, to the extent necessary to fulfill the Trustee's obligations
hereunder.
(g) The Trustee shall pay the reasonable compensation
of the co-trustees or separate trustees appointed pursuant to this
Section 8.11 hereof (other than expenses, disbursements and
advances made by such co-trustees or separate trustees, which shall
be paid out of the Trust Fund to the extent, and in accordance with
the standards, specified in Section 8.6 hereof).
(h) Subject to the consent of the Servicer, which
consent shall not be unreasonably withheld, the Trustee may appoint
at any time a Mortgage Custodian to act as the agent of the Trustee
for purposes of holding the Mortgage File provided that such
appointment shall not adversely affect the ratings of any
Certificates by the Rating Agency. The Trustee shall serve as the
initial Mortgage Custodian hereunder. Upon the appointment of a
Mortgage Custodian other than the Trustee, the Servicer, the
Trustee and the Mortgage Custodian shall enter into a mortgage
custodian agreement.
(i) The Trustee, the Depositor or the Holders of
Certificates evidencing a majority by Certificate Balance of the
Certificates, may at any time accept the resignation of or remove
any separate trustee or co-trustee so appointed by it or them, if
such removal does not violate the other terms of this Agreement.
(j) The provisions of Sections 8.1, 8.2, 8.3, 8.4 and
8.5 hereof applicable to the Trustee shall apply as well to the
Mortgage Custodian, the Authenticating Agent, the Paying Agent and
the Certificate Registrar.
Section 8.F Authenticating Agents. (a) The Trustee
may appoint one or more Authenticating Agents which shall be
authorized to act on behalf of the Trustee in executing and
authenticating Certificates. Wherever reference is made in this
Agreement to the execution and authentication of Certificates by
the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include execution and authentication
on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by
an Authenticating Agent. Each Authenticating Agent must be
acceptable to the Servicer and must be a corporation or financial
institution organized and doing business under the laws of the
United States of America or of any state and having a principal
office and place of business in the Borough of Manhattan, the City
and State of New York, having a combined capital and surplus of at
least $15,000,000, authorized under such laws to engage in a trust
business and subject to supervision or examination by federal or
state authorities. The Trustee shall serve as the initial
Authenticating Agent hereunder.
(b) Any Person into which any Authenticating Agent may
be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to
which any Authenticating Agent shall be a party, or any Person
succeeding to the corporate agency business of any Authenticating
Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of
the Trustee or the Authenticating Agent, provided that such Person
meets the requirements of Section 8.12(a) hereof.
(c) Any Authenticating Agent may at any time resign by
giving at least 30 days' advance written notice of resignation to
the Trustee, the Servicer and the Borrowers. The Trustee may at
any time terminate the agency of any Authenticating Agent by giving
written notice of termination to such Authenticating Agent, the
Servicer and the Borrowers. Upon receiving a notice of resignation
or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section 8.12, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such
appointment to the Servicer and the Borrowers and shall mail notice
of such appointment to all Holders of Certificates. Any successor
Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as
if originally named as Authenticating Agent. No such
Authenticating Agent shall be appointed unless eligible under the
provisions of this Section 8.12. No Authenticating Agent shall
have responsibility or liability for any action taken by it as such
at the direction of the Trustee. Any Authenticating Agent shall be
entitled to reasonable compensation for its services and, if paid
by the Trustee, it shall be a reimbursable expense pursuant to
Section 8.6 hereof.
Section 8.13 Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Paying
Agent shall comply with all federal withholding requirements with
respect to payments to Certificateholders of interest or original
issue discount that the Paying Agent reasonably believes are
applicable under the Code. The consent of Certificateholders shall
not be required for any such withholding. Without limiting the
foregoing, the Paying Agent agrees that it will not withhold with
respect to payments of interest or original issue discount in the
case of a Certificateholder which has furnished or caused to be
furnished an effective Form W-8 or an acceptable substitute form or
a successor form and which is not a "10 percent shareholder" within
the meaning of Code Section 871(h)(3)(B) or a "controlled foreign
corporation" described in Code Section 881(c)(3)(C) with respect to
the Trust REMIC, the Trust Fund or the Depositor or otherwise not
eligible for the exemption from withholding for "portfolio
interest" within the meaning of Code Sections 871(h) and 881(c).
In the event the Paying Agent withholds any amount from interest or
original issue discount payments or advances thereof to any
Certificateholder pursuant to federal withholding requirements, the
Paying Agent shall indicate the amount withheld to such
Certificateholder.
Section 8.14 Massachusetts Filings. The Trustee shall
make all filings required under Massachusetts General Laws, Chapter
182, Sections 2 and 12.
ARTICLE IX
TERMINATION
Section 9.1 Termination. (a) Subject to Section 9.2
hereof, the respective obligations and responsibilities of the
Servicer, the Depositor, the Paying Agent and the Trustee created
hereby (other than the obligation of the Paying Agent to make
certain payments to Certificateholders after the Final Distribution
Date and the obligation of the Servicer to disburse money from the
Distribution Account in payment of any sums then due the Trustee)
shall terminate upon the last action required to be taken by the
Paying Agent on the Final Distribution Date pursuant to this
Article IX upon the earlier of (i) the later of (A) the final
payment on the Mortgage Loan or (B) the liquidation of the last
Foreclosed Property remaining in the Trust Fund and the
distribution of the proceeds thereof in accordance with this
Agreement, (ii) the termination of this Agreement pursuant to
Section 9.1(b) below, (iii) the sale of the Mortgage Notes pursuant
to Section 9.1(c) below and (iv) the termination of the Trust Fund
pursuant to Section 9.1(d) below; provided, however, that in no
event shall the trust created hereby continue beyond the expiration
of twenty-one years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James, living on the date hereof.
(b) At any time when the Certificate Balance of the
Certificates (other than the R Certificates) is less than or equal
to 10% of the Certificate Balance of the Certificates (other than
the R Certificates) as of the Closing Date, the Depositor may give
written notice to the Trustee that it elects to purchase the
Mortgage Loan, at the price and on the other terms and conditions
set forth in Section 9.1(c) hereof, including the delivery to the
Trustee of the Opinion of Counsel referred to therein. Such
purchase shall be made in accordance with Section 9.2 hereof.
(c) The Servicer may on any Due Date purchase the
Mortgage Loan and any other property, if any, remaining in the
Trust Fund, provided that on the Distribution Date preceding the
date of such purchase, the Mortgage Loan Principal Balance, after
giving effect to distributions of principal made on such
Distribution Date, is not more than 10% of the initial Mortgage
Loan Principal Balance. Upon receipt of the Termination Price set
forth below, the Trustee shall (i) cause to be released to the
Servicer the Mortgage File and (ii) on the Distribution Date
following such Due Date, distribute the Termination Price to the
Certificateholders as a Voluntary Prepayment other than in
connection with a release of Mortgaged Property pursuant to Section
5(c) of each Mortgage Note. The "Termination Price" shall equal
the sum of (1) the greater of (x) 100% of the Mortgage Loan
Principal Balance on the day of such purchase plus accrued interest
to the last day of the Interest Accrual Period during which such
purchase occurs (plus any unreimbursed Servicing Advances and net
of unreimbursed Interest Advances) and (y) the fair market value of
the Mortgage Loan, and (2) the fair market value of any other
property remaining in the Trust Fund, such fair market value, in
the case of the Mortgage Loan, Foreclosed Property or other
property, to be determined by an Appraiser mutually agreed upon by
the Servicer, the Trustee and a majority in Certificate Balance of
the Class R Certificateholders. As a condition to the purchase of
the assets of the Trust Fund pursuant to this Section 9.1(c), the
Servicer must deliver to the Trustee and the Depositor an Opinion
of Counsel, which shall be an expense of the Servicer, stating that
such termination will be a "qualified liquidation" of the Trust
REMIC under Section 860F of the Code. Such purchase shall be made
in accordance with Section 9.2 hereof. Upon consummation of the
sale of the property included in the Trust Fund, the Mortgage
Custodian shall deliver the Mortgage Collateral Security to the
Servicer.
(d) Notice of any termination, specifying the Final
Distribution Date (which shall be a date that would otherwise be a
Distribution Date) upon which the Certificateholders may surrender
their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the
Paying Agent by letter to Certificateholders mailed not earlier
than the 15th day and not later than the 25th day of the month next
preceding the month of such Final Distribution Date specifying (i)
the Final Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of
Certificates at the office or agency of the Trustee therein
designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date
is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office or agency of the
Trustee therein specified.
(e) Upon presentation and surrender of the
Certificates, the Paying Agent shall cause to be distributed to the
holders of such Certificates on the Final Distribution Date, the
amounts payable to such Certificateholders in accordance with
Section 4.1 hereof. Upon any such termination, the Paying Agent
shall terminate the Certificate Account and the Default Interest
Account, and shall request the Servicer and the Trustee to
terminate any other account or fund maintained with respect to the
Certificates, subject to the Paying Agent's obligation hereunder to
hold all amounts payable to Certificateholders in trust without
interest pending such payment.
(f) In the event that all of the Certificateholders
shall not surrender their Certificates for final payment and
cancellation on or before the Final Distribution Date, the Paying
Agent shall on such date cause all funds in the Certificate Account
not distributed in final distribution to Certificateholders to be
withdrawn from the Certificate Account and credited to the
remaining Certificateholders by depositing such funds in a separate
escrow account held uninvested for the benefit of such
Certificateholders and the Paying Agent shall give a second written
notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice
all the Certificates shall not have been surrendered for
cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds
on deposit in such escrow account. If the remaining
Certificateholders do not surrender their Certificates for
cancellation and receipt of the final distribution with respect
thereto within two years following the Final Distribution Date, the
Paying Agent shall pay the amount of such unclaimed final
distribution to the Borrowers and thereafter such remaining
Certificateholders shall look only to the Borrowers for payment of
such final distribution as general unsecured creditors of the
Borrowers.
Section 9.2 Additional Termination Requirements. (a)
In connection with any termination pursuant to Section 9.1 hereof,
the Trust Fund and the Trust REMIC shall be terminated in
accordance with the following additional requirements, unless the
Servicer has obtained and paid for (at its own expense), and the
Trustee has been supplied with an Opinion of Counsel to the effect
that the failure of the Trust Fund to comply with the requirements
of this Section 9.2 will not (i) result in the imposition of taxes
on "prohibited transactions" on the Trust REMIC as defined in
Section 860F of the Code, or (ii) cause the Trust REMIC to fail to
qualify as a REMIC at any time that any Regular Certificates are
outstanding:
(i) Within 89 days prior to the Final
Distribution Date set forth in the notice given by the
Trustee under Section 9.1 hereof, the Trustee shall adopt
a plan of complete liquidation of the Trust REMIC,
meeting the requirements of a qualified liquidation under
the REMIC Provisions;
(ii) At or after the time of adoption of such
a plan of complete liquidation and at or prior to the
Final Distribution Date, the Servicer on behalf of the
Trustee shall sell or cause to be sold any remaining
assets of the Trust Fund included in the Trust REMIC.
(iii) At the time of the making of the final
payment on the Certificates other than the Class R
Certificates, the Trustee shall distribute or credit, or
cause to be distributed or credited, to the Holders of
the Class R Certificates all cash on hand in the pool of
assets constituting the Trust REMIC after such final
payment of the Certificates, other than cash retained to
meet claims, and the Trust Fund, and the Trust REMIC,
shall terminate at that time; and
(iv) In no event may the final payment on the
Certificates (except to the extent permitted in Section
9.1 hereof with respect to Certificateholders who fail to
surrender their Certificates) be made after the 89th day
from the date on which the plan of complete liquidation
for the Trust REMIC is adopted.
(b) By acceptance of the Class R Certificates, the
Holders thereof hereby authorize the Trustee to adopt such a plan
of complete liquidation in the form proposed by the Holders of the
Class R Certificates upon the written request of the Servicer and
agree to take such other action in connection therewith as may be
reasonably requested by the Servicer or the Trustee, which
authorization shall be binding upon all successor Class R
Certificateholders.
(c) On the final federal income tax return for the
Trust REMIC, the Trustee shall attach a statement specifying the
date of adoption of the plan of liquidation.
Section 9.3 Trusts Irrevocable. Except as expressly
provided herein, all trusts created hereby are irrevocable.
ARTICLE X
REMIC ADMINISTRATION
Section 10.1 REMIC Administration. (a) An election
will be made by the Trustee to treat the segregated pool of assets
consisting of (i) the Mortgage Loan (other than the right to
receive Default Interest), (ii) all amounts held from time to time
in the Distribution Account and the Certificate Account, (iii) any
property which secures the Mortgage Loan and which is acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise and (iv)
certain other rights set forth herein as a REMIC under the Code.
Such election will be made on Form 1066 or other appropriate
federal tax or information return for the taxable year ending on
the last day of the calendar year in which the Certificates are
issued. For purposes of such election, the rights of the Holders
of Class A, Class B, Class C and Class D Certificates (other than
the right to receive Default Interest) shall be designated as the
"regular interests" in the Trust REMIC and the rights of the
Holders of the Class R Certificates shall be designated as the
"residual interest" in the Trust REMIC. The final scheduled
distribution date for the Class A, the Class B, the Class C, the
Class D and the Class R Certificates shall be the Final Certificate
Distribution Date. The portion of the Trust Fund holding the right
to receive Default Interest shall be treated as a grantor trust or
as a mere custodial arrangement for United States Federal income
tax purposes and the Trustee shall file Form 1041 with respect to
such portion of the Trust Fund.
(b) The Closing Date is hereby designated as the
"Startup Day" of the Trust REMIC within the meaning of Section
860G(a)(9) of the Code.
(c) The Trustee shall pay the ordinary and usual
expenses of the Trust REMIC in connection with the preparation,
filing and mailing of tax information reports and returns required
to be filed under the Code (not including fees for filing which are
materially increased or any taxes, however denominated, including
any additions to tax, penalties and interest, or any professional
fees or expenses related to any administrative or judicial
proceedings with respect to the Trust REMIC that involve the
Internal Revenue Service or state tax authorities); provided that,
if, in its reasonable discretion, it deems it necessary, in order
to protect the status of the Trust REMIC or prevent the Trust Fund
or the Certificateholders or any of them from the imposition of
tax, to retain professionals to assist it in any such proceedings
(other than routine proceedings not involving a controversy) then
such fees and expenses may be reimbursed from the Distribution
Account pursuant to Section 3.3(e) hereof and the Class R
Certificateholders shall be required to reimburse the Trust Fund
for such expenses.
(d) The Trustee shall cause to be prepared, signed, and
timely filed with the Internal Revenue Service, on behalf of the
Trust REMIC, an application for a taxpayer identification number
for the Trust REMIC on Internal Revenue Service Form SS-4. The
Trustee, upon receipt from the Internal Revenue Service of the
Notice of Taxpayer Identification Number Assigned, shall promptly
forward a copy of such notice to the Depositor and the Servicer.
The Trustee shall prepare and file Form 8811 on behalf of the Trust
REMIC and shall designate an appropriate Person to respond to
inquiries by or on behalf of Certificateholders for original issue
discount and related information in accordance with applicable
provisions of the Code.
(e) The Trustee shall prepare or cause to be prepared
on behalf of the Trust Fund and the Trust REMIC and sign, and file
all of the Trust Fund's (including, without limitation, the portion
of the Trust Fund applicable to Default Interest, if any) and the
Trust REMIC's federal and state income or franchise tax and
information returns as each of the Trust Fund's and the Trust
REMIC's direct representative. Such returns shall be prepared at
the Trustee's expense, except that if additional state tax returns
are required to be filed in more than three states, the Trustee
shall be entitled, with respect to any such additional filings, to
(i) be paid a reasonable fee and (ii) receive its reasonable costs
and expenses, both as amounts reimbursable by the Depositor. The
Depositor and the Servicer shall provide on a timely basis to the
Trustee or its designee such information with respect to the Trust
Fund or the Trust REMIC as is in its possession, which the
Depositor or the Servicer has received or prepared by virtue of its
role as Depositor or Servicer hereunder and reasonably requested by
the Trustee to enable it to perform its obligations under this
subsection, and the Trustee shall be entitled to conclusively rely
on such information in the performance of its obligations
hereunder. The Trustee shall have no responsibility to file
returns or to take any other action under this Article X with
respect to any tax matters with any state or local jurisdiction
other than the States of New York, Massachusetts or Texas unless
required in writing by another jurisdiction or notified by an
Opinion of Counsel delivered to it by one of the parties hereto.
Subject to Section 6.3(a) hereof, the Servicer shall indemnify the
Trust REMIC for any liability of or assessment against the Trust
REMIC and any expenses incurred in connection with such liability
or assessment (including attorney's fees) resulting from any error
in any of such tax or information returns resulting from errors in
the information provided by the Servicer caused by the negligence,
willful misconduct or bad faith of the Servicer. The Trustee shall
indemnify the Trust REMIC for any liability of or assessment
against the Trust REMIC and any expense incurred in connection with
such liability or assessment (including attorney's fees) resulting
from any error in any of such tax or information returns resulting
from errors in the preparation of such returns caused by the
negligence, wilful misconduct or bad faith of the Trustee. Each
indemnified party shall immediately notify the indemnifying party
or parties of the existence of a claim for indemnification under
this Section 10.1(e), and provide the indemnifying party or
parties, at the expense of such indemnifying party or parties, an
opportunity to contest the tax or assessment or expense giving rise
to such claim, provided that failure to give such notification
shall not affect the indemnification rights in favor of the Trust
REMIC under this Section 10.1(e). Any such indemnification shall
survive the resignation or termination of the Servicer or the
Trustee or the termination of this Agreement.
(f) The Trustee shall forward to the Depositor copies
of quarterly and annual REMIC tax returns and Form 1099 information
returns and such other information within the control of the
Trustee as the Depositor may reasonably request in writing.
Moreover, the Trustee shall forward to each Certificateholder such
forms and furnish such information within its control as are
required by the Code to be furnished to them, shall prepare and
file annual reports and file copies of this Agreement with the
appropriate state authorities as may to the actual knowledge of a
responsible officer of the Trustee be required by applicable law
and shall prepare and disseminate to Certificateholders Forms 1099
(or otherwise furnish information within the control of the
Trustee) to the extent required by applicable law. The Trustee
will make available to any Certificateholder any tax-related
information required to be made available pursuant to the Code and
any Treasury Regulations thereunder.
(g) Subject to subsection (e) of this Section with 10.1
respect to certain reimbursements, the Trustee shall perform on
behalf of the Trust REMIC all reporting and other tax compliance
duties that are the responsibility of the Trust REMIC under the
Code, REMIC Provisions, or other compliance guidance issued by the
Internal Revenue Service or any state taxing authority. Among its
other duties, the Trustee shall provide (i) to the Internal Revenue
Service or other Persons (including, but not limited to, the
transferor of a Residual Certificate, to a Disqualified
Organization or to an agent that has acquired a Residual
Certificate on behalf of a Disqualified Organization) such
information as is necessary for the application of any tax relating
to the transfer of a Residual Certificate to any Disqualified
Organization and (ii) to the Certificateholders such information or
reports as are required by the Code or REMIC Provisions. Each of
the Depositor and the Servicer shall provide on a timely basis (but
in no event later than 15 days after the Trustee's request) to the
Trustee or its designee such information with respect to the Trust
REMIC as is in its possession and reasonably requested in writing
by the Trustee to enable it to perform its obligations under this
subsection.
(h) The Holder of the greatest percentage of Percentage
Interests of the Class R Certificates shall be the Tax Matters
Person for the Trust REMIC. The duties of the Tax Matters Person
for the Trust REMIC are hereby delegated to the Trustee and each
Residual Certificateholder agrees, by acceptance of its Residual
Certificate, on behalf of itself and all successor holders of such
Residual Certificate, to such delegation to the Trustee as their
agent and attorney in fact. The Trustee shall take whatever action
is necessary for the signing of such documents and designation of
a Tax Matters Person, including the designation of such Class R
Certificateholders.
(i) The Trustee, the Holders of the Residual
Certificates and the Servicer shall each exercise reasonable care,
to the extent within its control, and with respect to each of the
Trustee and the Servicer, within the scope of its express duties,
and shall each act in accordance with this Agreement and the REMIC
Provisions in order to create and maintain the status of the Trust
REMIC as a REMIC or, as appropriate, adopt a plan of complete
liquidation.
(j) The Trustee, the Holders of the Residual
Certificates and the Servicer shall not take any action or cause
the Trust REMIC to take any action that, under the REMIC
Provisions, could (i) endanger the status of the Trust REMIC as a
REMIC or (ii) result in the imposition of a tax upon the Trust
REMIC (including but not limited to the tax on prohibited
transactions as defined in Code Section 860F(a)(2) and the tax on
prohibited contributions as defined in Code Section 860G(d)) unless
(A) the Trustee has been supplied with a Nondisqualification
Opinion (at the expense of the party seeking to take such action)
with respect to such action or (B) the Trustee has been supplied
with an opinion (at the expense of the party seeking to take such
action) to the effect that such action will not cause the Trust
REMIC to fail to qualify as a REMIC and the Trustee has calculated
that no material tax will actually be imposed.
(k) The Holders of the Residual Certificates shall pay
when due their pro rata share of any and all federal, state and
local taxes imposed on the Trust REMIC or their assets or
transactions, including, without limitation, (i) "prohibited
transaction" taxes, as defined in Section 860F of the Code, any tax
on contributions imposed by Section 860G(d) of the Code and (ii)
any tax on "net income from foreclosure property" as defined in
Section 860G(c) of the Code (to the extent that such tax on net
income from foreclosure property cannot be paid out of such net
income). To the extent that taxes of the Trust REMIC are not paid
by the Residual Certificateholders, the Trustee shall pay any
remaining Trust REMIC taxes out of current or future amounts
otherwise distributable to the Holders of the respective Residual
Certificates or, if no such amounts are available, out of other
amounts held in the Distribution Account pursuant to Section 3.3
hereof.
(l) The Trustee and, to the extent that records are
maintained by the Servicer in the normal course of its business,
the Servicer shall, for federal income tax purposes, maintain books
and records with respect to the Trust REMIC on a calendar year and
on an accrual basis. Notwithstanding anything to the contrary
contained herein, in the Mortgage Loan or in the Mortgage, all
amounts collected on the Mortgage Loan shall, for federal income
tax purposes, be allocated first to interest due and payable on the
Mortgage Loan (including interest on overdue interest) (other than
additional interest at a penalty rate payable following a default).
The books and records must be sufficient concerning the nature and
amount of the Trust REMIC's investments to show that the Trust
REMIC has complied with the REMIC Provisions.
(m) Neither the Trustee nor the Servicer shall enter
into any arrangement by which the Trust REMIC will receive a fee or
other compensation for services.
(n) In order to enable the Trustee to perform its
duties as set forth herein, the Depositor or the Borrowers shall
provide, or cause to be provided, to the Trustee within ten (10)
days after the Closing Date all information or data that the
Trustee reasonably determines to be relevant for tax purposes on
the valuations and offering prices of the Certificates, including,
without limitation, the yield, prepayment assumption, issue prices
and projected cash flows of the Certificates and the projected cash
flows on the Mortgage Loan. Thereafter, the Depositor or the
Borrowers shall provide to the Trustee, promptly upon written
request therefor, any such additional information or data that the
Trustee may, from time to time, reasonably request in order to
enable the Trustee to perform its duties as set forth herein. The
Trustee is hereby directed to use any and all such information or
data provided by the Depositor or the Borrowers in the preparation
of all federal and state income or franchise tax and information
returns and reports for the Trust REMIC to Certificateholders as
required herein. The Borrowers hereby jointly and severally
indemnify the Trustee and the Trust REMIC for any losses,
liabilities, damages, claims or expenses of or assessments against
the Trustee or the Trust REMIC arising from any errors or
miscalculations of the Trustee pursuant to this Section that result
from any failure of the Depositor or the Borrowers to provide, or
to cause to be provided, accurate information or data to the
Trustee (but not resulting from the methodology employed by the
Trustee, provided such methodology is reasonable) on a timely basis
and such indemnifications shall survive the resignation or
termination of the Servicer or the Trustee or the termination of
this Agreement.
The Trustee agrees that all such information or data so
obtained by it are to be regarded as confidential information and
agrees that it shall use its best reasonable efforts to retain in
confidence, and shall ensure that its officers, employees and
representatives retain in confidence, and shall not disclose,
without the prior written consent of the Depositor or the
Borrowers, as the case may be, any or all of such information or
data, or make any use whatsoever (other than for the purposes
contemplated by this Agreement) of any such information or data
without the prior written consent of the Depositor or the
Borrowers, as the case may be, unless such information is generally
available to the public (other than as a result of a breach of this
Section 10.1(n)) or is required by law or applicable regulations to
be disclosed.
Section 10.2 Foreclosed Property. Pv Notwithstanding
any other provision of this Agreement, the Servicer, acting on
behalf of the Trustee hereunder, shall not rent, lease, or
otherwise earn income on behalf of the Trust Fund and/or the Trust
REMIC with respect to any Foreclosed Property which might cause
such Foreclosed Property to fail to qualify as "foreclosure
property" within the meaning of section 860G(a)(8) of the Code
(without giving effect to the final sentence thereof) or, except as
authorized by this Section, result in the receipt by the Trust
REMIC of any "income from non-permitted assets" within the meaning
of section 860F(a)(2) of the Code or any "net income from
foreclosure property" which is subject to tax under the REMIC
Provisions unless the Trustee and the Servicer have been supplied
with an Opinion of Counsel (at the expense of the Trust REMIC) to
the effect that, under the REMIC Provisions and any relevant
proposed legislation, any income generated for the Trust REMIC by
the Foreclosed Property would not result in the imposition of a tax
upon the Trust REMIC.
If, after consultation with tax counsel, which shall be
outside counsel knowledgeable of the issues occurring in the
practice of securitization and reasonably acceptable to the
Servicer, the Servicer in good faith believes that the aggregate
amount recoverable by Certificateholders (net of all related
expenses including taxes) with respect to a Foreclosed Property if
the Trust REMIC actually incurs a tax as described in the foregoing
paragraph exceeds the aggregate amount that would be recoverable by
Certificateholders if the Foreclosed Property is operated so as to
avoid such taxes, the Servicer may, upon delivery to the Trustee of
an Officer's Certificate specifying the reasons for its
conclusions, operate the Foreclosed Property in a manner that gives
rise to such a tax, provided that such operation does not adversely
affect the continuing status of the Trust REMIC as a REMIC for
federal income tax purposes as evidenced by a Nondisqualification
Opinion, the expense of which shall be paid from Foreclosure
Proceeds from the applicable property.
Without limiting the generality of the foregoing, the
Servicer shall not:
(i) permit the Trust Fund and/or Trust REMIC
to enter into, renew or extend any New Lease with respect
to any Foreclosed Property, if the New Lease by its terms
will give rise to any income that does not constitute
Rents from Real Property;
(ii) permit any amount to be received or
accrued under any New Lease other than amounts that will
constitute Rents from Real Property;
(iii) authorize or permit any construction on
any Foreclosed Property, other than the completion of a
building or other improvement thereon, and then only if
more than 10% of the construction of such building or
other improvement was completed before default on the
Mortgage Loan became imminent, all within the meaning of
Section 856(e)(4)(B) of the Code; or
(iv) Directly Operate, or allow any other
Person to Directly Operate, any Foreclosed Property on
any date more than 90 days after its acquisition date;
unless, in any such case, the Servicer has requested and
received an Opinion of Counsel at the expense of the
Trust REMIC to the effect that such action will not cause
such Foreclosed Property to fail to qualify as
"foreclosure property" within the meaning of Section
860G(a)(8) of the Code (without taking into account the
final sentence of such Section) at any time that it is
part of the Trust REMIC, in which case the Servicer may
take such actions as are specified in such Opinion of
Counsel.
(b) The Servicer, acting on behalf of the Trustee,
shall make reasonable efforts to sell any Foreclosed Property for
its fair market value in accordance with Section 3.11 hereof and
the Servicer shall each month advise the Trustee in writing of the
status of any Mortgaged Property which has been acquired. In any
event, however, the Servicer, acting on behalf of the Trustee,
shall dispose of any Foreclosed Property within two years following
its Acquisition Date unless the Trustee or the Servicer, on its
behalf, has been granted an extension of time (an "Extension") by
the Internal Revenue Service to sell such Foreclosed Property. If
the Trustee or the Servicer, on its behalf, has received such an
Extension, then the Servicer, acting on behalf of the Trustee,
shall continue to attempt to sell the Foreclosed Property for its
fair market value for such period longer than two years as such
Extension permits (the "Extended Period"). If the Trustee or the
Servicer, on its behalf, has not received such an Extension and the
Servicer, acting on behalf of the Trustee, is unable to sell the
Foreclosed Property within the two year period, or if the Trustee
has received such an Extension, and the Servicer, acting on behalf
of the Trustee, is unable to sell the Foreclosed Property within
the Extended Period, the Servicer shall before the end of the
two-year period or Extended Period, as the case may be, auction the
Foreclosed Property to the highest bidder (which may be the
Servicer) in accordance with Accepted Servicing Practices.
(c) Within 30 days of the sale of a Foreclosed
Property, the Servicer shall provide to the Trustee a statement of
accounting for such Foreclosed Property, including without
limitation, (i) the Acquisition Date for such Foreclosed Property,
(ii) the date of disposition of such Foreclosed Property, (iii) the
gross sales price, the related selling and other expenses and the
net sales price, (iv) accrued interest on the Allocated Loan Amount
with respect to such Foreclosed Property at the Mortgage Rates
calculated from the date of acquisition to the disposition date,
and (v) such other information as the Trustee may reasonably
request.
(d) The Trustee shall file in a timely manner all
information and other returns regarding foreclosed or abandoned
properties required by Section 6050J of the Code and the
regulations thereunder, shall forward to the Servicer and the
Depositor a copy of each such report or return, and shall furnish
copies of such returns or reports to the Borrowers or other persons
to whom copies of such returns are required to be furnished
pursuant to the Code and any regulations thereunder.
Section 10.3 Modifications of Mortgage Loan.
Notwithstanding anything to the contrary in this Agreement, neither
the Trustee nor the Servicer shall permit any modification of the
Mortgage Loan (including, but not limited to, the interest rate,
the principal balance, the amortization schedule, the Scheduled
Maturity Date, the collateral securing the Mortgage Loan, the
incurrence of additional fees or similar charges not provided for
in the Mortgage or any other material term ) unless (i) the Trustee
and the Servicer have received a Nondisqualification Opinion or a
ruling from the Internal Revenue Service (at the expense of the
party making the request of the Servicer or the Trustee to modify
the Mortgage Loan) to the same effect as a Nondisqualification
Opinion with respect to such modification or (ii) such modification
meets the requirements set forth in Section 3.7(d) hereof.
Section 10.4 Prohibited Transactions and Activities.
Neither the Servicer nor the Trustee shall permit the sale,
disposition or substitution of the Mortgage Loan or the
substitution of a property for a Mortgaged Property (except in a
disposition pursuant to (i) the bankruptcy or insolvency of the
Trust REMIC, (ii) the termination of the Trust REMIC in a
"qualified liquidation" as defined in Section 860F(a)(4) of the
Code, or (iii) Section 3.10 hereof with respect to a Defaulted
Mortgage Loan) nor acquire any assets for the Trust REMIC (other
than Foreclosed Property), or sell or dispose of any investments in
the Distribution Account or the Certificate Account for gain, nor
accept any contributions to the Trust REMIC (other than a cash
contribution during the three-month period beginning on the Startup
Day), unless it has been supplied with an Opinion of Counsel (at
the expense of the Person requesting the Trustee to take such
action) to the effect that such disposition, acquisition,
substitution, or acceptance will not (a) affect adversely the
status of the Trust REMIC as a REMIC or the status of the portion
of the Trust Fund holding the right to receive Default Interest as
a grantor trust, (b) affect the distribution of interest or
principal on the Certificates, (c) result in the encumbrance of the
assets transferred or assigned to the Trust REMIC (except pursuant
to the provisions of this Agreement) or (d) cause the Trust REMIC
to be subject to a tax on "prohibited transactions" or "prohibited
contributions" pursuant to the REMIC Provisions.
Section 10.5 Indemnification with Respect to Certain
Taxes and Loss of REMIC Status. (a) In the event that the Trust
REMIC fails to qualify as a REMIC, loses its status as a REMIC, or
incurs state, local or foreign taxes, or tax as a result of a
prohibited transaction or prohibited contribution subject to
taxation under the REMIC Provisions due to the gross negligence or
willful misconduct in the performance by the Trustee or the
Certificate Registrar of its duties and obligations specifically
set forth herein, subject to Section 6.3(a) hereof, the Trustee
shall indemnify the Holders of the applicable Residual Certificates
against any and all losses or liabilities, including penalties and
interest (collectively, "Losses"), for which such Holders or any of
them might be liable to any jurisdiction directly resulting from
such gross negligence or willful misconduct, provided that such
Holder has promptly notified the Trustee of any claim which might
be the subject of the indemnification hereunder (provided, however,
that the failure to so notify the Trustee shall not release the
Trustee from any of its obligations hereunder except and only to
the extent that it has been prejudiced thereby), whereupon the
Trustee shall assume the defense of any such claim (with counsel
reasonably satisfactory to such Holder) and pay all expenses in
connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered
against it in respect of such claim, and upon such assumption of
such defense, the Trustee shall not be obligated to pay the fees or
expenses of any other counsel retained by such Holder.
Notwithstanding the foregoing, the Trustee shall not be liable for
any such Losses to the extent attributable to an action or inaction
of the Servicer, the Depositor or the Holders of such Residual
Certificates nor for any such Losses resulting from misinformation
provided by the Servicer, the Depositor or such Holders of Residual
Certificates on which the Trustee has relied. The foregoing shall
not be deemed to limit or restrict the rights and remedies of the
other Holders of the Residual Certificates now or hereafter
existing at law or in equity.
(b) Subject to Section 6.3(a) hereof, in the event that
the Trust REMIC fails to qualify as a REMIC, loses its status as a
REMIC, or incurs state or local taxes, or a tax as a result of a
prohibited transaction or prohibited contribution subject to
taxation under the REMIC Provisions due to the gross negligence or
willful misconduct in the performance by the Servicer of its duties
and obligations set forth herein, the Servicer shall indemnify the
Holders of the applicable Residual Certificates against any and all
Losses for which such Holders or any of them might be liable to any
jurisdiction directly resulting from such gross negligence or
willful misconduct, provided that the Holder has promptly notified
the Servicer of any claim which might be the subject of the
indemnification hereunder (provided, however, that the failure to
so notify the Servicer shall not release the Servicer from any of
its obligations hereunder except and only to the extent that it has
been prejudiced thereby), whereupon the Servicer shall assume the
defense of any such claim (with counsel reasonably satisfactory to
such Holder) and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against it in respect of
such claim, and upon such assumption of such defense, the Servicer
shall not be obligated to pay the fees or expenses of any other
counsel retained by such Holder. Notwithstanding the foregoing,
the Servicer shall not be liable for any such Losses attributable
to the action or inaction of the Trustee, the Depositor or the
Holders of such Residual Certificates nor for any such Losses
resulting from misinformation provided by the Trustee, the
Depositor or such Holders of such Residual Certificates on which
the Servicer has reasonably relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the other
Holders of such Residual Certificates now or hereafter existing at
law or in equity.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1 Amendment. (a) This Agreement may be
amended from time to time by the Servicer and the Trustee, without
the consent of the Depositor or any of the Certificateholders, (i)
to cure any ambiguity, (ii) to correct or supplement any provision
herein which may be defective or inconsistent with any other
provisions herein, (iii) to the extent necessary or desirable to
maintain the status of the Trust REMIC as a REMIC, (iv) to maintain
a rating for Class A, Class B, Class C and Class D Certificates
from a nationally recognized statistical rating organization or (v)
to make any other provisions with respect to matters or questions
arising under this Agreement. No such amendment effected pursuant
to clause (i), (ii), (iv) or (v) above shall (x) adversely affect
in any material respect the interests of any Holder not consenting
thereto or (y) adversely affect the status of the Trust REMIC as a
REMIC. Prior to entering into any amendment without the consent of
Holders pursuant to this paragraph, the Trustee may require an
Opinion of Counsel and a Nondisqualification Opinion (in the case
of clauses (i), (ii) and (iii) above, at the expense of the
Borrowers, and otherwise at the expense of the party requesting
such amendment) to the effect that such amendment is permitted
under this paragraph. Any such amendment shall be deemed not to
adversely affect in any material respect any Holder if the Trustee
receives written affirmation from the Rating Agency that such
amendment will not cause the Rating Agency to qualify, downgrade or
withdraw the then current rating assigned to any Class of
Certificates. No such amendment effected pursuant to clause (i),
(ii), (iv) or (v) above shall adversely affect in any material
respect the interests of the Depositor unless the Depositor shall
have consented in writing thereto.
(b) This Agreement may also be amended from time to
time by the Servicer and the Trustee with the consent of the
Holders of Certificates evidencing not less than 50% by Certificate
Balance of the Certificates (other than the Class R Certificates)
for the purpose of adding any provisions or changing in any manner
or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on
the Mortgage Loan which are required to be distributed in respect
of any Certificate without the consent of the Holder of such
Certificate; (ii) alter the obligations of the Servicer and the
Trustee to make any Advance or alter the servicing standards set
forth herein; (iii) adversely affect the status of the Trust REMIC
as a REMIC (as evidenced by a Nondisqualification Opinion) without
the consent of 100% of the Certificateholders (including the Class
R Certificateholders); or (iv) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any
such amendments and provided further that no such amendment shall
adversely affect in any material respect the interests of the
Depositor unless the Depositor shall have consented in writing
thereto.
As soon as practicable after the execution of any such
amendment, the Servicer shall furnish written notification of the
substance of such amendment to each Certificateholder and the
Rating Agency.
It shall not be necessary for the consent of the
Certificateholders under this Section to approve the particular
form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such
reasonable regulations as the Trustee may prescribe.
Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive (at the expense
of the party requesting the amendment) and conclusively rely upon
an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement. The Trustee may, but
shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties or immunities under this
Agreement.
Section 11.2 Recordation of Agreement. This Agreement
(or an abstract hereof, if acceptable by the applicable recording
office) is subject to recordation in all appropriate public offices
for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the
Mortgage are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by
the Servicer at the expense of the Trust Fund upon its receipt of
an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement
may be executed simultaneously in any number of counterparts, each
of which counterparts shall be deemed to be an original, and such
counterparts shall constitute but one and the same instrument.
Section 11.3 Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an
accounting or take any action or proceeding in any court for a
partition or winding-up of the Trust Fund, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of
them.
Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a
Certificateholder, shall have any right to vote or in any manner
otherwise control the operation and management of the Trust Fund,
or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to
time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement
pursuant to any provision hereof.
In addition, unless specifically provided herein, for the
purposes of voting as to any matters arising hereunder or obtaining
any consent, waiver or approval hereunder and the Class R
Certificates shall not be permitted to vote, and the Percentage
Interests thereof shall not be considered to be outstanding.
No Certificateholder, solely by virtue of its status as
a Certificateholder, shall have any right by virtue of or by
availing of any provision of this Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with
respect to this Agreement, unless such Holder previously shall have
given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates of any Class affected thereby evidencing,
as to such Class, Percentage Interests aggregating not less than
25% shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable
security or indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee,
for 60 days after its receipt of such notice, request and offer of
security or indemnity, shall have neglected or refused to institute
any such action, suit or proceeding; it being understood and
intended, and being expressly covenanted by each Certificateholder
with every other Certificateholder of the same Class and the
Trustee, that no one or more Holders of Certificates shall have any
right in any manner whatever by virtue of or by availing of any
provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such Certificates of the same
Class, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the benefit
of all Certificateholders of the same Class. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief
as can be given either at law or in equity.
Section 11.4 Actions of Certificateholders. (a) Any
request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such
Certificateholders in person or by agent duly appointed in writing;
and except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments are
delivered to the Trustee and, where required, to the Depositor or
the Servicer. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any
purpose of this Agreement and conclusive in favor of the Trustee,
the Depositor and the Servicer, if made in the manner provided in
this Section 11.4.
(b) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved
in any reasonable manner which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction,
notice, consent, waiver or other act by a Certificateholder shall
bind every Holder of every Certificate issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, or omitted to be done, by the Trustee,
the Depositor or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Certificate.
(d) The Trustee may require additional proof of any
matter referred to in this Section 11.4 as it shall deem reasonably
necessary.
(e) In the event that a Borrower or the Depositor
becomes a Certificateholder, any Certificates held by any such
Persons shall be considered as not issued and outstanding hereunder
in determining the percentage of Certificate Balance required to
make, or for the purpose of making, any request, demand,
authorization, direction, notice, consent, waiver or other act by
the Certificateholders.
Section 11.5 Governing Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CHOICE OF LAW RULES THEREOF, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.6 Notices. All demands, notices and
communications to any party hereunder shall be in writing and shall
be deemed to have been duly given when delivered to (i) in the case
of the Depositor, KRT Origination Corp., c/o Kranzco Realty Trust,
128 Fayette Street, Conshohocken, Pennsylvania 19428, Attention:
Norman M. Kranzdorf; (ii) in the case of the Servicer, GE Capital
Asset Management Corporation, 2000 West Loop South, 12th Floor,
Houston, Texas 77027, Attention: Philip B. Smith, Jr., Esq.; and
(iii) in the case of the Trustee, the Paying Agent, the
Authenticating Agent and the Certificate Registrar, the Trustee's
Corporate Trust Office; or such other address as may hereafter be
furnished to the Depositor and the Servicer in writing by the
Trustee. Any notice required or permitted to be mailed or
delivered to a Certificateholder shall be given by first class
mail, postage prepaid, to the Certificateholder of record as
recorded on and at the address of such Holder as shown in the
Certificate Register. Any notice mailed to a Certificateholder
within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the addressee
receives such notice.
Section 11.7 Notices to the Rating Agency. The Servicer
shall deliver written notice of the following events to the Rating
Agency at Fitch Investors Service, L.P., One State Street Plaza,
New York, New York 10004, Attention: Commercial Mortgage
Surveillance, promptly following the occurrence thereof: a material
amendment to this Agreement or any other documents included in the
Trust Fund; any Event of Default; change in or termination of the
Trustee; the results of any inspection (whether structural,
environmental or otherwise) of any of the Mortgaged Properties; and
final payment to Certificateholders. In furtherance and not in
limitation of the foregoing or anything in this Agreement, the
Trustee shall also deliver copies of the following documents to the
Rating Agency at the address set forth above at the time such
documents are required to be delivered pursuant to this Agreement:
monthly reports to Certificateholders pursuant to Section 4.2
hereof; quarterly unaudited financial statements of the Borrowers;
annual audited financial statements of the Borrowers; annual report
of independent accountants pursuant to section 3.14 hereof; notice
of the removal of the Servicer or any successor servicer as
servicer; and annual Servicer compliance report pursuant to Section
3.13 hereof. The Servicer also shall furnish such other
information regarding the Trust Fund as may be reasonably requested
by the Rating Agency to the extent the Servicer has or can obtain
such information without unreasonable effort or expense. All
notices to Rating Agency required hereunder shall be in writing.
Section 11.8 Severability. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall
be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability
of the other provisions of this Agreement or of the Certificates or
the rights of the holders thereof.
Section 11.9 Streit Act. Any provisions required to be
contained in this Agreement by Section 126 and/or Section 130-k of
Article 4-A of the New York Real Property Law in order to have the
benefit of such Section 126 and/or Section 130-k are hereby
incorporated herein, and such provisions shall be in addition to
those conferred or imposed by this Agreement; provided, however,
that to the extent that such Section 126 and/or Section 130-k shall
not have any effect, and if said Section 126 and/or Section 130-k
should at any time be repealed or cease to apply to this Agreement,
or be construed by judicial decision to be inapplicable, said
Section 126 and/or Section 130-k shall cease to have any further
effect upon the provisions of this Agreement. In case of a
conflict between the provisions of this Agreement and any mandatory
provisions of Article 4-A of the New York Real Property Law, such
mandatory provisions of said Article 4-A shall prevail, provided
that if said Article 4-A shall not apply to this Agreement, should
at any time be repealed, or cease to apply to this Agreement, or be
construed by judicial decision to be inapplicable, such mandatory
provisions of such Article 4-A shall cease to have any further
effect upon the provisions of this Agreement.
Section 11.9a Notice Under Escrow Agreement. In the
event that the Trustee shall receive notification from the
Borrowers that Net Operating Income has decreased by greater than
25% as calculated in the Escrow Agreement, the Trustee shall
deliver to the escrow agent under the Escrow Agreement the
certificate provided for in Section 3 of the Escrow Agreement.
Section 11.10 Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed
to be an original, and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused their
names to be signed hereto by their respective officers thereunto
duly authorized, all as of the day and year first above written.
KRT ORIGINATION CORP.
as Depositor
By: /s/ Norman Kranzdorf
Name: Norman Kranzdorf
Title: President
STATE STREET BANK AND TRUST COMPANY,
as Trustee, Mortgage Custodian,
Certificate Registrar,
Authenticating Agent and Paying Agent
By: /s/ James Byrne
Name: James Byrne
Title: Assistant Vice President
GE CAPITAL ASSET MANAGEMENT CORPORATION,
as Servicer and Special Servicer
By: /s/ Bethann C. Roberts
Name: Bethann C. Roberts
Title: President and Chief
Executive Officer
EXHIBIT A
[UNLESS THIS CERTIFICATE IS PRESENTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
("DTC"), NEW YORK, NEW YORK, TO THE DEPOSITOR OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
TRANSFERS OF THIS BOOK-ENTRY
CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE, AND TRANSFERS OF BENEFICIAL INTERESTS IN THIS
BOOK-ENTRY CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE TRUST AGREEMENT
REFERRED TO BELOW.]
THIS CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER
HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT THIS
CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND, WITHIN THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THE CERTIFICATES OR THE LAST DATE ON WHICH
THIS CERTIFICATE IS HELD BY AN AFFILIATE OF THE DEPOSITOR ONLY (1)
TO THE DEPOSITOR, (2) PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT TO A PERSON WHO THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER ("QIB") WITHIN THE MEANING OF RULE 144A,
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM
THE HOLDER HAS INFORMED THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A; (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT; (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE); OR
(5) IN CERTIFICATED FORM TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION
D OF THE SECURITIES ACT WHO IS NOT A QIB PURSUANT TO ANY OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO (A) IN CERTAIN CIRCUMSTANCES RECEIPT BY THE DEPOSITOR
AND THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN
THE TRUST AGREEMENT REFERRED TO BELOW, AND (B) RECEIPT BY THE
DEPOSITOR AND THE TRUSTEE OF SUCH CERTIFICATES, LEGAL OPINIONS AND
OTHER EVIDENCE ACCEPTABLE TO THE DEPOSITOR AND THE TRUSTEE THAT
SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS.
THIS CERTIFICATE WILL NOT BE ACCEPTED
FOR REGISTRATION OF TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE
SATISFACTORY TO THE TRUSTEE THAT THE RESTRICTIONS ON TRANSFER SET
FORTH ABOVE HAVE BEEN COMPLIED WITH, ALL AS PROVIDED IN THE TRUST
AGREEMENT.
REGISTERED
SOLELY FOR U.S. FEDERAL INCOME TAX
PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL
ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED.
FORM OF CLASS A CERTIFICATE
KRT ORIGINATION CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
NUMBER: A-1 ORIGINAL
DENOMINATION: $-------------
DATE OF TRUST AND ORIGINAL CLASS A
SERVICING AGREEMENT: PRINCIPAL BALANCE: $-------------
JUNE 18, 1996
FIRST DISTRIBUTION DATE: CUSIP NUMBER: --------------
JULY 20, 1996
evidencing a percentage interest in all distributions
allocable to the Class A Certificates with respect to a
mortgage loan, secured by a first lien on 27 neighborhood
and community shopping center properties, which mortgage
loan was sold by
KRT ORIGINATION CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN KRT ORIGINATION CORP., THE BORROWERS, THE SERVICER OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOAN ARE GUARANTEED OR INSURED BY KRT ORIGINATION CORP., THE BOR-
ROWERS, THE SERVICER OR THE TRUSTEE OR BY ANY OF THEIR RESPECTIVE
AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
AS PROVIDED IN THE TRUST AGREEMENT, THIS CERTIFICATE IS
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY.
This certifies that is the registered owner of a beneficial
interest in certain monthly distributions with respect to the mort-
gage loan (the "Mortgage Loan") to KRT Property Holdings, Inc.,
Hillcrest Plaza Limited Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Holdings, Inc., KR Best
Associates, L.P., KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P. by
a first lien on 27 neighborhood and community shopping center
properties (each a "Mortgaged Property"), which Mortgage Loan was
sold by KRT Origination Corp. (hereinafter called the "Depositor")
together with certain other property held in trust for the benefit
of Certificateholders (collectively, the "Trust Fund"). The Trust
Fund was created pursuant to a Trust and Servicing Agreement, dated
as specified above (the "Trust Agreement"), among the Depositor, GE
Capital Asset Management Corporation, as servicer (the "Servicer"),
and State Street Bank and Trust Company, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned to them in
the Trust Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as KRT Origination Corp. Commercial Mort-
gage Pass-Through Certificates, Class A (the "Class A Certifi-
cates"), Class B (the "Class B Certificates"), Class C (the "Class
C Certificates"), Class D (the "Class D Certificates") and the
Class R (the "Class R Certificates" and, collectively with the
Class A, Class B, Class C and Class D Certificates, the "Certifi-
cates"), and is issued under and is subject to the terms, provi-
sions and conditions of the Trust Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. The Class B, Class C,
Class D and Class R Certificates are subordinated to the Class A
Certificates in right of payment to the extent described in the
Trust Agreement.
The Class A Certificates represent, in the aggregate, an
initial beneficial ownership interest of 68.1% in the Trust REMIC
(as hereinafter defined), and will bear interest at a fixed rate of
7.76% per annum. Pursuant to the terms of the Trust Agreement, the
Trustee or its designated Paying Agent will distribute from funds
in the Certificate Account on the 20th day of each month or, if
such 20th day is not a Business Day, the first Business Day
immediately following (each, a "Distribution Date"), commencing on
July 20, 1996, to the Person in whose name this Certificate is
registered at the close of business on the last day of the
preceding Interest Accrual Period (the "Record Date"), payments of
principal and interest on this Certificate in the amounts and in
the priorities set forth in the Trust Agreement for such Distribu-
tion Date.
Distributions on this Certificate will be made on each
Distribution Date by the Trustee or its designated Paying Agent
either by check mailed to the address of the Holder hereof, as such
name and address shall appear on the Certificate Register, or, upon
written request by a Holder hereof holding in excess of $5,000,000
in initial Certificate Balance on all Classes of Certificates,
delivered at least five Business Days prior to the related Record
Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States,
or by such other means of payment as the Holder hereof and the
Paying Agent shall agree upon. Notwithstanding the above, the
final distribution on this Certificate will be made after due
notice by the Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and
specified in such notice of final distribution.
The Trust Fund will consist primarily of the Mortgage
Loan secured by the Mortgage on the Borrowers fee or, in certain
cases, leasehold interests in the Mortgaged Properties. Pursuant
to the Trust Agreement, a segregated pool of assets of the Trust
Fund will consist of (i) the Mortgage Loan (other than the right to
Default Interest), (ii) the amounts held from time to time in the
Distribution Account and the Certificate Account established under
the Trust Agreement, (iii) any property which secures the Mortgage
Loan and which is acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise and (iv) certain other rights set forth in
the Trust Agreement. The Depositor intends to cause an election to
be made to treat such segregated pool of assets as a real estate
mortgage investment conduit (a "REMIC"), and upon such election,
such segregated pool of assets will be a REMIC known as the "Trust
REMIC." The Certificates (other than the Class R Certificates)
will be designated as the "regular interests" in the Trust REMIC
and the Class R Certificates will be designated as the "residual
interests" in the Trust REMIC.
The Certificate Registrar will cause to be kept at the
Corporate Trust Office or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar will
provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the
Certificate Registrar maintained for such purposes, the Certificate
Registrar or a designated Authenticating Agent will, subject to the
limitations set forth in the Trust Agreement, authenticate and
deliver, in the name of the designated transferee or transferees,
a Certificate of a like Class and aggregate Percentage Interest and
dated the date of authentication.
No service charge will be made for any transfer or
exchange of the Certificate, but the Certificate Registrar or its
designated agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection
with any transfer or exchange of the Certificate. Prior to the due
presentation of a Certificate for registration of transfer, the
Depositor, the Servicer and the Trustee may treat the person in
whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to
the Trust Agreement and for all other purposes whatsoever, and
neither the Depositor, the Servicer nor the Trustee will be
affected by notice to the contrary.
The Trust Agreement may be amended from time to time by
the Servicer and the Trustee, without the consent of any of the
Holders of Certificates or the Depositor, (i) to cure any
ambiguity, (ii) to correct or supplement any provision therein
which may be defective or inconsistent with any other provisions
therein, (iii) to the extent necessary or desirable to maintain the
status of the Trust REMIC as a REMIC, (iv) to maintain a rating for
the Class A, Class B, Class C and Class D Certificates from a
nationally recognized statistical rating organization or (v) to
make any other provisions with respect to matters or questions
arising under the Trust Agreement; provided that no such amendment
effected pursuant to clause (i), (ii), (iv) or (v) shall (a)
adversely affect in any material respect the interests of any
Holder not consenting thereto or (b) adversely affect the status of
the Trust REMIC as a REMIC.
The Trust Agreement may also be amended from time to time
by the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing not less than 50% by Certificate Balance of
the Certificates (other than the Class R Certificates) for the
purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of the Trust Agreement or of
modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on
the Mortgage Loan which are required to be distributed in respect
of any Certificate without the consent of the Holder of such Cer-
tificate; (ii) alter the obligations of the Servicer or the Trustee
to make an Advance or alter the servicing standards set forth in
the Trust Agreement; (iii) adversely affect the status of the Trust
REMIC as a REMIC (as evidenced by a Nondisqualification Opinion)
without the consent of 100% of the Certificateholders (including
the Class R Certificateholders); or (iv) reduce the aforesaid per-
centages of Certificates the Holders of which are required to
consent to any such amendments.
The respective obligations and responsibilities of the
Servicer, the Depositor, the Paying Agent and the Trustee created
under the Trust Agreement (other than the obligation of the Paying
Agent to make certain payments to Certificateholders after the
Final Distribution Date and certain obligations of the Servicer to
the Trustee, including the obligation of the Servicer to disburse
money from the Distribution Account in payment of certain sums then
due the Trustee) shall terminate upon the last action required to
be taken by the Paying Agent on the Final Distribution Date
pursuant to Article IX of the Trust Agreement upon the earlier of
(i) the later of (A) the final payment on the Mortgage Loan or (B)
the final liquidation of the last Foreclosed Property remaining in
the Trust Fund and the distribution of the proceeds thereof in
accordance with the Trust Agreement, (ii) the termination of the
Trust Agreement pursuant to Section 9.1(b) thereof, (iii) the sale
of the Mortgage Notes pursuant to Section 9.1(c) of the Trust
Agreement and (iv) the termination of the Trust Fund pursuant to
Section 9.1(d) of the Trust Agreement; provided, however, that in
no event shall the trust created pursuant to the terms of the Trust
Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of
St. James, living on the date hereof.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CON-
STRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee or by its designated Authenticating Agent,
by manual signature, this Certificate shall not be entitled to any
benefit under the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Class A
Certificate to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By:------------------------------
Name:
Title:
Dated: -----------------
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS A CERTIFICATES REFERRED TO IN
THE WITHIN-MENTIONED AGREEMENT.
STATE STREET BANK AND TRUST COMPANY,
Authenticating Agent
By:----------------------
Authorized Signatory FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY*
OR
U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
(Please Print or Typewrite Name and Address of Assignee)
the within Certificate, and all rights thereunder, and does hereby
irrevocably constitute and appoint,
Attorney
to transfer the within Certificate on the books kept for
registration thereof, with full power and substitution in the
premises.
Dated:
(Signature Guaranteed)
NOTICE: The signature of this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration or enlargement or any change whatsoever.
(*This information, which is voluntary, is being requested to
ensure that the Assignee will not be subject to backup withholding
under Section 3406 of the Code.)
EXHIBIT B
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), NEW YORK,
NEW YORK, TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGIS-
TERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS BOOK-ENTRY CERTIFICATE SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF
BENEFICIAL INTERESTS IN THIS BOOK-ENTRY CERTIFICATE SHALL BE LIMIT-
ED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE TRUST AGREEMENT REFERRED TO BELOW.]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND,
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE
CERTIFICATES OR THE LAST DATE ON WHICH THIS CERTIFICATE IS HELD BY
AN AFFILIATE OF THE DEPOSITOR ONLY (1) TO THE DEPOSITOR, (2)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON WHO THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
("QIB") WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED
THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A; (3) IN AN OFFSHORE TRANSACTION IN ACCOR-
DANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE); OR (5) IN CERTIFICATED
FORM TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D OF THE
SECURITIES ACT WHO IS NOT A QIB PURSUANT TO ANY OTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO (A) IN CERTAIN CIRCUMSTANCES RECEIPT BY THE DEPOSITOR AND THE
TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE TRUST
AGREEMENT REFERRED TO BELOW, AND (B) RECEIPT BY THE DEPOSITOR AND
THE TRUSTEE OF SUCH CERTIFICATES, LEGAL OPINIONS AND OTHER EVIDENCE
ACCEPTABLE TO THE DEPOSITOR AND THE TRUSTEE THAT SUCH REOFFER,
RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT
AND OTHER APPLICABLE LAWS.
THIS CERTIFICATE OR ANY INTEREST HEREIN SHOULD NOT BE
PURCHASED BY A TRANSFEREE THAT IS (A) AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, INCLUDING AN INDIVIDUAL RETIREMENT
ACCOUNT OR A KEOGH PLAN, WHICH IS SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
GOVERNMENT PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS
TO A MATERIAL EXTENT SIMILAR TO THE FOREGOING PROVISIONS OF ERISA
OR THE CODE (A "SIMILAR LAW") (EACH A "PLAN"), OR (B) AN INSURANCE
COMPANY USING ASSETS OF ANY INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT IN WHICH ASSETS OF SUCH PLAN ARE INVESTED (OR WHICH
ARE DEEMED PURSUANT TO ERISA OR ANY SIMILAR LAW TO INCLUDE ASSETS
OF SUCH PLANS) OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR
USING THE ASSETS OF ANY SUCH PLAN. EACH PROSPECTIVE TRANSFEREE OF
THIS CERTIFICATE WILL BE REQUIRED TO DELIVER TO THE DEPOSITOR, THE
CERTIFICATE REGISTRAR AND THE TRUSTEE, (I) THE ERISA TRANSFER
AFFIDAVIT, SUBSTANTIALLY IN THE FORM ATTACHED TO THE TRUST AND
SERVICING AGREEMENT REFERRED TO HEREIN, STATING THAT SUCH
PROSPECTIVE TRANSFEREE IS NOT A PERSON REFERRED TO IN CLAUSE (A) OR
(B) ABOVE, OR (II) AN OPINION OF COUNSEL WHICH ESTABLISHES TO THE
SATISFACTION OF THE DEPOSITOR, THE SERVICER, THE TRUSTEE AND THE
CERTIFICATE REGISTRAR THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION
PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION
407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE
DEPOSITOR, THE SERVICER, THE TRUSTEE OR THE CERTIFICATE REGISTRAR
TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE), WHICH OPINION
OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND, THE SERVICER,
THE TRUSTEE, THE CERTIFICATE REGISTRAR OR THE DEPOSITOR.
THIS CERTIFICATE WILL NOT BE ACCEPTED FOR REGISTRATION OF
TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE
TRUSTEE THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN
COMPLIED WITH, ALL AS PROVIDED IN THE TRUST AGREEMENT.
REGISTERED
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
FORM OF CLASS B CERTIFICATE
KRT ORIGINATION CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
NUMBER: B-1 ORIGINAL
DENOMINATION: $------------
DATE OF TRUST AND ORIGINAL CLASS B
SERVICING AGREEMENT: PRINCIPAL BALANCE: $------------
JUNE 18, 1996
FIRST DISTRIBUTION DATE: CUSIP NUMBER: -------------
JULY 20, 1996
evidencing a percentage interest in all distributions
allocable to the Class B Certificates with respect to one
mortgage loan, secured by a first lien on 27 neighborhood
and community shopping center properties, which mortgage
loan was sold by
KRT ORIGINATION CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN KRT ORIGINATION CORP., THE BORROWERS, THE SERVICER OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOAN ARE GUARANTEED OR INSURED BY KRT ORIGINATION CORP., THE
BORROWERS, THE SERVICER OR THE TRUSTEE OR BY ANY OF THEIR
RESPECTIVE AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.AS PROVIDED IN THE TRUST AGREEMENT, THIS CERTIFICATE
IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY.
This certifies that ----------------------------- is the
registered owner of a beneficial interest in certain monthly
distributions with respect to the mortgage loan (the "Mortgage
Loan") to KRT Property Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban, L.P., Fox Run, Limited Partnership, KR
MacArthur Holdings, Inc., KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester, Inc., KR Street
Associates, L.P., KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P. (the "Borrowers"),
secured by a first lien on 27 neighborhood and community shopping
center properties (each a "Mortgaged Property"), which Mortgage
Loan was sold by KRT Origination Corp. (hereinafter called the "De-
positor") together with certain other property held in trust for
the benefit of Certificateholders (collectively, the "Trust Fund").
The Trust Fund was created pursuant to a Trust and Servicing
Agreement, dated as specified above (the "Agreement"), among the
Depositor, GE Capital Asset Management Corporation, as servicer
(the "Servicer"), and State Street Bank and Trust Company, as
trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not defined
herein, the capitalized terms used herein have the meanings
assigned to them in the Trust Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as KRT Origination Corp. Commercial Mort-
gage Pass-Through Certificates, Class A (the "Class A Certifi-
cates"), Class B (the "Class B Certificates"), Class C (the "Class
C Certificates"), Class D (the "Class D Certificates") and Class R
(the "Class R Certificates" and, collectively with the Class A,
Class B, Class C and Class D Certificates, the "Certificates"), and
is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The Class B, Class C, Class D and
Class R Certificates are subordinated to the Class A Certificates
in right of payment to the extent described in the Trust Agreement.
The Class B Certificates represent, in the aggregate, an
initial beneficial ownership interest of 11.3% in the Trust REMIC
(as hereinafter defined), and will bear interest at a fixed rate of
7.98% per annum. Pursuant to the terms of the Trust Agreement, the
Trustee or its designated Paying Agent will distribute from funds
in the Certificate Account on the 20th day of each month or, if
such 20th day is not a Business Day, the first Business Day
immediately following (each, a "Distribution Date"), commencing on
July 20, 1996, to the Person in whose name this Certificate is
registered at the close of business on the last day of the
preceding Interest Accrual Period (the "Record Date"), payments of
principal and interest on this Certificate in the amounts and in
the priorities set forth in the Trust Agreement for such Distribu-
tion Date.
Distributions on this Certificate will be made on each
Distribution Date by the Trustee or its designated Paying Agent
either by check mailed to the address of the Holder hereof, as such
name and address shall appear on the Certificate Register, or, upon
written request by a Holder hereof holding in excess of $5,000,000
in initial Certificate Balance on all Classes of Certificates,
delivered at least five Business Days prior to the related Record
Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States,
or by such other means of payment as the Holder hereof and the
Paying Agent shall agree upon. Notwithstanding the above, the
final distribution on this Certificate will be made after due
notice by the Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and
specified in such notice of final distribution.
The Trust Fund will consist primarily of the Mortgage
Loan secured by the Mortgage on the Borrowers fee or, in certain
cases, leasehold interests in the Mortgaged Properties. Pursuant
to the Trust Agreement, a segregated pool of assets of the Trust
Fund will consist of (i) the Mortgage Loan (other than the right to
Default Interest), (ii) the amounts held from time to time in the
Distribution Account and the Certificate Account established under
the Trust Agreement, (iii) any property which secures the Mortgage
Loan and which is acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise and (iv) certain other rights set forth in
the Trust Agreement. The Depositor intends to cause an election to
be made to treat such segregated pool of assets as a real estate
mortgage investment conduit (a "REMIC"), and upon such election,
such segregated pool of assets will be a REMIC known as the "Trust
REMIC." The Certificates (other than the Class R Certificates)
will be designated as the "regular interests" in the Trust REMIC
and the Class R Certificates will be designated as the "residual
interests" in the Trust REMIC.
The Certificate Registrar will cause to be kept at the
Corporate Trust Office or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar will
provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the
Certificate Registrar maintained for such purposes, the Certificate
Registrar or a designated Authenticating Agent will, subject to the
limitations set forth in the Trust Agreement, authenticate and
deliver, in the name of the designated transferee or transferees,
a Certificate of a like Class and aggregate Percentage Interest and
dated the date of authentication.
No service charge will be made for any transfer or
exchange of the Certificate, but the Certificate Registrar or its
designated agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection
with any transfer or exchange of the Certificate. Prior to the due
presentation of a Certificate for registration of transfer, the
Depositor, the Servicer and the Trustee may treat the person in
whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to
the Trust Agreement and for all other purposes whatsoever, and
neither the Depositor, the Servicer nor the Trustee will be
affected by notice to the contrary.
The Trust Agreement may be amended from time to time by
the Servicer and the Trustee, without the consent of any of the
Holders of Certificates or the Depositor, (i) to cure any
ambiguity, (ii) to correct or supplement any provision therein
which may be defective or inconsistent with any other provisions
therein, (iii) to the extent necessary or desirable to maintain the
status of the Trust REMIC as a REMIC, (iv) to maintain a rating for
the Class A, Class B, Class C and Class D Certificates from a
nationally recognized statistical rating organization or (v) to
make any other provisions with respect to matters or questions
arising under the Trust Agreement; provided that no such amendment
effected pursuant to clause (i), (ii), (iv) or (v) shall (a)
adversely affect in any material respect the interests of any
Holder not consenting thereto or (b) adversely affect the status of
the Trust REMIC as a REMIC.
The Trust Agreement may also be amended from time to time
by the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing not less than 50% by Certificate Balance of
the Certificates (other than the Class R Certificates) for the
purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of the Trust Agreement or of
modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on
the Mortgage Loan which are required to be distributed in respect
of any Certificate without the consent of the Holder of such Cer-
tificate; (ii) alter the obligations of the Servicer or the Trustee
to make an Advance or alter the servicing standards set forth in
the Trust Agreement; (iii) adversely affect the status of the Trust
REMIC as a REMIC (as evidenced by a Nondisqualification Opinion)
without the consent of 100% of the Certificateholders (including
the Class R Certificateholders); or (iv) reduce the aforesaid per-
centages of Certificates the Holders of which are required to
consent to any such amendments.
The respective obligations and responsibilities of the
Servicer, the Depositor, the Paying Agent and the Trustee created
under the Trust Agreement (other than the obligation of the Paying
Agent to make certain payments to Certificateholders after the
Final Distribution Date and certain obligations of the Servicer to
the Trustee, including the obligation of the Servicer to disburse
money from the Distribution Account in payment of certain sums then
due the Trustee) shall terminate upon the last action required to
be taken by the Paying Agent on the Final Distribution Date
pursuant to Article IX of the Trust Agreement upon the earlier of
(i) the later of (A) the final payment on the Mortgage Loan or (B)
the final liquidation of the last Foreclosed Property remaining in
the Trust Fund and the distribution of the proceeds thereof in
accordance with the Trust Agreement, (ii) the termination of the
Trust Agreement pursuant to Section 9.1(b) thereof, (iii) the sale
of the Mortgage Notes pursuant to Section 9.1(c) of the Trust
Agreement and (iv) the termination of the Trust Fund pursuant to
Section 9.1(d) of the Trust Agreement; provided, however, that in
no event shall the trust created pursuant to the terms of the Trust
Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of
St. James, living on the date hereof.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CON-
STRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee or by its designated Authenticating Agent,
by manual signature, this Certificate shall not be entitled to any
benefit under the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Class B
Certificate to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By:------------------------------
Name:
Title:
Dated: -------------------------
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS B CERTIFICATES REFERRED TO IN
THE WITHIN-MENTIONED AGREEMENT.
STATE STREET BANK AND TRUST COMPANY,
As Authenticating Agent
By: ----------------------
Authorized Signatory FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY*
OR
U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
(Please Print or Typewrite Name and Address of Assignee)
the within Certificate, and all rights thereunder, and does hereby
irrevocably constitute and appoint,
Attorney
to transfer the within Certificate on the books kept for
registration thereof, with full power and substitution in the
premises.
Dated:
(Signature Guaranteed)
NOTICE: The signature of this assignment must correspond with
the name as it appears upon the face of the within Certificate in every
particular, without alteration or enlargement or any change whatsoever.
(*This information, which is voluntary, is being requested to
ensure that the Assignee will not be subject to backup withholding
under Section 3406 of the Code.)
EXHIBIT C
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), NEW YORK,
NEW YORK, TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGIS-
TERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS BOOK-ENTRY CERTIFICATE SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF
BENEFICIAL INTERESTS IN THIS BOOK-ENTRY CERTIFICATE SHALL BE LIMIT-
ED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE TRUST AGREEMENT REFERRED TO BELOW.]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND,
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE
CERTIFICATES OR THE LAST DATE ON WHICH THIS CERTIFICATE IS HELD BY
AN AFFILIATE OF THE DEPOSITOR ONLY (1) TO THE DEPOSITOR, (2)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON WHO THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
("QIB") WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED
THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A; (3) IN AN OFFSHORE TRANSACTION IN ACCOR-
DANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE); OR (5) IN CERTIFICATED
FORM TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D OF THE
SECURITIES ACT WHO IS NOT A QIB PURSUANT TO ANY OTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO (A) IN CERTAIN CIRCUMSTANCES RECEIPT BY THE DEPOSITOR AND THE
TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE TRUST
AGREEMENT REFERRED TO BELOW, AND (B) RECEIPT BY THE DEPOSITOR AND
THE TRUSTEE OF SUCH CERTIFICATES, LEGAL OPINIONS AND OTHER EVIDENCE
ACCEPTABLE TO THE DEPOSITOR AND THE TRUSTEE THAT SUCH REOFFER,
RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT
AND OTHER APPLICABLE LAWS.
THIS CERTIFICATE OR ANY INTEREST HEREIN SHOULD NOT BE
PURCHASED BY A TRANSFEREE THAT IS (A) AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, INCLUDING AN INDIVIDUAL RETIREMENT
ACCOUNT OR A KEOGH PLAN, WHICH IS SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
GOVERNMENT PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS
TO A MATERIAL EXTENT SIMILAR TO THE FOREGOING PROVISIONS OF ERISA
OR THE CODE (A "SIMILAR LAW") (EACH A "PLAN"), OR (B) AN INSURANCE
COMPANY USING ASSETS OF ANY INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT IN WHICH ASSETS OF SUCH PLAN ARE INVESTED (OR WHICH
ARE DEEMED PURSUANT TO ERISA OR ANY SIMILAR LAW TO INCLUDE ASSETS
OF SUCH PLANS) OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR
USING THE ASSETS OF ANY SUCH PLAN. EACH PROSPECTIVE TRANSFEREE OF
THIS CERTIFICATE WILL BE REQUIRED TO DELIVER TO THE DEPOSITOR, THE
CERTIFICATE REGISTRAR AND THE TRUSTEE, (I) THE ERISA TRANSFER
AFFIDAVIT, SUBSTANTIALLY IN THE FORM ATTACHED TO THE TRUST AND
SERVICING AGREEMENT REFERRED TO HEREIN, STATING THAT SUCH
PROSPECTIVE TRANSFEREE IS NOT A PERSON REFERRED TO IN CLAUSE (A) OR
(B) ABOVE, OR (II) AN OPINION OF COUNSEL WHICH ESTABLISHES TO THE
SATISFACTION OF THE DEPOSITOR, THE SERVICER, THE TRUSTEE AND THE
CERTIFICATE REGISTRAR THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION
PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION
407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE
DEPOSITOR, THE SERVICER, THE TRUSTEE OR THE CERTIFICATE REGISTRAR
TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE), WHICH OPINION
OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND, THE SERVICER,
THE TRUSTEE, THE CERTIFICATE REGISTRAR OR THE DEPOSITOR.
THIS CERTIFICATE WILL NOT BE ACCEPTED FOR REGISTRATION OF
TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE
TRUSTEE THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN
COMPLIED WITH, ALL AS PROVIDED IN THE TRUST AGREEMENT.
REGISTERED
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
FORM OF CLASS C CERTIFICATE
KRT ORIGINATION CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
NUMBER: C-1 ORIGINAL
DENOMINATION: $-------------
DATE OF TRUST AND ORIGINAL CLASS C
SERVICING AGREEMENT: PRINCIPAL BALANCE: $-------------
JUNE 18, 1996
FIRST DISTRIBUTION DATE: CUSIP NUMBER: --------------
JULY 20, 1996
evidencing a percentage interest in all distributions
allocable to the Class C Certificates with respect to one
mortgage loan, secured by a first lien on 27 neighborhood
and community shopping center properties, which mortgage
loan was sold by
KRT ORIGINATION CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN KRT ORIGINATION CORP., THE BORROWERS, THE SERVICER OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOAN ARE GUARANTEED OR INSURED BY KRT ORIGINATION CORP., THE BOR-
ROWERS, THE SERVICER OR THE TRUSTEE OR BY ANY OF THEIR RESPECTIVE
AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
AS PROVIDED IN THE TRUST AGREEMENT, THIS CERTIFICATE IS
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY.
This certifies that ----------------------------- is the
registered owner of a beneficial interest in certain monthly
distributions with respect to the mortgage loan (the "Mortgage
Loan") to KRT Property Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban, L.P., Fox Run, Limited Partnership, KR
MacArthur Holdings, Inc., KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester, Inc., KR Street
Associates, L.P., KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P. (the "Borrowers"), se-
cured by a first lien on 27 neighborhood and community shopping
center properties (each a "Mortgaged Property"), which Mortgage
Loan was sold by KRT Origination Corp. (hereinafter called the "De-
positor") together with certain other property held in trust for
the benefit of Certificateholders (collectively, the "Trust Fund").
The Trust Fund was created pursuant to a Trust and Servicing
Agreement, dated as specified above (the "Agreement"), among the
Depositor, GE Capital Asset Management Corporation, as servicer
(the "Servicer"), and State Street Bank and Trust Company, as
trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not defined
herein, the capitalized terms used herein have the meanings
assigned to them in the Trust Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as KRT Origination Corp. Commercial Mort-
gage Pass-Through Certificates, Class A (the "Class A Certifi-
cates"), Class B (the "Class B Certificates"), Class C (the "Class
C Certificates"), Class D (the "Class D Certificates") and Class R
(the "Class R Certificates" and, collectively with the Class A,
Class B, Class C and Class D Certificates, the "Certificates"), and
is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The Class C, Class D and Class R
Certificates are subordinated to the Class A and Class B Certif-
icates in right of payment to the extent described in the Trust
Agreement.
The Class C Certificates represent, in the aggregate, an
initial beneficial ownership interest of 15.9% in the Trust REMIC
(as hereinafter defined), and will bear interest at a fixed rate of
8.28% per annum. Pursuant to the terms of the Trust Agreement, the
Trustee or its designated Paying Agent will distribute from funds
in the Certificate Account on the 20th day of each month or, if
such 18th day is not a Business Day, the first Business Day
immediately following (each, a "Distribution Date"), commencing on
July 20, 1996, to the Person in whose name this Certificate is
registered at the close of business on the last day of the
preceding Interest Accrual Period (the "Record Date"), payments of
principal and interest on this Certificate in the amounts and in
the priorities set forth in the Trust Agreement for such Distribu-
tion Date.
Distributions on this Certificate will be made on each
Distribution Date by the Trustee or its designated Paying Agent
either by check mailed to the address of the Holder hereof, as such
name and address shall appear on the Certificate Register, or, upon
written request by a Holder hereof holding in excess of $5,000,000
in initial Certificate Balance on all Classes of Certificates,
delivered at least five Business Days prior to the related Record
Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States,
or by such other means of payment as the Holder hereof and the
Paying Agent shall agree upon. Notwithstanding the above, the
final distribution on this Certificate will be made after due
notice by the Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and
specified in such notice of final distribution.
The Trust Fund will consist primarily of the Mortgage
Loan secured by the Mortgage on the Borrowers fee or, in certain
cases, leasehold interests in the Mortgaged Properties. Pursuant
to the Trust Agreement, a segregated pool of assets of the Trust
Fund will consist of (i) the Mortgage Loan (other than the right to
Default Interest), (ii) the amounts held from time to time
Distribution Account and the Certificate Account established under
the Trust Agreement, (iii) any property which secures the Mortgage
Loan and which is acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise and (iv) certain other rights set forth in
the Trust Agreement. The Depositor intends to cause an election to
be made to treat such segregated pool of assets as a real estate
mortgage investment conduit (a "REMIC"), and upon such election,
such segregated pool of assets will be a REMIC known as "the Trust
REMIC." The Certificates (other than the Class R Certificates)
will be designated as the "regular interests" in the Trust REMIC
and the Class R Certificates will be designated as the "residual
interests" in the Trust REMIC.
The Certificate Registrar will cause to be kept at the
Corporate Trust Office or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar will
provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the
Certificate Registrar maintained for such purposes, the Certificate
Registrar or a designated Authenticating Agent will, subject to the
limitations set forth in the Trust Agreement, authenticate and
deliver, in the name of the designated transferee or transferees,
a Certificate of a like Class and aggregate Percentage Interest and
dated the date of authentication.
No service charge will be made for any transfer or
exchange of the Certificate, but the Certificate Registrar or its
designated agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection
with any transfer or exchange of the Certificate. Prior to the due
presentation of a Certificate for registration of transfer, the
Depositor, the Servicer and the Trustee may treat the person in
whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to
the Trust Agreement and for all other purposes whatsoever, and
neither the Depositor, the Servicer nor the Trustee will be
affected by notice to the contrary.
The Trust Agreement may be amended from time to time by
the Servicer and the Trustee, without the consent of any of the
Holders of Certificates or the Depositor, (i) to cure any
ambiguity, (ii) to correct or supplement any provision therein
which may be defective or inconsistent with any other provisions
therein, (iii) to the extent necessary or desirable to maintain the
status of the Trust REMIC as a REMIC, (iv) to maintain a rating for
the Class A, Class B, Class C and Class D Certificates from a
nationally recognized statistical rating organization or (v) to
make any other provisions with respect to matters or questions
arising under the Trust Agreement; provided that no such amendment
effected pursuant to clause (i), (ii), (iv) or (v) shall (a)
adversely affect in any material respect the interests of any
Holder not consenting thereto or (b) adversely affect the status of
the Trust REMIC as a REMIC.
The Trust Agreement may also be amended from time to time
by the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing not less than 50% by Certificate Balance of
the Certificates (other than the Class R Certificates) for the
purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of the Trust Agreement or of
modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on
the Mortgage Loan which are required to be distributed in respect
of any Certificate without the consent of the Holder of such Cer-
tificate; (ii) alter the obligations of the Servicer or the Trustee
to make an Advance or alter the servicing standards set forth in
the Trust Agreement; (iii) adversely affect the status of the Trust
REMIC as a REMIC (as evidenced by a Nondisqualification Opinion)
without the consent of 100% of the Certificateholders (including
the Class R Certificateholders); or (iv) reduce the aforesaid per-
centages of Certificates the Holders of which are required to
consent to any such amendments.
The respective obligations and responsibilities of the
Servicer, the Depositor, the Paying Agent and the Trustee created
under the Trust Agreement (other than the obligation of the Paying
Agent to make certain payments to Certificateholders after the
Final Distribution Date and certain obligations of the Servicer to
the Trustee, including the obligation of the Servicer to disburse
money from the Distribution Account in payment of certain sums then
due the Trustee) shall terminate upon the last action required to
be taken by the Paying Agent on the Final Distribution Date
pursuant to Article IX of the Trust Agreement upon the earlier of
(i) the later of (A) the final payment on the Mortgage Loan or (B)
the final liquidation of the last Foreclosed Property remaining in
the Trust Fund and the distribution of the proceeds thereof in
accordance with the Trust Agreement, (ii) the termination of the
Trust Agreement pursuant to Section 9.1(b) thereof, (iii) the sale
of the Mortgage Notes pursuant to Section 9.1(c) of the Trust
Agreement and (iv) the termination of the Trust Fund pursuant to
Section 9.1(d) of the Trust Agreement; provided, however, that in
no event shall the trust created pursuant to the terms of the Trust
Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of
St. James, living on the date hereof.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CON-
STRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee or by its designated Authenticating Agent,
by manual signature, this Certificate shall not be entitled to any
benefit under the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Class C
Certificate to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By: ----------------------
Name:
Title:
Dated: ----------------------
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS C CERTIFICATES REFERRED TO IN
THE WITHIN-MENTIONED AGREEMENT.
STATE STREET BANK AND TRUST COMPANY,
As Authenticating Agent
By: ----------------------
Authorized Signatory FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY*
OR
U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
(Please Print or Typewrite Name and Address of Assignee)
the within Certificate, and all rights thereunder, and does hereby
irrevocably constitute and appoint,
Attorney
to transfer the within Certificate on the books kept for
registration thereof, with full power and substitution in the
premises.
Dated:
(Signature Guaranteed)
NOTICE: The signature of this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration or enlargement or any change whatsoever.
(*This information, which is voluntary, is being requested to
ensure that the Assignee will not be subject to backup withholding
under Section 3406 of the Code.)
EXHIBIT D
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), NEW YORK,
NEW YORK, TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGIS-
TERED IN THE NAME OF CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC OR SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT HEREON IS MADE TO CEDE & CO.), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
TRANSFERS OF THIS BOOK-ENTRY CERTIFICATE SHALL BE LIMITED
TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE, AND TRANSFERS OF
BENEFICIAL INTERESTS IN THIS BOOK-ENTRY CERTIFICATE SHALL BE LIMIT-
ED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH
IN THE TRUST AGREEMENT REFERRED TO BELOW.]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND,
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE
CERTIFICATES OR THE LAST DATE ON WHICH THIS CERTIFICATE IS HELD BY
AN AFFILIATE OF THE DEPOSITOR ONLY (1) TO THE DEPOSITOR, (2)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON WHO THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
("QIB") WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED
THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A; (3) IN AN OFFSHORE TRANSACTION IN ACCOR-
DANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE); OR (5) IN CERTIFICATED
FORM TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D OF THE
SECURITIES ACT WHO IS NOT A QIB PURSUANT TO ANY OTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT
TO (A) IN CERTAIN CIRCUMSTANCES RECEIPT BY THE DEPOSITOR AND THE
TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE TRUST
AGREEMENT REFERRED TO BELOW, AND (B) RECEIPT BY THE DEPOSITOR AND
THE TRUSTEE OF SUCH CERTIFICATES, LEGAL OPINIONS AND OTHER EVIDENCE
ACCEPTABLE TO THE DEPOSITOR AND THE TRUSTEE THAT SUCH REOFFER,
RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT
AND OTHER APPLICABLE LAWS.
THIS CERTIFICATE OR ANY INTEREST HEREIN SHOULD NOT BE
PURCHASED BY A TRANSFEREE THAT IS (A) AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, INCLUDING AN INDIVIDUAL RETIREMENT
ACCOUNT OR A KEOGH PLAN, WHICH IS SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
GOVERNMENT PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS
TO A MATERIAL EXTENT SIMILAR TO THE FOREGOING PROVISIONS OF ERISA
OR THE CODE (A "SIMILAR LAW") (EACH A "PLAN"), OR (B) AN INSURANCE
COMPANY USING ASSETS OF ANY INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT IN WHICH ASSETS OF SUCH PLAN ARE INVESTED (OR WHICH
ARE DEEMED PURSUANT TO ERISA OR ANY SIMILAR LAW TO INCLUDE ASSETS
OF SUCH PLANS) OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR
USING THE ASSETS OF ANY SUCH PLAN. EACH PROSPECTIVE TRANSFEREE OF
THIS CERTIFICATE WILL BE REQUIRED TO DELIVER TO THE DEPOSITOR, THE
CERTIFICATE REGISTRAR AND THE TRUSTEE, (I) THE ERISA TRANSFER
AFFIDAVIT, SUBSTANTIALLY IN THE FORM ATTACHED TO THE TRUST AND
SERVICING AGREEMENT REFERRED TO HEREIN, STATING THAT SUCH
PROSPECTIVE TRANSFEREE IS NOT A PERSON REFERRED TO IN CLAUSE (A) OR
(B) ABOVE, OR (II) AN OPINION OF COUNSEL WHICH ESTABLISHES TO THE
SATISFACTION OF THE DEPOSITOR, THE SERVICER, THE TRUSTEE AND THE
CERTIFICATE REGISTRAR THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION
PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION
407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE
DEPOSITOR, THE SERVICER, THE TRUSTEE OR THE CERTIFICATE REGISTRAR
TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE), WHICH OPINION
OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND, THE SERVICER,
THE TRUSTEE, THE CERTIFICATE REGISTRAR OR THE DEPOSITOR.
THIS CERTIFICATE WILL NOT BE ACCEPTED FOR REGISTRATION OF
TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE
TRUSTEE THAT THE RESTRICTIONS ON TRANSFER SET FORTH ABOVE HAVE BEEN
COMPLIED WITH, ALL AS PROVIDED IN THE TRUST AGREEMENT.
REGISTERED
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS
CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN
SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
FORM OF CLASS D CERTIFICATE
KRT ORIGINATION CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
NUMBER: D-1 ORIGINAL
DENOMINATION: $-------------
DATE OF TRUST AND ORIGINAL CLASS D
SERVICING AGREEMENT: PRINCIPAL BALANCE: $-------------
JUNE 18, 1996
FIRST DISTRIBUTION DATE: CUSIP NUMBER: --------------
JULY 20, 1996
evidencing a percentage interest in all distributions
allocable to the Class A Certificates with respect to a
mortgage loan, secured by a first lien on 27 neighborhood
and community shopping center properties, which mortgage
loan was sold by
KRT ORIGINATION CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN KRT ORIGINATION CORP., THE BORROWERS, THE SERVICER OR
THE TRUSTEE REFERRED TO BELOW OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOAN ARE GUARANTEED OR INSURED BY KRT ORIGINATION CORP., THE BOR-
ROWERS, THE SERVICER OR THE TRUSTEE OR BY ANY OF THEIR RESPECTIVE
AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
AS PROVIDED IN THE TRUST AGREEMENT, THIS CERTIFICATE IS
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY.
This certifies that
is the registered owner of a beneficial
interest in certain monthly distributions with respect to the mort-
gage loan (the "Mortgage Loan") to KRT Property Holdings, Inc.,
Hillcrest Plaza Limited Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Holdings, Inc., KR Best
Associates, L.P., KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P. by
a first lien on 27 neighborhood and community shopping center
properties (each a "Mortgaged Property"), which Mortgage Loan was
sold by KRT Origination Corp. (hereinafter called the "Depositor")
together with certain other property held in trust for the benefit
of Certificateholders (collectively, the "Trust Fund"). The Trust
Fund was created pursuant to a Trust and Servicing Agreement, dated
as specified above (the "Trust Agreement"), among the Depositor, GE
Capital Asset Management Corporation, as servicer (the "Servicer"),
and State Street Bank and Trust Company, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned to them in
the Trust Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as KRT Origination Corp. Commercial Mort-
gage Pass-Through Certificates, Class A (the "Class A Certifi-
cates"), Class B (the "Class B Certificates"), Class C (the "Class
C Certificates"), Class D (the "Class D Certificates") and Class R
(the "Class R Certificates" and, collectively with the Class A,
Class B, Class C and Class D Certificates, the "Certificates"), and
is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The Class D and Class R Certificates
are subordinated to the Class A, Class B and Class C Certificates
in right of payment to the extent described in the Trust Agreement.
The Class D Certificates represent, in the aggregate, an
initial beneficial ownership interest of 4.7% in the Trust Fund,
and will bear interest at a fixed rate of 8.92% per annum. Pursu-
ant to the terms of the Trust Agreement, the Trustee or its
designated Paying Agent will distribute from funds in the
Certificate Account on the 20th day of each month or, if such 20th
day is not a Business Day, the first Business Day immediately
following (each, a "Distribution Date"), commencing on July 20,
1996, to the Person in whose name this Certificate is registered at
the close of business on the last day of the preceding Interest
Accrual Period (the "Record Date"), payments of principal and
interest on this Certificate in the amounts and in the priorities
set forth in the Trust Agreement for such Distribution Date.
Distributions on this Certificate will be made on each
Distribution Date by the Trustee or its designated Paying Agent
either by check mailed to the address of the Holder hereof, as such
name and address shall appear on the Certificate Register, or, upon
written request by a Holder hereof holding in excess of $5,000,000
in initial Certificate Balance on all Classes of Certificates,
delivered at least five Business Days prior to the related Record
Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States,
or by such other means of payment as the Holder hereof and the
Paying Agent shall agree upon. Notwithstanding the above, the
final distribution on this Certificate will be made after due
notice by the Paying Agent of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and
specified in such notice of final distribution.
The Trust Fund will consist primarily of the Mortgage
Loan secured by the Mortgage on the Borrowers fee or, in certain
cases, leasehold interests in the Mortgaged Properties. Pursuant
to the Trust Agreement, a segregated pool of assets of the Trust
Fund will consist of (i) the Mortgage Loan (other than the right to
Default Interest), (ii) the amounts held from time to time in the
Distribution Account and the Certificate Account established under
the Trust Agreement, (iii) any property which secures the Mortgage
Loan and which is acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise and (iv) certain other rights set forth in
the Trust Agreement. The Depositor intends to cause an election to
be made to treat such segregated pool of assets as a real estate
mortgage investment conduit (a "REMIC"), and upon such election,
such segregated pool of assets will be a REMIC known as the "Trust
REMIC." The Certificates (other than the Class R Certificates)
will be designated as the "regular interests" in REMIC and the
Class R Certificates will be designated as the "residual interests"
in the Trust REMIC.
The Certificate Registrar will cause to be kept at the
Corporate Trust Office or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar will
provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the
Certificate Registrar maintained for such purposes, the Certificate
Registrar or a designated Authenticating Agent will, subject to the
limitations set forth in the Trust Agreement, authenticate and
deliver, in the name of the designated transferee or transferees,
a Certificate of a like Class and aggregate Percentage Interest and
dated the date of authentication.
No service charge will be made for any transfer or
exchange of the Certificate, but the Certificate Registrar or its
designated agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection
with any transfer or exchange of the Certificate. Prior to the due
presentation of a Certificate for registration of transfer, the
Depositor, the Servicer and the Trustee may treat the person in
whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to
the Trust Agreement and for all other purposes whatsoever, and
neither the Depositor, the Servicer nor the Trustee will be
affected by notice to the contrary.
The Trust Agreement may be amended from time to time by
the Servicer and the Trustee, without the consent of any of the
Holders of Certificates or the Depositor, (i) to cure any
ambiguity, (ii) to correct or supplement any provision therein
which may be defective or inconsistent with any other provisions
therein, (iii) to the extent necessary or desirable to maintain the
status of the Trust REMIC as a REMIC, (iv) to maintain a rating for
the Class A, Class B, Class C and Class D Certificates from a
nationally recognized statistical rating organization or (v) to
make any other provisions with respect to matters or questions
arising under the Trust Agreement; provided that no such amendment
effected pursuant to clause (i), (ii), (iv) or (v) shall (a)
adversely affect in any material respect the interests of any
Holder not consenting thereto or (b) adversely affect the status of
the Trust REMIC as a REMIC.
The Trust Agreement may also be amended from time to time
by the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing not less than 50% by Certificate Balance of
the Certificates (other than the Class R Certificates) for the
purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of the Trust Agreement or of
modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on
the Mortgage Loan which are required to be distributed in respect
of any Certificate without the consent of the Holder of such Cer-
tificate; (ii) alter the obligations of the Servicer or the Trustee
to make an Advance or alter the servicing standards set forth in
the Trust Agreement; (iii) adversely affect the status of the Trust
REMIC as a REMIC (as evidenced by a Nondisqualification Opinion)
without the consent of 100% of the Certificateholders (including
the Class R Certificateholders); or (iv) reduce the aforesaid per-
centages of Certificates the Holders of which are required to
consent to any such amendments.
The respective obligations and responsibilities of the
Servicer, the Depositor, the Paying Agent and the Trustee created
under the Trust Agreement (other than the obligation of the Paying
Agent to make certain payments to Certificateholders after the
Final Distribution Date and certain obligations of the Servicer to
the Trustee, including the obligation of the Servicer to disburse
money from the Distribution Account in payment of certain sums then
due the Trustee) shall terminate upon the last action required to
be taken by the Paying Agent on the Final Distribution Date
pursuant to Article IX of the Trust Agreement upon the earlier of
(i) the later of (A) the final payment on the Mortgage Loan or (B)
the final liquidation of the last Foreclosed Property remaining in
the Trust Fund and the distribution of the proceeds thereof in
accordance with the Trust Agreement, (ii) the termination of the
Trust Agreement pursuant to Section 9.1(b) thereof, (iii) the sale
of the Mortgage Notes pursuant to Section 9.1(c) of the Trust
Agreement and (iv) the termination of the Trust Fund pursuant to
Section 9.1(d) of the Trust Agreement; provided, however, that in
no event shall the trust created pursuant to the terms of the Trust
Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of
St. James, living on the date hereof.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE CON-
STRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Trustee or by its designated Authenticating Agent,
by manual signature, this Certificate shall not be entitled to any
benefit under the Trust Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Class D
Certificate to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By:------------------------------
Name:
Title:
Dated: -----------------
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS D CERTIFICATES REFERRED TO IN
THE WITHIN-MENTIONED AGREEMENT.
STATE STREET BANK AND TRUST COMPANY,
As Authenticating Agent
By: ----------------------
Authorized Signatory FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY*
OR
U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
(Please Print or Typewrite Name and Address of Assignee)
the within Certificate, and all rights thereunder, and does hereby
irrevocably constitute and appoint,
Attorney
to transfer the within Certificate on the books kept for
registration thereof, with full power and substitution in the
premises.
Dated:
(Signature Guaranteed)
NOTICE: The signature of this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration or enlargement or any change whatsoever.
(*This information, which is voluntary, is being requested to
ensure that the Assignee will not be subject to backup withholding
under Section 3406 of the Code.)
EXHIBIT R
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 86OG
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. NEITHER
THIS CERTIFICATE NOR ANY BENEFICIAL INTEREST IN THIS CERTIFICATE
MAY BE TRANSFERRED, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS,
PRIOR TO SUCH DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE
TRUSTEE, AMONG OTHER THINGS, (1) AN AFFIDAVIT STATING THAT THE
PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION OR AN ERISA
PLAN, AS SUCH TERMS ARE DEFINED IN THE TRUST AGREEMENT, AND (2) A
TRANSFEREE AGREEMENT IN THE APPROPRIATE FORM, AND SATISFIES THE
REQUIREMENTS SET FORTH THEREIN. NOTWITHSTANDING THE PAYMENT OF ALL
AMOUNTS, IF ANY, REQUIRED TO BE PAID TO THE HOLDER HEREOF, THIS
CERTIFICATE SHALL REMAIN OUTSTANDING UNTIL THE LIQUIDATION OF THE
TRUST FUND AND THE TRUST REMIC IN ACCORDANCE WITH ARTICLE IX OF THE
TRUST AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF
ANY STATE OF THE UNITED STATES OR ANY FOREIGN SECURITIES LAW. THE
HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES FOR THE
BENEFIT OF THE TRUSTEE AND THE DEPOSITOR THAT THIS CERTIFICATE MAY
BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE TERMS OF THE TRUST AGREEMENT AND THE
RESTRICTIONS CONTAINED THEREIN AND HEREIN AND IN COMPLIANCE WITH
THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1) IN
CERTIFICATED FORM TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN
THE MEANING THEREOF IN RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT OR PURSUANT TO ANY OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT, TO (A) THE RECEIPT BY THE CERTIFICATE REGISTRAR OF A
LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE TRUST AGREEMENT OR
(B) THE RECEIPT BY THE REGISTRAR OF SUCH OTHER EVIDENCE ACCEPTABLE
TO THE REGISTRAR THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OR
(2) TO THE DEPOSITOR OR ITS AFFILIATES.
THIS CERTIFICATE WILL NOT BE ACCEPTED FOR REGISTRATION OF
TRANSFER EXCEPT UPON PRESENTATION OF EVIDENCE SATISFACTORY TO THE
CERTIFICATE REGISTRAR THAT THE RESTRICTIONS ON TRANSFER SET FORTH
ABOVE AND HEREIN HAVE BEEN COMPLIED WITH, ALL AS PROVIDED IN THE
TRUST AGREEMENT.
FORM OF CLASS R CERTIFICATE
KRT ORIGINATION CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
CLASS R
NUMBER: R-----------
PERCENTAGE INTEREST: ------%
CERTIFICATE BALANCE: None
CERTIFICATE RATE: None
evidencing a percentage interest in all distributions
allocable to the Class R Certificates with respect to a
mortgage loan, secured by a first lien on 27 neighborhood
community shopping center properties (the "Mortgaged
Property"), which mortgage loan was sold by
KRT ORIGINATION CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR
INTEREST IN KRT ORIGINATION CORP., THE BORROWERS, THE SERVICER, THE
TRUSTEE OR THE FISCAL AGENT REFERRED TO BELOW OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOAN ARE GUARANTEED OR INSURED BY KRT ORIGINATION CORP.,
THE BORROWERS, THE SERVICER OR THE TRUSTEE OR BY ANY OF THEIR
RESPECTIVE AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
This certifies that ----------------------- is the
registered owner of a ----% interest in the "residual interest" in
the Trust REMIC (as defined in the Trust and Servicing Agreement,
dated as of June 18, 1996 (the "Trust Agreement"), among the
Depositor, GE Capital Asset Management Corporation, as servicer
(the "Servicer"), and State Street Bank and Trust Company, as
trustee (the "Trustee"). The assets of the Trust Fund include,
collectively, a mortgage loan (the "Mortgage Loan") to KRT Property
Holdings, Inc., Hillcrest Plaza Limited Partnership, KR Suburban,
L.P., Fox Run, Limited Partnership, KR MacArthur Holdings, Inc., KR
Best Associates, L.P., KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.
(the "Borrowers") secured by a first lien on the Mortgaged
Property, which Mortgage Loan was sold by KRT Origination Corp.
(hereinafter called the "Depositor") together with certain other
property held in trust for the benefit of Certificateholders. The
Trust Fund was created pursuant to the Trust Agreement, a summary
of certain of the pertinent provisions of which is set forth below.
To the extent not defined herein, the capitalized terms used herein
have the meanings assigned to them in the Trust Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as KRT Origination Corp., Commercial
Mortgage Pass-Through Certificates, Class A (the "Class A
Certificates"), Class B (the "Class B Certificates"), Class C (the
"Class C Certificates"), Class D (the "Class D Certificates"), and
Class R (the "Class R Certificates" and, collectively with the
Class A, Class B, Class C and Class D Certificates, the
"Certificates"), and is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which
Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The
Class R Certificates are subordinated to the Class A, Class B,
Class C and Class D Certificates in right of payment to the extent
described in the Trust Agreement.
This Class R Certificate has no Certificate Balance or
Certificate Rate. Pursuant to the terms of the Trust Agreement,
the Trustee or its designated paying agent will distribute from
funds in the Certificate Account on the 20th day of the month or,
if such 20th day is not a Business Day, the first Business Day
immediately following such 20th day (a "Distribution Date"),
interest earned on funds on deposit in the Distribution Account to
the extent and subject to the limitations set forth in the Trust
Agreement, and after the Certificate Balances of the Class A, Class
B, Class C and Class D Certificates have been reduced to zero and
the Holders of the Class A, Class B, Class C and Class D
Certificates have received all amounts payable to them with respect
to the Trust REMIC under the Trust Agreement, to the Person in
whose name this Certificate is registered at the close of business
on the last day of the preceding Interest Accrual Period (the
"Record Date"), an amount equal its pro rata share of the balance,
if any, of the amounts available for distribution in the
Distribution Account on such Distribution Date.
Distributions on this Certificate will be made on each
Distribution Date by the Trustee or its designated Paying Agent
either by check mailed to the address of the Holder hereof, as such
name and address shall appear on the Certificate Register, or by
such other means of payment as the Holder hereof and the Paying
Agent shall agree upon. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by
the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or
agency appointed by the Trustee for that purpose and specified in
such notice of final distribution. Notwithstanding the final
payment of all amounts (if any) payable hereunder, this Certificate
will remain outstanding until liquidation of the Trust REMIC.
The Trust Fund will consist primarily of the Mortgage
Loan secured by the Mortgage on the Borrowers fee or, in certain
cases, leasehold interests in the Mortgaged Properties. Pursuant
to the Trust Agreement, a segregated pool of assets of the Trust
Fund will consist of (i) the Mortgage Loan (other than the right to
Default Interest), (ii) the amounts held from time to time in the
Distribution Account and the Certificate Account established under
the Trust Agreement, (iii) any property which secures the Mortgage
Loan and which is acquired by foreclosure, deed-in-lieu of
foreclosure or otherwise and (iv) certain other rights set forth in
the Trust Agreement. The Depositor intends to cause an election to
be made to treat such segregated pool of assets as a real estate
mortgage investment conduit (a "REMIC"), and upon such election,
such segregated pool of assets will be a REMIC known as the "Trust
REMIC." The Certificates (other than the Class R Certificates)
will be designated as the "regular interests" in REMIC and the
Class R Certificates will be designated as the "residual interests"
in the Trust REMIC.
The Certificate Registrar will cause to be kept at the
Corporate Trust Office or at the office of its designated agent, a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar will
provide for the registration of Certificates and of transfers and
exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the
Certificate Registrar maintained for such purposes, the Certificate
Registrar or a designated Authenticating Agent will, subject to the
limitations set forth in the Trust Agreement, authenticate and
deliver, in the name of the designated transferee or transferees,
a Certificate of a like Class and aggregate Percentage Interest and
dated the date of authentication.
No Class R Certificate or any percentage interest therein
(whether or not a Certificate is physically transferred) may be
owned, pledged or transferred, directly or indirectly, by or to a
Disqualified Organization or an employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended or
a plan or individual retirement account subject to Section 4975 of
the Internal Revenue Code (such plans and individual retirement
accounts are hereinafter collectively referred to as "ERISA Plan").
Prior to and as a condition of the registration of any transfer,
sale or other disposition of a Class R Certificate or any
percentage interest therein, the proposed transferee shall deliver
to the Certificate Registrar an affidavit in substantially the
respective forms attached to the Trust Agreement as Exhibit J-l(a)
(for a U.S. Holder) or Exhibit J-l(b) (for a foreign Holder)
representing and warranting that such transferee is neither a
Disqualified Organization nor an ERISA Plan nor an agent or nominee
acting on behalf of a Disqualified Organization or an ERISA Plan
(any such transferee, a "Permitted Transferee"). In addition, the
Certificate Registrar may (but shall have no obligation to)
require, prior to and as a condition of any such transfer, the
delivery by the proposed transferee of an opinion of Counsel,
satisfactory in form and substance to the Certificate Registrar,
that such proposed transferee or, if the proposed transferee is an
agent or nominee, the proposed beneficial owner, is not a
Disqualified Organization or an ERISA Plan. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or
other disposition of a Class R Certificate or any percentage
therein to a Disqualified Organization or an ERISA Plan or an agent
or nominee acting on behalf of a Disqualified Organization or an
ERISA Plan, such registration shall be deemed to be of no legal
force or effect whatsoever and such Disqualified Organization or
such ERISA Plan (or such agent or nominee) shall not be deemed to
be a Certificateholder for any purpose hereunder, including, but
not limited to, the receipt of distributions on such Class R
Certificate. The Certificate Registrar shall not be under any
liability to any person for any registration or transfer of a Class
R Certificate to a Disqualified Organization or an ERISA Plan or
for the maturity of any payments due on such Class R Certificate to
the Holder thereof or for taking any other action with respect to
such Holder under the provisions of the Trust Agreement, so long as
the transfer was effected in accordance with Section 5.2(h) of the
Trust Agreement, unless the Certificate Registrar shall have actual
knowledge at the time of such transfer or the time of such payment
or other action that the transferee is a Disqualified Organization
or an ERISA Plan (or an agent or nominee thereof). The Certificate
Registrar shall be entitled to recover from any Holder of a Class
R Certificate or any percentage interest therein that was a
Disqualified Organization or an ERISA Plan (or an agent or nominee
thereof) at the time it became a Holder or any subsequent time it
became a Disqualified organization or an ERISA Plan all payments
made on such Class R Certificate at and after either of such times
(and all costs and expenses, including but not limited to
attorneys' fees, incurred in connection therewith). Any payment
(not including any such costs and expenses) so recovered by the
Certificate Registrar shall be paid and delivered to the last
preceding Holder of such Class R Certificate or interest therein.
Any percentage interest in a Class R Certificate shall be a pro
rata individual interest.
In addition to the foregoing restrictions on transfer of
a Class R Certificate or any percentage interest therein, the
Certificate Registrar will not register the transfer of a Class R
Certificate unless (a) it has received a transferee letter either
in the form attached as Exhibit J-2(a) or Exhibit J-2(b) to the
Trust Agreement and (b) in the event that the transferee letter is
in the form of Exhibit J-2(b) (a "Foreign Holder Letter"), it has
received written evidence satisfactory to the Certificate Registrar
that the transferor has paid or provided for payment of all taxes
(including all accrued taxes on excess inclusion income) accrued on
such Class R Certificate in accordance with the provisions set
forth in Section 10.1(k) of the Trust Agreement, which written
evidence shall include a copy of the applicable Forms 1066Q (or
other applicable form prescribed by the Internal Revenue Service),
to the extent that any such form has been filed, evidencing the
amount of excess inclusion income for the periods during which the
transferor held such Class R Certificate or any percentage interest
therein; (c) it has received the calculations and certifications
described in paragraph (4) of Exhibit J-2(b) or paragraph (14) of
Exhibit J-2(a), and in the event that the transferee letter is in
the form of Exhibit J-2(b), the requirements set forth in paragraph
(3)(xi) thereof have been complied with to the satisfaction of the
Certificate Registrar. Upon satisfaction of the foregoing
requirements, the Certificate Registrar shall register the Class R
Certificate in the name of the transferee on whose benefit the
transferee letter is made and delivered (and not in the name of any
nominee thereof).
If any purported transferee shall become a registered
Holder of a Class R Certificate in violation of the provisions of
Section 5.2(h) of the Trust Agreement, then, upon receipt of
written notice to the Certificate Registrar that the registration
of transfer of such Class R Certificate was not in fact permitted
by Section 5.2(h) of the Trust Agreement, the last preceding
Permitted Transferee shall be restored to all rights as Holder
thereof retroactive to the date of such registration of transfer of
such Class R Certificate. The Certificate Registrar shall be under
no liability to any Person for any registration of transfer of a
Class R Certificate that is in fact not permitted by Section 5.2(h)
of the Trust Agreement, for making any payment due on such
Certificate to the registered Holder thereof or for taking any
other action with respect to such Holder under the provisions of
the Trust Agreement so long as the transfer was registered upon
receipt of the affidavit and the transferee letter described in
Section 5.2(h) of the Trust Agreement.
In addition to the restrictions set forth above with
respect to the Class R Certificates, the Certificate Registrar
shall register the transfer of a Class R Certificate only (A) to
the Depositor or its Affiliates or (B) only if (x) the transferor
has advised the Certificate Registrar in writing that the Class R
Certificate is being transferred to an Institutional Accredited
Investor or a QIB and (y) prior to transfer the transferor
furnishes to the Certificate Registrar a Transferee Letter,
provided that, (a) in lieu thereof, the transferee or proposed
transferor may furnish such other certifications, legal opinions or
other information as are reasonably satisfactory to the Depositor
and the Certificate Registrar to confirm that the proposed transfer
is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act
or (b) if based upon an Opinion of Counsel to the effect that the
delivery of (A)(x) and (y) above are not sufficient to confirm that
the proposed transfer is being made pursuant to an exemption from,
or in a transaction not subject to, the registration requirements
of the Securities Act, the Depositor and the Certificate Registrar
may as a condition of the registration of any such transfer require
the transferor to furnish other certifications, legal opinions or
other information prior to registering the transfer of a Class R
Certificate.
No service charge will be made for any transfer or
exchange of the Certificate, but the Certificate Registrar or its
designated agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection
with any transfer or exchange of the Certificate. Prior to the due
presentation of a Certificate for registration of transfer, the
Depositor, the Servicer and the Trustee may treat the person in
whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to
the Trust Agreement and for all other purposes whatsoever, and
neither the Depositor, the Servicer nor the Trustee will be
affected by notice to the contrary.
The Trust Agreement may be amended from time to time by
the Servicer and the Trustee, without the consent of any of the
Holders of Certificates or the Depositor, (i) to cure any
ambiguity, (ii) to correct or supplement any provision therein
which may be defective or inconsistent with any other provisions
therein, (iii) to the extent necessary or desirable to maintain the
status of the Trust REMIC as a REMIC, (iv) to maintain a rating for
the Class A, Class B, Class C and Class D Certificates from a
nationally recognized statistical rating organization or (v) to
make any other provisions with respect to matters or questions
arising under the Trust Agreement; provided that no such amendment
effected pursuant to clause (i), (ii), (iv) or (v) shall (a)
adversely affect in any material respect the interests of any
Holder not consenting thereto or (b) adversely affect the status of
the Trust REMIC as a REMIC.
The Trust Agreement may also be amended from time to time
by the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing not less than 50% by Certificate Balance of
the Certificates (other than the Class R Certificates) for the
purpose of adding any provisions or changing in any manner or
eliminating any of the provisions of the Trust Agreement or of
modifying in any manner the rights of the Holders of Certificates;
provided, however, that no such amendment shall (i) reduce in any
manner the amount of, or delay the timing of, payments received on
the Mortgage Loan which are required to be distributed in respect
of any Certificate without the consent of the Holder of such Cer-
tificate; (ii) alter the obligations of the Servicer or the Trustee
to make an Advance or alter the servicing standards set forth in
the Trust Agreement; (iii) adversely affect the status of the Trust
REMIC as a REMIC (as evidenced by a Nondisqualification Opinion)
without the consent of 100% of the Certificateholders (including
the Class R Certificateholders); or (iv) reduce the aforesaid per-
centages of Certificates the Holders of which are required to
consent to any such amendments.
The respective obligations and responsibilities of the
Servicer, the Depositor, the Paying Agent and the Trustee created
under the Trust Agreement (other than the obligation of the Paying
Agent to make certain payments to Certificateholders after the
Final Distribution Date and certain obligations of the Servicer to
the Trustee, including the obligation of the Servicer to disburse
money from the Distribution Account in payment of certain sums then
due the Trustee) shall terminate upon the last action required to
be taken by the Paying Agent on the Final Distribution Date
pursuant to Article IX of the Trust Agreement upon the earlier of
(i) the later of (A) the final payment on the Mortgage Loan or (B)
the final liquidation of the last Foreclosed Property remaining in
the Trust Fund and the distribution of the proceeds thereof in
accordance with the Trust Agreement, (ii) the termination of the
Trust Agreement pursuant to Section 9.1(b) thereof, (iii) the sale
of the Mortgage Notes pursuant to Section 9.1(c) of the Trust
Agreement and (iv) the termination of the Trust Fund pursuant to
Section 9.1(d) of the Trust Agreement; provided, however, that in
no event shall the trust created pursuant to the terms of the Trust
Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of
St. James, living on the date hereof.
THIS CERTIFICATE AND THE TRUST AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
Unless the certificate of authentication hereon has been
executed by the Authenticating Agent, by manual signature, this
Certificate shall not he entitled to any benefit under the Trust
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Class R
Certificate to be duly executed.
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By: --------------------------
Name:
Title:
Dated: ---------------
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS R CERTIFICATES REFERRED TO IN
THE WITHIN-MENTIONED AGREEMENT.
STATE STREET BANK AND TRUST COMPANY,
As Authenticating Agent
By: -------------------------
Authorized Signatory
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY*
OR
U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
(Please Print or Typewrite Name and Address of Assignee)
the within Certificate, and all rights thereunder, and does hereby
irrevocably constitute and appoint,
Attorney
to transfer the within Certificate on the books kept for
registration thereof, with full power and substitution in the
premises.
Dated:
(Signature Guaranteed)
NOTICE: The signature of this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration or enlargement or any change whatsoever.
(*This information, which is voluntary, is being requested to
ensure that the Assignee will not be subject to backup withholding
under Section 3406 of the Code.)
EXHIBIT E
FORM OF SECURITIES LEGEND
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS CERTIFICATE, AGREES THAT THIS CERTIFICATE MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND,
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THE
CERTIFICATES OR THE LAST DATE ON WHICH THIS CERTIFICATE IS HELD BY
AN AFFILIATE OF THE DEPOSITOR ONLY (1) TO THE DEPOSITOR, (2) PURSU-
ANT TO RULE 144A UNDER THE SECURITIES ACT TO A PERSON WHO THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
("QIB") WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED
THAT SUCH REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A; (3) IN AN OFFSHORE TRANSACTION IN ACCOR-
DANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT; (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE); OR (5) IN CERTIFICATED
FORM TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D OF THE SECURI-
TIES ACT WHO IS NOT A QIB PURSUANT TO ANY OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO (A) IN
CERTAIN CIRCUMSTANCES RECEIPT BY THE DEPOSITOR AND THE TRUSTEE OF
A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE TRUST AGREEMENT
REFERRED TO BELOW, AND (B) RECEIPT BY THE DEPOSITOR AND THE TRUSTEE
OF SUCH CERTIFICATES, LEGAL OPINION AND OTHER EVIDENCE ACCEPTABLE
TO THE DEPOSITOR AND THE TRUSTEE THAT SUCH REOFFER, RESALE, PLEDGE
OR TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS.
EXHIBIT F
FORM OF RULE 144A TRANSFER CERTIFICATE
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Re: KRT Origination Corp. Commercial
Mortgage Pass-Through Certificates
Reference is hereby made to the Trust and Servicing
Agreement dated as of June 18, 1996 (the "Trust Agreement") among
KRT Origination Corp., as Depositor, GE Capital Asset Management
Corporation, as Servicer, and State Street Bank and Trust Company,
as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Trust Agreement.
[NOTE: INSERT [A] FOR TRANSFERS OF DEFINITIVE CERTIFICATES TO
TRANSFEREES THAT TAKE DELIVERY IN INTERESTS IN THE BOOK-ENTRY
CERTIFICATES. INSERT [B] FOR TRANSFERS OF DEFINITIVE CERTIFICATES
TO TRANSFEREES THAT TAKE DELIVERY IN DEFINITIVE CERTIFICATES.
INSERT [C] FOR TRANSFERS OF INTERESTS IN THE BOOK-ENTRY CERTIFI-
CATES TO TRANSFEREES THAT TAKE DELIVERY IN DEFINITIVE CERTIFI-
CATES.)
[A] This letter relates to $ initial Certificate
Balance of Class [A, B, C or D] Certificates which are held in the
form of Definitive Certificates in the name of [insert name of
transferor] (the "Transferor"). The Transferor has requested a
transfer of such Definitive Certificates for a beneficial interest
in the Book-Entry Certificate of such Class (CUSIP No. ---------)
to be held with the Clearing Agency in the name of [insert name of
transferee].
[B] This letter relates to $ initial
Certificate Balance of Class [A, B, C or D] Certificates which are
held in the form of Definitive Certificates registered in the name
of [insert name of transferor] (the "Transferor"). The Transferor
has requested a transfer of such Definitive Certificates for
Definitive Certificates of such Class registered in the name of
[insert name of transferee].
[C] This letter relates to $ initial
Certificate Balance of Class [A, B, C or D] Certificates which are
held in the form of a beneficial interest in the Book-Entry
Certificate of such Class (CUSIP No. ---------) with the Clearing
Agency in the name of [insert name of transferor] (the "Transfer-
or"). The Transferor has requested a transfer of such beneficial
interest in the Book-Entry Certificate for Definitive Certificates
of such Class registered in the name of [insert name of transfer-
ee].
In connection with such request, and in respect of such
Certificates, the Transferor hereby certifies that such
Certificates are being transferred in accordance with (i) the
transfer restrictions set forth in the Trust Agreement and the
Certificates and (ii) Rule 144A under the Securities Act to a
purchaser that the Transferor reasonably believes is a "qualified
institutional buyer" within the meaning of Rule 144A purchasing for
its own account or for the account of a "qualified institutional
buyer," which purchaser is aware that the sale to it is being made
in reliance upon Rule 144A, in a transaction meeting the require-
ments of Rule 144A and in accordance with any applicable securities
laws of any state of the United States or any other applicable
jurisdiction.
This certificate and the statements contained herein are
made for your benefit and the benefit of the Placement Agent and
the Depositor.
[Insert Name of Transferor]
By:-------------------------
Name:
Title:
Dated: ---------------
EXHIBIT G
FORM OF REGULATION S TRANSFER CERTIFICATE
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Re: KRT Origination Corp. Commercial
Mortgage Pass-Through Certificates
Reference is hereby made to the Trust and Servicing
Agreement, dated as of June 18, 1996 (the "Trust Agreement") among
KRT Origination Corp., as Depositor, GE Capital Asset Management
Corporation, as Servicer, and State Street Bank and Trust Company,
as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Trust Agreement or in Regu-
lation S.
[NOTE: INSERT [A] FOR TRANSFERS OF DEFINITIVE CERTIFICATES TO
TRANSFEREES THAT TAKE DELIVERY IN DEFINITIVE CERTIFICATES. INSERT
[B] FOR TRANSFERS OF INTERESTS IN THE BOOK-ENTRY CERTIFICATES TO
TRANSFEREES THAT TAKE DELIVERY IN DEFINITIVE CERTIFICATES.]
[A] This letter relates to U.S. $ initial
Certificate Balance of Class [A, B, C, D or R] Certificates which
are held in the form of Definitive Certificates registered in the
name of [insert name of transferor] (the "Transferor"). The
Transferor has requested a transfer of such Definitive Certificates
for Definitive Certificates of such class registered in the name of
[insert name of transferee].
[B] This letter relates to U.S. $-------- initial
Certificate Balance of Class [A, B, C or D] Certificates which are
held in the form of a beneficial interest in the Book-Entry
Certificate of such Class (CUSIP No. ---------) with the Clearing
Agency in the name of [insert name of transferor] (the "Transfer-
or"). The Transferor has requested a transfer of such beneficial
interest for Definitive Certificates of such class registered in
the name of [insert name of transferee].
[NOTE: INSERT [C] IN EITHER CASE.]
[C] In connection with such request and in respect of
such Certificates, the Transferor does hereby certify that such
transfer has been effected in accordance with the transfer restric-
tions set forth in the Trust Agreement and the Certificates and
pursuant to and in accordance with Rule 904 of Regulation S under
the Securities Act, and accordingly the Transferor does hereby
certify that:
(1) the offer of the Certificates was not made to a
person in the United States;
[(2) at the time the buy order was originated, the trans-
feree was outside the United States or the Transferor and any
person acting on its behalf reasonably believed that the
transferee was outside the United States,]
[(2) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its behalf
knows that the transaction was pre-arranged with a buyer in
the United States,]1
(3) no directed selling efforts have been made in
contravention of the requirements of 904(b) of Regulation S,
and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
This certificate and the statements contained herein are
made for your benefit and the benefit of the Placement Agent and
the Depositor.
[Insert Name of Transferor]
By:----------------------
Name:
Title:
Dated:---------------------
EXHIBIT H
FORM OF RULE 144A EXCHANGE CERTIFICATE
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Re: KRT Origination Corp. Commercial
Mortgage Pass-Through Certificates
Reference is hereby made to the Trust and Servicing
Agreement, dated as of June 18, 1996 (the "Trust Agreement") among
KRT Origination Corp., as Depositor, GE Capital Asset Management
Corporation, as Servicer, and State Street Bank and Trust Company,
as Trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Trust Agreement.
This letter relates to U.S. $ initial
Certificate Balance of Class [A, B, C or D] Certificates which are
held in the form of Definitive Certificates in the name of [insert
name of holder] (the "Holder"). The Holder has requested an
exchange of such Definitive Certificates for a beneficial interest
in the Book-Entry Certificate of such Class (CUSIP No. ---------)
to be held with the Clearing Agency in the name of the Holder.
In connection with such request, and in respect of such
Certificates, the Holder does hereby certify that it is a "qual-
ified institutional buyer" within the meaning of Rule 144A.
This certificate and the statements contained herein are
made for your benefit and the benefit of the Placement Agent and
the Depositor.
[Insert Name of Holders]
By:-----------------------
Name:
Title:
Dated:---------------
EXHIBIT I
FORM OF TRANSFEREE'S LETTER FOR
INSTITUTIONAL ACCREDITED INVESTORS
(Date)
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
World Financial Center, North Tower
New York, New York 10281
Dear Sirs:
In connection with our proposed purchase of $-------- principal
amount of Commercial Mortgage Pass-Through Certificates (the
"Offered Certificates") of KRT Origination Corp. (the "Depositor"),
we confirm that:
(1) We have received a copy of the Offering Memorandum dated June
18, 1996 relating to the Offered Certificates (the "Memoran-
dum"), and we understand that the Offered Certificates have
not been, and will not be, registered under the Securities Act
of 1933, as amended (the "Securities Act"), and may not be
sold except as permitted in the following sentence. We agree,
on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell any
Offered Certificates within three years of the later of the
date of original issuance of the Offered Certificates or the
last day on which such Offered Certificates are owned by the
Depositor or any affiliate of the Depositor we will do so only
(A) to the Depositor, (B) to "qualified institutional buyers"
(within the meaning of Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act ("QIBs"),
(C) pursuant to an exemption from registration in accordance
with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule
144 under the Securities Act, or (E) to an institutional "ac-
credited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act that is
not a QIB (an "Institutional Accredited Investor") which,
prior to such transfer, delivers to the Trustee under the
Trust and Servicing Agreement dated as of June 18, 1996 among
the Depositor, GE Capital Asset Management Corporation, as
Servicer, and State Street Bank and Trust Company, as Trustee
(the "Trustee"), a signed letter in the form of this letter;
and we further agree, in the capacities stated above, to
provide to any person purchasing any of the Offered Certifi-
cates from us a notice advising such purchaser that resales of
the Offered Certificates are restricted as stated herein.
(2) We understand that, on any proposed resale of any Offered
Certificates to an Institutional Accredited Investor, we will
be required to furnish to the Trustee and the Depositor such
certifications, legal opinions and other information as either
of them may reasonably require to confirm that the proposed
sale is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act. We further understand that the Offered
Certificates purchased by us will bear a legend to the fore-
going effect.
(3) We are acquiring the Offered Certificates for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the
Securities Act. We have such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of our investment in the Offered Certifi-
cates, and we and any account for which we are acting are each
able to bear the economic risk of such investment.
(4) We are acquiring the Offered Certificates purchased by us for
our own account or for one or more accounts (each of which is
an Institutional Accredited Investor or a QIB) as to each of
which we exercise sole investment discretion.
(5) We have received such information as we deem necessary in
order to make our investment decision.
(6) If we are acquiring Class A Offered Certificates, we
understand that in accordance with ERISA and the Code, no Plan
as to which the Placement Agent, any Lender, the Depositor,
the Borrowers, the Servicer or the Trustee is a party in
interest or disqualified person, and no person acting on
behalf of such a Plan may acquire such Offered Certificate
unless the acquisition would constitute an exempt transaction
under a statutory exemption or any of the administrative
exemptions issued by the U.S. Department of Labor.
(7) If we are acquiring Class B, Class C or Class D Offered Cer-
tificates, we are not a Plan, and no Plan Assets have been
used to acquire such Offered Certificates.
Terms used in this letter which are not otherwise defined
herein have the respective meanings assigned thereto in the
Memorandum.
You, the Depositor and the Borrowers are entitled to rely upon
this letter and are irrevocably authorized to produce this letter
or a copy hereof to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters
covered hereby.
Very truly yours,
[PURCHASER]
By:------------------------
Name:
Title:
Offered Certificates to be purchased:
$---------- original Certificate Balance
of Class --- Offered Certificates.
EXHIBIT J-1(a)
(US Holder)
CLASS R CERTIFICATEHOLDER AFFIDAVIT PURSUANT TO
SECTION 860E(e)
OF THE INTERNAL REVENUE CODE OF 1986
Re: KRT Origination Corp., Commercial Mortgage
Pass-Through Certificates, Class R
STATE OF )
) ss.:
COUNTY OF )
I, ----------------, under penalties of perjury, declare
that, to the best of my knowledge and belief, the following
representations are true, correct, and complete and being first
sworn, depose and say:
1. That I am the ---------------- of
- -------------------------- (the "Investor"), whose taxpayer
identification number is ----------------, on behalf of which I
have the authority to make this affidavit.
2. That the Investor is acquiring a Class R Certificate
(a "Residual Certificate") representing ---% of the Class R
Certificates, which Residual Certificate represents the residual
interest in a REMIC established by KRT Origination Corp. (the
"Depositor") to secure its Commercial Mortgage Pass-Through
Certificates, for which a real estate mortgage investment conduit
("REMIC") election has been made under Section 860D of the Internal
Revenue Code of 1986, as amended (the "Code").
3. That no purpose of the acquisition of the Residual
Certificate is to avoid or impede the assessment or collection of
federal income tax.
4. That the Investor is not a "Disqualified
Organization" (as defined below), and that the Investor is not
acquiring the Class R Certificate for the account of, or as agent
or nominee of, or with a view to the transfer of direct or indirect
record or beneficial ownership to, a Disqualified Organization.
For the purposes hereof, a Disqualified Organization is any of the
following: (i) the United States, any State or political
subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality (as defined in
Section 860E(e)(5) of the Code) of any of the foregoing; (ii) any
organization (other than a farmer's cooperative as defined in
Section 521 of the Code) that is exempt from federal income
taxation (including taxation under the unrelated business taxable
income provisions of the Code); or (iii) any rural telephone or
electrical service cooperative described in Section 1381(A)(2)(C)
of the Code.
5. That the Investor acknowledges that Section 860E(e)
of the Code imposes a substantial tax on the transferor or, in
certain circumstances, on an agent for the transferee, with respect
to any transfer of any interest in any Residual Certificate to a
Disqualified Organization.
6. That the Investor is not a Benefit Plan Investor,
which for purposes hereof means (A) any employee benefit plan (as
defined in Section 3(3) of ERISA), whether or not it is subject to
Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (B) any plan described in Section 4975(e)(1) of
the Code, (C) any governmental plan, as defined in Section 3(32) of
ERISA, subject to any federal, state or local law which is, to a
material extent, similar to the provisions of ERISA or Section 4975
of the Code or (D) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (within the
meaning of Department of Labor Regulation 29 C.F.R. 2510.3-101).
7. That the Investor is a "U.S. Person" as that term is
defined in the Transferee's Letter of even date herewith, and that
the Investor is the beneficial owner of the Residual Certificate,
and is not holding the Residual Certificate as nominee for any
other person.
8. That the Investor acknowledges that as the holder of
the Residual Certificate, to the extent the Class R Certificate
would be treated as a noneconomic residual interest within the
meaning of Treasury regulation Section 1.860E-1(c)(2), the Investor
may incur tax liabilities in excess of cash flows generated by the
Class R Certificate and that the Investor intends to pay taxes
associated with holding the Class R Certificate as they become due.
9. That the following information of the Investor is
true and correct:
Address: -------------------------------------; contact for tax
matters ---------------; phone number ---------------; form of
Organization of Investor ------------------------; and Acquisition
Date ---------------.
IN WITNESS WHEREOF, the Investor has caused this
instrument to be duly executed on its behalf, by its --------------
and its seal to be hereunto attached, this ---- day of
- -------------, 19--.
[NAME OF INVESTOR]
By: ------------------------
Name:
Title:
Personally appeared before me --------------, known or
proved to me to be the same person who executed the foregoing
instrument and to be a ------------- of the Investor, and
acknowledged to me that he executed the same as his free act and
deed and as the free act and deed of the Investor.
Subscribed and sworn before me
this --- day of -------, 19--.
- --------------------------
Notary Public
My commission expires the --- day
of ---------------, 19--.
EXHIBIT J-1(b)
(Foreign Holder)
CLASS R CERTIFICATEHOLDER AFFIDAVIT PURSUANT TO
SECTION 860E(e)
OF THE INTERNAL REVENUE CODE OF 1986
Re: KRT Origination Corp., Commercial Mortgage
Pass-Through Certificates, Class R
STATE OF )
)
COUNTY OF ) ss.:
)
COUNTRY OF )
I, ----------------------, under penalties of perjury,
declare that, to the best of my knowledge and belief, the following
representations are true, correct, and complete and being first
sworn, depose and say;
1. That I am the ----------------- of -------
- ------------ (the "Investor"), whose taxpayer identification
number, if any, is --------------, on behalf of which I have the
authority to make this affidavit.
2. That the Investor is acquiring a Class R Certificate
(a "Residual Certificate") representing --% of the Class R
Certificates, which Residual Certificate represents the interests
in the REMIC established by KRT Origination Corp. (the "Depositor")
to secure its Commercial Mortgage Pass-Through Certificates, for
which a real estate mortgage investment conduit ("REMIC") election
has been made under Section 860D of the Internal Revenue Code of
1986, as amended (the "Code").
3. That the Investor is not a "Disqualified
Organization" (as defined below), and that the Investor is not
acquiring the Class R Certificate for the account of, or as agent
or nominee of, or with a view to the transfer of direct or indirect
record or beneficial ownership to, a Disqualified Organization.
For the purposes hereof, a Disqualified Organization is any of the
following: (i) the United States, any State or political
subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality (as defined in
Section 860E(e)(5) of the Code) of any of the foregoing; (ii) any
organization (other than a farmer's cooperative as defined in
Section 521 of the Code) that is exempt from federal income
taxation (including taxation under the unrelated business taxable
income provisions of the Code); or (iii) any rural telephone or
electrical service cooperative described in Section 1381(a)(2)(C)
of the Code.
4. That the Investor acknowledges that Section 860E(e)
of the Code imposes a substantial tax on the transferor or, in
certain circumstances, on an agent for the transferee, with respect
to any transfer of any interest in any Residual Certificate to a
Disqualified Organization.
5. That the Investor is not a Benefit Plan Investor,
which for purposes hereof means (A) any employee benefit plan (as
defined in Section 3(3) of ERISA), whether or not it is subject to
Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), (B) any plan described in Section 4975(e)(1) of
the Code, (C) any governmental plan, as defined in Section 3(32) of
ERISA, subject to any federal, state or local law which is, to a
material extent, similar to the provisions of ERISA or Section 4975
of the Code or (D) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (within the
meaning of Department of Labor Regulation 29 C.F.R. 2510.3-101).
6. That no purpose of the acquisition of the Residual
Certificate by the Investor is to avoid or impede the assessment or
collection of federal income tax.
7. That the Investor is not a "U.S. Person" as that
term is defined in the Transferee's Letter of even date herewith,
and that the Investor is the beneficial owner of the Residual
Certificate, and is not holding the Residual Certificate as nominee
for any other person.
8. That the following information of the Investor is
true and correct:
Address:
- -----------------------------------------------------------------
- --- ; contact for tax matters ---------; phone number --------;
form of Organization of Investor ------------------; and Acquisi-
tion Date -----------.
IN WITNESS WHEREOF, the Investor has caused this
instrument to be duly executed on its behalf, by its -----------
and its seal to be hereunto attached, this ---- day of
- -------------, 19--.
[NAME OF INVESTOR]
By: ---------------------
Name:
Title:
Personally appeared before me -----------------, known or
proved to me to be the same person who executed the foregoing
instrument and to be a ---------------------- of the Investor, and
acknowledged to me that he executed the same as his free act and
deed and as the free act and deed of the Investor.
Subscribed and sworn before me
this --- day of -----------, 19--.
- ------------------------------
Notary Public
My commission expires the --- day
of ----------, 19--.
EXHIBIT J-2(a)
[US Holder]
TRANSFEREE'S LETTER
-------------, 19--
KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
State Street Bank and Trust Company
as Certificate Registrar
Two International Place
Boston, Massachusetts 02110
Ladies and Gentlemen:
We propose to purchase a KRT Origination Corp. Commercial
Mortgage Pass-Through Class R Certificate (a "Residual Certifi-
cate") issued under the Trust and Servicing Agreement, dated as of
June 18, 1996, among KRT Origination Corp., as depositor, GE
Capital Asset Management Corporation, as servicer and State Street
Bank and Trust Company, as trustee (the "Trust and Servicing Agree-
ment"). Capitalized terms used but not defined herein shall have
the meanings set forth in the Trust and Servicing Agreement. We
are delivering this letter pursuant to Section 5.2(h) of the Trust
and Servicing Agreement.
1. We certify that on the date hereof we have
simultaneously herewith delivered to you an affidavit certifying,
among other things, that (A) we are not a Disqualified Organization
and (B) we are not purchasing such Residual Certificate on behalf
of a Disqualified Organization. We understand that any breach by
us of this certification may cause us to be liable for a tax
imposed upon transfers to Disqualified Organizations.
2. We acknowledge that we will be the beneficial owner
of the Residual Certificate and that the Residual Certificate will
be registered in our name and not in the name of a nominee.
3. We certify that no purpose of our purchase of the
Residual Certificate is to avoid or impede the assessment or
collection of tax.
4. We represent that:
(a) We understand that the Residual Certificate
represents for federal income tax purposes a "residual interest" in
a real estate mortgage investment conduit.
(b) We understand that as the holder of the
Residual Certificate we will be required to take into account, in
determining our taxable income, our pro rata percentage interest of
the taxable income of the Trust REMIC in accordance with all
applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
5. We understand that if, notwithstanding the transfer
restrictions, the Residual Certificate is in fact transferred to a
Disqualified Organization, a tax may be imposed on the transferor
of such Residual Certificate. We agree that any breach by us of
these representations shall render such transfer of such Residual
Certificate by us absolutely null and void and shall cause no
rights in the Residual Certificate to vest in the transferee.
6. The sale to us and our purchase of the Residual
Certificate constitutes a sale for tax and all other purposes and
each party thereto has received due and adequate consideration. In
our view, the transaction represents fair value, representing the
results of arms length negotiations and taking into account our
analysis of the tax and other consequences of investment in the
Residual Certificate.
7. We expect that the purchase of the Residual
Certificate, together with the receipt of the price, if any,
therefor will be economically neutral or profitable to us overall,
after all related expenses (including taxes) have been paid and
based on conservative assumptions with respect to discount rates,
prepayments and other factors necessary to evaluate profitability.
8. We are a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in
or under the laws of the United States or any political subdivision
thereof, or an estate or trust that is subject to U.S. federal
income tax regardless of the source of its income. We are duly
organized and validly existing under the laws of the jurisdiction
of our organization. We are neither bankrupt nor insolvent nor do
we have reason to believe that we will become bankrupt or
insolvent. We have conducted and are conducting our business so as
to comply in all material respects with all applicable statutes and
regulations. The person executing and delivering this letter on
our behalf is duly authorized to do so, the execution and delivery
by us of this letter and the consummation of the transaction on the
terms set forth herein are within our corporate power and upon such
execution and delivery, this letter will constitute our legal,
valid and binding obligation, enforceable against us in accordance
with its terms, subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the right of creditors generally and to
general principles of equity and the discretion of the court
(regardless of whether enforcement of such remedies is considered
in a proceeding in equity or at law).
9. Neither the execution and delivery by us of this
letter, nor the compliance by us with the provisions hereof, nor
the consummation by us of the transactions as set forth herein,
will (A) conflict with or result in a breach of, or constitute a
default or result in the acceleration of any obligation under, our
certificate of incorporation or by-laws or, after giving effect to
the consents or the taking of the actions contemplated by clause
(B) of this subparagraph, any of the provisions of any law, govern-
mental rule, regulation, judgment, decree or order binding on us or
our properties, or any of the provisions of any indenture or
mortgage or any other contract or instrument to which we are a
party or by which we or any of our properties is bound, or (B) re-
quire the consent of or notice to or any filing with, any person,
entity or governmental body, which has not been obtained or made by
us.
10. We anticipate being a profit-making entity on an
ongoing basis.
11. We have filed all required federal and state income
tax returns and have paid all federal and state income taxes due;
we intend to file and pay all such returns and taxes in the future.
We acknowledge that as the holder of the Residual Certificate, to
the extent the Residual Certificate would be treated as a
noneconomic residual interest within the meaning of Treasury
Regulation Section 1.860E-1(c)(2), we may incur tax liabilities in
excess of cash flows generated by the Residual Certificate and that
we intend to pay taxes associated with holding the Residual
Certificate as they become due.
12. We agree that in the event that at some future time
we wish to transfer any Residual Certificate, we will transfer such
Residual Certificate only to a transferee that:
(i) is not a Disqualified Organization and is
not purchasing such Residual Certificate on behalf of a
Disqualified Organization, and
(ii) has delivered to the Certificate Registrar
a transferee letter in the form of Exhibit J-2(a) or J-2(b) to the
Trust and Servicing Agreement, as appropriate, and an affidavit in
the form of Exhibit J-1(a) or J-1(b) to the Trust and Servicing
Agreement, as appropriate, and, if requested by the Certificate
Registrar, an opinion of counsel, in form acceptable to the
Certificate Registrar, that the proposed transfer will not cause
the Residual Certificate to be held by a Disqualified Organization.
13. We are knowledgeable and experienced in financial,
business and tax matters generally and in particular, the
investment risks and tax consequences of REMIC residuals that
provide little or no cash flow, and are capable of evaluating the
merits and risks of an investment in the Residual Certificates; we
are able to bear the economic risks of an investment in the
Residual Certificates.
14. In addition, we acknowledge that the Certificate
Registrar will not register the transfer of a Residual Certificate
to a transferee that is a non-U.S. Person required to deliver a
transferee's letter in the form attached as Exhibit J-2(b) to the
Trust and Servicing Agreement unless we have furnished to the
Servicer on behalf of the Trustee, (i) calculations prepared at our
expense by a Person acceptable to the Servicer demonstrating that
the expected future distributions on the Residual Certificate will
equal at least 30% of the anticipated excess inclusion, as provided
in Treasury Regulation Section 1.860G-3(a) (or any successor provi-
sions, to the extent applicable to the Residual Certificate) and
(ii) a statement certifying that we reasonably expect that the
transferee will receive an amount of distributions from the REMIC
at least equal to 30% of each anticipated excess inclusion and that
such amounts will be distributed at or after the time at which the
excess inclusion accrues and not later than the year following the
year in which such excess inclusion accrues. The calculations
prepared pursuant to clause (i) shall demonstrate that the expected
distributions will equal at least 30% of the anticipated excess
inclusion and that such amounts will be distributed at or after the
time such excess inclusion accrues and not later than the year
following the year in which such excess inclusion accrues.
15. "U.S. Person" shall mean a citizen or resident of
the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or
any political subdivision thereof, or an estate or trust that is
subject to U.S. federal income tax regardless of the source of its
income.
16. We hereby designate the Servicer as our fiduciary to
perform the duties of the tax matters person for the Trust REMIC.
Very truly yours,
[Name of Transferee]
By:--------------------------
Name:
Title:
EXHIBIT J-2(b)
[Foreign Transferee]
TRANSFEREE'S LETTER
--------------, 199-
KRT Origination Corp.
c/o Kranzco Realty Trust
129 Fayette Street
Conshohocken, Pennsylvania 19428
State Street and Trust Company
as Certificate Registrar
Two International Place
Boston, Massachusetts 02110
Ladies and Gentlemen:
We propose to purchase a KRT Origination Corp. Commercial
Mortgage Pass-Through Class R Certificate (a "Residual Certifi-
cate") issued under a Trust and Servicing Agreement, dated as of
June 18, 1996, among KRT Origination Corp., as depositor, GE
Capital Asset Management Corporation, as servicer, and State Street
Bank and Trust Company, as trustee (the "Trust and Servicing Agree-
ment"). Capitalized terms used but not defined herein shall have
the meanings set forth in the Trust and Servicing Agreement. We
are delivering this letter pursuant to Section 5.2(h) of the Trust
and Servicing Agreement.
1. We certify that on the date hereof we have
simultaneously herewith delivered to you an affidavit certifying,
among other things, that (A) we are not a Disqualified Organization
and (B) we are not purchasing such Residual Certificate on behalf
of a Disqualified Organization. We understand that any breach by
us of this certification may cause us to be liable for a tax
imposed upon transfers to Disqualified Organizations.
2. We acknowledge that we have reviewed (a) a copy of
the original Memorandum; (b) applicable U.S. tax law regarding
withholding taxes and, in particular, the taxation of REMIC
residuals held by non-U.S. Persons; and we have reviewed the
historical and projected tax liability on the Residual Certificate
and compared it to the projected cash flow of the Residual
Certificate.
3. We agree that we will not hold the Residual
Certificate at any time in connection with the conduct of a trade
or business in the United States and:
(i) represent that we are either (a) a
corporation that was not created or organized under the laws of the
United States or any jurisdiction therein or (b) a person who is a
U.S. Alien (as defined below) other than a corporation and we agree
to furnish the Withholding Agent with a Form W-8 simultaneously
with the execution of this letter;
(ii) acknowledge that we will be the benefi-
cial owner of the Residual Certificate and that the Residual
Certificate will be registered in our name and not in the name of
a nominee;
(iii) acknowledge that we will be subject to
U.S. income tax under Code Section 871 or 881 on any "excess
inclusion" that accrues with respect to the Residual Certificate
that accrue during the time which we hold, or, in certain circum-
stances, former holders of such Residual Certificate held, such
Residual Certificate;
(iv) acknowledge that we understand that
future losses cannot be used to reduce the residual's accumulated
excess inclusion income, either from one quarter to another or over
the life of the Residual Certificate and, accordingly, the gross
amount of excess inclusion income will be subject to withholding
tax liability;
(v) agree to pay any such taxes (including
previous taxes on excess inclusion income accrued from the date of
acquisition, or such greater amount as may be due if previously
accrued taxes have not been paid as required by the Trust and
Servicing Agreement and this Letter in each year in which (a) we
receive any cash payment with respect to the Residual Certificate
or (b) we dispose of the Residual Certificate, or earlier as
required by law) and we agree to provide satisfactory written
evidence of such payment to the Withholding Agent which shall
include a copy of the applicable Forms 1066Q (or other applicable
form prescribed by the Internal Revenue Service) evidencing the
amount of excess inclusion income for the periods during which the
transferor held the Residual Certificate (as defined below);
(vi) agree that until the evidence described
in clause (v) above has been provided with respect to periods
through the end of the most recent calendar quarter, the
Certificate Registrar will not register a transfer of a Residual
Certificate;
(vii) agree that until the evidence described
in class (v) above has been provided for the period from the end of
the most recent calendar quarter through the date of transfer of
the Residual Certificate, the Withholding Agent may (a) withhold
all (or any portion) of distributions that would otherwise be made
on the Residual Certificate and (b) pay the withheld amount to the
Internal Revenue Service (the "IRS") on behalf of any Residual
Certificateholder, including any former holder;
(viii) agree that the Withholding Agent is
entitled to withhold (and pay to the IRS) any portion of any
payment on the Residual Certificate that the Withholding Agent may
reasonably determine is required to be withheld (such amount may be
based on the Withholding Agent's reasonable understanding of the
law, any reasonable estimate of the facts and any reasonable
assumption as to future events and, if the Withholding Agent
reasonably determines that a more accurate determination of the
amount required to be withheld could be made at some point after
the date on which the related distribution is to be made, the
Withholding Agent may withhold the greatest amount that may
reasonably be expected to be required to be withheld from such
distribution (which, if appropriate, may be 100 percent of the
distribution));
(ix) acknowledge that any amount withheld
pursuant to clauses (vii) and (viii) above has been distributed on
the Residual Certificate pursuant to the terms and conditions of
the Trust and Servicing Agreement;
(x) if any of our equity holders are U.S.
Persons or are engaged in a U.S. trade or business, we have
consulted with our own tax advisors regarding the tax consequences
to them of our acquiring the Residual Certificate; and
(xi) agree that the Residual Certificate may
be transferred only to a person who is not a Disqualified
Organization and is not purchasing any such Residual Certificate on
behalf of a Disqualified Organization or any other entity and only
if we comply with this paragraph (xi). Prior, and as a condition,
to any transfer of the Residual Certificate, we will make a deposit
with (or provide evidence that payment has been made to the IRS)
the Withholding Agent equal in amount to the excess of (a) the
product of the rate of tax imposed by Code Section 871 or 881 (or
any successor provisions) and the sum of the excess inclusion with
respect to the Residual Certificate for all periods from issuance
of the Residual Certificate through the end of the most recent
calendar quarter during which the Residual Certificate was held by
us or another U.S. Alien over (b) the federal income taxes in
respect of such excess inclusion that have been previously withheld
from payments on such Residual Certificate or otherwise paid to the
IRS, to the extent the Withholding Agent has received satisfactory
written evidence that such taxes have been so paid in accordance
with clause (v) above or otherwise. In addition we agree to
provide a bond, letter of credit, pledge, indemnification, or other
security arrangement to, or make a cash deposit with, the
Withholding Agent sufficient to secure payment of the product of
the rate of tax imposed by Code Section 871 or 881 (or successor
provisions) and the excess inclusion income accrued from the end of
the most recent calendar quarter through the date of transfer.
Such bond, letter of credit, indemnification or other security
arrangement or deposit shall be satisfactory in form and substance
to the Withholding Agent and shall permit payment only to the IRS
on our behalf as described below, or, to the extent not necessary
to satisfy the taxes described in clause (iii) above, to us upon
presentation of satisfactory written evidence that such taxes have
been paid. Such bond, letter of credit, indemnification or other
security arrangement or deposit shall be used by the Withholding
Agent to make a payment to the IRS on the earliest of the date on
which such bond, letter of credit, pledge, indemnification, or
other security arrangement expires, the date on which the With-
holding Agent is directed in writing by us to make such payment, or
the date which is the second anniversary of the date of such
transfer. Earnings on any deposit shall be used first to pay any
taxes due on such earnings and otherwise shall be paid to us.
4. In addition, we acknowledge that the Certificate
Registrar will not register the transfer of the Residual
Certificate unless we have furnished to the Servicer, on behalf of
the Trustee, (i) calculations prepared at our expense by a Person
acceptable to the Servicer demonstrating that the expected future
distributions on the Residual Certificate will equal at least 30%
of the anticipated excess inclusion, as provided in Treasury
Regulation Section 1.860G-3(a) (or any successor provisions, to the
extent applicable to the Residual Certificate), and (ii) a state-
ment certifying that we reasonably expect that the transferee will
receive an amount of distributions from the Trust REMIC at least
equal to 30% of each excess inclusion from the Trust REMIC at or
after the time at which each such excess inclusion accrues and not
later than the year following the year in which such excess
inclusion accrues. The calculations prepared pursuant to clause
(i) shall demonstrate that the expected distributions will equal at
least 30% of the anticipated excess inclusion and that such amounts
will be distributed at or after the time such excess inclusion
accrues and not later than the year following the year in which
such excess inclusion accrues.
5. We understand that if, notwithstanding the transfer
restrictions, a Residual Certificate is in fact transferred to a
Disqualified Organization, a tax may be imposed on the transferor
of such Residual Certificate. We agree that any breach by us of
these representations shall render such transfer of such Residual
Certificate by us absolutely null and void and shall cause no
rights in the Residual Certificate to vest in the transferee.
6. The sale to us and our purchase of the Residual
Certificates constitute a sale for tax and all other purposes and
each party thereto has received due and adequate consideration, if
any. In our view, the transaction represents fair value,
representing the results of arms length negotiations and taking
into account our analysis of the tax and other consequences of
investment in the Residual Certificate.
7. We are duly organized and validly existing under the
laws of the jurisdiction of our organization. We are neither
bankrupt nor insolvent nor do we have reason to believe that we
will become bankrupt or insolvent. We have conducted and are
conducting our business so as to comply in all material respects
with all applicable statutes and regulations. The person executing
and delivering this letter on our behalf is duly authorized to do
so, the execution and delivery by us of this letter and the
consummation of the transaction on the terms set forth herein are
within our corporate power and upon such execution and delivery,
this letter will constitute our legal, valid and binding obliga-
tion, enforceable against us in accordance with its terms, subject,
as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting the
right of creditors generally and to general principals of equity
and the discretion of the court (regardless of whether enforcement
of such remedies is considered in a proceeding in equity or at
law).
8. Neither the execution and delivery by us of this
letter, nor the compliance by us with the provisions hereof, nor
the consummation by us of the transactions as set forth herein,
will (A) conflict with or result in a breach of, or constitute a
default or result in the acceleration of any obligation under, our
articles or by-laws or, after giving effect to the consents or the
taking of the actions contemplated by clause (B) of this
subparagraph, any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on us or our
properties, or any of the provisions of any indenture or mortgage
or any other contract or instrument to which we are a party or by
which we or any of our properties is bound, or (B) require the
consent of or notice to or any filing with, any person, entity or
governmental body, which has not been obtained or made by us.
9. We agree that in the event that at some future time
we wish to transfer any Residual Certificate, we will transfer such
Residual Certificate only to a transferee that:
(i) is not a Disqualified Organization and is
not purchasing such Residual Certificate on behalf of a
Disqualified Organization, and
(ii) has delivered to the Certificate Registrar
a transferee letter in the form of Exhibit I-2(a) or I-2(b) to the
Trust and Servicing Agreement, as appropriate, and an affidavit in
the form of Exhibit I-1(a) or I-1(b) to the Trust and Servicing
Agreement, as appropriate, and, if requested by the Certificate
Registrar, an opinion of counsel (in form acceptable to the
Certificate Registrar) that the proposed transfer will not cause
the Residual Certificate to be held by a Disqualified Organization.
10. We are knowledgeable and experienced in financial,
business and tax matters generally and in particular, the
investment risks and tax consequences of REMIC residuals that
provide little or no cash flow after projected foreign withholding
tax liability, and are capable of evaluating the merits and risks
of an investment in the Residual Certificate; we expect to bear any
economic consequences of transferring the Residual Certificate if
and when we so elect.
11. "U.S. Alien" shall mean any person who is not a
"U.S. Person," except that for purposes of clause 3(xi) above, the
term shall include only such persons who are subject to withholding
under Code Sections 1441 or 1442 on distributions on a residual
interest in a REMIC that are attributable to excess inclusion
income.
"U.S. Person" shall mean a citizen or resident of the
United States, a corporation, partnership or other entity created
or organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust that is
subject to U.S. federal income tax regardless of the source of its
income.
"Excess inclusion" shall have the meaning set forth in
Code Section 860E(c), as reasonably determined by the REMIC
administrator, based on the REMIC tax return.
"Withholding Agent" shall mean the Trustee, its paying
agent or any other person who is liable to withhold federal tax
from a distribution on the Residual Certificates under Code
Sections 1441 or 1442.
We hereby designate the Servicer as our fiduciary to act
as the tax matters person for the Trust REMIC.
Very truly yours,
- ----------------------------------------
[Name of Transferee]
By:-------------------------------------
Name:
Title:
EXHIBIT K
FORM OF TRUST RECEIPT
-------------, 199-
State Street Bank and Trust Company,
Mortgage Custodian
Two International Place
Boston, Massachusetts 02110
Re: KRT Origination Corp. Commercial
Mortgage Pass-Through Certificates
Ladies and Gentlemen:
In connection with the administration of the Mortgage
Loan held by you as Mortgage Custodian under the Trust and
Servicing Agreement dated as of June 18, 1996 among KRT Origination
Corp., GE Capital Asset Management Corporation, as Servicer, and
State Street Bank and Trust Company, as Trustee (the "Trust Agree-
ment"), we hereby request a release of the portion of the Mortgage
File held by you as Mortgage Custodian relating to the following
described Mortgaged Property for the reason indicated below.
Mortgaged Property:
Reason for requesting the items:
- ---------- 1. Required for foreclosure or servicing.
Items requested: --------------------
The undersigned certifies that he is a Servicing Officer
of the Servicer holding the office set forth beneath his signature
and that he is duly authorized to execute this request on behalf of
the Servicer.
GE CAPITAL ASSET MANAGEMENT
CORPORATION, as Servicer
Date:-------------- By:----------------------
Name:
Title:
EXHIBIT L
[Form of Document Request]
--------------, ----
State Street Bank and Trust Company,
Mortgage Custodian
Two International Place
Boston, Massachusetts 02110
Re: KRT Origination Corp. Commercial
Mortgage Pass-Through Certificates
Ladies and Gentlemen:
The undersigned Servicing Officer of GE Capital Asset Management
Corporation in its capacity as Servicer (the "Servicer") under the
Trust and Servicing Agreement dated as of June 18, 1996 (the "Trust
Agreement") by and among KRT Origination Corp., as Depositor, the
Servicer, and State Street Bank and Trust Company, as Trustee,
hereby requests the Mortgage Custodian to execute and return to the
Servicer the enclosed document(s) relating to the Mortgage Loan.
The undersigned Servicing Officer of the Servicer hereby certifies
to the Trustee that:
(1) the reason for this request is that the execution and delivery
of said document by the Trustee is necessary to the
foreclosure or Trustee's sale in respect of a Mortgaged
Property, or to legal action brought to obtain judgment
against the Borrowers or the Mortgage Notes or the Mortgage,
or to enforce other remedies or rights provided by the
Mortgage Notes or the Mortgage or otherwise available at law
or in equity, being carried out by the Servicer (or a Sub-
Servicer on its behalf), in accordance with the Trust
Agreement, and
(2) the execution and delivery of said document(s) by the Trustee
will not invalidate or otherwise affect the lien of the
Mortgage, except for the termination of such lien upon
completion of the foreclosure or trustee's sale.
This action is taken pursuant to and in accordance with the Trust
Agreement. The Servicer shall deposit or cause to be deposited
into the Distribution Account all Net Liquidation Proceeds (and
other amounts required to be deposited in the Distribution Account
pursuant to the Trust Agreement) in a timely manner.
Capitalized words and phrases used herein and not otherwise
expressly defined herein shall have the respective meanings
assigned to them in the Trust Agreement.
GE CAPITAL ASSET MANAGEMENT
CORPORATION, as Servicer
By:------------------------------
Name:
Title:
Date: ------------------
EXHIBIT N
FORM OF MORTGAGE CUSTODIAN INITIAL CERTIFICATE
----------, ----
KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
World Financial Center
North Tower
New York, New York 10281
GE Capital Asset
Management Corporation
2000 West Loop South
Houston, Texas 77027
Re: Trust and Servicing Agreement with respect to
KRT Origination Corp. Commercial Mortgage
Pass-Through Certificates
Ladies and Gentlemen:
In accordance with Section 2.2(a) of the Trust and Servicing
Agreement, dated as of June 18, 1996 (the "Trust Agreement"), among
KRT Origination Corp., as Depositor, GE Capital Asset Management
Corporation, as Servicer, and State Street Bank and Trust Company,
as Trustee and Mortgage Custodian, the undersigned, as Trustee and
Mortgage Custodian, hereby acknowledges, subject to the provisions
of Section 2.1 of the Trust Agreement and the review procedures
provided for in Section 2.2(b) of the Trust Agreement, that, except
as set forth on Annex 1 hereto, it has received the Mortgage File
for the Mortgage Loan and will hold the documents constituting the
Mortgage File in trust, upon the trusts established pursuant to the
Trust Agreement, for the use and benefit of all present and future
Certificateholders. The undersigned has no actual knowledge of any
adverse claims, liens or encumbrances on any of the Mortgage Col-
lateral Security, including without limitation, federal tax liens
or liens arising under ERISA.
Capitalized words and phrases used herein and not otherwise
defined herein shall be the respective meanings assigned to them in
the Trust Agreement. This Certificate is subject in all respects
to the terms of said Trust Agreement.
STATE STREET BANK AND
TRUST COMPANY,
as Trustee and Mortgage
Custodian
By:
Name:
Title:
EXHIBIT M
FORM OF MORTGAGE CUSTODIAN FINAL CERTIFICATE
------------, ----
KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
World Financial Center
North Tower,
New York, New York 10281
GE Capital Asset
Management Corporation
2000 West Loop South
Houston, Texas 77027
Re: Trust and Servicing Agreement with respect to
KRT Origination Corp. Commercial Mortgage
Pass-Through Certificates
Ladies and Gentlemen:
In accordance with Section 2.2(b) of the Trust and Servicing
Agreement, dated as of June 18, 1996 (the "Trust Agreement"), by
and among KRT Origination Corp., as Depositor, GE Capital Asset
Management Corporation, as Servicer, and State Street Bank and
Trust Company, as Trustee and Mortgage Custodian, the undersigned,
as Trustee and Mortgage Custodian, hereby certifies that, except as
noted in the exception report attached hereto, it has received the
documents or instruments listed in clauses (a) through (h) below:
(a) the original Mortgage Notes, endorsed by the
Depositor without recourse to the order of the Trustee in
substantially the following form: "Pay to the order of State Street
Bank and Trust Company, as the Trustee for the benefit of the
Holders of KRT Origination Corp. Commercial Mortgage Pass-Through
Certificates, and its successors and assigns, without recourse" and
signed in the name of the Depositor by an authorized officer;
(b) each counterpart of the original Mortgage, with
evidence of the delivery thereof for recording;
(c) each Mortgage Collateral Assignment, duly signed
and, in the case of assignments of the Mortgage and the Assignment
of Leases, in form suitable for recording in the applicable
jurisdictions, with evidence of the delivery thereof for recording;
(d) all Required Insurance Policies together with proof
of payment of premiums relating thereto (which may be in the form
of copies of such policies or certificates of insurance showing
such policies to be in effect on the Closing Date);
(e) the original Title Insurance Policies, or in the
event such original Title Insurance Policies are certified by the
Depositor as unavailable, copies of the marked-up original title
reports and the Depositor's recording instructions, with the
originals to be delivered by the Depositor as soon as available but
in no event later than 90 days after the Closing Date;
(f) an original of the Cash Collateral Agreement and
assignments thereof from the Depositor to the Trustee or the
Mortgage Custodian;
(g) an original of the Assignment of Leases, in form
suitable for recording or filing in the applicable jurisdictions,
and assignments thereof, in form suitable for recording or filing
in the applicable jurisdictions, from the Depositor to the Trustee
or the Mortgage Custodian, with evidence of the delivery thereof
for recording; and
(h) copies of the UCC-1 financing statements covering
the Mortgage Collateral Security, showing the Borrowers as debtors,
the Depositor as secured party and the Trustee as the assignee and
each with evidence of filing thereon; provided that if the
Depositor cannot deliver any such financing statements with
evidence of filing thereon because such financing statements have
not yet been returned by the public filing office where such
financing statements have been submitted for filing, then the
Depositor shall deliver or cause to be delivered a photocopy of
such financing statements (certified by the Depositor to be a true
and complete copy) together with an Officer's Certificate stating
that such financing statements have been dispatched to the
appropriate public filing office for filing.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the Trust Agreement. This
Certificate is qualified in all respects by the terms of said Trust
Agreement.
STATE STREET BANK AND
TRUST COMPANY,
as Trustee and Mortgage Custodian
By:
Name:
Title:
EXHIBIT O
FORM OF CERTIFICATE REQUESTING
ON-GOING INFORMATION
State Street Bank and Trust Company,
as Trustee
Two International Place
Boston, Massachusetts 02110
Attention: Corporate Trust
Re: KRT Origination Corp. Commercial
Mortgage Pass-Through Certificates
Ladies and Gentlemen:
Reference is hereby made to the Trust Agreement dated as of
June 18, 1996 (the "Trust Agreement") among KRT Origination Corp.,
as Depositor, GE Capital Asset Management Corporation, as Servicer,
and State Street Bank and Trust Company, as Trustee. Capitalized
terms used but not defined herein shall have the meaning given to
them in the Trust Agreement.
The undersigned hereby requests, pursuant to the Trust
Agreement, that copies of the materials described in Section 14(b),
(c) and (d) of the Mortgage be delivered to the undersigned at
[address].
The undersigned hereby confirms that (i) it is either (a) a
Holder or a beneficial owner of Certificates or (b) is considering
an investment in the Certificates and (ii) is requesting such
information solely for the purpose of evaluating its investment in
the Certificates.
The undersigned hereby agrees that it shall, and shall cause
its directors, officers and employees, agents, attorneys,
accountants, financial advisors and other representatives, to keep
all materials obtained as a result of this request confidential and
to use reasonable efforts, if such material is not marked
"Proprietary" or "Confidential" and to use special efforts, if such
material is so marked, not, without the prior written consent of
the Depositor and the Borrowers, to disclose any information
contained in such materials in any manner whatsoever, in whole or
in part; provided, however, that the undersigned and or our
representatives shall be permitted to disclose any such information
if required by law or any such information that is or becomes
generally available to the public. The undersigned hereby
acknowledges that a monetary remedy would not be adequate to
compensate the Depositor and the Borrower for any violation of the
agreement contained in the preceding sentence, and that the
Depositor and the Borrowers shall, in addition to any other
remedies available to them at law or in equity, be entitled to
injunctive relief in connection with any such violation.
We understand that this certificate is required in connection
with certain securities laws of the United States. In connection
therewith, if administrative or legal proceedings are commenced or
threatened in connection with this certificate is or would be
relevant, we irrevocably authorize you to produce this certificate
to any interested party in such proceeding. This certificate and the
statements contained herein are made for your benefit and the benefit
of the Depositor, the Borrower and the Placement Agents.
[Name of Holder or beneficial owner
of
Certificates or of Prospective
Investor in Certificates]
By:------------------------------
Name:
Title:
Dated: ----------------
EXHIBIT P
FORM OF ERISA TRANSFER AFFIDAVIT
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being duly sworn, deposes and says as
follows:
1. The undersigned is the ------------------------ of
- ---------------- (the "Investor"), a [corporation] duly organized
and validly existing under the laws of the State of
- ----------------, on behalf of which s/he makes this affidavit.
2. The Investor either (i) is acquiring only Class A
Certificates or (ii) if it is acquiring Class B, Class C or Class
D Certificates it (x) is not a Benefit Plan Investor subject to the
Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any federal, state or local law which is,
to a material extent, similar to the provisions of ERISA or Section
4975 of the Code. For purposes of this paragraph, the term
"Benefit Plan Investor" means (A) any employee benefit plan (as
defined in Section 3(3) of ERISA), whether or not it is subject to
Title I of ERISA, (B) any plan described in Section 4975(e)(1) of
the Code, (C) any governmental plan, as defined in Section 3(32) of
ERISA, subject to any federal, state or local law which is, to a
material extent, similar to the provisions of ERISA or Section 4975
of the Code or (D) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (within the
meaning of Department of Labor Regulation 29 C.F.R. 2510.3-101).
3. The Investor hereby acknowledges that under the terms of
the Trust and Servicing Agreement, dated as of June 18, 1996, among
KRT Origination Corp., as Depositor, GE Capital Asset Management
Corporation, as Servicer, and State Street Bank and Trust Company,
as Trustee, no transfer of the Class B, Class C and Class D
Certificates shall be permitted to be made to any person unless the
Depositor and the Trustee have received (i) an affidavit from such
transferee to the effect that such transferee is not a Benefit Plan
Investor subject to ERISA or Section 4975 of the Code or (ii) if
such transferee is a Benefit Plan Investor subject to ERISA or
Section 4975 of the Code, an opinion of counsel to the effect that
the purchase and holding of such Certificate by the transferee will
not cause the assets of the Trust to be regarded as assets of a
Benefit Plan Investor; constitute or result in a prohibited
transaction within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code; or give rise to a fiduciary duty on the
part of the Depositor, the Servicer or the Trustee.
IN WITNESS WHEREOF, the Investor has caused this instrument to
be executed on its behalf, pursuant to proper authority, by its
duly authorized officer, duly attested, this -------- day of
- -------------, ----.
- -----------------------------
By:--------------------------
Name:
Title:
ATTEST:
- -------------------------
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named ---------------,
known or proved to me to be the same person who executed the
foregoing instrument and to be the -------------------- of the
Investor, and acknowledged that he executed the same as his/her
free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this ----- day of
- ---------------, ----.
------------------------
NOTARY PUBLIC
My commission expires the
- ----
day of ------------, 19---.
EXHIBIT R
FORM OF ERISA LEGEND
THIS CERTIFICATE OR ANY INTEREST HEREIN SHOULD NOT BE
PURCHASED BY A TRANSFEREE THAT IS (A) AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, INCLUDING AN INDIVIDUAL AN INDIVIDUAL
RETIREMENT ACCOUNT OR A KEOGH PLAN, WHICH IS SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A
GOVERNMENT PLAN SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS
TO A MATERIAL EXTENT SIMILAR TO THE FOREGOING PROVISIONS OF ERISA
OR THE CODE (A "SIMILAR LAW") (EACH A "PLAN"), OR (B) AN INSURANCE
COMPANY USING ASSETS OF ANY INSURANCE COMPANY SEPARATE ACCOUNT OR
GENERAL ACCOUNT IN WHICH ASSETS OF SUCH PLAN ARE INVESTED (OR WHICH
ARE DEEMED PURSUANT TO ERISA OR ANY SIMILAR LAW TO INCLUDE ASSETS
OF SUCH PLANS) OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR
USING THE ASSETS OF ANY SUCH PLAN. EACH PROSPECTIVE TRANSFEREE OF
THIS CERTIFICATE WILL BE REQUIRED TO DELIVER TO THE DEPOSITOR, THE
CERTIFICATE REGISTRAR AND THE TRUSTEE, (I) A TRANSFER OR
REPRESENTATION LETTER, SUBSTANTIALLY IN THE FORM OF EXHIBIT Q TO
THE TRUST AND SERVICING AGREEMENT REFERRED TO HEREIN, STATING THAT
SUCH PROSPECTIVE TRANSFEREE IS NOT A PERSON REFERRED TO IN CLAUSE
(A) OR (B) ABOVE, OR (II) AN OPINION OF COUNSEL WHICH ESTABLISHES
TO THE SATISFACTION OF THE DEPOSITOR, THE SERVICER, THE TRUSTEE AND
THE CERTIFICATE REGISTRAR THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION
PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION
407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE
DEPOSITOR, THE SERVICER, THE TRUSTEE OR THE CERTIFICATE REGISTRAR
TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR
LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE), WHICH OPINION
OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST FUND, THE SERVICER,
THE TRUSTEE, THE CERTIFICATE REGISTRAR OR THE DEPOSITOR.
EXHIBIT R
FORM OF OWNERSHIP EVIDENCE
State Street Bank and Trust Company,
Trustee and Certificate Registrar
Two International Place
Boston, Massachusetts 02110
Attn: Corporate Trust Department
Re: [Name of Security]
Ladies and Gentlemen:
In consideration for your recognizing the undersigned as the
owner of the securities identified below for the purpose of
enabling the undersigned to exercise rights of a Certificateholder
pursuant to the Trust and Servicing Agreement, dated as of June 18,
1996, among KRT Origination Corp., as Depositor, GE Capital Asset
Management Corporation, as Servicer, and State Street Bank and
Trust Company, as Trustee, the undersigned hereby certifies that it
is the owner ("Owner") of the securities identified below and that
such securities are held by it through its securities account with
the Depository Trust Company ("DTC") Participant/Indirect
Participant identified below. The undersigned further agrees to
notify you in writing of any change in the information provided
herein.
Original Name of Participant
Class Face Amount Nominee Name or Indirect Participant
- ----- ----------- ------------- -----------------------
Very truly yours,
----------------------------, as Owner
Name:
Title:
Form of Indirect Participant Acknowledgement
The undersigned hereby acknowledges and confirms that it
maintains a securities account for the person identified above as
Owner showing such Owner as being entitled to the securities
identified above. Such securities are held by the undersigned for
such Owner at DTC through the facilities of the Participant
executing the Form of Participant Acknowledgement set forth below.
---------------------------, as indirect participant
By:-----------------------------------
Name:
Title:
Form of Participant Acknowledgement
The undersigned hereby acknowledges and confirms that (check
one)
---- it maintains a securities account for the person
identified above as Owner showing such Owner as being entitled to
the securities identified above.
---- it maintains a securities account for the indirect
participant identified above and shows securities of the series,
class and face amount set forth above as being in such account.
Such securities are held through the book-entry facilities of
the Depository Trust Company.
---------------------------, as DTC participant
By:----------------------------------------
Name:
Title:
Schedule 1
Mortgage Loan Schedule
Original Mortgage Default
Principal Balance Rate Rate
----------------- ------- -------
A Note $123,700,000 7.80% 10.80%
B Note $ 20,600,000 8.02% 11.02%
C Note $ 28,900,000 8.32% 11.32%
D Note $ 8,500,000 8.96% 11.96%
CASH COLLATERAL ACCOUNT
SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
CASH COLLATERAL ACCOUNT SECURITY, PLEDGE AND ASSIGNMENT
AGREEMENT (this "Agreement"), dated as of June 18, 1996, among
KRT PROPERTY HOLDINGS, INC., HILLCREST PLAZA LIMITED PARTNERSHIP,
KR SUBURBAN, L.P., FOX RUN, LIMITED PARTNERSHIP, KR MACARTHUR
ASSOCIATES, L.P., KR BEST ASSOCIATES, L.P., KR 69TH STREET, L.P.,
KR TRUST ONE, INC., KR MANCHESTER, INC., KR STREET ASSOCIATES,
L.P., KR ORANGE, INC., KR COLLEGETOWN, INC., KR HILLCREST MALL,
INC. and KR PILGRIM, L.P., as borrowers (collectively,
"Borrower"), KRT ORIGINATION CORP., a Delaware corporation, as
lender (together with its successors and assigns "Lender") and
STATE STREET BANK AND TRUST COMPANY, a banking corporation
organized under the laws of the Commonwealth of Massachusetts, as
agent for Lender ("Agent").
W I T N E S S E T H:
WHEREAS, Borrower is the owner of certain real property
more particularly described in Exhibit A attached hereto and made
a part hereof (the "Properties");
WHEREAS, Lender has agreed to lend Borrower the sum of
One Hundred Eighty One Million Seven Hundred Thousand Dollars
($181,700,000) (the "Loan"), which Loan is evidenced by four
Mortgage Notes, each dated as of the date hereof (individually, a
"Note" and collectively, the "Notes"), made by Borrower, as
maker, in favor of Lender, as payee, and secured by (i) an
Indenture of Mortgage, Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases,
Rents and Security Deposits, dated as of the date hereof, among
Borrower, as grantor, Ronald P. Fish, Esq. and Thomas A. Hauser,
Esq., together as mortgage trustee, and Lender, as beneficiary
(the "Mortgage"), (ii) an Assignment of Leases, Rents and
Security Deposits (the "Assignment") and (iii) the other Loan
Documents;
WHEREAS, pursuant to the Mortgage and the Assignment,
Borrower has granted to Lender a first perfected security
interest in the Rents, Proceeds and other revenues derived from
or otherwise attributable or allocable to the Properties, and has
absolutely assigned and conveyed to Lender all of the rents,
income, revenue, issues and profits due and to become due or to
which Borrower is now or may hereafter become entitled, arising
out of the Leases or the Trust Estate or any part or parts
thereof; and
WHEREAS, pursuant to the Mortgage and the Assignment,
in order to further effectuate the assignment of rents and
profits by the Borrower to the Lender set forth therein, Borrower
has agreed to establish the Receipts Account, the Collection
Account, the Default Interest Account, the Capital and TI Reserve
Account and the Sinking Fund Account (as such terms are
hereinafter defined) (the foregoing accounts being hereinafter
collectively referred to as the "Accounts") and to grant to
Agent, as agent for Lender, first perfected security interests
therein upon the terms and subject to the conditions hereof.
NOW, THEREFORE, in consideration of the agreements and
covenants hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms used but not
otherwise defined herein shall have the respective meanings given
thereto in the Mortgage unless otherwise expressly provided
herein. For purposes hereof, an "Event of Default" shall mean an
"Event of Default" under the Mortgage. Agent shall not be deemed
to have any knowledge hereunder of an Event of Default unless
notified thereof in writing by Borrower or Lender hereunder or
the Servicer or Depositor (each capitalized term as defined in
the Trust and Servicing Agreement referred to in Paragraph 15(j)
hereof).
2. Security for Obligations. To secure the full and
punctual payment and performance of all obligations of Borrower
now or hereafter existing with respect to the Loan, whether for
principal, interest, fees, expenses or otherwise, and all
obligations of Borrower now or hereafter existing under the
Notes, the Mortgage, this Agreement and all other Loan Documents
(all such obligations, collectively, the "Obligations"), Borrower
hereby assigns, conveys, pledges and transfers to Lender, a first
continuing security interest in and to the following property of
Borrower, whether now owned or existing or hereafter acquired or
arising and regardless of where located (all of the same,
collectively, the "Collateral"):
(a) the Accounts and all cash, checks,
drafts, certificates and instruments, if any, from time
to time deposited or held in the Accounts from time to
time including, without limitation, all deposits or
wire transfers made to the Accounts pursuant to
Paragraph 3(a) hereof;
(b) any and all amounts invested by Agent in
Eligible Investments (as hereinafter defined);
(c) all interest, dividends, cash (other
than amounts disbursed to Borrower in accordance with
Section 3(f) hereof), instruments and other property
from time to time received, receivable or otherwise
payable in respect of, or in exchange for, any or all
of the foregoing; and
(d) to the extent not covered by clauses
(a), (b) and (c) above, all proceeds (as defined under
the Uniform Commercial Code as in effect in the
Commonwealth of Massachusetts (the "UCC")) of any or
all of the foregoing.
Lender shall have with respect to the Collateral, in addition to
the rights and remedies herein set forth, all of the rights and
remedies available to a secured party under the UCC, as if such
rights and remedies were fully set forth herein.
3. Accounts. (a) Establishment of Accounts.
Borrower hereby agrees that all Rents from each Tenant of the
Properties received by Borrower or any of its Affiliates shall be
deposited by Borrower within one Business Day of receipt by
Borrower or such Affiliate into an account or accounts in the
name of Agent, as agent for Lender, as secured party (the
"Receipts Account"). Borrower shall enter into an agreement
(which agreement may not be amended without the consent of
Lender) with each bank where a Receipt Account is established,
which agreement shall provide that prior to the payment in full
of the Notes, all cleared funds in the Receipts Account shall be
transferred each Business Day into an interest-bearing trust
account established by Borrower in the name of Agent, as agent
for Lender, as secured party (the "Collection Account"). Until
so deposited into the Collection Account, any such amounts held
by Borrower shall be deemed to be Collateral and shall be held in
trust by it for the benefit of Agent, as agent for Lender, and
shall not be commingled with any other funds or property of
Borrower or any Affiliate of Borrower. Borrower represents,
warrants and covenants that (i) all Operating Income from the
Properties will be deposited into the Receipts Account, (ii)
there are no other accounts maintained by Borrower with respect
to the receipt of funds from the ownership and operation of the
Properties, and (iii) so long as the Notes shall be outstanding,
it shall not open any other property accounts except as
contemplated by the Loan Documents (any account designated by
Borrower for the receipt of funds from the Accounts pursuant to
this Agreement or for the receipt of Proceeds permitted to be
held by Borrower not being property accounts within this
context). Borrower has established in the name of Agent, as
agent for Lender, as secured party, the following trust accounts
with Agent, as more particularly described in the Cash Collateral
Agreement (as hereinafter defined): the "Capital and TI Reserve
Account," the "Sinking Fund Account" and the "Default Interest
Account." The Accounts may be maintained on a sub-ledger basis
only rather than in individual segregated accounts. The
Collateral shall be held in the Accounts in accordance with the
terms of the cash collateral agreement, dated the date hereof
(the "Cash Collateral Agreement"), between Borrower and Agent, a
copy of which is attached hereto as Exhibit B. Borrower agrees
that prior to the payment in full of the Notes, the Cash
Collateral Agreement shall be irrevocable by Borrower without the
prior written consent of Lender. The Accounts 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 or governmental authority, as may now or hereafter be in
effect. Interest accruing on the Accounts shall be periodically
added to the principal amount of the Accounts and shall be held,
disbursed and applied in accordance with the provisions of this
Agreement. All statements relating to the Accounts shall be
issued by Agent to Lender (or at the written direction of Lender,
to Lender's representative) and Borrower and Lender shall be
notified in writing or by electronic media of account activity on
a monthly basis. Agent shall provide Lender and Borrower with
such other information as Lender or Borrower may reasonably
request. Borrower shall be the beneficial owner of the Accounts
for federal income tax purposes and shall report all income on
the Accounts but Borrower shall have no right of withdrawal
therefrom except as specifically provided herein.
(b) Default Interest Deposit. While an Event of
Default is continuing, Borrower shall deposit in the Default
Interest Account any interest at the Default Rate with respect to
the debt service payments due on the Notes ("Default Interest")
(amounts required to be deposited in such Account from time to
time pursuant hereto being hereinafter referred to as the
"Default Interest Amounts"). Lender shall notify Agent of any
amounts required to be deposited into the Default Interest
Account pursuant to Section 3(k) hereof.
(c) Annual Statement of Monthly Deposit. On or
before the first day of each calendar year during the term of the
Notes, and from time to time as any amount to be withdrawn by
Agent from the Collection Account ("Withdrawal Amounts") shall
change due to prepayment (whether voluntary or mandatory) of the
principal amount of the Indebtedness (as defined in the
Mortgage), substitution of Properties or otherwise, Borrower
shall deliver to Agent and Lender a statement, together with an
Officer's Certificate, setting forth any necessary revisions to
any Withdrawal Amounts for the balance of the applicable calendar
year. Any such statement shall be subject to reasonable
verification by Lender.
(d) Monthly Funding of Accounts; Funding of
Accounts Subsequent to Acceleration. (A) Borrower and Lender
each hereby instructs Agent to withdraw from the Collection
Account for each month on or before each Due Date (as defined in
the Notes) (i.e., the fourth Business Day prior to each
Distribution Date (as defined in the Trust and Servicing
Agreement) each month) as soon as there shall be sufficient
collected funds on deposit in the Collection Account, funds in an
amount equal to, and in the following order of priority:
(i) first, to the Servicer as reimbursement
for any Mortgage Recording Tax Advance (as defined in the
Trust and Servicing Agreement), or any portion thereof, made
by the Servicer;
(ii) second, to the Distribution Account (the
"Distribution Account") established pursuant to the Trust
and Servicing Agreement, an amount equal to the Interest
Installment (as defined in the Notes) in the next succeeding
month (other than Default Interest), which, until further
notice from Lender, shall be $1,205,566.67;
(iii) third, to the Distribution Account to
pay fees and expenses incurred by the Lender pursuant to
Section 18 of the Mortgage;
(iv) fourth, upon written notice from Lender
or the Servicer to Agent, to reimburse Lender or Servicer in
connection with the enforcement of Borrower's obligations
under the Loan;
(v) fifth, to the Capital and TI Reserve
Account an amount equal to the amount required to be
deposited in such Account from time to time pursuant to
Section 48(a) of the Mortgage (the "Capital and TI Reserve
Amount"), i.e., (1) 1/12th of $0.25 per square foot of the
gross leasable area of the Properties, determined pursuant
to Section 48(a) and (b) of the Mortgage, minus (2) funds
expended by Borrower for capital expenditures and tenant
improvements from sources other than the Capital and TI
Reserve Account, as determined in accordance with Section
48(a) of the Mortgage;
(vi) sixth, to the Sinking Fund Account an
amount equal to the amount required to be deposited in such
Account each month pursuant to Section 48(c) of the Mortgage
(the "Sinking Fund Amount"), i.e., $11,000, until such time
as the aggregate amount in the Sinking Fund Account,
together with all investment income earned thereon, equals
or exceeds $786,000; provided that amounts on deposit in the
Sinking Fund Account shall be released pursuant to the terms
of Section 48(c) of the Mortgage (i.e., on the earlier of
(1) repayment in full of the Mortgage Loan and (2) the date
of release or substitution of the Property located in
Orange, Connecticut in accordance with the provisions of the
Mortgage);
(vii) seventh, upon written notice from
Trustee to Agent, to pay any other amounts owing under the
Notes or the Mortgage, including Default Interest to the
Default Interest Account; and
(viii) eighth, the remaining balance, if any
(including, without limitation, interest and other earnings
on the Eligible Investments), to such account or accounts as
Borrower may direct.
(B) In the event that two Business Days prior to any
Due Date, the aggregate balances in the Accounts are not adequate
to make the required monthly fundings as described in this
Section 3(d), Lender shall so notify Borrower (with a copy to
Agent) no later than the following Business Day of such
deficiency and Borrower, subject to the provisions of Section 33
of the Mortgage, shall deposit such deficiency in the Collection
Account no later than such Due Date.
(C) Borrower and Lender each hereby instructs Agent
that upon the occurrence of an Event of Default and the
acceleration of the Notes, to withdraw from the Collection
Account as soon as there shall be sufficient collected funds on
deposit in the Collection Account, funds in an amount equal to,
and in the following order of priority:
(i) first, upon written notice from Lender
to Agent, to reimburse Lender in connection with the
enforcement of Borrower's obligations under the Mortgage
(other than reimbursement of any Advances);
(ii) second, to the Distribution Account an
amount equal to any Interest Installments then due and
payable;
(iii) third, to the Distribution Account an
amount equal to any Principal Amount then outstanding on the
Notes;
(iv) fourth, upon written notice from Trustee
to Agent, to pay any other amounts owing under the Notes or
the Mortgage, including Default Interest to the Default
Interest Account; and
(v) fifth, the remaining balance, if any
(including, without limitation, interest and other earnings
on the Eligible Investments), to such account or accounts as
Borrower may direct.
(e) Payments from Certain Accounts Prior to and
After an Event of Default. Prior to Agent's receipt of written
notice from Lender of the occurrence of an Event of Default,
Borrower may request Lender to instruct Agent to transfer from
the Capital and TI Reserve Account to an account designated by
Borrower such amounts as are in accordance with Section 48(a) of
the Mortgage and subject to the conditions set forth therein,
Lender shall so instruct Agent within five (5) Business Days of
Borrower's request (provided the same is in compliance with such
Section 48(a)), and Agent shall disburse such amounts. After
Agent's receipt of any notice of an Event of Default, and during
the continuance of such Event of Default, Borrower shall have no
right to request Lender to so instruct Agent. Agent may rely
exclusively upon such written instructions and directions from
Lender and shall not incur any liability as a result of funding
amounts to Borrower in accordance with the terms hereof prior to
the occurrence of an Event of Default.
(f) Disbursement of Excess Amounts prior to an
Event of Default. Provided that (i) Agent has not received
notice of an Event of Default hereunder or under any of the other
Loan Documents and (ii) all required installments of the Capital
and TI Reserve Amounts, the Sinking Fund Amounts and the
Distribution Amounts have been deposited or retained in the
applicable Accounts pursuant to clause 3(d), then, subject to the
provisions of Section 3(d)(B), from time to time during the term
of the Loan, Agent shall transfer amounts from the Collection
Account (including, without limitation, interest and other
earnings on the Eligible Investments) to such account or accounts
of Borrower as Borrower may direct, to pay Operating Expenses of
the Properties, to make distributions to the shareholders or
partners of Borrower, or otherwise (pursuant to written
instructions to Agent with a copy to Lender). Borrower's
instructions delivered as aforesaid shall remain in effect until
such time as Borrower delivers new instructions to Agent, with a
copy to Lender.
(g) Disbursements of Excess Amounts Subsequent to
an Event of Default and Prior to Acceleration. If an Event of
Default shall occur, Borrower shall have no further right to
request withdrawals from the Collection Account while such Event
of Default is continuing, except as provided below. Provided
that (i) the Notes have not theretofore been accelerated and (ii)
the balance in the Accounts is at all relevant times greater than
the then sum of the required amounts to be deposited therein and
(iii) the amount of the debt service payments due under the Notes
in the next succeeding month (or in the month of June 1996 as to
the first debt service payment) shall have been deposited in the
Distribution Account plus all other amounts then due under the
Notes or the Mortgage, Borrower may request Lender to instruct
Agent in writing to transfer amounts from the Collection Account
solely for the purpose of curing such Event of Default to the
payee thereof or to an account designated by Borrower; provided
that such request to Lender is accompanied by (1) an Officer's
Certificate from Borrower certifying that such funds will be used
solely to cure such Event of Default (and that upon payment of
such funds such Event of Default will be cured) and (2)
reasonably detailed documentation as to the amount, necessity and
purpose therefor. Lender agrees to promptly notify Agent of the
existence of an Event of Default in writing; provided, however,
Agent shall be permitted to rely conclusively on Lender's written
instructions, and shall have no liability for transfers from the
Collection Account based on any such written instructions.
Notwithstanding anything contained herein to the contrary,
Borrower hereby acknowledges that, from and during the
continuance of any Event of Default hereunder or under any other
Loan Document, Lender shall have the right to direct Agent and
Agent shall comply with any such direction, to apply any amounts
in any of the Accounts to the curing of such Event of Default or
the payment of any Operating Expenses in accordance with the
provisions of the Mortgage and the Assignment.
(h) Disbursements of Excess Amounts Subsequent to
Acceleration. Upon the occurrence of an Event of Default and the
acceleration of the Notes, then, in addition to the provisions of
clause (g) above, Lender shall promptly notify Agent in writing
of such Event of Default and acceleration and, without notice
from Agent or Lender, (i) Borrower shall have no further right in
respect of (including, without limitation, the right to instruct
Lender or Agent to transfer from) the Accounts and (ii) Lender
may direct Agent to liquidate and transfer any amounts then
invested in Eligible Investments to the Collection Account and
withdraw funds from the Collection Account and pay the same in
accordance with the provisions of Section 3(d)(B) hereof.
(i) Investments. Any amounts held in any of the
Accounts shall be invested, liquidated and reinvested at
Borrower's written direction to Agent with a copy to Lender
(provided Agent has not received notice that an Event of Default
has occurred and is continuing), or if Agent has received notice
that an Event of Default has occurred and is continuing, at
Lender's written direction, in the name of Agent, as agent for
Lender, as secured party under this Agreement, in either case, in
permitted investments, as set forth on Exhibit C hereto (the
"Eligible Investments") (or, if Borrower so directs and Agent has
not received notice that an Event of Default has occurred and is
continuing, shall be retained in the applicable Account) and
disbursed in accordance with this Agreement. Agent shall not
have any liability for any decline in value of any investment
made by it at the direction of Borrower or Lender other than as a
result of Agent's gross negligence or willful misconduct in
maintaining custody of any such investment or determining whether
any such investment is an Eligible Investment. Notwithstanding
anything to the contrary contained herein, in no event shall
Borrower instruct Agent to invest funds in the Accounts in (i)
stock representing more than ten percent (10%) of the outstanding
voting stock of the issuer thereof or (ii) interests in any
partnership or trust owning stock where the portion of such stock
attributable to such interests would represent more than ten
percent (10%) of the outstanding voting stock of the issuer
thereof.
(j) Payments on the Notes. Borrower and Lender
hereby irrevocably instruct Agent to withdraw from the Collection
Account by 12:00 p.m. New York time on each Due Date and deposit
in the Distribution Account amounts necessary to pay the interest
installment due to the Lender on such Due Date as specified in
Section 3(d)(A)(i) hereof.
(k) Disbursements of Default Interest Amounts.
During any period in which the Borrower is required to pay
Default Interest Amounts pursuant to any Loan Document, Agent, at
the written direction of Lender, shall transfer to an account
designated by Lender amounts necessary to pay the installments of
the Default Interest Amounts due to the Lender on such Due Date.
4. Financing Statement; Further Assurances.
Simultaneously herewith, Borrower shall execute and deliver to
Lender for filing a financing statement or statements in
connection with the Collateral in the form reasonably required to
properly perfect Lender's security interest therein. Borrower
agrees that at any time and from time to time, at the reasonable
expense of Borrower, Borrower will promptly execute and deliver
all further instruments and documents, and take all further
action, that may be reasonably necessary or desirable, or that
Lender may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby
(including, without limitation, any security interest in and to
any Eligible Investments) or to enable Agent or Lender to
exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Borrower authorizes Lender to file
one or more financing or continuation statements under the UCC
relating to the Collateral, naming Lender as "secured party."
5. Transfers and Other Liens. Subject to the powers
granted by Section 3(d), Borrower agrees that it will not (i)
sell or otherwise dispose of any of the Collateral or (ii) create
or permit to exist any Lien upon or with respect to all or any of
the Collateral, except for the Lien granted to Lender, under this
Agreement.
6. Lender's Right to Perform Borrower's Obligations;
No Liability of Lender. If Borrower fails to perform any of the
covenants or obligations contained herein, and such failure shall
continue for a period of ten (10) days after Borrower's receipt
of written notice thereof from the Lender, Lender may itself
perform, or cause performance of, such covenants or obligations,
and the reasonable expenses of Lender incurred in connection
therewith shall be payable by Borrower to Lender in accordance
with Section 10 hereof. Notwithstanding the Lender's right to
perform certain obligations of Borrower, it is acknowledged and
agreed that, prior to the consummation of any foreclosure or
transfer in lieu of foreclosure with respect to any of the
Properties, Borrower retains control of the Properties and
operation thereof and notwithstanding anything contained herein
or the Cash Collateral Agreement or Agent's or Lender's exercise
of any of its rights or remedies hereunder, under the Loan
Documents or otherwise at law or in equity (but only to the
extent permitted by law), neither Agent nor Lender shall be
deemed to be a mortgagee-in-possession nor shall Agent or Lender
be subject to any liability with respect to the Properties other
than any claims arising from the gross negligence or willful
misconduct of Agent or Lender or their respective employees,
officers, agents or representatives.
7. Reasonable Care. Beyond the exercise of reasonable
care in the custody thereof, neither Agent nor Lender shall have
any duty as to any Collateral in its possession or in the
possession or control of any agent therefor or bailees thereof or
any income thereon or the preservation of rights against any
person or otherwise with respect thereto. Agent and Lender each
shall be deemed to have exercised reasonable care in the custody
and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially in accordance with
the customary standards of practice of reasonable commercial
banks utilized with respect to Collateral comparable to the
Collateral.
8. Remedies. Upon the occurrence of an Event of
Default, Lender may:
(a) without further notice to Borrower,
except as required by law, and at any time or from time
to time, charge, set-off and otherwise apply all or any
part of the Collateral against the Indebtedness or any
part thereof;
(b) in its sole discretion, at any time and
from time to time, exercise any and all rights and
remedies available to it under this Agreement, and/or
as a secured party under the UCC; and
(c) demand, collect, take possession of,
receipt for, settle, compromise, adjust, sue for,
foreclose or realize upon the Collateral (or any
portion thereof) as Lender may determine in its sole
discretion.
Borrower hereby expressly waives, to the fullest extent permitted
by law, presentment, demand, protest or any notice of any kind in
connection with this Agreement or the Collateral. Borrower
acknowledges and agrees that ten (10) days' prior written notice
of the time and place of any public sale of the Collateral or any
other intended disposition thereof shall be reasonable and
sufficient notice to Borrower within the meaning of the UCC.
9. No Waiver. The rights and remedies provided in
this Agreement and the other Loan Documents are cumulative and
may be exercised independently or concurrently, and are not
exclusive of any other right or remedy provided at law or in
equity. No failure to exercise or delay by Lender in exercising
any right or remedy hereunder or under the Loan Documents shall
impair or prohibit the exercise of any such rights or remedies in
the future or be deemed to constitute a waiver or limitation of
any such right or remedy or acquiescence therein. Every right
and remedy granted to Lender under Section 8 or by law may be
exercised by Lender, as the case may be, at any time and from
time to time, and as often as Lender may deem it expedient. Any
and all of Lender's rights with respect to the lien and security
interest granted hereunder shall continue unimpaired, and
Borrower shall be and remain obligated in accordance with the
terms hereof, notwithstanding (a) any proceeding of Borrower
under the Federal Bankruptcy Code or any bankruptcy, insolvency
or reorganization laws or statutes of any state, (b) the release
or substitution of Collateral at any time, or of any rights or
interests therein or (c) any delay, extension of time, renewal,
compromise or other indulgence granted by the Lender in the event
of any default, with respect to the Collateral or otherwise
hereunder. No delay or extension of time by Lender 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 Borrower
by Lender, shall constitute a waiver thereof, or limit, impair or
prejudice Lender's right, without notice or demand, to take any
action against Borrower or to exercise any other power of sale,
option or any other right or remedy.
10. Expenses. The Collateral shall secure, and
Borrower shall pay to Agent and Lender and/or Agent's and
Lender's counsel (if so directed by Agent or Lender,
respectively) on demand, from time to time, all costs and
expenses (including, but not limited to, reasonable attorneys'
fees and disbursements, and transfer, recording and filing fees,
taxes and other charges) of, or incidental to, (a) the
negotiation of this Agreement and the review of the other Loan
Documents, (b) the creation or perfection of any lien or security
interest granted or intended to be granted hereby, (c) the
custody, care, sale, transfer, administration, collection of or
realization on the Collateral, or in any way relating to the
enforcement, protection or preservation of the rights or remedies
of Agent and/or Lender under this Agreement, the Notes, the
Mortgage, the Assignment or the other Loan Documents after an
Event of Default. Any such costs and expenses or portion thereof
not paid promptly upon the demand thereof shall accrue interest
thereon from and including the date of demand through but not
including the date of payment thereof at a rate per annum equal
to the Prime Rate (as most recently published in The Wall Street
Journal) on the date of demand plus 100 basis points, compounded
monthly. The provisions of this Section 10 shall survive the
termination of this Agreement and the resignation or removal of
Agent.
11. Lender Appointed Attorney-In-Fact. Borrower
hereby irrevocably constitutes and appoints Lender as Borrower's
true and lawful attorney-in-fact, with full power of
substitution, to execute, acknowledge and deliver any instruments
and to exercise and enforce every right, power, remedy, option
and privilege of Borrower with respect to the Collateral, and do
in the name, place and stead of Borrower, all such acts, things
and deeds for and on behalf of and in the name of Borrower, which
Borrower could or might do or which Lender may deem necessary or
desirable to more fully vest in Lender the rights and remedies
provided for herein and to accomplish the purposes of this
Agreement in the event that Borrower shall fail to perform any of
the foregoing agreements within ten (10) days after written
request therefor by Lender. The foregoing powers of attorney are
irrevocable and coupled with an interest. If Borrower fails to
perform any agreement herein contained within ten (10) days after
written request therefor by Lender, Lender may itself perform or
cause performance of any such agreement, and any reasonable
expenses of Agent and Lender incurred in connection therewith
shall be paid by Borrower as provided in Section 10 hereof.
12. Liability and Indemnification of Lender and Agent.
(a) Lender, in its capacity as secured party
hereunder, and Agent each shall be responsible for the
performance only of such duties as are specifically set forth
herein and in the Cash Collateral Agreement, and no duty shall be
implied from any provision hereof. Neither Lender nor Agent
shall be under any obligation or duty to perform any act which
would involve it in expense or liability or to institute or
defend any suit in respect hereof, or to advance any of its own
monies. Borrower shall indemnify and hold harmless Agent and
Lender, their agents, employees, directors, and officers from and
against any loss, cost or damage (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by the
Agent or Lender in connection with the transactions contemplated
hereby other than as a result of the negligence or willful
misconduct of Agent or Lender or their respective agents,
employees, directors or officers. The provisions of this Section
12 shall survive the termination of this Agreement and the
resignation or removal of Agent.
(b) Agent shall be protected in acting upon any
notice, resolution, request, consent, order, certificate, report,
opinion, bond or other paper, document or signature believed by
it to be genuine, and it may be assumed that any person
purporting to give any of the foregoing in connection with the
provisions hereof has been duly authorized to do so. Agent may
consult with counsel of its selection, and the opinion of such
counsel shall be full and complete authorization and protection
in respect of any action taken or suffered by it hereunder and in
good faith in accordance therewith. Agent shall not be liable to
Borrower for any act or omission done or omitted to be done by
Agent in reliance upon any written instruction, direction or
certification received by Agent and without gross negligence or
bad faith.
(c) Agent shall not be required to, and shall
not, expend or risk any of its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder.
(d) Agent shall not incur any liability for not
performing any act or fulfilling any duty, obligation or
responsibility hereunder by reason of any occurrence beyond the
control of Agent (including but not limited to any act or
provision of any present or future law or regulation or
governmental authority, any act of God or war, or the
unavailability of the Federal Reserve Bank wire or telex or other
wire or communication facility).
(e) In the event of any ambiguity or uncertainty
hereunder or in any notice, instruction or other communication
received by Agent hereunder, Agent may, in its sole discretion,
refrain from taking any action other than retaining possession of
the Collateral, unless Agent receives written instructions,
signed by Lender, which eliminates such ambiguity or uncertainty.
(f) In the event of any dispute between or
conflicting claims by or among the Borrower and Lender and/or any
other person or entity with respect to any Collateral, Agent
shall be entitled to rely on instructions from Lender, and Agent
shall not be or become liable in any way to the Borrower or
Lender for failure or refusal to comply with such conflicting
claims, demands or instructions of Borrower or such other person.
(g) Agent shall have no duty to verify amounts
required to be deposited or withdrawn from the Accounts if such
amounts are in accordance with the terms hereof or written
instructions of Lender. Nor shall Agent have any duty to file
UCC financing statements or perfect or maintain perfected the
first priority security interest in the Collateral. In the
absence of actual notice from Lender, Agent shall have no duty to
determine whether an Event of Default has occurred or is
continuing.
13. Continuing Security Interest. This Agreement
shall create a continuing security interest in the Collateral and
shall remain in full force and effect until payment in full of
the Indebtedness. Upon payment in full of the Indebtedness, this
Agreement shall terminate and Borrower shall be entitled to the
return, upon its request and at its expense, of such of the
Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof and Agent and/or Lender shall
execute such instruments and documents as may be reasonably
requested by Borrower to evidence such termination and the
release of the lien hereof.
14. Replacement and Resignation of Agent. (a)
Borrower shall have the right at any time, so long as no Event of
Default shall have occurred and be continuing, with or without
cause, to remove Agent as agent hereunder upon 30 days' written
notice to Agent and Lender and to appoint any banking institution
which has a rating of "AA" or better for its senior unsecured
debt obligations, as successor Agent, provided that no removal of
Agent shall be effective until the successor Agent shall have
accepted such appointment and executed an instrument by which it
shall have assumed all of the rights and obligations of Agent
hereunder.
(b) Agent shall have the right to resign as agent
hereunder upon 30 days' written notice to Borrower and Lender,
and in the event of such resignation, Borrower shall appoint a
successor Agent meeting the qualifications set forth in clause
(a) above. No such resignation by Agent shall become effective
until a successor Agent shall have accepted such appointment and
executed an instrument by which it shall have assumed all of the
rights and obligations of Agent hereunder. If no such successor
Agent is appointed within 60 days after receipt of the resigning
Agent's notice of resignation, the resigning Agent may petition a
court for the appointment of a successor Agent.
(c) In connection with any removal of or
resignation by the Agent, (i) the removed or resigning Agent
shall, at Borrower's sole cost, (A) duly assign, transfer and
deliver to the successor Agent this Agreement and the Cash
Collateral Agreement and all cash and Eligible Investments held
by it hereunder, (B) execute such financing statements and other
instruments as may be necessary to assign to the successor Agent
the security interest in the Collateral existing in favor of the
retiring Agent hereunder and to otherwise give effect to such
succession and (C) take such other actions as may be reasonably
required by Borrower, Lender or the successor Agent in connection
with the foregoing and (ii) the successor Agent shall establish
in its name, as agent for Lender, as secured party, cash
collateral trust accounts satisfying all requirements of this
Agreement, which shall become the Accounts for purposes of this
Agreement upon the succession of such Agent.
(d) Agent may enter into a Sub-Agency Agreement
with GE Capital Asset Management Corporation ("Sub-Agent")
(provided such agreement would not result in the withdrawal,
qualification or downgrade of the then current ratings on the
Class A, Class B, Class C or Class D Certificates, as evidenced
by a letter to such effect from the Rating Agency delivered to
the Lender prior to entering into any sub-agency Agreement with
Sub-Agent ("Sub-Agency Agreement") and provided such Sub-Agency
Agreement requires the Sub-Agent to comply with all of the
conditions of this Agreement applicable to Agent in respect of
the duties delegated) for the performance of the duties of Agent
hereunder. References in this Agreement to actions taken or to
be taken by Agent in performing its duties hereunder include
actions taken or to be taken by Sub-Agent on behalf of Agent.
For purposes of this Agreement, Agent shall be deemed to have
received any payment when Sub-Agent receives such payment. Agent
shall notify Lender in writing promptly upon the appointment of
Sub-Agent and promptly furnish Lender with a copy of the Sub-
Agency Agreement. Any and all fees and expenses payable to Sub-
Agent, in its capacity as such, pursuant to the terms of the Sub-
Agency Agreement or otherwise shall be due and payable from Agent
and Agent shall not be entitled to any reimbursement with respect
thereof, and neither Lender nor any other Person shall have any
obligation or liability with respect thereto. Notwithstanding
any Sub-Agency Agreement, Agent shall remain obligated and liable
to Borrower and Lender for the performance of the duties of Agent
hereunder without diminution of such obligation or liability by
virtue of the Sub-Agency Agreement or arrangements or by virtue
of indemnification from Sub-Agent and to the same extent and
under the same terms and conditions as if the Agent alone were
performing the obligations of Agent hereunder.
15. Miscellaneous. (a) This Agreement constitutes
the entire and final agreement between the parties with respect
to the subject matter hereof and may not be changed, terminated
or otherwise varied, except by a writing duly executed by the
parties.
(b) No waiver of any term or condition of this
Agreement, whether by delay, omission or otherwise, shall be
effective unless in writing and signed by the party sought to be
charged, and then such waiver shall be effective only in the
specific instance and for the purpose for which given.
(c) This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective
successors and permitted assigns.
(d) All notices, demands, requests, consents,
approvals and other communications (any of the foregoing, a
"Notice") required, permitted, or desired, to be given hereunder
shall be in writing (i) sent by telecopy or by registered or
certified mail, postage prepaid, return receipt requested or (ii)
delivered by hand or reputable overnight courier, addressed to
the party to be so notified at its address hereinafter set forth,
or to such other address as such party may hereafter specify in
accordance with the provisions of this Section 15(d). Any such
Notice shall be deemed to have been received three (3) days after
the date such Notice is mailed or on the date of sending by
telecopy or delivery by hand or courier addressed to the parties
as follows:
If to Lender: KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attn: Norman M. Kranzdorf
Facsimile: (610) 941-9193
If to Borrower:
KRT Property Holdings, Inc.,
Hillcrest Plaza Limited
Partnership, KR Suburban, L.P.,
Fox Run, Limited Partnership, KR
MacArthur Associates, L.P., KR
Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc.,
KR Manchester, Inc., KR Street
Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR
Pilgrim, L.P.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attn: Robert Dennis
Facsimile: (610) 941-9193
With a Copy to:Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Alan S. Pearce, Esq.
Facsimile: (212) 541-4630
If to Agent:
State Street Bank and Trust
Company
Two International Place
5th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust
Facsimile: (617) 664-5367
If to the Rating
Agency:Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attn: Commercial Mortgage
Surveillance
Facsimile: (212) 635-0295
(e) All captions in this Agreement are included
herein for convenience of reference only and shall not constitute
part of this Agreement for any other purpose.
(f) This Agreement shall be governed by and
construed and enforced in all respects in accordance with the
laws of the State of New York.
(g) As between Borrower and Lender, but not
Agent, this Agreement and Borrower's obligations hereunder shall
be subject to the provisions and limitations set forth in Section
33 of the Mortgage except that Borrower shall be liable to Lender
for any sums received by Borrower which are not deposited in the
Collection Account in accordance with this Agreement, and the
non-recourse provisions of Section 33 of the Mortgage and any
other non-recourse provisions contained in the Loan Documents
shall be inapplicable to any claims with respect thereto.
(h) Notwithstanding anything contained herein to
the contrary, at such time as Borrower shall withdraw any amounts
from any Accounts in accordance with the provisions hereof, the
same shall cease to constitute Collateral.
(i) Notwithstanding anything contained herein to
the contrary, if at any time the credit rating of the long term
debt obligations of Agent by the Rating Agency shall be less than
"AA-," Borrower shall cause Agent to be replaced with another
commercial bank with a credit rating by the Rating Agency of its
long term debt obligations of "AA" or better in accordance with
and subject to Section 14 hereof within thirty (30) days after
Borrower receives notice of such downgrading.
(j) The parties hereto hereby acknowledge that
the rights of the Lender are simultaneously herewith being
assigned to KRT Origination Corp., which is assigning the same to
State Street Bank and Trust Company, as trustee under the Trust
and Servicing Agreement (the "Trust and Servicing Agreement") and
who shall thereafter be deemed to be "Lender" for the purposes of
this Agreement. In addition, the parties hereby acknowledge that
Agent shall be entitled to rely on, and shall follow, any
instructions from GE Capital Asset Management Corporation, as
Servicer on behalf of Lender unless Agent has received
instructions to the contrary from Lender.
(k) Upon repayment in full of the Obligations,
Lender shall take such actions and execute and deliver such
documents and instruments including, without limitation, UCC-3
termination statements as are reasonably necessary to terminate
this Agreement and the security interests created hereby.
16. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
BORROWER:
KRT PROPERTY HOLDINGS, INC.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
HILLCREST PLAZA LIMITED
PARTNERSHIP
By KR Hillcrest, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR SUBURBAN, L.P.
By KR Suburban, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
FOX RUN, LIMITED PARTNERSHIP
By Fox Run, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Account, Security, Pledge
and Assignment Agreement continue on following page]
KR MACARTHUR ASSOCIATES, L.P.
By KR MacArthur, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR BEST ASSOCIATES, L.P.
By KR Best Associates, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR 69TH STREET, L.P.
By KR 69th Street, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR TRUST ONE, INC.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR MANCHESTER, INC.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Account, Security, Pledge
and Assignment Agreement continue on following page]
KR STREET ASSOCIATES, L.P.
By KR Street, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR ORANGE, INC.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR COLLEGETOWN, INC.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR HILLCREST MALL, INC.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR PILGRIM, L.P.
By KR Pilgrim, Inc.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Account, Security, Pledge
and Assignment Agreement continue on following page]
LENDER:
KRT ORIGINATION CORP.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
AGENT:
STATE STREET BANK AND TRUST
COMPANY
By: /s/ James Byrnes
----------------------------
Name: James Byrnes
Title: Assistant Vice
President
EXHIBIT A
PROPERTIES
Location of
Property Property
-------- ----------
CONNECTICUT
Groton Square. . . . . . Groton
Manchester Kmart . . . . Manchester
Milford. . . . . . . . . Milford
Orange . . . . . . . . . Orange
MARYLAND
Anneslie . . . . . . . . Baltimore
Fox Run. . . . . . . . . Prince Frederick
Hillcrest Plaza. . . . . Frederick
NEW JERSEY
Collegetown. . . . . . . Glassboro
Hillcrest Mall . . . . . Phillipsburg
Suburban Plaza . . . . . Hamilton Township
NEW YORK
A&P Mamaroneck . . . . . Mamaroneck
The Mall at Cross County Yonkers
Highridge Plaza. . . . . Yonkers
North Ridge. . . . . . . New Rochelle
Port Washington. . . . . Port Washington
Village Square . . . . . Larchmont
PENNSYLVANIA
69th Street Plaza. . . . Upper Darby
Barn Plaza . . . . . . . Doylestown
Bensalem Square. . . . . Bensalem
Best Plaza . . . . . . . Tredyffrin
Bethlehem Square . . . . Bethlehem
Bristol Commerce Park. . Bristol
MacArthur Road . . . . . Whitehall
Park Hills Plaza . . . . Altoona
Pilgrim Gardens. . . . . Drexel Hill
Street Road. . . . . . . Bensalem
Whitehall Square . . . . Whitehall
EXHIBIT B
CASH COLLATERAL AGREEMENT
June 18, 1996
State Street Bank and Trust Company
Two International Place
5th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust
Re: KRT Property Holdings, Inc., Hillcrest Plaza
Limited Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Associates,
L.P., KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR
Pilgrim, L.P., KR Manchester, Inc. and KR Street
Associates, L.P.
Ladies and Gentlemen:
Reference is made to trust account no. 990-01265 (such
account, together with all subaccounts thereunder, the
"Accounts") maintained with you (the "Bank") at your corporate
trust offices located at Two International Place, Boston,
Massachusetts, by KRT Property Holdings, Inc., Hillcrest Plaza
Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.
(collectively, "Borrower"). The Accounts are further described
as set forth on Schedule I attached hereto. Pursuant to a
Collection Account Security, Pledge and Assignment Agreement,
dated as of the date hereof (the "Security Agreement"), Borrower
has agreed with the Bank and KRT Origination Corp., as lender
("Lender") to establish and maintain the Accounts and to confirm
and/or create a security interest in favor of the Bank as agent
for Lender in the following (the "Account Collateral"): the
Accounts, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing
the Accounts, all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the foregoing and all proceeds of any and all of the foregoing
other than Account Collateral distributed to the Borrower under
the Security Agreement. It is a condition to the continued
maintenance of the Accounts with the Bank that the Bank agrees to
this letter agreement.
By signing this letter agreement, the parties agree
with each other as follows:
1. Notwithstanding anything to the contrary in any
other agreement relating to the Accounts, (a) the Accounts will
be entitled: (i) "State Street Bank and Trust Company, as agent,
Re: KRT Property Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban, L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P., KR Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc., KR Manchester, Inc., KR Street
Associates, L.P., KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P., Receipts Account," and
(ii) "State Street Bank and Trust Company, as agent, Re: KRT
Property Holdings, Inc., Hillcrest Plaza Limited Partnership, KR
Suburban, L.P., Fox Run, Limited Partnership, KR MacArthur
Associates, L.P., KR Best Associates, L.P., KR 69th Street, L.P.,
KR Trust One, Inc., KR Manchester, Inc., KR Street Associates,
L.P., KR Orange, Inc., KR Collegetown, Inc., KR Hillcrest Mall,
Inc. and KR Pilgrim, L.P., Collection Account"; and (b) the
subaccounts thereunder: (i) "State Street Bank and Trust
Company, as agent, Re: KRT Property Holdings, Inc., Hillcrest
Plaza Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Capital and TI Reserve Account," (ii) "State Street Bank and
Trust Company, as agent, Re: KRT Property Holdings, Inc.,
Hillcrest Plaza Limited Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Associates, L.P., KR Best
Associates, L.P., KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Sinking Fund Account," and (iii) "State Street Bank and Trust
Company, as agent, Re: KRT Property Holdings, Inc., Hillcrest
Plaza Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Default Interest Account," and withdrawals therefrom will be
permitted only in accordance with the Security Agreement.
2. The Bank shall be entitled to exercise any and all
rights of Borrower in respect of the Accounts and Borrower
authorizes the Bank to exercise any and all rights in respect of
the Accounts (provided that such exercise is consistent with the
Security Agreement) as the Bank shall deem reasonably necessary
or desirable in order to effectuate the provisions of this letter
agreement. The Bank shall, as soon as practicable after its
exercise of such rights, notify Borrower and Lender in writing of
such exercise, provided, however, that in no event shall any
failure by the Bank to so notify Borrower affect in any way the
Bank's rights under this Paragraph 2. The Bank hereby waives any
and all rights it may have at law or otherwise to set off, or
make any claim, against the Accounts, other than the right to
receive compensation and indemnification under the Security
Agreement.
3. Notwithstanding any other provisions of this letter
agreement, it is agreed that the Bank shall not be liable either
directly or indirectly for any action taken by it or any of its
directors, officers, agents or employees in accordance with this
letter agreement except for its or their own gross negligence or
bad faith. In no event shall the Bank be liable either directly
or indirectly for losses or delays resulting from force majeure,
computer malfunctions, interruption of communication facilities,
labor difficulties or other causes beyond the Bank's reasonable
control or for consequential damages.
4. This letter agreement shall be effective as of the
date above written. Neither this letter agreement nor any
provisions hereof may be changed, amended, modified or waived
orally, but only by an instrument in writing signed by the
parties hereto and consented to by Lender. Any provisions of
this letter agreement which may prove unenforceable under any law
or regulation shall not affect the validity of any other
provision hereof.
5. All notices, demands, requests, consents, approvals
and other communications (each herein a "Notice" or collectively
"Notices") required, permitted, or desired, to be given hereunder
shall be in writing and (i) sent by telecopy or by registered or
certified mail, postage prepaid, return receipt requested or (ii)
delivered by hand or reputable overnight courier service,
addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party
shall have specified most recently by like Notice.
If to the Bank: State Street Bank and Trust
Company Two International
Place-5th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust
Facsimile: (617) 664-5367
If to Borrower: KRT Property Holdings, Inc.,
Hillcrest Plaza Limited
Partnership, KR Suburban,
L.P., Fox Run, Limited
Partnership, KR MacArthur
Associates, L.P., KR Best
Associates, L.P., KR 69th
Street, L.P., KR Trust One,
Inc., KR Manchester, Inc., KR
Street Associates, L.P., KR
Orange, Inc., KR Collegetown,
Inc., KR Hillcrest Mall, Inc.
and KR Pilgrim, L.P., c/o
Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania
19428
Attn: Robert Dennis
Facsimile: (610) 941-9193
With a Copy to: Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Alan S. Pearce, Esq.
Facsimile: (212) 541-4630
If to Lender: KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania
19428
Attn: Norman M. Kranzdorf
Facsimile: (610) 941-9193
6. This letter agreement shall not be assignable by
the Bank without the consent of the undersigned (which shall not
be unreasonably withheld) and Lender and shall not be assignable
by the undersigned. This letter agreement shall be binding upon
the parties and their respective successors and permitted assigns
and shall inure to the benefit of the parties and their
respective successors and permitted assigns. The Bank may
terminate this letter agreement only upon thirty (30) days' prior
written notice to Borrower in accordance with Section 14 of the
Security Agreement. Upon such termination the Bank shall hold
all funds in the Accounts until it receives instructions from
Lender or its successor instructing it how to dispose of such
funds.
7. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York
without regard to conflicts of law principles of such State.
8. The rights and remedies of the Bank as set forth in
the Security Agreement are expressly incorporated in this letter
agreement.
9. This letter agreement shall be subject to all of
the terms, covenants and conditions of the Security Agreement all
of which are incorporated herein by reference as if fully set
forth herein.
Very truly yours,
BORROWER:
KRT PROPERTY HOLDINGS, INC.
By:---------------------------
Name: Norman Kranzdorf
Title: President
HILLCREST PLAZA LIMITED
PARTNERSHIP
By KR Hillcrest, Inc.
By:------------------------
Name: Norman Kranzdorf
Title: President
KR SUBURBAN, L.P.
By KR Suburban, Inc.
By:------------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Agreement continue on following
page]
FOX RUN, LIMITED PARTNERSHIP
By Fox Run, Inc.
By:------------------------
Name: Norman Kranzdorf
Title: President
KR MACARTHUR ASSOCIATES, L.P.
By KR MacArthur, Inc.
By:-------------------------
Name: Norman Kranzdorf
Title: President
KR BEST ASSOCIATES, L.P.
By KR Best Associates, Inc.
By:--------------------
Name: Norman Kranzdorf
Title: President
KR 69TH STREET, L.P.
By KR 69th Street, Inc.
By:------------------------
Name: Norman Kranzdorf
Title: President
KR TRUST ONE, INC.
By:-------------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Agreement continue on following
page]
KR MANCHESTER, INC.
By:--------------------------
Name: Norman Kranzdorf
Title: President
KR STREET ASSOCIATES, L.P.
By KR Street, Inc.
By:------------------------
Name: Norman Kranzdorf
Title: President
KR ORANGE, INC.
By:---------------------------
Name: Norman Kranzdorf
Title: President
KR COLLEGETOWN, INC.
By:---------------------------
Name: Norman Kranzdorf
Title: President
KR HILLCREST MALL, INC.
By:------------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Agreement continue on following
page]
KR PILGRIM, L.P.
By KR Pilgrim, Inc.
By:------------------------
Name: Norman Kranzdorf
Title: President
ACKNOWLEDGED AND AGREED TO
AS OF THE DATE FIRST
ABOVE WRITTEN:
STATE STREET BANK AND
TRUST COMPANY, as Agent
By:-----------------------------
Name: James Byrnes
Title: SCHEDULE I
Account Number Account Name
- -------------- -------------
1412912975 State Street Bank and Trust Company, as
agent, Re: KRT Property
(CoreStates Bank) Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Associates,
L.P., KR Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P.,
KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Receipts Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR L.P., Fox Run, Limited Partnership, KR
Suburban, Bank MacArthur Associates, L.P.,
and Trust KR Best Associates, L.P., KR 69th Street,
Company) L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Collection
Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban,
Bank and Trust L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P.,
Company) KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Capital and
TI Reserve Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban,
Bank and Trust L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P.,
Company) KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Sinking Fund
Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban,
Bank and Trust L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P.,
Company) KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Default
Interest Account
Exhibit C
----------
"Eligible Investments" shall mean at any time, any one or
more of the following obligations and securities (each
capitalized term not otherwise defined herein shall have the
respective meaning set forth in the Trust and Servicing
Agreement):
(a) direct debt obligations of, and debt obligations
fully guaranteed as to timely payment of principal and interest
by, the United States, FNMA, FHLMC, or any agency or
instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States;
(b) general obligations of or debt obligations
guaranteed by any state of the United States, or the District of
Columbia, in each case receiving the highest long-term debt
rating of the Rating Agency, or such lower rating as will not
result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;
(c) commercial or finance company paper or demand
notes that constitute vehicles for commercial paper which are
then rated in the highest unsecured commercial or finance company
paper rating category of the Rating Agency (whether or not
published by the Rating Agency) or if such commercial or finance
company paper is not then rated by the Rating Agency, which is
then rated in the highest unsecured commercial or finance company
paper rating category by at least two other nationally recognized
rating agencies, or such lower category as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Class A, Class B, Class C or Class D Certificates by the Rating
Agency as evidenced by a letter confirming such result by the
Rating Agency;
(d) certificates of deposit, demand or time deposits,
federal funds or bankers' acceptances issued by any depository
institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision
and examination by federal or state banking authorities, provided
that the short-term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution or trust company in a holding company
system, the short-term unsecured debt obligations of such holding
company) are rated F-1+ by the Rating Agency (whether or not
published by the Rating Agency) or, if not then rated by the
Rating Agency, are rated in the highest short-term rating
category by at least two other nationally recognized rating
agencies, or such lower or other rating category as will not
result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;
(e) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation and providing for a
return in the nature of interest; provided that the short-term
unsecured debt obligations of such corporation (or in the case of
the principal depository institution or trust company in a
holding company system, the short-term unsecured debt obligations
of such holding company) are rated F-1+ by the Rating Agency
(whether or not published by the Rating Agency) or, if not then
rated by the Rating Agency, are rated in the highest short-term
rating category by at least two other nationally recognized
rating agencies, or such lower or other rating category as will
not result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;
(f) repurchase obligations with respect to any
security described in clauses (a) and (b) of this definition and
providing for a return in the nature of interest, in each case
entered into with a depository institution or trust company
(acting as principal) described in clause (d) above or, on an
overnight basis, with the Trustee;
(g) securities (other than stripped bonds or stripped
coupons) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or
any state thereof, which are rated AA by the Rating Agency
(whether or not published by the Rating Agency) or, if not then
rated by the Rating Agency, are rated in the highest long-term
rating category by at least two other nationally recognized
rating agencies, or in such lower rating category as will not
result in the downgrading or withdrawal of the ratings then
assigned to the Class A, Class B, Class C or Class D Certificates
by the Rating Agency as evidenced by a letter confirming such
result by the Rating Agency;
(h) such other investments bearing interest or sold at
a discount, or earning a return "in the nature of interest"
within the meaning of Treasury Regulations Section 1.860G-2(g) (1), (as
evidenced by an Opinion of Counsel delivered to the Trustee by
the Servicer at its own expense), as are acceptable to the Rating
Agency, and otherwise treated as a "permitted investment" under
Section 860(G)(a)(5) of the Code, as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Class A, Class B, Class C or Class D Certificates by the Rating
Agency as evidenced by a letter confirming such result by the
Rating Agency; and
(i) money market funds investing in such obligations
and securities set forth in clause (a) above, which funds
maintain a constant net asset value and which are rated AAA by
the Rating Agency (whether or not published by the Rating Agency)
or, if not then rated by the Rating Agency, are rated in the
highest long-term rating category by at least two other
nationally recognized rating agencies, or in such lower rating
category as will not result in the downgrading or withdrawal of
the ratings then assigned to the Class A, Class B, Class C or
Class D Certificates by the Rating Agency as evidenced by a
letter confirming such result by the Rating Agency.
Unless otherwise specified herein, (i) any such
Permitted Investment must be available for withdrawal without
penalty and must mature no later than the Business Day
immediately preceding the date of anticipated use, (ii) no such
instrument set forth above shall constitute a Permitted
Investment if such instrument evidences either (a) a right to
receive only interest payments with respect to the obligations
underlying such instrument or (b) a right to receive both
principal and interest payments derived from obligations
underlying such instrument and the principal and interest
payments with respect to such instrument provide for a yield to
maturity of greater than 120% of the yield to maturity at par of
such underlying obligations; provided that if any such instrument
or security is redeemable by the issuer thereof, it shall not be
redeemable at less than par and if redeemable by any party, such
redemption must be without penalty or discount; and (iii) no
Permitted Investment shall be purchased at a price in excess of
the face amount thereof.
CASH COLLATERAL ACCOUNT
SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT
among
KRT Property Holdings, Inc., Hillcrest Plaza Limited
Partnerships, KR Suburban, L.P., Fox Run Limited Partnership, KR
MacArthur Associates, L.P., KR Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc., KR Manchester, Inc., KR Street
Associates, L.P.,
KR Orange, Inc., KR Collegetown, Inc., KR Hillcrest Mall, Inc.
and KR Pilgrim, L.P.,
as Borrower
and
State Street Bank and Trust Company, as Agent
and
KRT Origination Corp., as Lender
Dated as of June 18, 1996
CASH COLLATERAL AGREEMENT
June 18, 1996
State Street Bank and Trust Company
Two International Place
5th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust
Re: KRT Property Holdings, Inc., Hillcrest Plaza
Limited Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Associates,
L.P., KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR
Pilgrim, L.P., KR Manchester, Inc. and KR Street
Associates, L.P.
Ladies and Gentlemen:
Reference is made to trust account no. 990-01265 (such
account, together with all subaccounts thereunder, the
"Accounts") maintained with you (the "Bank") at your corporate
trust offices located at Two International Place, Boston,
Massachusetts by KRT Property Holdings, Inc., Hillcrest Plaza
Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.
(collectively, "Borrower"). The Accounts are further described
as set forth on Schedule I attached hereto. Pursuant to a
Collection Account Security, Pledge and Assignment Agreement,
dated as of the date hereof (the "Security Agreement"), Borrower
has agreed with the Bank and KRT Origination Corp., as lender
("Lender") to establish and maintain the Accounts and to confirm
and/or create a security interest in favor of the Bank as agent
for Lender in the following (the "Account Collateral"): the
Accounts, all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing
the Accounts, all interest, dividends, cash, instruments and
other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of the foregoing and all proceeds of any and all of the foregoing
other than Account Collateral distributed to the Borrower under
the Security Agreement. It is a condition to the continued
maintenance of the Accounts with the Bank that the Bank agrees to
this letter agreement.
By signing this letter agreement, the parties agree
with each other as follows:
1. Notwithstanding anything to the contrary in any
other agreement relating to the Accounts, (a) the Accounts will
be entitled: (i) "State Street Bank and Trust Company, as agent,
Re: KRT Property Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban, L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P., KR Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc., KR Manchester, Inc., KR Street
Associates, L.P., KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P., Receipts Account," and
(ii) "State Street Bank and Trust Company, as agent, Re: KRT
Property Holdings, Inc., Hillcrest Plaza Limited Partnership, KR
Suburban, L.P., Fox Run, Limited Partnership, KR MacArthur
Associates, L.P., KR Best Associates, L.P., KR 69th Street, L.P.,
KR Trust One, Inc., KR Manchester, Inc., KR Street Associates,
L.P., KR Orange, Inc., KR Collegetown, Inc., KR Hillcrest Mall,
Inc. and KR Pilgrim, L.P., Collection Account"; and (b) the
subaccounts thereunder: (i) "State Street Bank and Trust
Company, as agent, Re: KRT Property Holdings, Inc., Hillcrest
Plaza Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Capital and TI Reserve Account," (ii) "State Street Bank and
Trust Company, as agent, Re: KRT Property Holdings, Inc.,
Hillcrest Plaza Limited Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Associates, L.P., KR Best
Associates, L.P., KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Sinking Fund Account," and (iii) "State Street Bank and Trust
Company, as agent, Re: KRT Property Holdings, Inc., Hillcrest
Plaza Limited Partnership, KR Suburban, L.P., Fox Run, Limited
Partnership, KR MacArthur Associates, L.P., KR Best Associates,
L.P., KR 69th Street, L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Default Interest Account," and withdrawals therefrom will be
permitted only in accordance with the Security Agreement.
2. The Bank shall be entitled to exercise any and all
rights of Borrower in respect of the Accounts and Borrower
authorizes the Bank to exercise any and all rights in respect of
the Accounts (provided that such exercise is consistent with the
Security Agreement) as the Bank shall deem reasonably necessary
or desirable in order to effectuate the provisions of this letter
agreement. The Bank shall, as soon as practicable after its
exercise of such rights, notify Borrower and Lender in writing of
such exercise, provided, however, that in no event shall any
failure by the Bank to so notify Borrower affect in any way the
Bank's rights under this Paragraph 2. The Bank hereby waives any
and all rights it may have at law or otherwise to set off, or
make any claim, against the Accounts, other than the right to
receive compensation and indemnification under the Security
Agreement.
3. Notwithstanding any other provisions of this letter
agreement, it is agreed that the Bank shall not be liable either
directly or indirectly for any action taken by it or any of its
directors, officers, agents or employees in accordance with this
letter agreement except for its or their own gross negligence or
bad faith. In no event shall the Bank be liable either directly
or indirectly for losses or delays resulting from force majeure,
computer malfunctions, interruption of communication facilities,
labor difficulties or other causes beyond the Bank's reasonable
control or for consequential damages.
4. This letter agreement shall be effective as of the
date above written. Neither this letter agreement nor any
provisions hereof may be changed, amended, modified or waived
orally, but only by an instrument in writing signed by the
parties hereto and consented to by Lender. Any provisions of
this letter agreement which may prove unenforceable under any law
or regulation shall not affect the validity of any other
provision hereof.
5. All notices, demands, requests, consents, approvals
and other communications (each herein a "Notice" or collectively
"Notices") required, permitted, or desired, to be given hereunder
shall be in writing and (i) sent by telecopy or by registered or
certified mail, postage prepaid, return receipt requested or (ii)
delivered by hand or reputable overnight courier service,
addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party
shall have specified most recently by like Notice.
If to the Bank: State Street Bank and Trust Company
Two International Place
5th Floor
Boston, Massachusetts 02110
Attn: Corporate Trust
Facsimile: (617) 664-5367
If to Borrower: KRT Property Holdings, Inc., Hillcrest Plaza
Limited Partnership, KR Suburban, L.P., Fox
Run, Limited Partnership, KR MacArthur
Associates, L.P., KR Best Associates, L.P.,
KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P.,
KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attn: Robert Dennis
Facsimile: (610) 941-9193
With a Copy to: Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
Attn: Alan S. Pearce, Esq.
Facsimile: (212) 541-4630
If to Lender: KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Attn: Norman M. Kranzdorf
Facsimile: (610) 941-9193
6. This letter agreement shall not be assignable by
the Bank without the consent of the undersigned (which shall not
be unreasonably withheld) and Lender and shall not be assignable
by the undersigned. This letter agreement shall be binding upon
the parties and their respective successors and permitted assigns
and shall inure to the benefit of the parties and their
respective successors and permitted assigns. The Bank may
terminate this letter agreement only upon thirty (30) days' prior
written notice to Borrower in accordance with Section 14 of the
Security Agreement. Upon such termination the Bank shall hold
all funds in the Accounts until it receives instructions from
Lender or its successor instructing it how to dispose of such
funds.
7. This letter agreement shall be governed by and
construed in accordance with the laws of the State of New York
without regard to conflicts of law principles of such State.
8. The rights and remedies of the Bank as set forth in
the Security Agreement are expressly incorporated in this letter
agreement.
9. This letter agreement shall be subject to all of
the terms, covenants and conditions of the Security Agreement all
of which are incorporated herein by reference as if fully set
forth herein.
Very truly yours,
BORROWER:
KRT PROPERTY HOLDINGS, INC.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
HILLCREST PLAZA LIMITED
PARTNERSHIP
By KR Hillcrest, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR SUBURBAN, L.P.
By KR Suburban, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
FOX RUN, LIMITED PARTNERSHIP
By Fox Run, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Agreement continue on following
page]
KR MACARTHUR ASSOCIATES, L.P.
By KR MacArthur, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR BEST ASSOCIATES, L.P.
By KR Best Associates, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR 69TH STREET, L.P.
By KR 69th Street, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR TRUST ONE, INC.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR MANCHESTER, INC.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Agreement continue on following
page]
KR STREET ASSOCIATES, L.P.
By KR Street, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR ORANGE, INC.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR COLLEGETOWN, INC.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
KR HILLCREST MALL, INC.
By: /s/ Norman Kranzdorf
------------------------
Name: Norman Kranzdorf
Title: President
KR PILGRIM, L.P.
By KR Pilgrim, Inc.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
[Signatures to Cash Collateral Agreement continue on following
page]ACKNOWLEDGED AND AGREED TO
AS OF THE DATE FIRST
ABOVE WRITTEN:
STATE STREET BANK AND
TRUST COMPANY, as Agent
By: /s/ James Byrnes
---------------------------
Name: James Byrnes
Title: Assistant Vice President SCHEDULE I
Account Number Account Name
1412912975 State Street Bank and Trust Company, as
agent, Re: KRT Property
(CoreStates Bank) Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban, L.P., Fox Run,
Limited Partnership, KR MacArthur Associates,
L.P., KR Best Associates, L.P., KR 69th
Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P.,
KR Orange, Inc., KR Collegetown, Inc., KR
Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
Receipts Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban,
Bank and Trust L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P.,
Company) KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Collection
Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban,
Bank and Trust L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P.,
Company) KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Capital and
TI Reserve Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban,
Bank and Trust L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P.,
Company) KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Sinking Fund
Account
990-01265 State Street Bank and Trust Company, as
agent, Re: KRT Property
(State Street Holdings, Inc., Hillcrest Plaza Limited
Partnership, KR Suburban,
Bank and Trust L.P., Fox Run, Limited Partnership, KR
MacArthur Associates, L.P.,
Company) KR Best Associates, L.P., KR 69th Street,
L.P., KR Trust One, Inc., KR Manchester,
Inc., KR Street Associates, L.P., KR Orange,
Inc., KR Collegetown, Inc., KR Hillcrest
Mall, Inc. and KR Pilgrim, L.P., Default
Interest Account
CLASS A
MORTGAGE NOTE
$123,700,000 New York, New York
June 18, 1996
W I T N E S S E T H:
- - - - - - - - - -
FOR VALUE RECEIVED, the undersigned, collectively,
as makers (collectively, "Borrower"), promises to pay to the
order of KRT Origination Corp., having an office c/o Kranzco
Realty Trust, 128 Fayette Street, Conshohocken, Pennsylvania
19428, as payee ("Lender"), the principal sum of One Hundred
Twenty-Three Million Seven Hundred Thousand and No/100
($123,700,000) Dollars, less any payments of principal (each, a
"Prepayment") made thereon from time to time (the "Principal
Amount"), with interest on such Principal Amount as hereinafter
provided. All payments due from Borrower pursuant to the terms
of this Mortgage Note or any other Loan Document shall be paid
into the Collection Account (as hereinafter defined), or as
otherwise directed by Lender from time to time, on the applicable
Due Date (as hereafter defined). This Mortgage Note is one of
four notes secured by (a) an Indenture of Mortgage, Deed of
Trust, Security Agreement, Financing Statement, Fixture Filing
and Assignment of Leases, Rents and Security Deposits, dated as
of the date hereof (the "Mortgage"), securing a first mortgage
lien upon the Trust Estate (as defined in the Mortgage), made by
Borrower, as grantor, in favor of Lender, as beneficiary, (b) an
Assignment of Leases, Rents and Security Deposits, dated as of
the date hereof (the "Assignment"), made by Borrower, as
assignor, in favor of Lender, as assignee, and (c) all of the
other Loan Documents. All capitalized terms used but not
otherwise defined herein shall have the respective meanings
ascribed thereto in the Mortgage.
1. Interest and Principal Payments. Interest on the
outstanding principal balance of this Mortgage Note shall accrue
at the rate of Seven and Eighty-One Hundredths (7.80%) percent
per annum (the "Interest Rate") (in the event of an Event of
Default, payment of an additional amount equal to interest at the
Default Rate (as hereinafter defined) on the outstanding
principal amount of this Mortgage Note shall also be due for each
Interest Accrual Period during any part of which such Event of
Default continues in accordance with the provisions of Paragraph
3 hereof). Interest at the Interest Rate shall be payable in
monthly installments in arrears (each such monthly payment being
an "Interest Installment") of $804,050.00 (except in the case of
the Interest Installment due July 16, 1996, which shall be equal
to $857,653.33) on or before 12:00 noon, Eastern Standard Time,
on the fourth (4th) Business Day prior to the twentieth (20th)
day of each calendar month or if such 20th day is not a Business
Day, the next succeeding Business Day (each, a "Due Date") during
the term hereof, commencing on July 16, 1996 until the Maturity
Date (as hereinafter defined) or otherwise. Interest shall be
computed on the basis of a 360-day year consisting of twelve (12)
months of thirty (30) days each, and thirty (30) days' interest
shall be paid on each Due Date and shall accrue from and
including each Due Date to but not including the next succeeding
Due Date, except with respect to the Due Date on July 16, 1996 on
which thirty-two (32) days' interest shall be paid. The entire
outstanding principal balance of this Mortgage Note, together
with all accrued but unpaid interest hereon, shall be due and
payable to Lender on the Due Date in June, 2003 (the "Maturity
Date") or on such earlier date as may be required under the terms
of this Mortgage Note. All payments hereunder shall be made by
wire transfer of immediately available funds into an account
designated by Lender (the "Collection Account") in accordance
with the Cash Collateral Agreement. In the event of any
prepayment pursuant to the provisions of Paragraphs 4 or 5
hereof, the amount of the Interest Installment shall be adjusted
to reflect such prepayment.
2. Definitions. As used herein, the following terms
shall have the following meanings:
(a) Mandatory Prepayment: As defined in Paragraph 5
hereof.
(b) Servicer: GE Capital Asset Management
Corporation.
(c) Voluntary Prepayment: As defined in Paragraph 4
hereof.
(d) Other Notes: means the three mortgage notes (the
"Class B Note," the "Class C Note" and the "Class D Note"), each
dated as of the date hereof, executed by Borrower for the benefit
of Lender, in the outstanding principal amount of $20,600,000,
$28,900,000 and $8,500,000, respectively; the Class B Note, the
Class C Note and the Class D Note are also secured by the
Mortgage.
(e) Interest Accrual Period: means the period
commencing on (and including) the 20th day of each calendar month
(except with respect to the initial Interest Accrual Period which
shall commence on (and include) the date hereof) and ending on
(but excluding) the 20th day of the immediately succeeding
calendar month.
3. Default Rate. In the event that there occurs and
is continuing an Event of Default, then, and in addition to
Lender's rights set forth in Paragraph 7 hereof, additional
interest ("Default Interest") shall accrue on the outstanding
principal amount of this Mortgage Note, as of the first day of
the Interest Accrual Period in which such Event of Default occurs
and through the last day of the Interest Accrual Period in which
such Event of Default is cured, at a rate equal to three percent
(3%) per annum (the "Default Rate"). If interest payable pursuant
to the Default Rate is deemed to be interest in excess of the
Maximum Amount (as hereinafter defined), the amount actually
collected by Lender in excess of such amount shall be applied in
accordance with the provisions of Paragraphs 11 and 12 hereof.
4. Voluntary Prepayment. (a) Prior to the Due Date
in May, 2003 Borrower may not prepay the Principal Amount in
whole or in part. From and after such Due Date, and provided no
Event of Default shall have occurred and be continuing, Borrower
may prepay the Principal Amount, in whole or in part (a
"Voluntary Prepayment"), on any Due Date, upon not less than
thirty (30) days prior written notice to Lender, which notice
shall specify the Due Date on which such Prepayment shall be
made, the amount of the Prepayment, and shall be irrevocable, but
only upon the payment of the Prepayment Amount (as hereinafter
defined).
(b) The prepayment amount (the "Prepayment Amount")
shall be equal to the sum of (i) the amount of the Principal
Amount being prepaid, and (ii) all accrued and unpaid interest
through the Due Date of the Interest Installment period in which
such Voluntary Prepayment is made.
(c) Any Principal Amount prepaid pursuant to the
provisions of Section 38(b) of the Mortgage shall be applied
first to this Mortgage Note until the same is repaid in full, and
then to the Class B Note, the Class C Note and the Class D Note
as provided therein, in alphabetical order. Any other Principal
Amount prepaid by Borrower pursuant to this Paragraph 4 shall be
applied to this Mortgage Note and/or the Other Notes in such
manner as Borrower shall specify at the time.
(d) Any Principal Amount of this Mortgage Note prepaid
pursuant to the provisions of this Paragraph 4 may not be
reborrowed hereunder.
5. Mandatory Prepayment. (a) Following certain
events of casualty or condemnation, Borrower is required,
pursuant to Section 6 of the Mortgage, to repay the Principal
Amount (the "Mandatory Prepayment") to the extent of the
applicable insurance or condemnation proceeds, without premium or
penalty, upon the Due Date next succeeding the date such proceeds
become available for prepayment.
(b) Any Mandatory Prepayment shall be applied first to
this Mortgage Note until the same is repaid in full, and then to
the Class B Note, the Class C Note and the Class D Note as
provided therein, in alphabetical order.
(c) Any Principal Amount of this Mortgage Note prepaid
pursuant to this Paragraph 5 may not be reborrowed hereunder.
6. Application of Funds. Subject to the provisions
of Paragraphs 11 and 12 hereof, all payments received by Lender
on the Mortgage Notes shall be applied first, to accrued interest
(other than Default Interest) on this Mortgage Note; second, to
interest on the Class B Note, the Class C Note and the Class D
Note in that order; third, to reduce the principal amount of this
Mortgage Note to zero; fourth, to reduce to zero the principal
amount of the Class B Note, the Class C Note and the Class D
Note, in that order; fifth, to reimburse Lender for expenses
payable to Lender and its assignees pursuant to Paragraph 8
hereof in connection with the enforcement of this Mortgage Note
and the other Loan Documents; and sixth, to Default Interest.
7. Events of Default. The occurrence and continuance
of an Event of Default (as defined in the Mortgage) shall
constitute an "Event of Default" hereunder. Upon the occurrence
and continuance of an Event of Default, Lender may, at its
option, declare all or any portion of the unpaid principal
balance of this Mortgage Note, together with all accrued and
unpaid interest hereon, and all other amounts payable hereunder,
to be immediately due and payable and thereby accelerate the
maturity hereof, and Lender may proceed to exercise any rights or
remedies that it may have under this Mortgage Note or such other
rights and remedies which Lender, subject to Paragraph 14 hereof,
may have at law, equity or otherwise.
8. Lender's Costs and Expenses. Borrower shall pay
all costs and expenses of Lender, in addition to principal,
interest and Default Interest (if applicable), in connection with
(a) its performance of its obligations and exercise of its rights
under the Mortgage, this Mortgage Note and the other Loan
Documents, (b) the review of any Tax Opinion, Nondisqualification
Opinion, or other Opinion of Counsel delivered by Borrower
pursuant to the Mortgage or the other Loan Documents, and (c) the
servicing and monitoring of this Mortgage Note and the Mortgage.
Borrower shall also pay all costs and expenses of collection of
Lender in connection with this Mortgage Note, in addition to
principal, interest and Default Interest (if applicable)
including, without limitation, reasonable attorneys' fees and
disbursements and other reasonable costs and expenses incurred by
Lender upon the occurrence and during the continuance of an Event
of Default in connection with the pursuit by Lender of any of its
rights or remedies referred to herein or the protection of or
realization of collateral or in connection with any of Lender's
collection efforts or any advances made by any advancing agent
pursuant to the Trust and Servicing Agreement, whether or not
suit on this Mortgage Note, on any of the other Loan Documents or
any foreclosure proceeding is filed. All such costs and expenses
shall be payable as provided in the Trust and Servicing Agreement
upon Borrower's receipt of a statement therefor from Lender and
also shall be secured by the Mortgage and the other Loan
Documents.
9. No Waivers. No failure on the part of Lender to
exercise any right or remedy hereunder, whether before or after
the happening of a default, shall constitute a waiver of such
default, any future default or of any other default. No failure
to accelerate the debt evidenced hereby by reason of an Event of
Default, or acceptance of a past due installment, or indulgence
granted from time to time shall be construed to be a waiver of
the right to insist upon prompt payment, nor shall it be deemed
to be a novation of this Mortgage Note or as a reinstatement of
the debt evidenced hereby or as a waiver of such right of
acceleration or any other right, nor be construed so as to
preclude the exercise of any right which Lender may have, at law
or in equity, and, subject to the provisions of Paragraph 14
hereof, Borrower hereby expressly waives the benefit of any
statute or rule of law or equity which would produce a result
contrary to or be in conflict with the foregoing. This Mortgage
Note may not be changed orally, but only by an agreement in
writing signed by the party against whom such agreement is sought
to be enforced.
10. Borrower's Waiver of Rights. Borrower, for itself
and its successors and assigns, hereby waives presentment,
protest, demand, diligence, notice of dishonor and of nonpayment,
and waives and renounces all rights to the benefits of any
statute of limitations and any moratorium, appraisement, and
exemption now provided or which may hereafter be provided by any
federal or state statute, law, rule or regulation, including but
not limited to, exemptions provided by or allowed under any
federal or state bankruptcy or insolvency laws, both as to itself
and as to all of its property, whether real or personal, against
the enforcement and collection of the obligations evidenced by
this Mortgage Note and any and all extensions, renewals and
modifications hereof.
11. Maximum Interest Rate. It is the intention of the
parties to conform strictly to the usury and other laws relating
to interest from time to time in force, and this Mortgage Note is
hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to Lender,
or collected by Lender or for the use, forbearance or detention
of the money to be loaned hereunder or otherwise, or for the
payment or performance of any covenant or obligation contained
herein, exceed the maximum amount permissible under applicable
usury or other laws of similar import (the "Maximum Amount"). If
under any circumstances whatsoever fulfillment of any provision
hereof at the time performance of such provision shall be due,
shall involve transcending the Maximum Amount, then ipso facto,
the obligation to be fulfilled shall be reduced to the Maximum
Amount. For the purposes of calculating the actual amount of
interest paid and/or payable hereunder, in respect of laws
pertaining to usury or laws of similar import, all sums paid or
agreed to be paid to the holder hereof for the use, forbearance
or detention of the indebtedness of Borrower evidenced hereby,
outstanding from time to time shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Mortgage Note,
until payment in full of all of such indebtedness, so that the
actual rate of interest on account of such indebtedness is
uniform through the term hereof. Subject to the terms of
Paragraph 14 hereof, the terms and provisions of this Paragraph
11 and Paragraph 12 hereof shall control and supersede every
other provision of all agreements between Borrower and Lender.
12. Excess Interest Payments. If under any
circumstances Lender shall ever receive an amount deemed interest
by applicable law, which would exceed the Maximum Amount, such
amount that would be excessive interest under applicable usury
laws or laws of similar import shall be applied by Lender in
payment of the Principal Amount until such time as the interest
rate decreases below the Maximum Amount.
13. Governing Law. (a) This Mortgage Note 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. To the fullest extent
permitted by law, Borrower hereby unconditionally and irrevocably
waives any claim to assert that the law of any other jurisdiction
governs this Mortgage Note and this Mortgage Note shall be
governed by and construed in accordance with the laws of the
State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) To the extent permitted by law, any legal suit,
action or proceeding against Lender arising out of or relating to
this Mortgage Note shall be, and any legal suit, action or
proceeding against Borrower on this Mortgage Note may be,
instituted in any federal or state court in New York, New York,
pursuant to Section 5-1402 of the New York General Obligations Law, and
Borrower waives any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding and
Borrower hereby irrevocably submits to the jurisdiction of any
such court in any suit, action or proceeding. Borrower does
hereby designate and appoint Robinson Silverman Pearce Aronsohn &
Berman LLP as its authorized agent to accept and acknowledge on
its behalf service of any and all process which may be served in
any such suit, action or proceeding in any federal or state court
in New York, New York, and agrees that service of process upon
said agent at said address and written notice of said service of
Borrower mailed or delivered to Borrower in the manner provided
in the Mortgage, shall be deemed in every respect effective
service of process upon Borrower, in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give
prompt notice to the Lender of any changed address of its
authorized agent hereunder, (ii) may at any time and from time to
time designate a substitute authorized agent with an office in
New York, New York (which office shall be designated as the
address for service of process), and (iii) shall promptly
designate such a substitute if its authorized agent ceases to
have an office in New York, New York or is dissolved without
leaving a successor.
14. Non-Recourse. Notwithstanding anything in this
Mortgage Note and except to the extent expressly set forth in
Section 33 and 41 of the Mortgage, no personal liability shall be
asserted or enforceable against (i) Borrower, (ii) any Direct
Beneficial Owner, (iii) any Affiliate of Borrower or any Direct
Beneficial Owner, (iv) any Person owning directly or indirectly,
any legal or beneficial interest in Borrower, any Direct
Beneficial Owner or any Affiliate of Borrower or any Direct
Beneficial Owner, or (v) any partner, principal, officer,
controlling person, beneficiary, trustee, advisor, shareholder,
employee, agent, Affiliate or director of any Persons described
in clauses (i) through (iv) above (collectively, the "Exculpated
Parties") by Lender in respect of this Mortgage Note, the
Mortgage or the other Loan Documents or the making, issuance or
transfer thereof, all such liability, if any, being expressly
waived by Lender and each successive holder of this Mortgage Note
upon the express condition of this provision and limitation that
in the case of the occurrence and continuance of an Event of
Default, Lender's remedies in its sole discretion shall be any or
all of:
(i) Foreclosure of the lien of the Mortgage in
accordance with the terms and provisions set forth in the
Mortgage;
(ii) Action against any other security at any time
given to secure the payment of this Mortgage Note and under
the other Loan Documents; and
(iii) Exercise of any other remedy set forth in
the Mortgage or any other Loan Document.
The lien of any judgment against Borrower and any
proceeding instituted on, under or in connection with this
Mortgage Note, the Mortgage or the other Loan Documents shall not
extend to any property now or hereafter owned by Borrower or any
of the Exculpated Parties other than the Net Operating Income
from, and the ownership interest of Borrower in, the Trust Estate
and the other security for the payment of this Mortgage Note.
15. Legal Relationship. Borrower and Lender intend
that the relationship created under this Mortgage Note be solely
that of debtor and creditor. Nothing herein is intended to
create a joint venture, partnership, tenancy-in-common or joint
tenancy relationship between Borrower and Lender.
16. Assignment. The parties hereto acknowledge that
immediately following the execution and delivery of this Mortgage
Note, the Mortgage and the other Loan Documents, Lender intends
to sell, transfer and assign this Mortgage Note, the Mortgage and
the other Loan Documents to State Street Bank and Trust Company,
as Trustee. All references to "Lender" hereunder shall be deemed
to include the assigns of the Lender.
17. Waiver of Jury Trial. Borrower hereby waives and
shall to the extent permitted by law waive trial by jury in any
action or proceeding brought by or counterclaim, other than a
compulsory counterclaim, asserted by Lender which action,
proceeding or counterclaim arises out of or is connected with
this Mortgage Note.
IN WITNESS WHEREOF, each Borrower has executed this
instrument by its respective duly authorized officer or signatory
on the date first above written.
KRT PROPERTY HOLDINGS, INC.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
HILLCREST PLAZA LIMITED PARTNERSHIP
By: KR Hillcrest, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR SUBURBAN, L.P.
By: KR Suburban, Inc.
By: /s/ Robert Dennis
---------------------------
---------------------------
---------------------------
Name: Robert Dennis
Title: Vice President
FOX RUN, LIMITED PARTNERSHIP
By: KR Fox Run, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR MacARTHUR ASSOCIATES, L.P.
By: KR MacArthur, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR BEST ASSOCIATES, L.P.
By: KR Best Associates, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR 69TH STREET, L.P.
By: KR 69th Street, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR TRUST ONE, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR MANCHESTER, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR STREET ASSOCIATES, L.P.
By: KR Street, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR ORANGE, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR COLLEGETOWN, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR HILLCREST MALL, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR PILGRIM, L.P.
By: KR Pilgrim, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
Pay to the order of
State Street Bank and
Trust Company,
as Trustee, without recourse
CLASS B
MORTGAGE NOTE
$20,600,000 New York, New York
June 18, 1996
W I T N E S S E T H:
- - - - - - - - - -
FOR VALUE RECEIVED, the undersigned, collectively, as
maker ("Borrower"), promises to pay to the order of KRT
Origination Corp., having an office c/o Kranzco Realty Corp., 128
Fayette Street, Conshohocken, Pennsylvania 19428, as payee
("Lender"), the principal sum of Twenty Million Six Hundred
Thousand and no/100 Dollars ($20,600,000), less any payments of
principal (each, a "Prepayment") made thereon from time to time
(the "Principal Amount"), with interest on such Principal Amount
as hereinafter provided. All payments due from Borrower pursuant
to the terms of this Mortgage Note or any other Loan Document
shall be paid into the Collection Account (as hereinafter
defined), or as otherwise directed by Lender from time to time,
on the applicable Due Date (as hereafter defined). This Mortgage
Note is one of four notes secured by (a) an Indenture of
Mortgage, Deed of Trust, Security Agreement, Financing Statement,
Fixture Filing and Assignment of Leases, Rents and Security
Deposits, dated as of the date hereof (the "Mortgage"), securing
a first mortgage lien upon the Trust Estate (as defined in the
Mortgage), made by Borrower, as grantor, in favor of Lender, as
beneficiary, (b) an Assignment of Leases, Rents and Security
Deposits, dated as of the date hereof (the "Assignment"), made by
Borrower, as assignor, in favor of Lender, as assignee, and (c)
all of the other Loan Documents. All capitalized terms used but
not otherwise defined herein shall have the respective meanings
ascribed thereto in the Mortgage.
1. Interest and Principal Payments. Interest on the
outstanding principal balance of this Mortgage Note shall accrue
at the rate of Eight and Two One-Hundredths (8.02%) percent per
annum (the "Interest Rate") (in the event of an Event of Default,
payment of an additional amount equal to interest at the Default
Rate (as hereinafter defined) on the outstanding principal amount
of this Mortgage Note shall also be due for each Interest Accrual
Period during any part of which such Event of Default continues
in accordance with the provisions of Paragraph 3 hereof).
Interest at the Interest Rate shall be payable in equal monthly
installments in arrears (each such monthly payment being an
"Interest Installment") of $137,676.67 (except in the case of the
Interest Installment due July 16, 1996, which shall be equal to
$146,855.11) on or before 12:00 noon, Eastern Standard Time, on
the fourth (4th) Business Day prior to the twentieth (20th) day
of each calendar month or if such 20th day is not a Business Day,
the next succeeding Business Day (the "Due Date") during the term
hereof, commencing on July 16, 1996 the Maturity Date (as
hereinafter defined) or otherwise. Interest shall be computed on
the basis of a 360-day year consisting of twelve (12) months of
thirty (30) days each, and thirty (30) days' interest shall be
paid on each Due Date and shall accrue from and including each
Due Date to but not including the next succeeding Due Date,
except with respect to the Due Date on July 16, 1996 on which
thirty-two (32) days' interest shall be paid. The entire
outstanding principal balance of this Mortgage Note, together
with all accrued but unpaid interest hereon, shall be due and
payable to Lender on the Due Date in June, 2003 (the "Maturity
Date") or on such earlier date as may be required under the terms
of this Mortgage Note. All payments hereunder shall be made by
wire transfer of immediately available funds into an account
designated by Lender (the "Collection Account") in accordance
with the Cash Collateral Agreement. In the event of any
prepayment pursuant to the provisions of Paragraphs 4 or 5
hereof, the amount of the Interest Installment shall be adjusted
to reflect such prepayment.
2. Definitions. As used herein, the following terms
shall have the following meanings:
(a) Mandatory Prepayment: As defined in Paragraph 5
hereof.
(b) Servicer: GE Capital Asset Management
Corporation.
(c) Voluntary Prepayment: As defined in Paragraph 4
hereof.
(d) Other Notes: means the three mortgage notes (the
"Class A Note," the "Class C Note" and the "Class D Note"), each
dated as of the date hereof, executed by Borrower for the benefit
of Lender, in the outstanding principal amounts of $123,700,000,
$28,900,000 and $8,500,000, respectively; the Class A Note and
the Class C Note and the Class D Note are also secured by the
Mortgage.
(e) Interest Accrual Period: means the period
commencing on (and including) the 20th day of each calendar month
(except with respect to the initial Interest Accrual Period which
shall commence on (and include) the date hereof) and ending on
(but excluding) the 20th day of the immediately succeeding
calendar month.
3. Default Rate. In the event that there occurs and
is continuing an Event of Default, then, and in addition to
Lender's rights set forth in Paragraph 7 hereof, additional
interest ("Default Interest") shall accrue on the outstanding
principal amount of this Mortgage Note, as of the first day of
the Interest Accrual Period in which such Event of Default occurs
and through the last day of the Interest Accrual Period in which
such Event of Default is cured, at a rate equal to three percent
(3%) per annum (the "Default Rate"). If interest payable
pursuant to the Default Rate is deemed to be interest in excess
of the Maximum Amount (as hereinafter defined), the amount
actually collected by Lender in excess of such amount shall be
applied in accordance with the provisions of Paragraphs 11 and 12
hereof.
4. Voluntary Prepayment. (a) Prior to the Due Date
in May, 2003, Borrower may not prepay the Principal Amount in
whole or in part. From and after such Due Date, and provided no
Event of Default shall have occurred and be continuing, Borrower
may prepay the Principal Amount, in whole or in part (a
"Voluntary Prepayment"), on any Due Date, upon not less than
thirty (30) days prior written notice to Lender, which notice
shall specify the Due Date on which such Prepayment shall be
made, the amount of the Prepayment, and shall be irrevocable, but
only upon the payment of the Prepayment Amount (as hereinafter
defined).
(b) The prepayment amount (the "Prepayment Amount")
shall be equal to the sum of (i) the amount of the Principal
Amount being prepaid, and (ii) all accrued and unpaid interest
through the Due Date of the Interest Installment period in which
such Voluntary Prepayment is made.
(c) Any Principal Amount prepaid pursuant to the
provisions of Section 38(b) of the Mortgage shall be applied
first to the Class A Note until the same is repaid in full, then
to this Mortgage Note until the same is repaid in full, and then
to the Class C Note and the Class D Note as provided therein.
Any other Principal Amount prepaid by Borrower pursuant to this
Paragraph 4 shall be applied to this Mortgage Note and/or the
Other Notes in such manner as Borrower shall specify at the time.
(d) Any Principal Amount of this Mortgage Note prepaid
pursuant to the provisions of this Paragraph 4 may not be
reborrowed hereunder.
5. Mandatory Prepayment. (a) Following certain
events of casualty or condemnation, Borrower is required,
pursuant to Section 6 of the Mortgage, to repay the Principal
Amount (the "Mandatory Prepayment") to the extent of the
applicable insurance or condemnation proceeds, without premium or
penalty, upon the Due Date next succeeding the date such proceeds
become available for prepayment.
(b) Any Mandatory Prepayment shall be applied first to
the Class A Note until the same is repaid in full, then to this
Mortgage Note until the same is repaid in full, and then to the
Class C Note and the Class D Note as provided therein.
(c) Any Principal Amount of this Mortgage Note prepaid
pursuant to this Paragraph 6 may not be reborrowed hereunder.
6. Application of Funds. Subject to the provisions
of Paragraphs 11 and 12 hereof, all payments received by Lender
on the Mortgage Notes shall be applied first, to accrued interest
(other than Default Interest) on the Class A Note; second, to
interest on this Mortgage Note, the Class C Note and the Class D
Note, in that order; third, to reduce the principal amount of the
Class A Note to zero; fourth, to reduce to zero the principal
amount of this Mortgage Note, the Class C Note and the Class D
Note, in that order; fifth, to reimburse Lender for expenses
payable to Lender and its assignees pursuant to Paragraph 8
hereof in connection with the enforcement of this Mortgage Note
and the other Loan Documents; and sixth, to Default Interest.
7. Events of Default. The occurrence and continuance
of an Event of Default (as defined in the Mortgage) shall
constitute an "Event of Default" hereunder. Upon the occurrence
and continuance of an Event of Default, Lender may, at its
option, declare all or any portion of the unpaid principal
balance of this Mortgage Note, together with all accrued and
unpaid interest hereon, and all other amounts payable hereunder,
to be immediately due and payable and thereby accelerate the
maturity hereof, and Lender may proceed to exercise any rights or
remedies that it may have under this Mortgage Note or such other
rights and remedies which Lender, subject to Paragraph 15 hereof,
may have at law, equity or otherwise.
8. Lender's Costs and Expenses. Borrower shall pay
all costs and expenses of Lender, in addition to principal,
interest and Default Interest (if applicable), in connection with
(a) its performance of its obligations and exercise of its rights
under the Mortgage, this Mortgage Note and the other Loan
Documents, (b) the review of any Tax Opinion, Nondisqualification
Opinion, or other Opinion of Counsel delivered by Borrower
pursuant to the Mortgage or the other Loan Documents, and (c) the
servicing and monitoring of this Mortgage Note and the Mortgage.
Borrower shall also pay all costs and expenses of collection of
Lender in connection with this Mortgage Note, in addition to
principal, interest and Default Interest (if applicable)
including, without limitation, reasonable attorneys' fees and
disbursements and other reasonable costs and expenses incurred by
Lender upon the occurrence and during the continuance of an Event
of Default in connection with the pursuit by Lender of any of its
rights or remedies referred to herein or the protection of or
realization of collateral or in connection with any of Lender's
collection efforts or any advances made by any advancing agent
pursuant to the Trust and Servicing Agreement, whether or not
suit on this Mortgage Note, on any of the other Loan Documents or
any foreclosure proceeding is filed. All such costs and expenses
shall be payable as provided in the Trust and Servicing Agreement
upon Borrower's receipt of a statement therefor from Lender and
also shall be secured by the Mortgage and the other Loan
Documents.
9. No Waivers. No failure on the part of Lender to
exercise any right or remedy hereunder, whether before or after
the happening of a default, shall constitute a waiver of such
default, any future default or of any other default. No failure
to accelerate the debt evidenced hereby by reason of an Event of
Default, or acceptance of a past due installment, or indulgence
granted from time to time shall be construed to be a waiver of
the right to insist upon prompt payment, nor shall it be deemed
to be a novation of this Mortgage Note or as a reinstatement of
the debt evidenced hereby or as a waiver of such right of
acceleration or any other right, nor be construed so as to
preclude the exercise of any right which Lender may have, at law
or in equity, and, subject to the provisions of Paragraph 15
hereof, Borrower hereby expressly waives the benefit of any
statute or rule of law or equity which would produce a result
contrary to or be in conflict with the foregoing. This Mortgage
Note may not be changed orally, but only by an agreement in
writing signed by the party against whom such agreement is sought
to be enforced.
10. Borrower's Waiver of Rights. Borrower, for itself
and its successors and assigns, hereby waives presentment,
protest, demand, diligence, notice of dishonor and of nonpayment,
and waives and renounces all rights to the benefits of any
statute of limitations and any moratorium, appraisement, and
exemption now provided or which may hereafter be provided by any
federal or state statute, law, rule or regulation, including but
not limited to, exemptions provided by or allowed under any
federal or state bankruptcy or insolvency laws, both as to itself
and as to all of its property, whether real or personal, against
the enforcement and collection of the obligations evidenced by
this Mortgage Note and any and all extensions, renewals and
modifications hereof.
11. Maximum Interest Rate. It is the intention of the
parties to conform strictly to the usury and other laws relating
to interest from time to time in force, and this Mortgage Note is
hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to Lender,
or collected by Lender or for the use, forbearance or detention
of the money to be loaned hereunder or otherwise, or for the
payment or performance of any covenant or obligation contained
herein, exceed the maximum amount permissible under applicable
usury or other laws of similar import (the "Maximum Amount"). If
under any circumstances whatsoever fulfillment of any provision
hereof at the time performance of such provision shall be due,
shall involve transcending the Maximum Amount, then ipso facto,
the obligation to be fulfilled shall be reduced to the Maximum
Amount. For the purposes of calculating the actual amount of
interest paid and/or payable hereunder, in respect of laws
pertaining to usury or laws of similar import, all sums paid or
agreed to be paid to the holder hereof for the use, forbearance
or detention of the indebtedness of Borrower evidenced hereby,
outstanding from time to time shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Mortgage Note,
until payment in full of all of such indebtedness, so that the
actual rate of interest on account of such indebtedness is
uniform through the term hereof. Subject to the terms of
Paragraph 14 hereof, the terms and provisions of this Paragraph
11 and Paragraph 12 hereof shall control and supersede every
other provision of all agreements between Borrower and Lender.
12. Excess Interest Payments. If under any
circumstances Lender shall ever receive an amount deemed interest
by applicable law, which would exceed the Maximum Amount, such
amount that would be excessive interest under applicable usury
laws or laws of similar import shall be applied by Lender in
payment of the Principal Amount until such time as the interest
rate decreases below the Maximum Amount.
13. Governing Law. (a) This Mortgage Note 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. To the fullest extent
permitted by law, Borrower hereby unconditionally and irrevocably
waives any claim to assert that the law of any other jurisdiction
governs this Mortgage Note and this Mortgage Note shall be
governed by and construed in accordance with the laws of the
State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) To the extent permitted by law, any legal suit,
action or proceeding against Lender arising out of or relating to
this Mortgage Note shall be, and any legal suit, action or
proceeding against Borrower on this Mortgage Note may be,
instituted in any federal or state court in New York, New York,
pursuant to Section 5-1402 of the New York General Obligations Law, and
Borrower waives any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding and
Borrower hereby irrevocably submits to the jurisdiction of any
such court in any suit, action or proceeding. Borrower does
hereby designate and appoint Robinson Silverman Pearce Aronsohn &
Berman LLP as its authorized agent to accept and acknowledge on
its behalf service of any and all process which may be served in
any such suit, action or proceeding in any federal or state court
in New York, New York, and agrees that service of process upon
said agent at said address and written notice of said service of
Borrower mailed or delivered to Borrower in the manner provided
in the Mortgage, shall be deemed in every respect effective
service of process upon Borrower, in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give
prompt notice to the Lender of any changed address of its
authorized agent hereunder, (ii) may at any time and from time to
time designate a substitute authorized agent with an office in
New York, New York (which office shall be designated as the
address for service of process), and (iii) shall promptly
designate such a substitute if its authorized agent ceases to
have an office in New York, New York or is dissolved without
leaving a successor.
14. Non-Recourse. Notwithstanding anything in this
Mortgage Note and except to the extent expressly set forth in
Section 33 and 41 of the Mortgage, no personal liability shall be
asserted or enforceable against (i) Borrower, (ii) any Direct
Beneficial Owner, (iii) any Affiliate of Borrower or any Direct
Beneficial Owner, (iv) any Person owning directly or indirectly,
any legal or beneficial interest in Borrower, any Direct
Beneficial Owner or any Affiliate of Borrower or any Direct
Beneficial Owner, or (v) any partner, principal, officer,
controlling person, beneficiary, trustee, advisor, shareholder,
employee, agent, Affiliate or director of any Persons described
in clauses (i) through (iv) above (collectively, the "Exculpated
Parties") by Lender in respect of this Mortgage Note, the
Mortgage or the other Loan Documents or the making, issuance or
transfer thereof, all such liability, if any, being expressly
waived by Lender and each successive holder of this Mortgage Note
upon the express condition of this provision and limitation that
in the case of the occurrence and continuance of an Event of
Default, Lender's remedies in its sole discretion shall be any or
all of:
(i) Foreclosure of the lien of the Mortgage in
accordance with the terms and provisions set forth in the
Mortgage;
(ii) Action against any other security at any time
given to secure the payment of this Mortgage Note and under
the other Loan Documents; and
(iii) Exercise of any other remedy set forth in
the Mortgage or any other Loan Document.
The lien of any judgment against Borrower and any
proceeding instituted on, under or in connection with this
Mortgage Note, the Mortgage or the other Loan Documents shall not
extend to any property now or hereafter owned by Borrower or any
of the Exculpated Parties other than the Net Operating Income
from, and the ownership interest of Borrower in, the Trust Estate
and the other security for the payment of this Mortgage Note.
15. Legal Relationship. Borrower and Lender intend
that the relationship created under this Mortgage Note be solely
that of debtor and creditor. Nothing herein is intended to
create a joint venture, partnership, tenancy-in-common or joint
tenancy relationship between Borrower and Lender.
16. Assignment. The parties hereto acknowledge that
immediately following the execution and delivery of this Mortgage
Note, the Mortgage and the other Loan Documents, Lender intends
to sell, transfer and assign this Mortgage Note, the Mortgage and
the other Loan Documents to State Street Bank and Trust Company,
as Trustee. All references to "Lender" hereunder shall be deemed
to include the assigns of the Lender.
17. Waiver of Jury Trial. Borrower hereby waives and
shall to the extent permitted by law waive trial by jury in any
action or proceeding brought by or counterclaim, other than a
compulsory counterclaim, asserted by Lender which action,
proceeding or counterclaim arises out of or is connected with
this Mortgage Note.
IN WITNESS WHEREOF, each Borrower has executed this
instrument by its respective duly authorized officer or signatory
on the date first above written.
BORROWER:
KRT PROPERTY HOLDINGS, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
HILLCREST PLAZA LIMITED PARTNERSHIP
By: KR Hillcrest, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR SUBURBAN, L.P.
By: KR Suburban, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
FOX RUN, LIMITED PARTNERSHIP
By: KR Fox Run, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR MacARTHUR ASSOCIATES, L.P.
By: KR MacArthur, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR BEST ASSOCIATES, L.P.
By: KR Best Associates, Inc.
By: /s/ Robert Dennis
--------------------------
- -
Name: Robert Dennis
Title: Vice President
KR 69TH STREET, L.P.
By: KR 69th Street, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR TRUST ONE, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR MANCHESTER, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR STREET ASSOCIATES, L.P.
By: KR Street, Inc.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR ORANGE, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR COLLEGETOWN, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR HILLCREST MALL, INC.
By: /s/ Robert Dennis
---------------------------
Name: Robert Dennis
Title: Vice President
KR PILGRIM, L.P.
By: KR Pilgrim, Inc.
By: /s/ Robert Dennis
--------------------------
Name: Robert Dennis
Title: Vice President
Pay to the order of
State Street Bank & Trust,
as Trustee, without recourse
By: KRT ORGANIZATION CORP.
By: /s/ Norman Kranzdorf
--------------------------
Name: Norman Kranzdorf
Title: President
CLASS C
MORTGAGE NOTE
$28,900,000 New York, New York
June 18, 1996
W I T N E S S E T H:
FOR VALUE RECEIVED, the undersigned, collectively,
as maker ("Borrower"), promises to pay to the order of KRT
Origination Corp., having an office c/o Kranzco Realty Corp., 128
Fayette Street, Conshohocken, Pennsylvania 19428, as payee
("Lender"), the principal sum of Twenty-Eight Million Nine
Hundred Thousand ($28,900,000) Dollars, less any payments of
principal (each, a "Prepayment") made thereon from time to time
(the "Principal Amount"), with interest on such Principal Amount
as hereinafter provided. All payments due from Borrower pursuant
to the terms of this Mortgage Note or any other Loan Document
shall be paid into the Collection Account (as hereinafter
defined), or as otherwise directed by Lender from time to time,
on the applicable Due Date (as hereafter defined). This Mortgage
Note is one of four notes secured by (a) an Indenture of
Mortgage, Deed of Trust, Security Agreement, Financing Statement,
Fixture Filing and Assignment of Leases, Rents and Security
Deposits, dated as of the date hereof (the "Mortgage"), securing
a first mortgage lien upon the Trust Estate (as defined in the
Mortgage), made by Borrower, as grantor, in favor of Lender, as
beneficiary, (b) an Assignment of Leases, Rents and Security
Deposits, dated as of the date hereof (the "Assignment"), made by
Borrower, as assignor, in favor of Lender, as assignee, and (c)
all of the other Loan Documents. All capitalized terms used but
not otherwise defined herein shall have the respective meanings
ascribed thereto in the Mortgage.
1. Interest and Principal Payments. Interest on the
outstanding principal balance of this Mortgage Note shall accrue
at the rate of Eight and Thirty-Two One Hundredths (8.32%)
percent per annum (the "Interest Rate") (in the event of an Event
of Default, payment of an additional amount equal to interest at
the Default Rate (as hereinafter defined) on the outstanding
principal amount of this Mortgage Note shall also be due for each
Interest Accrual Period during any part of which such Event of
Default continues in accordance with the provisions of Paragraph
3 hereof). Interest at the Interest Rate shall be payable in
equal monthly installments in arrears (each such monthly payment
being an "Interest Installment") of $200,373.33 (except in the
case of the Interest Installment due July 16, 1996, which shall
be equal to $213,731.56) on or before 12:00 noon, Eastern
Standard Time, on the fourth (4th) Business Day prior to the
twentieth (20th) day of each calendar month or if such 20th day
is not a Business Day, the next succeeding Business Day (the "Due
Date") during the term hereof, commencing on July 16, 1996 until
the Maturity Date (as hereinafter defined) or otherwise.
Interest shall be computed on the basis of a 360-day year
consisting of twelve (12) months of thirty (30) days each, and
thirty (30) days' interest shall be paid on each Due Date and
shall accrue from and including each Due Date to but not
including the next succeeding Due Date, except with respect to
the Due Date on July 16, 1996 on which thirty-two (32) days'
interest shall be paid. The entire outstanding principal balance
of this Mortgage Note, together with all accrued but unpaid
interest hereon, shall be due and payable to Lender on the Due
Date in June 2003 (the "Maturity Date") or on such earlier date
as may be required under the terms of this Mortgage Note. All
payments hereunder shall be made by wire transfer of immediately
available funds into an account designated by Lender (the
"Collection Account") in accordance with the Cash Collateral
Agreement. In the event of any prepayment pursuant to the
provisions of Paragraph 4 or 5 hereof, the amount of the Interest
Installment shall be adjusted to reflect such prepayment.
2. Definitions. As used herein, the following terms
shall have the following meanings:
(a) Mandatory Prepayment: As defined in Paragraph 5
hereof.
(b) Servicer: GE Capital Asset Management
Corporation.
(c) Voluntary Prepayment: As defined in Paragraph 4
hereof.
(d) Other Notes: means the three mortgage notes (the
"Class A Note," the "Class B Note" and the "Class D Note"), each
dated as of the date hereof, executed by Borrower for the benefit
of Lender, in the outstanding principal amounts of $123,700,000,
$20,600,000 and $8,500,000, respectively; the Class A Note and
the Class B Note are also secured by the Mortgage.
(e) Interest Accrual Period: means the period
commencing on (and including) the 20th day of each calendar month
(except with respect to the initial Interest Accrual Period which
shall commence on (and include) the date hereof) and ending on
(but excluding) the 20th day of the immediately succeeding
calendar month.
3. Default Rate. In the event that there occurs and
is continuing an Event of Default, then, and in addition to
Lender's rights set forth in Paragraph 7 hereof, additional
interest ("Default Interest") shall accrue on the outstanding
principal amount of this Mortgage Note, as of the first day of
the Interest Accrual Period in which such Event of Default occurs
and through the last day of the Interest Accrual Period in which
such Event of Default is cured, at a rate equal to [three percent
(3%)] per annum (the "Default Rate"). If interest payable
pursuant to the Default Rate is deemed to be interest in excess
of the Maximum Amount (as hereinafter defined), the amount
actually collected by Lender in excess of such amount shall be
applied in accordance with the provisions of Paragraphs 11 and 12
hereof.
4. Voluntary Prepayment. (a) Prior to the Due Date
in May, 2003, Borrower may not prepay the Principal Amount in
whole or in part. From and after such Due Date, and provided no
Event of Default shall have occurred and be continuing, Borrower
may prepay the Principal Amount, in whole or in part (an
"Voluntary Prepayment"), on any Due Date, upon not less than
thirty (30) days prior written notice to Lender, which notice
shall specify the Due Date on which such Prepayment shall be
made, the amount of the Prepayment, and shall be irrevocable, but
only upon the payment of the Prepayment Amount (as hereinafter
defined).
(b) The prepayment amount (the "Prepayment Amount")
shall be equal to the sum of (i) the amount of the Principal
Amount being prepaid, and (ii) all accrued and unpaid interest
through the Due Date of the Interest Installment period in which
such Voluntary Prepayment is made.
(c) Any Principal Amount prepaid pursuant to the
provisions of Section 38(b) of the Mortgage shall be applied
first to Class A and Class B Notes in that order, until each of
the same is repaid in full, then to this Mortgage Note until the
same is repaid in full. Any other Principal Amount prepaid by
Borrower pursuant to this Paragraph 4 shall be applied to this
Mortgage Note and/or the Other Notes in such manner as Borrower
shall specify at the time.
(d) Any Principal Amount of this Mortgage Note prepaid
pursuant to the provisions of this Paragraph 4 may not be
reborrowed hereunder.
5. Mandatory Prepayment. (a) Following certain
events of casualty or condemnation, Borrower is required,
pursuant to Section 6 of the Mortgage, to repay the Principal
Amount (the "Mandatory Prepayment") to the extent of the
applicable insurance or condemnation proceeds, without premium or
penalty, upon the Due Date next succeeding the date such proceeds
become available for prepayment.
(b) Any Mandatory Prepayment shall be applied first to
the Class A and Class B Notes until each of the same is repaid in
full, and then to this Mortgage Note until the same is repaid in
full.
(c) Any Principal Amount of this Mortgage Note prepaid
pursuant to this Paragraph 6 may not be reborrowed hereunder.
6. Application of Funds. Subject to the provisions
of Paragraphs 11 and 12 hereof, all payments received by Lender
on the Mortgage Notes shall be applied first, to accrued interest
(other than Default Interest) on the Class A Note and the Class B
Note in that order; second, to interest on this Mortgage Note and
the Class D Note, in that order; third, pro rata, to reduce the
principal amount of the Class A Note and the Class B Note to
zero; fourth, to reduce to zero the principal amount of this
Mortgage Note and the Class D Note, in that order; fifth, to
reimburse Lender for expenses payable to Lender and its assignees
pursuant to Paragraph 8 hereof in connection with the enforcement
of this Mortgage Note and the other Loan Documents; and sixth, to
Default Interest.
7. Events of Default. The occurrence and continuance
of an Event of Default (as defined in the Mortgage) shall
constitute an "Event of Default" hereunder. Upon the occurrence
and continuance of an Event of Default, Lender may, at its
option, declare all or any portion of the unpaid principal
balance of this Mortgage Note, together with all accrued and
unpaid interest hereon, and all other amounts payable hereunder,
to be immediately due and payable and thereby accelerate the
maturity hereof, and Lender may proceed to exercise any rights or
remedies that it may have under this Mortgage Note or such other
rights and remedies which Lender, subject to Paragraph 14 hereof,
may have at law, equity or otherwise.
8. Lender's Costs and Expenses. Borrower shall pay
all costs and expenses of Lender, in addition to principal,
interest and Default Interest (if applicable), in connection with
(a) its performance of its obligations and exercise of its rights
under the Mortgage, this Mortgage Note and the other Loan
Documents, (b) the review of any Tax Opinion, Nondisqualification
Opinion, or other Opinion of Counsel delivered by Borrower
pursuant to the Mortgage or the other Loan Documents, and (c) the
servicing and monitoring of this Mortgage Note and the Mortgage.
Borrower shall also pay all costs and expenses of collection of
Lender in connection with this Mortgage Note, in addition to
principal, interest and Default Interest (if applicable)
including, without limitation, reasonable attorneys' fees and
disbursements and other reasonable costs and expenses incurred by
Lender upon the occurrence and during the continuance of an Event
of Default in connection with the pursuit by Lender of any of its
rights or remedies referred to herein or the protection of or
realization of collateral or in connection with any of Lender's
collection efforts or any advances made by any advancing agent
pursuant to the Trust and Servicing Agreement, whether or not
suit on this Mortgage Note, on any of the other Loan Documents or
any foreclosure proceeding is filed. All such costs and expenses
shall be payable as provided in the Trust and Servicing Agreement
upon Borrower's receipt of a statement therefor from Lender and
also shall be secured by the Mortgage and the other Loan
Documents.
9. No Waivers. No failure on the part of Lender to
exercise any right or remedy hereunder, whether before or after
the happening of a default, shall constitute a waiver of such
default, any future default or of any other default. No failure
to accelerate the debt evidenced hereby by reason of an Event of
Default, or acceptance of a past due installment, or indulgence
granted from time to time shall be construed to be a waiver of
the right to insist upon prompt payment, nor shall it be deemed
to be a novation of this Mortgage Note or as a reinstatement of
the debt evidenced hereby or as a waiver of such right of
acceleration or any other right, nor be construed so as to
preclude the exercise of any right which Lender may have, at law
or in equity, and, subject to the provisions of Paragraph 14
hereof, Borrower hereby expressly waives the benefit of any
statute or rule of law or equity which would produce a result
contrary to or be in conflict with the foregoing. This Mortgage
Note may not be changed orally, but only by an agreement in
writing signed by the party against whom such agreement is sought
to be enforced.
10. Borrower's Waiver of Rights. Borrower, for itself
and its successors and assigns, hereby waives presentment,
protest, demand, diligence, notice of dishonor and of nonpayment,
and waives and renounces all rights to the benefits of any
statute of limitations and any moratorium, appraisement, and
exemption now provided or which may hereafter be provided by any
federal or state statute, law, rule or regulation, including but
not limited to, exemptions provided by or allowed under any
federal or state bankruptcy or insolvency laws, both as to itself
and as to all of its property, whether real or personal, against
the enforcement and collection of the obligations evidenced by
this Mortgage Note and any and all extensions, renewals and
modifications hereof.
11. Maximum Interest Rate. It is the intention of the
parties to conform strictly to the usury and other laws relating
to interest from time to time in force, and this Mortgage Note is
hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to Lender,
or collected by Lender or for the use, forbearance or detention
of the money to be loaned hereunder or otherwise, or for the
payment or performance of any covenant or obligation contained
herein, exceed the maximum amount permissible under applicable
usury or other laws of similar import (the "Maximum Amount"). If
under any circumstances whatsoever fulfillment of any provision
hereof at the time performance of such provision shall be due,
shall involve transcending the Maximum Amount, then ipso facto,
the obligation to be fulfilled shall be reduced to the Maximum
Amount. For the purposes of calculating the actual amount of
interest paid and/or payable hereunder, in respect of laws
pertaining to usury or laws of similar import, all sums paid or
agreed to be paid to the holder hereof for the use, forbearance
or detention of the indebtedness of Borrower evidenced hereby,
outstanding from time to time shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Mortgage Note,
until payment in full of all of such indebtedness, so that the
actual rate of interest on account of such indebtedness is
uniform through the term hereof. Subject to the terms of
Paragraph 14 hereof, the terms and provisions of this Paragraph
11 and Paragraph 12 hereof shall control and supersede every
other provision of all agreements between Borrower and Lender.
12. Excess Interest Payments. If under any
circumstances Lender shall ever receive an amount deemed interest
by applicable law, which would exceed the Maximum Amount, such
amount that would be excessive interest under applicable usury
laws or laws of similar import shall be applied by Lender in
payment of the Principal Amount until such time as the interest
rate decreases below the Maximum Amount.
13. Governing Law. (a) This Mortgage Note 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. To the fullest extent
permitted by law, Borrower hereby unconditionally and irrevocably
waives any claim to assert that the law of any other jurisdiction
governs this Mortgage Note and this Mortgage Note shall be
governed by and construed in accordance with the laws of the
State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) To the extent permitted by law, any legal suit,
action or proceeding against Lender arising out of or relating to
this Mortgage Note shall be, and any legal suit, action or
proceeding against Borrower on this Mortgage Note may be,
instituted in any federal or state court in New York, New York,
pursuant to Section 5-1402 of the New York General Obligations Law, and
Borrower waives any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding and
Borrower hereby irrevocably submits to the jurisdiction of any
such court in any suit, action or proceeding. Borrower does
hereby designate and appoint Robinson Silverman Pearce Aronsohn &
Berman LLP as its authorized agent to accept and acknowledge on
its behalf service of any and all process which may be served in
any such suit, action or proceeding in any federal or state court
in New York, New York, and agrees that service of process upon
said agent at said address and written notice of said service of
Borrower mailed or delivered to Borrower in the manner provided
in the Mortgage, shall be deemed in every respect effective
service of process upon Borrower, in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give
prompt notice to the Lender of any changed address of its
authorized agent hereunder, (ii) may at any time and from time to
time designate a substitute authorized agent with an office in
New York, New York (which office shall be designated as the
address for service of process), and (iii) shall promptly
designate such a substitute if its authorized agent ceases to
have an office in New York, New York or is dissolved without
leaving a successor.
14. Non-Recourse. Notwithstanding anything in this
Mortgage Note and except to the extent expressly set forth in
Section 33 and 41 of the Mortgage, no personal liability shall be
asserted or enforceable against (i) Borrower, (ii) any Direct
Beneficial Owner, (iii) any Affiliate of Borrower or any Direct
Beneficial Owner, (iv) any Person owning directly or indirectly,
any legal or beneficial interest in Borrower, any Direct
Beneficial Owner or any Affiliate of Borrower or any Direct
Beneficial Owner, or (v) any partner, principal, officer,
controlling person, beneficiary, trustee, advisor, shareholder,
employee, agent, Affiliate or director of any Persons described
in clauses (i) through (iv) above (collectively, the "Exculpated
Parties") by Lender in respect of this Mortgage Note, the
Mortgage or the other Loan Documents or the making, issuance or
transfer thereof, all such liability, if any, being expressly
waived by Lender and each successive holder of this Mortgage Note
upon the express condition of this provision and limitation that
in the case of the occurrence and continuance of an Event of
Default, Lender's remedies in its sole discretion shall be any or
all of:
(i) Foreclosure of the lien of the Mortgage in
accordance with the terms and provisions set forth in the
Mortgage;
(ii) Action against any other security at any time
given to secure the payment of this Mortgage Note and under
the other Loan Documents; and
(iii) Exercise of any other remedy set forth in
the Mortgage or any other Loan Document.
The lien of any judgment against Borrower and any
proceeding instituted on, under or in connection with this
Mortgage Note, the Mortgage or the other Loan Documents shall not
extend to any property now or hereafter owned by Borrower or any
of the Exculpated Parties other than the Net Operating Income
from, and the ownership interest of Borrower in, the Trust Estate
and the other security for the payment of this Mortgage Note.
15. Legal Relationship. Borrower and Lender intend
that the relationship created under this Mortgage Note be solely
that of debtor and creditor. Nothing herein is intended to
create a joint venture, partnership, tenancy-in-common or joint
tenancy relationship between Borrower and Lender.
16. Assignment. The parties hereto acknowledge that
immediately following the execution and delivery of this Mortgage
Note, the Mortgage and the other Loan Documents, Lender intends
to sell, transfer and assign this Mortgage Note, the Mortgage and
the other Loan Documents to State Street Bank and Trust Company,
as Trustee. All references to "Lender" hereunder shall be deemed
to include the assigns of the Lender.
17. Waiver of Jury Trial. Borrower hereby waives and
shall to the extent permitted by law waive trial by jury in any
action or proceeding brought by or counterclaim, other than a
compulsory counterclaim, asserted by Lender which action,
proceeding or counterclaim arises out of or is connected with
this Mortgage Note.
IN WITNESS WHEREOF, each Borrower has executed this
instrument by its respective duly authorized officer or signatory
on the date first above written.
BORROWERS:
KRT PROPERTY HOLDINGS, INC.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
HILLCREST PLAZA LIMITED PARTNERSHIP
By: KR Hillcrest, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR SUBURBAN, L.P.
By: KR Suburban, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
FOX RUN, LIMITED PARTNERSHIP
By: KR Fox Run, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR MacARTHUR ASSOCIATES, L.P.
By: KR MacArthur, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR BEST ASSOCIATES, L.P.
By: KR Best Associates, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR 69TH STREET, L.P.
By: KR 69th Street, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR TRUST ONE, INC.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR MANCHESTER, INC.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR STREET ASSOCIATES, L.P.
By: KR Street, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR ORANGE, INC.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR COLLEGETOWN, INC.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR HILLCREST MALL, INC.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR PILGRIM, L.P.
By: KR Pilgrim, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
Pay to the order of
State Street Bank & Trust,
as Trustee, without recourse
By: KRT ORIGINATION CORP.
By: /s/ Norman Kranzdorf
-------------------------
Name: Norman Kranzdorf
Title: President
CLASS D
MORTGAGE NOTE
$8,500,000 New York, New York
June 18, 1996
W I T N E S S E T H:
FOR VALUE RECEIVED, the undersigned, collectively,
as maker ("Borrower"), promises to pay to the order of KRT
Origination Corp., having an office c/o Kranzco Realty Corp., 128
Fayette Street, Conshohocken, Pennsylvania 19428, as payee
("Lender"), the principal sum of Eight Million Five Hundred
Thousand and no/100 Dollars ($8,500,000), less any payments of
principal (each, a "Prepayment") made thereon from time to time
(the "Principal Amount"), with interest on such Principal Amount
as hereinafter provided. All payments due from Borrower pursuant
to the terms of this Mortgage Note or any other Loan Document
shall be paid into the Collection Account (as hereinafter
defined), or as otherwise directed by Lender from time to time,
on the applicable Due Date (as hereafter defined). This Mortgage
Note is one of four notes secured by (a) an Indenture of
Mortgage, Deed of Trust, Security Agreement, Financing Statement,
Fixture Filing and Assignment of Leases, Rents and Security
Deposits, dated as of the date hereof (the "Mortgage"), securing
a first mortgage lien upon the Trust Estate (as defined in the
Mortgage), made by Borrower, as grantor, in favor of Lender, as
beneficiary, (b) an Assignment of Leases, Rents and Security
Deposits, dated as of the date hereof (the "Assignment"), made by
Borrower, as assignor, in favor of Lender, as assignee, and (c)
all of the other Loan Documents. All capitalized terms used but
not otherwise defined herein shall have the respective meanings
ascribed thereto in the Mortgage.
1. Interest and Principal Payments. Interest on the
outstanding principal balance of this Mortgage Note shall accrue
at the rate of Eight and Ninety-Six Hundredths (8.96%) percent
per annum (the "Interest Rate") (in the event of an Event of
Default, payment of an additional amount equal to interest at the
Default Rate (as hereinafter defined) on the outstanding
principal amount of this Mortgage Note shall also be due for each
Interest Accrual Period during any part of which such Event of
Default continues in accordance with the provisions of Paragraph
3 hereof). Interest at the Interest Rate shall be payable in
equal monthly installments in arrears (each such monthly payment
being an "Interest Installment") of $63,466.67 (except in the
case of the Interest Installment due July 16, 1996, which shall
be equal to $67,697.78) on or before 12:00 noon, Eastern Standard
Time, on the fourth (4th) Business Day prior to the twentieth
(20th) day of each calendar month or if such 20th day is not a
Business Day, the next succeeding Business Day (the "Due Date")
during the term hereof, commencing on July 16, 1996 until the
Maturity Date (as hereinafter defined) or otherwise. Interest
shall be computed on the basis of a 360-day year consisting of
twelve (12) months of thirty (30) days each, and thirty (30)
days' interest shall be paid on each Due Date and shall accrue
from and including each Due Date to but not including the next
succeeding Due Date, except with respect to the Due Date on
July 16, 1996 on which thirty-two (32) days' interest shall be
paid. The entire outstanding principal balance of this Mortgage
Note, together with all accrued but unpaid interest hereon, shall
be due and payable to Lender on the Due Date in June, 2003 (the
"Maturity Date") or on such earlier date as may be required under
the terms of this Mortgage Note. All payments hereunder shall be
made by wire transfer of immediately available funds into an
account designated by Lender (the "Collection Account") in
accordance with the Cash Collateral Agreement. In the event of
any prepayment pursuant to the provisions of Paragraphs 4 or 5
hereof, the amount of the Interest Installment shall be adjusted
to reflect such prepayment.
2. Definitions. As used herein, the following terms
shall have the following meanings:
(a) Mandatory Prepayment: As defined in Paragraph 5
hereof.
(b) Servicer: GE Capital Asset Management
Corporation.
(c) Voluntary Prepayment: As defined in Paragraph 6
hereof.
(d) Other Notes: means the three mortgage notes (the
"Class A Note," the "Class B Note" and the "Class C Note"), each
dated as of the date hereof, executed by Borrower for the benefit
of Lender, in the outstanding principal amounts of $123,700,000,
$20,600,000 and $28,900,000, respectively; the Class A Note, the
Class B and the Class C Note are also secured by the Mortgage.
(e) Interest Accrual Period: means the period
commencing on (and including) the 20th day of each calendar month
(except with respect to the initial Interest Accrual Period which
shall commence on (and include) the date hereof) and ending on
(but excluding) the 20th day of the immediately succeeding
calendar month.
3. Default Rate. In the event that there occurs and
is continuing an Event of Default, then, and in addition to
Lender's rights set forth in Paragraph 7 hereof, additional
interest ("Default Interest") shall accrue on the outstanding
principal amount of this Mortgage Note, as of the first day of
the Interest Accrual Period in which such Event of Default occurs
and through the last day of the Interest Accrual Period in which
such Event of Default is cured, at a rate equal to three percent
(3%) per annum (the "Default Rate"). If interest payable
pursuant to the Default Rate is deemed to be interest in excess
of the Maximum Amount (as hereinafter defined), the amount
actually collected by Lender in excess of such amount shall be
applied in accordance with the provisions of Paragraphs 11 and 12
hereof.
4. Voluntary Prepayment. (a) Prior to the Due Date
in May, 2003, Borrower may not prepay the Principal Amount in
whole or in part. From and after such Due Date, and provided no
Event of Default shall have occurred and be continuing, Borrower
may prepay the Principal Amount, in whole or in part (an
"Voluntary Prepayment"), on any Due Date, upon not less than
thirty (30) days prior written notice to Lender, which notice
shall specify the Due Date on which such Prepayment shall be
made, the amount of the Prepayment, and shall be irrevocable, but
only upon the payment of the Prepayment Amount (as hereinafter
defined).
(b) The prepayment amount (the "Prepayment Amount")
shall be equal to the sum of (i) the amount of the Principal
Amount being prepaid, and (ii) all accrued and unpaid interest
through the Due Date of the Interest Installment period in which
such Voluntary Prepayment is made.
(c) Any Principal Amount prepaid pursuant to the
provisions of Section 38(b) of the Mortgage shall be applied
first to the Other Notes until each of the same is repaid in
full, then to this Mortgage Note until the same is repaid in
full. Any other Principal Amount prepaid by Borrower pursuant to
this Paragraph 4 shall be applied to this Mortgage Note and/or
the Other Notes in such manner as Borrower shall specify at the
time.
(d) Any Principal Amount of this Mortgage Note prepaid
pursuant to the provisions of this Paragraph 4 may not be
reborrowed hereunder.
5. Mandatory Prepayment. (a) Following certain
events of casualty or condemnation, Borrower is required,
pursuant to Section 6 of the Mortgage, to repay the Principal
Amount (the "Mandatory Prepayment") to the extent of the
applicable insurance or condemnation proceeds, without premium or
penalty, upon the Due Date next succeeding the date such proceeds
become available for prepayment.
(b) Any Mandatory Prepayment shall be applied first to
the Other Notes until each of the same is repaid in full, and
then to this Mortgage Note until the same is repaid in full.
(c) Any Principal Amount of this Mortgage Note prepaid
pursuant to this Paragraph 6 may not be reborrowed hereunder.
6. Application of Funds. Subject to the provisions
of Paragraphs 11 and 12 hereof, all payments received by Lender
on the Mortgage Notes shall be applied first, to accrued interest
(other than Default Interest) on the Class A Note, the Class B
and the Class C Note, in that order; second, to interest on this
Mortgage Note; third, to reduce the principal amount of the Class
A Note, the Class B and the Class C Note, in that order to zero;
fourth, to reduce to zero the principal amount of this Mortgage
Note; fifth, to reimburse Lender for expenses payable to Lender
and its assignees pursuant to Paragraph 8 hereof in connection
with the enforcement of this Mortgage Note and the other Loan
Documents; and sixth, to Default Interest.
7. Events of Default. The occurrence and continuance
of an Event of Default (as defined in the Mortgage) shall
constitute an "Event of Default" hereunder. Upon the occurrence
and continuance of an Event of Default, Lender may, at its
option, declare all or any portion of the unpaid principal
balance of this Mortgage Note, together with all accrued and
unpaid interest hereon, and all other amounts payable hereunder,
to be immediately due and payable and thereby accelerate the
maturity hereof, and Lender may proceed to exercise any rights or
remedies that it may have under this Mortgage Note or such other
rights and remedies which Lender, subject to Paragraph 14 hereof,
may have at law, equity or otherwise.
8. Lender's Costs and Expenses. Borrower shall pay
all costs and expenses of Lender, in addition to principal,
interest and Default Interest (if applicable), in connection with
(a) its performance of its obligations and exercise of its rights
under the Mortgage, this Mortgage Note and the other Loan
Documents, (b) the review of any Tax Opinion, Nondisqualification
Opinion, or other Opinion of Counsel delivered by Borrower
pursuant to the Mortgage or the other Loan Documents, and (c) the
servicing and monitoring of this Mortgage Note and the Mortgage.
Borrower shall also pay all costs and expenses of collection of
Lender in connection with this Mortgage Note, in addition to
principal, interest and Default Interest (if applicable)
including, without limitation, reasonable attorneys' fees and
disbursements and other reasonable costs and expenses incurred by
Lender upon the occurrence and during the continuance of an Event
of Default in connection with the pursuit by Lender of any of its
rights or remedies referred to herein or the protection of or
realization of collateral or in connection with any of Lender's
collection efforts or any advances made by any advancing agent
pursuant to the Trust and Servicing Agreement, whether or not
suit on this Mortgage Note, on any of the other Loan Documents or
any foreclosure proceeding is filed. All such costs and expenses
shall be payable as provided in the Trust and Servicing Agreement
upon Borrower's receipt of a statement therefor from Lender and
also shall be secured by the Mortgage and the other Loan
Documents.
9. No Waivers. No failure on the part of Lender to
exercise any right or remedy hereunder, whether before or after
the happening of a default, shall constitute a waiver of such
default, any future default or of any other default. No failure
to accelerate the debt evidenced hereby by reason of an Event of
Default, or acceptance of a past due installment, or indulgence
granted from time to time shall be construed to be a waiver of
the right to insist upon prompt payment, nor shall it be deemed
to be a novation of this Mortgage Note or as a reinstatement of
the debt evidenced hereby or as a waiver of such right of
acceleration or any other right, nor be construed so as to
preclude the exercise of any right which Lender may have, at law
or in equity, and, subject to the provisions of Paragraph 14
hereof, Borrower hereby expressly waives the benefit of any
statute or rule of law or equity which would produce a result
contrary to or be in conflict with the foregoing. This Mortgage
Note may not be changed orally, but only by an agreement in
writing signed by the party against whom such agreement is sought
to be enforced.
10. Borrower's Waiver of Rights. Borrower, for itself
and its successors and assigns, hereby waives presentment,
protest, demand, diligence, notice of dishonor and of nonpayment,
and waives and renounces all rights to the benefits of any
statute of limitations and any moratorium, appraisement, and
exemption now provided or which may hereafter be provided by any
federal or state statute, law, rule or regulation, including but
not limited to, exemptions provided by or allowed under any
federal or state bankruptcy or insolvency laws, both as to itself
and as to all of its property, whether real or personal, against
the enforcement and collection of the obligations evidenced by
this Mortgage Note and any and all extensions, renewals and
modifications hereof.
11. Maximum Interest Rate. It is the intention of the
parties to conform strictly to the usury and other laws relating
to interest from time to time in force, and this Mortgage Note is
hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or
otherwise, shall the amount paid or agreed to be paid to Lender,
or collected by Lender or for the use, forbearance or detention
of the money to be loaned hereunder or otherwise, or for the
payment or performance of any covenant or obligation contained
herein, exceed the maximum amount permissible under applicable
usury or other laws of similar import (the "Maximum Amount"). If
under any circumstances whatsoever fulfillment of any provision
hereof at the time performance of such provision shall be due,
shall involve transcending the Maximum Amount, then ipso facto,
the obligation to be fulfilled shall be reduced to the Maximum
Amount. For the purposes of calculating the actual amount of
interest paid and/or payable hereunder, in respect of laws
pertaining to usury or laws of similar import, all sums paid or
agreed to be paid to the holder hereof for the use, forbearance
or detention of the indebtedness of Borrower evidenced hereby,
outstanding from time to time shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread from
the date of disbursement of the proceeds of this Mortgage Note,
until payment in full of all of such indebtedness, so that the
actual rate of interest on account of such indebtedness is
uniform through the term hereof. Subject to the terms of
Paragraph 14 hereof, the terms and provisions of this Paragraph
11 and Paragraph 12 hereof shall control and supersede every
other provision of all agreements between Borrower and Lender.
12. Excess Interest Payments. If under any
circumstances Lender shall ever receive an amount deemed interest
by applicable law, which would exceed the Maximum Amount, such
amount that would be excessive interest under applicable usury
laws or laws of similar import shall be applied by Lender in
payment of the Principal Amount until such time as the interest
rate decreases below the Maximum Amount.
13. Governing Law. (a) This Mortgage Note 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. To the fullest extent
permitted by law, Borrower hereby unconditionally and irrevocably
waives any claim to assert that the law of any other jurisdiction
governs this Mortgage Note and this Mortgage Note shall be
governed by and construed in accordance with the laws of the
State of New York pursuant to Section 5-1401 of the New York General
Obligations Law.
(b) To the extent permitted by law, any legal suit,
action or proceeding against Lender arising out of or relating to
this Mortgage Note shall be, and any legal suit, action or
proceeding against Borrower on this Mortgage Note may be,
instituted in any federal or state court in New York, New York,
pursuant to Section 5-1402 of the New York General Obligations Law, and
Borrower waives any objection which it may now or hereafter have
to the laying of venue of any such suit, action or proceeding and
Borrower hereby irrevocably submits to the jurisdiction of any
such court in any suit, action or proceeding. Borrower does
hereby designate and appoint Robinson Silverman Pearce Aronsohn &
Berman LLP as its authorized agent to accept and acknowledge on
its behalf service of any and all process which may be served in
any such suit, action or proceeding in any federal or state court
in New York, New York, and agrees that service of process upon
said agent at said address and written notice of said service of
Borrower mailed or delivered to Borrower in the manner provided
in the Mortgage, shall be deemed in every respect effective
service of process upon Borrower, in any such suit, action or
proceeding in the State of New York. Borrower (i) shall give
prompt notice to the Lender of any changed address of its
authorized agent hereunder, (ii) may at any time and from time to
time designate a substitute authorized agent with an office in
New York, New York (which office shall be designated as the
address for service of process), and (iii) shall promptly
designate such a substitute if its authorized agent ceases to
have an office in New York, New York or is dissolved without
leaving a successor.
14. Non-Recourse. Notwithstanding anything in this
Mortgage Note and except to the extent expressly set forth in
Section 33 and 41 of the Mortgage, no personal liability shall be
asserted or enforceable against (i) Borrower, (ii) any Direct
Beneficial Owner, (iii) any Affiliate of Borrower or any Direct
Beneficial Owner, (iv) any Person owning directly or indirectly,
any legal or beneficial interest in Borrower, any Direct
Beneficial Owner or any Affiliate of Borrower or any Direct
Beneficial Owner, or (v) any partner, principal, officer,
controlling person, beneficiary, trustee, advisor, shareholder,
employee, agent, Affiliate or director of any Persons described
in clauses (i) through (iv) above (collectively, the "Exculpated
Parties") by Lender in respect of this Mortgage Note, the
Mortgage or the other Loan Documents or the making, issuance or
transfer thereof, all such liability, if any, being expressly
waived by Lender and each successive holder of this Mortgage Note
upon the express condition of this provision and limitation that
in the case of the occurrence and continuance of an Event of
Default, Lender's remedies in its sole discretion shall be any or
all of:
(i) Foreclosure of the lien of the Mortgage in
accordance with the terms and provisions set forth in the
Mortgage;
(ii) Action against any other security at any time
given to secure the payment of this Mortgage Note and under
the other Loan Documents; and
(iii) Exercise of any other remedy set forth in
the Mortgage or any other Loan Document.
The lien of any judgment against Borrower and any
proceeding instituted on, under or in connection with this
Mortgage Note, the Mortgage or the other Loan Documents shall not
extend to any property now or hereafter owned by Borrower or any
of the Exculpated Parties other than the Net Operating Income
from, and the ownership interest of Borrower in, the Trust Estate
and the other security for the payment of this Mortgage Note.
15. Legal Relationship. Borrower and Lender intend
that the relationship created under this Mortgage Note be solely
that of debtor and creditor. Nothing herein is intended to
create a joint venture, partnership, tenancy-in-common or joint
tenancy relationship between Borrower and Lender.
16. Assignment. The parties hereto acknowledge that
immediately following the execution and delivery of this Mortgage
Note, the Mortgage and the other Loan Documents, Lender intends
to sell, transfer and assign this Mortgage Note, the Mortgage and
the other Loan Documents to State Street Bank and Trust Company,
as Trustee. All references to "Lender" hereunder shall be deemed
to include the assigns of the Lender.
17. Waiver of Jury Trial. Borrower hereby waives and
shall to the extent permitted by law waive trial by jury in any
action or proceeding brought by or counterclaim, other than a
compulsory counterclaim, asserted by Lender which action,
proceeding or counterclaim arises out of or is connected with
this Mortgage Note.
IN WITNESS WHEREOF, each Borrower has executed this
instrument by its respective duly authorized officer or signatory
on the date first above written.
BORROWERS:
KRT PROPERTY HOLDINGS, INC.
By: /s/ Robert Dennis
Name: Robert Dennis
Title: Vice President
HILLCREST PLAZA LIMITED PARTNERSHIP
By: KR Hillcrest, Inc.
By: /s/ Robert Dennis
Name: Robert Dennis
Title: Vice President
KR SUBURBAN, L.P.
By: KR Suburban, Inc.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
FOX RUN, LIMITED PARTNERSHIP
By: KR Fox Run, Inc.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR MacARTHUR ASSOCIATES, L.P.
By: KR MacArthur, Inc.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR BEST ASSOCIATES, L.P.
By: KR Best Associates, Inc.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR 69TH STREET, L.P.
By: KR 69th Street, Inc.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR TRUST ONE, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR MANCHESTER, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR STREET ASSOCIATES, L.P.
By: KR Street, Inc.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR ORANGE, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR COLLEGETOWN, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR HILLCREST MALL, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR PILGRIM, L.P.
By: KR Pilgrim, Inc.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
Pay to the order of
State Street Bank & Trust Company,
as Trustee, without recourse
By: KRT ORIGINATION CORP.
By: /s/ Norman Kranzdorf
----------------------
Name: Norman Kranzdorf
Title: President
Indenture of Mortgage, Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and
Assignment of Leases, Rents and Security Deposits
Dated as of June 18, 1996
from
KRT Property Holdings, Inc., Hillcrest Plaza Limited Partnership,
KR Suburban, L.P., Fox Run, Limited Partnership, KR MacArthur
Associates, L.P., KR Best Associates, L.P., KR 69th Street, L.P.,
KR Trust One, Inc., KR Manchester, Inc., KR Street Associates,
L.P., KR Orange, Inc., KR Collegetown, Inc., KR Hillcrest Mall,
Inc. and KR Pilgrim, L.P., each having an address
c/o Kranzco Realty Trust
128 Fayette Street, Conshohocken, PA 19428
as Grantor
(as to properties in New Jersey, Pennsylvania, Connecticut
and New York) to
KRT Origination Corp.
having an address c/o Kranzco Realty Trust
128 Fayette Street, Conshohocken, PA 19428
as Mortgagee
and
(as to properties in Maryland) to
Ronald P. Fish, Esq. and Thomas A. Hauser, Esq.
having an address at
Ballard Spahr Andrews & Ingersoll
300 East Lombard Street, Baltimore, Maryland 21202
as Trustee for the benefit of
KRT ORIGINATION CORP.
having an address c/o Kranzco Realty Trust
128 Fayette Street, Conshohocken, PA 19428
as Beneficiary
- -----------------------------------------------------------------
After recording, return to:
Martha Feltenstein, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
- -----------------------------------------------------------------
Maximum principal indebtedness for New York mortgage recording
tax purposes is $37,086,793.05
This Mortgage, to the extent it covers property located in
Pennsylvania is an "open-end mortgage" that secures future
advances, and for Pennsylvania Open-End Mortgage purposes, the
maximum principal indebtedness to be
secured hereby is $181,700.000.00. [CT]
TABLE OF CONTENTS
Page
----
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 7
2. Warranty of Title . . . . . . . . . . . . . . . . . . . . 26
3. Payment and Performance of Obligations Secured. . . . . . 27
4. Negative Covenants. . . . . . . . . . . . . . . . . . . . 27
5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 28
6. Condemnation and Insurance Proceeds . . . . . . . . . . . 33
7. Impositions, Liens and Other Items. . . . . . . . . . . . 39
8. Ground Leases . . . . . . . . . . . . . . . . . . . . . . 40
9. License to Collect Rents. . . . . . . . . . . . . . . . . 42
10. Security Agreement. . . . . . . . . . . . . . . . . . . . 43
11. Transfers, Indebtedness and Subordinate Liens . . . . . . 44
12. Maintenance of Trust Estate; Alterations; Inspection;
Utilities . . . . . . . . . . . . . . . . . . . . . . . . 49
13. Legal Compliance. . . . . . . . . . . . . . . . . . . . . 50
14. Books and Records, Financial Statements, Reports and Other
Information . . . . . . . . . . . . . . . . . . . . . . . 51
15. Compliance with Leases and Agreements . . . . . . . . . . 53
16. Beneficiary's Right to Perform. . . . . . . . . . . . . . 55
17. Grantor's Existence; Organization and Authority . . . . . 56
18. Protection of Security; Costs and Expenses. . . . . . . . 57
19. Management of the Trust Estate. . . . . . . . . . . . . . 58
20. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 59
21. Application of Proceeds . . . . . . . . . . . . . . . . . 66
22. Certain Waivers . . . . . . . . . . . . . . . . . . . . . 66
23. Notice of Certain Occurrences . . . . . . . . . . . . . . 67
24. Trust Funds . . . . . . . . . . . . . . . . . . . . . . . 67
25. Taxation. . . . . . . . . . . . . . . . . . . . . . . . . 67
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 67
27. No Oral Modification. . . . . . . . . . . . . . . . . . . 68
28. Partial Invalidity. . . . . . . . . . . . . . . . . . . . 68
29. Successors and Assigns. . . . . . . . . . . . . . . . . . 68
30. Governing Law . . . . . . . . . . . . . . . . . . . . . . 68
31. Certain Representations, Warranties and Covenants . . . . 69
32. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 73
33. Non-Recourse Obligations. . . . . . . . . . . . . . . . . 73
34. Further Assurances. . . . . . . . . . . . . . . . . . . . 74
35. Estoppel Certificates . . . . . . . . . . . . . . . . . . 74
36. Intentionally Omitted . . . . . . . . . . . . . . . . . . 74
37. Indemnification by Grantor. . . . . . . . . . . . . . . . 74
38. Release of Property . . . . . . . . . . . . . . . . . . . 76
39. Rating Agency Monitoring. . . . . . . . . . . . . . . . . 80
40. Environmental Matters . . . . . . . . . . . . . . . . . . 80
41. Recourse Nature of Certain Indemnifications . . . . . . . 82
42. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 82
43. Merger, Conversion, Consolidation or Succession to Business
of Beneficiary. . . . . . . . . . . . . . . . . . . . . . 82
44. No Endorsement. . . . . . . . . . . . . . . . . . . . . . 82
45. Substitute Property . . . . . . . . . . . . . . . . . . . 82
46. Defeasance. . . . . . . . . . . . . . . . . . . . . . . . 87
47. Defeasance Collateral Account . . . . . . . . . . . . . . 90
48. Reserves. . . . . . . . . . . . . . . . . . . . . . . . . 91
49. Modification of Operating Agreements. . . . . . . . . . . 92
50. Substitute or Successor Trustee . . . . . . . . . . . . . 92
51. Liability of Trustee. . . . . . . . . . . . . . . . . . . 93
52. Beneficiary and Trustee . . . . . . . . . . . . . . . . . 94
53. Miscellaneous; Servicer Cure. . . . . . . . . . . . . . .101
54. As to Property in Maryland. . . . . . . . . . . . . . . .101
55. As to Property in Connecticut . . . . . . . . . . . . . .102
56. As to Property in New Jersey. . . . . . . . . . . . . . .106
57. As to Property in New York. . . . . . . . . . . . . . . .106
58. As to Property in Pennsylvania. . . . . . . . . . . . . .108
59. Liability of Assignees of Beneficiary . . . . . . . . . .110
60. One of a Number of Mortgages. . . . . . . . . . . . . . .110
EXHIBITS
EXHIBIT A Legal Descriptions of Properties
EXHIBIT B Environmental Reports
EXHIBIT C Subordination, Nondisturbance
and Attornment Agreement
SCHEDULES
SCHEDULE 1 - Allocated Loan Amounts
SCHEDULE 2 - Grantor/Grantor Properties
SCHEDULE 3 - Short-Term Repairs
INDENTURE OF MORTGAGE, DEED OF TRUST,
SECURITY AGREEMENT, FINANCING STATEMENT,
FIXTURE FILING AND ASSIGNMENT
OF LEASES, RENTS AND SECURITY DEPOSITS
THIS INDENTURE OF MORTGAGE, DEED OF TRUST, SECURITY
AGREEMENT, FINANCING STATEMENT, FIXTURE FILING AND ASSIGNMENT OF
LEASES, RENTS AND SECURITY DEPOSITS (herein, together with all
amendments and supplements thereto, this "Mortgage"), dated as of
the 18th day of June, 1996, is made by those certain entities
listed on Schedule 4 hereto (collectively, "Grantor" or
"Mortgagor"), having an address c/o Kranzco Realty Trust, 128
Fayette Street, Conshohocken, Pennsylvania 19428, (as to
properties in New Jersey, Pennsylvania, Connecticut and New York)
to KRT ORIGINATION CORP. having an address at c/o Kranzco Realty
Trust, 128 fayette Street, Conshohocken, Pennsylvania 19428, as
Mortgagee, and (as to properties in Maryland) to Ronald P. Fish,
Esq. and Thomas A. Hauser, Esq., individuals having an address at
c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street,
19th Floor, Baltimore, Maryland 21202 (individually and/or
collectively, the "Trustee"), for the benefit of KRT ORIGINATION
CORP., a Delaware corporation, having an address at c/o Kranzco
Realty Trust, 128 Fayette Street, Conshohocken, Pennsylvania
19428 (together with its successors and assigns, "Beneficiary" or
"Mortgagee").
W I T N E S S E T H :
WHEREAS, each Grantor is the record and beneficial
owner of the fee simple or leasehold interests in one or more of
the Properties (as defined below), located on and comprising the
land described in Exhibit "A" attached hereto (collectively, the
"Land"), which Exhibit A sets forth which Grantor is such owner
of each of the Properties or a leasehold interest therein; and
WHEREAS, Beneficiary has agreed to make loans to
Grantor in the aggregate principal amount of One Hundred Eighty-
One Million Seven Hundred Thousand Dollars ($181,700,000)
(collectively, the "Loan"), which Loan shall be evidenced by the
Class A Mortgage Note (the "Class A Note"), the Class B Mortgage
Note (the "Class B Note"), the Class C Mortgage Note (the "Class
C Note"), and the Class D Mortgage Note (the "Class D Note"),
each of even date herewith (together with all amendments,
modifications, supplements, restatements, substitutions and
replacements of any thereof or thereto, the "Notes"), executed by
Grantor in favor of Beneficiary, in the initial principal amounts
of $123,700,000, $20,600,000, $28,900,000 and $8,500,000,
respectively, payable as specified therein, with a maturity date
of June 20, 2003 or if such date is not a Business Day, on the
next preceding Business Day (the "Maturity Date") or such earlier
date as may be required under the terms of the Notes; and
WHEREAS, the indebtedness evidenced by the Notes and
the other obligations of Grantor set forth in the other Loan
Documents (as defined below) shall be secured by this Mortgage
and the other Loan Documents; and
WHEREAS, Grantor and Beneficiary intend these recitals
to be a material part of this Mortgage.
NOW, THEREFORE, in consideration of the Loan to Grantor
evidenced by the Notes and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees as follows:
TO SECURE:
(i) payment and performance of all covenants,
conditions, liabilities and obligations of Grantor to
Beneficiary contained in, and payment of the indebtedness
evidenced by, the Notes plus all interest payable
thereunder; and
(ii) payment and performance of all covenants,
conditions, liabilities and obligations contained in this
Mortgage and any extensions, renewals or modifications
hereof; and
(iii) payment and performance of all covenants,
conditions, liabilities and obligations of Grantor contained
in the Assignment of Leases, Rents and Security Deposits,
dated as of the date hereof (together with any extensions,
renewals or modifications thereof, the "Assignment of
Leases"), between Grantor, as assignor, and Beneficiary, as
assignee, and the Cash Collateral Account, Security, Pledge
and Assignment Agreement, dated as of the date hereof
(together with any extensions, renewals or modifications
thereof, the "Cash Collateral Agreement"), among Grantor, as
pledgor, State Street Bank and Trust Company, as collateral
agent, and Beneficiary, as pledgee; and
(iv) payment and performance of all covenants,
conditions, liabilities and obligations of Grantor contained
in each of the other Loan Documents (as defined below); and
(v) without limiting the foregoing, payment of
all indebtedness, liabilities, and amounts from time to time
incurred by Beneficiary pursuant to the Notes, this Mortgage
or such other Loan Documents, even if the aggregate amount
of the monetary obligation outstanding at any one time
exceeds the face amount of the Notes (all of the foregoing
indebtedness, monetary liabilities and obligations set forth
in clauses (i)-(iv) above and this clause (v), collectively,
the "Indebtedness"); and
(vi) payment of the Indebtedness together with the
payment and performance of all other covenants, conditions,
liabilities and obligations described and set forth in
clauses (i)-(v) above and in this clause (vi), collectively,
the "Obligations."
GRANTING CLAUSES
NOW, THEREFORE, THIS MORTGAGE WITNESSETH: that
Grantor, in consideration of the premises, the Indebtedness
secured by the Notes and other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged (a)
has mortgaged, warranted, granted, bargained, sold, alienated,
released, confirmed, conveyed, pledged and assigned and (b) by
these presents does hereby irrevocably grant and create a first
priority Lien (as defined below), subject to the Permitted
Encumbrances and the provisions hereof and of the other Loan
Documents, on and security interest in, and does hereby MORTGAGE,
WARRANT, GRANT A SECURITY INTEREST IN, GRANT, BARGAIN, SELL,
ALIENATE, RELEASE, CONFIRM, CONVEY, PLEDGE, ASSIGN, TRANSFER AND
SET OVER (as to properties in New Jersey, Pennsylvania,
Connecticut and New York) to Beneficiary as Mortgagee and (as to
properties in Maryland) to Trustee, IN TRUST WITH POWER OF SALE
AND RIGHT OF ENTRY AND POSSESSION, and its respective successors
and assigns forever, all its estate, right, title and interest
now owned or hereafter acquired in, to and under any and all the
property (collectively, the "Trust Estate") described in the
following Granting Clauses:
(A) the Land;
(B) all of Grantor's right, title and interest in
and to the buildings, foundations, structures, improvements
and fixtures now or hereafter located or erected on the Land
(the "Improvements");
(C) all of Grantor's right, title and interest,
if any, in and to (i) all streets, avenues, roads, alleys,
passages, places, sidewalks, strips and gores of land and
ways, existing or proposed, public or private, adjacent to
the Land, and all reversionary rights with respect to the
vacation of said streets, avenues, roads, alleys, passages,
places, sidewalks and ways in the land lying thereunder,
(ii) all air, lateral support, drainage, oil, gas and
mineral rights, options to purchase or lease, waters, water
courses and riparian rights now or hereafter pertaining to
or used in connection with the Land and/or Improvements,
(iii) all and singular, the tenements, hereditaments, rights
of way, easements, appendages and appurtenances and property
now or hereafter belonging or in any way appertaining to the
Land, and (iv) all estate, right, title, claim or demand
whatsoever, either at law or in equity, in possession or
expectancy, of, in and to the Land (collectively, the
"Appurtenances");
(D) all of Grantor's right, title and interest in
and to all of the machinery, appliances, apparatus, equip-
ment, fittings, fixtures, materials, articles of personal
property and goods of every kind and nature whatsoever, and
all additions to and renewals and replacements thereof, and
all substitutions therefor, now or hereafter affixed to,
attached to, placed upon or located upon or in the Land, or
any part thereof, and used in connection with the use,
ownership, management, maintenance, enjoyment or operation
of the Land in any present or future occupancy or use
thereof and now owned or leased or hereafter owned or leased
(to the extent permitted by the applicable Lease) by Grantor
including, but without limiting the generality of the
foregoing, all heating, lighting, laundry, cooking, incin-
erating, loading, unloading and power equipment, boilers,
dynamos, stokers, engines, pipes, pumps, tanks, motors,
conduits, switchboards, plumbing, lifting, cleaning, fire
prevention, fire extinguishing, refrigerating, ventilating,
and communications apparatus, air cooling and air condi-
tioning apparatus, building materials and equipment,
elevators, escalators, carpeting, shades, draperies,
awnings, screens, doors and windows, blinds, stoves, ranges,
refrigerators, dishwashers, cabinets, office equipment,
furniture and furnishings, partitions, ducts and compressors
(other than equipment and personal property of tenants of
the Land or the Improvements, or any part thereof) (herein-
after collectively called "Building Equipment"), and Grantor
agrees to execute and deliver, from time to time, such
further instruments (including, without limitation, any
financing statements under the Uniform Commercial Code of
the applicable State in which a Property is located (the
"UCC")) as may be reasonably requested by Beneficiary to
confirm the lien of this Mortgage on any Building Equipment
or any Intangible;
(E) all of Grantor's right, title and interest as
lessee in and to all of the leases of the Properties, or any
part thereof, now existing or hereafter entered into by
Grantor, (collectively, the "Ground Leases");
All such right, title and interest of Grantor in and to
each of the parcels or sets of parcels of the Land, the Ground
Leases, Grantor's interest in and to the Improvements and
Building Equipment located thereon and such other property with
respect thereto described in the foregoing Granting Clauses is
herein called a "Property" and all such Property, together with
the Land, the Ground Leases, Grantor's interest in and to the
Improvements and Building Equipment comprising a part of the
properties owned by each Grantor and identified on Schedule 2 are
herein collectively called the "Properties."
(F) all of Grantor's right, title and interest as
lessor or licensor, as the case may be, in, to and under all
leases, underlettings, concession agreements and licenses of
the Properties, or any part thereof, now existing or here-
after entered into by Grantor including, without limitation,
any cash and securities deposited thereunder (collectively,
the "Leases"), the grant of such cash and securities here-
under being expressly subject to the provisions of the
applicable Leases, and all of Grantor's right, title and
interest, subject to the provisions of Section 9, in the
right to receive and collect the revenues, income, rents,
issues, profits, royalties and other benefits payable under
any of the Leases or otherwise arising from the use or
enjoyment of all or any portion of the Properties
(collectively, the "Rents");
(G) subject to the provisions of Section 6
hereof, all of Grantor's right, title and interest in and to
all proceeds, judgments, claims, compensation, awards or
payments hereafter made to Grantor for the taking, whether
permanent or temporary, by condemnation, eminent domain, or
for any conveyance made in lieu of such taking, of the whole
or any part of the Properties, including, without limita-
tion, all proceeds, judgments, claims, compensation awards
or payments for changes of grade of streets or any other
injury to or decrease in the value of the Properties,
whether direct or consequential, which said awards and
payments are hereby assigned to Beneficiary, who is hereby
authorized to collect and receive the proceeds thereof and
to give proper receipts and acquittances therefor, and to
apply the same toward the payment of the Indebtedness in
such order as Beneficiary may determine in accordance with
the provisions of this Mortgage without regard to the
adequacy of Beneficiary's security hereunder and notwith-
standing the fact that the amount thereof may not then be
due and payable, and toward the payment of reasonable
counsel fees, costs and disbursements incurred by
Beneficiary in connection with the collection of such awards
or payments; and Grantor hereby agrees, upon request, to
make, execute and deliver any and all further assignments
and other instruments sufficient for the purpose of
confirming this assignment of said proceeds, judgments,
claims, compensation awards or payments to Beneficiary,
free, clear and discharged of any encumbrances of any kind
or nature whatsoever other than the Permitted Encumbrances;
(H) subject to the provisions of Section 6
hereof, all of Grantor's right, title and interest in and to
all unearned premiums paid under insurance policies now or
hereafter obtained by Grantor to the extent the same insure
the Properties and any other insurance policies required to
be maintained pursuant to Section 5 hereof to the extent the
same insure the Properties including, without limitation,
liability insurance policies and Grantor's interest in and
to all proceeds of the conversion and the interest payable
thereon, voluntary or involuntary, of the Trust Estate, or
any part thereof, into cash or liquidated claims including,
without limitation, proceeds of casualty insurance, title
insurance (other than liability insurance) or any other
insurance maintained on or with respect to the Properties;
(I) all right, title and interest of Grantor in
and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and
Appurtenances to, the Properties, hereafter acquired by or
released to Grantor or constructed, assembled or placed by
Grantor on the Properties, and all conversions of the
security constituted thereby; immediately upon such
acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case, to
the extent permitted by law, without any further mortgage,
conveyance, assignment or other act by Grantor, any of such
extensions, improvements, betterments, renewals, substitutes
and replacements shall become subject to the Lien of this
Mortgage as fully and completely, and with the same effect,
as though now owned by Grantor and specifically described
herein;
(J) all of Grantor's right, title and interest
in, to and under, to the extent the same may be encumbered
or assigned by Grantor pursuant to the terms thereof without
occurrence of a breach of default thereunder or a violation
under applicable law, and without impairment of the validity
or enforceability thereof, (i) any Operating Agreements (as
defined below) and all contracts and agreements relating to
the Properties (other than the Leases), and other documents,
books and records related to the ownership and operation of
the Properties; (ii) to the extent permitted by law, all
consents, licenses (including, to the extent permitted by
law, any licenses held by Grantor permitting the sale of
liquor at any of the Properties the transfer and/or
assignment of which is permitted by law without filing or
other qualification), warranties, guaranties, building
permits and government approvals relating to or required for
the construction, completion, occupancy and operation of the
Properties; (iii) all plans and specifications for the
construction of the Improvements, including, without
limitation, installations of curbs, sidewalks, gutters,
landscaping, utility connections and all fixtures and
equipment necessary for the construction, operation and
occupancy of the Improvements; (iv) all such other contracts
and agreements (other than the Leases) from time to time
executed by Grantor relating to the ownership, leasing,
construction, maintenance, operation, occupancy or sale of
the Properties, together with all rights of Grantor to
compel performance of the terms of such contracts and
agreements; and (v) subject to the terms of the Cash
Collateral Agreement, the Accounts (as defined below) and
any funds in such Accounts from time to time (it being
understood that at such time as Grantor shall withdraw any
amounts from any Accounts in accordance with the provisions
of the Cash Collateral Agreement, the same shall cease to
constitute part of the Trust Estate);
(K) to the extent the same may be encumbered or
assigned by Grantor pursuant to the terms thereof and to the
extent permitted by law, all of Grantor's right, title and
interest in, to and under escrows, documents, instruments,
and general intangibles, as the foregoing terms are defined
in the UCC, in any case which now or hereafter relate to,
are derived from, or are used in connection with the Prop-
erties, and all contract rights, franchises, books, records,
plans, specifications, permits, licenses, approvals, actions
and causes of action which now or hereafter relate to, are
derived from or used in connection with the Properties or
the use, operation, maintenance, occupancy or enjoyment
thereof or the conduct of any business or activities thereon
(collectively, the property described in the foregoing
paragraphs (G), (H), (I), (J) and this paragraph (K), the
"Intangibles"); and
(L) all of Grantor's right, title and interest in
all proceeds, both cash and noncash, of the foregoing which
may be sold or otherwise be disposed of pursuant to the
terms hereof.
TO HAVE AND TO HOLD THE TRUST ESTATE hereby conveyed,
or mentioned and intended so to be, whether now owned or held or
hereafter acquired, subject only to the Permitted Encumbrances,
unto Trustee for the benefit and use of Beneficiary, its
successors and assigns, forever, upon the terms and conditions
set forth herein.
IN TRUST FOREVER, WITH POWER OF SALE (to the extent
permitted by applicable law), upon the terms and trusts set forth
herein and to secure the performance of, and compliance with, the
obligations, covenants and conditions of this Mortgage and the
other Loan Documents all as herein set forth.
1. Definitions. Wherever used in this Mortgage, the
following terms, and the singular and plural thereof, shall have
the following meanings. All capitalized terms used but not
otherwise defined herein shall have the meanings assigned to them
in the Notes:
Accounts: Shall mean, collectively, the Collection
Account, the Capital and TI Reserve Account and the Sinking Fund
Account and any and all of Grantor's other accounts, general
intangibles, chattel paper, cash or monies, wherever located,
whether in the form of cash or checks, and all cash equivalents
including all deposits and certificates of deposit, instruments,
whether negotiable or non-negotiable, debt notes both
certificated and uncertificated, repurchase obligations for
underlying notes of the types described herein, and commercial
paper (it being agreed that all of the foregoing must at all
times qualify as Eligible Investments (as defined in the Cash
Collateral Agreement)), (a) received in connection with the sale
or other disposition of all or any of the Properties, (b)
maintained by Grantor in a segregated account in trust for the
benefit of Beneficiary, or (c) held by Beneficiary, but not any
account maintained by Grantor or an Affiliate of Grantor not in
trust for the benefit of Beneficiary, or cash or cash equivalents
that have been disbursed to Grantor in accordance with the Cash
Collateral Agreement.
Affiliate: Shall mean, with respect to any specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with, or
any general partner in, 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 interest,
by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
Agent: Shall mean the Collateral Agent acting as such
under the Cash Collateral Agreement.
Aggregate Alteration Threshold Amount: Shall mean
$5,000,000.
Allocated Loan Amount: Shall mean the portion of the
Principal Indebtedness allocated, solely for purposes of
performing certain calculations hereunder, to each Property as
set forth in Schedule 1 annexed hereto and made a part hereof, as
such amounts shall be adjusted from time to time as hereinafter
set forth. In the case of a Total Loss in accordance with Section
6(d) where the Proceeds are less than 125% of the Allocated Loan
Amount, each Allocated Loan Amount shall be increased by an
amount equal to the product of (a) the difference between 125% of
the applicable Allocated Loan Amount and the Proceeds, and (b) a
fraction, the numerator of which is the applicable Allocated Loan
Amount (prior to the adjustment in question) and the denominator
of which is the Principal Indebtedness prior to the adjustment to
the Principal Indebtedness resulting in the recalculation of the
Allocated Loan Amount. Whenever a property is substituted for a
Property pursuant to Section 45 hereof, the Allocated Loan Amount
for the Replaced Property shall be the Allocated Loan Amount for
the Substitute Property. All calculations made pursuant to this
Mortgage with respect to an Allocated Loan Amount (including or
scheduled interest payments on an Allocated Loan Amount) shall be
certified to Beneficiary by Grantor pursuant to an Officer's
Certificate.
Alteration: As defined in Section 12(c) hereof.
Approved Banks: Shall mean banks or other financial
institutions which have a minimum long-term unsecured debt rating
of at least "AA" by the Rating Agency (whether or not published
by the Rating Agency), or if any such bank or other financial
institution is not rated by the Rating Agency, then a minimum
long-term rating of at least "AA" or its equivalent by two of
Standard & Poor's Ratings Services, Duff & Phelps Credit Rating
Corp. or Moody's Investors Services, Inc.
Appurtenances: As defined in Granting Clause (C)
hereof.
Assignee: As defined in Section 59 hereof.
Assignment of Leases: As defined in the recitals
hereof.
Beneficiary: As defined in the introductory paragraph
hereof.
Best: As defined in Section 5(b).
Building Equipment: As defined in Granting Clause (D)
hereof.
Business Day: Shall mean any day except a Saturday, a
Sunday or any other day on which commercial banks in the States
of New York or Pennsylvania are authorized or obligated by law,
governmental decree or executive order to be closed.
Capital and TI Reserve Account: Shall have the meaning
set forth for such term in the Cash Collateral Account.
Cash and Cash Equivalents: Shall mean (i) cash, and
(ii) direct obligations of the United States Government,
including, without limitation, treasury bills, notes and bonds,
(iii) interest bearing or discounted obligations of Federal
agencies and government sponsored entities or pools of such
instruments offered by Approved Banks and dealers, including,
without limitation, Federal Home Loan Mortgage Corporation
participation sale certificates, Government National Mortgage
Association modified pass-through certificates, Federal National
Mortgage Association bonds and notes, Federal Farm Credit System
securities, (iv) time deposits, domestic and Eurodollar
certificates of deposit, bankers acceptances, commercial paper
rated "F-1+" by the Rating Agency, and/or guaranteed by an entity
rated "AA" by the Rating Agency, floating rate notes, other money
market instruments and letters of credit each issued by Approved
Banks, (v) obligations issued by state and local governments or
their agencies, rated "AA" with respect to long-term debt or "F-
1+" for short-term debt by the Rating Agency and/or guaranteed by
an unconditional, irrevocable, clean, sight draft letter of
credit of an Approved Bank in favor of Beneficiary, and (vi)
repurchase agreements with Approved Banks and primary government
securities dealers fully secured by U.S. Government or agency
collateral equal to or exceeding the principal amount on a daily
basis and held in safekeeping.
Cash Collateral Agreement: As defined in the recitals
hereof.
Casualty Amount: As defined in Section 6(b) hereof.
Certificates: Shall mean, collectively, Certificates
issued pursuant to the Trust and Servicing Agreement.
Closing Date: Shall mean the date the Loan and the
transactions contemplated hereby are consummated.
Collection Account: Shall have the meaning set forth
for such term in the Cash Collateral Agreement.
Code: Shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto, and any temporary or final
regulations promulgated thereunder.
CPI: Shall mean the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the
United States Department of Labor, All Items (1982-1984=100), or
any successor index thereto, appropriately adjusted. In the
event that the CPI is converted to a different standard reference
base or otherwise revised, the determination of adjustments
provided for herein shall be made with the use of such conversion
factor, formula or table for converting the CPI as may be
published by the Bureau of Labor Statistics or, if said Bureau
shall not publish the same, then with the use of such conversion
factor, formula or table as may be published by Prentice-Hall,
Inc., or any other nationally recognized publisher of similar
statistical information.
Debt: Shall mean, with respect to any Person at any
time, (a) indebtedness or liability of such Person for borrowed
money whether or not evidenced by bonds, debentures, notes or
other instruments, or for the deferred purchase price of property
or services (excluding trade obligations); (b) obligations of
such Person as lessee under leases which should have been or
should be, in accordance with GAAP, recorded as capital leases;
(c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for, or liabilities incurred on the account
of, such Person; (e) obligations or liabilities of such Person
arising under acceptance facilities; (f) obligations of such
Person under any guarantees or other agreement to become
secondarily liable for any obligation of any other Person,
endorsements (other than for collection or deposit in the
ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest
in any Person or otherwise to assure a creditor against loss; (g)
obligations of such Person secured by any Lien on any property of
such Person, whether or not the obligations have been assumed by
such Person; or (h) obligations of such Person under any interest
rate or currency exchange agreement.
Debt Service: Shall mean the amount of interest and
principal due and payable in accordance with the Notes during any
applicable period.
Debt Service Coverage Ratio: Shall mean for any period
the ratio of Net Operating Income to Debt Service on the Notes
(based on a debt service constant on the Notes of the greater or
10.09% per annum and the actual average debt service constant on
the Notes) for such period.
Default: Shall mean the occurrence or existence of any
event or condition which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default
hereunder.
Default Rate: Shall mean, in the case of each Note,
the lesser of (a) the rate per annum on such Note plus 3%, and
(b) the maximum rate of interest allowable under New York law.
Defeasance: As defined in Section 46 hereof.
Defeasance Collateral: Shall mean Defeasance Eligible
Investments included in the Trust Estate as collateral pursuant
to Sections 38, 45 and 46 hereof (including, without limitation,
all amounts then on deposit in the Defeasance Collateral
Account).
Defeasance Collateral Account: As defined in Section
47 hereof.
Defeasance Eligible Investments: Shall mean obliga-
tions or securities not subject to prepayment, call or early
redemption which are direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of America
or any agency or instrumentality of the United States of America,
or the obligations of which are backed by the full faith and
credit of the United States of America, the ownership of which
will not cause Beneficiary to be an "investment company" under
the Investment Company Act of 1940, as amended, as evidenced by
an Opinion of Counsel acceptable to Beneficiary, and which
qualify under Section 1.860G-2(a)(8) of the Treasury regulations. All
such obligations or securities shall mature or be redeemable, or
provide for payments of interest thereon, on or prior to the
Business Day preceding the date such amounts are required to be
applied under this Mortgage.
Direct Beneficial Owner: Shall mean such Persons who
own any direct ownership interest in Grantor.
Environmental Certificate: As defined in Section 40(b)
hereof.
Environmental Claim: Shall mean any action,
governmental investigation or written notice by any Person
alleging potential liability (including potential liability for
investigatory costs, cleanup costs, natural resource damages,
property damages, personal injuries or penalties) arising out of,
based upon or resulting from (a) the presence, threatened
presence, release or threatened release into the environment of
any Hazardous Substances from or at the Properties, or (b) the
violation, or alleged violation, of any Environmental Law,
relating to the Properties.
Environmental Event: As defined in Section 40(b)
hereof.
Environmental Laws: Shall mean all present or future
federal, state and local laws, statutes, rules, ordinances, and
regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata),
including, without limitation laws, statutes, rules, ordinances
and regulations relating to emissions, discharges, releases of
Hazardous Substances, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et
seq.; the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq.; the Toxic Substance Control Act, 15
U.S.C. Section 2601 et seq.; the Water Pollution Control Act (also
known as the Clean Water Act), 33 U.S.C. Section 1251 et seq.; the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; and the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq., as the
same may be hereafter amended or modified.
Environmental Reports: As defined in Section 40(a)
hereof.
ERISA: Shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated thereunder.
Events of Default: Shall mean the occurrence of any of
the following, each of which shall constitute an Event of Default
under this Mortgage:
(a) (i) Failure to make any payment of interest or
principal on any Note when due, or (ii) failure to pay the
principal balance of any Note when due; or
(b) Grantor fails to pay any other amount payable
pursuant to this Mortgage or the Notes when due and payable in
accordance with the provisions hereof, with such failure
continuing for ten (10) days after Beneficiary delivers written
notice thereof to Grantor; or
(c) (i) Failure to keep in force the insurance
required by Section 5 of this Mortgage, or (ii) failure to comply
with any other covenants set forth in Section 5 with such failure
in this clause (ii) continuing for ten (10) Business Days after
Beneficiary delivers written notice thereof to Grantor; or
(d) Any default under the terms of Section 7(b)
(subject to the terms of Section 7(c)) beyond any applicable time
periods set forth therein, with such default continuing for ten
(10) Business Days after Beneficiary delivers written notice
thereof to Grantor, or the incurrence of any Debt in violation of
Section 11(c) of this Mortgage or the occurrence of any Transfer
in violation of Sections 11(a) and 11(b) (but subject to the
terms of Section 11(d)) of this Mortgage; or
(e) Any attempt by Grantor to assign its rights under
this Mortgage; or
(f) Any other default in the performance or payment,
or breach, of any material covenant, warranty, representation or
agreement of Grantor contained herein or in any other Loan
Document (other than a covenant, representation or agreement, a
default in the performance or payment of or the breach of which
is specifically addressed elsewhere in this definition), which
default is not cured within thirty (30) Business Days after
receipt by Grantor of notice from Beneficiary in writing of such
breach. If cure of such default (a) would require performance of
an Obligation other than payment of Indebtedness to Grantor and
(b) cannot be effected within said 30 Business Day period despite
Grantor's diligence in prosecuting such cure, then, provided
Grantor commences to cure within said thirty (30) Business Day
period and diligently prosecutes said cure to completion, subject
only to Excusable Delays, the cure period provided hereunder
shall be extended to such time as may be reasonably necessary to
cure the default; provided, however, that such extended period
shall in no event exceed 60 days plus time permitted for
Excusable Delays; and provided, further, that Grantor shall
provide Beneficiary with a written report and evidence of the
progress of Grantor's cure efforts 30 days after commencement of
such 60-day cure period. Notwithstanding the foregoing sentence,
the cure period provided hereunder may be extended for one
additional 90-day period, subject to Excusable Delays, if and
only if (x) such default involves breach of a covenant (as
distinct from a representation) and cure of such default would
require physical construction or remedial work, and (y) such cure
cannot with diligence be completed within the initial 60-day
period. Grantor shall provide Beneficiary with an additional
written report and evidence of the progress of Grantor's cure
efforts 45 days after commencement of such additional 90-day cure
period; or
(g) The entry by a court of (A) a decree or order for
relief in respect of Grantor or its General Partner in an
involuntary case or proceeding under any applicable Federal or
state bankruptcy, insolvency, reorganization or other similar law
or (B) a decree or order adjudging Grantor or its General Partner
a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of Grantor or its General Partner
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of Grantor or its General Partner or of any
substantial part of either of their respective property, or
ordering the winding up or liquidation of either of their
respective affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and
in effect for a period of more than ninety (90) consecutive days;
or
(h) The commencement by Grantor or its General Partner
of a voluntary case or proceeding under any applicable Federal or
state bankruptcy, insolvency, reorganization or other similar law
or of any other case or proceeding to be adjudicated a bankrupt
or insolvent, or the consent by it to the entry of a decree or
order for relief in respect of it in an involuntary case or
proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding
against it, or the filing by Grantor or its general partner of a
petition or answer or consent seeking reorganization or relief
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law, or the consent by Grantor or
its General Partner to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official
of Grantor or its General Partner or of any substantial part of
any of either of their respective property, or the making by
Grantor or its General Partner of an assignment for the benefit
of creditors, or the admission by Grantor or its General Partner
in writing of its inability to pay its debts generally as they
become due, or the taking of official partnership action of
Grantor or corporate action of its General Partner (or if, at any
time, Grantor shall no longer be a partnership or the General
Partner shall no longer be a corporation) in furtherance of any
such action; or
(i) This Mortgage or any other Loan Document or any
Lien granted hereunder or thereunder shall, in whole or in part,
terminate, cease to be effective or cease to be a legally valid,
binding and enforceable obligation of Grantor, or any Lien
securing the Indebtedness shall, in whole or in part, cease to be
a perfected first priority Lien, subject to the Permitted
Encumbrances (except in any of the foregoing cases in accordance
with the terms hereof or under any other Loan Document); or
(j) Any "Event of Default" as defined in any Loan
Document other than this Mortgage occurs.
Exculpated Parties: As defined in Section 33 hereof.
Excusable Delay: Shall mean a delay due to acts of
God, governmental restrictions, stays, judgments, orders,
decrees, enemy actions, civil commotion, fire, casualty, strikes,
work stoppages, shortages of labor or materials or other causes
beyond the reasonable control of Grantor, but lack of funds in
and of itself shall not be deemed a cause beyond the control of
Grantor.
First Class: Shall mean, with respect to any Property,
a standard of operation and maintenance consistent with
properties comparable to and in the same metropolitan area as the
applicable Property.
Fitch: Shall mean Fitch Investors Service, L.P. or any
successor thereto.
GAAP: Shall mean the generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such
entity as may be in general use by significant segments of the
U.S. accounting profession, to the extent such principles are
applicable to the facts and circumstances on the date of
determination.
General Partner: Shall mean a general partner in a
Grantor which is a partnership.
Governmental Authority: Shall mean any Federal, state
or local government or any other political subdivision thereof
exercising executive, legislative, judicial, regulatory or
administrative functions.
Grantor: As defined in the introductory paragraph
hereof, Grantor shall mean, collectively, the entities described
on Exhibit 4 attached hereto, and as the context may provide,
Grantor shall also mean each of such entities separately with
respect to a matter pertaining solely to an entity itself or to a
particular Property owned by an entity.
Ground Leases: As defined in Granting Clause (E)
hereof.
Hazardous Substance: Shall mean any material waste or
material substance which is:
(a) included within the definition of "hazardous
substances," "hazardous materials," "toxic substances," or "solid
waste" in or pursuant to any Environmental Law, or subject to
regulation under any Environmental Law;
(b) listed in the United States Department of
Transportation Optional Hazardous Materials Table, 49 C.F.R.
Section 172.101 enacted as of the date hereof or hereafter amended, or
in the United States Environmental Protection Agency List of
Hazardous Substances and Reportable Quantities, 40 C.F.R. Part
302, as enacted as of the date hereof or as hereafter amended; or
(c) an explosive, radioactive, asbestos,
polychlorinated biphenyl, oil or petroleum product.
Holders: Shall mean, collectively, the holders of the
Certificates issued pursuant to the Trust and Servicing
Agreement.
Impositions: Shall mean all taxes (including all ad
valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible
transaction, privilege or license or similar taxes), governmental
assessments (including all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date
hereof and whether or not commenced or completed within the term
of this Mortgage), water, sewer or other rents and charges,
excises, levies, fees (including license, permit, inspection,
authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in
respect of the Trust Estate and/or any Rents (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 (a) Grantor
(including all income, franchise, single business or other taxes
imposed on Grantor for the privilege of doing business in the
jurisdiction in which the Trust Estate is located), (b) the Trust
Estate, or any other collateral delivered or pledged to
Beneficiary in connection with the Loan, or any part thereof, or
any Rents therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of,
or sales from, or activity conducted on, or in connection with
the Trust Estate or the leasing or use of all or any part
thereof. Nothing contained in this Mortgage shall be construed
to require Grantor to pay any tax, assessment, levy or charge
imposed on (i) any tenant occupying any portion of the Property
or (ii) Beneficiary or any Holder in the nature of a franchise,
capital levy, estate, inheritance, succession, income or net
revenue tax.
Improvements: As defined in Granting Clause (B)
hereof.
Indebtedness: As defined in the recitals hereof.
Indemnified Environmental Parties: As defined in
Section 40(c) hereof.
Indemnified Parties: As defined in Section 37 hereof.
Independent Accountant: Shall mean Arthur Andersen
LLP, or another firm of nationally recognized, independent
certified public accountants selected by Grantor which is
reasonably acceptable to Beneficiary.
Independent Appraiser: Shall mean an independent
appraiser which is a member of the American Institute of Real
Estate Appraisers selected by Grantor and having at least five
(5) years of experience in the applicable real estate market
where the applicable Property is located in the valuation of
properties of the type being appraised.
Independent Architect: Shall mean an independent
architect, engineer or construction consultant selected by
Grantor, licensed to practice in the State where the applicable
Property is located and having at least five (5) years of
experience.
Individual Environmental Matter: As defined in Section
48(c).
Individual Threshold Amount: Shall mean, with respect
to each Property, five percent (5%) of the Allocated Loan Amount
therefor.
Individual Trustee: Shall mean such person as is re-
quired by applicable state law to perform the functions of the
Trustee pursuant to Section 52 hereof.
Insurance Requirements: Shall mean all terms of any
insurance policy required hereunder covering or applicable to any
Property or any part thereof, all requirements of the issuer of
any such policy, and all orders, rules, regulations and other
requirements of which Grantor has notice of the national board of
fire underwriters (or any other body exercising similar
functions) applicable to or affecting any Property or any part
thereof or any use of any Property or any part thereof.
Intangibles: As defined in Granting Clause (K) hereof.
Jurisdictional Trustee: As defined in Section 52
hereof.
Land: As defined in the recitals hereof.
Leases: As defined in Granting Clause (F) hereof.
Legal Requirements: As defined in Section 13(a)
hereof.
Lien: Shall mean any mortgage, deed of trust, lien,
pledge, hypothecation, assignment, security interest, or any
other encumbrance of, on or affecting the Trust Estate or any
portion thereof 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, and mechanic's, materialmen's and other
similar liens and encumbrances.
Loan: As defined in the recitals hereof.
Loan Amount: Shall mean the aggregate Principal Amount
of the Loan, which initially shall be $181,700,000.
Loan Documents: Shall mean this Mortgage, the
Assignment of Leases, the Cash Collateral Agreement, the Notes,
and any and all other agreements, instruments or documents
executed by Grantor evidencing, securing or delivered in
connection with the Loan and the transactions contemplated
hereby.
Material Adverse Effect: Shall mean any event or
condition that has a material adverse effect on (i) all of the
Properties taken as a whole, (ii) the business, prospects,
profits, operations or condition (financial or otherwise) of
Grantor, or (iii) the ability of Grantor to repay the principal
and interest of the Indebtedness as it becomes due.
Material Alteration: Shall mean any Alteration which,
when aggregated with all related Alterations constituting a
single project, involves an estimated cost exceeding the greater
of the Individual Threshold Amount and $500,000 with respect to
Alterations (including the Alteration in question) being
undertaken at a single Property at such time or the Aggregate
Alteration Threshold Amount with respect to Alterations
(including the Alteration in question) being undertaken at all
the Properties at such time, but in either event, excluding any
Alteration for which a Tenant is obligated to pay directly.
Maturity Date: As defined in the recitals hereof.
Maximum Foreseeable Casualty Loss: As defined in
Section 5(b) hereof.
Minimum Defeasance Collateral Requirement: Shall mean,
with respect to a Property Release or a substitution pursuant to
Section 46 hereof resulting in a Defeasance, Defeasance Collater-
al in an amount (i) sufficient to pay 125% of the Allocated Loan
Amount applicable to the Property which is the subject of the
Property Release or substitution in respect of the first seven
Properties and 135% of the Allocated Loan Amount for the release
or substitution of each Property thereafter or, if the Property
to be released is a Specified Property, an amount equal to 150%
of the Allocated Loan Amount unless prior to the release of such
Specified Property the Rating Agency has delivered the written
affirmation of the ratings of the Certificates as provided for in
Section 38(b)(iii) hereof, and (ii) sufficient to pay scheduled
interest and principal payments (such payments, the "Defeasance
Debt Service Payments") on the portion of the Loan equal to such
Allocated Loan Amount on such Property or Replaced Property, as
the case may be, assuming an average interest rate on the Notes
equal to the actual interest rates on the Notes. Sufficient
portions of the Defeasance Collateral must mature on or before
the dates when such amounts are required to be applied to pay
Defeasance Debt Service Payments when due.
Monthly Capital and TI Reserve Amount: As defined in
Section 48(b) hereof.
Mortgage: As defined in the recitals hereof.
Net Operating Income: Shall mean, with respect to any
period, the excess of Operating Income over Operating Expenses
for such period.
Nondisqualification Opinion: Shall have the meaning
set forth for such term in the Trust and Servicing Agreement.
Nondisturbance Agreement: As defined in Section 15(d)
hereof.
Notes: As defined in the recitals hereof.
Obligations: As defined in the recitals hereof.
Officer's Certificate: Shall mean a certificate
delivered to Beneficiary and signed by an officer of Kranzco
Realty Trust or by an officer of one of the entities comprising
the Grantor (or if such entity is a partnership, then signed by a
general partner in the entity).
Operating Agreements: Shall mean the reciprocal
easement agreements, operating agreements and similar agreements
affecting the ownership, use and operation of the Properties, as
such agreements have been or may hereafter be amended, modified
or supplemented.
Operating Expenses: Shall mean, for any period,
without duplication, all expenses paid or to be paid by Grantor
during such period in connection with the operation, management,
maintenance, repair and use of the Trust Estate, determined on an
accrual basis, and, except to the extent otherwise provided in
this definition, in accordance with GAAP. Operating Expenses
specifically shall include (i) all payments required to be made
pursuant to any Ground Leases and/or Operating Agreements, (ii)
legal, accounting, appraisal and other professional fees and
disbursements in connection with the Notes, and (iii) fees and
expenses of Beneficiary (if any) paid by Grantor, and (iv)
management fees, whether or not actually paid, equal to 3.5% of
annual "base" or "fixed" Rent and any percentage rent due under
the Leases. Notwithstanding the foregoing, Operating Expenses
shall not include (1) depreciation or amortization, (2) income
taxes or other Impositions in the nature of income taxes, (3) any
expenses (including legal, accounting and other professional
fees, expenses and disbursements) incurred in connection with the
issuance of the Notes or the sale, exchange, transfer, financing
or refinancing of all or any portion of the Trust Estate or in
connection with the recovery of insurance or condemnation
proceeds which are applied to prepay the Notes, (4) any expenses
which in accordance with GAAP should be capitalized, (5) Debt
Service, and (6) any item of expense which would otherwise be
considered within Operating Expenses pursuant to the provisions
above but is paid directly by any Tenant.
Operating Income: Shall mean, for any period, all
income of Grantor during such period from the operation of the
Trust Estate or, as applicable, a Property as follows:
(i) all amounts payable to Grantor by any Person
as rent and other amounts under Leases, license agreements,
occupancy agreements or other agreements relating to the
Trust Estate or, as applicable, a Property (including
reimbursements and percentage rents);
(ii) rent insurance proceeds; and
(iii) all other amounts which in accordance with
GAAP are included in Grantor's annual financial statements
as operating income attributable to the Trust Estate or, as
applicable, a Property.
Notwithstanding the foregoing, Operating Income shall
not include (a) any condemnation or insurance proceeds (other
than rent insurance proceeds or condemnation proceeds with
respect to a temporary taking and, in either such case, only to
the extent allocable to the applicable reporting period), (b) any
proceeds resulting from the Transfer of all or any portion of a
Property, (c) any rent attributable to a Lease prior to the date
on which the actual payment of rent is required to commence
thereunder, (d) any item of income otherwise includable in
Operating Income but paid directly by any tenant to a Person
other than Grantor, provided such item of income is an item of
expense (such as payments for utilities paid directly to a
utility company) and is otherwise excluded from the definition of
Operating Expenses, or (e) security deposits received from
Tenants until forfeited. Operating Income shall be calculated on
the accrual basis of accounting and, except to the extent
otherwise provided in this definition, in accordance with GAAP.
Opinion of Counsel: Shall mean an opinion of counsel
of a nationally recognized law firm or other law firm reasonably
acceptable to Beneficiary and, at any time that the Loan is
included in any securitization transaction, the Rating Agency,
procured by Grantor and rendered at Grantor's sole cost and
expense.
Permitted Debt: As defined in Section 11(c) hereof.
Permitted Encumbrances: Shall mean:
(i) Liens for Impositions not yet due and payable
or Liens arising after the date hereof which are being
contested in good faith by appropriate proceedings promptly
instituted and diligently conducted in accordance with
Section 7(c) hereof;
(ii) In the case of Liens arising after the date
hereof, statutory Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens arising by
operation of law, which are incurred in the ordinary course
of business for sums not more than sixty (60) days
delinquent or which are being contested in good faith in
accordance with Section 7(c);
(iii) Easements, rights-of-way, restrictions and
other similar charges or non-monetary encumbrances against
real property not interfering in any material respect with
the use or ordinary conduct of Grantor's business or any
Property and not diminishing in any material respect the
value of the Property or Properties to which it is attached;
(iv) Liens arising from filing UCC financing
statements regarding leases of Building Equipment;
(v) From and after the date hereof, liens and
judgments which have been or will be bonded or released of
record within thirty (30) days after Grantor has received
notice of the filing of such Lien or judgment or which are
being contested in good faith in accordance with Section
7(c) hereof;
(vi) Those matters set forth in the "marked-up"
commitment for Beneficiary's loan policy of title insurance
concerning the Properties issued by the Title Company;
(vii) Liens in favor of Beneficiary under this
Mortgage and the other Loan Documents;
(viii) Rights of existing and future Tenants, as
tenants only, pursuant to Leases;
(ix) Such other title exceptions as Beneficiary
and the Rating Agency may approve in writing in their sole
discretion; and
(x) Any Liens related to or secured by any
Excluded Property.
Person: Shall mean any individual, corporation,
partnership, joint venture, estate, trust, unincorporated
association, and any federal, state, county or municipal
government or any political subdivision thereof.
Principal Amount: Shall mean in the case of each Note,
the principal amount thereof, as defined therein.
Principal Indebtedness: Shall mean, in the aggregate,
the Principal Amount payable by Grantor under each Note.
Proceeds: As defined in Section 6(b) hereof.
Properties: As defined in Granting Clause (E) hereof.
Property Release: Shall mean the release of a Replaced
Property from the lien and security interest of Beneficiary in
this Mortgage and other Loan Documents relating to such Replaced
Property, and the execution and delivery by Beneficiary of any
agreements reasonably requested by Grantor to release and
terminate or reconvey and reassign, such Mortgage; provided that
such release and termination or reconveyance and reassignment
shall be without recourse to Beneficiary and without any
representation and warranty and Grantor shall be released from
its obligations under the Loan Documents with respect to the
Replaced Property, and if a particular entity which is one of the
entities comprising Grantor has no other interest in any of the
Properties after the replacement of the Replaced property, then
such entity shall also be released from any liability under the
Loan Documents; provided, further, that upon the release and
termination or reconveyance and reassignment of Beneficiary's
security interest in this Mortgage relating to the Replaced
Property, all references herein to this Mortgage relating to the
Replaced Property shall be deemed deleted; and provided, further,
that upon any Property Release, Grantor shall cause to be
delivered to Beneficiary in form and substance reasonably
satisfactory to Beneficiary, at Grantor's sole cost and expense,
an original title insurance policy endorsement, if available at a
nominal cost (without additional premium), insuring Beneficiary's
perfected first priority interest under this Mortgage in and to
the remaining Properties in the Trust Estate following the
Property Release.
Qualifying Manager: As defined in Section 19(a)
hereof.
Rating Agency: Shall mean Fitch or any of its
successors, or, if such entity shall for any reason no longer
perform the functions of a securities rating agency, any other
nationally recognized statistical rating agency designated by
Beneficiary.
Release Date: As defined in Section 38 hereof.
Release Price: As defined in Section 38 hereof.
Renewal Lease: As defined in Section 15(b) hereof.
Rents: As defined in Granting Clause (F) hereof.
Replaced Property: As defined in Section 45(a) hereof.
Servicer: Shall mean the Servicer acting as such under
the Trust and Servicing Agreement.
Sinking Fund Account: Shall have the meaning set forth
for such term in the Cash Collateral Agreement.
Single Purpose Entity: Shall mean a Person, other than
an individual, which is formed or organized solely for the
purpose of holding, directly, an ownership interest in one or
more of the Properties, does not engage in any business unrelated
to the Properties and the financing thereof, does not have any
assets other than those related to its interest in the Properties
or the financing thereof or any indebtedness other than as
permitted by this Mortgage or the other Loan Documents, has its
own separate books and records and its own accounts, in each case
which are separate and apart from the books and records and
accounts of any other Person, holds itself out as being a Person,
separate and apart from any other Person, and it and its
partnership agreement, certificate of incorporation or other
organizational documents complies with the standards for a Single
Purpose Entity set by the Rating Agency at such time.
Specified Property: As defined in Section 38(b)
hereof.
Substitute Property: As defined in Section 45(a)
hereof.
Taking: Shall mean a temporary or permanent taking by
any Governmental Authority as the result or in lieu or in
anticipation of the exercise of the right of condemnation or
eminent domain, of all or any part of the Trust Estate, or any
interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting a Property or
any part thereof.
Tax Opinion: Shall mean an Opinion of Counsel to the
effect that a contemplated action (a) will not result in any
deemed exchange pursuant to Section 1001 of the Code of any Note;
and (b) will not adversely affect the Notes' or such other note's
status as indebtedness for federal income tax purposes.
Tenant: Shall mean any Person leasing, subleasing or
otherwise occupying any portion of a Property.
Threshold Amount: Shall mean $500,000.
Title Company: Shall mean Lawyer's Title Insurance
Company.
Total Defeasance Collateral Requirement: Shall mean
with respect to a Defeasance of the Lien of this Mortgage with
respect to all of the Properties, Defeasance Collateral in an
amount sufficient to pay all principal indebtedness outstanding
as of the date of Defeasance under the Notes as it becomes due
and sufficient to pay scheduled interest payments on the Loan,
assuming an interest rate equal to the actual average interest
rate on the Notes. All Defeasance Collateral must mature on or
before the Maturity Date.
Total Loss: Shall mean (i) a casualty, damage or
destruction of a Property, the cost of restoration of which
(calculated in accordance with the provisions of Section 6
hereof) would exceed fifty percent (50%) of the applicable
Allocated Loan Amount, and with respect to which Grantor is not
required, under the applicable Lease to apply Proceeds to the
restoration of such Property or (ii) a permanent Taking of fifty
percent (50%) or more of the gross leasable area of a Property or
so much of a Property, in either case, such that it would be
impracticable, in Beneficiary's reasonable discretion, even after
restoration, to operate such Property as an economically viable
whole and with respect to which the applicable Lease does not
require such restoration.
Transfer: Shall mean sell, assign, convey, transfer,
pledge or otherwise dispose of, or where used as a noun, a sale,
assignment, conveyance, transfer, pledge or other disposition.
Trust and Servicing Agreement: Shall mean the Trust and
Servicing Agreement, dated of even date herewith, among GE
Capital Asset Management Corporation, as servicer, State Street
Bank and Trust Company, as trustee and Beneficiary, as depositor,
for the benefit of the respective Holders of the Certificates
evidencing beneficial interests in each of the trusts established
by the Trust and Servicing Agreement.
Trust Estate: As defined in the Granting Clauses
hereof, which shall, in any event, exclude any and all Replaced
Property, and include any and all Substitute Property.
Trustee: As defined in the recitals hereof.
Trustees: Shall mean the Trustee, the Individual
Trustee together with the Jurisdictional Trustee, all separate
trustees and co-trustees appointed as provided in Section 52
hereof.
UCC: As defined in Granting Clause (D) hereof.
Work: As defined in Section 6(b) hereof.
All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein,
the term "financial statements" shall include the notes and
schedules thereto. Unless otherwise specified herein or therein,
all terms defined in this Mortgage shall have the defined
meanings when used in any other Loan Document or in any
certificate or other document made or delivered pursuant thereto.
The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Mortgage shall refer to this
Mortgage as a whole and not to any particular provision of this
Mortgage, and section, schedule and exhibit references are to
this Mortgage unless otherwise specified. The words "includes"
and "including" are not limiting and mean "including without
limitation."
In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but
excluding," and the word "through" means "to and including."
References to agreements and other documents shall be
deemed to include all subsequent amendments and other
modifications thereto executed in writing by all of the parties
thereto and, if Beneficiary's consent was required for the
original of any such document, consented to by Beneficiary. All
references in this Mortgage to the plural of any document
described herein shall mean all of such documents collectively.
References to statutes or regulations are to be
construed as including all statutory and regulatory provisions
consolidating, amending, or replacing the statute or regulation.
The captions and headings of this Mortgage are for
convenience of reference only and shall not affect the
construction of this Mortgage.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Grantor represents and warrants to, and covenants and
agrees with, Beneficiary as follows:
2. Warranty of Title. (a) Grantor owns good and
insurable fee simple or leasehold title to the Land and the
Improvements, subject only to the Permitted Encumbrances. This
Mortgage upon its due execution and proper recordation is and
will remain a valid and enforceable (and, with respect to all
personalty (as to which security interests are governed by the
UCC), upon proper recordation and the filing of a financing
statement) perfected first Lien on and security interest on the
Land, Improvements and such personalty, or the Ground Leases, as
the case may be, subject to the Permitted Encumbrances. Grantor
will preserve its fee simple or leasehold title to the Trust
Estate for so long as any of the Notes remain outstanding and
will warrant and defend same and the validity and priority of the
Lien hereof from and against any and all claims whatsoever other
than the Permitted Encumbrances.
(b) The Ground Leases are in full force and effect,
unmodified by any writing or otherwise; (ii) all rent, additional
rent and/or other charges reserved in or payable under the Ground
Leases, have been paid to the extent that they are payable to the
date hereof; (iii) the Grantor is not in default under any of the
material terms of the Ground Leases and to the best of its
knowledge, is not in default under any other term of the Ground
Leases and there are no circumstances which, with the passage of
time or the giving of notice or both, would constitute a default
under the Ground Lease; (iv) the fee owners of the Properties
subject to the Ground Leases are not in default under any of the
material terms or provisions of the Ground Leases and to the best
of the Grantor's knowledge, such fee owners are not in default
under any other terms or provisions of the Ground Leases, on its
part to be observed or performed; and (v) the Grantor has
delivered to the Trustee true, accurate and complete copies of
the Ground Leases.
(c) As additional security for Grantor's obligation to
warrant and defend its title to the Trust Estate, Grantor hereby
collaterally assigns to Beneficiary, all right, title and
interest of Grantor in and to any of the proceeds of any claim to
which Grantor is entitled under any owner's policy of title
insurance covering all or any part of Grantor's interest in and
to any Property comprising a part of the Trust Estate; provided,
that Beneficiary's interest in and to any such claim shall be
limited to its interest in and lien upon such Property and any
amounts to which Beneficiary is entitled shall be decreased by
the amount of any proceeds received by Beneficiary in respect of
such claim under any policy of title insurance, insuring the lien
of this Mortgage. If Grantor elects to not pursue a claim under
any owner's policy of title insurance covering all or any part of
Grantor's interest in and to the Trust Estate, Grantor will
notify Beneficiary of its election not to pursue a claim. If
Grantor fails to make a claim in respect of a title defect
affecting in any material respect Grantor's title to the Trust
Estate, Beneficiary shall have the right upon 15 days notice to
Grantor to pursue such claim directly with the title company in
the name and stead of Grantor.
3. Payment and Performance of Obligations Secured.
Grantor shall promptly pay when due the principal of and interest
on the Indebtedness and all other payment Obligations secured by
this Mortgage, all in lawful money of the United States of
America, and shall further perform fully and in a timely manner
all Obligations of Grantor. All sums payable by Grantor
hereunder shall be paid without demand, counterclaim, offset,
deduction (except as required by law) or defense. Grantor waives
all rights now or hereafter conferred by statute or otherwise to
any such demand, counterclaim (other than mandatory
counterclaims), setoff, deduction or defense.
4. Negative Covenants. Grantor covenants and agrees
that it shall not:
(a) incur, create or assume any indebtedness for
borrowed money or Transfer or lease the Trust Estate or any
interest therein, except as permitted under Sections 11 and 15
hereof;
(b) engage, directly or indirectly, in any business
other than that of entering into this Mortgage and the other Loan
Documents to which Grantor is a party and the ownership,
management, leasing, construction, development, operation and
maintenance of the Trust Estate for its present and related uses;
(c) commingle its assets with the assets of any other
Person;
(d) guarantee any obligations of any Person or make
advances (other than distributions or dividends) or loans to any
Persons or entities;
(e) except as set forth in Section 19, enter into any
management agreement for any of the Properties without
Beneficiary's consent, which shall not be unreasonably withheld
or delayed;
(f) dissolve, terminate, liquidate, merge with or
consolidate into another Person, except as expressly permitted
pursuant to this Mortgage;
(g) engage in any activity that would subject it to
regulation under ERISA; or
(h) voluntarily file or consent to the filing of a
petition for bankruptcy, reorganization, assignment for the
benefit of creditors or similar proceeding under any Federal or
state bankruptcy, insolvency, reorganization or other similar
law.
5. Insurance.
(a) Insurance Coverage Requirements. Grantor shall,
at its sole cost and expense, keep in full force and effect
insurance coverage of the types and minimum limits as follows
during the term of this Mortgage:
(i) Property Insurance. Insurance with respect
to the Improvements and the Building Equipment against any
peril included within the classification "All Risks of
Physical Loss" with extended coverage in amounts at all
times sufficient to prevent Grantor from becoming a co-
insurer within the terms of the applicable policies, but in
any event such insurance shall be maintained in an amount
equal to the full insurable value of the Improvements and
the Building Equipment, and such policies shall be subject
only to exclusions that are standard and customary for
properties comparable to the applicable Property. The term
"full insurable value" means the actual replacement cost of
the Improvements and the Building Equipment (without taking
into account any depreciation, and exclusive of excavations,
footings and foundations, landscaping and paving) (but in no
event less than 125% of the applicable Allocated Loan
Amount) as would be determined by an insurer, a recognized
independent insurance broker or an Independent Appraiser
selected and paid by Grantor and in no event less than the
coverage required pursuant to the terms of any Lease or
Ground Lease; provided, however, if the terms of the
applicable insurance policies expressly provide for
insurance to be provided in the amount of the actual
replacement cost of the Improvements and the Building
Equipment or such policies contain a replacement cost
endorsement, no such annual determination will be necessary;
(ii) Liability Insurance. Comprehensive general
liability insurance, including bodily injury, death and
property damage liability, and excess and/or umbrella
liability insurance against any and all claims, including
all legal liability that could be imposed upon Beneficiary,
to the extent insurable, and all court costs and attorneys'
fees and expenses, arising out of or connected with the
possession, use, leasing, operation, maintenance or
condition of each Property in such amounts as are generally
available at commercially reasonable premiums and are
generally required by institutional lenders for properties
comparable to the Properties written on a per occurrence
basis with a per occurrence limit of not less than
$1,000,000, an aggregate limit of not less than $2,000,000
per Property and umbrella liability coverage of not less
than $25,000,000;
(iii) Workers' Compensation Insurance. Statutory
workers' compensation insurance (to the extent the risks to
be covered thereby are not already covered by other policies
of insurance maintained by Grantor), with respect to any
work by or for Grantor performed on or about any Property;
(iv) Loss of Rental Value. Loss of "rental
value" or "business interruption" insurance in an amount
sufficient to avoid any co-insurance penalty and to provide
Proceeds which will cover the loss of rents sustained during
the period of at least twelve (12) months following the date
of casualty, except that in the case of the Property known
as The Mall at Cross County located in Yonkers, New York the
period of coverage shall be at least eighteen (18) months
following the date of casualty. Such policies of insurance
shall be subject only to exclusions that are commercially
reasonable and generally acceptable to institutional
lenders. The term "rental value" means the sum of (A) the
total then ascertainable Rents payable under the Leases and
(B) the total ascertainable amount of all other amounts to
be received by Grantor from third parties which are the
legal obligation of Tenants, reduced to the extent such
amounts would not be received because of Operating Expenses
not incurred during a period of non-occupancy of that
portion of such Property then not being occupied;
(v) Boiler and Machinery Insurance. To the
extent applicable, broad form boiler and machinery insurance
(without exclusion for explosion) covering all boilers or
other pressure vessels, machinery and equipment, if any,
located in, on or about each Property and insurance against
loss of occupancy or use arising from any such breakdown in
such amounts as are generally available at commercially
reasonable premiums and are generally required by
institutional lenders for properties comparable to each
Property;
(vi) Flood Insurance. If any Improvement on any
Property is located within an area designated as "flood
prone" (as defined under the regulations adopted under the
National Flood Insurance Act of 1968 and the Flood Disaster
Protection Act of 1973), flood insurance if available, in an
amount equal to the Maximum Foreseeable Casualty Loss,
acceptable to Beneficiary, provided, however, that if flood
insurance shall be unavailable from private carriers, flood
insurance provided by the federal or state government, if
available; and
(vii) Other Insurance. At Beneficiary's
reasonable request, such other insurance, including but not
limited to earthquake insurance, with respect to the Trust
Estate against loss or damage of the kinds from time to time
customarily insured against and in such amounts as are
generally available at commercially reasonable premiums and
are generally required by institutional lenders on loans of
similar amounts and secured by properties comparable to the
Properties, and, in the case of earthquake coverage, from
insurers that are generally acceptable to such institutional
lenders, but not including environmental insurance.
(b) Ratings of Insurers. Grantor will maintain the
insurance coverage described in Section 5(a) above, in all cases,
with one or more domestic primary insurers having either (x) a
claims-paying-ability rating by the Rating Agency of "AA" or
better or (y) an Alfred M. Best Company, Inc. ("Best") rating of
"A-" or better and a financial size category of not less than
VII; provided, that if Grantor shall elect to change the
insurance carrier, such new carrier must have either (i) a
claims-paying ability rating of "AA" or better by the Rating
Agency, (ii) a Best rating of "A" or better and a financial size
category of not less than IX, or (iii) such other rating if the
Rating Agency has delivered its written affirmation, which
affirmation may be granted or withheld in the Rating Agency's
sole and absolute discretion, that the ratings of the
Certificates immediately prior to such change of insurance
carrier will not be qualified, downgraded or withdrawn as a
result of such change of insurer; provided, further that
notwithstanding the foregoing in the case of the insurance
referred to in Sections 5(a)(iv), (vi) and (vii) above, the
rating may be "A-/VII" or better (except in the case of earth-
quake coverage which shall be such as is generally acceptable to
institutional lenders as provided in Section 5(a)(vii) above) and
the coverage described in Section 5(a)(iii) above with either an
insurer having a claims-paying-ability or rating as set forth
above or with the applicable state workers' compensation fund.
All insurers providing insurance required by this Mortgage shall
be authorized to issue insurance in the state where the Property
insured is located.
For the purposes hereof, "Maximum Foreseeable Casualty
Loss" shall mean the estimate of a qualified fire protection
engineer in connection with Grantor's existing insurance package
of the maximum probable casualty loss which would be suffered in
respect of the Improvements and Building Equipment for any
Property as a result of damage caused by the perils covered by
the insurance described in Section 5(a)(i).
The insurance coverage required under Section 5(a) may
be effected under a blanket policy or policies covering the Trust
Estate and other properties and assets not constituting a part of
the Trust Estate; provided that any such blanket policy shall
specify, except in the case of public liability insurance, the
portion of the total coverage of such policy that is allocated to
the Trust Estate, and any sublimits in such blanket policy
applicable to the Trust Estate, which amounts shall not be less
than the amounts required pursuant to Section 5(a) and which
shall in any case comply in all other respects with the
requirements of this Section 5.
(c) Form of Insurance Policies; Endorsements. All
insurance policies shall be in such form and with such
endorsements as are comparable to the forms of, and endorsements
to, Grantor's insurance policies in effect on the date hereof or
otherwise in accordance with commercially reasonable standards
applied by prudent owners of First Class properties comparable to
and in the general vicinities of the Properties. A certificate
of insurance with respect to all of the above-mentioned insurance
policies has been delivered to Beneficiary as of the date hereof,
or if same have not been so delivered, originals or certified
copies of all such policies shall be delivered to Beneficiary
when the same are available and shall be held by Beneficiary.
Grantor shall deliver to Beneficiary annually, simultaneously
with the renewal of the insurance policies required hereunder, an
Officer's Certificate stating that the insurance policies
required to be delivered to Beneficiary pursuant to this Section
5(c) are maintained with insurers who comply with the terms of
Section 5(b) hereof, setting forth a schedule describing all
premiums required to be paid by Grantor to maintain the policies
of insurance required under this Section 5, and stating that
Grantor has, or the applicable Tenant has, paid such premiums.
All such policies shall name Beneficiary as an additional named
insured, shall provide that all Proceeds (except with respect to
Proceeds of general liability and workers' compensation
insurance) be payable to Beneficiary as and to the extent set
forth in Section 6 hereof, and shall contain: (i) a standard
"non-contributory mortgagee" endorsement or its equivalent
relating, inter alia, to recovery by Beneficiary notwithstanding
the negligent or willful acts or omissions of Grantor; (ii) to
the extent available at commercially reasonable rates, a waiver
of subrogation endorsement in favor of Beneficiary; (iii) an
endorsement providing that no policy shall be impaired or
invalidated by virtue of any act, failure to act, negligence of,
or violation of declarations, warranties or conditions contained
in such policy by Grantor, Beneficiary or any other named
insured, additional insured or loss payee, except for the willful
misconduct of Beneficiary knowingly in violation of the
conditions of such policy; (iv) an endorsement providing for a
deductible per loss of an amount not more than that which is
customarily maintained by prudent owners of First Class
properties comparable to and in the general vicinities of the
Properties, but in no event in excess of $250,000, earthquake
coverage for all applicable Properties, for which such deductible
shall not be in excess of that generally required by
institutional lenders on loans of similar amounts secured by
comparable properties; and (v) a provision that such policies
shall not be cancelled, terminated or expired without at least
thirty (30) days' prior written notice to Beneficiary, in each
instance. Certificates of insurance with respect to all
replacement policies shall be delivered to Beneficiary not less
than ten (10) Business Days prior to the expiration date of any
of the insurance policies required to be maintained hereunder
which certificates shall bear notations evidencing payment of
applicable premiums. Originals or certified copies of
replacement insurance policies with respect to any tenant
executing a Lease from and after the date hereof, and in all
other cases, such other reasonable evidence of insurance
coverage, shall be delivered to Beneficiary promptly after
Grantor's receipt thereof but in any case within thirty (30) days
after the effective date thereof. If Grantor fails to maintain
and deliver to Beneficiary the certificates of insurance required
by this Mortgage, upon ten (10) Business Days' prior notice to
Grantor, Beneficiary may, in accordance with the provisions of
Section 8 hereof, procure such insurance, and all costs thereof
shall be paid by Grantor pursuant to the provisions of Section
18.
(d) Compliance with Insurance Requirements. Grantor
shall comply with all Insurance Requirements and shall not bring
or keep or permit to be brought or kept any article upon any of
the Property or cause or permit any condition to exist thereon
which would be prohibited by any Insurance Requirement, or would
invalidate insurance coverage required hereunder to be maintained
by Grantor on or with respect to any part of any Property
pursuant to this Section 5.
(e) Blanket Policies. Except in the case of public
liability insurance, upon Beneficiary's request, Grantor shall
deliver to Beneficiary an Officer's Certificate setting forth (i)
the number of properties covered by such policy, (ii) the
location by city (if available, otherwise, county) and state of
the properties, (iii) the approximate average square footage of
the properties (or the approximate aggregate square footage),
(iv) a brief description of the typical construction type
included in the blanket policy (i.e., single story, stand alone,
tilt up concrete), and (v) such other information as Beneficiary
may reasonably request. Grantor shall also provide supporting
evidence, such as the annual report of the applicable tenant
providing the blanket policy, a letter from the applicable tenant
or its insurance carrier or its authorized agent, any 10K report
filed with the Securities and Exchange Commission, or such other
evidence as Beneficiary may deem reasonably necessary to ensure
that the applicable Property is insured in accordance with the
terms of this Mortgage.
6. Condemnation and Insurance Proceeds.
(a) Grantor will promptly notify Beneficiary and the
Rating Agency in writing upon obtaining knowledge of (i) the
institution of any proceedings relating to any Taking, or (ii)
the occurrence of any casualty, damage or injury to, any Property
or any portion thereof the restoration of which is estimated by
Grantor in good faith to cost more than the Individual Threshold
Amount. In addition, notice of any casualty, damage, injury or
Taking, the restoration of which is estimated by Grantor in good
faith to cost more than the Individual Threshold Amount, shall
set forth such good faith estimate of the cost of repairing or
restoring such casualty, damage, injury or Taking in reasonable
detail if the same is then available and, if not, as soon
thereafter as it can reasonably be provided.
(b) In the event of any Taking of or casualty or other
damage or injury to any Property, Grantor's right, title and
interest in and to all compensation, awards, proceeds, damages,
claims, insurance recoveries, causes and rights of action
(whether accrued prior to or after the date hereof) and payments
which Grantor may receive or to which Grantor may become entitled
with respect to the Trust Estate or any part thereof other than
payments received in connection with any liability or loss of
rental value or business interruption insurance (collectively,
"Proceeds"), in connection with any such Taking of, or casualty
or other damage or injury to, any Property or any part thereof
are hereby assigned by Grantor to, and shall be paid to,
Beneficiary, subject to the rights of tenants under their leases,
as to which such lease provisions will govern. Notwithstanding
anything to the contrary set forth in this Mortgage, however, and
excluding situations involving a Total Loss and provided no Event
of Default shall have occurred and be continuing, to the extent
such Proceeds with respect to such Property do not exceed the
greater of the Individual Threshold Amount and $500,000, (the
"Casualty Amount"), or, if less than the Casualty Amount but when
aggregated with all other then unapplied Proceeds with respect to
any Property, do not exceed $2,000,000 in the aggregate, such
Proceeds are to be paid directly to Grantor to be applied to
restoration of the Trust Estate in accordance with the terms
hereof. Subject to the provisions of this Section 6(b) and
Sections 6(c) and 6(g) hereof, promptly after the occurrence of
any damage or destruction to all or any portion of such Property
or a Taking of a portion of such Property, in either case which
shall not constitute a Total Loss, Grantor shall either cause
such Property to be released from the lien of this Mortgage in
accordance with Section 38 hereof, or shall commence, or cause
the applicable Tenant to commence, and diligently prosecute to
completion, subject to Excusable Delays, the repair, restoration
and rebuilding of such Property (in the case of a partial Taking,
to the extent it is capable of being restored) (such repair,
restoration and rebuilding are sometimes hereinafter collectively
referred to as the "Work") so damaged, destroyed or remaining
after such Taking in full compliance with all material Legal
Requirements and free and clear of any and all Liens except
Permitted Encumbrances; it being understood, however, that
Grantor shall not be obligated to restore, or cause the
applicable Tenant to restore, such Property to the precise
condition of such Property prior to any partial Taking of, or
casualty or other damage or injury to such Property, if the Work
actually performed, if any, or failed to be performed, shall have
no material adverse effect on the value of such Property from the
value that such Property would have had if the same had been
restored to its condition immediately prior to such Taking or
casualty. Grantor will, in good faith and in a commercially
reasonable manner, file and prosecute, or cause the applicable
Tenant to file and prosecute in accordance with its Lease, the
adjustment, compromise or settlement of any claim for Proceeds
and, subject to Grantor's right to receive the direct payment of
any Proceeds as provided above, and, with respect to Proceeds
from a Total Loss, subject to the provisions below and subject to
the applicable terms of the Leases, will cause the same to be
paid directly to Beneficiary, to be held and applied in
accordance with the provisions of this Mortgage. Except upon the
occurrence and during the continuance of an Event of Default,
Grantor may settle any insurance claim with respect to Proceeds
which does not exceed the Casualty Amount. If an Event of
Default shall have occurred and be continuing, or if Grantor
fails to file and/or prosecute any insurance claim for a period
of fifteen (15) Business Days following Grantor's receipt of
written notice from Beneficiary, Grantor hereby irrevocably
empowers Beneficiary, in the name of Grantor as its true and
lawful attorney-in-fact, to file and prosecute such claim
(including settlement thereof) with counsel satisfactory to
Beneficiary and to collect and to make receipt for any such
payment, all at Grantor's expense (including payment of interest
at the Default Rate for any amounts advanced by Beneficiary
pursuant to this Section 6(b)). In the event of (i) a Total Loss
resulting from a casualty, damage or destruction, and the cost to
repair the Property as estimated by the Independent Architect
would exceed the Casualty Amount and the restoration of the
Property cannot reasonably be completed before the date of
expiration of any business interruption insurance and under such
circumstances Grantor is not required under the applicable Lease
to make Proceeds available for restoration of the Property, or
(ii) a Total Loss resulting from a Taking, Grantor shall be re-
quired to comply with the provisions of Section 6(j) below and
Beneficiary shall apply such Proceeds, first toward reimbursement
of Beneficiary's reasonable costs and expenses in connection with
recovery of the Proceeds (as further described below), including,
without limitation, reasonable administrative costs and inspec-
tion fees, and then as required by Section 6(j) hereof. Any Pro-
ceeds remaining after prepayment in part as set forth in Section
6(j) hereof shall be paid to Grantor or as it may direct in writ-
ing. Whether or not an Event of Default shall have occurred and
be continuing, Beneficiary shall have the right to approve, such
approval not to be unreasonably withheld or delayed, any
settlement which might result in any Proceeds in excess of the
Casualty Amount and Grantor will deliver or cause to be delivered
to Beneficiary all instruments reasonably requested by
Beneficiary to permit such approval. Grantor will pay, pursuant
to the provisions of Section 18, all reasonable costs, fees and
expenses reasonably incurred by Beneficiary (including all
reasonable attorneys' fees and expenses, the reasonable fees of
insurance experts and adjusters and reasonable costs incurred in
any litigation or arbitration), in connection with the settlement
of any claim for insurance or Taking Proceeds and seeking and
obtaining of any payment on account thereof in accordance with
the foregoing provisions. If any Proceeds are received by
Grantor and may be retained by Grantor pursuant to this Section
6, such Proceeds shall, until the completion of the related Work,
be held in trust for Beneficiary and shall be segregated from
other funds of Grantor to be used to pay for the cost of the Work
in accordance with the terms hereof, and in the event such
Proceeds exceed the Casualty Amount, such Proceeds shall be
forthwith paid directly to and held by Beneficiary in a
segregated account in trust for Grantor, in each case to be
applied or disbursed in accordance with this Section 6.
(c) Upon the occurrence and during the continuance of
an Event of Default hereunder, or in the event that any Proceeds
are required to be paid to Beneficiary pursuant to subparagraph
(b) above, then all Proceeds while an Event of Default exists,
and any such Proceeds so required to be paid to Beneficiary shall
be paid over to Beneficiary (if not paid directly to Beneficiary)
and shall be applied first toward reimbursement of Beneficiary's
reasonable costs and expenses (plus interest thereon at the
Default Rate to the extent not paid within ten (10) Business Days
after delivery of a request for reimbursement by Beneficiary)
actually incurred in connection with recovery of the Proceeds and
disbursement of the Proceeds (as further described below),
including reasonable administrative costs and inspection fees,
and then to be applied or disbursed in accordance with this
Section 6.
Subject to Grantor's rights pursuant to Section 38(b)
to cause a Property to be released from the Lien of this
Mortgage, Grantor shall be obligated to restore each Property
suffering a casualty or which has been subject to a partial
Taking in accordance with the provisions of this Section 6,
whether or not the Proceeds shall be sufficient, provided that,
if applicable, the Proceeds shall be made available to Grantor by
Beneficiary in accordance with this Mortgage.
(d) Except as otherwise provided in Section 6(j)
below, in the event that any portion of such Proceeds is applied
toward the repayment of the Indebtedness (in which event Grantor
shall not be obligated to restore pursuant to subparagraph (c)
above), Grantor shall be entitled to obtain from Beneficiary a
release without representation or warranty (in the form provided
by Grantor) of the applicable Property from the Lien and security
interests created by this Mortgage and the other Loan Documents
and a release without representation or warranty (in the form
provided by Grantor) of Grantor from all liability with respect
to the other Loan Documents as they relate to the Property
released from the Lien of this Mortgage, provided that (i) no
Event of Default exists, and if a particular entity which is one
of the entities comprising Grantor has no interest in any of the
Properties after the release of such Property, then such entity
shall also be released from any liability under the Loan
Documents, (ii) Grantor shall comply with the provisions hereof,
and (iii) Grantor pays to Beneficiary the amount, if any, by
which 125% of the Allocated Loan Amount for such Property exceeds
the Proceeds received by Beneficiary and applied to repayment of
the Indebtedness, in which case the Allocated Loan Amount for
such Property shall be reduced to zero. If any Proceeds are ap-
plied to reduce the Indebtedness, Beneficiary shall apply the
same in accordance with the provisions of the Notes. In the
event that Proceeds are used for the Work, any excess Proceeds
remaining after completion of such Work shall be paid to Grantor.
(e) Notwithstanding anything contained in this
Mortgage or any other Loan Document to the contrary, Grantor
shall not be required to use funds other than Proceeds to prepay
any Indebtedness in connection with any casualty or Taking.
(f) Unless an Event of Default has occurred and is
continuing (in which event the provisions of Sections 20 and 21
shall apply), any Proceeds to be applied pursuant to this Section
6 to prepay the Indebtedness shall be applied to prepay the
Principal Amount of the Notes in accordance with the terms
thereof, without the requirement of the payment of any prepayment
penalty.
(g) If Proceeds are not required to be applied towards
payment of the Indebtedness pursuant to the terms hereof, then
Beneficiary shall make the Proceeds which it is holding pursuant
to the terms hereof (after payment of any reasonable expenses
actually incurred by Beneficiary in connection with the
collection thereof plus interest thereon at the Default Rate to
the extent the same are not paid within ten (10) Business Days
after request for reimbursement by Beneficiary) available to
Grantor for payment of or reimbursement of Grantor's expenses
incurred with respect to the Work, upon the terms and subject to
the conditions set forth below and in Section 6(h) hereof:
(i) there shall be no continuing Event of Default
hereunder;
(ii) if the estimated cost of the Work (as
estimated by the Independent Architect referred to in clause
(iii) below) shall exceed the Proceeds, Grantor shall, at
its option (within a reasonable period of time after receipt
of such estimate) either deposit with or deliver to
Beneficiary (A) Cash and Cash Equivalents in an amount equal
to the estimated cost of the Work less the Proceeds
available, or (B) such other reasonable evidence of
Grantor's or such Tenant's ability to meet such excess costs
as may be permitted under the applicable Lease; and
(iii) Beneficiary shall, within a reasonable
period of time prior to request for initial disbursement, be
furnished with an estimate of the cost of the Work
accompanied by an Independent Architect's certification as
to such costs and appropriate plans and specifications for
the Work. The plans and specifications shall require that
the Work be done in a first-class workmanlike manner at
least equivalent to the quality and character of the
original work in the Improvements (provided, however, that
in the case of a partial Taking, the Property restoration
shall be done to the extent reasonably practicable after
taking into account the consequences of such partial
Taking), so that upon completion thereof, the Property shall
be at least equal in value and general utility to the
Property prior to the damage or destruction; it being
understood, however, that neither Grantor nor the applicable
Tenant shall be obligated to restore such Property to the
precise condition of such Property prior to any partial
Taking of, or casualty or other damage or injury to, such
Property, if the Work actually performed, if any, or failed
to be performed, shall have no material adverse effect on
the value of such Property from the value that such Property
would have had if the same had been restored to its
condition immediately prior to such Taking or casualty.
Grantor shall restore, or cause the applicable Tenant to
restore, all Improvements such that when they are fully
restored and/or repaired, such Improvements and their
contemplated use fully comply with all applicable material
Legal Requirements including zoning, environmental and
building laws, codes, ordinances and regulations.
(h) Disbursement of the Proceeds in Cash or Cash
Equivalents to Grantor shall be made from time to time (but not
more frequently than twice in any month) by Beneficiary but only
for so long as no Event of Default shall have occurred and be
continuing, as the Work progresses upon receipt by Beneficiary of
(i) an Officer's Certificate dated not more than ten (10) days
prior to the application for such payment, requesting such
payment or reimbursement and describing the Work performed that
is the subject of such request, the parties that performed such
Work and the actual cost thereof, and also certifying that such
Work and materials are or, upon disbursement of the payment
requested to the parties entitled thereto, will be free and clear
of Liens other than Permitted Encumbrances and (ii) an
Independent Architect's certificate certifying performance of the
Work together with an estimate of the cost to complete the Work.
Provided that the applicable Lease permits such retainage by
Grantor, no payment made prior to the final completion of the
Work, except for payment made to contractors whose Work shall
have been fully completed and from which final lien waivers have
been received, shall exceed ninety-five percent (95%) of the
value of the Work performed and materials furnished and
incorporated into the Improvements from time to time, and at all
times the undisbursed balance of said Proceeds together with all
amounts deposited, bonded, guaranteed or otherwise provided for
pursuant to clause 6(d)(ii) above, shall be at least sufficient
to pay for the estimated cost of completion of the Work; final
payment of all Proceeds remaining with Beneficiary shall be made
upon receipt by Beneficiary of a certification by an Independent
Architect, as to the completion of the Work substantially in
accordance with the submitted plans and specifications, final
lien releases, and the filing of a notice of completion and the
expiration of the period provided under the law of the State in
which the applicable Property is located for the filing of
mechanic's and materialmen's liens which are entitled to priority
as to other creditors, encumbrances and purchasers, as certified
pursuant to an Officer's Certificate, and delivery of a
certificate of occupancy with respect to the Work, or, if not
applicable, an Officer's Certificate to the effect that a
certificate of occupancy is not required.
(i) If, after the Work is completed and all costs of
completion have been paid, there are excess Proceeds, then upon
ten (10) days' prior written notice from Grantor to Beneficiary,
provided no Event of Default has occurred and is then continuing,
Grantor shall have the option of directing Beneficiary to either
(1) retain such Proceeds in the Capital and TI Reserve Account to
be applied by Grantor to the cost of improvements, alterations,
tenant improvements or other capital improvements at any of the
Properties, (2) apply such excess Proceeds with respect to the
Taking of or damage or injury to the Trust Estate to the payment
or prepayment of all or any portion of the Indebtedness secured
hereby without penalty or premium, provided, however, that any
such prepayment shall not reduce any Allocated Loan Amount or (3)
to return such excess proceeds to the Grantor.
(j) If (i) there is any Taking as to a Property that
constitutes a Total Loss and Beneficiary elects to apply the
Proceeds against the Indebtedness (which election may not be made
by Beneficiary if an applicable Lease requires restoration), or
(ii) Grantor is otherwise required to comply with this Section
6(j), then Grantor, in any such instance, must prepay the Notes
to the extent of the Proceeds received up to an amount equal to
125% of the original Allocated Loan Amount with respect to the
relevant Property, without the requirement of the payment of any
prepayment penalty, and the Allocated Loan Amounts for all other
Properties shall be increased or decreased in the manner provided
in the definition of Allocated Loan Amount.
(k) Whenever Beneficiary is required to make an
election under this Section 6, Beneficiary may consult with the
Servicer (as defined in the Trust and Servicing Agreement) and
may conclusively rely on the Servicer's reasonable determination.
7. Impositions, Liens and Other Items.
(a) Subject to Grantor's right of contest set forth in
Section 7(c) hereof, as set forth in the next two sentences,
Beneficiary on behalf of Grantor shall pay all Impositions other
than those which pursuant to the terms of any Lease are to be
paid directly by the Tenant thereunder, which are attributable to
or affect the Trust Estate or Grantor, prior to the date such
Impositions shall become delinquent or late charges may be
imposed thereon, directly to the applicable taxing authority with
respect thereto.
(b) Subject to its right of contest set forth in
Section 7(c) hereof and its rights set forth in Sections 11(c)
and 11(d) hereof, Grantor shall at all times keep the Trust
Estate free from all Liens (other than the Lien hereof and
Permitted Encumbrances) and shall pay, or cause the applicable
Tenant to pay, when due and payable all claims and demands of
mechanics, materialmen, laborers and others which, if unpaid,
might result in or permit the creation of a Lien on the Trust
Estate or any portion thereof and shall in any event cause the
prompt, full and unconditional discharge of all Liens imposed on
or against the Trust Estate or any portion thereof within thirty
(30) days after receiving written notice of the filing (whether
from Beneficiary, the lienor or any other Person) thereof.
Grantor shall do or cause to be done, at the sole cost of
Grantor, everything reasonably necessary to fully preserve the
first priority of the Lien of this Mortgage against the Trust
Estate subject to the Permitted Encumbrances. Upon the
occurrence of an Event of Default with respect to its Obligations
as set forth in this Section 7, Beneficiary may (but shall not be
obligated to) make such payment or discharge such Lien, and
Grantor shall reimburse Beneficiary on demand for all such
advances pursuant to Section 16 hereof (together with interest
thereon at the Default Rate).
(c) Nothing contained herein shall be deemed to
require Grantor to pay, or cause to be paid, any Imposition, to
satisfy any Lien, or to comply with any Legal Requirement or
Insurance Requirement, so long as Grantor or the applicable
Tenant is in good faith, and by proper legal proceedings, where
appropriate, diligently contesting the validity, amount or
application thereof, provided that in each case, at the time of
the commencement of any such action or proceeding, and during the
pendency of such action or proceeding (i) no Event of Default
shall exist and be continuing hereunder, (ii) Grantor shall keep
Beneficiary apprised of the status of such contest; (iii) if
Grantor is not providing security as provided in clause (vi)
below, adequate reserves with respect thereto are maintained on
Grantor's books in accordance with GAAP or in the Mortgage Escrow
Account, (iv) such contest operates to suspend collection or
enforcement as the case may be, of the contested Imposition or
Lien and such contest is maintained and prosecuted continuously
and with diligence or the Imposition or Lien is bonded, (v) in
the case of any Insurance Requirement, the failure of Grantor to
comply therewith shall not impair the validity of any insurance
required to be maintained by Grantor under Section 5 hereof or
the right to full payment of any claims thereunder, and (vi) in
the case of Impositions and Liens in excess of $500,000
individually, or in the aggregate, with respect to a particular
Property, during such contest, Grantor, subject to the terms and
conditions of the applicable Lease, shall provide, or cause the
applicable Tenant to provide, security in the form required by
Section 6(g)(ii) hereof in an amount equal to the sum of (A) the
amount of Grantor's obligations being contested plus (B) any
additional interest, charge, or penalty arising from such contest
if such security is required to be delivered pursuant to such
Tenant's Lease. Notwithstanding the foregoing, the creation of
any such reserves or the furnishing of any bond or other
security, Grantor promptly shall comply with any contested Legal
Requirement or Insurance Requirement or shall pay any contested
Imposition or Lien, and compliance therewith or payment thereof
shall not be deferred, if, at any time the Trust Estate or any
portion thereof shall be, in Beneficiary's reasonable judgment,
in imminent danger of being forfeited or lost or Beneficiary is
likely to be subject to civil or criminal damages as a result
thereof. If such action or proceeding is terminated or
discontinued adversely to Grantor or the applicable Tenant,
Grantor shall deliver to Beneficiary reasonable evidence of
Grantor's or such Tenant's compliance with such contested
Imposition, Lien, Legal Requirements or Insurance Requirements,
as the case may be.
8. Ground Leases. (a) The Grantor shall:
(i) promptly perform and observe all of the
covenants and agreements required to be performed and
observed by the lessee under the Ground Leases and do all
things necessary to preserve and to keep unimpaired its
rights thereunder;
(ii) promptly notify the Beneficiary and the
Rating Agency of any default by the Grantor under the Ground
Leases in the performance or observance of any of the
covenants or agreements on the part of the Grantor to be
performed or observed thereunder or of the giving of any
notice by the lessor under the Ground Leases to the Grantor
(x) claiming such a default or (y) of such lessor's
intention to exercise any remedy reserved to the lessor
thereunder; and
(iii) promptly cause a copy of each such notice
given by such lessor to the Grantor to be delivered to the
Beneficiary and the Rating Agency.
(b) If the Grantor shall fail to perform or
observe any of the covenants or agreements required to be
performed or observed by it under the Ground Leases, including,
without limitation, payment of all ground rent and other charges
due thereunder, the Beneficiary may, after 10 Business Days'
notice (except in emergencies or in situations where a failure
sooner to perform or observe the same may result in a forfeiture
under any Ground Lease), take such action as is appropriate to
cause such covenants or agreements promptly to be performed or
observed on behalf of the Grantor but no such action by the
Beneficiary shall release the Grantor from any of its obligations
under this Mortgage.
(c) The Grantor shall not surrender its leasehold
estate under the Ground Leases, nor terminate or cancel any
Ground Lease, and the Grantor shall not modify, change,
supplement, alter or amend any Ground Lease in any material
respect either orally or in writing, and any attempt on the part
of the Grantor to exercise any such right without the consent of
the Beneficiary shall be null and void.
(d) The fee title to the properties demised by
the Ground Leases and the leasehold estate shall not merge, but
shall always remain separate and distinct, notwithstanding the
union of such estates either in the lessor or the lessee under
the Ground Leases or in a third party by purchase or otherwise.
(e) If any Ground Lease is canceled or
terminated, and if the Trustee or its nominee shall acquire an
interest in any new lease given in substitution therefor, the
Grantor shall have no right, title or interest in or to the new
lease or the leasehold estate created by such new lease.
(f) The Grantor shall obtain and deliver to the
Trustee, within thirty (30) days after written demand therefor by
the Trustee, an estoppel certificate from any ground lessor,
stating (1) that the applicable Ground Lease is in full force and
effect and has not been modified or, if its has been modified,
the date of each modification (together with copies of each such
modification), (2) the date to which the fixed rent has been paid
under such Ground Lease, (3) whether a notice of default has been
sent to the Tenant under such Ground Lease which has not been
cured, and if such notice has been sent, the date it was sent and
the nature of the default. Notwithstanding the foregoing,
however, the Grantor shall not be in default hereunder if it
fails to deliver such an estoppel certificate to the Trustee
provided that it has used all diligent efforts to do so and that
it shall continue to diligently pursue its efforts to obtain such
a certificate.
(g) Notwithstanding anything to the contrary
contained herein, this Mortgage shall not constitute an
assignment of any Ground Lease within the meaning of any
provision thereof prohibiting its assignment and the Beneficiary
shall have no liability or obligation thereunder by reason of its
acceptance of this Mortgage. The Beneficiary shall be liable for
the obligations of the tenant arising under any Ground Lease for
only that period of time during which the Beneficiary is in
possession or has acquired, by foreclosure or otherwise, and is
holding, all of the Grantor's right, title and interest therein.
(h) If Grantor requests Benefciary's consent to
any material modification or amendment of any Ground Lease
pursuant to Section 8(c), Grantor shall reimburse Beneficiary for
all reasonable costs and expenses incurred by Beneficiary
(including, reasonable attorneys' fees and expenses) in
determining whether or not to give its consent to such
modification or amendment.
9. License to Collect Rents. Beneficiary and Grantor
hereby confirm that Beneficiary has granted to Grantor a license
to collect and use the Rents as they become due and payable under
the Leases in accordance with the provisions of the Assignment of
Leases and the Cash Collateral Agreement, until an Event of
Default has occurred and is continuing, provided that the
existence of such right shall not operate to subordinate this
assignment of Leases to any subsequent assignment, in whole or in
part by Grantor, and any such subsequent assignment shall be
subject to Beneficiary's rights under this Mortgage. Grantor
further agrees to execute and deliver such assignments of leases
as Beneficiary may from time to time reasonably request in order
to better assure, transfer and confirm to Beneficiary the rights
intended to be granted to Beneficiary with respect thereto. In
accordance with the provisions of the Assignment of Leases, upon
the occurrence and during the continuance of an Event of Default
(1) Grantor agrees that Beneficiary may, but shall not be
obligated to, assume the management of the real property, and
collect the Rents, applying the same upon the Obligations and (2)
Grantor hereby authorizes and directs all tenants, purchasers or
other persons occupying or otherwise acquiring any interest in
any part of the real property to pay the Rents due under the
Leases to Beneficiary upon Beneficiary's request. In the event
Beneficiary actually receives such Rents, after an Event of
Default, any application of the Rents by Beneficiary shall not
constitute a misappropriation of the Rents by Grantor pursuant to
Section 33 hereof. Beneficiary shall have and hereby expressly
reserves the right and privilege (but assumes no obligation) to
demand, collect, sue for, receive and recover the Rents, or any
part thereof, now existing or hereafter made, and apply the same
in accordance with this Mortgage, the Assignment of Leases, and
applicable law.
10. Security Agreement.
(a) Security Intended. Notwithstanding any provision
of this Mortgage to the contrary, the parties intend that this
document constitutes security for the payment and performance of
the Obligations and shall be a "mortgage" or "deed of trust"
under applicable law. If, despite that intention, a court of
competent jurisdiction determines that this document does not
qualify as a "trust deed" or "deed of trust" under applicable
law, then ab initio, this instrument shall be deemed a realty
mortgage under applicable law and shall be enforceable as a
realty mortgage, and Grantor shall be deemed a "mortgagor,"
Beneficiary shall be deemed a "mortgagee," and Trustee shall have
no capacity (but shall be disregarded and all references to
"Trustee" shall be deemed to refer to the "mortgagee" to the
extent not inconsistent with interpreting this instrument as
though it were a realty mortgage). Except with respect to
Properties located in New York, as a realty mortgage, Grantor, as
mortgagor, shall be deemed to have conveyed the Property ab
initio to Beneficiary as mortgagee, such conveyance as a security
to be void upon condition that Grantor pay and perform all its
Obligations. The remedies for any violation of the covenants,
terms and conditions of the agreements herein contained shall be
as prescribed herein or by general law, or, as to that part of
the security in which a security interest may be perfected under
the UCC, by the specific statutory consequences now or hereafter
enacted and specified in the UCC, all at Beneficiary's sole
election.
Fixture Filing. This Mortgage constitutes a
financing statement and, to the extent required under UCC Section 9-
402(f) because portions of the Property may constitute fixtures,
this Mortgage is to be filed in the office where a mortgage for
the Land would be recorded. Beneficiary also shall be entitled
to proceed against all or portions of the Trust Estate in
accordance with the rights and remedies available under UCC Section
9-501(d). Grantor is, for the purposes of this Mortgage, deemed to
be the Debtor, and Beneficiary is deemed to be the Secured Party,
as those terms are defined and used in the UCC. Grantor agrees
that the Indebtedness and Obligations secured by this Mortgage
are further secured by security interests in all of Grantor's
right, title and interest in and to fixtures, equipment, and
other property covered by the UCC, if any, which are used upon,
in, or about the Trust Estate (or any part) or which are used by
Grantor or any other person in connection with the Trust Estate.
Grantor grants to Beneficiary a valid and effectual security
interest in all of Grantor's right, title and interest in and to
such personal property (but only to the extent permitted in the
case of leased personal property), together with all
replacements, additions, and proceeds. Except for Permitted
Encumbrances, Grantor agrees that, without the written consent of
Beneficiary, no other security interest will be created under the
provisions of the UCC and no lease will be entered into with
respect to any goods, fixtures, equipment, appliances, or
articles of personal property now attached to or used or to be
attached to or used in connection with the Trust Estate except as
otherwise permitted hereunder. Grantor agrees that all property
of every nature and description covered by the lien and charge of
this Mortgage together with all such property and interests
covered by this security interest are encumbered as a unit, and
upon and during the continuance of an Event of Default by
Grantor, all of the Trust Estate, at Beneficiary's option, may be
foreclosed upon or sold in the same or different proceedings or
at the same or different time, subject to the provisions of
applicable law. The filing of any financing statement relating
to any such property or rights or interests shall not be
construed to diminish or alter any of Beneficiary's rights of
priorities under this Mortgage.
11. Transfers, Indebtedness and Subordinate Liens.
Unless such action is permitted by the provisions of this Section
11, Section 15, Section 38, Section 45 or Section 46 hereof,
Grantor will not (i) Transfer all or any part of the Trust
Estate, (ii) incur indebtedness for borrowed money, (iii)
mortgage, hypothecate or otherwise encumber or grant a security
interest in all or any part of the Trust Estate, (iv) permit any
transfer of any interest in Grantor (except as set forth in
clause (b) of this Section 11), or (iv) file a declaration of
condominium with respect to any Property. Grantor shall deliver
to Beneficiary written notice pursuant to the provisions of
Section 26 hereof of any such Transfer permitted pursuant to the
provisions of this Section 11 or Section 15 hereof.
In connection with any Transfer or any series of
Transfers that affects (on a cumulative basis) more than 10% of
the value of the Trust Estate, a Tax Opinion and a
Nondisqualification Opinion shall be furnished to Beneficiary.
(a) Sale of the Trust Estate. Grantor may transfer or
dispose of Building Equipment which is being replaced or which is
no longer necessary in connection with the operation of a
Property free from the Lien of this Mortgage provided that such
transfer or disposal will not materially adversely affect the
value of the Trust Estate taken as a whole, will not materially
impair the utility of such Property, and will not result in a
reduction or abatement of, or right of offset against, the Rents
payable under any Lease, in either case as a result thereof, and
provided that any new Building Equipment acquired by Grantor (and
not so disposed of) shall be subject to the Lien of this Mortgage
unless the same constitutes leased Building Equipment.
Beneficiary shall, from time to time, upon receipt of an
Officer's Certificate requesting the same and confirming
satisfaction of the conditions set forth above, execute a written
instrument in form reasonably satisfactory to Beneficiary to
confirm that such Building Equipment which is to be, or has been,
sold or disposed of is free from the Lien of this Mortgage.
(b) Transfer of Interests of Grantor. Notwithstanding
anything contained herein to the contrary, Beneficiary's consent
shall not be required with respect to Transfers of (i) direct
beneficial interests in any individual Grantor, provided that (A)
no Event of Default shall have occurred and be continuing, (B)
Grantor (or the transferor of such interest) shall deliver notice
thereof to Beneficiary and the Rating Agency at least fifteen
(15) Business Days prior to the effective date of such Transfer,
(C) such Grantor shall remain a Single Purpose Entity and (D) if
such transfer involves a transfer of 50% or more of the direct
beneficial interests in such Grantor, the Rating Agency shall
have issued its written affirmation that such transfer will not
cause the ratings of the Certificates immediately prior to such
transfer to be qualified, downgraded or withdrawn or (ii) any
indirect Transfer of a beneficial interest in any individual
Grantor, including, without limitation a Transfer of any interest
in any Person owning a beneficial interest in such Grantor by
reason of a consolidation, merger or sale of all or substantially
all of the assets of any Person owning a beneficial interest in
such Grantor or the sale of any shares of stock of any Person
directly or indirectly owning a beneficial interest in such
Grantor through any nationally recognized stock exchange. If 50%
or more of direct beneficial interests (including, any general
partnership interest of any Grantor) in such Grantor are
Transferred, Grantor shall deliver or cause to be delivered to
the Rating Agency and Beneficiary (x) an Opinion of Counsel
addressed to the Rating Agency and Beneficiary and dated as of
the date of the Transfer to the effect that in a properly
presented case, a bankruptcy court in a case involving such
transferee, or any Affiliate thereof, would not disregard the
corporate or partnership forms of such entity, their Affiliates
and/or their partners, as the case may be, so as to consolidate
the assets and liabilities of such entity or entities and/or
their Affiliates with those of Grantor or their respective
general partners (a "Nonconsolidation Opinion"), and (y) an
Officer's Certificate certifying that such Transfer is not an
Event of Default.
(c) Indebtedness. Grantor shall not incur, create or
assume any Debt or incur any liabilities without the consent of
Beneficiary; provided, however, that if no Event of Default shall
have occurred and be continuing, Grantor may, without the consent
of Beneficiary, incur, create or assume any or all of the
following indebtedness (collectively, "Permitted Debt"):
(i) the Notes and the other obligations,
indebtedness and liabilities specifically provided for in
any Loan Document and secured by this Mortgage and the other
Loan Documents;
(ii) amounts, not secured by Liens on the Trust
Estate (other than liens being properly contested in
accordance with the provisions of this Mortgage), payable by
or on behalf of Grantor for or in respect of the operation
of the Trust Estate in the ordinary course of operating
Grantor's business, including amounts payable by or on
behalf of Grantor to counterparts under the Operating
Agreements, suppliers, contractors, mechanics, vendors,
materialmen or other Persons providing property or services
to Grantor or to the Trust Estate, and capitalized personal
property leasing expense, or in connection with the
ownership, management, operation, cleaning, maintenance,
repair, replacement, improvement, alteration or restoration
thereof (provided, however, that notwithstanding the
foregoing, in no event shall Grantor be permitted under this
provision to execute or deliver a note or other instrument
for borrowed money); and
(iii) amounts, not secured by Liens on the Trust
Estate (other than liens being properly contested in
accordance with the provisions of this Mortgage), payable or
reimbursable to any Tenant on account of work performed at a
Property by such Tenant or for costs incurred by such Tenant
in connection with its occupancy of space in the Property,
including for tenant improvements (provided, however, that
notwithstanding the foregoing, in no event shall Grantor be
permitted under this provision to enter into a note or other
instrument for borrowed money).
(d) Additional Permitted Transfers. Notwithstanding
the above provisions of this Section 11, Grantor may, without the
consent of Beneficiary, (i) make immaterial transfers of portions
of a Property to Governmental Authorities for dedication or
public use (subject to the provisions of Section 6 hereof), or
immaterial transfers of portions of such Property to third
parties, including owners of out parcels, or other properties for
the purpose of erecting and operating additional structures whose
use is integrated with the use of such Property, (ii) grant
easements, restrictions, covenants, reservations and rights of
way in the ordinary course of business for access, water and
sewer lines, telephone and telegraph lines, electric lines or
other utilities or for other similar purposes or amend the
Operating Agreements, (iii) transfer or lease to a compatible
user (by conveyance, ground lease or otherwise) one or more non-
income producing pads consisting of undeveloped land which may
not be located immediately adjacent to the applicable Improvement
(together with parking ancillary thereto, as well as reasonable
and/or customary easements in connection therewith); provided,
that no such transfer or lease shall be to any tenant then
leasing 10,000 or more square feet of gross leasable area at any
Property unless the Rating Agency issues its written affirmation,
which affirmation may be granted or withheld in the Rating
Agency's sole discretion, that such transfer or ground lease will
not cause ratings of the Certificates immediately prior to such
relocation to be qualified, downgraded or withdrawn; and (iv)
transfer or ground lease to a retail or other compatible user (by
conveyance, ground lease or otherwise) one or more pads subject
to existing leases, subject, however, to written affirmation by
the Rating Agency that such transfer or ground lease will not
cause the ratings of the Certificates immediately prior to such
transfer to be qualified, downgraded or withdrawn, provided that
no such transfer, conveyance or encumbrance set forth in the
foregoing clauses (i), (ii), (iii), and (iv) shall materially
impair the utility and operation of the applicable Property or
materially adversely affect the value of the applicable Property
taken as a whole. In addition, it shall be a condition to any
transfer set forth in clause (iv) that Grantor shall deliver to
Beneficiary and the Rating Agency an Opinion of Counsel that the
applicable Property has been subdivided (to the extent required
by law) and that the Property, after any such transfer, shall be
in compliance with all laws, Leases and Operating Agreements and
that such transfer shall not cause an Event of Default to occur.
If Grantor shall receive any net proceeds in connection with any
transfer or other conveyance set forth in clause (iv), Grantor
shall have the right to use any such proceeds in connection with
any Alterations performed in connection with, or required as a
result of, such conveyance. Except as provided below with
respect to any Taking, the amount of any net proceeds received by
Grantor in excess of the cost of such Alterations shall be
deposited in the Capital and TI Reserve Account (which amounts
shall be in addition to, and not in lieu of, amounts otherwise
required to be deposited pursuant to Section 48(b) hereof), and
shall be available to Grantor for use in performing any further
or other Alterations or with respect to the Properties. Any
amounts held in such account shall be invested in accordance with
Section 3(i) of the Cash Collateral Agreement. In connection
with any transfer, conveyance or encumbrance permitted pursuant
to this Section 11(d), Beneficiary shall execute and deliver any
instrument reasonably necessary or appropriate, in the case of
the transfers referred to in clauses (i), (iii) and (iv) above,
to release the portion of a Property affected by such Taking or
such transfer from the Lien of this Mortgage or, in the case of
clause (ii) above, to subordinate the Lien of this Mortgage to
such easements, restrictions, covenants, reservations and rights
of way or other similar grants by receipt by Beneficiary of:
(i) a copy of the instrument of transfer; and
(ii) an Officer's Certificate stating (x) with
respect to any Transfer, the consideration, if any, being
paid for the Transfer and (y) that such Transfer does not
materially impair the utility and operation of the affected
Property or materially reduce its value.
In addition, in the case of a release pursuant to clauses (iii)
and (iv) above, Grantor shall deliver to Beneficiary a
Nondisqualification Opinion. As a condition to the execution of
such documents by Beneficiary, Grantor shall reimburse
Beneficiary for all reasonable costs and expenses (including,
reasonable attorneys' fees and disbursements) in connection with
the execution of such documents.
All Taking Proceeds shall be applied in accordance with
the provisions of Section 6 hereof.
(e) Not less than fifteen (15) Business Days prior to
the closing of any transaction subject to the provisions of this
Section 11 or of any transfer of a 50%, direct or indirect,
beneficial interest in Grantor or of any transfer that shall
result in a Person acquiring a greater than 50% interest in
Grantor or of any transfer that shall result in a Person that had
a greater than 50% interest in Grantor having less than a 50%
interest in Grantor, Grantor shall deliver to Beneficiary and the
Rating Agency excluding, however, a Transfer of any interest in
any Person owning a beneficial interest in Grantor by reason of a
consolidation, merger or sale of all or substantially all of the
assets of any Person owning a beneficial interest in Grantor or
the sale of any shares of stock of any Person directly or
indirectly owning a beneficial interest in Grantor through any
nationally recognized stock exchange, (i) an Officer's
Certificate describing the proposed transaction and stating that
such transaction is permitted by this Section 11, together with
any appraisal or other documents upon which such Officer's
Certificate is based, and (ii) an Opinion of Counsel to the
transferee, addressed to the Rating Agency and Beneficiary and
dated as of the date of the Transfer, to the effect that, in a
properly presented case, a bankruptcy court in a case involving
such transferee would not disregard the corporate or partnership
form of such transferee so as to consolidate the assets and
liabilities of such transferee with those of Grantor or their
respective general partners. In addition, Grantor shall provide
Beneficiary and the Rating Agency with copies of executed deeds,
assignments of Direct Beneficial Owner interests in Grantor,
mortgages or other similar closing documents within ten (10) days
after such closing.
12. Maintenance of Trust Estate; Alterations;
Inspection; Utilities.
(a) Maintenance of Trust Estate. Grantor shall keep
and maintain, or shall cause the Tenants under the Leases to keep
and maintain, the Trust Estate and every part thereof in good
condition and repair, subject to ordinary wear and tear, and,
subject to Excusable Delays and the provisions of this Mortgage
with respect to damage or destruction caused by casualty events
or Takings, shall not permit or commit any waste, impairment, or
deterioration of any portion of the Trust Estate in any material
respect. Grantor further covenants to do all other acts which
from the character or use of the Trust Estate may be reasonably
necessary to protect the security hereof, the specific
enumerations herein not excluding the general. Grantor shall not
remove or demolish any Improvement on any Property except as the
same may be necessary in connection with an Alteration or a
restoration in connection with a Taking or casualty in accordance
with the terms and conditions hereof.
(b) No Changes in Use. Except as may be necessary in
connection with an Alteration permitted by Section 12(c) hereof,
Grantor shall not make any changes or allow any changes to be
made in the nature of the use of any Property or any part thereof
or initiate or take any action in furtherance of any change in
any zoning or other land use classification affecting all or any
portion of a Property.
(c) Conditions to Alteration. Provided that no Event
of Default shall have occurred and be continuing hereunder,
Grantor shall have the right, without Beneficiary's consent, to
undertake any alteration, improvement, demolition or removal of
any Property or any portion thereof (any such alteration,
improvement, demolition or removal, an "Alteration") so long as
(i) Grantor provides Beneficiary and the Rating Agency with prior
written notice of any Material Alteration, and (ii) any
Alteration is undertaken in accordance with the applicable
provisions of this Mortgage and the other Loan Documents, is not
prohibited by any relevant Operating Agreements and the Leases
and shall not upon completion (giving credit to rent and other
charges attributable to Leases executed upon such completion)
materially adversely (A) affect the value of such Property taken
as a whole or (B) reduce the Net Operating Income for such
Property from the level available immediately prior to
commencement of such Alteration. Any Material Alteration with
respect to any one Property shall be conducted under the
supervision of an Independent Architect and no such Material
Alteration shall be undertaken until five (5) Business Days after
there shall have been filed with Beneficiary, for information
purposes only and not for approval by Beneficiary, detailed plans
and specifications and cost estimates therefor, prepared by such
Independent Architect, as well as an Officer's Certificate
stating that such Alteration will involve an estimated cost of
more than (I) the greater of the Individual Threshold Amount and
$500,000 with respect to Alterations being undertaken at a single
Property at such time, or (II) the Aggregate Alteration Threshold
Amount for Alterations at all the Properties. Such plans and
specifications may be revised at any time and from time to time
by such Independent Architect provided that material revisions of
such plans and specifications are filed with Beneficiary, for
information purposes only. All work done in connection with any
Alteration shall be performed with due diligence in a good and
workmanlike manner, all materials used in connection with any
Alteration shall not be less than the standard of quality of the
materials currently used at such Property and all materials used
shall be in accordance with all applicable material Legal
Requirements and Insurance Requirements.
(d) Right to Inspect. Beneficiary and any Persons
authorized by it may at all reasonable times and upon reasonable
notice enter and examine such Property and may inspect all work
done, labor performed and materials furnished in and about such
Property subject in all instances to the rights of Tenants under
Leases. Beneficiary shall have no duty to make any such
inspection and shall have no liability or obligation for making
(except for its negligence or willful misconduct) or not making
any such inspection.
(e) Short-Term Repairs and Renovations. Grantor shall
perform or cause to be performed the short-term repairs and
renovations identified on the Summary of Short-Term Repairs
annexed hereto as Schedule 3. All such repairs shall be
completed subject to Excusable Delays within 18 months from the
date of this Mortgage to the extent such repairs and renovations
can be completed in such time period.
13. Legal Compliance. (a) Grantor and the Trust
Estate and the use thereof materially comply with all Legal
Requirements (as defined below). Grantor represents and warrants
that, as of the date hereof, it has not received notice of any
violation of any Legal Requirement that remains outstanding.
Subject to Grantor's right to contest pursuant to Section 7(c)
hereof, Grantor shall comply with, or cause Tenants or other
third parties whose obligation it is to comply with, all present
and future laws, statutes, codes, ordinances, orders, judgments,
decrees, injunctions, rules, regulations and requirements, and
irrespective of the nature of the work to be done, of every
Governmental Authority including, without limitation,
Environmental Laws, and all covenants, restrictions and
conditions now or hereafter of record which may be applicable to
it or to any Property and the Building Equipment thereon, or to
the use, manner of use, occupancy, possession, operation, mainte-
nance, alteration, repair or reconstruction of any Property and
the Building Equipment thereon including, without limitation,
building and zoning codes and ordinances (collectively, the
"Legal Requirements"), except where the failure is not reasonably
likely to have a Material Adverse Effect.
(b) Grantor currently holds all certificates of
occupancy, licenses, registrations, permits, consents, franchises
and approvals of any Governmental Authority which are necessary
for Grantor's ownership and operation of the Properties or which
are necessary for the conduct of Grantor's business thereon. All
such certificates of occupancy, licenses, registrations, permits,
consents, franchises and approvals are current and will be kept
current and in full force and effect.
14. Books and Records, Financial Statements, Reports
and Other Information.
(a) Books and Records. Grantor will keep and maintain
on a fiscal year basis proper books and records separate from any
other Person, in which accurate and complete entries shall be
made of all dealings or transactions of or in relation to the
Notes, the Trust Estate and the business and affairs of Grantor
relating to the Trust Estate, in accordance with GAAP.
Beneficiary and its authorized representatives shall have the
right at reasonable times and upon reasonable notice to examine
the books and records of Grantor relating to the operation of the
Trust Estate and to make such copies or extracts thereof as
Beneficiary may reasonably require. Beneficiary shall not,
without Grantor's consent, disclose any information contained in
Grantor's books and records to any third party, except to the
Rating Agency or to the extent Beneficiary is required or
authorized to disclose such information to third parties,
including, without limitation, Holders or prospective Holders
pursuant to the Trust and Servicing Agreement or on advice of
Beneficiary's counsel, or in accordance with applicable law.
(b) Financial Statements.
(i) Quarterly Reports. Not later than sixty (60)
days following the end of each calendar quarter (other than
the fourth (4th) quarter of any calendar year), Grantor will
deliver to Beneficiary (with a copy to the Rating Agency)
unaudited financial statements, internally prepared, in
accordance with GAAP, consistently applied, including a
balance sheet as of the end of such quarter, a statement of
revenues and expenses through the end of such quarter, a
statement of Net Operating Income for such quarter and a
statement of profits and losses as to each Property. Such
statements for each quarter shall be accompanied by an
Officer's Certificate certifying to the best of the signer's
knowledge, (A) that such statements fairly represent the
financial condition and results of operations of Grantor in
accordance with GAAP consistently applied, (B) that as of
the date of such Officer's Certificate, no Default exists
under this Mortgage, the Notes or any other Loan Document
or, if so, specifying the nature and status of each such
Default and the action then being taken by Grantor or
proposed to be taken to remedy such Default, (C) the Debt
Service Coverage Ratio for the preceding calendar quarter
and calendar year, and (D) that as of the date of each
Officer's Certificate, no litigation exists involving
Grantor or the Trust Estate in which the amount involved is
$500,000 or more and is not covered by insurance, or, if so,
specifying such litigation and the actions being taking in
relation thereto in accordance with Section 23 hereof. Such
financial statements shall contain such other information as
shall be reasonably requested by Beneficiary for purposes of
calculations to be made by Beneficiary pursuant to the terms
hereof.
(ii) Annual Reports. Not later than ninety (90)
days after the end of each fiscal year of Grantor's
operations, Grantor will deliver to Beneficiary (with a copy
to the Rating Agency) audited financial statements certified
by an Independent Accountant in accordance with GAAP
consistently applied, including a balance sheet, income
statement and statement of cash flow as of and for the year
then ended. In addition, the Company shall provide a
statement of Net Operating Income for the year and such
annual financial statements shall also be accompanied by an
Officer's Certificate in the form required pursuant to
Section 14(b)(i) hereof.
(c) Leasing Reports. Not later than sixty (60)
days after the end of each calendar quarter of Grantor's
operations, Grantor will deliver to Beneficiary (with a copy to
the Rating Agency) a true and complete rent roll for each
Property (and aggregating the occupancy rate with respect to all
the Properties), dated as of the last day of such fiscal year,
showing the approximate percentage of gross leasable area of each
Property (and in the aggregate) leased as of the last day of the
preceding fiscal year, the approximate percentage of lease roll-
overs for each Property (and in the aggregate) for the preceding
fiscal year, a summary of new lease signings (including tenant
name, approximate square footage occupied and designation of the
tenant's operations as national, regional or local) and lease
terminations for the preceding fiscal year, the current annual
rent for each Property, gross sales figures to the extent such
information is required to be provided by reporting tenants and
are actually reported by such tenants to Grantor, the expiration
date of each lease, the various options, if any, available to the
tenant with respect to renewal (including the amount of the rent
in the event of renewal), whether to Grantor's knowledge the
Property has been sublet, and if it has, the name of the
subtenant, and whether the Property is vacant, and such rent roll
shall be accompanied by an Officer's Certificate certifying that
such rent roll is true, correct and complete in all material
respects as of its date and stating whether Grantor, within the
past fiscal year, has issued a notice of default with respect to
any Lease which has not been cured or vacated the Property, and
the nature of such default.
(d) Material Changes. Grantor will notify Beneficiary
in writing of any material changes affecting the operations or
finances of any Property promptly after becoming aware thereof.
(e) Other Information. Grantor will, promptly after
written request by Beneficiary or the Rating Agency, furnish or
cause to be furnished to Beneficiary or the Rating Agency, as
applicable, in such manner and in such detail as may be reason-
ably requested by Beneficiary or the Rating Agency, as applic-
able, such reasonable additional information as may be reasonably
requested by Beneficiary or the Rating Agency as applicable with
respect to the Trust Estate. Without limiting the foregoing, so
long as any Certificates remain outstanding, Grantor shall, upon
request of Holder, make available to such Holder, or a prospec-
tive purchaser designated by such Holder, any and all such infor-
mation with respect to Grantor and the Properties required to
permit the offer and sale of the Certificates pursuant to Rule
144 under the Securities Act of 1933, as amended.
15. Compliance with Leases and Agreements.
(a) Leases and Operating Agreements. The Leases and
the Operating Agreements, if any, are in full force and effect.
Grantor has neither given to, nor received any notice of default
from, any party to any of the Operating Agreements, if any, or
any Lease which remains uncured. To the best of Grantor's
knowledge, except as set forth in estoppel certificates delivered
to Beneficiary and the Rating Agency prior to the date hereof, no
events or circumstances exist which with or without the giving of
notice, the passage of time or both, may constitute a default
under any of the Operating Agreements or the Leases on the part
of Grantor, or party thereunder. Grantor has complied with and
performed all of its material construction, improvement and
alteration obligations with respect to each Property required
under the Operating Agreements and the Leases. Grantor will
promptly after receipt thereof deliver to Beneficiary a copy of
any notice received with respect to the Operating Agreements and
the Leases, claiming that Grantor is in default in the
performance or observance of any of the material terms, covenants
or conditions of any of the Operating Agreements or the Leases.
(b) New Leases. Grantor may, at all times, lease to
any Person space within each Property in a manner consistent with
other First Class properties comparable to the applicable
Property and then current market conditions existing in the
applicable market area in which such Property is located, and
otherwise in accordance with this Mortgage. Each Lease entered
into after the date hereof (including the renewal or extension on
or after the date hereof of any Lease entered into prior to the
date hereof if the rent payable during such renewal or extension,
or a formula or other method to compute such rent, is not
provided for in such Lease (such a renewal or extension a
"Renewal Lease")) (A) shall provide for payment of rent and all
other material amounts payable thereunder at rates at least equal
to the fair market rental value (taking into account the type and
creditworthiness of the tenant, the length of tenancy and the
location and size of the unit so rented), as of the date such
Lease is executed by Grantor, of the space covered by such Lease
or Renewal Lease for the term thereof, including any renewal
options, and (B) shall not contain any provision whereby the rent
payable thereunder would be based, in whole or in part, upon the
net income or profits derived by any Person from the Property
(provided, however, that it may contain a provision in which a
portion of rent may be payable based on a percentage of gross
income), and (C) shall not prevent Proceeds from being held and
disbursed by Beneficiary in accordance with the terms hereof, and
(D) shall not entitle any tenant to receive and retain Proceeds
except those that may be specifically awarded to it in
condemnation proceedings because of the Taking of its trade
fixtures and its leasehold improvements which have not become
part of the realty and such business loss as tenant may
specifically and separately establish. Grantor may not, without
the consent of Beneficiary, amend, modify or waive the provisions
of any Lease or terminate, reduce rents under or shorten the term
of any Lease in any manner unless such action would not, in the
good faith judgment of the Grantor, have a material adverse
effect on the applicable Property taken as a whole. All
reasonable costs and expenses incurred by Beneficiary (including
reasonable attorneys' fees and expenses) for purposes of
determining whether or not to give its consent under this Section
15(b), if and to the extent that Grantor has requested
Beneficiary's consent to a proposed action, shall be paid by
Grantor pursuant to the provisions of Section 18.
(c) No Default Under Leases. Grantor shall (i)
promptly perform and observe all of the material terms, covenants
and conditions required to be performed and observed by Grantor
under the Leases and the Operating Agreements, if the failure to
perform or observe the same would materially and adversely affect
the value of any Property; (ii) exercise, within fifteen (15)
Business Days after a written request by Beneficiary, any right
to request from the Tenant under any Lease or the party to any
Operating Agreement a certificate with respect to the status
thereof; and (iii) not collect any of the Rents under the Leases
more than one (1) month in advance (except that Grantor may
collect such security deposits as are permitted by Legal
Requirements and are commercially reasonable in the prevailing
market and collect other charges in accordance with the terms of
each Lease).
(d) Subordination and Non-Disturbance. All Leases
entered into by Grantor after the date hereof, if any, shall be
subject and subordinate to this Mortgage; provided that,
Beneficiary shall enter into, and, if required by applicable law
to provide constructive notice, or if required by the terms of
the Tenant's lease, record in the county where the subject
Property is located, a subordination, attornment and non-
disturbance agreement, in form and substance substantially
similar to the form attached hereto as Exhibit "C" (a "Nondis-
turbance Agreement"), with any Tenant entering into a Lease after
the date hereof or, within ten (10) Business Days after written
request therefor by Grantor, with any other Tenant under any
Lease or prospective Lease (other than a Lease to an Affiliate of
Grantor) existing on the date hereof or made or to be made in
accordance with the provisions of this Section 15, provided that,
with respect to any Lease entered into after the date hereof,
such request is accompanied by an Officer's Certificate stating
that such Lease complies in all respects with this Section 15.
All reasonable costs and expenses of Beneficiary in connection
with the negotiation, preparation, execution and delivery of any
Nondisturbance Agreement including, without limitation,
reasonable attorneys' fees and disbursements shall be paid by
Grantor. Beneficiary shall enter into a Nondisturbance Agreement
or an agreement in any other form reasonably requested by such
Tenant, provided that Grantor certifies to Beneficiary in writing
in the form attached hereto in Exhibit C that the same does not
materially increase the obligations or liabilities of Beneficiary
from what the same would have been under the form of
Nondisturbance Agreement attached hereto.
(e) Notwithstanding the foregoing provisions of this
Section 15, Grantor and Beneficiary hereby acknowledge and agree
that the provisions of Section 15(b) shall not apply to any
sublease of any space located within any out parcels which have
been transferred or leased pursuant to Section 11(d)(iii) of this
Mortgage and Beneficiary will at Grantor's request enter into a
Nondisturbance Agreement in the form of Exhibit C with any Tenant
leasing all or a portion of such space. Beneficiary shall
reimburse Grantor for all reasonable costs and expenses incurred
by Beneficiary (including reasonable attorneys' fees and
disbursements) in connection with the execution of such
Nondisturbance Agreement.
16. Beneficiary's Right to Perform. Upon the
occurrence and during the continuance of an Event of Default with
respect to the performance of any of the Obligations contained
herein, Beneficiary may, without waiving or releasing Grantor
from any Obligation or Default under this Mortgage, but shall not
be obligated to, at any time perform the same, and the cost
thereof, with interest at the Default Rate from the date of
payment by Beneficiary to the date such amount is paid by
Grantor, shall immediately be due from Grantor to Beneficiary and
the same shall be secured by this Mortgage and shall be a Lien on
the Trust Estate prior to any right, title to, interest in or
claim upon the Trust Estate attaching subsequent to the Lien of
this Mortgage. No payment or advance of money by Beneficiary
under this Section 16 shall be deemed or construed to cure
Grantor's Default or waive any right or remedy of Beneficiary
hereunder.
17. Grantor's Existence; Organization and Authority.
For so long as this Mortgage remains of record with respect to
any of the Properties, Grantor shall do all things necessary to
preserve and keep in full force and effect its existence, rights
and privileges as the form of entity which it is (e.g., partner-
ship, corporation, etc.) on the date hereof and its right to own
property or transact business in all states in which the
Properties are located. For so long as any portion of the
Indebtedness shall remain outstanding, Grantor shall do all
things necessary to continue to be, a Single Purpose Entity, and
shall prevent any general partner of Grantor from amending such
general partner's articles of incorporation or bylaws, or other
formation documents, in any manner that would enable such general
partner to expand Grantor's business purposes beyond those
specified in such documents as of the date hereof. Grantor
hereby represents and warrants that each of the entities
comprising Grantor, and the general partners of such entities
which are partnerships, (i) is a duly organized and validly
existing entity as described in Schedule 4 hereof under the laws
of the jurisdiction of its formation, (ii) has the requisite
power and authority to own its properties and to carry on its
business as now being conducted and as proposed to be conducted
and is qualified to do business in all States in which the
Properties are located, and (iii) has the requisite power to
execute and deliver and perform its obligations under this
Mortgage, the Notes and each of the other Loan Documents. The
execution and delivery by Grantor of this Mortgage, the Notes and
each of the other Loan Documents to be executed by Grantor,
Grantor's performance of its respective obligations thereunder
and the creation of the security interest and Liens provided for
in this Mortgage have been duly authorized by all requisite
action on the part of Grantor, and will not violate in any
material respect any Legal Requirement, any order of any court or
other Governmental Authority, Grantor's certificate of limited
partnership or partnership agreement or any material indenture,
agreement or other instrument to which Grantor is a party, or by
which Grantor is bound; and will not conflict with, result in a
breach of, or constitute (with due notice or lapse of time or
both) a default under any of the foregoing, or result in the
creation or imposition of any Lien, of any nature whatsoever,
upon any of the property or assets of Grantor except the Liens
created hereunder. Grantor is not required to obtain any
consent, approval or authorization from or to file any
declaration or statement with, any Governmental Authority in
connection with or as a condition to the execution, delivery or
performance of this Mortgage, the Notes or the other Loan
Documents by Grantor other than those which have already been
obtained or filed. Grantor further represents and warrants that
it is and, so long as any portion of the Indebtedness shall
remain outstanding, shall do all things necessary to continue to
be, a Single-Purpose Entity.
18. Protection of Security; Costs and Expenses.
Grantor shall appear in and defend any action or proceeding of
which it has as a matter of law received proper notice purporting
to affect the security hereof or the rights or powers of
Beneficiary or Trustee hereunder and shall pay all costs and
expenses, including, without limitation, cost of evidence of
title and reasonable attorneys' fees and disbursements, in any
such action or proceeding, and in any suit brought by Beneficiary
to foreclose this Mortgage or to enforce or establish any other
rights or remedies of Beneficiary hereunder upon the occurrence
and during the continuance of an Event of Default. If an Event
of Default occurs under this Mortgage, or if any action or
proceeding is commenced in which it becomes necessary to defend
or uphold the Lien or priority of this Mortgage or which
adversely affects Beneficiary or Beneficiary's interest in the
Trust Estate or any part thereof, including, but not limited to,
eminent domain, enforcement of, or proceedings of any nature
whatsoever under any Legal Requirement affecting the Trust Estate
or involving Grantor's bankruptcy, insolvency, arrangement,
reorganization or other form of debtor relief, then Beneficiary,
upon reasonable notice to Grantor, may, but without obligation to
do so and without releasing Grantor from any obligation
hereunder, make such appearances, disburse such reasonable sums
and take such action as Beneficiary reasonably deems necessary or
appropriate to protect Beneficiary's interest in the Trust
Estate, including, but not limited to, disbursement of reasonable
attorneys' fees, entry upon the Trust Estate to make repairs or
take other action to protect the security hereof, and payment,
purchase, contest or compromise of any encumbrance, charge or
lien which in the reasonable judgment of Beneficiary appears to
be prior or superior hereto; provided, however, that the
foregoing shall be subject to Grantor's rights to contest under
Section 7(c) hereof and Beneficiary shall not pay or discharge
any lien, encumbrance or charge being contested by Grantor in
accordance with Section 7(c) hereof. Grantor further agrees to
pay all reasonable costs and expenses of Beneficiary, Servicer or
Trustee, including, reasonable attorneys' fees and disbursements
incurred by Beneficiary, Servicer or Trustee in connection with
(a) the negotiation, preparation, execution, delivery and
performance of this Mortgage, the Notes and the other Loan
Documents, (b) the performance of their respective obligations
and exercise of their rights under this Mortgage, the Notes and
the other Loan Documents, (c) the review of any Tax Opinion,
Nondisqualification Opinion, or other Opinion of Counsel
delivered by Grantor pursuant to this Mortgage or the other Loan
Documents, and (d) the servicing and monitoring of the Loan and
this Mortgage. All of the costs, expenses and amounts set forth
in this Section 18 shall be payable by Grantor, on demand and,
together with interest thereon at the Default Rate, if the same
are not paid within ten (10) Business Days after demand therefor
by Beneficiary (or Trustee), until the date of repayment by
Grantor, shall be deemed to be Indebtedness hereunder and shall
be a Lien on the Trust Estate prior to any right, title, interest
or claim upon the Trust Estate (subject to the provisions of
Section 11(d) hereof). Nothing contained in this Section 18
shall be construed to require Beneficiary to incur any expense,
make any appearance, or take any other action (the foregoing,
however, shall not in any way be deemed to affect the Servicer's
obligations to the Holders under the Trust and Servicing
Agreement).
19. Management of the Trust Estate.
(a) For purposes hereof, a "Qualifying Manager" shall
mean any property manager, other than an affiliate, as to which
the Rating Agency issues the affirmation described below.
Grantor shall notify Beneficiary and the Rating Agency in writing
(and shall deliver a copy of the proposed management agreement)
of any entity proposed to be designated as a Qualifying Manager
of all or any of the Properties no less than 30 days before such
Qualifying Manager begins to manage such Property(ies) and shall
obtain prior to any appointment of a Qualifying Manager a written
affirmation from the Rating Agency that the rating of the
Certificates immediately prior to retention of any such
Qualifying Manager will not cause the ratings of the Certificates
to be qualified, downgraded or withdrawn as a result of such
change.
(b) It is acknowledged and agreed that a Qualifying
Manager may be retained at Beneficiary's direction at any time
following the occurrence and during the continuance of an Event
of Default.
(c) Grantor shall provide a copy of any new management
agreement and subordination agreement with an existing Qualifying
Manager to the Rating Agency.
(d) Notwithstanding the foregoing provisions of this
Section 19, if the aggregate Net Operating Income of all of the
Properties owned by Grantor and subject to the lien of this
Mortgage on the date of determination for the preceding four (4)
calendar quarters decreases by an amount greater than 25% of the
aggregate Net Operating Income of such Properties for the
calendar year 1995 (except if such reduction is as a result of
market conditions or the event described in clause (e) below),
Beneficiary may instruct the Grantor to remove any manager of the
Properties and designate a replacement property manager willing
to discharge such duties for total annual fees not to exceed 4%
of the annual base and percentage rents, for management, and fees
for leasing at the prevailing market rates, and the Grantor shall
so remove the manager and appoint such replacement. If such
option is exercised by Beneficiary, the replacement property
management company shall be selected by Beneficiary, and the
senior manager(s) thereof shall have had not less than ten (10)
years' experience in the management of properties in the nature
of the Properties, shall be reasonably acceptable to the Grantor
and shall be a Qualifying Manager.
(e) In the event that the Net Operating Income of the
Properties decreases for a period of four (4) consecutive
calendar quarters as contemplated by clause (d) above directly as
a result of the loss of one or more tenants leasing in excess of
10,000 square feet of space at a Property (by reason of the
termination of such tenant's Lease, default by such tenant in
respect of its obligations under such Lease or otherwise),
Beneficiary may not instruct Grantor to remove the manager;
provided that the applicable Grantor, within twelve (12) months
of such termination, shall have entered into a bona fide letter
of intent for a new Lease or Leases of the relevant premises with
a new tenant or tenants and the base rent under such Lease would
restore the Net Operating Income of the Properties owned by the
Grantor on the date of such determination and subject to the lien
of this Mortgage to the amount of such Net Operating Income
immediately prior to such four (4) consecutive calendar quarters.
20. Remedies. Upon the occurrence and during the
continuation of an Event of Default, Beneficiary may take such
actions against Grantor, subject to Section 33 hereof, and/or
instruct Trustee to take such action against the Trust Estate or
any portion thereof as Beneficiary determines is necessary to
protect and enforce its rights hereunder, without notice or
demand except as set forth below or as required under applicable
law. Any such actions taken by Beneficiary shall be cumulative
and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such
order as Beneficiary may determine in its sole discretion, to the
fullest extent permitted by law, without impairing or otherwise
affecting the other rights and remedies of Beneficiary permitted
by law, equity or contract or as set forth herein or in the other
Loan Documents. Beneficiary's determination of appropriate
action may be based on the advice of the Servicer or another
appropriate real estate or other consultant and/or counsel, and
Beneficiary may rely conclusively on such advice. If such
consultant is not the Servicer, Grantor shall pay such
consultant's and reasonable attorney's fees and expenses incurred
by Beneficiary pursuant to this Section 20. Such actions may
include the following:
(a) Acceleration. Subject to any applicable
provisions of the Notes and the other Loan Documents, Beneficiary
may declare all or any portion of the unpaid principal balance
under the Notes, together with all accrued and unpaid interest
thereon, and all other unpaid Indebtedness, to be immediately due
and payable.
(b) Entry. Subject to the provisions and restrictions
of applicable law, Beneficiary and/or Trustee, if applicable,
personally, or by its agents or attorneys, at Beneficiary's
election, may enter into and upon all or any part of the Trust
Estate (including any Property and any part thereof), and may
exclude Grantor, its agents and servants therefrom (but such
entry shall be subject to any Nondisturbance Agreements then in
effect); and Beneficiary and/or Trustee, if applicable, having
and holding the same, may use, operate, manage and control the
Trust Estate or any part thereof and conduct the business
thereof, either personally or by its superintendents, managers,
agents, servants, attorneys or receiver. Upon every such entry,
Beneficiary and/or Trustee, if applicable, may, at the reasonable
expense of the Trust Estate and/or Grantor, from time to time,
either by purchase, repair or construction, maintain and restore
the Trust Estate or any part thereof, and may insure and reinsure
the same in such amount and in such manner as may seem to them to
be advisable. Similarly, from time to time, Beneficiary and/or
Trustee, if applicable, may, at the expense of Grantor (which
amounts may be disbursed by Beneficiary and/or Trustee, if
applicable, from the Trust Estate on behalf of Grantor), make all
necessary or proper repairs, renewals, replacements, alterations,
additions, betterments and improvements to and on the Trust
Estate or any part thereof as it may seem advisable. Beneficiary
or its designee shall also have the right to manage and operate
the Trust Estate or any part thereof and to carry on the business
thereof and exercise all rights and powers of Grantor with
respect thereto, either in the name of Grantor or otherwise, as
may seem to them to be advisable. In confirmation of the grant
made in Granting Clause (E) hereof, in the case of the occurrence
and continuation of an Event of Default, Beneficiary shall be
entitled to collect and receive all earnings, revenues, rents,
issues, profits and income of the Trust Estate or any part
thereof (i.e., the "Rents") to be applied in the order of
priorities and amounts as shall be provided for in Section 21
hereof. Beneficiary shall be liable to account only for rents,
issues and profits and other proceeds actually received by
Beneficiary and for security deposits and payments made. All
actions which may be taken by Beneficiary pursuant to this
Section 20(b) may be taken by the Trustee or the Jurisdictional
Trustee, upon the direction of Beneficiary. Beneficiary or the
Jurisdictional Trustee, as applicable, shall be liable to account
only for rents, issues and profits and other proceeds actually
received by Beneficiary or the Jurisdictional Trustee.
(c) Foreclosure. Prior to taking title to any
Property (whether by foreclosure, deed in lieu or otherwise),
Beneficiary shall obtain, in each instance, at Grantor's
reasonable expense a new phase I environmental report with
respect to each Property, and such additional environmental
studies as may be recommended in such phase I reports.
(i) Beneficiary, with or without entry,
personally or by its agents or attorneys, insofar as
applicable, and in addition to any and every other remedy,
may (A) sell or instruct the Trustee or the Jurisdictional
Trustee, if applicable, to sell, to the extent permitted by
law and pursuant to the power of sale granted herein, all
and singular the Trust Estate, and all estate, right, title
and interest, claim and demand therein, and right of
redemption thereof, at one or more sales, as an entirety or
in parcels, and at such times and places as required or
permitted by law and as are customary in any county or
parish in which a Property is located and upon such terms as
Beneficiary, the Trustee or the Jurisdictional Trustee if
applicable may fix and specify in the notice of sale to be
given to Grantor (and on such other notice published or
otherwise given as provided by law), or as may be required
by law; (B) institute (or instruct the Trustee or the
Jurisdictional Trustee to institute) proceedings for the
complete or partial foreclosure of this Mortgage under the
provisions of the laws of the jurisdiction or jurisdictions
in which the Trust Estate or any part thereof is located, or
under any other applicable provision of law; or (C) take all
steps to protect and enforce the rights of Beneficiary,
whether by action, suit or proceeding in equity or at law
(for the specific performance of any covenant, condition or
agreement contained in this Mortgage, or in aid of the
execution of any power herein granted, or for any
foreclosure hereunder, or for the enforcement of any other
appropriate legal or equitable remedy), or otherwise, as
Beneficiary, being advised by counsel and its financial
advisor, shall deem most advisable to protect and enforce
any of their rights or duties hereunder.
(ii) Beneficiary, the Trustee (or the Juris-
dictional Trustee, as applicable), may conduct any number of
sales from time to time. The power of sale shall not be ex-
hausted by any one or more such sales as to any part of the
Trust Estate remaining unsold, but shall continue unimpaired
until the entire Trust Estate shall have been sold.
(iii) With respect to any Property, this
Mortgage is made upon any statutory conditions of the State
in which such Property is located, and, for any breach
thereof or any breach of the terms of this Mortgage,
Beneficiary shall have the statutory power of sale, if any,
provided for by the laws of such State.
(d) Specific Performance. Beneficiary, in its sole
and absolute discretion, or the Jurisdictional Trustee, at
Beneficiary's election, may institute an action, suit or
proceeding at law or in equity for the specific performance of
any covenant, condition or agreement contained herein or in the
Notes or any other Loan Document, or in aid of the execution of
any power granted hereunder or for the enforcement of any other
appropriate legal or equitable remedy.
(e) Enforcement of Notes. Subject to Section 33
hereof and to the extent permitted under the provisions of
applicable law, Beneficiary or the Jurisdictional Trustee, at
Beneficiary's election, may recover judgment on the Notes (or any
portion of the Indebtedness evidenced thereby), either before,
during or after any proceedings for the foreclosure (or partial
foreclosure) or enforcement of this Mortgage.
(f) Sale of Trust Estate; Application of Proceeds.
(i) Beneficiary, the Trustee (or the Juris-
dictional Trustee, if applicable), may postpone any sale of
all or any part of the Trust Estate to be made under or by
virtue of this Section 20 by public announcement at the time
and place of such sale, or by publication, if required by
law, and, from time to time, thereafter, may further
postpone such sale by public announcement made at the time
of sale fixed by the preceding postponement.
(ii) Upon the completion of any sale made by
Beneficiary, the Trustee or the Jurisdictional Trustee under
or by virtue of this Section 20, Beneficiary, the Trustee or
the Jurisdictional Trustee, if applicable, shall execute and
deliver to the accepted purchaser or purchasers a good and
sufficient deed or deeds or other appropriate instruments,
conveying, assigning and transferring all its estate, right,
title and interest in and to the property and rights so
sold. Beneficiary, the Trustee or the Jurisdictional
Trustee, as applicable, is hereby appointed the true and
lawful irrevocable attorney-in-fact of Grantor in its name
and stead or in the name of Beneficiary to make all
necessary conveyances, assignments, transfers and deliveries
of the property and rights so sold, and, for that purpose,
Beneficiary, the Trustee or the Jurisdictional Trustee, as
applicable, may execute all necessary deeds and other
instruments of assignment and transfer, and may substitute
one or more persons with like power, Grantor hereby
ratifying and confirming all that such attorney or attorneys
or such substitute or substitutes shall lawfully do by
virtue hereof. Grantor shall, nevertheless, if so requested
in writing by Beneficiary, ratify and confirm any such sale
or sales by executing and delivering to Beneficiary or to
such purchaser or purchasers all such instruments as may be
advisable, in the judgment of Beneficiary, for such purposes
and as may be designated in such request. Any such sale or
sales made under or by virtue of this Section 20 shall
operate to divest all the estate, right, title, interest,
claim and demand, whether at law or in equity, of Grantor in
and to the property and rights so sold, and shall be a
perpetual bar, at law and in equity, against Grantor, its
successors and assigns and any Person claiming through or
under Grantor and its successors and assigns.
(iii) The receipt of Beneficiary, the
Trustee or the Jurisdictional Trustee, as applicable, for
the purchase money paid as a result of any such sale shall
be a sufficient discharge therefor to any purchaser of the
property or rights, or any part thereof, so sold. No such
purchaser, after paying such purchase money and receiving
such receipt, shall be bound to see to the application of
such purchase money upon or for any trust or purpose of this
Mortgage, or shall be answerable, in any manner, for any
loss, misapplication or non-application of any such purchase
money or any part thereof, nor shall any such purchaser be
bound to inquire as to the authorization, necessity,
expediency or regularity of such sale.
(iv) Upon any sale made under or by virtue
of this Section 20, Beneficiary may bid for and acquire the
Trust Estate or any part thereof and, in lieu of paying cash
therefor, may make settlement for the purchase price by
crediting upon the Notes secured by this Mortgage the net
proceeds of sale, after deducting therefrom the expense of
the sale and the costs of the action and any other sums
which Beneficiary is authorized to deduct under this
Mortgage. The person making such sale shall accept such
settlement without requiring the production of the Notes or
this Mortgage, and without such production there shall be
deemed credited to the Indebtedness and Obligations under
this Mortgage the net proceeds of such sale. Beneficiary,
upon acquiring the Trust Estate or any part thereof, shall
be entitled to own, hold, lease, rent, operate, manage or
sell the same in any manner permitted by applicable laws.
(g) Voluntary Appearance; Receivers. After the
happening, and during the continuance of, any Event of Default,
and immediately upon commencement of (i) any action, suit or
other legal proceeding by Beneficiary to obtain judgment for the
principal and interest on the Notes and any other sums required
to be paid pursuant to this Mortgage, or (ii) any action, suit or
other legal proceeding by Beneficiary of any other nature in aid
of the enforcement of the Loan Documents or any of them, Grantor
will (A) enter their voluntary appearance in such action, suit or
proceeding, and (B) if required by Beneficiary, consent to the
appointment of one or more receivers of the Trust Estate and of
the earnings, revenues, rents, issues, profits and income
thereof. After the happening of any Event of Default, or upon
the filing of a bill in equity to foreclose this Mortgage or to
enforce the specific performance hereof or in aid thereof, or
upon the commencement of any other judicial proceeding to enforce
any right of Beneficiary, Beneficiary shall be entitled, as a
matter of right, if it shall so elect, without notice to any
other party and without regard to the adequacy of the security of
the Trust Estate, forthwith, either before or after declaring the
principal and interest on the Notes to be due and payable, to the
appointment of such a receiver or receivers. Any receiver or
receivers so appointed shall have such powers as a court or
courts shall confer, which may include, without limitation, any
or all of the powers which Beneficiary is authorized to exercise
by the provisions of this Section 20, and shall have the right to
incur such obligations and to issue such certificates therefor as
the court shall authorize. Notwithstanding the foregoing,
Beneficiary as a matter of right may appoint or secure the
appointment of a receiver, trustee, liquidator or similar
official of the Trust Estate or any portion thereof, and Grantor
hereby irrevocably consents and agrees to such appointment,
without notice to Grantor and without regard to the value of the
Trust Estate or adequacy of the security for the Indebtedness and
without regard to the solvency of the Grantor or any other Person
liable for the payment of the Indebtedness, and such receiver or
other official shall have all rights and powers permitted by
applicable law and such other rights and powers as the court
making such appointment may confer, but the appointment of such
receiver or other official shall not impair or in any manner
prejudice the rights of Beneficiary to receive the Rents with
respect to any of the Trust Estate pursuant to this Mortgage, the
Assignment of Leases or the Cash Collateral Agreement.
(h) UCC Remedies. Beneficiary may exercise any or all
of the remedies granted to a secured party under the UCC,
specifically including, without limitation, the right to recover
the attorneys' fees and other expenses incurred by Beneficiary in
the enforcement of this Mortgage or in connection with Grantor's
redemption of the Improvements or Building Equipment.
Beneficiary may exercise its rights under this Mortgage
independently of any other collateral or guaranty that Grantor
may have granted or provided to Beneficiary in order to secure
payment and performance of the Obligations, and Beneficiary shall
be under no obligation or duty to initiate foreclosure or levy
upon any other collateral given by Grantor to secure any
Obligation or to proceed against any guarantor before enforcing
its rights under this Mortgage.
(i) Leases. Beneficiary may, at its option, before
any proceeding for the foreclosure (or partial foreclosure) or
enforcement of this Mortgage, treat any Lease which is
subordinate by its terms to the Lien of this Mortgage, as either
subordinate or superior to the Lien of this Mortgage.
(j) Other Rights. Beneficiary may pursue against
Grantor any other rights and remedies of Beneficiary permitted by
law, equity or contract or as set forth herein or in the other
Loan Documents.
(k) Retention of Possession. Notwithstanding the ap-
pointment of any receiver, liquidator or trustee of Grantor, or
any of its property, or of the Trust Estate or any part thereof,
Beneficiary or the Jurisdictional Trustee, as applicable, to the
extent permitted by law, shall be entitled to retain possession
and control of all property now or hereafter granted to or held
by Beneficiary or the Jurisdictional Trustee, as applicable,
under this Mortgage.
(l) Suits by Beneficiary. Any such suit or proceeding
instituted by Beneficiary shall be brought in the name of Benefi-
ciary and any recovery of judgment shall be subject to the rights
of Beneficiary.
(m) Remedies Cumulative. Subject to Section 33
hereof, no remedy herein conferred upon or reserved to the
Trustee, the Jurisdictional Trustee and/or the Beneficiary shall
exclude any other remedy, and each such remedy shall be
cumulative and in addition to every other remedy given hereunder
or now or hereafter existing at law or in equity. No delay or
omission of Beneficiary, the Trustee and/or the Jurisdictional
Trustee to exercise any right or power accruing upon any Event of
Default shall impair any such right or power, or shall be
construed to be a waiver of any such Event of Default or an
acquiescence therein. Every power and remedy given by this
Mortgage to the Trustee, the Jurisdictional Trustee and/or
Beneficiary may be exercised from time to time and as often as
the Trustee, the Jurisdictional Trustee (at Beneficiary's
direction) and Beneficiary may deem expedient. Nothing in this
Mortgage shall affect Grantor's obligations to pay the principal
of, and interest on, the Notes in the manner and at the time and
place expressed in the Notes.
(n) Waiver of Rights. Grantor agrees that, to the
fullest extent permitted by law, it will not at any time, (1)
insist upon, plead or claim or take any benefit or advantage of
any stay, extension or moratorium law, wherever enacted, now or
at any time hereafter in force, which may affect the covenants
and terms of performance of this Mortgage, (2) claim, take or
insist upon any benefit or advantage of any law, now or at any
time hereafter in force, providing for valuation or appraisal of
the Trust Estate, or any part thereof, prior to any sale or sales
thereof which may be made pursuant to any provision herein
contained, or pursuant to the decree, judgment or order of any
court of competent jurisdiction, or (3) after any such sale or
sales, claim or exercise any right, under any statute heretofore
or hereafter enacted by the United States of America, any State
thereof or otherwise, to redeem the property and rights sold
pursuant to such sale or sales or any part hereof. Grantor
hereby expressly waives all benefits and advantages of such laws,
and covenants, to the fullest extent permitted by law, not to
hinder, delay or impede the execution of any power herein granted
or delegated to Beneficiary or the Trustees, but will suffer and
permit the execution of every power as though no such laws had
been made or enacted. Grantor for itself and all who may claim
through or under it, waives, to the extent it lawfully may do so,
any and all homestead rights and, any and all rights to
reinstatement, any and all right to have the property comprising
the Trust Estate marshaled upon any foreclosure of the Lien
hereof.
21. Application of Proceeds.
(a) Sale Proceeds. The proceeds of any sale or
foreclosure of the Trust Estate or any portion thereof shall be
applied to the following in the following order of priority the
payment of: (i) the costs and expenses of the foreclosure
proceedings with respect to such Property (including reasonable
counsel fees and disbursements actually incurred and advertising
costs and expenses), liabilities and advances made or incurred
under this Mortgage, and reasonable receivers' and trustees' fees
and commissions and fees and expenses incurred by Beneficiary,
together with interest at the Default Rate to the extent payable,
(ii) any other sums advanced by Beneficiary (or any advancing
agent on its behalf) in accordance with the terms hereof and not
repaid to it by Grantor, together with interest at the Default
Rate to the extent payable, (iii) all sums due under the Notes in
the order of priority set forth therein, and (iv) any surplus to
Grantor or other party legally entitled thereto.
(b) Other Proceeds. All Proceeds or other amounts
collected by Beneficiary and applied to pay interest or principal
of the Notes or other amounts due on this Mortgage following an
Event of Default and acceleration of the Notes shall be applied
(1) first, to reimburse any expenses related to such collection
and (2) thereafter, as provided in Section 21(a) hereof. If the
Notes have not been accelerated, any amount available to make
payments or applied in lieu of such payments thereon shall be
applied (i) first, to interest due or overdue on the Notes, (ii)
then, any amounts applied to pay or applied in lieu of paying
principal on the Notes then due shall be applied to pay or
applied in lieu of paying each Note in order of priority, and
(iii) thereafter, to Grantor.
22. CERTAIN WAIVERS. TO INDUCE BENEFICIARY TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE NOTES AND THIS
MORTGAGE, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, GRANTOR
AND EACH OF THE PARTNERS IN ENTITIES COMPRISING GRANTOR WHICH ARE
PARTNERSHIPS, EXPRESSLY AND IRREVOCABLY HEREBY WAIVE THE
FOLLOWING RIGHTS, IN ADDITION TO AND NOT IN DEROGATION OF ALL
OTHER WAIVERS CONTAINED IN THE NOTES, THIS MORTGAGE AND THE OTHER
LOAN DOCUMENTS:
(a) WAIVER OF RIGHT TO TRIAL BY JURY. GRANTOR HEREBY
WAIVES AND SHALL WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BROUGHT BY, OR COUNTERCLAIM ASSERTED BY BENEFICIARY WHICH ACTION,
PROCEEDING OR COUNTERCLAIM ARISES OUT OF OR IS CONNECTED WITH
THIS MORTGAGE, THE NOTES OR ANY OTHER LOAN DOCUMENTS.
23. Notice of Certain Occurrences. In addition to all
other notices required to be given by Grantor hereunder, Grantor
shall give notice to Beneficiary and the Rating Agency promptly
upon the occurrence of: (a) any litigation or proceeding
affecting Grantor or the Trust Estate or any part thereof in
which the amount involved is Five Hundred Thousand Dollars
($500,000) or more and not covered by insurance or in which
injunctive or similar relief is sought and likely to be obtained;
and (b) together with the quarterly financial statements required
to be delivered hereunder, a list of all litigation and
proceedings affecting Grantor or the Trust Estate or any part
thereof in which the amount involved is Five Hundred Thousand
Dollars ($500,000) or more, whether or not covered by insurance
and whether or not relief is being sought, but information
regarding a particular litigation need not be given in subsequent
reports if it has been given previously and the information to be
given in the litigation report regarding that litigation has not
changed since the last report describing such litigation.
24. Trust Funds. To the extent required by applicable
law, all security deposits paid under the Leases shall be treated
as trust funds and not commingled with any other funds of
Grantor. Within ten (10) days after request by Beneficiary,
Grantor shall furnish Beneficiary with satisfactory evidence of
compliance with this Section 24, together with a statement of all
security deposits by Tenants under the Leases, which statement
shall be certified by Grantor.
25. Taxation. In the event a law is passed after the
date hereof of the United States or of any state in which a
Property is located either (a) changing in any way the laws for
the taxation of mortgages or debts secured thereby for federal,
state or local purposes, or the manner of collection of any such
taxes, or (b) imposing a tax, either directly or indirectly, on
mortgages or debts secured thereby, in each case other than
income taxes, franchise taxes, or withholding taxes, that
materially adversely affects Beneficiary, Beneficiary shall have
the right to declare the Notes due on a date to be specified by
not less than thirty (30) days' written notice to be given to
Grantor unless within such thirty (30) day period Grantor shall
assume as an obligation hereunder the payment of any tax so
imposed until full payment of the Notes provided such assumption
shall be permitted by law.
26. Notices. Any notice, election, request or demand
which by any provision of this Mortgage is required or permitted
to be given or served hereunder shall be in writing and shall be
given or served by hand delivery against receipt, by any
nationally recognized overnight courier service providing
evidence of the date of delivery or by certified mail return
receipt requested, postage prepaid, addressed to Grantor at: c/o
Kranzco Realty Trust, 128 Fayette Street, Conshohocken,
Pennsylvania 19428, with a copy to Robinson Silverman Pearce
Aronsohn & Berman LLP, 1290 Avenue of the Americas, New York, New
York 10104, Attention: Alan S. Pearce, Esq.; if to Trustee at:
Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street,
Baltimore, Maryland 21202, Attention: Ronald P. Fish and Thomas
A. Hauser; if to Beneficiary at c/o Kranzco Realty Trust, 128
Fayette Street, Conshohocken, Pennsylvania 19428 with a copy to
the Servicer under the Trust and Servicing Agreement; if to the
Rating Agency at: Fitch Investors Service, L.P., One State
Street Plaza, New York, New York 10004, Attention: Commercial
Mortgage Surveillance, or at such other address as shall be
designated from time to time by Grantor, Trustee, Beneficiary or
the Rating Agency by notice given in accordance with the
provisions of this Section 26. Any such notice or demand given
hereunder shall be effective upon receipt. All notices,
elections, requests and demands required or permitted under this
Mortgage shall be in the English language.
27. No Oral Modification. This Mortgage may not be
waived, altered, amended, modified, changed, discharged or
terminated orally but only by a written agreement signed by the
party against which enforcement is sought.
28. Partial Invalidity. In the event any one or more
of the provisions contained in this Mortgage shall for any reason
be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision hereof, but each shall be construed as if
such invalid, illegal or unenforceable provision had never been
included hereunder.
29. Successors and Assigns. All covenants of Grantor
contained in this Mortgage are imposed solely and exclusively for
the benefit of Beneficiary and its successors and assigns, and no
other Person shall have standing to require compliance with such
covenants or be deemed, under any circumstances, to be a
beneficiary of such covenants, any or all of which may be freely
waived in whole or in part by Beneficiary at any time if in its
sole discretion it deems it advisable to do so. All such
covenants of Grantor shall run with the land and bind Grantor,
the successors and assigns of Grantor (and each of them) and all
subsequent owners, encumbrancers and Tenants of the Trust Estate,
and shall inure to the benefit of Beneficiary, its successors and
assigns.
30. Governing Law. This Mortgage 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 the State of New York and any
applicable laws of the United States of America except that at
all times the provisions for the creation, perfection and
enforcement of the Liens and security interest created pursuant
to this Mortgage with respect to any Property and pursuant to the
Assignment of Leases shall be governed by the laws of the State
in which such Property is located. Whenever possible, each
provision of this Mortgage shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any
provision of this Mortgage 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
remaining provisions of this Mortgage. Nothing contained in this
Mortgage or in any Loan Document shall require either Grantor to
pay or Beneficiary to accept any sum in any amount which would,
under applicable law, subject Beneficiary, any Trustee or any
Holder to penalty or adversely affect the enforceability of this
Mortgage. In the event that the payment of any sum due hereunder
or under any Loan Document would have such result under
applicable law, then, ipso facto, the obligation of Grantor to
make such payments shall be reduced to the highest sum then
permitted under applicable law and appropriate adjustment shall
be made by Grantor and Beneficiary.
31. Certain Representations, Warranties and Covenants.
(a) Recording Fees, Taxes, Etc. Grantor hereby agrees
to take all such further reasonable actions, and to pay all
taxes, recording fees, charges, costs and other expenses
including, without limitation, reasonable attorneys' and
professional fees and disbursements which are currently or in the
future shall be imposed, and which may be required or necessary
to establish, preserve, protect or enforce the Lien of this
Mortgage.
(b) No Offsets. Grantor warrants, covenants and
represents to Beneficiary that as of the date hereof there exists
no cause of action at law or in equity that would constitute any
offset, counterclaim or deduction against the Indebtedness or
Obligations.
(c) Full and Accurate Disclosure. To the best of
Grantor's knowledge, no statement of fact made by or on behalf of
Grantor in this Mortgage 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 as of the date made.
(d) Tax Filings. Grantor has filed all federal, state
and local tax returns required to be filed prior to the date
hereof and has paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments shown
to be due from Grantor on such tax returns.
(e) No Litigation. No litigation is pending or, to
Grantor's best knowledge, threatened against Grantor which, if
determined adversely to Grantor, would have a material adverse
effect on any Property or the security created hereby and no
Taking has been commenced or, to Grantor's best knowledge, is
contemplated with respect to all or any portion of the Trust
Estate or for the relocation of roadways providing access to the
Trust Estate. Grantor has delivered to Beneficiary and the
Rating Agency a certificate setting forth all litigation
affecting Grantor or any Property.
(f) Solvency. The fair saleable value of Grantor's
assets exceeds and will, immediately following the issuance and
sale of the Notes and the consummation of the other transactions
contemplated to take place simultaneously therewith, exceed
Grantor's liabilities, including subordinated, unliquidated,
disputed and contingent liabilities. Grantor's assets do not
and, immediately following the issuance and sale of the Notes and
the consummation of the other transactions contemplated to take
place simultaneously therewith will not, constitute unreasonably
insufficient capital to carry out its business as conducted or as
proposed to be conducted. Grantor does not intend to, and does
not believe that it will, incur debts and liabilities (including,
without limitation, contingent liabilities) beyond its ability to
pay such debts as they mature.
(g) ERISA. Grantor is not an "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) to which ERISA
applies and Grantor's assets do not constitute plan assets. No
actions, suits or claims under any laws and regulations
promulgated pursuant to ERISA are pending or, to Grantor's
knowledge, threatened against Grantor. Grantor has no knowledge
of any material liability incurred by Grantor which remains
unsatisfied for any taxes or penalties with respect to any
employee benefit plan or any Multiemployer Plan, or of any lien
which has been imposed on Grantor's assets pursuant to Section
412 of the Code or Sections 302 or 4068 of ERISA.
(h) Claims. No actions, suits, proceedings or
governmental investigations, whether judicial or otherwise are
pending or, to the best knowledge of Grantor, has been commenced
against Grantor before any domestic or foreign court or
administrative, arbitral, governmental or regulatory authority or
agency which, if determined adversely to Grantor, would have a
material adverse effect on the security created hereby. Grantor
has delivered to Beneficiary and the Rating Agency a certificate
setting forth all such matters known to Grantor pending against
Grantor as of the date hereof.
(i) Liens. No Lien, other than Permitted
Encumbrances, which remains outstanding as of the date hereof,
including, without limitation, any tax lien, has been levied
against the Trust Estate.
(j) Outstanding Liabilities. No outstanding
liabilities of Grantor exist which, individually or in the
aggregate, would have a material adverse effect on the security
created hereby or would materially adversely affect the condition
(financial or otherwise) of Grantor. Grantor has delivered to
Beneficiary and the Rating Agency a certificate setting forth all
liabilities of Grantor as of the date hereof.
(k) Creditors' Claims. To Grantor's best knowledge,
no claim of any creditor of Grantor would have a material adverse
effect on the security created hereby or would materially
adversely affect the condition (financial or otherwise) of
Grantor. Grantor has delivered to Beneficiary and the Rating
Agency a certificate setting forth all such claims of creditors
of Grantor as of the date hereof.
(l) Separate Business; Corporate Formalities.
(i) Grantor shall maintain its own deposit
account or accounts, separate from those of any Affiliate,
with commercial banking institutions. The funds of Grantor
will not be diverted to any other Person or for other than
business uses of Grantor;
(ii) To the extent that Grantor shares the same
officers or other employees as any of its partners or
Affiliates or any other entity comprising Grantor or a
partner in such entity, the salaries of and the expenses
related to providing benefits to such officers and other
employees shall be fairly allocated among such entities, and
each such entity shall bear its fair share of the salary and
benefit costs associated with all such common officers and
employees;
(iii) To the extent that Grantor jointly
contracts with any of its partners or Affiliates or any
other entity comprising Grantor or a partner in such entity
to do business with vendors or service providers or to share
overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities, and each such entity
shall bear its fair share of such costs. To the extent that
Grantor contracts or does business with vendors or service
providers where the goods and services provided are
partially for the benefit of any other Person, the costs
incurred in so doing shall be fairly allocated to or among
such entities for whose benefit the goods and services are
provided, and each such entity shall bear its fair share of
such costs. All material transactions between Grantor and
any of its Affiliates shall be only on an arm's length
basis.
(iv) To the extent that Grantor and any of its
constituent partners or Affiliates have offices in the same
location, there shall be a fair and appropriate allocation
of overhead costs among them, and each such entity shall
bear its fair share of such expenses.
(v) Grantor shall conduct its affairs strictly in
accordance with its organizational documents, and observe
all necessary, appropriate and customary partnership or
corporate formalities, as the case may be, including, but
not limited to, obtaining any and all consents necessary to
authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts,
including, but not limited to, payroll and intercompany
transaction accounts.
(m) Director Consents. The General Partner of any
entity comprising Grantor which is a partnership, or if such
entity is a limited liability company, the managing member shall
obtain the consent of all its directors to (i) file a bankruptcy
or insolvency petition or otherwise institute insolvency
proceedings or to authorize Grantor to do so, (ii) dissolve,
liquidate, consolidate, merge or sell all or substantially all of
Grantor's assets, (iii) engage in any other business activity, or
(iv) amend its organizational documents.
(n) No Default. As of the date hereof, Grantor is not
in material default under the terms and provisions of any
Operating Agreement or any Lease.
(o) Collateral As Entirety of Property. Each Property
and the Personalty located thereon constitutes all of the real
property, equipment and fixtures currently owned by Grantor or
currently used in the operation of the business located on such
Property.
(p) No Property Damage. As of the date hereof, to
Grantor's knowledge, no portion of the Improvements at any
Property has been materially damaged, destroyed or injured by
fire or other casualty which is not now fully restored or in the
process of being restored.
(q) Access. Each Property has adequate access to
public streets, roads or highways as reasonably necessary for the
current use of the Property.
(r) Separate Tax Parcels. Each Property constitutes
one or more separate tax lots, with a separate tax assessment,
independent of any other land or improvements.
(s) Utilities. All utility services necessary for the
operation of each Property have been connected and are available
in adequate capacities directly from utility lines and without
the need for private easements not presently existing.
32. No Waiver. No failure by Beneficiary to insist
upon the strict performance of any term hereof or to exercise any
right, power or remedy consequent upon a breach thereof shall
constitute a waiver of any such term or right, power or remedy or
of any such breach. No waiver of any breach shall affect or
alter this Mortgage, which shall continue in full force and
effect, or shall affect or alter the rights of Beneficiary with
respect to any other then existing or subsequent breach.
33. Non-Recourse Obligations. Notwithstanding
anything in this Mortgage (other than as set forth in Section 41
hereof), the Notes or the other Loan Documents, no personal
liability shall be asserted or enforceable against (i) Grantor,
(ii) any Affiliate of Grantor, (iii) any Person owning directly
or indirectly, any legal or beneficial interest in Grantor or any
Affiliate of Grantor, or (iv) any partner, principal, officer,
controlling person, beneficiary, trustee, advisor, shareholder,
employee, agent, Affiliate or director of any Persons described
in clauses (i) through (iii) above (collectively, the "Exculpated
Parties") by Beneficiary or Trustee in respect of the
Obligations, this Mortgage, any Notes or any other Loan Document,
or the making, issuance or transfer thereof, all such liability,
if any, being expressly waived by Beneficiary, Trustee, and each
successive holder of any Note and this Mortgage shall accept the
Notes and this Mortgage upon the express condition of this
provision and limitation that in the case of the occurrence and
continuance of an Event of Default, Beneficiary's remedies in its
sole discretion shall be any or all of:
(i) Foreclosure of the lien of this Mortgage in
accordance with the terms and provisions set forth in this
Mortgage;
(ii) Action against any other security at any time
given to secure the payment of the Notes and under the other
Loan Documents; and
(iii) Exercise of any other remedy set forth in
this Mortgage or any other Loan Document.
The lien of any judgment against Grantor and any
proceeding instituted on, under or in connection with the Notes
or this Mortgage, or both, shall not extend to any property now
or hereafter owned by Grantor or any Exculpated Party other than
the Net Operating Income from, and the ownership interest of
Grantor in, the Trust Estate and the other security for the
payment of the Notes or this Mortgage.
Notwithstanding anything in this Mortgage to the
contrary, there shall at no time be any limitation on Grantor's
liability for the payment to Beneficiary of: (1) condemnation
proceeds or insurance proceeds which Grantor has received and to
which Beneficiary is entitled pursuant to the terms of this
Mortgage or any of the Loan Documents to the extent the same have
not been applied toward payment of sums due under the Notes or
under this Mortgage, or used for the repair or replacement of the
Trust Estate pursuant to this Mortgage, or (2) all loss, damage
and expense as incurred by Beneficiary and arising from any
fraud, or intentional misrepresentation of Grantor, or (3) any
misappropriation of Rents or security deposits by Grantor or any
Affiliate of Grantor.
34. Further Assurances. Grantor, at its own expense,
will execute, acknowledge and deliver all such reasonable further
acts, documents or instruments including security agreements on
any building equipment included or to be included in the Trust
Estate and a separate assignment of each Lease and take all such
actions as Beneficiary from time to time may reasonably request
to better assure, transfer and confirm unto Beneficiary the
rights now or hereafter intended to be granted to Beneficiary
under this Mortgage or the other Loan Documents. Grantor shall
notify Beneficiary no less than thirty (30) days prior to a
change of address.
35. Estoppel Certificates. Grantor and Beneficiary
each will, from time to time, upon twenty (20) days' prior
written request by the other party, execute, acknowledge and
deliver to the requesting party, in the case of a request to
Beneficiary, a certificate signed by an authorized officer or
officers and in the case of a request to Grantor, an Officer's
Certificate, stating that this Mortgage is unmodified and in full
force and effect (or, if there have been modifications, that this
Mortgage is in full force and effect as modified and setting
forth such modifications) and stating the amount of accrued and
unpaid interest and the outstanding principal amount of the
Notes. The request for an estoppel certificate from Beneficiary
shall also state either that, to Grantor's best knowledge and
based on no independent investigation, no Default exists
hereunder or, if any Event of Default shall exist hereunder,
specify any Event of Default of which Grantor has actual
knowledge and the steps being taken to cure such Event of
Default.
36. Intentionally Omitted.
37. Indemnification by Grantor.
Subject to the provisions of Section 33 hereof,
Grantor will protect, indemnify and save harmless Beneficiary,
and all officers, directors, stockholders, partners, employees,
successors and assigns thereof (collectively, the "Indemnified
Parties") from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses
(including all reasonable attorneys' fees and expenses actually
incurred) imposed upon or incurred by or asserted against the
Indemnified Parties or the Trust Estate or any part of its
interest therein, by reason of the occurrence or existence of any
of the following (to the extent Insurance Proceeds payable on
account of the following shall be inadequate, it being understood
that in no event will the Indemnified Parties be required to
actually pay or incur any costs or expenses as a condition to the
effectiveness of the foregoing indemnity) prior to (i) the
acceptance by Beneficiary of a deed-in-lieu of foreclosure with
respect to the applicable Property, or (ii) the Indemnified
Parties taking possession or control of the applicable Property,
unless caused solely by the actual willful misconduct or gross
negligence of the Indemnified Parties (other than such willful
misconduct or gross negligence imputed to the Indemnified Parties
because of their interest in the Trust Estate): (1) ownership of
Grantor's interest in the Trust Estate, or any interest therein,
or receipt of any Rents or other sum therefrom, (2) any accident,
injury to or death of any persons or loss of or damage to
property occurring on or about the Trust Estate or any
Appurtenances thereto, (3) any design, construction, operation,
repair, maintenance, use, non-use or condition of the Trust
Estate or Appurtenances thereto, including claims or penalties
arising from violation of any Legal Requirement or Insurance
Requirement, as well as any claim based on any patent or latent
defect, whether or not discoverable by Beneficiary, any claim the
insurance as to which is inadequate, and any Environmental Claim,
(4) any Default under this Mortgage or any of the other Loan
Documents or any failure on the part of Grantor to perform or
comply with any of the material terms of any Lease or Operating
Agreement within the applicable notice or grace periods, (5) any
performance of any labor or services or the furnishing of any
materials or other property in respect of the Trust Estate or any
part thereof, (6) any negligence or tortious act or omission on
the part of Grantor or any of its agents, contractors, servants,
employees, sublessees, licenses or invitees, (7) any contest
referred to in Section 7(c) hereof, (8) any obligation or
undertaking relating to the performance or discharge of any of
the terms, covenants and conditions of the landlord contained in
the Leases or (9) the presence at, in or under any Property or
the Improvements thereon of any Hazardous Substance in violation
of any Legal Requirement. Any amounts the Indemnified Parties
are legally entitled to receive under this Section 37 which are
not paid within ten (10) Business Days after written demand
therefor by the Indemnified Parties or Beneficiary, setting forth
in reasonable detail the amount of such demand and the basis
therefor, shall bear interest from the date of demand at the
Default Rate, and shall, together with such interest, be part of
the Indebtedness and secured by this Mortgage. In case any
action, suit or proceeding is brought against the Indemnified
Parties by reason of any such occurrence, Grantor shall at
Grantor's expense resist and defend such action, suit or
proceeding or will cause the same to be resisted and defended by
counsel at Grantor's reasonable expense for the insurer of the
liability or by counsel designated by Grantor (unless reasonably
disapproved by Beneficiary promptly after Beneficiary has been
notified of such counsel); provided, however, that nothing herein
shall compromise the right of Beneficiary (or any Indemnified
Party) to appoint its own counsel at Grantor's expense for its
defense with respect to any action which in its reasonable
opinion presents a conflict or potential conflict between
Beneficiary and Grantor that would make such separate
representation advisable; provided further that if Beneficiary
shall have appointed separate counsel pursuant to the foregoing,
Grantor shall not be responsible for the expense of additional
separate counsel of any Indemnified Party unless in the
reasonable opinion of Beneficiary a conflict or potential
conflict exists between such Indemnified Party and Beneficiary.
So long as Grantor is resisting and defending such action, suit
or proceeding as provided above in a prudent and commercially
reasonable manner, Beneficiary and the Indemnified Parties shall
not be entitled to settle such action, suit or proceeding and
claim the benefit of this Section 37 with respect to such action,
suit or proceeding and Beneficiary agrees that it will not settle
any such action, suit or proceeding without the consent of
Grantor; provided, however, that if Beneficiary reasonably
determines that Grantor is not diligently defending such action,
suit or proceeding in a prudent and commercially reasonable
manner as provided above, and has provided Grantor with thirty
(30) days' prior written notice, or shorter period if mandated by
the requirements of applicable law, and opportunity to correct
such determination, Beneficiary may settle such action, suit or
proceeding subject only to Grantor's consent which shall not be
unreasonably withheld or delayed, and claim the benefit of this
Section 37 with respect to settlement of such action, suit or
proceeding. Any Indemnified Party will give Grantor prompt
notice after such Indemnified Party obtains actual knowledge of
any potential claim by such Indemnified Party for indemnification
hereunder.
38. Release of Property. (a) If Grantor shall pay or
cause to be paid, the principal of and interest on the Notes in
full at maturity or as permitted in accordance with the terms
thereof and all other Indebtedness payable to Beneficiary
hereunder by Grantor or secured hereby or by the other Loan
Documents and all of the payment Obligations shall have been
performed, then this Mortgage and all the other Loan Documents
shall be discharged and satisfied or assigned (to Grantor or to
any other Person at Grantor's direction and without
representation or warranty by, or recourse to, Beneficiary), at
Grantor's option, without warranty (except that Beneficiary shall
be deemed to have represented that such release and termination
or reassignment has been duly authorized and that it has not
assigned or encumbered this Mortgage or the other Loan
Documents), at the expense of Grantor upon its written request.
Concurrently with such release and satisfaction or assignment of
this Mortgage and all the other Loan Documents, Beneficiary will
return to Grantor the Notes and all insurance policies relating
to the Trust Estate which may be held by Beneficiary, any amounts
held in escrow pursuant to this Mortgage or the Cash Collateral
Agreement, if applicable, or otherwise, and any part of the Trust
Estate or other Collateral that may be in its possession and, on
the written request and at the expense of Grantor, will execute
and deliver such instruments of conveyance, assignment and
release (including appropriate UCC-3 termination statements)
prepared by Grantor and as may reasonably be requested by Grantor
to evidence such release and satisfaction, or assignment, and any
such instrument, when duly executed by Beneficiary and, if
appropriate, duly recorded by Grantor in the places where this
Mortgage and each other Loan Document is recorded, shall
conclusively evidence the release and satisfaction or assignment
of this Mortgage and the other Loan Documents.
(b) Grantor shall be entitled to have one (1) or
more of the Properties released from the Lien of this Mortgage
from and after the date which is two years from the date of this
Mortgage, provided that all of the conditions set forth below
have been satisfied. The release of any Property shall be subject
to the satisfaction of the following conditions:
(i) Beneficiary shall have received from Grantor
at least 30 days' prior written notice of the
date proposed for such release (the "Release
Date");
(ii) No Event of Default shall have occurred and
be continuing as of the date of such notice
and the Release Date;
(iii) Grantor shall deliver to Beneficiary
(pursuant to and in accordance with the
provisions of Sections 46 and 47 hereof) on
the Release Date, Defeasance Collateral in
such amount as shall satisfy (A) the Minimum
Defeasance Collateral Requirement for such
Property with respect to a release of less
than all the Properties or (B) the Total
Defeasance Collateral Requirement with
respect to a release of all of the
Properties; provided, however, that in the
event of a release of any of the Property
commonly known as (x) The Mall at Cross
County located in Yonkers, Westchester
County, New York, (y) Whitehall Square
located in Whitehall, Lehigh County,
Pennsylvania, or (z) Bethlehem Square located
in Bethlehem, Northampton County,
Pennsylvania (each a "Specified Property"),
the Release Price shall be equal to 150% of
the Allocated Loan Amount for each Specified
Property to be released, unless prior to the
release of such Specified Property the Rating
Agency has delivered its written affirmation
to the Grantor that the ratings of the
Certificates immediately prior to such
release will not be qualified, downgraded or
withdrawn as a result of such release which
affirmation may be granted or withheld in the
Rating Agency's sole and absolute discretion;
and provided, further, that if the Rating
Agency shall issue such an affirmation the
Release Price for such Specified Property
shall be equal to 125% or 135% of the
Allocated Loan Amount, as the case may be, or
such other percentage (not less than 125%) of
the Allocated Loan Amount as may be
acceptable to the Rating Agency;
(iv) Grantor shall have delivered to Beneficiary
an Officer's Certificate, dated the Release
Date, confirming the matters referred to in
clause (ii) above, certifying that the
provisions of clause (iii) above have been
complied with and certifying that all condi-
tions precedent for such release contained in
this Mortgage have been complied with; and
(v) Grantor, at its sole cost and expense, shall
have delivered to Beneficiary, one or more
endorsements to the mortgagee policy of title
insurance delivered to Beneficiary on the
date hereof in connection with this Mortgage
insuring that, after giving effect to such
release, (x) the Liens created hereby and
insured thereunder are first priority Liens
on the respective remaining Properties
subject only to the Permitted Encumbrances
applicable to the remaining Properties and
(y) that such policy is in full force and
effect and unaffected by such release,
provided that such endorsements are available
at a nominal cost (without additional
premium).
(vi) After giving effect to such proposed release,
the Debt Service Coverage Ratio would be not
less than (A) the greater of the Debt Service
Coverage Ratio without giving effect to such
release and 1.60:1 with respect to each of
the first seven Properties which are released
and (B) the greater of the Debt Service
Coverage Ratio without giving effect to such
release and 1.75:1 with respect to each
Property thereafter;
(vii) Beneficiary and the Rating Agency shall have
received from Grantor with respect to the
matters referred to in clause (vi), (x)
statements of the Net Operating Income and
Debt Service (both on a consolidated basis
and separately for the applicable
Property(ies) to be released) for the
applicable measuring period, (y) based on the
foregoing statements of Net Operating Income
and Debt Service, calculations of the Debt
Service Coverage Ratio both with and without
giving effect to the proposed release and (z)
calculations of the ratios referred to in
such clause (vi), accompanied by an Officers'
Certificate stating that such statements,
calculations and information are true,
correct, and complete in all material
respects; and
(viii) Grantor shall have reimbursed Beneficiary,
Servicer and Trustee for all reasonable costs
and expenses actually incurred (including
reasonable attorneys' fees and disbursements)
in connection with a Property Release
pursuant to this Section 38.
Upon or after the delivery of Defeasance
Collateral in accordance with Section 38(b)(iii) hereof and in
the case of clause (y), the satisfaction of all other conditions
provided for herein in Sections 46 and 47) the notice required
pursuant to subsection (i) above, Beneficiary shall effectuate
the following (hereinafter referred to as a "Property Release"):
the security interest of Beneficiary in this Mortgage and other
Loan Documents relating to the released Property shall be
released from the Lien of this Mortgage and Beneficiary will
execute and deliver any agreements reasonably requested by
Grantor to release and terminate or reassign, at Grantor's
option, this Mortgage as to the released Property; provided, that
such release and termination or reassignment shall be without
recourse to Beneficiary (except as contemplated hereby) and
without any representation or warranty except that Beneficiary
shall be deemed to have represented that such release and
termination or reassignment has been duly authorized and that it
has not assigned or encumbered this Mortgage or the other Loan
Documents relating to the released Property (except as
contemplated hereby) and Beneficiary shall return the originals
of any Loan Documents that relate solely to the released Property
to Grantor; provided, further, that upon the release and
termination or reassignment of Beneficiary's security interest in
this Mortgage relating to the released Property all references
herein to this Mortgage relating to the released Property shall
be deemed deleted, except as otherwise provided herein with
respect to indemnities.
39. Rating Agency Monitoring. Until the Obligations
are paid in full, Grantor shall provide the Rating Agency with
all financial reports required hereunder and such other
information as it shall reasonably request to enable it to
continuously monitor the creditworthiness of Grantor and to
permit an annual surveillance of the implied credit rating of
certain securities secured by a pledge of the Notes and shall pay
all Rating Agency monitoring and review fees.
40. Environmental Matters.
(a) Representations. Grantor hereby represents and
warrants that except as set forth in the reports listed on
Exhibit B hereto (the "Environmental Reports"), (i) Grantor has
not engaged in or knowingly permitted any operations or
activities upon, or any use or occupancy of any Property, or any
portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any
Hazardous Substances on, under, in or about the Property, or
transported any Hazardous Substances to, from or across the
Property, except in all cases in material compliance with
Environmental Requirements and only in the course of legitimate
business operations at the Property; (ii) to Grantor's knowledge,
no tenant, occupant or user of any Property, nor any other
person, has during Grantor's ownership of such Property, engaged
in or permitted any operations or activities upon, or any use or
occupancy of the Property, or any portion thereof, for the
purpose of or in any material way involving the handling,
manufacture, treatment, storage, use, generation, release,
discharge, refining, dumping or disposal of any Hazardous
Substances on, in or about the Property, or transported any
Hazardous Substances to, from or across the Property, except in
all cases in material compliance with Environmental Requirements
and only in the course of legitimate business operations at the
Property; (iii) to Grantor's knowledge, no Hazardous Substances
are presently constructed, deposited, stored, or otherwise
located on, under, in or about any Property except in material
compliance with Environmental Requirements; (iv) to Grantor's
knowledge, no Hazardous Substances have migrated from any
Property upon or beneath other properties which would reasonably
be expected to result in material liability for Grantor; and (v)
to Grantor's knowledge, no Hazardous Substances have migrated or
threaten to migrate from other properties upon, about or beneath
any Property which would reasonably be expected to result in
material liability for Grantor.
(b) Covenants. Subject to Grantor's right to contest
under Section 7(c) hereof, Grantor covenants and agrees with
Beneficiary that it shall comply with all Environmental Laws. If
at any time during the continuance of the Lien of this Mortgage,
a Governmental Authority having jurisdiction over the Trust
Estate requires remedial action to correct the presence of
Hazardous Materials in, around, or under any Property (an
"Environmental Event"), Grantor shall deliver prompt notice of
the occurrence of such Environmental Event to Beneficiary and the
Rating Agency. Within (30) thirty days after Grantor has
knowledge of the occurrence of an Environmental Event, Grantor
shall deliver to Beneficiary an Officer's Certificate (an
"Environmental Certificate") identifying the Environmental Event
in reasonable detail and setting forth the proposed remedial
action, if any.
(c) Environmental Indemnification. Grantor shall
protect, indemnify, save, defend and hold harmless Beneficiary
and all officers, directors, stockholders, partners, employees,
successors and assigns thereof (collectively, the "Indemnified
Environmental Parties") from and against any and all liability,
loss, damage, actions, causes of action, costs or expenses
whatsoever (including reasonable attorneys' fees and expenses)
and any and all claims, suits and judgments which any Indemnified
Environmental Party may suffer, as a result of or with respect
to: (a) any Environmental Claim relating to or arising from such
Property; (b) the violation of any Environmental Law in
connection with such Property; (c) any release, spill, or the
presence of any Hazardous Substances affecting such Property; and
(d) the presence at, in, on or under, or the release, escape,
seepage, leakage, discharge or migration at or from, such
Property of any Hazardous Substances, whether or not such
condition was known or unknown to Grantor; provided that, in each
case, Grantor may be relieved of its obligation under this
subsection if any of the matters referred to in clauses (a)
through (d) above did not occur (but need not have been
discovered) prior to (1) the foreclosure of this Mortgage with
respect to such Property, (2) the delivery by Grantor to
Beneficiary of a deed-in-lieu of foreclosure with respect to such
property, or (3) Beneficiary's taking possession and control of
such Property after the occurrence of an Event of Default
hereunder and such obligation is a result of the acts or
omissions of any Indemnified Party. If any such action or other
proceeding shall be brought against Beneficiary, upon written
notice from Grantor to Beneficiary (given reasonably promptly
following Beneficiary's notice to Grantor of such action or
proceeding), Grantor shall be entitled to assume the defense
thereof, at Grantor's expense, with counsel reasonably acceptable
to Beneficiary; provided, however, Beneficiary may, at its own
expense, retain separate counsel to participate in such defense,
but such participation shall not be deemed to give Beneficiary a
right to control such defense, which right Grantor expressly
retains. Notwithstanding the foregoing, each Indemnified
Environmental Party shall have the right to employ separate
counsel at Grantor's expense if, in the reasonable opinion of
legal counsel, a conflict or potential conflict exists between
the Indemnified Environmental Party and Grantor that would make
such separate representation advisable.
41. Recourse Nature of Certain Indemnifications.
Notwithstanding anything to the contrary provided in this
Mortgage or in any other Loan Document, the indemnification
provided in Section 40(c) hereof shall be fully recourse to
Grantor (but not to (i) any Affiliate of Grantor, (ii) any Person
owning directly or indirectly, any legal or beneficial interest
in Grantor or any Affiliate of Grantor, or (iii) any partner,
principal, officer, controlling person, beneficiary, trustee,
advisor, shareholder, employee, agent, Affiliate or director of
Grantor or of any Persons described in clauses (i) through (ii)
above) and shall be independent of, and shall survive, the
discharge of the Indebtedness, the release of the Lien created
under this Mortgage, and/or the conveyance of title to any
Property to Beneficiary or any purchaser or designee in
connection with a foreclosure of this Mortgage or conveyance in
lieu of foreclosure.
42. Counterparts. This Mortgage may be executed in
one or more counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the
same instrument.
43. Merger, Conversion, Consolidation or Succession to
Business of Beneficiary. Any corporation into which Beneficiary
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which Beneficiary shall be a party, or any
corporation succeeding to all or substantially all the corporate
trust business of Beneficiary, shall be the successor of
Beneficiary hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties
hereto. Beneficiary shall provide the Rating Agency with written
notice of any merger or conversion to be undertaken pursuant to
this Section 43 no less than 30 days prior to such merger or
conversion.
44. No Endorsement. Beneficiary shall not become or
be considered to be an endorser, co-maker or co-obligor on any
Notes or on any obligation of Grantor secured by this Mortgage or
otherwise.
45. Substitute Property.
(a) Generally. At any time and from time to time,
Grantor may, subject to the conditions in this Section 45,
substitute a property (a "Substitute Property") for an existing
Property up to a maximum of five such Properties (a "Replaced
Property") or Defeasance Collateral. From and after the
substitution of a Substitute Property in accordance herewith,
such Substitute Property shall thereafter be deemed a Property
under this Mortgage, and the Allocated Loan Amount of such
Substitute Property shall be the same as the Allocated Loan
Amount of the Replaced Property, except as otherwise provided in
Section 46(b) below. In the event of a substitution, the Notes
shall remain in full force and effect, and either a new Mortgage
encumbering the Substitute Property (the "Substitute Mortgage")
shall be executed and delivered by Grantor to Beneficiary or a
counterpart original of this Mortgage, modified as necessary,
shall be executed and delivered by Grantor to Beneficiary to
encumber the Substitute Property and the remainder of the Trust
Estate. Concurrently with the completion of all steps necessary
to substitute a Substitute Property as provided herein,
Beneficiary shall execute or cause to be executed all such
documents requested by Grantor as are necessary or appropriate
(i) to release all Liens granted to Beneficiary and affecting the
Replaced Property, and (ii) to cause the Substitute Mortgage to
be cross-collateralized and cross-defaulted with this Mortgage.
Grantor shall prepare at its expense all such documents.
(b) Substitute Property Requirements. To qualify as a
Substitute Property, the property must, at the time of
substitution:
(i) be a property as to which Grantor will hold
good and insurable fee or, subject to the Beneficiary's
right to approve the terms and provisions of any ground
lease, leasehold title free and clear of any lien or
other encumbrance except for Permitted Encumbrances and
easements, restrictive covenants and other title
exceptions and Leases which do not have a material
adverse effect on the utility or value of such property
for its current use;
(ii) be free and clear, as shall be demonstrated
in an environmental report issued by a recognized
environmental consultant at Grantor's expense and in
form and substance reasonably acceptable to
Beneficiary, of Hazardous Substance except for nominal
amounts of any such substances commonly incorporated in
or used in the operation of properties similar to the
Properties (in either case in compliance with all
Environmental Laws), all as certified by such
consultant;
(iii) be in reasonably good repair and condition,
as shall be certified by an Officer's Certificate of
Grantor in form and substance reasonably acceptable to
Beneficiary;
(iv) be in compliance, in all material respects,
with Legal Requirements and Insurance Requirements, as
shall be certified in an Officer's Certificate in form
and substance reasonably acceptable to Beneficiary;
(v) (as evidenced by two appraisals prepared by
Independent Appraisers selected by Beneficiary
performed at Grantor's expense) have a fair market
value and Net Operating Income per square foot no less
than the greater of
(1) the fair market value and Net Operating
Income per square foot of the Replaced
Property as of the date hereof, and
(2) the fair market value and Net Operating
Income per square foot of the Replaced
Property immediately prior to the
Substitution.
(c) Conditions to Substitution. In addition to the
conditions in this Section 45 above, substitution of any Property
pursuant to this Section 45 shall be subject to the satisfaction
of the following, all of which shall be prepared or obtained at
Grantor's expense:
(i) receipt by Beneficiary and the Rating Agency
of written notice thereof from Grantor at least thirty
(30) days before the date of the proposed substitution
(the "Substitution Date"), together with (1) written
evidence that the property proposed to be a Substitute
Property complies with Section 45 above and (2) such
other information, including financial information, as
Beneficiary or the Rating Agency may request;
(ii) Beneficiary's receipt of written affirmation
from the Rating Agency that the credit ratings of the
Certificates immediately prior to such substitution
will not be qualified, downgraded or withdrawn as a
result of such substitution, which affirmation may be
granted or withheld in the Rating Agency's sole and
absolute discretion;
(iii) delivery to Beneficiary of an Opinion of
Counsel opining as to the enforceability of the
Substitute Mortgage with respect to the Substitute
Property in substantially the same form and substance
as the opinion concerning enforceability originally
delivered at the Closing Date in connection with the
Replaced Property, with reasonable allowance for
variations in applicable state law and a
Nondisqualification Opinion and a Tax Opinion;
(iv) no Event of Default shall have occurred and
be continuing;
(v) the representations and warranties set forth
in this Mortgage and the Loan Documents applicable to
the Replaced Property shall be true and correct (except
as to title exceptions) as to the Substitute Property
on the Substitution Date in all material respects;
(vi) delivery to Beneficiary of a copy of the
Partnership Agreement or other organizational
documentation of Grantor and all amendments thereto, or
in the case of any leasehold property a copy of the
ground lease, in each case certified as true, complete
and correct by the managing general partner; a
certificate from the Secretary of State or other
applicable state official or officer in Grantor's
jurisdiction of formation certifying that it is duly
formed and in good standing (with tax clearance, if
applicable), if available, certificates from the
Secretary of State of the state in which the Substitute
Property is located, certifying as to Grantor's good
standing as a limited partnership in such state (with
tax clearance, if applicable); delivery by the managing
general partner of Grantor of a certificate, dated the
Substitution Date and signed on behalf of its Secretary
or Assistant Secretary, certifying the names of the
officers of the managing general partner authorized to
execute and deliver, in the name and on behalf of
Grantor, the Substitute Mortgage and the other Loan
Documents to which Grantor is a party, together with
the original (not photocopied) signatures of such
officers;
(vii) delivery to Beneficiary of an Officer's
Certificate certifying to the veracity of the
statements in Subsections 45(a)(ii)(B), 45(a)(ii)(C),
45(a)(ii)(D), 45(a)(iii)(E) and 45(a)(iii)(F) hereof;
(viii) delivery to Beneficiary in form and
substance satisfactory to Beneficiary of originals of
the following:
(1) a Substitute Mortgage or an amendment to
this Mortgage, duly executed and acknowledged
by Grantor;
(2) a substitute assignment of leases and
rents with respect to the Substitute Property
or an amendment to the Assignment of Leases,
duly executed and acknowledged by Grantor,
assigning and transferring to Beneficiary a
first priority security interest in all
rents, revenues, issues, profits and proceeds
arising under the Leases relating to the
Substitute Property, subject to the Permitted
Encumbrances;
(3) a title insurance policy issued by the
Title Company or another title insurance
company reasonably acceptable to Beneficiary
in the amount equal to the Allocated Loan
Amount (so long as a "tie-in" endorsement
shall be available, otherwise in the amount
of 125% of the Allocated Loan Amount)
containing such affirmative coverage
reasonably acceptable to Beneficiary
available at commercially reasonable rates
insuring that the Substitute Mortgage creates
a valid first lien on Grantor's fee title in
the Substitute Property subject to the
Permitted Encumbrances, or if the
substitution is accomplished by modification
of this Mortgage an endorsement to the
original title policy insuring this Mortgage
and an original title insurance policy
endorsement, if available at a nominal cost
(without additional premium), insuring that
Beneficiary's perfected first priority
interest in and to the other Properties in
the Trust Estate is unaffected by such
modification;
(4) a current as-built land title survey and
a certificate from a professional licensed
land surveyor with respect to such Substitute
Property, certified to the Title Company and
Beneficiary, and showing the location,
dimensions and area of each parcel of the
Substitute Property, including all existing
buildings and improvements, utilities,
parking areas and spaces, internal streets,
if any, external streets, rights-of-way, as
well as any easements, setback violations or
encroachments on such Substitute Property and
identifying each item with its corresponding
exception, if any, in the title policy re-
lating thereto and otherwise reasonably
acceptable to Beneficiary. Each survey shall
contain the original signature and seal of
the surveyor and any additional matter re-
quired by the title companies. In addition,
Grantor shall provide with respect to each
Substitute Property a certificate of a
professional land surveyor to the effect that
the Improvements located upon such Substitute
Property are not located in a flood plain
area, or, if such Substitute Property is in a
flood plain area, Grantor shall deliver on
the Closing Date evidence of flood insurance;
(5) Uniform Commercial Code financing state-
ments (Form UCC-1) (or other forms required
in any jurisdiction), duly executed by
Grantor, covering all fixtures, Building
Equipment and other personal property collat-
eral and all proceeds thereof, naming Grantor
as debtor and Beneficiary as secured party;
(6) insurance certificates issued by
insurance companies reasonably satisfactory
to Beneficiary evidencing the insurance
coverage required under Section 5 hereof; and
(7) payment of all costs and expenses
anticipated to be incurred in connection with
such substitution, including (x)
reimbursement of Beneficiary's reasonable
costs, title premiums, mortgage recording
taxes, transfer taxes, recording fees, and
reasonable attorneys' fees and disbursements
actually incurred, and (y) reimbursement of
Servicer's reasonable internal costs and
expenses; provided, that such costs and
expenses shall not exceed an amount equal to
1% of the Allocated Loan Amount of the
Substituted Property.
46. Defeasance.
(a) With respect to either (i) a Property Release
with respect to which Grantor proposes to deliver Defeasance Col-
lateral pursuant to Section 38(b) hereof or (ii) a release of the
Lien of this Mortgage with respect to all of the Properties
pursuant to Section 38(b) hereof other than in connection with a
total prepayment or repayment on the Maturity Date (each, a
"Defeasance"), the Grantor shall deposit Defeasance Collateral in
accordance with subsection (b) below to the Defeasance Collateral
Account. In no event shall the deliverance of Defeasance
Collateral cause the Grantor to be released from its obligations
to make payments of principal and interest on the Notes.
(b) The Defeasance shall be permitted at such
time as all of the following events shall have occurred:
(i) the Defeasance Collateral Account shall
have been established pursuant to Section 47 hereof;
(ii) if the Mortgage Loan is held by a
REMIC, a period of more than two years shall have elapsed
since the date on which the Mortgage Loan is deposited into
such REMIC;
(iii) Grantor shall have delivered or caused
to have been delivered to Beneficiary the Defeasance
Collateral for deposit into the Defeasance Collateral
Account such that it will satisfy either (A) the Minimum
Defeasance Collateral Requirement with respect to a release
of less than all of the Properties or (B) the Total
Defeasance Collateral Requirement with respect to a release
of all of the Properties, as the case may be, at the time of
delivery and all such Defeasance Collateral, if in regis-
tered form, shall be registered in the name of Beneficiary
or its nominee for the benefit of the Holders (and, if
registered in nominee name endorsed to Beneficiary or in
blank) and, if issued in book-entry form, the name of
Beneficiary or its nominee shall appear as the owner of such
securities for the benefit of the Holders on the books of
the Federal Reserve Bank or other party maintaining such
book-entry system;
(iv) Grantor shall have granted or caused to
have been granted to Beneficiary for the ratable benefit of
the Holders a valid perfected first priority security inter-
est in the Defeasance Collateral and all proceeds thereof;
(v) Grantor shall have delivered or caused
to be delivered to Beneficiary an Officers' Certificate,
dated as of the date of such delivery (x) that sets forth
the aggregate face amount or unpaid principal amount, in-
terest rate and maturity of all such Defeasance Collateral,
a copy of the transaction journal, if any, or such other
notification, if any, published by or on behalf of the
Federal Reserve Bank or other party maintaining a book-entry
system advising that Beneficiary or its nominee is the owner
of such securities issued in book-entry form, and (y) to the
following effect that states that:
(A) Grantor owns the Defeasance Collateral
being delivered to Beneficiary free and clear of
any and all Liens, security interests or other
encumbrances, and has not assigned any interest or
participation therein (or, if any such interest or
participation has been assigned, it has been re-
leased), and Grantor has full power and authority
to pledge such Defeasance Collateral to Benefi-
ciary;
(B) such Defeasance Collateral consists
solely of Defeasance Eligible Investments;
(C) such Defeasance Collateral satisfies
the Minimum Defeasance Collateral Requirement or
the Total Defeasance Collateral Requirement, as
the case may be, determined as of the date of de-
livery;
(D) the Defeasance contemplated hereby will
not give rise to an Event of Default; and
(E) the information set forth in the sched-
ule attached to such Officers' Certificate is cor-
rect and complete as of the date of delivery (such
schedule, which shall be attached to and form a
part of such Officers' Certificate, shall demon-
strate satisfaction of the requirement set forth
in clause (C) above, in a form reasonably
acceptable to Beneficiary);
(vi) Grantor shall have delivered or caused
to be delivered to Beneficiary (A) an Opinion of Counsel
that Beneficiary has been granted a perfected security
interest in the Defeasance Collateral, (B) a Tax Opinion,
(C) if the Mortgage Loan at such time is included in a
REMIC, a Nondisqualification Opinion, and (D) in the event
the aggregate of amounts previously defeased and currently
subject to a Defeasance equals or exceeds in the aggregate
an amount equal to 40% of the Loan Amount, an additional
Opinion of Counsel, to the effect that Beneficiary will not
be required to be registered under the Investment Company
Act as a result of such Defeasance; and
(vii) Grantor shall have delivered or cause
to be delivered to Beneficiary a statement confirming that
the Defeasance Collateral is sufficient to satisfy (A) the
Minimum Defeasance Collateral Requirement with respect to a
release of less than all of the Properties or (B) the Total
Defeasance Collateral Requirement with respect to a release
of all the Properties, as the case may be, from either an
Independent Accountant, an investment banking firm, a
commercial bank, or other third party having expertise in
buying, selling or evaluating securities that would qualify
as Defeasance Eligible Investments; and
(viii) Grantor shall have delivered or
caused to be delivered to Beneficiary such other documents and
certificates as Beneficiary may reasonably request in connection
with demonstrating that Grantor has satisfied the provisions of
this Section 46(b).
(c) For purposes of determining whether suffi-
cient amounts are on deposit in the Defeasance Collateral
Account, there shall be included only payments of principal and
predetermined and certain income thereon (determined without
regard to any reinvestment of such amounts) that will occur on a
stated date for a stated payment on or before the dates when such
amounts may be required to be applied to pay the principal and
interest when due on the Notes.
(d) If at any time prior to the Defeasance of the
Lien of this Mortgage with respect to all of the Properties Gran-
tor shall have delivered Defeasance Collateral to Beneficiary,
Grantor, at its sole option, may elect to substitute one or more
Substitute Properties for all or any portion of the Defeasance
Collateral. If Grantor shall so elect, Grantor shall comply with
the provisions of Section 45 hereof as to the Substitute Property
and, upon compliance with such Section 45, Beneficiary shall
deliver to Grantor Defeasance Collateral, free and clear of all
Liens, in an amount equal to the Minimum Defeasance Collateral
Requirement that would have been attributable to such Substitute
Property as of the Substitution Date.
(e) Grantor shall have the right to transfer its
interest in and to any Defeasance Collateral pledged to the
Agent, together with its obligations in respect of the Loan to
any Person (a "Successor Grantor") provided, that (i) Grantor
shall have delivered a Tax Opinion to Beneficiary in respect of
such transfer; (ii) such Successor Grantor assumes the
obligations of Grantor under this Mortgage; (iii) such Successor
Grantor complies with the covenants set forth in Section 4 and
Section 31(1) of this Mortgage; and (iv) Grantor shall have
delivered a Nonconsolidation Opinion in respect of such Successor
Grantor to the Rating Agency and the Beneficiary.
47. Defeasance Collateral Account.
(a) On or before the date on which Grantor
delivers Defeasance Collateral to Beneficiary pursuant to Section
46 hereof, Grantor shall open at any Approved Bank or Banks at
the time and acting as custodian for Beneficiary, a defeasance
collateral account (the "Defeasance Collateral Account") which
shall at all times be an Eligible Account (as defined in the Cash
Collateral Agreement), in which Grantor shall grant to
Beneficiary or reconfirm the grant to Beneficiary of a security
interest as part of the Trust Estate hereunder. Should Grantor
open the Defeasance Collateral Account at a bank or banks other
than an Approved Bank, such Defeasance Collateral Account must be
maintained as a segregated trust account. The Defeasance Collat-
eral Account shall contain (i) all Defeasance Collateral deliv-
ered by Grantor pursuant to Sections 38, 46 and 47 hereof, (ii)
all payments received on Defeasance Collateral held in the
Defeasance Collateral Account and (iii) all income or other gains
from investment of moneys or other property deposited in the
Defeasance Collateral Account, provided, however, that (x) any
sums earned on any Defeasance Collateral, which sums were not
included in the determination of the Minimum Defeasance
Collateral Requirement or the Total Defeasance Collateral, as the
case may be, shall be paid monthly by Beneficiary into the
Collection Account to be held in accordance with the Cash Col-
lateral Agreement, and (y) any sums earned on any Defeasance
Collateral representing the difference between the assumed
interest on the Notes at the Default Rate and the lesser, if
applicable, of the actual interest on the Notes for the quarter
prior to the preceding Due Date shall be paid quarterly to the
Collection Account. All such amounts, including all income from
the investment or reinvestment thereof, shall be held by Bene-
ficiary as part of the Trust Estate, subject to withdrawal by
Beneficiary for the purposes set forth in this Section 47.
Grantor shall be the owner of the Defeasance Collateral Account
and shall report all income accrued on Defeasance Collateral for
federal, state and local income tax purposes in its income tax
return.
(b) Beneficiary shall withdraw, draw on or
collect and apply the amounts that are on deposit in the Defea-
sance Collateral Account to pay when due the principal and all
installments of interest and principal on the Notes and other
amounts due under the Loan Documents.
(c) Funds and other property in the Defeasance
Collateral Account shall not be commingled with any other monies
or property of Grantor or any Affiliate of Grantor.
(d) Beneficiary shall not in any way be held
liable by reason of any insufficiency in the Defeasance Collat-
eral Account.
48. Reserves. (a) On the 20th day of July, 1996 and
on the 20th day of every month thereafter Beneficiary will
instruct Agent to withdraw from the Collection Account to the
extent funds are available therefor and deposit into the Capital
and TI Reserve Account, a sum equal to the result obtained after
dividing (i) an amount equal to $0.25 per square foot of the
gross leasable area of the Mortgaged Property by (ii) twelve
(such funds, together with all investment income earned thereon,
are referred to herein as the "Monthly Capital and TI Reserve
Amount"); provided, that to the extent funds are not available in
a given month to deposit such amount in the Capital and TI
Reserve Account, to the extent funds are available on deposit in
the Collection Account, the amount of such monthly shortfall
shall be deposited in the next succeeding month or any month
thereafter until such time as the monthly shortfall has been
reduced to zero. Portions of the Capital and TI Reserve Account
shall be disbursed by Agent to Grantor pursuant to instructions
from Beneficiary not more frequently than once per month,
provided no Event of Default shall have occurred and be
continuing, upon delivery by Grantor to Beneficiary of an
Officer's Certificate stating that Grantor has incurred costs
associated with capital improvements, repairs, alterations,
tenant improvements and leasing commissions as described therein,
and pursuant to invoices attached thereto, other than those set
forth on Schedule 3. Within five (5) Business Days of receipt of
such certification, Beneficiary shall instruct Agent to disburse
to Grantor an amount equal to that requested by Grantor.
(b) The monthly amount to be deposited each month
in the Capital and TI Reserve Account has been initially
determined based upon a gross leasable area (the "GLA") for all
of the Properties of 3,925,301 square feet. If the GLA decreases
or increases by an amount greater than 1%, as indicated in the
leasing reports delivered by the Grantor to the Beneficiary and
the Rating Agency pursuant to Section 14(c), the monthly amount
to be deposited in the Capital and TI Reserve Account pursuant to
Section 48(a) shall be recalculated to reflect the increase or
decrease in GLA and the recalculated amount shall be deposited in
the Capital and TI Reserve Account commencing with the monthly
deposit to be made on the 20th day of the first month occurring
after the delivery of such leasing report.
(c) On the 20th day of July, 1996 and on the 20th
day of every month thereafter, Beneficiary will instruct Agent to
withdraw from the Collection Account to the extent funds are
available therefor and deposit into the Sinking Fund Account
established pursuant to the Cash Collateral Agreement, the sum of
$11,000, until such time as the aggregate amount in the Sinking
Fund Account, together with all investment income earned thereon
equals or exceeds the sum of $786,000. Amounts on deposit in the
Sinking Fund Account shall, unless an Event of Default has
occurred and is continuing, be returned to the Grantor on the
earlier of (i) the date of the release or substitution of the
Mortgaged Property located in Orange, Connecticut in accordance
with the provisions of this Mortgage and (ii) repayment in full
of the Loan. If an Event of Default shall have occurred and be
continuing, amounts deposited in the Sinking Fund should be
applied as provided in the Cash Collateral Agreement.
49. Modification of Operating Agreements. Grantor
shall be permitted to enter into amendments and modifications to
any Operating Agreement without Beneficiary's consent provided
that (a) no Event of Default has occurred and is then continuing,
and (b) the execution of such amendment or modification will not
have a material adverse effect on the operation or value of the
subject Property (each as certified in an Officer's Certificate
delivered to Beneficiary).
50. Substitute or Successor Trustee. Trustee may
resign by an instrument in writing addressed to Beneficiary, or
Trustee may be removed at any time with or without cause by
Beneficiary. In case of death, resignation, removal or
disqualification of Trustee or if for any reason Beneficiary
shall deem it desirable to appoint a substitute or successor
trustee to act instead of the herein named trustee or any
substitute or successor trustee, then Beneficiary shall have the
right and is hereby authorized and empowered to appoint a
successor trustee, or a substitute trustee, without other
formality than appointment and designation in writing executed
and acknowledged by Beneficiary and, if required by applicable
law to provide constructive notice, recorded in the county or
counties where the Properties are located, and the authority
hereby conferred shall extend to the appointment of other
successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full or until the
Properties are sold hereunder. In the event the indebtedness
secured hereby is owned by more than one person or entity, the
holder or holders of not less than a majority in the amount of
such indebtedness shall have the right and authority to make the
appointment of a successor or substitute trustee provided for in
the preceding sentence. Such appointment and designation by
Beneficiary or by the holder or holders of not less than a
majority of the indebtedness secured hereby shall be full
evidence of the right and authority to make the same and of all
facts therein recited. If Beneficiary is a corporation or a
nationally chartered bank and such appointment is executed in its
behalf by an officer of such corporation or nationally chartered
bank, such appointment shall be conclusively presumed to be
executed with authority and shall be valid and sufficient without
proof of any action by the board of directors or any superior
officer of the corporation. Upon the making of any such
appointment and designation, all of the estate and title of
Trustee in the Properties shall vest in the named successor or
substitute trustee and he shall thereupon succeed to and shall
hold, possess and execute all the rights, powers, privileges,
immunities and duties herein conferred upon Trustee; but
nevertheless, upon the written request of Beneficiary or of the
successor or substitute trustee, Trustee ceasing to act shall
execute and deliver an instrument transferring to such successor
or substitute trustee all of the estate and title in the
Properties of Trustee so ceasing to act, together with all
rights, powers, privileges, immunities and duties herein
conferred upon Trustee, and shall duly assign, transfer and
deliver any of the properties and monies held by said Trustee
hereunder to said successor or substitute trustee. All
references herein to Trustee shall be deemed to refer to Trustee
(including any successor or substitute appointed and designated
as herein provided) from time to time acting hereunder. Grantor
hereby ratifies and confirms any and all acts which the herein
named Trustee or his successor or successors, substitute or
substitutes, in this trust, shall do lawfully by virtue hereof.
51. Liability of Trustee. Trustee shall not be liable
for any error of judgment or act done by Trustee in good faith,
or be otherwise responsible or accountable under any
circumstances whatsoever, except for Trustee's gross negligence
or willful misconduct. Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by him hereunder,
believed by him in good faith to be genuine. All monies received
by Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, and
shall be segregated from all other monies, and Trustee shall be
under no liability for interest on any monies received by him
hereunder. Grantor will reimburse Trustee for, and indemnify and
save him harmless against, any and all liability and expenses
which may be incurred by him in the performance of his duties
hereunder.
52. Beneficiary and Trustee.
(a) The Trustees accept the trusts hereby created and
agree to perform the duties herein required of them upon the
terms and conditions hereof.
The duties and obligations of the Trustees in respect
of this Mortgage shall be as set forth in this Section 52.
(i) Except upon the occurrence and during
the continuance of an Event of Default actually known to
Beneficiary:
(A) The Trustees shall undertake to perform
such duties and obligations and only such duties and obliga-
tions as are specifically set forth in this Mortgage and the
other Loan Documents or as otherwise directed by a letter of
direction from Beneficiary, and no implied covenants or
obligations shall be read into this Mortgage or the other
Loan Documents against the Trustees; and
(B) In the absence of bad faith, the
Trustees may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustees and conforming to the requirements of this Mortgage
and the other Loan Documents; but in the case of any such
certificates or opinions which by any provision hereof or
thereof are specifically required to be furnished to
Beneficiary, the Trustees shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Mortgage and the other Loan Documents.
(ii) In case an Event of Default known to
Beneficiary has occurred and is continuing, the Trustees
shall exercise the rights and powers vested in the Trustees
by this Mortgage and the other Loan Documents, with reason-
able care.
(iii) No provision of this Mortgage shall be
construed to relieve the Trustees from liability for their
own negligence or willful misconduct, except that:
(A) Section 52(a) hereof shall not be
construed to limit the effect of Section 52(b) hereof;
(B) The Trustees shall not be liable for any
error of judgment made in good faith by an officer of the
Trustees, unless it shall be proved that the Trustees were
negligent in ascertaining the pertinent facts; and
(C) The Trustees shall not be liable with
respect to any action taken or omitted to be taken in good
faith in accordance with the direction of the Holders
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustees, or
exercising any trust or power conferred upon the Trustees
under this Mortgage.
(iv) Whether or not therein expressly so
provided, every provision of this Mortgage relating to the
conduct or affecting the liability of or affording pro-
tection to the Trustees shall be subject to the provisions
of this Section 52(b).
(v) No provision of this Mortgage shall re-
quire the Trustees to expend or risk their own funds or
otherwise incur any personal financial liability in the per-
formance of any of their duties hereunder, or in the
exercise of any of their rights or powers, if they shall
have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability
is not reasonably assured to them.
(b) At any time or times for the purpose of
meeting the Legal Requirements of any jurisdiction in which any
part of a Trust Estate may at the time be located, Beneficiary
shall have the power to appoint and, upon the written request of
Beneficiary, Grantor shall for such purpose join with Beneficiary
in the execution, delivery and performance of all instruments and
agreements reasonably necessary or proper to appoint one or more
Persons reasonably approved by Beneficiary to act as trustee
pursuant to this Mortgage in such jurisdiction for such portion
of the Trust Estate located in such jurisdiction (the
"Jurisdictional Trustee") with such powers as are provided in the
instrument of appointment which shall expressly designate the
Property affected and the capacity of the appointee as a
Jurisdictional Trustee, and to vest in such Person or Persons in
the capacity aforesaid, any property, title, right or power
deemed necessary or desirable, subject to the other provisions of
this Section 52. If Grantor does not join in such appointment
within fifteen (15) days after the receipt by it of a request so
to do, or in case an Event of Default has occurred and is
continuing, Beneficiary alone shall make such appointment.
Should any written instrument from Grantor be reasonably required
by any Jurisdictional Trustee so appointed for more fully
confirming to such Jurisdictional Trustee such property, title,
right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by Grantor.
(i) Every Jurisdictional Trustee shall, to
the extent permitted by law, but to such extent only, be
appointed subject to the terms set forth in Section
52(b)(iii) hereof.
(ii) To the extent permitted by law, but to
such extent only, the Jurisdictional Trustee is appointed
herein subject to the following terms, namely:
(A) Subject to the terms hereof and to the
extent permitted by law, all rights, powers, duties and
obligations under this Mortgage granted to or imposed upon
Beneficiary and the Jurisdictional Trustee shall be
exercised solely by Beneficiary.
(B) The rights, powers, duties and obli-
gations hereby conferred or imposed upon Beneficiary and the
Jurisdictional Trustee in respect of any Property covered by
such appointment shall be exercised or performed by
Beneficiary separately, or at the election of Beneficiary by
Beneficiary and the Jurisdictional Trustee jointly, except
to the extent that (i) under any law of any jurisdiction in
which any particular act is to be performed by Beneficiary
and/or the Jurisdictional Trustee, Beneficiary shall be
incompetent or unqualified to perform such act or (ii)
Beneficiary shall deem it inconvenient or undesirable to
perform such act, then in any such event such rights,
powers, duties and obligations shall be exercised and
performed by the Jurisdictional Trustee at the written
direction of Beneficiary.
(C) Beneficiary at any time, by an instru-
ment in writing executed by it, may accept the resignation
of or remove any Jurisdictional Trustee. Upon the written
request of Beneficiary, Grantor shall join with Beneficiary
in the execution, delivery and performance of all instru-
ments and agreements reasonably necessary or proper to
effectuate such resignation or removal. A successor to the
Jurisdictional Trustee so resigned or removed may be
appointed in the manner provided in this Section 52.
(D) Upon the resignation or removal of any
Jurisdictional Trustee, Beneficiary shall have the power to
appoint and, upon the written request of Beneficiary,
Grantor shall, for such purpose, join with Beneficiary in
the execution, delivery and performance of all instruments
and agreements reasonably necessary or proper to appoint one
or more Persons reasonably approved by Beneficiary to act as
successor Jurisdictional Trustee together with Beneficiary
of all or any part of the Trust Estate so designated, with
such power as provided for in this Section 52, and to vest
in such Person or Persons in the capacity aforesaid, any
property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section
52. If Grantor does not join in such appointment, within
fifteen (15) days after the receipt by it of a request so to
do, or in case an Event of Default has occurred and is
continuing, Beneficiary acting alone shall make such
appointment. Should any written instrument from Grantor be
required by any successor Jurisdictional Trustee so
appointed for more fully confirming to such trustee such
property, title, right or power, any and all such instru-
ments shall, on request, be executed, acknowledged and
delivered by Grantor.
(E) No Jurisdictional Trustee hereunder
shall be personally liable by reason of any act or omission
of Beneficiary or any other trustee hereunder and Bene-
ficiary shall not be personally liable by reason of any act
or omission of the Jurisdictional Trustee; neither shall
knowledge of Beneficiary be imputed to the Jurisdictional
Trustee nor shall knowledge of the Jurisdictional Trustee be
imputed to Beneficiary.
(F) Any notice delivered to Beneficiary
shall be deemed to have been sufficiently delivered without
any delivery to the Jurisdictional Trustee.
(G) Any obligation of Grantor to file or
give notices, reports or information to Beneficiary here-
under shall be satisfied by the delivery thereof to Benefi-
ciary.
(H) Any successor to the Jurisdictional
Trustee (herein, called the "Successor Jurisdictional Trust-
ee") shall execute, acknowledge and deliver to its
predecessor (herein called the "Predecessor Jurisdictional
Trustee"), Beneficiary and Grantor, an instrument accepting
such appointment. Thereupon, the Successor Jurisdictional
Trustee shall, without any further act, deed or conveyance,
become vested with the estates, properties, rights, powers,
duties and trusts of the Predecessor Jurisdictional Trustee
in the trusts created by this Mortgage, with the same effect
as if originally named as Jurisdictional Trustee. At the
written request of Grantor, Beneficiary or the Successor
Jurisdictional Trustee, the Predecessor Jurisdictional
Trustee shall execute and deliver an instrument, in record-
able form, transferring to the Successor Jurisdictional
Trustee, upon the trusts herein expressed, the Trust Estate
and shall duly assign transfer, deliver and pay over to the
Successor Jurisdictional Trustee, any property and money
subject to the Lien hereof held by it. If any written
instrument from Grantor or Beneficiary be required by the
Successor Jurisdictional Trustee for more fully and
certainly vesting in and confirming to the Successor
Jurisdictional Trustee such estates, properties, rights,
powers and trusts, then, at the request of the Successor
Jurisdictional Trustee, all such instruments shall be made,
executed, acknowledged and delivered by Grantor or
Beneficiary to the Successor Jurisdictional Trustee.
(c) Grantor covenants and agrees:
(i) to pay to the Trustees from time to time
reasonable compensation for all services rendered by them
hereunder;
(ii) to reimburse the Trustees upon request
for all reasonable expenses, disbursements and advances in-
curred or made by it or them in accordance with any
provision of this Mortgage (including reasonable
compensation, expenses and disbursements of agents and
counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
(iii) to indemnify the Trustees for, and to
hold each harmless against, any loss, liability or expense
incurred without negligence, willful misconduct or bad faith
on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts
hereunder or the enforcement of remedies hereunder including
the costs and expenses of defending against any claim or
liability in connection with the exercise or performance of
any of the powers or duties hereunder or thereunder (except
any liability incurred by Trustee and the Jurisdictional
Trustee with negligence, willful misconduct or bad faith on
its or their part).
The obligations of Grantor under this Section 52(c) to compensate
or indemnify the Trustees and to pay or reimburse the Trustees
for expenses, disbursements and advances shall constitute
additional Indebtedness hereunder and shall survive the
satisfaction and discharge of this Mortgage. When the Trustees
or Beneficiary incur expenses or render services after an
occurrence of an Event of Default hereunder, the expenses and
compensation for services are intended to constitute expenses of
administration under any bankruptcy law.
(d) To the extent permitted by law, but to such
extent only, the Individual Trustee is appointed herein by
Beneficiary subject to the following terms, namely:
(i) Subject to the terms hereof and to the
extent permitted by law, all the rights, powers, duties and
obligations under this Mortgage granted to or imposed upon
the Individual Trustee shall be exercised solely by
Beneficiary except as herein provided.
(ii) The rights, powers, duties and obliga-
tions hereby conferred or imposed upon the Individual
Trustee in respect of any property covered by such
appointment shall be exercised or performed by Beneficiary
separately, or at the election of Beneficiary by Beneficiary
and the Individual Trustee jointly, except to the extent
that (i) under any law of any jurisdiction in which any
particular act is to be performed by the Individual Trustee,
Beneficiary shall be incompetent or unqualified to perform
such act or (ii) Beneficiary shall deem it inconvenient or
undesirable to perform such act, then in any such event such
rights, powers, duties and obligations shall be exercised
and performed by the Individual Trustee at the written
direction of Beneficiary.
(iii) Beneficiary at any time, by an instru-
ment in writing executed by it, may accept the resignation
of or remove any Individual Trustee. Upon the written
request of Beneficiary, Grantor shall join with Beneficiary
in the execution, delivery and performance of all instru-
ments and agreements reasonably necessary or proper to
effectuate such resignation or removal. A successor to the
Individual Trustee so resigned or removed may be appointed
in the manner provided in this Section 52.
(iv) Upon the death, resignation or removal
of any Individual Trustee, Beneficiary shall have power to
appoint and, upon the written request of Beneficiary,
Grantor shall, for such purpose, join with Beneficiary in
the execution, delivery and performance of all instruments
and agreements reasonably necessary or proper to appoint,
one or more persons approved by Beneficiary to act as
Successor Individual Trustee together with Beneficiary of
all or any part of the Trust Estate, with such powers as
provided for in this Section 52, and to vest in such person
or persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the
other provisions of this Section 52. If Grantor does not
join in such appointment, within fifteen (15) days after the
receipt by it of a request so to do, or in case an Event of
Default has occurred and is continuing, Beneficiary acting
alone shall make such appointment.
(v) Should any written instrument from
Grantor be reasonably required by any successor Individual
Trustee so appointed for more fully confirming to such
trustee such property, title, right or power, any and all
such instruments shall, on request, be executed,
acknowledged and delivered by Grantor.
(vi) No Individual Trustee hereunder shall
be personally liable by reason of any act or omission of
Beneficiary or any other Trustee hereunder and Beneficiary
shall not be personally liable by reason of any act or
omission of the Individual Trustee; neither shall knowledge
of Beneficiary be imputed to the Individual Trustee nor
shall knowledge of the Individual Trustee be imputed to
Beneficiary.
(vii) Any notice delivered to Beneficiary
shall be deemed to have been sufficiently delivered without
any delivery to the Individual Trustee.
(viii) Any obligation of Grantor to file or
give notices, reports or information to the Trustees
hereunder shall be satisfied by the delivery thereof to
Beneficiary.
Any successor to the Individual Trustee (herein, in
this subsection called the "Successor Individual Trustee") shall
execute, acknowledge and deliver to his predecessor (herein, in
this subsection, called the "Predecessor Individual Trustee"),
Beneficiary and Grantor, an instrument accepting such appoint-
ment. Thereupon, the Successor Individual Trustee shall, without
any further act, deed or conveyance, become vested with the
estates, properties, rights, powers, duties and trusts of the
Predecessor Individual Trustee in the trusts created by this
Mortgage, with the same effect as if originally named as
Individual Trustee. At the written request of Grantor,
Beneficiary or the Successor Individual Trustee, the Predecessor
Individual Trustee shall execute and deliver an instrument
transferring to the Successor Individual Trustee, upon the trusts
herein expressed, the Trust Estate and shall duly assign, trans-
fer, deliver and pay over to the Successor Individual Trustee,
any property and money subject to the Lien hereof held by him.
If any written instrument from Grantor or Beneficiary be
reasonably required by the Successor Individual Trustee for more
fully and certainly vesting in and confirming to the Successor
Individual Trustee such estates, properties, rights, powers and
trusts, then, at the request of the Successor Individual Trustee,
all such instruments shall be made, executed, acknowledged and
delivered by Grantor or Beneficiary to the Successor Individual
Trustee.
(e) At any time or times, (i) for the purpose of
meeting the Legal Requirements of any jurisdiction in which any
part of a Trust Estate may at the time be located or (ii) if
Beneficiary deems it to be necessary or desirable for the
protection of the interests of the Holders, Beneficiary shall
have the power to appoint, and upon written request of Benefi-
ciary, Grantor shall for such purpose join with Beneficiary in
the execution, delivery and performance of all instruments and
agreements reasonably necessary or proper to appoint, one or more
Persons approved by Beneficiary either to act as co-trustee,
jointly with Beneficiary, of all or any part of the Trust Estate,
or to act as separate trustee of any such property, in either
case with such powers as may be provided in the instrument of
appointment which shall expressly designate the property affected
and the capacity of the appointee as either a co-trustee or
separate trustee, and to vest in such person or persons in the
capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this
Section 52. If Grantor does not join in such appointment within
15 days after the receipt by it of a request so to do, or in case
an Event of Default has occurred and is continuing, Beneficiary
alone shall make such appointment.
Should any written instrument from Grantor be required
by any co-trustee or separate trustee so appointed for more fully
confirming to such co-trustee or separate trustee such property,
title, right or power, any and all such instruments shall, by
request, be executed, acknowledged and delivered by Grantor.
Every co-trustee or separate trustee shall, to the
extent permitted by law, but to such extent only, be appointed
subject to the same terms as hereinabove set forth for the
Individual Trustee.
53. Miscellaneous; Servicer Cure.
(a) Grantor and Beneficiary intend that the
relationship created under this Mortgage be solely that of
mortgagor and mortgagee. Nothing herein is intended to create a
joint venture, partnership, tenancy-in-common or joint tenancy
relationship between Grantor and Beneficiary.
(b) Notwithstanding anything contained herein to the
contrary, Servicer shall have the right to cure, and Beneficiary
shall accept any such cure by Servicer of any monetary Event of
Default hereunder in accordance with Section 3.17 of the Trust
and Servicing Agreement.
(c) The Servicer shall have the power and authority to
exercise all of the rights and remedies, and be entitled to all
of the benefits, of the Beneficiary and to act as agent of the
Beneficiary hereunder.
54. As to Property in Maryland.
Notwithstanding anything herein to the contrary, as to
any property of the Trust Estate located in the State of Maryland
and encumbered by this Mortgage:
1. Deed of Trust. This instrument shall be
deemed a "Deed of Trust" under Maryland law
and shall not be deemed to be a mortgage.
2. Assent of Decree. The Grantor hereby
declares its assent to the passing of a
decree for the sale of any or all of the
Trust Estate located in the State of Maryland
upon the occurrence of an Event of Default.
The Trustee may pursue any number of
proceedings from time to time. The assent to
decree shall not be exhausted if such
proceeding is dismissed or canceled before
the Indebtedness is paid in full.
3. Commercial Loan. The loan evidenced by the
Notes is a commercial loan as that term is
used in the provisions of Title 12 of the
Commercial Law Article of the Annotated Code
of Maryland.
55. As to Property in Connecticut. Notwithstanding
anything to the contrary herein, as to any Property comprising
part(s) of the Trust Estate and located in the State of
Connecticut (the "Connecticut Property"):
(a) This instrument is intended to be a realty
mortgage, and shall be enforceable as such. Grantor shall be
deemed a "mortgagor," Beneficiary shall be deemed a "mortgagee,"
Trustee shall have no capacity and all references to "Trustee"
shall be deemed to refer to the "mortgagee" to the extent not
inconsistent with interpreting this instrument as a mortgage of
Connecticut realty. As a realty mortgage, Grantor, as mortgagor,
hereby gives, grants, bargains, sells and confirms all
Connecticut Property to Beneficiary, its successors and assigns,
as mortgagee.
(b) Each of the remedies set forth herein (including,
without limitation, any remedies involving a power of sale), as
same may purport to relate to the Connecticut Property, shall be
exercisable only if, and only to the extent, if any, permitted by
the laws of the State of Connecticut in force at the time of the
exercise of such remedies, without regard to the enforceability
of such remedies at the time of the execution and delivery of
this Mortgage.
(c) Whenever reference is made herein to a recording
or land records office, such reference, with respect to the
Connecticut Property, shall be deemed to read "any one or more of
the offices of the Town Clerks of the Towns and Cities wherein
any part of the Connecticut Property is located."
(d) If Grantor, shall pay or discharge all of the
Obligations, then this deed shall be void, but otherwise shall
remain in full force and effect.
(e) (i) Grantor and Beneficiary agree: (A) that this
Mortgage shall constitute a Security Agreement within the meaning
of the UCC, as adopted in the State of Connecticut, with respect
to all sums on deposit pursuant to the Loan Documents and with
respect to all personal property described in Granting Clauses
(D) through (L), inclusive of both, and all parts of the Trust
Estate which may not be deemed to form a part of the Connecticut
Property or may constitute a "fixture" (within the meaning of the
Connecticut UCC), and all property listed on any financing
statement filed with regard to the security agreement created
hereunder, and all replacements of such property, substitutions
for such property, additions to such property, and the proceeds
thereof, and such personal property; (B) that a security interest
in and to such personal property and all sums on deposit pursuant
to the Loan Documents is hereby granted to Beneficiary; and (C)
that all sums on deposit pursuant to the Loan Documents and all
of Grantor's right, title and interest therein are hereby
assigned to Beneficiary; all to secure payment of the
Indebtedness and to secure performance by Grantor of the terms,
covenants and provisions hereof.
(ii) Carbon copies, photographic copies or other
reproductions of this Mortgage, or of any financing statement
relating to this Mortgage, shall be sufficient as a financing
statement. This Mortgage is effective, and shall be effective,
as a financing statement filed as a fixture filing with respect
to all goods which are or are to become fixtures included within
the Connecticut property, as is to be filed for record in the
real estate records of the offices of the town clerks where
portions of the Connecticut property are situated. The mailing
address of Grantor and the address of beneficiary from which
information concerning the security interest may be obtained are
set forth in the notice section hereof.
(iii) In addition to any other rights and
remedies available to Beneficiary hereunder, Beneficiary shall
have all the rights of a secured party under the Connecticut UCC.
Grantor covenants and agrees that it will not further encumber or
grant a security interest in any personal property, or any sums
on deposit pursuant to the Loan Documents, or any part thereof,
and that such personal property shall at all times be owned by
Grantor and shall not be leased or otherwise treated in any
manner whereby the ownership or any beneficiary interest in any
of such personal property shall be held by any person or entity
other than Grantor. Furthermore, to the extent permitted by law,
Grantor hereby authorizes Beneficiary to sign and file financing
statements at any time in respect of any of such personal
property and any sums on deposit pursuant to the Loan Documents,
without such financing statements being executed by, or on behalf
of, Grantor, but Grantor shall, however, at any time, on request
of Beneficiary, execute, or cause to be executed, financing
statements in respect of any personal property and any sums on
deposit pursuant to the Loan Documents. Grantor agrees to pay
all filing fees, including fees for filing continuation
statements in connection with such financing statements, and to
reimburse Beneficiary for all costs and expenses of any kind
incurred in connection therewith.
(iv) Grantee shall have any and all rights and
remedies provided for in the Connecticut UCC as amended from time
to time, in addition to those provided in the Loan Documents.
Upon the request of Beneficiary, Grantor shall assemble all
personal property and make it available to Grantor at such
location as Beneficiary shall reasonably desire. Beneficiary may
at its option sell any personal property, for cash or on credit,
to a wholesaler, retailer or user of such property at a public or
private sale, or at auction, or may sell any personal property,
together with all or any part of the balance of the Trust Estate,
at the same time as, and in connection with, any foreclosure or
other sale, all of which shall be deemed to be commercially
reasonable, and the proceeds of such sale or other disposition of
any personal property may be first applied by Beneficiary to its
reasonable expenses incurred in connection with its retaking,
maintenance, sale or disposition of such personal property,
including, but not limited to, reasonable attorneys' fees, and
the balance of such proceeds may be applied to the Indebtedness.
Beneficiary shall give Grantor written notice of the time and
place of any disposition of any personal property at least ten
(10) days prior to the disposition of same, which notice shall be
sent to Grantor in accordance with the notice provisions hereof.
The taking of possession of any personal property shall not
prevent concurrent or later proceedings for the foreclosure
and/or sale of other portions of the Trust Estate as provided
elsewhere herein.
(f) At the option of Beneficiary, and irrespective of
whether or not Beneficiary shall actually elect to declare the
Indebtedness due and payable, Grantee shall be entitled, at its
option, to the appointment of a receiver of the Connecticut
Property or the rents and profits of the Connecticut Property,
and such receiver shall be appointed, with or without notice, and
without regard to the adequacy of any security held for the
payment of the Indebtedness and other sums secured hereby, or the
solvency of any Person or Persons liable for the payment of such
amounts. Such receiver may also be granted such extended powers,
duties and authority as would be necessary or useful in the
management and operation of the Connecticut Property, including,
without limitation, the power to enter into, modify, terminate
and enforce leases; pay Impositions and operating expenses;
employ property managers; make payments of principal and interest
on the Notes and sums secured by this Mortgage as the same
becomes due; and expend reasonable sums in repair and maintenance
of the Connecticut Property.
(g) GRANTOR ACKNOWLEDGES THAT THE INDEBTEDNESS AND
OBLIGATIONS ARE FOR COMMERCIAL PURPOSES, AND WAIVES ANY RIGHT TO
NOTICE AND HEARING UNDER SECTIONS 52-278A THROUGH 52-278N OF THE
CONNECTICUT GENERAL STATUTES, AS NOW OR HEREAFTER AMENDED, AND
AUTHORIZES THE ATTORNEY OF BENEFICIARY, OR ANY SUCCESSOR THEREOF,
TO ISSUE A WRIT OF PREJUDGMENT REMEDY WITHOUT COURT ORDER;
GRANTOR ACKNOWLEDGES THAT IT MAKES THESE WAIVERS KNOWINGLY AND
VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THESE WAIVERS WITH ITS ATTORNEYS.
(h) The provisions of this paragraph (h) are included
herein to provide more details as to the Notes. Each Note is
dated June 18, 1996, and the maximum principal amounts of the
Notes and the Maturity Date for all amounts remaining unpaid
under the Notes is as stated in the recitals hereof.
(i) Grantor hereby agrees that any legal action or
proceeding with respect to this Mortgage or the Loan Documents
may be brought in the courts of the State of Connecticut or in
the United States District Court for the District of Connecticut,
as Beneficiary may elect, and, by the execution and delivery of
this Mortgage, Grantor hereby accepts, with regard to any such
action or proceeding, for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts. Nothing herein shall affect the right to service of
process in any other manner permitted by law. Grantor further
agrees that a final, non-appealable judgment against it in any
such action or proceeding shall be conclusive and may be enforced
in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy
of which shall be conclusive evidence of the fact and of the
amount of its indebtedness.
(j) This Mortgage does not constitute an "Open-End
Mortgage" that can secure future advances pursuant to Connecticut
law.
(k) To the extent permitted by law, any sums not paid
by Grantor hereunder when due (after any applicable grace
periods) shall bear interest, both before and after judgment and
until collection on any action brought by Beneficiary against
Grantor for payment thereof or foreclosure of this Mortgage, at
an annual rate to be applicable during any period when the holder
of the Notes may accelerate payment of the Indebtedness evidenced
thereby set forth in the Notes, and the payment of such interest
by Grantor shall be secured by this Mortgage to the extent
permitted by law.
(l) If, pursuant to the Notes, accrued interest may be
added to the principal amount secured by this Mortgage, interest
will accrue on any such interest added to the principal amount
secured by this Mortgage. Interest on any accrued interest that
is added to the principal amount secured by this Mortgage shall
be secured by this Mortgage to the same extent as interest on the
original principal amount secured by this Mortgage.
56. As to Property in New Jersey. Notwithstanding
anything to the contrary elsewhere in this Mortgage, as to any
property of the Trust Estate located in the State of New Jersey
(the "New Jersey Property") and encumbered by this Mortgage:
(a) Instrument a Mortgage. This instrument and the
creation, validity, perfection, priority and enforceability of
the lien and security interest created hereby, all warranties of
title contained herein with respect to the New Jersey Property,
and all provisions hereof relating to the realization of the
security covered hereby with respect to the New Jersey Property
shall be governed by the law of the State of New Jersey.
(b) This instrument is not a "deed of trust" under New
Jersey law. This document constitutes a Mortgage on real estate
and a security agreement covering personal property under the
laws of the State of New Jersey, and Grantor shall be deemed to
be the Mortgagor, and Beneficiary shall be deemed to be the
Mortgagee. Trustee shall have no capacity, and all references to
the Trustee shall be deemed to be references to the Mortgagee.
(c) Beneficiary shall be entitled to all rights and
remedies that a mortgagee would have under the law or in equity
in addition to all rights and remedies it may have hereunder.
(d) In addition to the other Granting Clauses of this
Mortgage, the Mortgagor hereby MORTGAGES and WARRANTS unto the
Mortgagee the Trust Estate.
(e) References in this Mortgage to "Environmental
Laws" shall be deemed to include but not be limited to the
Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq., the Spill
Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq., the
Water Pollution Control Act, N.J.S.A. 58:10A-1 et seq., the New
Jersey Air Pollution Control Act, N.J.S.A. 26:2C-1 et seq., the
Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq., the New
Jersey Hazardous Discharges Law, N.J.S.A. 13:1k-15 et seq., the
Fresh Water Wetlands Act, N.J.S.A. 13:9B-1 et seq., the
Waterfront Improvements Act, N.J.S.A. 40:68-1 et seq., the
Coastal Facilities Review Act, N.J.S.A. 13:19-1 et seq., the Safe
Drinking Water Act, N.J.S.A. 58:12A-1 et seq., the Pollution
Prevention Act, N.J.S.A. 13:1D-35 et seq. and the Toxic
Catastrophe Prevention Act, N.J.S.A 58:10A-21 et seq.
57. As to Property in New York.
(a) This instrument shall be deemed a mortgage and not
a deed of trust. Beneficiary shall be entitled to all rights and
remedies that a mortgagee would have under the law or in equity
in addition to all rights and remedies it may have hereunder.
(b) Lien Law. (i) This Mortgage is made subject to
Section 13 of the New York Lien Law and, in compliance with
Section 13 of the New York Lien Law, Grantor will receive
the loan secured by this Mortgage and the right to receive
such advances as a trust fund to be applied first for the
purpose of paying any unpaid costs of the Improvements; and
Grantor has applied and will apply the same first to the
payment of any unpaid costs of the Improvements before using
any part of the total of the same for any other purpose.
(ii) Grantor will indemnify and hold
Beneficiary harmless against any loss, liability, cost
or expense, including any judgments, attorneys' fees,
costs of appeal bonds or printing costs, arising out of
or relating to any proceedings instituted by any
claimant alleging a violation by Grantor of Article 3-A
of the New York Lien Law.
(c) Real Property Law. (i) Sections 5 and 6 hereof
shall be construed according to subdivision 4 of Section 254
of the New York Real Property Law as amended by Chapter 886
of the Laws of 1945 but not as amended by Chapter 830 of the
Laws of 1965 or as otherwise thereafter amended.
(ii) For purposes of Section 291-f of
the New York Real Property Law, Tenant and every tenant
or subtenant who after the recording of this Mortgage,
enters into a Lease upon the premises of any of the
Properties or who acquires by instrument of assignment
or by operation of law a leasehold estate upon the
premises located in the State of New York in existence
on the date of recording of this Mortgage is hereby
notified that Grantor shall not, without obtaining
Beneficiary's prior consent in each instance, cancel,
abridge or otherwise modify any Leases upon the
premises located in the State of New York or accept
prepayments for more than thirty (30) days of
installments of rent to become due with respect to any
Lease thereof having an unexpired term on the date of
this Mortgage of five years or more, except as ex-
pressly permitted under this Mortgage or the Assignment
of Leases, and that any such cancellation, abridgement,
modification or prepayment made by any such tenant or
subtenant without either being expressly permitted
under this Mortgage or receiving Beneficiary's prior
consent shall be voidable by Beneficiary at its option.
(d) RPAPL. If an Event of Default shall occur and be
continuing, Beneficiary may elect to sell (and, in the case
of any default of any purchaser, resell) any Property or any
part of any Property by exercise of the power of foreclosure
or of sale granted to Beneficiary by Articles 13 or 14 of
the New York Real Property Actions and Proceedings Law (the
"RPAPL"). In such case, Beneficiary may commence a civil
action to foreclose this Mortgage pursuant to Article 13 of
the RPAPL, or it may proceed and sell the Property pursuant
to Article 14 of the RPAPL to satisfy the Notes and all
other amounts secured hereby.
(e) Maximum Principal Indebtedness. The amount of
principal indebtedness this Mortgage secures against the
Property located in the State of New York and, for purposes
of Sections 253, 256 and 260 of the Tax Law of the State of
New York (relating to the taxation of mortgages), the
maximum amount of the principal indebtedness secured by this
Mortgage, or which by any contingency may be secured by this
Mortgage, and for which this Mortgage may be foreclosed or
otherwise enforced against, the Property located in the
State of New York, is $37,086,793.05 principal amount of
this Mortgage.
(f) No Residential Units. This Mortgage does not
encumber real property principally improved or to be
improved by one or more structures containing in the
aggregate six or fewer residential dwelling units having
their own separate cooking facilities.
58. As to Property in Pennsylvania. Notwithstanding
anything to the contrary elsewhere in this Mortgage, as to any
property of the Trust Estate located in the Commonwealth of
Pennsylvania:
(a) This instrument is intended to be a realty
mortgage and shall be enforceable as such. Grantor shall be
deemed a "mortgagor," Beneficiary shall be deemed a "mortgagee"
and Trustee shall have no capacity (but shall be disregarded and
all references to "Trustee" shall be deemed to refer to the
"mortgagee" to the extent not inconsistent with interpreting this
instrument as a realty mortgage). As a realty mortgage, Grantor,
as mortgagor, shall convey all Pennsylvania Property ab initio to
Beneficiary, as mortgagee and the provisions of the paragraph
immediately preceding Section 1 of this Mortgage beginning with
the words "In Trust Forever ...," shall be deleted and of no
force and effect.
(b) Each of the remedies set forth herein, including
without limitation the remedies involving a power of sale of the
Pennsylvania Property in connection with the enforcement of the
terms of this Mortgage, shall be exercisable if, and to the
extent, permitted by the laws of the Commonwealth of Pennsylvania
in force at the time of the exercise of such remedies without
regard to the enforceability of such remedies at the time of the
execution and delivery of this Mortgage.
(c) Upon the occurrence and during the continuation of
an Event of Default, Beneficiary may institute any one or more
actions of mortgage foreclosure against all or any part of the
Pennsylvania Property, or take such other action at law or in
equity for the enforcement of this Mortgage and realization on
the security herein or elsewhere provided for, as law may allow,
and may proceed therein to final judgment and execution for the
entire amount of the outstanding Indebtedness. Beneficiary shall
have the option to proceed with foreclosure of the lien and
security interests evidenced by this Mortgage in satisfaction of
the Loan through the courts, all without declaring the
Indebtedness due, and provided that if a sale of the Pennsylvania
Property is because of default in the payment of part of the
Indebtedness, such sale may be made subject to the unmatured part
of the Indebtedness; and such sale, if so made, shall not in any
manner affect the unmatured part of the Indebtedness, but as to
such unmatured part of the Indebtedness, this Mortgage shall
remain in full force and effect just as though no sale had been
made.
(d) If, as provided in Section 38(a) hereof, Grantor
shall pay or cause to be paid, the principal of and interest on
the Notes in full at maturity or as permitted in accordance with
the terms thereof and all other Indebtedness payable to
Beneficiary hereunder by Grantor or secured hereby or by the
other Loan Documents and all of the payment Obligations shall
have been performed, then in addition to the provisions of
Section 38(a), the estate hereby granted, transferred and
assigned shall cease, terminate and become void.
(e) The references to the UCC in the Granting Clauses
of this Mortgage shall be deemed to be references to the
Pennsylvania Uniform Commercial Code in 13 Pa. C.S.A. Section 1101 et
seq.
(f) This instrument shall constitute a security
agreement and continuously perfected fixture filing and financing
statement. Grantor hereby authorizes Beneficiary, after ten (10)
days' notice to Grantor and Grantor's failure to execute such
financing statements, to execute, deliver, file or refile as
Secured Party, without joinder of Grantor, as Debtor, any
financing statement, continuation statement, or other instruments
Beneficiary may reasonably require from time to time to perfect
or renew such security interest under the UCC. Grantor is, for
the purposes of this agreement, deemed to be the Debtor, and
Beneficiary is deemed to be the Secured Party, as those terms are
used in the UCC. The addresses of secured party and debtor from
which information concerning the security agreement may be
obtained are set forth in the initial paragraph of this Mortgage.
(g) Subject to any Nondisturbance Agreements then in
effect, if Beneficiary exercises its right of entry under Section
20(b) hereof and the tenant fails to surrender possession of the
Pennsylvania Property, Beneficiary shall be entitled to institute
and maintain an action of ejectment with respect to the
Pennsylvania Property in the county or counties in which such
property, or any part thereof, is situated.
(h) This Mortgage is intended to be an "Open-End
Mortgage" that secures future advances pursuant to the provisions
of 42 Pa.C.S.A. Section 8143. It is the intent of the parties that the
lien of such future advances relates back to the date of this
Mortgage subject to compliance with the provisions of such
section.
59. Liability of Assignees of Beneficiary. No
assignee of Beneficiary (an "Assignee") shall have any personal
liability, directly or indirectly, under or in connection with
this Mortgage or any amendment or amendments hereto made at any
time or times, heretofore or hereafter, any liability being
limited to the assets pledged as security pursuant to this
Mortgage and Grantor hereby forever and irrevocably waives and
releases any and all such personal liability. In addition, no
Assignee shall have at any time or times hereafter any personal
liability, directly or indirectly, under or in connection with or
secured by any agreement, lease, instrument, encumbrance, claim
or right affecting or relating to the Properties or to which the
Properties are now or hereafter subject. The limitation of
liability provided in this Section 59 is (i) in addition to, and
not in limitation of, any limitation of liability applicable to
the assignee provided by law or by any other contract, agreement
or instrument, and (ii) shall not apply to any Assignee's
negligence or willful misconduct.
60. One of a Number of Mortgages. This Mortgage is
given as security together with certain other mortgages and deeds
of trust which collectively cover the Properties and secure the
Obligations. A copy of all such mortgages and deeds of trust
(including this Mortgage) are available from the Beneficiary
during normal business hours upon reasonable advance request
therefor. A default with respect to any such mortgage or deed of
trust (including this Mortgage) shall constitute a default under
all such mortgages and deeds of trust (including this Mortgage).
IN WITNESS WHEREOF, this Mortgage has been duly
executed by Grantor on the date first hereinabove written.
All of the following KRT PROPERTY HOLDINGS, INC.
signed and acknowledged
in the presence of:
/s/ Michael Markman By: /s/ Robert Dennis
- ------------------------- ------------------------------
Michael Markman, Secretary Name: Robert Dennis
Title: Vice President
/s/ Jeffrey M. Calcagni
- -------------------------
Jeffrey M. Calcagni, Esq.
HILLCREST PLAZA LIMITED PARTNERSHIP
By: KR Hillcrest, Inc.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
KR SUBURBAN, L.P.
By: KR Suburban, Inc.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
FOX RUN, LIMITED PARTNERSHIP
By: KR Fox Run, Inc.
By: /s/ Robert Dennis
-----------------------------
Name: Robert Dennis
Title: Vice President
KR MacARTHUR ASSOCIATES, L.P.
By: KR MacArthur, Inc.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
KR BEST ASSOCIATES, L.P.
By: KR Best Associates, Inc.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
KR 69TH STREET, L.P.
By: KR 69th Street, Inc.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
KR TRUST ONE, INC.
By: /s/ Robert Dennis
-------------------------------
Name: Robert Dennis
Title: Vice President
KR MANCHESTER, INC.
By: /s/ Robert Dennis
-------------------------------
Name: Robert Dennis
Title: Vice President
KR STREET ASSOCIATES, L.P.
By: KR Street, Inc.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
KR ORANGE, INC.
By: /s/ Robert Dennis
-------------------------------
Name: Robert Dennis
Title: Vice President
KR COLLEGETOWN, INC.
By: /s/ Robert Dennis
-------------------------------
Name: Robert Dennis
Title: Vice President
KR HILLCREST MALL, INC.
By: /s/ Robert Dennis
-------------------------------
Name: Robert Dennis
Title: Vice President
KR PILGRIM, L.P.
By: KR Pilgrim, Inc.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
PENNSYLVANIA
CERTIFICATE OF RESIDENCE
The address of Mortgagee is:
KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, PA 19428
------------------------------
On Behalf of Mortgagee
Norman Kranzdorf, President
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
The undersigned hereby certifies that the above
instrument has been prepared under the supervision of an attorney
admitted to practice before the Court of Appeals of New York.
------------------------------
Thomas E. Charbonneau, Esq.
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KRT PROPERTY HOLDINGS, INC., signer of the foregoing
instrument, who acknowledged the same to be his/her free act and
deed, and the free act and deed of said corporation, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR HILLCREST, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, the free
act and deed of said corporation as general partner of HILLCREST
PLAZA, LIMITED PARTNERSHIP, and the free act and deed of said
limited partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR SUBURBAN, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, the free
act and deed of said corporation as general partner of KR
SUBURBAN, L.P., and the free act and deed of said limited
partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR FOX RUN, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, the free
act and deed of said corporation as general partner of FOX RUN,
LIMITED PARTNERSHIP, and the free act and deed of said limited
partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR MacARTHUR, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, the free
act and deed of said corporation as general partner of KR
MacARTHUR ASSOCIATES, L.P., and the free act and deed of said
limited partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR BEST ASSOCIATES, INC., signer of the foregoing instrument,
who acknowledged the same to be his/her free act and deed, the
free act and deed of said corporation as general partner of KR
BEST ASSOCIATES, L.P., and the free act and deed of said limited
partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR 69TH STREET, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, the free
act and deed of said corporation as general partner of KR 69TH
STREET, L.P., and the free act and deed of said limited
partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR TRUST ONE, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, and the
free act and deed of said corporation, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR MANCHESTER, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, and the
free act and deed of said corporation, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR STREET, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, the free
act and deed of said corporation as general partner of KR STREET
ASSOCIATES, L.P., and the free act and deed of said limited
partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR ORANGE, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, and the
free act and deed of said corporation, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR COLLEGETOWN, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, and the
free act and deed of said corporation, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR HILLCREST MALL, INC., signer of the foregoing instrument,
who acknowledged the same to be his/her free act and deed, and
the free act and deed of said corporation, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
STATE OF NEW YORK )
ss: June -----, 1996
COUNTY OF NEW YORK )
Personally appeared, ROBERT DENNIS, as Vice President
of KR PILGRIM, INC., signer of the foregoing instrument, who
acknowledged the same to be his/her free act and deed, the free
act and deed of said corporation as general partner of KR
PILGRIM, L.P., and the free act and deed of said limited
partnership, before me.
-----------------------------------
Notary Public
My Commission
Expires:---------------
NOTARIAL SEAL
EXHIBIT A
Legal Descriptions of Properties
EXHIBIT B
----------
Environmental Reports
STATE PROPERTY NAME DATE OF FINAL
REPORT
(AS SHOWN ON COVER)
- ------- ---------------- --------------------
Connecticut Groton Square May 17, 1996
Connecticut Manchester Kmart Plaza May 8, 1996
Connecticut Milford Center May 16, 1996
Connecticut Orange Site May 8, 1996
Maryland Anneslie Shopping Center May 2, 1996
Maryland Fox Run Shopping Center May 17, 1996
Maryland Hillcrest Plaza May 17, 1995
New Jersey Collegetown Shopping Center April 25, 1996
New Jersey Hillcrest Mall April 30, 1996
New Jersey Suburban Plaza April 25, 1996
New York A&P Mamaroneck April 23, 199
New York Highbridge Plaza May 16, 1996
New York The Mall at Cross County May 9, 1996
New York North Ridge Shopping Center May 16, 1996
New York Port Washington Center May 17, 1996
New York Village Square May 16, 1996
Pennsylvania Barn Plaza April 19, 1996
Pennsylvania Bensalem Square May 3, 1996
Pennsylvania Best Plaza April 23, 1996
Pennsylvania Bethlehem Square April 19, 1996
Pennsylvania Bristol Commerce Park April 30, 1996
Pennsylvania Loehmann's Plaza at Pilgrim Gardens April 29, 1996
Pennsylvania MacArthur Road Plaza May 2, 1996
Pennsylvania Park Hills Plaza May 16, 1996
Pennsylvania 69th Street Drug Emporium Plaza April 25, 1996
Pennsylvania Street Road Plaza May 14, 1996
Pennsylvania Whitehall Square April 25, 1996
EXHIBIT C
-----------
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the -----
day of --------, 1996, by and among -----------------------------
("Lender"), --------------------- ("Tenant"), and ---------------
- -------------------------------- ("Landlord").
RECITALS
---------
Landlord is the owner and holder of fee simple title in
and to certain real property which is described on Exhibit A
attached hereto and made a part hereof ("Property").
Lender is the owner and holder of a Mortgage dated
- ---------- --, 1996 made by Landlord to Lender and encumbering
the Property in the original principal amount of ---------------
- ---------------------- ($-------------) Dollars, which Mortgage
was heretofore recorded (the "Mortgage").
Tenant is the holder of a leasehold estate in a portion
of the Property (the "Leased Premises") pursuant to the terms of
that certain Lease between Landlord and Tenant dated as of ------
- -----------, 19-- (the "Lease"). [A Memorandum of Lease with
respect to the Lease was recorded on ---------, 19-- in the
office of the ------------------------------ in and for ---------
County, ------------------------- as Document No. ----------.]
*Delete if inapplicable.
Tenant, Landlord and Lender desire to confirm their
understanding with respect to the Lease and the Mortgage.
AGREEMENT
----------
NOW, THEREFORE, in consideration of the sum of One
Dollar ($1.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. SUBORDINATION. Subject to the terms of this Agreement,
the Lease and all rights of Tenant under the Lease and to the
Property, including but not limited to any rights to insurance
proceeds and condemnation awards, are now and shall at all times
continue to be subject and subordinate in each and every respect
to the Mortgage, any and all documents executed in connection
therewith, and all rights of Lender as mortgagee thereunder. The
term "Mortgage", as used herein shall include the Mortgage and
any and all amendments, supplements, modifications, extensions
and renewals thereof.
2. TENANT NOT TO BE DISTURBED. At any time that the
Mortgage shall be in effect, Lender agrees that so long as Tenant
is not in default (beyond any period given Tenant under the Lease
to cure such default) in the payment of rent or additional rent
or in the performance of any of the other terms, covenants or
conditions of the Lease on Tenant's part to be performed, Lender
will not join Tenant as a party defendant in any action or
proceeding foreclosing the Mortgage unless required to foreclose
the Mortgage and then only for such purpose and not for the
purpose of terminating the Lease, and further, that Tenant's
possession of the Leased Premises and Tenant's rights and
privileges under the Lease, or any extensions or renewals thereof
which may be effected in accordance with the Lease, shall not be
diminished or interfered with by Lender, and Tenant's occupancy
of the Leased Premises shall not be disturbed by Lender, except
in accordance with the terms of the Lease.
3. TENANT TO ATTORN TO LENDER. If Landlord's interest in
the Lease shall be transferred to and/or owned by Lender by
reason of foreclosure of the Mortgage, acceptance of a deed in
lieu of foreclosure or by any other manner, and Lender succeeds
to the interest of Landlord under the Lease, Tenant shall be
bound to Lender under all of the terms, covenants and conditions
of the Lease for the balance of the remaining term thereof and
any extension thereof duly made by Tenant pursuant to the terms
of the Lease with the same force and effect as if Lender were the
landlord under the Lease, and Tenant does hereby attorn to Lender
as its landlord, said attornment to be effective and
self-operative without the execution of any further instruments
on the part of any of the parties hereto immediately upon
Lender's succeeding to the interest of Landlord under the Lease;
provided, however, that Tenant shall have no obligation to pay
rent to Lender until Tenant receives written notice from Lender
that it has succeeded to the interest of Landlord under the Lease
or that it is entitled to collect rents pursuant to the Mortgage
or any separate assignment of leases and rents. Except as
provided in paragraph 4 hereof, and except that recourse against
Lender or any of its successors and assigns for any breach of the
Lease shall be limited to its interest in the Property, the
respective rights and obligations of Tenant and Lender upon such
attornment shall be the same as are now set forth in the Lease,
it being the intention of the parties hereto for this purpose to
incorporate the Lease in this Agreement by reference with the
same force and effect as if set forth at length herein.
4. LENDER NOT BOUND BY CERTAIN ACTS OF LANDLORD. If
Lender shall succeed to the interest of Landlord under the Lease,
Lender shall be bound to the extent provided by the terms and
conditions of the Lease for all obligations of Landlord arising
or occurring during the time that Lender is the owner of the
interest of Landlord under the Lease; except that Lender shall
not be:
(a) liable for any act or omission of any prior
landlord (including Landlord);
(b) subject to any offsets, claims, counterclaims or
defenses that Tenant might have against any prior
landlord (including Landlord);
(c) bound by any rent or additional rent or advance rent
that Tenant might have paid for more than the current
month to any prior landlord (including Landlord), and
all such rent shall remain due and owing
notwithstanding such advance payment;
(d) liable for reimbursement to Tenant for any overpayment
of Tenant's proportionate share of taxes and other
operating costs of the Property, unless all payments of
such costs for the year to which reimbursement relates
were paid by Tenant to Lender;
(e) bound by any provision of the Lease which
obligates Landlord to make improvements to the
Leased Premises or the Property or which provides
for warranties of construction from the landlord
to the tenant;
(f) liable for any payment to Tenant of any sums, or the
granting to Tenant of any credit, in the nature of a
contribution towards credit, in the nature of a
contribution towards the cost of preparing, furnishing
or moving into the Leasehold Premises, or any portion
thereof;
(g) bound by any amendment or modification of the
Lease or by any waiver of any term of the Lease
made without Lender's written consent if such
amendment, modification or waiver requires the
consent of Lender under the terms of the Mortgage;
or
(h) be required to account for any security deposit other
than any security deposit actually delivered to Lender.
5. ACKNOWLEDGEMENT AND WAIVER. Tenant agrees upon demand
of Lender to make payments under the Lease to Lender in
accordance with the Mortgage, and Tenant waives the provisions of
any statute or rule of law now or hereafter in effect which may
give or purport to give Tenant any right or election to terminate
or otherwise adversely affect the Lease and the obligations of
Tenant thereunder by reason of any foreclosure proceeding with
respect to the Mortgage.
6. SUCCESSORS AND ASSIGNS. This Agreement and each and
every covenant, agreement and other provision hereof shall be
binding upon the parties hereto and their respective heirs,
administrators, representatives, successors and assigns.
7. NOTICE TO LENDER. In the event of any alleged default
by Landlord under the Lease, Tenant shall give written notice
thereof to Lender, and Tenant and Lender agree that Lender shall
have the right (but no obligation) to cure such default before
Tenant invokes any of its remedies under the Lease.
8. AMENDMENT. This Agreement may not be modified orally
or in any other manner than by an agreement in writing signed by
the parties hereto or their respective successors in interest.
9. COUNTERPARTS. This Agreement may be executed in
several counterparts, and all so executed shall constitute one
agreement, binding on all parties hereto, notwithstanding that
all parties are not signatories to the same counterpart.
10. NOTICES. All notices or other communications required
or permitted to be given pursuant to the provisions hereof shall
be in writing and shall be given by first class United States
mail, postage prepaid, registered or certified with return
receipt requested, and addressed as herein provided. Notice so
given shall be effective two (2) days after deposit in the United
States mail. For purposes of notice, the addresses of the
parties shall be:
Landlord: c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Tenant: ------------------------------------
------------------------------------
------------------------------------
Lender: ------------------------------------
------------------------------------
------------------------------------
provided, however, that any party shall have the right to change
its address for notice hereunder to any other location within the
continental United States by thirty (30) days' prior written
notice to the other parties in the manner set forth hereinabove.
11. CAPTIONS AND HEADINGS. The captions and headings of
this Agreement are for convenience only and are not to be
construed as confining or limiting in any way the scope or intent
of the provisions hereof. Whenever the context requires or
permits, the singular shall include the plural, the plural shall
include the singular and the masculine, feminine and neuter shall
be freely interchangeable.
12. GOVERNING LAW. This agreement shall be governed by the
law of the jurisdiction in which the Property is located.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
LENDER:
By:----------------------------
Name:
Title:
TENANT:
-------------------------------
By:-----------------------------
Name:
Title:
LANDLORD:
By:-----------------------------
Name: Norman M. Kranzdorf
Title: President
STATE OF )
: ss.:
COUNTY OF )
On this ---- day of --------------, 1996, before me,
- --------------------------, the undersigned officer, personally
appeared ------------------------, who acknowledged for himself
that he is the ----------------- of
and that he being authorized to do so executed the foregoing
instrument for the purposes therein contained by signing the name
of the Corporation by himself as ------------------.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
-----------------------------------
Notary Public
My Commission Expires:
STATE OF )
: ss.:
COUNTY OF )
On this ---- day of --------------, 1996, before me,
- -----------------------, the undersigned officer, personally
appeared NORMAN M. KRANZDORF, who acknowledged himself to be the
President of ----------------------, a ----------------
corporation and that he as such President being authorized to do
so, executed the foregoing instrument for the purposes therein
contained by signing the name of the Corporation by himself as
President.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
-----------------------------------
Notary Public
My Commission Expires:
STATE OF )
: ss.:
COUNTY OF )
On this ---- day of ------------, 1996, before me,
- -----------------------, the undersigned officer, personally
appeared ------------------------, who acknowledged himself to be
the --------------------- of ------------------------------------
- ------------------------, that he as such ---------- being
authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the trust by
himself as ----------------.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
-----------------------------------
Notary Public
My Commission Expires:
SNDA Certification
[Borrower's Name and Address]
---------- --, 1996
Trustee Name and Address
Re: [Property Name]
---------------
Gentlemen:
Reference is made to Section --- (the "Mortgage")
between [KRT Origination Corp.] and [Borrower] with respect to
the above mentioned property. [Borrower] has entered into or is
about to enter into a lease of a portion of the above mention
property with [Tenant]. [Tenant] has requested that [Trustee]
enter into a non-disturbance agreement in the form enclosed
herewith. Said form is either on the form of non-disturbance
agreement attached as Exhibit C to the Mortgage, with such
changes as do not materially adversely affect the [Trustee] or is
on the Tenant's standard form, provided, however, that the
protections afforded to the [Trustee] by said agreement are not
materially less than the protections that would have been
afforded had the Tenant entered into the form of non-disturbance
agreement attached to the Mortgage.
Please execute and return to us the enclosed
agreements.
Very truly yours,
[BORROWER]
By: ------------------------
[Authorized Signatory]
SCHEDULE 1
----------
Allocated Loan Amounts
Allocated Loan Amounts
The chart below sets forth the original Allocated Loan Amount with
respect to each of the Mortgaged Properties provided for in the Mortgage.
As a % of
Total
Allocated Allocated
Location of Loan Loan
Mortgaged Property Mortgaged Property Amount Amount
- ------------------ ------------------- -------- ----------
The Mall at Cross County Yonkers, NY $ 20,283,000 11.16%
Bethlehem Square Bethlehem, PA 16,249,000 8.94%
Whitehall Square Whitehall, PA 15,176,000 8.35%
Fox Run Prince Frederick, MD 14,069,000 7.74%
Bristol Commerce Park Bristol, PA 12,994,000 7.15%
Groton Square Groton, CT 12,174,000 6.70%
Suburban Plaza Hamilton, NJ 10,453,000 5.75%
Park Hills Plaza Altoona, PA 9,602,000 5.29%
Barn Plaza Doylestown, PA 9,164,000 5.04%
Highridge Plaza Yonkers, NY 7,242,000 3.99%
Anneslie Baltimore, MD 5,859,000 3.22%
Best Plaza Tredyffrin, PA 5,747,000 3.16%
Collegetown Glassboro, NJ 5,487,000 3.03%
Hillcrest Mall Phillipsburg, NJ 5,384,000 2.96%
Bensalem Square Bensalem, PA 4,281,000 2.36%
Street Road Bensalem, PA 4,127,000 2.27%
Pilgrim Gardens Drexel Hill, PA 4,058,000 2.23%
Hillcrest Plaza Frederick, MD 3,832,000 2.11%
North Ridge New Rochelle, NY 2,597,000 1.43%
Manchester Kmart Manchester, CT 2,522,000 1.39%
69th Street Plaza Upper Darby, PA 2,479,000 1.37%
MacArthur Road Whitehall, PA 2,308,000 1.27%
Village Square Larchmont, NY 1,850,000 1.02%
Milford Milford, CT 1,470,000 0.81%
A&P Mamaroneck Mamaroneck, NY 1,061,000 0.58%
Orange Orange, CT 786,000 0.43%
Port Washington Port Washington, NY 446,000 0.25%
TOTAL $181,700,000 100.00%
============ =======
SCHEDULE 2
----------
Grantor Properties
Grantor Property
------- ---------
1. KRT Property Holdings, Inc. ("KRT") The Mall at Cross County
2. KRT Bethlehem Square
3. KRT Whitehall Square
4. Fox Run, Limited Partnership Fox Run
5. KRT Bristol Commerce Park
6. KRT Groton Square
7. KR Suburban, L.P. Suburban Plaza
8. KRT Park Hills Plaza
9. KRT Barn Plaza
10. KRT Highridge Plaza
11. KR Trust One, Inc. Anneslie
12. KR Best Associates, L.P. Best Plaza
13. KR Collegetown, Inc. Collegetown
14. KR Hillcrest Mall, Inc. Hillcrest Mall
15. KRT Bensale Square
16. KR Street Associates, L.P. Street Road
17. KR Pilgrim, L.P. Pilgrim Gardens
18. Hillcrest Plaza Limited Partnership Hillcrest Plaza
19. KRT North Ridge
20. KR Manchester, Inc. Manchester Kmart
21. KR 69th Street, L.P. 69th Street Plaza
22. KR MacArthur Associates, L.P. MacArthur Road
23. KRT Village Square
24. KRT Milford
25. KRT A&P Mamaroneck
26. KR Orange, Inc. Orange
27. KRT Port Washington
SCHEDULE 3
----------
Short-Term Repairs
---------------------
Environmental & Engineering Reports
Major CAM Breakdowns
Center Current Description 2-5 Years Description
- ------ ------- ------------ --------- ------------
Anneslie $46,750.00 Re-roof north $1,000.00 Mortar
retails pointing
$5,000.00 Replace east
facade coating
Fox Run $25,000.00 Stormwater
management system
rehabilitation
required due to
erosion damage.
The rehab program
has commenced.
Collegetown $21,350.00 Replace room
above Marianne
Store and from
Rent-A-Center to
Gold Connection
II. Tenants com-
plaining of
leakage where
overhang connects
to main roof and
at rear of roofs.
Also, replace
roof from
Collegetown
Speedwash to H &
H Appliance.
Hillcrest $65,400.00 Re-roof areas above
Mall stores #9, 10,
11, 18 and 19.
Reshingle and
seal peaked roof
above Super Fresh
(Store #35).
Ownership plans
to re-roof Store
18-19 in the next
few months and to
reshingle and
seal the peaked
Super Fresh roof
soon.
$49,000.00 Repair flat roofs
above stores 17
and 20 through
25. Ownership
plans to re-roof
store 17 (old
section of
Rickels) in the
next few months.
Note that store
20 (Woolworth's)
has roof warranty
in effect which
may cover roof
repair costs for
that store. Find
the source of
leakage from
canopies of
buildings with
the following
store numbers 2
through 7, 8
through 15 and 16
through 24. Seal
and repair.
A & P $48,000.00 Re-roof one-story $24,000.00 Re-roof
Mamaroneckof section of two-story
building. section of
building
$5,000.00 Power wash and
repaint
exterior CMU
walls.
Highridge $15,000.00 Resurface
McDonald's &
Pizza Express
roofs.
$12,600.00 Complete the
resurfacing of
north building
roof.
Northridge $18,000.00 Replace two
HVAC units over
the vacant
stores.
Bensalem $24,000.00 Replace broken
paving on north
side of building,
service area and
overflow parking
areas.
Bristol Commerce Park $3,000.00 Paving repairs
- circular
drive.
$1,500.00 Replace
sidewalk of
Boston Market.
$3,000.00 Stucco Facade
reserve for
repairs
Cross County 1. Correction of
all existing
Building Code
violations
disclosed in the
Notice of
Violation dated
April 2, 1996
forwarded to KRT
Property
Holdings, Inc.
relating to Cross
County Square
Shopping Center.
2. Final
certificate of
completion for
all work
undertaken in
connection with
Building Permit
#71229 issued
March 24, 1988
for walkways,
stairs and
retaining walls,
relating to Cross
County Square
Shopping Center.
TOTALS $279,500.00 TOTALS $88,100.00
Indenture of Mortgage,
Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and
Assignment of Leases, Rents and Security Deposits
Dated as of June 18, 1996
from
KRT Property Holdings, Inc., Hillcrest Plaza Limited Partnership, KR
Suburban, L.P., Fox Run, Limited Partnership, KR MacArthur Associates, L.P.,
KR Best Associates, L.P., KR 69th Street, L.P., KR Trust One, Inc., KR
Manchester, Inc., KR Street Associates, L.P., KR Orange, Inc., KR
Collegetown, Inc., KR Hillcrest Mall, Inc. and KR Pilgrim, L.P.,
each having an address c/o Kranzco Realty Trust
128 Fayette Street, Conshohocken, PA 19428
as Grantor
(as to properties in New Jersey, Pennsylvania, Connecticut and New York) to
KRT Origination Corp.
having an address c/o Kranzco Realty Trust
128 Fayette Street, Conshohocken, PA 19428
as Mortgagee
and
(as to properties in Maryland) to
Ronald P. Fish, Esq. and Thomas A. Hauser, Esq.
having an address at
Ballard Spahr Andrews & Ingersoll
300 East Lombard Street, Baltimore, Maryland 21202
as Trustee for the benefit of
KRT ORIGINATION CORP.
having an address c/o Kranzco Realty Trust
128 Fayette Street, Conshohocken, PA 19428
as Beneficiary
- ----------------------------------------------------------------------------
After recording, return to:
Martha Feltenstein, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
- ----------------------------------------------------------------
The maximum principal indebtedness hereby secured by property
located in Calvert County, Maryland is $11,725,000.
The maximum principal indebtedness hereby secured by property
located in Baltimore City/Baltimore County, Maryland is $5,230,000.
[MD2nd]
TABLE OF CONTENTS
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Page
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1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2. Warranty of Title . . . . . . . . . . . . . . . . . . . . . . . . . 29
3. Payment and Performance of Obligations Secured. . . . . . . . . . . 30
4. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 30
5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6. Condemnation and Insurance Proceeds . . . . . . . . . . . . . . . . 36
7. Impositions, Liens and Other Items. . . . . . . . . . . . . . . . . 42
8. Ground Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9. License to Collect Rents. . . . . . . . . . . . . . . . . . . . . . 45
10. Security Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 46
11. Transfers, Indebtedness and Subordinate Liens . . . . . . . . . . . 47
12. Maintenance of Trust Estate; Alterations; Inspection; Utilities . . 52
13. Legal Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 53
14. Books and Records, Financial Statements, Reports and Other
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
15. Compliance with Leases and Agreements . . . . . . . . . . . . . . . 56
16. Beneficiary's Right to Perform. . . . . . . . . . . . . . . . . . . 58
17. Grantor's Existence; Organization and Authority . . . . . . . . . . 59
18. Protection of Security; Costs and Expenses. . . . . . . . . . . . . 60
19. Management of the Trust Estate. . . . . . . . . . . . . . . . . . . 61
20. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
21. Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . 69
22. Certain Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 69
23. Notice of Certain Occurrences . . . . . . . . . . . . . . . . . . . 70
24. Trust Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
25. Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
27. No Oral Modification. . . . . . . . . . . . . . . . . . . . . . . . 71
28. Partial Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . 71
29. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 71
30. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
31. Certain Representations, Warranties and Covenants . . . . . . . . . 72
32. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
33. Non-Recourse Obligations. . . . . . . . . . . . . . . . . . . . . . 76
34. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 77
35. Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . 77
36. Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . 77
37. Indemnification by Grantor. . . . . . . . . . . . . . . . . . . . . 77
38. Release of Property . . . . . . . . . . . . . . . . . . . . . . . . 79
39. Rating Agency Monitoring. . . . . . . . . . . . . . . . . . . . . . 83
40. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 83
41. Recourse Nature of Certain Indemnifications . . . . . . . . . . . . 85
42. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
43. Merger, Conversion, Consolidation or Succession to Business of
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
44. No Endorsement. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
45. Substitute Property . . . . . . . . . . . . . . . . . . . . . . . . 86
46. Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Page
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47. Defeasance Collateral Account . . . . . . . . . . . . . . . . . . . 93
48. Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
49. Modification of Operating Agreements. . . . . . . . . . . . . . . . 95
50. Substitute or Successor Trustee . . . . . . . . . . . . . . . . . . 96
51. Liability of Trustee. . . . . . . . . . . . . . . . . . . . . . . . 97
52. Beneficiary and Trustee . . . . . . . . . . . . . . . . . . . . . . 97
53. Miscellaneous; Servicer Cure. . . . . . . . . . . . . . . . . . . . 104
54. As to Property in Maryland. . . . . . . . . . . . . . . . . . . . . 104
55. As to Property in Connecticut . . . . . . . . . . . . . . . . . . . 105
56. As to Property in New Jersey. . . . . . . . . . . . . . . . . . . . 109
57. As to Property in New York. . . . . . . . . . . . . . . . . . . . . 109
58. As to Property in Pennsylvania. . . . . . . . . . . . . . . . . . . 111
59. Liability of Assignees of Beneficiary . . . . . . . . . . . . . . . 113
60. One of a Number of Mortgages . . . . . . . . . . . . . . . . . 113
EXHIBITS
EXHIBIT A Legal Descriptions of Properties
EXHIBIT B Environmental Reports
EXHIBIT C Subordination, Nondisturbance
and Attornment Agreement
SCHEDULES
SCHEDULE 1 - Allocated Loan Amounts
SCHEDULE 2 - Grantor/Grantor Properties
SCHEDULE 3 - Short-Term Repairs
INDENTURE OF MORTGAGE,
DEED OF TRUST, SECURITY AGREEMENT, FINANCING STATEMENT,
FIXTURE FILING AND ASSIGNMENT
OF LEASES, RENTS AND SECURITY DEPOSITS
THIS INDENTURE OF MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,
FINANCING STATEMENT, FIXTURE FILING AND ASSIGNMENT OF LEASES, RENTS AND
SECURITY DEPOSITS (herein, together with all amendments and supplements
thereto, this "Mortgage"), dated as of the 18th day of June, 1996, is made
by those certain entities listed on Schedule 2 hereto (collectively,
"Grantor" or "Mortgagor"), having an address c/o Kranzco Realty Trust, 128
Fayette Street, Conshohocken, Pennsylvania 19428, (as to properties in New
Jersey, Pennsylvania, Connecticut and New York) to KRT ORIGINATION CORP.
having an address at c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428, as Mortgagee, and (as to properties in
Maryland) to Ronald P. Fish, Esq. and Thomas A. Hauser, Esq., individuals
having an address at c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard
Street, 19th Floor, Baltimore, Maryland 21202 (individually and/or
collectively, the "Trustee"), for the benefit of KRT ORIGINATION CORP., a
Delaware corporation, having an address at c/o Kranzco Realty Trust, 128
Fayette Street, Conshohocken, Pennsylvania 19428 (together with its
successors and assigns, "Beneficiary" or "Mortgagee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, each Grantor is the record and beneficial owner of the
fee simple or leasehold interests in one or more of the Properties (as
defined below), located on and comprising the land described in Exhibit "A"
attached hereto (collectively, the "Land"), which Exhibit A sets forth which
Grantor is such owner of each of the Properties or a leasehold interest
therein; and
WHEREAS, Beneficiary has agreed to make loans to Grantor in the
aggregate principal amount of One Hundred Eighty-One Million Seven Hundred
Thousand Dollars ($181,700,000) (collectively, the "Loan"), which Loan shall
be evidenced by the Class A Mortgage Note (the "Class A Note"), the Class B
Mortgage Note (the "Class B Note"), the Class C Mortgage Note (the "Class C
Note"), and the Class D Mortgage Note (the "Class D Note"), each of even
date herewith (together with all amendments, modifications, supplements,
restatements, substitutions and replacements of any thereof or thereto, the
"Notes"), executed by Grantor in favor of Beneficiary, in the initial
principal amounts of $123,700,000, $20,600,000, $28,900,000 and $8,500,000,
respectively, payable as specified therein, with a maturity date of June 20,
2003 or if such date is not a Business Day, on the next preceding Business
Day (the "Maturity Date") or such earlier date as may be required under the
terms of the Notes.
NOW, THEREFORE, in consideration of the Loan to Grantor evidenced
by the Notes and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor hereby agrees as
follows:
TO SECURE:
(i) payment and performance of all covenants, conditions,
liabilities and obligations of Grantor to Beneficiary contained in, and
payment of the indebtedness evidenced by, the Notes plus all interest
payable thereunder; and
(ii) payment and performance of all covenants, conditions,
liabilities and obligations contained in this Mortgage and any
extensions, renewals or modifications hereof; and
(iii) payment and performance of all covenants, conditions,
liabilities and obligations of Grantor contained in the Assignment of
Leases, Rents and Security Deposits, dated as of the date hereof
(together with any extensions, renewals or modifications thereof, the
"Assignment of Leases"), between Grantor, as assignor, and Beneficiary,
as assignee, and the Cash Collateral Account, Security, Pledge and
Assignment Agreement, dated as of the date hereof (together with any
extensions, renewals or modifications thereof, the "Cash Collateral
Agreement"), among Grantor, as pledgor, State Street Bank and Trust
Company, as collateral agent, and Beneficiary, as pledgee; and
(iv) payment and performance of all covenants, conditions,
liabilities and obligations of Grantor contained in each of the other
Loan Documents (as defined below); and
(v) without limiting the foregoing, payment of all
indebtedness, liabilities, and amounts from time to time incurred by
Beneficiary pursuant to the Notes, this Mortgage or such other Loan
Documents; provided, that of the total principal amount of
indebtedness, $11,725,000 shall be secured by that certain property
located in Calvert County, Maryland, and $5,230,000 shall be secured by
that certain property located in Baltimore City and Baltimore County,
Maryland, all of which properties are more fully described on Exhibit
"A" (all of the foregoing indebtedness, monetary liabilities and
obligations set forth in clauses (i)-(iv) above and this clause (v),
collectively, the "Indebtedness"); and
(vi) payment of the Indebtedness together with the payment
and performance of all other covenants, conditions, liabilities and
obligations described and set forth in clauses (i)-(v) above and in
this clause (vi), collectively, the "Obligations."
GRANTING CLAUSES
NOW, THEREFORE, THIS MORTGAGE WITNESSETH: that Grantor, in
consideration of the premises, the Indebtedness secured by the Notes and
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged (a) has mortgaged, warranted, granted, bargained,
sold, alienated, released, confirmed, conveyed, pledged and assigned and (b)
by these presents does hereby irrevocably grant and create a first priority
Lien (as defined below), subject to the Permitted Encumbrances and the
provisions hereof and of the other Loan Documents, on and security interest
in, and does hereby MORTGAGE, WARRANT, GRANT A SECURITY INTEREST IN, GRANT,
BARGAIN, SELL, ALIENATE, RELEASE, CONFIRM, CONVEY, PLEDGE, ASSIGN, TRANSFER
AND SET OVER (as to properties in New Jersey, Pennsylvania, Connecticut and
New York) to Beneficiary as Mortgagee and (as to properties in Maryland) to
Trustee, IN TRUST WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, and
its respective successors and assigns forever, all its estate, right, title
and interest now owned or hereafter acquired in, to and under any and all
the property (collectively, the "Trust Estate") described in the following
Granting Clauses:
(A) the Land;
(B) all of Grantor's right, title and interest in and to the
buildings, foundations, structures, improvements and fixtures now or
hereafter located or erected on the Land (the "Improvements");
(C) all of Grantor's right, title and interest, if any, in
and to (i) all streets, avenues, roads, alleys, passages, places,
sidewalks, strips and gores of land and ways, existing or proposed,
public or private, adjacent to the Land, and all reversionary rights
with respect to the vacation of said streets, avenues, roads, alleys,
passages, places, sidewalks and ways in the land lying thereunder, (ii)
all air, lateral support, drainage, oil, gas and mineral rights,
options to purchase or lease, waters, water courses and riparian rights
now or hereafter pertaining to or used in connection with the Land
and/or Improvements, (iii) all and singular, the tenements,
hereditaments, rights of way, easements, appendages and appurtenances
and property now or hereafter belonging or in any way appertaining to
the Land, and (iv) all estate, right, title, claim or demand
whatsoever, either at law or in equity, in possession or expectancy,
of, in and to the Land (collectively, the "Appurtenances");
(D) all of Grantor's right, title and interest in and to all
of the machinery, appliances, apparatus, equipment, fittings, fixtures,
materials, articles of personal property and goods of every kind and
nature whatsoever, and all additions to and renewals and replacements
thereof, and all substitutions therefor, now or hereafter affixed to,
attached to, placed upon or located upon or in the Land, or any part
thereof, and used in connection with the use, ownership, management,
maintenance, enjoyment or operation of the Land in any present or
future occupancy or use thereof and now owned or leased or hereafter
owned or leased (to the extent permitted by the applicable Lease) by
Grantor including, but without limiting the generality of the
foregoing, all heating, lighting, laundry, cooking, incinerating,
loading, unloading and power equipment, boilers, dynamos, stokers,
engines, pipes, pumps, tanks, motors, conduits, switchboards, plumbing,
lifting, cleaning, fire prevention, fire extinguishing, refrigerating,
ventilating, and communications apparatus, air cooling and air condi-
tioning apparatus, building materials and equipment, elevators,
escalators, carpeting, shades, draperies, awnings, screens, doors and
windows, blinds, stoves, ranges, refrigerators, dishwashers, cabinets,
office equipment, furniture and furnishings, partitions, ducts and
compressors (other than equipment and personal property of tenants of
the Land or the Improvements, or any part thereof) (hereinafter
collectively called "Building Equipment"), and Grantor agrees to
execute and deliver, from time to time, such further instruments
(including, without limitation, any financing statements under the
Uniform Commercial Code of the applicable State in which a Property is
located (the "UCC")) as may be reasonably requested by Beneficiary to
confirm the lien of this Mortgage on any Building Equipment or any
Intangible;
(E) all of Grantor's right, title and interest as
lessee in and to all of the leases of the Properties, or any part
thereof, now existing or hereafter entered into by Grantor,
(collectively, the "Ground Leases");
All such right, title and interest of Grantor in and to each of
the parcels or sets of parcels of the Land, the Ground Leases, Grantor's
interest in and to the Improvements and Building Equipment located thereon
and such other property with respect thereto described in the foregoing
Granting Clauses is herein called a "Property" and all such Property,
together with the Land, the Ground Leases, Grantor's interest in and to the
Improvements and Building Equipment comprising a part of the properties
owned by each Grantor and identified on Schedule 2 are herein collectively
called the "Properties."
(F) all of Grantor's right, title and interest as lessor or
licensor, as the case may be, in, to and under all leases,
underlettings, concession agreements and licenses of the Properties, or
any part thereof, now existing or hereafter entered into by Grantor
including, without limitation, any cash and securities deposited
thereunder (collectively, the "Leases"), the grant of such cash and
securities hereunder being expressly subject to the provisions of the
applicable Leases, and all of Grantor's right, title and interest,
subject to the provisions of Section 9, in the right to receive and
collect the revenues, income, rents, issues, profits, royalties and
other benefits payable under any of the Leases or otherwise arising
from the use or enjoyment of all or any portion of the Properties
(collectively, the "Rents");
(G) subject to the provisions of Section 6 hereof, all of
Grantor's right, title and interest in and to all proceeds, judgments,
claims, compensation, awards or payments hereafter made to Grantor for
the taking, whether permanent or temporary, by condemnation, eminent
domain, or for any conveyance made in lieu of such taking, of the whole
or any part of the Properties, including, without limitation, all
proceeds, judgments, claims, compensation awards or payments for
changes of grade of streets or any other injury to or decrease in the
value of the Properties, whether direct or consequential, which said
awards and payments are hereby assigned to Beneficiary, who is hereby
authorized to collect and receive the proceeds thereof and to give
proper receipts and acquittances therefor, and to apply the same toward
the payment of the Indebtedness in such order as Beneficiary may
determine in accordance with the provisions of this Mortgage without
regard to the adequacy of Beneficiary's security hereunder and notwith-
standing the fact that the amount thereof may not then be due and
payable, and toward the payment of reasonable counsel fees, costs and
disbursements incurred by Beneficiary in connection with the collection
of such awards or payments; and Grantor hereby agrees, upon request, to
make, execute and deliver any and all further assignments and other
instruments sufficient for the purpose of confirming this assignment of
said proceeds, judgments, claims, compensation awards or payments to
Beneficiary, free, clear and discharged of any encumbrances of any kind
or nature whatsoever other than the Permitted Encumbrances;
(H) subject to the provisions of Section 6 hereof, all of
Grantor's right, title and interest in and to all unearned premiums
paid under insurance policies now or hereafter obtained by Grantor to
the extent the same insure the Properties and any other insurance
policies required to be maintained pursuant to Section 5 hereof to the
extent the same insure the Properties including, without limitation,
liability insurance policies and Grantor's interest in and to all
proceeds of the conversion and the interest payable thereon, voluntary
or involuntary, of the Trust Estate, or any part thereof, into cash or
liquidated claims including, without limitation, proceeds of casualty
insurance, title insurance (other than liability insurance) or any
other insurance maintained on or with respect to the Properties;
(I) all right, title and interest of Grantor in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and Appurtenances to, the
Properties, hereafter acquired by or released to Grantor or
constructed, assembled or placed by Grantor on the Properties, and all
conversions of the security constituted thereby; immediately upon such
acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case, to the extent
permitted by law, without any further mortgage, conveyance, assignment
or other act by Grantor, any of such extensions, improvements,
betterments, renewals, substitutes and replacements shall become
subject to the Lien of this Mortgage as fully and completely, and with
the same effect, as though now owned by Grantor and specifically
described herein;
(J) all of Grantor's right, title and interest in, to and
under, to the extent the same may be encumbered or assigned by Grantor
pursuant to the terms thereof without occurrence of a breach of default
thereunder or a violation under applicable law, and without impairment
of the validity or enforceability thereof, (i) any Operating Agreements
(as defined below) and all contracts and agreements relating to the
Properties (other than the Leases), and other documents, books and
records related to the ownership and operation of the Properties; (ii)
to the extent permitted by law, all consents, licenses (including, to
the extent permitted by law, any licenses held by Grantor permitting
the sale of liquor at any of the Properties the transfer and/or
assignment of which is permitted by law without filing or other
qualification), warranties, guaranties, building permits and government
approvals relating to or required for the construction, completion,
occupancy and operation of the Properties; (iii) all plans and
specifications for the construction of the Improvements, including,
without limitation, installations of curbs, sidewalks, gutters,
landscaping, utility connections and all fixtures and equipment
necessary for the construction, operation and occupancy of the
Improvements; (iv) all such other contracts and agreements (other than
the Leases) from time to time executed by Grantor relating to the
ownership, leasing, construction, maintenance, operation, occupancy or
sale of the Properties, together with all rights of Grantor to compel
performance of the terms of such contracts and agreements; and (v)
subject to the terms of the Cash Collateral Agreement, the Accounts (as
defined below) and any funds in such Accounts from time to time (it
being understood that at such time as Grantor shall withdraw any
amounts from any Accounts in accordance with the provisions of the Cash
Collateral Agreement, the same shall cease to constitute part of the
Trust Estate);
(K) to the extent the same may be encumbered or assigned by
Grantor pursuant to the terms thereof and to the extent permitted by
law, all of Grantor's right, title and interest in, to and under
escrows, documents, instruments, and general intangibles, as the
foregoing terms are defined in the UCC, in any case which now or
hereafter relate to, are derived from, or are used in connection with
the Properties, and all contract rights, franchises, books, records,
plans, specifications, permits, licenses, approvals, actions and causes
of action which now or hereafter relate to, are derived from or used in
connection with the Properties or the use, operation, maintenance,
occupancy or enjoyment thereof or the conduct of any business or
activities thereon (collectively, the property described in the
foregoing paragraphs (G), (H), (I), (J) and this paragraph (K), the
"Intangibles"); and
(L) all of Grantor's right, title and interest in all
proceeds, both cash and noncash, of the foregoing which may be sold or
otherwise be disposed of pursuant to the terms hereof.
TO HAVE AND TO HOLD THE TRUST ESTATE hereby conveyed, or mentioned
and intended so to be, whether now owned or held or hereafter acquired,
subject only to the Permitted Encumbrances, unto Trustee for the benefit and
use of Beneficiary, its successors and assigns, forever, upon the terms and
conditions set forth herein.
IN TRUST FOREVER, WITH POWER OF SALE (to the extent permitted by
applicable law), upon the terms and trusts set forth herein and to secure
the performance of, and compliance with, the obligations, covenants and
conditions of this Mortgage and the other Loan Documents all as herein set
forth.
1. Definitions. Wherever used in this Mortgage, the following
terms, and the singular and plural thereof, shall have the following
meanings. All capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Notes:
Accounts: Shall mean, collectively, the Collection Account, the
Capital and TI Reserve Account and the Sinking Fund Account and any and all
of Grantor's other accounts, general intangibles, chattel paper, cash or
monies, wherever located, whether in the form of cash or checks, and all
cash equivalents including all deposits and certificates of deposit,
instruments, whether negotiable or non-negotiable, debt notes both
certificated and uncertificated, repurchase obligations for underlying notes
of the types described herein, and commercial paper (it being agreed that
all of the foregoing must at all times qualify as Eligible Investments (as
defined in the Cash Collateral Agreement)), (a) received in connection with
the sale or other disposition of all or any of the Properties, (b)
maintained by Grantor in a segregated account in trust for the benefit of
Beneficiary, or (c) held by Beneficiary, but not any account maintained by
Grantor or an Affiliate of Grantor not in trust for the benefit of
Beneficiary, or cash or cash equivalents that have been disbursed to Grantor
in accordance with the Cash Collateral Agreement.
Affiliate: Shall mean, with respect to any specified Person, any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with, or any general partner in, 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 interest, by
contract or otherwise; and the terms "controlling" and "controlled" have the
meanings correlative to the foregoing.
Agent: Shall mean the Collateral Agent acting as such under the
Cash Collateral Agreement.
Aggregate Alteration Threshold Amount: Shall mean $5,000,000.
Allocated Loan Amount: Shall mean the portion of the Principal
Indebtedness allocated, solely for purposes of performing certain
calculations hereunder, to each Property as set forth in Schedule 1 annexed
hereto and made a part hereof, as such amounts shall be adjusted from time
to time as hereinafter set forth. In the case of a Total Loss in accordance
with Section 6(d) where the Proceeds are less than 125% of the Allocated
Loan Amount, each Allocated Loan Amount shall be increased by an amount
equal to the product of (a) the difference between 125% of the applicable
Allocated Loan Amount and the Proceeds, and (b) a fraction, the numerator of
which is the applicable Allocated Loan Amount (prior to the adjustment in
question) and the denominator of which is the Principal Indebtedness prior
to the adjustment to the Principal Indebtedness resulting in the
recalculation of the Allocated Loan Amount. Whenever a property is
substituted for a Property pursuant to Section 45 hereof, the Allocated Loan
Amount for the Replaced Property shall be the Allocated Loan Amount for the
Substitute Property. All calculations made pursuant to this Mortgage with
respect to an Allocated Loan Amount (including or scheduled interest
payments on an Allocated Loan Amount) shall be certified to Beneficiary by
Grantor pursuant to an Officer's Certificate.
Alteration: As defined in Section 12(c) hereof.
Approved Banks: Shall mean banks or other financial institutions
which have a minimum long-term unsecured debt rating of at least "AA" by the
Rating Agency (whether or not published by the Rating Agency), or if any
such bank or other financial institution is not rated by the Rating Agency,
then a minimum long-term rating of at least "AA" or its equivalent by two of
Standard & Poor's Ratings Services, Duff & Phelps Credit Rating Corp. or
Moody's Investors Services, Inc.
Appurtenances: As defined in Granting Clause (C) hereof.
Assignee: As defined in Section 59 hereof.
Assignment of Leases: As defined in the recitals hereof.
Beneficiary: As defined in the introductory paragraph hereof.
Best: As defined in Section 5(b).
Building Equipment: As defined in Granting Clause (D) hereof.
Business Day: Shall mean any day except a Saturday, a Sunday or
any other day on which commercial banks in the States of New York or
Pennsylvania are authorized or obligated by law, governmental decree or
executive order to be closed.
Capital and TI Reserve Account: Shall have the meaning set forth
for such term in the Cash Collateral Account.
Cash and Cash Equivalents: Shall mean (i) cash, and (ii) direct
obligations of the United States Government, including, without limitation,
treasury bills, notes and bonds, (iii) interest bearing or discounted
obligations of Federal agencies and government sponsored entities or pools
of such instruments offered by Approved Banks and dealers, including,
without limitation, Federal Home Loan Mortgage Corporation participation
sale certificates, Government National Mortgage Association modified pass-
through certificates, Federal National Mortgage Association bonds and notes,
Federal Farm Credit System securities, (iv) time deposits, domestic and
Eurodollar certificates of deposit, bankers acceptances, commercial paper
rated "F-1+" by the Rating Agency, and/or guaranteed by an entity rated "AA"
by the Rating Agency, floating rate notes, other money market instruments
and letters of credit each issued by Approved Banks, (v) obligations issued
by state and local governments or their agencies, rated "AA" with respect to
long-term debt or "F-1+" for short-term debt by the Rating Agency and/or
guaranteed by an unconditional, irrevocable, clean, sight draft letter of
credit of an Approved Bank in favor of Beneficiary, and (vi) repurchase
agreements with Approved Banks and primary government securities dealers
fully secured by U.S. Government or agency collateral equal to or exceeding
the principal amount on a daily basis and held in safekeeping.
Cash Collateral Agreement: As defined in the recitals hereof.
Casualty Amount: As defined in Section 6(b) hereof.
Certificates: Shall mean, collectively, Certificates issued
pursuant to the Trust and Servicing Agreement.
Closing Date: Shall mean the date the Loan and the transactions
contemplated hereby are consummated.
Collection Account: Shall have the meaning set forth for such
term in the Cash Collateral Agreement.
Code: Shall mean the Internal Revenue Code of 1986, as amended,
and any successor thereto, and any temporary or final regulations
promulgated thereunder.
CPI: Shall mean the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics of the United States Department
of Labor, All Items (1982-1984=100), or any successor index thereto,
appropriately adjusted. In the event that the CPI is converted to a
different standard reference base or otherwise revised, the determination of
adjustments provided for herein shall be made with the use of such
conversion factor, formula or table for converting the CPI as may be
published by the Bureau of Labor Statistics or, if said Bureau shall not
publish the same, then with the use of such conversion factor, formula or
table as may be published by Prentice-Hall, Inc., or any other nationally
recognized publisher of similar statistical information.
Debt: Shall mean, with respect to any Person at any time,
(a) indebtedness or liability of such Person for borrowed money whether or
not evidenced by bonds, debentures, notes or other instruments, or for the
deferred purchase price of property or services (excluding trade
obligations); (b) obligations of such Person as lessee under leases which
should have been or should be, in accordance with GAAP, recorded as capital
leases; (c) current liabilities of such Person in respect of unfunded vested
benefits under plans covered by Title IV of ERISA; (d) obligations issued
for, or liabilities incurred on the account of, such Person; (e) obligations
or liabilities of such Person arising under acceptance facilities; (f)
obligations of such Person under any guarantees or other agreement to become
secondarily liable for any obligation of any other Person, endorsements
(other than for collection or deposit in the ordinary course of business)
and other contingent obligations to purchase, to provide funds for payment,
to supply funds to invest in any Person or otherwise to assure a creditor
against loss; (g) obligations of such Person secured by any Lien on any
property of such Person, whether or not the obligations have been assumed by
such Person; or (h) obligations of such Person under any interest rate or
currency exchange agreement.
Debt Service: Shall mean the amount of interest and principal due
and payable in accordance with the Notes during any applicable period.
Debt Service Coverage Ratio: Shall mean for any period the ratio
of Net Operating Income to Debt Service on the Notes (based on a debt
service constant on the Notes of the greater or 10.09% per annum and the
actual average debt service constant on the Notes) for such period.
Default: Shall mean the occurrence or existence of any event or
condition which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default hereunder.
Default Rate: Shall mean, in the case of each Note, the lesser of
(a) the rate per annum on such Note plus 3%, and (b) the maximum rate of
interest allowable under New York law.
Defeasance: As defined in Section 46 hereof.
Defeasance Collateral: Shall mean Defeasance Eligible Investments
included in the Trust Estate as collateral pursuant to Sections 38, 45 and
46 hereof (including, without limitation, all amounts then on deposit in the
Defeasance Collateral Account).
Defeasance Collateral Account: As defined in Section 47 hereof.
Defeasance Eligible Investments: Shall mean obligations or
securities not subject to prepayment, call or early redemption which are
direct obligations of, or obligations fully guaranteed as to timely payment
by, the United States of America or any agency or instrumentality of the
United States of America, or the obligations of which are backed by the full
faith and credit of the United States of America, the ownership of which
will not cause Beneficiary to be an "investment company" under the Invest-
ment Company Act of 1940, as amended, as evidenced by an Opinion of Counsel
acceptable to Beneficiary, and which qualify under Section 1.860G-2(a)(8) of the
Treasury regulations. All such obligations or securities shall mature or be
redeemable, or provide for payments of interest thereon, on or prior to the
Business Day preceding the date such amounts are required to be applied
under this Mortgage.
Direct Beneficial Owner: Shall mean such Persons who own any
direct ownership interest in Grantor.
Environmental Certificate: As defined in Section 40(b) hereof.
Environmental Claim: Shall mean any action, governmental
investigation or written notice by any Person alleging potential liability
(including potential liability for investigatory costs, cleanup costs,
natural resource damages, property damages, personal injuries or penalties)
arising out of, based upon or resulting from (a) the presence, threatened
presence, release or threatened release into the environment of any
Hazardous Substances from or at the Properties, or (b) the violation, or
alleged violation, of any Environmental Law, relating to the Properties.
Environmental Event: As defined in Section 40(b) hereof.
Environmental Laws: Shall mean all present or future federal,
state and local laws, statutes, rules, ordinances, and regulations relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land surface
or subsurface strata), including, without limitation laws, statutes, rules,
ordinances and regulations relating to emissions, discharges, releases of
Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq.; the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq.; the Toxic Substance Control Act, 15 U.S.C. Section
2601 et seq.; the Water Pollution Control Act (also known as the Clean Water
Act), 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401
et seq.; and the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801
et seq., as the same may be hereafter amended or modified.
Environmental Reports: As defined in Section 40(a) hereof.
ERISA: Shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
thereunder.
Events of Default: Shall mean the occurrence of any of the
following, each of which shall constitute an Event of Default under this
Mortgage:
(a) (i) Failure to make any payment of interest or principal on
any Note when due, or (ii) failure to pay the principal balance of any Note
when due; or
(b) Grantor fails to pay any other amount payable pursuant to
this Mortgage or the Notes when due and payable in accordance with the
provisions hereof, with such failure continuing for ten (10) days after
Beneficiary delivers written notice thereof to Grantor; or
(c) (i) Failure to keep in force the insurance required by
Section 5 of this Mortgage, or (ii) failure to comply with any other
covenants set forth in Section 5 with such failure in this clause (ii)
continuing for ten (10) Business Days after Beneficiary delivers written
notice thereof to Grantor; or
(d) Any default under the terms of Section 7(b) (subject to the
terms of Section 7(c)) beyond any applicable time periods set forth therein,
with such default continuing for ten (10) Business Days after Beneficiary
delivers written notice thereof to Grantor, or the incurrence of any Debt in
violation of Section 11(c) of this Mortgage or the occurrence of any
Transfer in violation of Sections 11(a) and 11(b) (but subject to the terms
of Section 11(d)) of this Mortgage; or
(e) Any attempt by Grantor to assign its rights under this
Mortgage; or
(f) Any other default in the performance or payment, or breach,
of any material covenant, warranty, representation or agreement of Grantor
contained herein or in any other Loan Document (other than a covenant,
representation or agreement, a default in the performance or payment of or
the breach of which is specifically addressed elsewhere in this definition),
which default is not cured within thirty (30) Business Days after receipt by
Grantor of notice from Beneficiary in writing of such breach. If cure of
such default (a) would require performance of an Obligation other than
payment of Indebtedness to Grantor and (b) cannot be effected within said 30
Business Day period despite Grantor's diligence in prosecuting such cure,
then, provided Grantor commences to cure within said thirty (30) Business
Day period and diligently prosecutes said cure to completion, subject only
to Excusable Delays, the cure period provided hereunder shall be extended to
such time as may be reasonably necessary to cure the default; provided,
however, that such extended period shall in no event exceed 60 days plus
time permitted for Excusable Delays; and provided, further, that Grantor
shall provide Beneficiary with a written report and evidence of the progress
of Grantor's cure efforts 30 days after commencement of such 60-day cure
period. Notwithstanding the foregoing sentence, the cure period provided
hereunder may be extended for one additional 90-day period, subject to
Excusable Delays, if and only if (x) such default involves breach of a
covenant (as distinct from a representation) and cure of such default would
require physical construction or remedial work, and (y) such cure cannot
with diligence be completed within the initial 60-day period. Grantor shall
provide Beneficiary with an additional written report and evidence of the
progress of Grantor's cure efforts 45 days after commencement of such
additional 90-day cure period; or
(g) The entry by a court of (A) a decree or order for relief in
respect of Grantor or its General Partner in an involuntary case or
proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging
Grantor or its General Partner a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of Grantor or its General Partner under any
applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of Grantor or its General
Partner or of any substantial part of either of their respective property,
or ordering the winding up or liquidation of either of their respective
affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of more than
ninety (90) consecutive days; or
(h) The commencement by Grantor or its General Partner of a
voluntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree or order for relief in respect of it in an
involuntary case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it,
or the filing by Grantor or its general partner of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or
state bankruptcy, insolvency, reorganization or other similar law, or the
consent by Grantor or its General Partner to the filing of such petition or
to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of Grantor
or its General Partner or of any substantial part of any of either of their
respective property, or the making by Grantor or its General Partner of an
assignment for the benefit of creditors, or the admission by Grantor or its
General Partner in writing of its inability to pay its debts generally as
they become due, or the taking of official partnership action of Grantor or
corporate action of its General Partner (or if, at any time, Grantor shall
no longer be a partnership or the General Partner shall no longer be a
corporation) in furtherance of any such action; or
(i) This Mortgage or any other Loan Document or any Lien granted
hereunder or thereunder shall, in whole or in part, terminate, cease to be
effective or cease to be a legally valid, binding and enforceable obligation
of Grantor, or any Lien securing the Indebtedness shall, in whole or in
part, cease to be a perfected first priority Lien, subject to the Permitted
Encumbrances (except in any of the foregoing cases in accordance with the
terms hereof or under any other Loan Document); or
(j) Any "Event of Default" as defined in any Loan Document other
than this Mortgage occurs.
Exculpated Parties: As defined in Section 33 hereof.
Excusable Delay: Shall mean a delay due to acts of God,
governmental restrictions, stays, judgments, orders, decrees, enemy actions,
civil commotion, fire, casualty, strikes, work stoppages, shortages of labor
or materials or other causes beyond the reasonable control of Grantor, but
lack of funds in and of itself shall not be deemed a cause beyond the
control of Grantor.
First Class: Shall mean, with respect to any Property, a standard
of operation and maintenance consistent with properties comparable to and in
the same metropolitan area as the applicable Property.
Fitch: Shall mean Fitch Investors Service, L.P. or any successor
thereto.
GAAP: Shall mean the generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such entity as may be
in general use by significant segments of the U.S. accounting profession, to
the extent such principles are applicable to the facts and circumstances on
the date of determination.
General Partner: Shall mean a general partner in a Grantor which
is a partnership.
Governmental Authority: Shall mean any Federal, state or local
government or any other political subdivision thereof exercising executive,
legislative, judicial, regulatory or administrative functions.
Grantor: As defined in the introductory paragraph hereof, Grantor
shall mean, collectively, the entities described on Exhibit 4 attached
hereto, and as the context may provide, Grantor shall also mean each of such
entities separately with respect to a matter pertaining solely to an entity
itself or to a particular Property owned by an entity.
Ground Leases: As defined in Granting Clause (E) hereof.
Hazardous Substance: Shall mean any material waste or material
substance which is:
(a) included within the definition of "hazardous substances,"
"hazardous materials," "toxic substances," or "solid waste" in or pursuant
to any Environmental Law, or subject to regulation under any Environmental
Law;
(b) listed in the United States Department of Transportation
Optional Hazardous Materials Table, 49 C.F.R. 172.101 enacted as of the
date hereof or hereafter amended, or in the United States Environmental
Protection Agency List of Hazardous Substances and Reportable Quantities, 40
C.F.R. Part 302, as enacted as of the date hereof or as hereafter amended;
or
(c) an explosive, radioactive, asbestos, polychlorinated
biphenyl, oil or petroleum product.
Holders: Shall mean, collectively, the holders of the
Certificates issued pursuant to the Trust and Servicing Agreement.
Impositions: Shall mean all taxes (including all ad valorem,
sales (including those imposed on lease rentals), use, single business,
gross receipts, value added, intangible transaction, privilege or license or
similar taxes), governmental assessments (including all assessments for
public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not commenced or completed within the term
of this Mortgage), water, sewer or other rents and charges, excises, levies,
fees (including license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Trust Estate and/or any Rents (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 (a) Grantor (including all income, franchise, single business
or other taxes imposed on Grantor for the privilege of doing business in the
jurisdiction in which the Trust Estate is located), (b) the Trust Estate, or
any other collateral delivered or pledged to Beneficiary in connection with
the Loan, or any part thereof, or any Rents therefrom or any estate, right,
title or interest therein, or (c) any occupancy, operation, use or
possession of, or sales from, or activity conducted on, or in connection
with the Trust Estate or the leasing or use of all or any part thereof.
Nothing contained in this Mortgage shall be construed to require Grantor to
pay any tax, assessment, levy or charge imposed on (i) any tenant occupying
any portion of the Property or (ii) Beneficiary or any Holder in the nature
of a franchise, capital levy, estate, inheritance, succession, income or net
revenue tax.
Improvements: As defined in Granting Clause (B) hereof.
Indebtedness: As defined in the recitals hereof.
Indemnified Environmental Parties: As defined in Section 40(c)
hereof.
Indemnified Parties: As defined in Section 37 hereof.
Independent Accountant: Shall mean Arthur Andersen LLP, or
another firm of nationally recognized, independent certified public
accountants selected by Grantor which is reasonably acceptable to
Beneficiary.
Independent Appraiser: Shall mean an independent appraiser which
is a member of the American Institute of Real Estate Appraisers selected by
Grantor and having at least five (5) years of experience in the applicable
real estate market where the applicable Property is located in the valuation
of properties of the type being appraised.
Independent Architect: Shall mean an independent architect,
engineer or construction consultant selected by Grantor, licensed to
practice in the State where the applicable Property is located and having at
least five (5) years of experience.
Individual Environmental Matter: As defined in Section 48(c).
Individual Threshold Amount: Shall mean, with respect to each
Property, five percent (5%) of the Allocated Loan Amount therefor.
Individual Trustee: Shall mean such person as is required by
applicable state law to perform the functions of the Trustee pursuant to
Section 52 hereof.
Insurance Requirements: Shall mean all terms of any insurance
policy required hereunder covering or applicable to any Property or any part
thereof, all requirements of the issuer of any such policy, and all orders,
rules, regulations and other requirements of which Grantor has notice of the
national board of fire underwriters (or any other body exercising similar
functions) applicable to or affecting any Property or any part thereof or
any use of any Property or any part thereof.
Intangibles: As defined in Granting Clause (K) hereof.
Jurisdictional Trustee: As defined in Section 52 hereof.
Land: As defined in the recitals hereof.
Leases: As defined in Granting Clause (F) hereof.
Legal Requirements: As defined in Section 13(a) hereof.
Lien: Shall mean any mortgage, deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance of,
on or affecting the Trust Estate or any portion thereof 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, and mechanic's, materialmen's and other similar liens and
encumbrances.
Loan: As defined in the recitals hereof.
Loan Amount: Shall mean the aggregate Principal Amount of the
Loan, which initially shall be $181,700,000.
Loan Documents: Shall mean this Mortgage, the Assignment of
Leases, the Cash Collateral Agreement, the Notes, and any and all other
agreements, instruments or documents executed by Grantor evidencing,
securing or delivered in connection with the Loan and the transactions
contemplated hereby.
Material Adverse Effect: Shall mean any event or condition that
has a material adverse effect on (i) all of the Properties taken as a whole,
(ii) the business, prospects, profits, operations or condition (financial or
otherwise) of Grantor, or (iii) the ability of Grantor to repay the
principal and interest of the Indebtedness as it becomes due.
Material Alteration: Shall mean any Alteration which, when
aggregated with all related Alterations constituting a single project,
involves an estimated cost exceeding the greater of the Individual Threshold
Amount and $500,000 with respect to Alterations (including the Alteration in
question) being undertaken at a single Property at such time or the
Aggregate Alteration Threshold Amount with respect to Alterations (including
the Alteration in question) being undertaken at all the Properties at such
time, but in either event, excluding any Alteration for which a Tenant is
obligated to pay directly.
Maturity Date: As defined in the recitals hereof.
Maximum Foreseeable Casualty Loss: As defined in Section 5(b)
hereof.
Minimum Defeasance Collateral Requirement: Shall mean, with
respect to a Property Release or a substitution pursuant to Section 46
hereof resulting in a Defeasance, Defeasance Collateral in an amount (i)
sufficient to pay 125% of the Allocated Loan Amount applicable to the
Property which is the subject of the Property Release or substitution in
respect of the first seven Properties and 135% of the Allocated Loan Amount
for the release or substitution of each Property thereafter or, if the
Property to be released is a Specified Property, an amount equal to 150% of
the Allocated Loan Amount unless prior to the release of such Specified
Property the Rating Agency has delivered the written affirmation of the
ratings of the Certificates as provided for in Section 38(b)(iii) hereof,
and (ii) sufficient to pay scheduled interest and principal payments (such
payments, the "Defeasance Debt Service Payments") on the portion of the Loan
equal to such Allocated Loan Amount on such Property or Replaced Property,
as the case may be, assuming an average interest rate on the Notes equal to
the actual interest rates on the Notes. Sufficient portions of the Defea-
sance Collateral must mature on or before the dates when such amounts are
required to be applied to pay Defeasance Debt Service Payments when due.
Monthly Capital and TI Reserve Amount: As defined in Section
48(b) hereof.
Mortgage: As defined in the recitals hereof.
Net Operating Income: Shall mean, with respect to any period, the
excess of Operating Income over Operating Expenses for such period.
Nondisqualification Opinion: Shall have the meaning set forth for
such term in the Trust and Servicing Agreement.
Nondisturbance Agreement: As defined in Section 15(d) hereof.
Notes: As defined in the recitals hereof.
Obligations: As defined in the recitals hereof.
Officer's Certificate: Shall mean a certificate delivered to
Beneficiary and signed by an officer of Kranzco Realty Trust or by an
officer of one of the entities comprising the Grantor (or if such entity is
a partnership, then signed by a general partner in the entity).
Operating Agreements: Shall mean the reciprocal easement
agreements, operating agreements and similar agreements affecting the
ownership, use and operation of the Properties, as such agreements have been
or may hereafter be amended, modified or supplemented.
Operating Expenses: Shall mean, for any period, without
duplication, all expenses paid or to be paid by Grantor during such period
in connection with the operation, management, maintenance, repair and use of
the Trust Estate, determined on an accrual basis, and, except to the extent
otherwise provided in this definition, in accordance with GAAP. Operating
Expenses specifically shall include (i) all payments required to be made
pursuant to any Ground Leases and/or Operating Agreements, (ii) legal,
accounting, appraisal and other professional fees and disbursements in
connection with the Notes, and (iii) fees and expenses of Beneficiary (if
any) paid by Grantor, and (iv) management fees, whether or not actually
paid, equal to 3.5% of annual "base" or "fixed" Rent and any percentage rent
due under the Leases. Notwithstanding the foregoing, Operating Expenses
shall not include (1) depreciation or amortization, (2) income taxes or
other Impositions in the nature of income taxes, (3) any expenses (including
legal, accounting and other professional fees, expenses and disbursements)
incurred in connection with the issuance of the Notes or the sale, exchange,
transfer, financing or refinancing of all or any portion of the Trust Estate
or in connection with the recovery of insurance or condemnation proceeds
which are applied to prepay the Notes, (4) any expenses which in accordance
with GAAP should be capitalized, (5) Debt Service, and (6) any item of
expense which would otherwise be considered within Operating Expenses
pursuant to the provisions above but is paid directly by any Tenant.
Operating Income: Shall mean, for any period, all income of
Grantor during such period from the operation of the Trust Estate or, as
applicable, a Property as follows:
(i) all amounts payable to Grantor by any Person as rent and
other amounts under Leases, license agreements, occupancy agreements or
other agreements relating to the Trust Estate or, as applicable, a
Property (including reimbursements and percentage rents);
(ii) rent insurance proceeds; and
(iii) all other amounts which in accordance with GAAP are
included in Grantor's annual financial statements as operating income
attributable to the Trust Estate or, as applicable, a Property.
Notwithstanding the foregoing, Operating Income shall not include
(a) any condemnation or insurance proceeds (other than rent insurance
proceeds or condemnation proceeds with respect to a temporary taking and, in
either such case, only to the extent allocable to the applicable reporting
period), (b) any proceeds resulting from the Transfer of all or any portion
of a Property, (c) any rent attributable to a Lease prior to the date on
which the actual payment of rent is required to commence thereunder, (d) any
item of income otherwise includable in Operating Income but paid directly by
any tenant to a Person other than Grantor, provided such item of income is
an item of expense (such as payments for utilities paid directly to a
utility company) and is otherwise excluded from the definition of Operating
Expenses, or (e) security deposits received from Tenants until forfeited.
Operating Income shall be calculated on the accrual basis of accounting and,
except to the extent otherwise provided in this definition, in accordance
with GAAP.
Opinion of Counsel: Shall mean an opinion of counsel of a
nationally recognized law firm or other law firm reasonably acceptable to
Beneficiary and, at any time that the Loan is included in any securitization
transaction, the Rating Agency, procured by Grantor and rendered at
Grantor's sole cost and expense.
Permitted Debt: As defined in Section 11(c) hereof.
Permitted Encumbrances: Shall mean:
(i) Liens for Impositions not yet due and payable or Liens
arising after the date hereof which are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted
in accordance with Section 7(c) hereof;
(ii) In the case of Liens arising after the date hereof,
statutory Liens of carriers, warehousemen, mechanics, materialmen and
other similar Liens arising by operation of law, which are incurred in
the ordinary course of business for sums not more than sixty (60) days
delinquent or which are being contested in good faith in accordance
with Section 7(c);
(iii) Easements, rights-of-way, restrictions and other
similar charges or non-monetary encumbrances against real property not
interfering in any material respect with the use or ordinary conduct of
Grantor's business or any Property and not diminishing in any material
respect the value of the Property or Properties to which it is
attached;
(iv) Liens arising from filing UCC financing statements
regarding leases of Building Equipment;
(v) From and after the date hereof, liens and judgments
which have been or will be bonded or released of record within thirty
(30) days after Grantor has received notice of the filing of such Lien
or judgment or which are being contested in good faith in accordance
with Section 7(c) hereof;
(vi) Those matters set forth in the "marked-up" commitment
for Beneficiary's loan policy of title insurance concerning the
Properties issued by the Title Company;
(vii) Liens in favor of Beneficiary under this Mortgage and
the other Loan Documents;
(viii) Rights of existing and future Tenants, as tenants
only, pursuant to Leases;
(ix) Such other title exceptions as Beneficiary and the
Rating Agency may approve in writing in their sole discretion; and
(x) Any Liens related to or secured by any Excluded
Property.
Person: Shall mean any individual, corporation, partnership,
joint venture, estate, trust, unincorporated association, and any federal,
state, county or municipal government or any political subdivision thereof.
Principal Amount: Shall mean in the case of each Note, the
principal amount thereof, as defined therein.
Principal Indebtedness: Shall mean, in the aggregate, the
Principal Amount payable by Grantor under each Note.
Proceeds: As defined in Section 6(b) hereof.
Properties: As defined in Granting Clause (E) hereof.
Property Release: Shall mean the release of a Replaced Property
from the lien and security interest of Beneficiary in this Mortgage and
other Loan Documents relating to such Replaced Property, and the execution
and delivery by Beneficiary of any agreements reasonably requested by
Grantor to release and terminate or reconvey and reassign, such Mortgage;
provided that such release and termination or reconveyance and reassignment
shall be without recourse to Beneficiary and without any representation and
warranty and Grantor shall be released from its obligations under the Loan
Documents with respect to the Replaced Property, and if a particular entity
which is one of the entities comprising Grantor has no other interest in any
of the Properties after the replacement of the Replaced property, then such
entity shall also be released from any liability under the Loan Documents;
provided, further, that upon the release and termination or reconveyance and
reassignment of Beneficiary's security interest in this Mortgage relating to
the Replaced Property, all references herein to this Mortgage relating to
the Replaced Property shall be deemed deleted; and provided, further, that
upon any Property Release, Grantor shall cause to be delivered to
Beneficiary in form and substance reasonably satisfactory to Beneficiary, at
Grantor's sole cost and expense, an original title insurance policy
endorsement, if available at a nominal cost (without additional premium),
insuring Beneficiary's perfected first priority interest under this Mortgage
in and to the remaining Properties in the Trust Estate following the
Property Release.
Qualifying Manager: As defined in Section 19(a) hereof.
Rating Agency: Shall mean Fitch or any of its successors, or, if
such entity shall for any reason no longer perform the functions of a
securities rating agency, any other nationally recognized statistical rating
agency designated by Beneficiary.
Release Date: As defined in Section 38 hereof.
Release Price: As defined in Section 38 hereof.
Renewal Lease: As defined in Section 15(b) hereof.
Rents: As defined in Granting Clause (F) hereof.
Replaced Property: As defined in Section 45(a) hereof.
Servicer: Shall mean the Servicer acting as such under the Trust
and Servicing Agreement.
Sinking Fund Account: Shall have the meaning set forth for such
term in the Cash Collateral Agreement.
Single Purpose Entity: Shall mean a Person, other than an
individual, which is formed or organized solely for the purpose of holding,
directly, an ownership interest in one or more of the Properties, does not
engage in any business unrelated to the Properties and the financing
thereof, does not have any assets other than those related to its interest
in the Properties or the financing thereof or any indebtedness other than as
permitted by this Mortgage or the other Loan Documents, has its own separate
books and records and its own accounts, in each case which are separate and
apart from the books and records and accounts of any other Person, holds
itself out as being a Person, separate and apart from any other Person, and
it and its partnership agreement, certificate of incorporation or other
organizational documents complies with the standards for a Single Purpose
Entity set by the Rating Agency at such time.
Specified Property: As defined in Section 38(b) hereof.
Substitute Property: As defined in Section 45(a) hereof.
Taking: Shall mean a temporary or permanent taking by any
Governmental Authority as the result or in lieu or in anticipation of the
exercise of the right of condemnation or eminent domain, of all or any part
of the Trust Estate, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting a
Property or any part thereof.
Tax Opinion: Shall mean an Opinion of Counsel to the effect that
a contemplated action (a) will not result in any deemed exchange pursuant to
Section 1001 of the Code of any Note; and (b) will not adversely affect the
Notes' or such other note's status as indebtedness for federal income tax
purposes.
Tenant: Shall mean any Person leasing, subleasing or otherwise
occupying any portion of a Property.
Threshold Amount: Shall mean $500,000.
Title Company: Shall mean Lawyer's Title Insurance Company.
Total Defeasance Collateral Requirement: Shall mean with respect
to a Defeasance of the Lien of this Mortgage with respect to all of the
Properties, Defeasance Collateral in an amount sufficient to pay all
principal indebtedness outstanding as of the date of Defeasance under the
Notes as it becomes due and sufficient to pay scheduled interest payments on
the Loan, assuming an interest rate equal to the actual average interest
rate on the Notes. All Defeasance Collateral must mature on or before the
Maturity Date.
Total Loss: Shall mean (i) a casualty, damage or destruction of a
Property, the cost of restoration of which (calculated in accordance with
the provisions of Section 6 hereof) would exceed fifty percent (50%) of the
applicable Allocated Loan Amount, and with respect to which Grantor is not
required, under the applicable Lease to apply Proceeds to the restoration of
such Property or (ii) a permanent Taking of fifty percent (50%) or more of
the gross leasable area of a Property or so much of a Property, in either
case, such that it would be impracticable, in Beneficiary's reasonable
discretion, even after restoration, to operate such Property as an
economically viable whole and with respect to which the applicable Lease
does not require such restoration.
Transfer: Shall mean sell, assign, convey, transfer, pledge or
otherwise dispose of, or where used as a noun, a sale, assignment,
conveyance, transfer, pledge or other disposition.
Trust and Servicing Agreement: Shall mean the Trust and Servicing
Agreement, dated of even date herewith, among GE Capital Asset Management
Corporation, as servicer, State Street Bank and Trust Company, as trustee
and Beneficiary, as depositor, for the benefit of the respective Holders of
the Certificates evidencing beneficial interests in each of the trusts
established by the Trust and Servicing Agreement.
Trust Estate: As defined in the Granting Clauses hereof, which
shall, in any event, exclude any and all Replaced Property, and include any
and all Substitute Property.
Trustee: As defined in the recitals hereof.
Trustees: Shall mean the Trustee, the Individual Trustee together
with the Jurisdictional Trustee, all separate trustees and co-trustees
appointed as provided in Section 52 hereof.
UCC: As defined in Granting Clause (D) hereof.
Work: As defined in Section 6(b) hereof.
All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. When used herein, the term "financial
statements" shall include the notes and schedules thereto. Unless otherwise
specified herein or therein, all terms defined in this Mortgage shall have
the defined meanings when used in any other Loan Document or in any
certificate or other document made or delivered pursuant thereto.
The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Mortgage shall refer to this Mortgage as a whole
and not to any particular provision of this Mortgage, and section, schedule
and exhibit references are to this Mortgage unless otherwise specified. The
words "includes" and "including" are not limiting and mean "including
without limitation."
In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through" means
"to and including."
References to agreements and other documents shall be deemed to
include all subsequent amendments and other modifications thereto executed
in writing by all of the parties thereto and, if Beneficiary's consent was
required for the original of any such document, consented to by Beneficiary.
All references in this Mortgage to the plural of any document described
herein shall mean all of such documents collectively.
References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending,
or replacing the statute or regulation.
The captions and headings of this Mortgage are for convenience of
reference only and shall not affect the construction of this Mortgage.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Grantor represents and warrants to, and covenants and agrees with,
Beneficiary as follows:
2. Warranty of Title. (a) Grantor owns good and insurable fee
simple or leasehold title to the Land and the Improvements, subject only to
the Permitted Encumbrances and the Consolidated, Amended and Restated
Indenture of Mortgage, Deed of Trust, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents and Security
Deposits of even date herewith by Grantor in favor of the Trustees named
therein for the benefit of the Beneficiary. This Mortgage upon its due
execution and proper recordation is and will remain a valid and enforceable
(and, with respect to all personalty (as to which security interests are
governed by the UCC), upon proper recordation and the filing of a financing
statement) perfected Lien on and security interest on the Land, Improvements
and such personalty, or the Ground Leases, as the case may be, subject to
the Permitted Encumbrances. Grantor will preserve its fee simple or
leasehold title to the Trust Estate for so long as any of the Notes remain
outstanding and will warrant and defend same and the validity and priority
of the Lien hereof from and against any and all claims whatsoever other than
the Permitted Encumbrances.
(b) The Ground Leases are in full force and effect, unmodified by
any writing or otherwise; (ii) all rent, additional rent and/or other
charges reserved in or payable under the Ground Leases, have been paid to
the extent that they are payable to the date hereof; (iii) the Grantor is
not in default under any of the material terms of the Ground Leases and to
the best of its knowledge, is not in default under any other term of the
Ground Leases and there are no circumstances which, with the passage of time
or the giving of notice or both, would constitute a default under the Ground
Lease; (iv) the fee owners of the Properties subject to the Ground Leases
are not in default under any of the material terms or provisions of the
Ground Leases and to the best of the Grantor's knowledge, such fee owners
are not in default under any other terms or provisions of the Ground Leases,
on its part to be observed or performed; and (v) the Grantor has delivered
to the Trustee true, accurate and complete copies of the Ground Leases.
(c) As additional security for Grantor's obligation to warrant
and defend its title to the Trust Estate, Grantor hereby collaterally
assigns to Beneficiary, all right, title and interest of Grantor in and to
any of the proceeds of any claim to which Grantor is entitled under any
owner's policy of title insurance covering all or any part of Grantor's
interest in and to any Property comprising a part of the Trust Estate;
provided, that Beneficiary's interest in and to any such claim shall be
limited to its interest in and lien upon such Property and any amounts to
which Beneficiary is entitled shall be decreased by the amount of any
proceeds received by Beneficiary in respect of such claim under any policy
of title insurance, insuring the lien of this Mortgage. If Grantor elects
to not pursue a claim under any owner's policy of title insurance covering
all or any part of Grantor's interest in and to the Trust Estate, Grantor
will notify Beneficiary of its election not to pursue a claim. If Grantor
fails to make a claim in respect of a title defect affecting in any material
respect Grantor's title to the Trust Estate, Beneficiary shall have the
right upon 15 days notice to Grantor to pursue such claim directly with the
title company in the name and stead of Grantor.
3. Payment and Performance of Obligations Secured. Grantor
shall promptly pay when due the principal of and interest on the
Indebtedness and all other payment Obligations secured by this Mortgage, all
in lawful money of the United States of America, and shall further perform
fully and in a timely manner all Obligations of Grantor. All sums payable
by Grantor hereunder shall be paid without demand, counterclaim, offset,
deduction (except as required by law) or defense. Grantor waives all rights
now or hereafter conferred by statute or otherwise to any such demand,
counterclaim (other than mandatory counterclaims), setoff, deduction or
defense.
4. Negative Covenants. Grantor covenants and agrees that it
shall not:
(a) incur, create or assume any indebtedness for borrowed money
or Transfer or lease the Trust Estate or any interest therein, except as
permitted under Sections 11 and 15 hereof;
(b) engage, directly or indirectly, in any business other than
that of entering into this Mortgage and the other Loan Documents to which
Grantor is a party and the ownership, management, leasing, construction,
development, operation and maintenance of the Trust Estate for its present
and related uses;
(c) commingle its assets with the assets of any other Person;
(d) guarantee any obligations of any Person or make advances
(other than distributions or dividends) or loans to any Persons or entities;
(e) except as set forth in Section 19, enter into any management
agreement for any of the Properties without Beneficiary's consent, which
shall not be unreasonably withheld or delayed;
(f) dissolve, terminate, liquidate, merge with or consolidate
into another Person, except as expressly permitted pursuant to this
Mortgage;
(g) engage in any activity that would subject it to regulation
under ERISA; or
(h) voluntarily file or consent to the filing of a petition for
bankruptcy, reorganization, assignment for the benefit of creditors or
similar proceeding under any Federal or state bankruptcy, insolvency,
reorganization or other similar law.
5. Insurance.
(a) Insurance Coverage Requirements. Grantor shall, at its sole
cost and expense, keep in full force and effect insurance coverage of the
types and minimum limits as follows during the term of this Mortgage:
(i) Property Insurance. Insurance with respect to the
Improvements and the Building Equipment against any peril included
within the classification "All Risks of Physical Loss" with extended
coverage in amounts at all times sufficient to prevent Grantor from
becoming a co-insurer within the terms of the applicable policies, but
in any event such insurance shall be maintained in an amount equal to
the full insurable value of the Improvements and the Building
Equipment, and such policies shall be subject only to exclusions that
are standard and customary for properties comparable to the applicable
Property. The term "full insurable value" means the actual replacement
cost of the Improvements and the Building Equipment (without taking
into account any depreciation, and exclusive of excavations, footings
and foundations, landscaping and paving) (but in no event less than
125% of the applicable Allocated Loan Amount) as would be determined by
an insurer, a recognized independent insurance broker or an Independent
Appraiser selected and paid by Grantor and in no event less than the
coverage required pursuant to the terms of any Lease or Ground Lease;
provided, however, if the terms of the applicable insurance policies
expressly provide for insurance to be provided in the amount of the
actual replacement cost of the Improvements and the Building Equipment
or such policies contain a replacement cost endorsement, no such annual
determination will be necessary;
(ii) Liability Insurance. Comprehensive general liability
insurance, including bodily injury, death and property damage
liability, and excess and/or umbrella liability insurance against any
and all claims, including all legal liability that could be imposed
upon Beneficiary, to the extent insurable, and all court costs and
attorneys' fees and expenses, arising out of or connected with the
possession, use, leasing, operation, maintenance or condition of each
Property in such amounts as are generally available at commercially
reasonable premiums and are generally required by institutional lenders
for properties comparable to the Properties written on a per occurrence
basis with a per occurrence limit of not less than $1,000,000, an
aggregate limit of not less than $2,000,000 per Property and umbrella
liability coverage of not less than $25,000,000;
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance (to the extent the risks to be covered thereby
are not already covered by other policies of insurance maintained by
Grantor), with respect to any work by or for Grantor performed on or
about any Property;
(iv) Loss of Rental Value. Loss of "rental value" or
"business interruption" insurance in an amount sufficient to avoid any
co-insurance penalty and to provide Proceeds which will cover the loss
of rents sustained during the period of at least twelve (12) months
following the date of casualty, except that in the case of the Property
known as The Mall at Cross County located in Yonkers, New York the
period of coverage shall be at least eighteen (18) months following the
date of casualty. Such policies of insurance shall be subject only to
exclusions that are commercially reasonable and generally acceptable to
institutional lenders. The term "rental value" means the sum of (A)
the total then ascertainable Rents payable under the Leases and (B) the
total ascertainable amount of all other amounts to be received by
Grantor from third parties which are the legal obligation of Tenants,
reduced to the extent such amounts would not be received because of
Operating Expenses not incurred during a period of non-occupancy of
that portion of such Property then not being occupied;
(v) Boiler and Machinery Insurance. To the extent
applicable, broad form boiler and machinery insurance (without
exclusion for explosion) covering all boilers or other pressure
vessels, machinery and equipment, if any, located in, on or about each
Property and insurance against loss of occupancy or use arising from
any such breakdown in such amounts as are generally available at
commercially reasonable premiums and are generally required by
institutional lenders for properties comparable to each Property;
(vi) Flood Insurance. If any Improvement on any Property is
located within an area designated as "flood prone" (as defined under
the regulations adopted under the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973), flood insurance if
available, in an amount equal to the Maximum Foreseeable Casualty Loss,
acceptable to Beneficiary, provided, however, that if flood insurance
shall be unavailable from private carriers, flood insurance provided by
the federal or state government, if available; and
(vii) Other Insurance. At Beneficiary's reasonable request,
such other insurance, including but not limited to earthquake
insurance, with respect to the Trust Estate against loss or damage of
the kinds from time to time customarily insured against and in such
amounts as are generally available at commercially reasonable premiums
and are generally required by institutional lenders on loans of similar
amounts and secured by properties comparable to the Properties, and, in
the case of earthquake coverage, from insurers that are generally
acceptable to such institutional lenders, but not including
environmental insurance.
(b) Ratings of Insurers. Grantor will maintain the insurance
coverage described in Section 5(a) above, in all cases, with one or more
domestic primary insurers having either (x) a claims-paying-ability rating
by the Rating Agency of "AA" or better or (y) an Alfred M. Best Company,
Inc. ("Best") rating of "A-" or better and a financial size category of not
less than VII; provided, that if Grantor shall elect to change the insurance
carrier, such new carrier must have either (i) a claims-paying ability
rating of "AA" or better by the Rating Agency, (ii) a Best rating of "A" or
better and a financial size category of not less than IX, or (iii) such
other rating if the Rating Agency has delivered its written affirmation,
which affirmation may be granted or withheld in the Rating Agency's sole and
absolute discretion, that the ratings of the Certificates immediately prior
to such change of insurance carrier will not be qualified, downgraded or
withdrawn as a result of such change of insurer; provided, further that
notwithstanding the foregoing in the case of the insurance referred to in
Sections 5(a)(iv), (vi) and (vii) above, the rating may be "A-/VII" or
better (except in the case of earthquake coverage which shall be such as is
generally acceptable to institutional lenders as provided in Section
5(a)(vii) above) and the coverage described in Section 5(a)(iii) above with
either an insurer having a claims-paying-ability or rating as set forth
above or with the applicable state workers' compensation fund. All insurers
providing insurance required by this Mortgage shall be authorized to issue
insurance in the state where the Property insured is located.
For the purposes hereof, "Maximum Foreseeable Casualty Loss" shall
mean the estimate of a qualified fire protection engineer in connection with
Grantor's existing insurance package of the maximum probable casualty loss
which would be suffered in respect of the Improvements and Building
Equipment for any Property as a result of damage caused by the perils
covered by the insurance described in Section 5(a)(i).
The insurance coverage required under Section 5(a) may be effected
under a blanket policy or policies covering the Trust Estate and other
properties and assets not constituting a part of the Trust Estate; provided
that any such blanket policy shall specify, except in the case of public
liability insurance, the portion of the total coverage of such policy that
is allocated to the Trust Estate, and any sublimits in such blanket policy
applicable to the Trust Estate, which amounts shall not be less than the
amounts required pursuant to Section 5(a) and which shall in any case comply
in all other respects with the requirements of this Section 5.
(c) Form of Insurance Policies; Endorsements. All insurance
policies shall be in such form and with such endorsements as are comparable
to the forms of, and endorsements to, Grantor's insurance policies in effect
on the date hereof or otherwise in accordance with commercially reasonable
standards applied by prudent owners of First Class properties comparable to
and in the general vicinities of the Properties. A certificate of insurance
with respect to all of the above-mentioned insurance policies has been
delivered to Beneficiary as of the date hereof, or if same have not been so
delivered, originals or certified copies of all such policies shall be
delivered to Beneficiary when the same are available and shall be held by
Beneficiary. Grantor shall deliver to Beneficiary annually, simultaneously
with the renewal of the insurance policies required hereunder, an Officer's
Certificate stating that the insurance policies required to be delivered to
Beneficiary pursuant to this Section 5(c) are maintained with insurers who
comply with the terms of Section 5(b) hereof, setting forth a schedule
describing all premiums required to be paid by Grantor to maintain the
policies of insurance required under this Section 5, and stating that
Grantor has, or the applicable Tenant has, paid such premiums. All such
policies shall name Beneficiary as an additional named insured, shall
provide that all Proceeds (except with respect to Proceeds of general
liability and workers' compensation insurance) be payable to Beneficiary as
and to the extent set forth in Section 6 hereof, and shall contain: (i) a
standard "non-contributory mortgagee" endorsement or its equivalent
relating, inter alia, to recovery by Beneficiary notwithstanding the
negligent or willful acts or omissions of Grantor; (ii) to the extent
available at commercially reasonable rates, a waiver of subrogation
endorsement in favor of Beneficiary; (iii) an endorsement providing that no
policy shall be impaired or invalidated by virtue of any act, failure to
act, negligence of, or violation of declarations, warranties or conditions
contained in such policy by Grantor, Beneficiary or any other named insured,
additional insured or loss payee, except for the willful misconduct of
Beneficiary knowingly in violation of the conditions of such policy; (iv) an
endorsement providing for a deductible per loss of an amount not more than
that which is customarily maintained by prudent owners of First Class
properties comparable to and in the general vicinities of the Properties,
but in no event in excess of $250,000, earthquake coverage for all
applicable Properties, for which such deductible shall not be in excess of
that generally required by institutional lenders on loans of similar amounts
secured by comparable properties; and (v) a provision that such policies
shall not be cancelled, terminated or expired without at least thirty (30)
days' prior written notice to Beneficiary, in each instance. Certificates
of insurance with respect to all replacement policies shall be delivered to
Beneficiary not less than ten (10) Business Days prior to the expiration
date of any of the insurance policies required to be maintained hereunder
which certificates shall bear notations evidencing payment of applicable
premiums. Originals or certified copies of replacement insurance policies
with respect to any tenant executing a Lease from and after the date hereof,
and in all other cases, such other reasonable evidence of insurance
coverage, shall be delivered to Beneficiary promptly after Grantor's receipt
thereof but in any case within thirty (30) days after the effective date
thereof. If Grantor fails to maintain and deliver to Beneficiary the
certificates of insurance required by this Mortgage, upon ten (10) Business
Days' prior notice to Grantor, Beneficiary may, in accordance with the
provisions of Section 8 hereof, procure such insurance, and all costs
thereof shall be paid by Grantor pursuant to the provisions of Section 18.
(d) Compliance with Insurance Requirements. Grantor shall comply
with all Insurance Requirements and shall not bring or keep or permit to be
brought or kept any article upon any of the Property or cause or permit any
condition to exist thereon which would be prohibited by any Insurance
Requirement, or would invalidate insurance coverage required hereunder to be
maintained by Grantor on or with respect to any part of any Property
pursuant to this Section 5.
(e) Blanket Policies. Except in the case of public liability
insurance, upon Beneficiary's request, Grantor shall deliver to Beneficiary
an Officer's Certificate setting forth (i) the number of properties covered
by such policy, (ii) the location by city (if available, otherwise, county)
and state of the properties, (iii) the approximate average square footage of
the properties (or the approximate aggregate square footage), (iv) a brief
description of the typical construction type included in the blanket policy
(i.e., single story, stand alone, tilt up concrete), and (v) such other
information as Beneficiary may reasonably request. Grantor shall also
provide supporting evidence, such as the annual report of the applicable
tenant providing the blanket policy, a letter from the applicable tenant or
its insurance carrier or its authorized agent, any 10K report filed with the
Securities and Exchange Commission, or such other evidence as Beneficiary
may deem reasonably necessary to ensure that the applicable Property is
insured in accordance with the terms of this Mortgage.
6. Condemnation and Insurance Proceeds.
(a) Grantor will promptly notify Beneficiary and the Rating
Agency in writing upon obtaining knowledge of (i) the institution of any
proceedings relating to any Taking, or (ii) the occurrence of any casualty,
damage or injury to, any Property or any portion thereof the restoration of
which is estimated by Grantor in good faith to cost more than the Individual
Threshold Amount. In addition, notice of any casualty, damage, injury or
Taking, the restoration of which is estimated by Grantor in good faith to
cost more than the Individual Threshold Amount, shall set forth such good
faith estimate of the cost of repairing or restoring such casualty, damage,
injury or Taking in reasonable detail if the same is then available and, if
not, as soon thereafter as it can reasonably be provided.
(b) In the event of any Taking of or casualty or other damage or
injury to any Property, Grantor's right, title and interest in and to all
compensation, awards, proceeds, damages, claims, insurance recoveries,
causes and rights of action (whether accrued prior to or after the date
hereof) and payments which Grantor may receive or to which Grantor may
become entitled with respect to the Trust Estate or any part thereof other
than payments received in connection with any liability or loss of rental
value or business interruption insurance (collectively, "Proceeds"), in
connection with any such Taking of, or casualty or other damage or injury
to, any Property or any part thereof are hereby assigned by Grantor to, and
shall be paid to, Beneficiary, subject to the rights of tenants under their
leases, as to which such lease provisions will govern. Notwithstanding
anything to the contrary set forth in this Mortgage, however, and excluding
situations involving a Total Loss and provided no Event of Default shall
have occurred and be continuing, to the extent such Proceeds with respect to
such Property do not exceed the greater of the Individual Threshold Amount
and $500,000, (the "Casualty Amount"), or, if less than the Casualty Amount
but when aggregated with all other then unapplied Proceeds with respect to
any Property, do not exceed $2,000,000 in the aggregate, such Proceeds are
to be paid directly to Grantor to be applied to restoration of the Trust
Estate in accordance with the terms hereof. Subject to the provisions of
this Section 6(b) and Sections 6(c) and 6(g) hereof, promptly after the
occurrence of any damage or destruction to all or any portion of such
Property or a Taking of a portion of such Property, in either case which
shall not constitute a Total Loss, Grantor shall either cause such Property
to be released from the lien of this Mortgage in accordance with Section 38
hereof, or shall commence, or cause the applicable Tenant to commence, and
diligently prosecute to completion, subject to Excusable Delays, the repair,
restoration and rebuilding of such Property (in the case of a partial
Taking, to the extent it is capable of being restored) (such repair,
restoration and rebuilding are sometimes hereinafter collectively referred
to as the "Work") so damaged, destroyed or remaining after such Taking in
full compliance with all material Legal Requirements and free and clear of
any and all Liens except Permitted Encumbrances; it being understood,
however, that Grantor shall not be obligated to restore, or cause the
applicable Tenant to restore, such Property to the precise condition of such
Property prior to any partial Taking of, or casualty or other damage or
injury to such Property, if the Work actually performed, if any, or failed
to be performed, shall have no material adverse effect on the value of such
Property from the value that such Property would have had if the same had
been restored to its condition immediately prior to such Taking or casualty.
Grantor will, in good faith and in a commercially reasonable manner, file
and prosecute, or cause the applicable Tenant to file and prosecute in
accordance with its Lease, the adjustment, compromise or settlement of any
claim for Proceeds and, subject to Grantor's right to receive the direct
payment of any Proceeds as provided above, and, with respect to Proceeds
from a Total Loss, subject to the provisions below and subject to the
applicable terms of the Leases, will cause the same to be paid directly to
Beneficiary, to be held and applied in accordance with the provisions of
this Mortgage. Except upon the occurrence and during the continuance of an
Event of Default, Grantor may settle any insurance claim with respect to
Proceeds which does not exceed the Casualty Amount. If an Event of Default
shall have occurred and be continuing, or if Grantor fails to file and/or
prosecute any insurance claim for a period of fifteen (15) Business Days
following Grantor's receipt of written notice from Beneficiary, Grantor
hereby irrevocably empowers Beneficiary, in the name of Grantor as its true
and lawful attorney-in-fact, to file and prosecute such claim (including
settlement thereof) with counsel satisfactory to Beneficiary and to collect
and to make receipt for any such payment, all at Grantor's expense
(including payment of interest at the Default Rate for any amounts advanced
by Beneficiary pursuant to this Section 6(b)). In the event of (i) a Total
Loss resulting from a casualty, damage or destruction, and the cost to
repair the Property as estimated by the Independent Architect would exceed
the Casualty Amount and the restoration of the Property cannot reasonably be
completed before the date of expiration of any business interruption
insurance and under such circumstances Grantor is not required under the
applicable Lease to make Proceeds available for restoration of the Property,
or (ii) a Total Loss resulting from a Taking, Grantor shall be required to
comply with the provisions of Section 6(j) below and Beneficiary shall apply
such Proceeds, first toward reimbursement of Beneficiary's reasonable costs
and expenses in connection with recovery of the Proceeds (as further
described below), including, without limitation, reasonable administrative
costs and inspection fees, and then as required by Section 6(j) hereof. Any
Proceeds remaining after prepayment in part as set forth in Section 6(j)
hereof shall be paid to Grantor or as it may direct in writing. Whether or
not an Event of Default shall have occurred and be continuing, Beneficiary
shall have the right to approve, such approval not to be unreasonably
withheld or delayed, any settlement which might result in any Proceeds in
excess of the Casualty Amount and Grantor will deliver or cause to be
delivered to Beneficiary all instruments reasonably requested by Beneficiary
to permit such approval. Grantor will pay, pursuant to the provisions of
Section 18, all reasonable costs, fees and expenses reasonably incurred by
Beneficiary (including all reasonable attorneys' fees and expenses, the
reasonable fees of insurance experts and adjusters and reasonable costs
incurred in any litigation or arbitration), in connection with the
settlement of any claim for insurance or Taking Proceeds and seeking and
obtaining of any payment on account thereof in accordance with the foregoing
provisions. If any Proceeds are received by Grantor and may be retained by
Grantor pursuant to this Section 6, such Proceeds shall, until the
completion of the related Work, be held in trust for Beneficiary and shall
be segregated from other funds of Grantor to be used to pay for the cost of
the Work in accordance with the terms hereof, and in the event such Proceeds
exceed the Casualty Amount, such Proceeds shall be forthwith paid directly
to and held by Beneficiary in a segregated account in trust for Grantor, in
each case to be applied or disbursed in accordance with this Section 6.
(c) Upon the occurrence and during the continuance of an Event of
Default hereunder, or in the event that any Proceeds are required to be paid
to Beneficiary pursuant to subparagraph (b) above, then all Proceeds while
an Event of Default exists, and any such Proceeds so required to be paid to
Beneficiary shall be paid over to Beneficiary (if not paid directly to
Beneficiary) and shall be applied first toward reimbursement of
Beneficiary's reasonable costs and expenses (plus interest thereon at the
Default Rate to the extent not paid within ten (10) Business Days after
delivery of a request for reimbursement by Beneficiary) actually incurred in
connection with recovery of the Proceeds and disbursement of the Proceeds
(as further described below), including reasonable administrative costs and
inspection fees, and then to be applied or disbursed in accordance with this
Section 6.
Subject to Grantor's rights pursuant to Section 38(b) to cause a
Property to be released from the Lien of this Mortgage, Grantor shall be
obligated to restore each Property suffering a casualty or which has been
subject to a partial Taking in accordance with the provisions of this
Section 6, whether or not the Proceeds shall be sufficient, provided that,
if applicable, the Proceeds shall be made available to Grantor by
Beneficiary in accordance with this Mortgage.
(d) Except as otherwise provided in Section 6(j) below, in the
event that any portion of such Proceeds is applied toward the repayment of
the Indebtedness (in which event Grantor shall not be obligated to restore
pursuant to subparagraph (c) above), Grantor shall be entitled to obtain
from Beneficiary a release without representation or warranty (in the form
provided by Grantor) of the applicable Property from the Lien and security
interests created by this Mortgage and the other Loan Documents and a
release without representation or warranty (in the form provided by Grantor)
of Grantor from all liability with respect to the other Loan Documents as
they relate to the Property released from the Lien of this Mortgage, provid-
ed that (i) no Event of Default exists, and if a particular entity which is
one of the entities comprising Grantor has no interest in any of the
Properties after the release of such Property, then such entity shall also
be released from any liability under the Loan Documents, (ii) Grantor shall
comply with the provisions hereof, and (iii) Grantor pays to Beneficiary the
amount, if any, by which 125% of the Allocated Loan Amount for such Property
exceeds the Proceeds received by Beneficiary and applied to repayment of the
Indebtedness, in which case the Allocated Loan Amount for such Property
shall be reduced to zero. If any Proceeds are applied to reduce the Indebt-
edness, Beneficiary shall apply the same in accordance with the provisions
of the Notes. In the event that Proceeds are used for the Work, any excess
Proceeds remaining after completion of such Work shall be paid to Grantor.
(e) Notwithstanding anything contained in this Mortgage or any
other Loan Document to the contrary, Grantor shall not be required to use
funds other than Proceeds to prepay any Indebtedness in connection with any
casualty or Taking.
(f) Unless an Event of Default has occurred and is continuing (in
which event the provisions of Sections 20 and 21 shall apply), any Proceeds
to be applied pursuant to this Section 6 to prepay the Indebtedness shall be
applied to prepay the Principal Amount of the Notes in accordance with the
terms thereof, without the requirement of the payment of any prepayment
penalty.
(g) If Proceeds are not required to be applied towards payment of
the Indebtedness pursuant to the terms hereof, then Beneficiary shall make
the Proceeds which it is holding pursuant to the terms hereof (after payment
of any reasonable expenses actually incurred by Beneficiary in connection
with the collection thereof plus interest thereon at the Default Rate to the
extent the same are not paid within ten (10) Business Days after request for
reimbursement by Beneficiary) available to Grantor for payment of or
reimbursement of Grantor's expenses incurred with respect to the Work, upon
the terms and subject to the conditions set forth below and in Section 6(h)
hereof:
(i) there shall be no continuing Event of Default hereunder;
(ii) if the estimated cost of the Work (as estimated by the
Independent Architect referred to in clause (iii) below) shall exceed
the Proceeds, Grantor shall, at its option (within a reasonable period
of time after receipt of such estimate) either deposit with or deliver
to Beneficiary (A) Cash and Cash Equivalents in an amount equal to the
estimated cost of the Work less the Proceeds available, or (B) such
other reasonable evidence of Grantor's or such Tenant's ability to meet
such excess costs as may be permitted under the applicable Lease; and
(iii) Beneficiary shall, within a reasonable period of time
prior to request for initial disbursement, be furnished with an
estimate of the cost of the Work accompanied by an Independent
Architect's certification as to such costs and appropriate plans and
specifications for the Work. The plans and specifications shall
require that the Work be done in a first-class workmanlike manner at
least equivalent to the quality and character of the original work in
the Improvements (provided, however, that in the case of a partial
Taking, the Property restoration shall be done to the extent reasonably
practicable after taking into account the consequences of such partial
Taking), so that upon completion thereof, the Property shall be at
least equal in value and general utility to the Property prior to the
damage or destruction; it being understood, however, that neither
Grantor nor the applicable Tenant shall be obligated to restore such
Property to the precise condition of such Property prior to any partial
Taking of, or casualty or other damage or injury to, such Property, if
the Work actually performed, if any, or failed to be performed, shall
have no material adverse effect on the value of such Property from the
value that such Property would have had if the same had been restored
to its condition immediately prior to such Taking or casualty. Grantor
shall restore, or cause the applicable Tenant to restore, all
Improvements such that when they are fully restored and/or repaired,
such Improvements and their contemplated use fully comply with all
applicable material Legal Requirements including zoning, environmental
and building laws, codes, ordinances and regulations.
(h) Disbursement of the Proceeds in Cash or Cash Equivalents to
Grantor shall be made from time to time (but not more frequently than twice
in any month) by Beneficiary but only for so long as no Event of Default
shall have occurred and be continuing, as the Work progresses upon receipt
by Beneficiary of (i) an Officer's Certificate dated not more than ten (10)
days prior to the application for such payment, requesting such payment or
reimbursement and describing the Work performed that is the subject of such
request, the parties that performed such Work and the actual cost thereof,
and also certifying that such Work and materials are or, upon disbursement
of the payment requested to the parties entitled thereto, will be free and
clear of Liens other than Permitted Encumbrances and (ii) an Independent
Architect's certificate certifying performance of the Work together with an
estimate of the cost to complete the Work. Provided that the applicable
Lease permits such retainage by Grantor, no payment made prior to the final
completion of the Work, except for payment made to contractors whose Work
shall have been fully completed and from which final lien waivers have been
received, shall exceed ninety-five percent (95%) of the value of the Work
performed and materials furnished and incorporated into the Improvements
from time to time, and at all times the undisbursed balance of said Proceeds
together with all amounts deposited, bonded, guaranteed or otherwise
provided for pursuant to clause 6(d)(ii) above, shall be at least sufficient
to pay for the estimated cost of completion of the Work; final payment of
all Proceeds remaining with Beneficiary shall be made upon receipt by
Beneficiary of a certification by an Independent Architect, as to the
completion of the Work substantially in accordance with the submitted plans
and specifications, final lien releases, and the filing of a notice of
completion and the expiration of the period provided under the law of the
State in which the applicable Property is located for the filing of
mechanic's and materialmen's liens which are entitled to priority as to
other creditors, encumbrances and purchasers, as certified pursuant to an
Officer's Certificate, and delivery of a certificate of occupancy with
respect to the Work, or, if not applicable, an Officer's Certificate to the
effect that a certificate of occupancy is not required.
(i) If, after the Work is completed and all costs of completion
have been paid, there are excess Proceeds, then upon ten (10) days' prior
written notice from Grantor to Beneficiary, provided no Event of Default has
occurred and is then continuing, Grantor shall have the option of directing
Beneficiary to either (1) retain such Proceeds in the Capital and TI Reserve
Account to be applied by Grantor to the cost of improvements, alterations,
tenant improvements or other capital improvements at any of the Properties,
(2) apply such excess Proceeds with respect to the Taking of or damage or
injury to the Trust Estate to the payment or prepayment of all or any
portion of the Indebtedness secured hereby without penalty or premium,
provided, however, that any such prepayment shall not reduce any Allocated
Loan Amount or (3) to return such excess proceeds to the Grantor.
(j) If (i) there is any Taking as to a Property that constitutes
a Total Loss and Beneficiary elects to apply the Proceeds against the In-
debtedness (which election may not be made by Beneficiary if an applicable
Lease requires restoration), or (ii) Grantor is otherwise required to comply
with this Section 6(j), then Grantor, in any such instance, must prepay the
Notes to the extent of the Proceeds received up to an amount equal to 125%
of the original Allocated Loan Amount with respect to the relevant Property,
without the requirement of the payment of any prepayment penalty, and the
Allocated Loan Amounts for all other Properties shall be increased or de-
creased in the manner provided in the definition of Allocated Loan Amount.
(k) Whenever Beneficiary is required to make an election under
this Section 6, Beneficiary may consult with the Servicer (as defined in the
Trust and Servicing Agreement) and may conclusively rely on the Servicer's
reasonable determination.
7. Impositions, Liens and Other Items.
(a) Subject to Grantor's right of contest set forth in Section
7(c) hereof, as set forth in the next two sentences, Beneficiary on behalf
of Grantor shall pay all Impositions other than those which pursuant to the
terms of any Lease are to be paid directly by the Tenant thereunder, which
are attributable to or affect the Trust Estate or Grantor, prior to the date
such Impositions shall become delinquent or late charges may be imposed
thereon, directly to the applicable taxing authority with respect thereto.
(b) Subject to its right of contest set forth in Section 7(c)
hereof and its rights set forth in Sections 11(c) and 11(d) hereof, Grantor
shall at all times keep the Trust Estate free from all Liens (other than the
Lien hereof and Permitted Encumbrances) and shall pay, or cause the
applicable Tenant to pay, when due and payable all claims and demands of
mechanics, materialmen, laborers and others which, if unpaid, might result
in or permit the creation of a Lien on the Trust Estate or any portion
thereof and shall in any event cause the prompt, full and unconditional
discharge of all Liens imposed on or against the Trust Estate or any portion
thereof within thirty (30) days after receiving written notice of the filing
(whether from Beneficiary, the lienor or any other Person) thereof. Grantor
shall do or cause to be done, at the sole cost of Grantor, everything
reasonably necessary to fully preserve the first priority of the Lien of
this Mortgage against the Trust Estate subject to the Permitted
Encumbrances. Upon the occurrence of an Event of Default with respect to
its Obligations as set forth in this Section 7, Beneficiary may (but shall
not be obligated to) make such payment or discharge such Lien, and Grantor
shall reimburse Beneficiary on demand for all such advances pursuant to
Section 16 hereof (together with interest thereon at the Default Rate).
F Nothing contained herein shall be deemed to require Grantor
to pay, or cause to be paid, any Imposition, to satisfy any Lien, or to
comply with any Legal Requirement or Insurance Requirement, so long as
Grantor or the applicable Tenant is in good faith, and by proper legal
proceedings, where appropriate, diligently contesting the validity, amount
or application thereof, provided that in each case, at the time of the
commencement of any such action or proceeding, and during the pendency of
such action or proceeding (i) no Event of Default shall exist and be
continuing hereunder, (ii) Grantor shall keep Beneficiary apprised of the
status of such contest; (iii) if Grantor is not providing security as
provided in clause (vi) below, adequate reserves with respect thereto are
maintained on Grantor's books in accordance with GAAP or in the Mortgage
Escrow Account, (iv) such contest operates to suspend collection or
enforcement as the case may be, of the contested Imposition or Lien and such
contest is maintained and prosecuted continuously and with diligence or the
Imposition or Lien is bonded, (v) in the case of any Insurance Requirement,
the failure of Grantor to comply therewith shall not impair the validity of
any insurance required to be maintained by Grantor under Section 5 hereof or
the right to full payment of any claims thereunder, and (vi) in the case of
Impositions and Liens in excess of $500,000 individually, or in the
aggregate, with respect to a particular Property, during such contest,
Grantor, subject to the terms and conditions of the applicable Lease, shall
provide, or cause the applicable Tenant to provide, security in the form
required by Section 6(g)(ii) hereof in an amount equal to the sum of (A) the
amount of Grantor's obligations being contested plus (B) any additional
interest, charge, or penalty arising from such contest if such security is
required to be delivered pursuant to such Tenant's Lease. Notwithstanding
the foregoing, the creation of any such reserves or the furnishing of any
bond or other security, Grantor promptly shall comply with any contested
Legal Requirement or Insurance Requirement or shall pay any contested
Imposition or Lien, and compliance therewith or payment thereof shall not be
deferred, if, at any time the Trust Estate or any portion thereof shall be,
in Beneficiary's reasonable judgment, in imminent danger of being forfeited
or lost or Beneficiary is likely to be subject to civil or criminal damages
as a result thereof. If such action or proceeding is terminated or
discontinued adversely to Grantor or the applicable Tenant, Grantor shall
deliver to Beneficiary reasonable evidence of Grantor's or such Tenant's
compliance with such contested Imposition, Lien, Legal Requirements or
Insurance Requirements, as the case may be.
8. Ground Leases. (a) The Grantor shall:
(i) promptly perform and observe all of the covenants and
agreements required to be performed and observed by the lessee under
the Ground Leases and do all things necessary to preserve and to keep
unimpaired its rights thereunder;
(ii) promptly notify the Beneficiary and the Rating Agency
of any default by the Grantor under the Ground Leases in the
performance or observance of any of the covenants or agreements on the
part of the Grantor to be performed or observed thereunder or of the
giving of any notice by the lessor under the Ground Leases to the
Grantor (x) claiming such a default or (y) of such lessor's intention
to exercise any remedy reserved to the lessor thereunder; and
(iii) promptly cause a copy of each such notice given by
such lessor to the Grantor to be delivered to the Beneficiary and the
Rating Agency.
(b) If the Grantor shall fail to perform or observe any of
the covenants or agreements required to be performed or observed by it under
the Ground Leases, including, without limitation, payment of all ground rent
and other charges due thereunder, the Beneficiary may, after 10 Business
Days' notice (except in emergencies or in situations where a failure sooner
to perform or observe the same may result in a forfeiture under any Ground
Lease), take such action as is appropriate to cause such covenants or
agreements promptly to be performed or observed on behalf of the Grantor but
no such action by the Beneficiary shall release the Grantor from any of its
obligations under this Mortgage.
(c) The Grantor shall not surrender its leasehold estate
under the Ground Leases, nor terminate or cancel any Ground Lease, and the
Grantor shall not modify, change, supplement, alter or amend any Ground
Lease in any material respect either orally or in writing, and any attempt
on the part of the Grantor to exercise any such right without the consent of
the Beneficiary shall be null and void.
(d) The fee title to the properties demised by the Ground
Leases and the leasehold estate shall not merge, but shall always remain
separate and distinct, notwithstanding the union of such estates either in
the lessor or the lessee under the Ground Leases or in a third party by
purchase or otherwise.
(e) If any Ground Lease is canceled or terminated, and if
the Trustee or its nominee shall acquire an interest in any new lease given
in substitution therefor, the Grantor shall have no right, title or interest
in or to the new lease or the leasehold estate created by such new lease.
(f) The Grantor shall obtain and deliver to the Trustee,
within thirty (30) days after written demand therefor by the Trustee, an
estoppel certificate from any ground lessor, stating (1) that the applicable
Ground Lease is in full force and effect and has not been modified or, if
its has been modified, the date of each modification (together with copies
of each such modification), (2) the date to which the fixed rent has been
paid under such Ground Lease, (3) whether a notice of default has been sent
to the Tenant under such Ground Lease which has not been cured, and if such
notice has been sent, the date it was sent and the nature of the default.
Notwithstanding the foregoing, however, the Grantor shall not be in default
hereunder if it fails to deliver such an estoppel certificate to the Trustee
provided that it has used all diligent efforts to do so and that it shall
continue to diligently pursue its efforts to obtain such a certificate.
(g) Notwithstanding anything to the contrary contained
herein, this Mortgage shall not constitute an assignment of any Ground Lease
within the meaning of any provision thereof prohibiting its assignment and
the Beneficiary shall have no liability or obligation thereunder by reason
of its acceptance of this Mortgage. The Beneficiary shall be liable for the
obligations of the tenant arising under any Ground Lease for only that
period of time during which the Beneficiary is in possession or has
acquired, by foreclosure or otherwise, and is holding, all of the Grantor's
right, title and interest therein.
(h) If Grantor requests Benefciary's consent to any material
modification or amendment of any Ground Lease pursuant to Section 8(c),
Grantor shall reimburse Beneficiary for all reasonable costs and expenses
incurred by Beneficiary (including, reasonable attorneys' fees and expenses)
in determining whether or not to give its consent to such modification or
amendment.
9. License to Collect Rents. Beneficiary and Grantor hereby
confirm that Beneficiary has granted to Grantor a license to collect and use
the Rents as they become due and payable under the Leases in accordance with
the provisions of the Assignment of Leases and the Cash Collateral
Agreement, until an Event of Default has occurred and is continuing,
provided that the existence of such right shall not operate to subordinate
this assignment of Leases to any subsequent assignment, in whole or in part
by Grantor, and any such subsequent assignment shall be subject to
Beneficiary's rights under this Mortgage. Grantor further agrees to execute
and deliver such assignments of leases as Beneficiary may from time to time
reasonably request in order to better assure, transfer and confirm to
Beneficiary the rights intended to be granted to Beneficiary with respect
thereto. In accordance with the provisions of the Assignment of Leases,
upon the occurrence and during the continuance of an Event of Default (1)
Grantor agrees that Beneficiary may, but shall not be obligated to, assume
the management of the real property, and collect the Rents, applying the
same upon the Obligations and (2) Grantor hereby authorizes and directs all
tenants, purchasers or other persons occupying or otherwise acquiring any
interest in any part of the real property to pay the Rents due under the
Leases to Beneficiary upon Beneficiary's request. In the event Beneficiary
actually receives such Rents, after an Event of Default, any application of
the Rents by Beneficiary shall not constitute a misappropriation of the
Rents by Grantor pursuant to Section 33 hereof. Beneficiary shall have and
hereby expressly reserves the right and privilege (but assumes no
obligation) to demand, collect, sue for, receive and recover the Rents, or
any part thereof, now existing or hereafter made, and apply the same in
accordance with this Mortgage, the Assignment of Leases, and applicable law.
10. Security Agreement.
(a) Security Intended. Notwithstanding any provision of this
Mortgage to the contrary, the parties intend that this document constitutes
security for the payment and performance of the Obligations and shall be a
"mortgage" or "deed of trust" under applicable law. If, despite that
intention, a court of competent jurisdiction determines that this document
does not qualify as a "trust deed" or "deed of trust" under applicable law,
then ab initio, this instrument shall be deemed a realty mortgage under
applicable law and shall be enforceable as a realty mortgage, and Grantor
shall be deemed a "mortgagor," Beneficiary shall be deemed a "mortgagee,"
and Trustee shall have no capacity (but shall be disregarded and all
references to "Trustee" shall be deemed to refer to the "mortgagee" to the
extent not inconsistent with interpreting this instrument as though it were
a realty mortgage). Except with respect to Properties located in New York,
as a realty mortgage, Grantor, as mortgagor, shall be deemed to have
conveyed the Property ab initio to Beneficiary as mortgagee, such conveyance
as a security to be void upon condition that Grantor pay and perform all its
Obligations. The remedies for any violation of the covenants, terms and
conditions of the agreements herein contained shall be as prescribed herein
or by general law, or, as to that part of the security in which a security
interest may be perfected under the UCC, by the specific statutory
consequences now or hereafter enacted and specified in the UCC, all at
Beneficiary's sole election.
(b) Fixture Filing. This Mortgage constitutes a financing
statement and, to the extent required under UCC 9-402(f) because portions
of the Property may constitute fixtures, this Mortgage is to be filed in the
office where a mortgage for the Land would be recorded. Beneficiary also
shall be entitled to proceed against all or portions of the Trust Estate in
accordance with the rights and remedies available under UCC 9-501(d).
Grantor is, for the purposes of this Mortgage, deemed to be the Debtor, and
Beneficiary is deemed to be the Secured Party, as those terms are defined
and used in the UCC. Grantor agrees that the Indebtedness and Obligations
secured by this Mortgage are further secured by security interests in all of
Grantor's right, title and interest in and to fixtures, equipment, and other
property covered by the UCC, if any, which are used upon, in, or about the
Trust Estate (or any part) or which are used by Grantor or any other person
in connection with the Trust Estate. Grantor grants to Beneficiary a valid
and effectual security interest in all of Grantor's right, title and
interest in and to such personal property (but only to the extent permitted
in the case of leased personal property), together with all replacements,
additions, and proceeds. Except for Permitted Encumbrances, Grantor agrees
that, without the written consent of Beneficiary, no other security interest
will be created under the provisions of the UCC and no lease will be entered
into with respect to any goods, fixtures, equipment, appliances, or articles
of personal property now attached to or used or to be attached to or used in
connection with the Trust Estate except as otherwise permitted hereunder.
Grantor agrees that all property of every nature and description covered by
the lien and charge of this Mortgage together with all such property and
interests covered by this security interest are encumbered as a unit, and
upon and during the continuance of an Event of Default by Grantor, all of
the Trust Estate, at Beneficiary's option, may be foreclosed upon or sold in
the same or different proceedings or at the same or different time, subject
to the provisions of applicable law. The filing of any financing statement
relating to any such property or rights or interests shall not be construed
to diminish or alter any of Beneficiary's rights of priorities under this
Mortgage.
11. Transfers, Indebtedness and Subordinate Liens. Unless such
action is permitted by the provisions of this Section 11, Section 15,
Section 38, Section 45 or Section 46 hereof, Grantor will not (i) Transfer
all or any part of the Trust Estate, (ii) incur indebtedness for borrowed
money, (iii) mortgage, hypothecate or otherwise encumber or grant a security
interest in all or any part of the Trust Estate, (iv) permit any transfer of
any interest in Grantor (except as set forth in clause (b) of this Section
11), or (iv) file a declaration of condominium with respect to any Property.
Grantor shall deliver to Beneficiary written notice pursuant to the
provisions of Section 26 hereof of any such Transfer permitted pursuant to
the provisions of this Section 11 or Section 15 hereof.
In connection with any Transfer or any series of Transfers that
affects (on a cumulative basis) more than 10% of the value of the Trust
Estate, a Tax Opinion and a Nondisqualification Opinion shall be furnished
to Beneficiary.
(a) Sale of the Trust Estate. Grantor may transfer or dispose of
Building Equipment which is being replaced or which is no longer necessary
in connection with the operation of a Property free from the Lien of this
Mortgage provided that such transfer or disposal will not materially
adversely affect the value of the Trust Estate taken as a whole, will not
materially impair the utility of such Property, and will not result in a
reduction or abatement of, or right of offset against, the Rents payable
under any Lease, in either case as a result thereof, and provided that any
new Building Equipment acquired by Grantor (and not so disposed of) shall be
subject to the Lien of this Mortgage unless the same constitutes leased
Building Equipment. Beneficiary shall, from time to time, upon receipt of
an Officer's Certificate requesting the same and confirming satisfaction of
the conditions set forth above, execute a written instrument in form
reasonably satisfactory to Beneficiary to confirm that such Building
Equipment which is to be, or has been, sold or disposed of is free from the
Lien of this Mortgage.
(b) Transfer of Interests of Grantor. Notwithstanding anything
contained herein to the contrary, Beneficiary's consent shall not be
required with respect to Transfers of (i) direct beneficial interests in any
individual Grantor, provided that (A) no Event of Default shall have
occurred and be continuing, (B) Grantor (or the transferor of such interest)
shall deliver notice thereof to Beneficiary and the Rating Agency at least
fifteen (15) Business Days prior to the effective date of such Transfer, (C)
such Grantor shall remain a Single Purpose Entity and (D) if such transfer
involves a transfer of 50% or more of the direct beneficial interests in
such Grantor, the Rating Agency shall have issued its written affirmation
that such transfer will not cause the ratings of the Certificates
immediately prior to such transfer to be qualified, downgraded or withdrawn
or (ii) any indirect Transfer of a beneficial interest in any individual
Grantor, including, without limitation a Transfer of any interest in any
Person owning a beneficial interest in such Grantor by reason of a
consolidation, merger or sale of all or substantially all of the assets of
any Person owning a beneficial interest in such Grantor or the sale of any
shares of stock of any Person directly or indirectly owning a beneficial
interest in such Grantor through any nationally recognized stock exchange.
If 50% or more of direct beneficial interests (including, any general
partnership interest of any Grantor) in such Grantor are Transferred,
Grantor shall deliver or cause to be delivered to the Rating Agency and
Beneficiary (x) an Opinion of Counsel addressed to the Rating Agency and
Beneficiary and dated as of the date of the Transfer to the effect that in a
properly presented case, a bankruptcy court in a case involving such
transferee, or any Affiliate thereof, would not disregard the corporate or
partnership forms of such entity, their Affiliates and/or their partners, as
the case may be, so as to consolidate the assets and liabilities of such
entity or entities and/or their Affiliates with those of Grantor or their
respective general partners (a "Nonconsolidation Opinion"), and (y) an
Officer's Certificate certifying that such Transfer is not an Event of
Default.
(c) Indebtedness. Grantor shall not incur, create or assume any
Debt or incur any liabilities without the consent of Beneficiary; provided,
however, that if no Event of Default shall have occurred and be continuing,
Grantor may, without the consent of Beneficiary, incur, create or assume any
or all of the following indebtedness (collectively, "Permitted Debt"):
(i) the Notes and the other obligations, indebtedness and
liabilities specifically provided for in any Loan Document and secured
by this Mortgage and the other Loan Documents;
(ii) amounts, not secured by Liens on the Trust Estate
(other than liens being properly contested in accordance with the
provisions of this Mortgage), payable by or on behalf of Grantor for or
in respect of the operation of the Trust Estate in the ordinary course
of operating Grantor's business, including amounts payable by or on
behalf of Grantor to counterparts under the Operating Agreements,
suppliers, contractors, mechanics, vendors, materialmen or other
Persons providing property or services to Grantor or to the Trust
Estate, and capitalized personal property leasing expense, or in
connection with the ownership, management, operation, cleaning,
maintenance, repair, replacement, improvement, alteration or
restoration thereof (provided, however, that notwithstanding the
foregoing, in no event shall Grantor be permitted under this provision
to execute or deliver a note or other instrument for borrowed money);
and
(iii) amounts, not secured by Liens on the Trust Estate
(other than liens being properly contested in accordance with the
provisions of this Mortgage), payable or reimbursable to any Tenant on
account of work performed at a Property by such Tenant or for costs
incurred by such Tenant in connection with its occupancy of space in
the Property, including for tenant improvements (provided, however,
that notwithstanding the foregoing, in no event shall Grantor be
permitted under this provision to enter into a note or other instrument
for borrowed money).
(d) Additional Permitted Transfers. Notwithstanding the above
provisions of this Section 11, Grantor may, without the consent of
Beneficiary, (i) make immaterial transfers of portions of a Property to
Governmental Authorities for dedication or public use (subject to the
provisions of Section 6 hereof), or immaterial transfers of portions of such
Property to third parties, including owners of out parcels, or other
properties for the purpose of erecting and operating additional structures
whose use is integrated with the use of such Property, (ii) grant easements,
restrictions, covenants, reservations and rights of way in the ordinary
course of business for access, water and sewer lines, telephone and
telegraph lines, electric lines or other utilities or for other similar
purposes or amend the Operating Agreements, (iii) transfer or lease to a
compatible user (by conveyance, ground lease or otherwise) one or more non-
income producing pads consisting of undeveloped land which may not be
located immediately adjacent to the applicable Improvement (together with
parking ancillary thereto, as well as reasonable and/or customary easements
in connection therewith); provided, that no such transfer or lease shall be
to any tenant then leasing 10,000 or more square feet of gross leasable area
at any Property unless the Rating Agency issues its written affirmation,
which affirmation may be granted or withheld in the Rating Agency's sole
discretion, that such transfer or ground lease will not cause ratings of the
Certificates immediately prior to such relocation to be qualified,
downgraded or withdrawn; and (iv) transfer or ground lease to a retail or
other compatible user (by conveyance, ground lease or otherwise) one or more
pads subject to existing leases, subject, however, to written affirmation by
the Rating Agency that such transfer or ground lease will not cause the
ratings of the Certificates immediately prior to such transfer to be
qualified, downgraded or withdrawn, provided that no such transfer,
conveyance or encumbrance set forth in the foregoing clauses (i), (ii),
(iii), and (iv) shall materially impair the utility and operation of the
applicable Property or materially adversely affect the value of the
applicable Property taken as a whole. In addition, it shall be a condition
to any transfer set forth in clause (iv) that Grantor shall deliver to
Beneficiary and the Rating Agency an Opinion of Counsel that the applicable
Property has been subdivided (to the extent required by law) and that the
Property, after any such transfer, shall be in compliance with all laws,
Leases and Operating Agreements and that such transfer shall not cause an
Event of Default to occur. If Grantor shall receive any net proceeds in
connection with any transfer or other conveyance set forth in clause (iv),
Grantor shall have the right to use any such proceeds in connection with any
Alterations performed in connection with, or required as a result of, such
conveyance. Except as provided below with respect to any Taking, the amount
of any net proceeds received by Grantor in excess of the cost of such
Alterations shall be deposited in the Capital and TI Reserve Account (which
amounts shall be in addition to, and not in lieu of, amounts otherwise
required to be deposited pursuant to Section 48(b) hereof), and shall be
available to Grantor for use in performing any further or other Alterations
or with respect to the Properties. Any amounts held in such account shall
be invested in accordance with Section 3(i) of the Cash Collateral
Agreement. In connection with any transfer, conveyance or encumbrance
permitted pursuant to this Section 11(d), Beneficiary shall execute and
deliver any instrument reasonably necessary or appropriate, in the case of
the transfers referred to in clauses (i), (iii) and (iv) above, to release
the portion of a Property affected by such Taking or such transfer from the
Lien of this Mortgage or, in the case of clause (ii) above, to subordinate
the Lien of this Mortgage to such easements, restrictions, covenants,
reservations and rights of way or other similar grants by receipt by
Beneficiary of:
(i) a copy of the instrument of transfer; and
F& an Officer's Certificate stating (x) with respect to any
Transfer, the consideration, if any, being paid for the Transfer and
(y) that such Transfer does not materially impair the utility and
operation of the affected Property or materially reduce its value.
In addition, in the case of a release pursuant to clauses (iii) and (iv)
above, Grantor shall deliver to Beneficiary a Nondisqualification Opinion.
As a condition to the execution of such documents by Beneficiary, Grantor
shall reimburse Beneficiary for all reasonable costs and expenses
(including, reasonable attorneys' fees and disbursements) in connection with
the execution of such documents.
All Taking Proceeds shall be applied in accordance with the
provisions of Section 6 hereof.
(e) Not less than fifteen (15) Business Days prior to the closing
of any transaction subject to the provisions of this Section 11 or of any
transfer of a 50%, direct or indirect, beneficial interest in Grantor or of
any transfer that shall result in a Person acquiring a greater than 50%
interest in Grantor or of any transfer that shall result in a Person that
had a greater than 50% interest in Grantor having less than a 50% interest
in Grantor, Grantor shall deliver to Beneficiary and the Rating Agency
excluding, however, a Transfer of any interest in any Person owning a
beneficial interest in Grantor by reason of a consolidation, merger or sale
of all or substantially all of the assets of any Person owning a beneficial
interest in Grantor or the sale of any shares of stock of any Person
directly or indirectly owning a beneficial interest in Grantor through any
nationally recognized stock exchange, (i) an Officer's Certificate
describing the proposed transaction and stating that such transaction is
permitted by this Section 11, together with any appraisal or other documents
upon which such Officer's Certificate is based, and (ii) an Opinion of
Counsel to the transferee, addressed to the Rating Agency and Beneficiary
and dated as of the date of the Transfer, to the effect that, in a properly
presented case, a bankruptcy court in a case involving such transferee would
not disregard the corporate or partnership form of such transferee so as to
consolidate the assets and liabilities of such transferee with those of
Grantor or their respective general partners. In addition, Grantor shall
provide Beneficiary and the Rating Agency with copies of executed deeds,
assignments of Direct Beneficial Owner interests in Grantor, mortgages or
other similar closing documents within ten (10) days after such closing.
12. Maintenance of Trust Estate; Alterations; Inspection;
Utilities.
(a) Maintenance of Trust Estate. Grantor shall keep and
maintain, or shall cause the Tenants under the Leases to keep and maintain,
the Trust Estate and every part thereof in good condition and repair,
subject to ordinary wear and tear, and, subject to Excusable Delays and the
provisions of this Mortgage with respect to damage or destruction caused by
casualty events or Takings, shall not permit or commit any waste,
impairment, or deterioration of any portion of the Trust Estate in any
material respect. Grantor further covenants to do all other acts which from
the character or use of the Trust Estate may be reasonably necessary to
protect the security hereof, the specific enumerations herein not excluding
the general. Grantor shall not remove or demolish any Improvement on any
Property except as the same may be necessary in connection with an
Alteration or a restoration in connection with a Taking or casualty in
accordance with the terms and conditions hereof.
(b) No Changes in Use. Except as may be necessary in connection
with an Alteration permitted by Section 12(c) hereof, Grantor shall not make
any changes or allow any changes to be made in the nature of the use of any
Property or any part thereof or initiate or take any action in furtherance
of any change in any zoning or other land use classification affecting all
or any portion of a Property.
(c) Conditions to Alteration. Provided that no Event of Default
shall have occurred and be continuing hereunder, Grantor shall have the
right, without Beneficiary's consent, to undertake any alteration,
improvement, demolition or removal of any Property or any portion thereof
(any such alteration, improvement, demolition or removal, an "Alteration")
so long as (i) Grantor provides Beneficiary and the Rating Agency with prior
written notice of any Material Alteration, and (ii) any Alteration is
undertaken in accordance with the applicable provisions of this Mortgage and
the other Loan Documents, is not prohibited by any relevant Operating
Agreements and the Leases and shall not upon completion (giving credit to
rent and other charges attributable to Leases executed upon such completion)
materially adversely (A) affect the value of such Property taken as a whole
or (B) reduce the Net Operating Income for such Property from the level
available immediately prior to commencement of such Alteration. Any
Material Alteration with respect to any one Property shall be conducted
under the supervision of an Independent Architect and no such Material
Alteration shall be undertaken until five (5) Business Days after there
shall have been filed with Beneficiary, for information purposes only and
not for approval by Beneficiary, detailed plans and specifications and cost
estimates therefor, prepared by such Independent Architect, as well as an
Officer's Certificate stating that such Alteration will involve an estimated
cost of more than (I) the greater of the Individual Threshold Amount and
$500,000 with respect to Alterations being undertaken at a single Property
at such time, or (II) the Aggregate Alteration Threshold Amount for
Alterations at all the Properties. Such plans and specifications may be
revised at any time and from time to time by such Independent Architect
provided that material revisions of such plans and specifications are filed
with Beneficiary, for information purposes only. All work done in
connection with any Alteration shall be performed with due diligence in a
good and workmanlike manner, all materials used in connection with any
Alteration shall not be less than the standard of quality of the materials
currently used at such Property and all materials used shall be in
accordance with all applicable material Legal Requirements and Insurance
Requirements.
(d) Right to Inspect. Beneficiary and any Persons authorized by
it may at all reasonable times and upon reasonable notice enter and examine
such Property and may inspect all work done, labor performed and materials
furnished in and about such Property subject in all instances to the rights
of Tenants under Leases. Beneficiary shall have no duty to make any such
inspection and shall have no liability or obligation for making (except for
its negligence or willful misconduct) or not making any such inspection.
(e) Short-Term Repairs and Renovations. Grantor shall perform or
cause to be performed the short-term repairs and renovations identified on
the Summary of Short-Term Repairs annexed hereto as Schedule 3. All such
repairs shall be completed subject to Excusable Delays within 18 months from
the date of this Mortgage to the extent such repairs and renovations can be
completed in such time period.
13. Legal Compliance. (a) Grantor and the Trust Estate and the
use thereof materially comply with all Legal Requirements (as defined
below). Grantor represents and warrants that, as of the date hereof, it has
not received notice of any violation of any Legal Requirement that remains
outstanding. Subject to Grantor's right to contest pursuant to Section 7(c)
hereof, Grantor shall comply with, or cause Tenants or other third parties
whose obligation it is to comply with, all present and future laws, stat-
utes, codes, ordinances, orders, judgments, decrees, injunctions, rules,
regulations and requirements, and irrespective of the nature of the work to
be done, of every Governmental Authority including, without limitation,
Environmental Laws, and all covenants, restrictions and conditions now or
hereafter of record which may be applicable to it or to any Property and the
Building Equipment thereon, or to the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction of
any Property and the Building Equipment thereon including, without limita-
tion, building and zoning codes and ordinances (collectively, the "Legal
Requirements"), except where the failure is not reasonably likely to have a
Material Adverse Effect.
(b) Grantor currently holds all certificates of occupancy,
licenses, registrations, permits, consents, franchises and approvals of any
Governmental Authority which are necessary for Grantor's ownership and
operation of the Properties or which are necessary for the conduct of
Grantor's business thereon. All such certificates of occupancy, licenses,
registrations, permits, consents, franchises and approvals are current and
will be kept current and in full force and effect.
14. Books and Records, Financial Statements, Reports and Other
Information.
(a) Books and Records. Grantor will keep and maintain on a
fiscal year basis proper books and records separate from any other Person,
in which accurate and complete entries shall be made of all dealings or
transactions of or in relation to the Notes, the Trust Estate and the
business and affairs of Grantor relating to the Trust Estate, in accordance
with GAAP. Beneficiary and its authorized representatives shall have the
right at reasonable times and upon reasonable notice to examine the books
and records of Grantor relating to the operation of the Trust Estate and to
make such copies or extracts thereof as Beneficiary may reasonably require.
Beneficiary shall not, without Grantor's consent, disclose any information
contained in Grantor's books and records to any third party, except to the
Rating Agency or to the extent Beneficiary is required or authorized to
disclose such information to third parties, including, without limitation,
Holders or prospective Holders pursuant to the Trust and Servicing Agreement
or on advice of Beneficiary's counsel, or in accordance with applicable law.
(b) Financial Statements.
(i) Quarterly Reports. Not later than sixty (60) days
following the end of each calendar quarter (other than the fourth (4th)
quarter of any calendar year), Grantor will deliver to Beneficiary
(with a copy to the Rating Agency) unaudited financial statements,
internally prepared, in accordance with GAAP, consistently applied,
including a balance sheet as of the end of such quarter, a statement of
revenues and expenses through the end of such quarter, a statement of
Net Operating Income for such quarter and a statement of profits and
losses as to each Property. Such statements for each quarter shall be
accompanied by an Officer's Certificate certifying to the best of the
signer's knowledge, (A) that such statements fairly represent the
financial condition and results of operations of Grantor in accordance
with GAAP consistently applied, (B) that as of the date of such
Officer's Certificate, no Default exists under this Mortgage, the Notes
or any other Loan Document or, if so, specifying the nature and status
of each such Default and the action then being taken by Grantor or
proposed to be taken to remedy such Default, (C) the Debt Service
Coverage Ratio for the preceding calendar quarter and calendar year,
and (D) that as of the date of each Officer's Certificate, no
litigation exists involving Grantor or the Trust Estate in which the
amount involved is $500,000 or more and is not covered by insurance,
or, if so, specifying such litigation and the actions being taking in
relation thereto in accordance with Section 23 hereof. Such financial
statements shall contain such other information as shall be reasonably
requested by Beneficiary for purposes of calculations to be made by
Beneficiary pursuant to the terms hereof.
(ii) Annual Reports. Not later than ninety (90) days after
the end of each fiscal year of Grantor's operations, Grantor will
deliver to Beneficiary (with a copy to the Rating Agency) audited
financial statements certified by an Independent Accountant in
accordance with GAAP consistently applied, including a balance sheet,
income statement and statement of cash flow as of and for the year then
ended. In addition, the Company shall provide a statement of Net
Operating Income for the year and such annual financial statements
shall also be accompanied by an Officer's Certificate in the form
required pursuant to Section 14(b)(i) hereof.
(c) Leasing Reports. Not later than sixty (60) days after
the end of each calendar quarter of Grantor's operations, Grantor will
deliver to Beneficiary (with a copy to the Rating Agency) a true and
complete rent roll for each Property (and aggregating the occupancy rate
with respect to all the Properties), dated as of the last day of such fiscal
year, showing the approximate percentage of gross leasable area of each
Property (and in the aggregate) leased as of the last day of the preceding
fiscal year, the approximate percentage of lease roll-overs for each
Property (and in the aggregate) for the preceding fiscal year, a summary of
new lease signings (including tenant name, approximate square footage
occupied and designation of the tenant's operations as national, regional or
local) and lease terminations for the preceding fiscal year, the current
annual rent for each Property, gross sales figures to the extent such
information is required to be provided by reporting tenants and are actually
reported by such tenants to Grantor, the expiration date of each lease, the
various options, if any, available to the tenant with respect to renewal
(including the amount of the rent in the event of renewal), whether to
Grantor's knowledge the Property has been sublet, and if it has, the name of
the subtenant, and whether the Property is vacant, and such rent roll shall
be accompanied by an Officer's Certificate certifying that such rent roll is
true, correct and complete in all material respects as of its date and
stating whether Grantor, within the past fiscal year, has issued a notice of
default with respect to any Lease which has not been cured or vacated the
Property, and the nature of such default.
(d) Material Changes. Grantor will notify Beneficiary in writing
of any material changes affecting the operations or finances of any Property
promptly after becoming aware thereof.
(e) Other Information. Grantor will, promptly after written
request by Beneficiary or the Rating Agency, furnish or cause to be
furnished to Beneficiary or the Rating Agency, as applicable, in such manner
and in such detail as may be reasonably requested by Beneficiary or the
Rating Agency, as applicable, such reasonable additional information as may
be reasonably requested by Beneficiary or the Rating Agency as applicable
with respect to the Trust Estate. Without limiting the foregoing, so long
as any Certificates remain outstanding, Grantor shall, upon request of
Holder, make available to such Holder, or a prospective purchaser designated
by such Holder, any and all such information with respect to Grantor and the
Properties required to permit the offer and sale of the Certificates
pursuant to Rule 144 under the Securities Act of 1933, as amended.
15. Compliance with Leases and Agreements.
(a) Leases and Operating Agreements. The Leases and the
Operating Agreements, if any, are in full force and effect. Grantor has
neither given to, nor received any notice of default from, any party to any
of the Operating Agreements, if any, or any Lease which remains uncured. To
the best of Grantor's knowledge, except as set forth in estoppel
certificates delivered to Beneficiary and the Rating Agency prior to the
date hereof, no events or circumstances exist which with or without the
giving of notice, the passage of time or both, may constitute a default
under any of the Operating Agreements or the Leases on the part of Grantor,
or party thereunder. Grantor has complied with and performed all of its
material construction, improvement and alteration obligations with respect
to each Property required under the Operating Agreements and the Leases.
Grantor will promptly after receipt thereof deliver to Beneficiary a copy of
any notice received with respect to the Operating Agreements and the Leases,
claiming that Grantor is in default in the performance or observance of any
of the material terms, covenants or conditions of any of the Operating
Agreements or the Leases.
(b) New Leases. Grantor may, at all times, lease to any Person
space within each Property in a manner consistent with other First Class
properties comparable to the applicable Property and then current market
conditions existing in the applicable market area in which such Property is
located, and otherwise in accordance with this Mortgage. Each Lease entered
into after the date hereof (including the renewal or extension on or after
the date hereof of any Lease entered into prior to the date hereof if the
rent payable during such renewal or extension, or a formula or other method
to compute such rent, is not provided for in such Lease (such a renewal or
extension a "Renewal Lease")) (A) shall provide for payment of rent and all
other material amounts payable thereunder at rates at least equal to the
fair market rental value (taking into account the type and creditworthiness
of the tenant, the length of tenancy and the location and size of the unit
so rented), as of the date such Lease is executed by Grantor, of the space
covered by such Lease or Renewal Lease for the term thereof, including any
renewal options, and (B) shall not contain any provision whereby the rent
payable thereunder would be based, in whole or in part, upon the net income
or profits derived by any Person from the Property (provided, however, that
it may contain a provision in which a portion of rent may be payable based
on a percentage of gross income), and (C) shall not prevent Proceeds from
being held and disbursed by Beneficiary in accordance with the terms hereof,
and (D) shall not entitle any tenant to receive and retain Proceeds except
those that may be specifically awarded to it in condemnation proceedings
because of the Taking of its trade fixtures and its leasehold improvements
which have not become part of the realty and such business loss as tenant
may specifically and separately establish. Grantor may not, without the
consent of Beneficiary, amend, modify or waive the provisions of any Lease
or terminate, reduce rents under or shorten the term of any Lease in any
manner unless such action would not, in the good faith judgment of the
Grantor, have a material adverse effect on the applicable Property taken as
a whole. All reasonable costs and expenses incurred by Beneficiary
(including reasonable attorneys' fees and expenses) for purposes of
determining whether or not to give its consent under this Section 15(b), if
and to the extent that Grantor has requested Beneficiary's consent to a
proposed action, shall be paid by Grantor pursuant to the provisions of
Section 18.
(c) No Default Under Leases. Grantor shall (i) promptly perform
and observe all of the material terms, covenants and conditions required to
be performed and observed by Grantor under the Leases and the Operating
Agreements, if the failure to perform or observe the same would materially
and adversely affect the value of any Property; (ii) exercise, within
fifteen (15) Business Days after a written request by Beneficiary, any right
to request from the Tenant under any Lease or the party to any Operating
Agreement a certificate with respect to the status thereof; and (iii) not
collect any of the Rents under the Leases more than one (1) month in advance
(except that Grantor may collect such security deposits as are permitted by
Legal Requirements and are commercially reasonable in the prevailing market
and collect other charges in accordance with the terms of each Lease).
(d) Subordination and Non-Disturbance. All Leases entered into
by Grantor after the date hereof, if any, shall be subject and subordinate
to this Mortgage; provided that, Beneficiary shall enter into, and, if
required by applicable law to provide constructive notice, or if required by
the terms of the Tenant's lease, record in the county where the subject
Property is located, a subordination, attornment and non-disturbance agree-
ment, in form and substance substantially similar to the form attached
hereto as Exhibit "C" (a "Nondisturbance Agreement"), with any Tenant
entering into a Lease after the date hereof or, within ten (10) Business
Days after written request therefor by Grantor, with any other Tenant under
any Lease or prospective Lease (other than a Lease to an Affiliate of
Grantor) existing on the date hereof or made or to be made in accordance
with the provisions of this Section 15, provided that, with respect to any
Lease entered into after the date hereof, such request is accompanied by an
Officer's Certificate stating that such Lease complies in all respects with
this Section 15. All reasonable costs and expenses of Beneficiary in
connection with the negotiation, preparation, execution and delivery of any
Nondisturbance Agreement including, without limitation, reasonable
attorneys' fees and disbursements shall be paid by Grantor. Beneficiary
shall enter into a Nondisturbance Agreement or an agreement in any other
form reasonably requested by such Tenant, provided that Grantor certifies to
Beneficiary in writing in the form attached hereto in Exhibit C that the
same does not materially increase the obligations or liabilities of
Beneficiary from what the same would have been under the form of
Nondisturbance Agreement attached hereto.
(e) Notwithstanding the foregoing provisions of this Section 15,
Grantor and Beneficiary hereby acknowledge and agree that the provisions of
Section 15(b) shall not apply to any sublease of any space located within
any out parcels which have been transferred or leased pursuant to Section
11(d)(iii) of this Mortgage and Beneficiary will at Grantor's request enter
into a Nondisturbance Agreement in the form of Exhibit C with any Tenant
leasing all or a portion of such space. Beneficiary shall reimburse Grantor
for all reasonable costs and expenses incurred by Beneficiary (including
reasonable attorneys' fees and disbursements) in connection with the
execution of such Nondisturbance Agreement.
16. Beneficiary's Right to Perform. Upon the occurrence and
during the continuance of an Event of Default with respect to the
performance of any of the Obligations contained herein, Beneficiary may,
without waiving or releasing Grantor from any Obligation or Default under
this Mortgage, but shall not be obligated to, at any time perform the same,
and the cost thereof, with interest at the Default Rate from the date of
payment by Beneficiary to the date such amount is paid by Grantor, shall
immediately be due from Grantor to Beneficiary and the same shall be secured
by this Mortgage and shall be a Lien on the Trust Estate prior to any right,
title to, interest in or claim upon the Trust Estate attaching subsequent to
the Lien of this Mortgage. No payment or advance of money by Beneficiary
under this Section 16 shall be deemed or construed to cure Grantor's Default
or waive any right or remedy of Beneficiary hereunder.
17. Grantor's Existence; Organization and Authority. For so long
as this Mortgage remains of record with respect to any of the Properties,
Grantor shall do all things necessary to preserve and keep in full force and
effect its existence, rights and privileges as the form of entity which it
is (e.g., partnership, corporation, etc.) on the date hereof and its right
to own property or transact business in all states in which the Properties
are located. For so long as any portion of the Indebtedness shall remain
outstanding, Grantor shall do all things necessary to continue to be, a
Single Purpose Entity, and shall prevent any general partner of Grantor from
amending such general partner's articles of incorporation or bylaws, or
other formation documents, in any manner that would enable such general
partner to expand Grantor's business purposes beyond those specified in such
documents as of the date hereof. Grantor hereby represents and warrants
that each of the entities comprising Grantor, and the general partners of
such entities which are partnerships, (i) is a duly organized and validly
existing entity as described in Schedule 4 hereof under the laws of the
jurisdiction of its formation, (ii) has the requisite power and authority to
own its properties and to carry on its business as now being conducted and
as proposed to be conducted and is qualified to do business in all States in
which the Properties are located, and (iii) has the requisite power to
execute and deliver and perform its obligations under this Mortgage, the
Notes and each of the other Loan Documents. The execution and delivery by
Grantor of this Mortgage, the Notes and each of the other Loan Documents to
be executed by Grantor, Grantor's performance of its respective obligations
thereunder and the creation of the security interest and Liens provided for
in this Mortgage have been duly authorized by all requisite action on the
part of Grantor, and will not violate in any material respect any Legal
Requirement, any order of any court or other Governmental Authority,
Grantor's certificate of limited partnership or partnership agreement or any
material indenture, agreement or other instrument to which Grantor is a
party, or by which Grantor is bound; and will not conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a
default under any of the foregoing, or result in the creation or imposition
of any Lien, of any nature whatsoever, upon any of the property or assets of
Grantor except the Liens created hereunder. Grantor is not required to
obtain any consent, approval or authorization from or to file any
declaration or statement with, any Governmental Authority in connection with
or as a condition to the execution, delivery or performance of this
Mortgage, the Notes or the other Loan Documents by Grantor other than those
which have already been obtained or filed. Grantor further represents and
warrants that it is and, so long as any portion of the Indebtedness shall
remain outstanding, shall do all things necessary to continue to be, a
Single-Purpose Entity.
18. Protection of Security; Costs and Expenses. Grantor shall
appear in and defend any action or proceeding of which it has as a matter of
law received proper notice purporting to affect the security hereof or the
rights or powers of Beneficiary or Trustee hereunder and shall pay all costs
and expenses, including, without limitation, cost of evidence of title and
reasonable attorneys' fees and disbursements, in any such action or
proceeding, and in any suit brought by Beneficiary to foreclose this
Mortgage or to enforce or establish any other rights or remedies of
Beneficiary hereunder upon the occurrence and during the continuance of an
Event of Default. If an Event of Default occurs under this Mortgage, or if
any action or proceeding is commenced in which it becomes necessary to
defend or uphold the Lien or priority of this Mortgage or which adversely
affects Beneficiary or Beneficiary's interest in the Trust Estate or any
part thereof, including, but not limited to, eminent domain, enforcement of,
or proceedings of any nature whatsoever under any Legal Requirement
affecting the Trust Estate or involving Grantor's bankruptcy, insolvency,
arrangement, reorganization or other form of debtor relief, then
Beneficiary, upon reasonable notice to Grantor, may, but without obligation
to do so and without releasing Grantor from any obligation hereunder, make
such appearances, disburse such reasonable sums and take such action as
Beneficiary reasonably deems necessary or appropriate to protect
Beneficiary's interest in the Trust Estate, including, but not limited to,
disbursement of reasonable attorneys' fees, entry upon the Trust Estate to
make repairs or take other action to protect the security hereof, and
payment, purchase, contest or compromise of any encumbrance, charge or lien
which in the reasonable judgment of Beneficiary appears to be prior or
superior hereto; provided, however, that the foregoing shall be subject to
Grantor's rights to contest under Section 7(c) hereof and Beneficiary shall
not pay or discharge any lien, encumbrance or charge being contested by
Grantor in accordance with Section 7(c) hereof. Grantor further agrees to
pay all reasonable costs and expenses of Beneficiary, Servicer or Trustee,
including, reasonable attorneys' fees and disbursements incurred by
Beneficiary, Servicer or Trustee in connection with (a) the negotiation,
preparation, execution, delivery and performance of this Mortgage, the Notes
and the other Loan Documents, (b) the performance of their respective
obligations and exercise of their rights under this Mortgage, the Notes and
the other Loan Documents, (c) the review of any Tax Opinion,
Nondisqualification Opinion, or other Opinion of Counsel delivered by
Grantor pursuant to this Mortgage or the other Loan Documents, and (d) the
servicing and monitoring of the Loan and this Mortgage. All of the costs,
expenses and amounts set forth in this Section 18 shall be payable by
Grantor, on demand and, together with interest thereon at the Default Rate,
if the same are not paid within ten (10) Business Days after demand therefor
by Beneficiary (or Trustee), until the date of repayment by Grantor, shall
be deemed to be Indebtedness hereunder and shall be a Lien on the Trust
Estate prior to any right, title, interest or claim upon the Trust Estate
(subject to the provisions of Section 11(d) hereof). Nothing contained in
this Section 18 shall be construed to require Beneficiary to incur any
expense, make any appearance, or take any other action (the foregoing,
however, shall not in any way be deemed to affect the Servicer's obligations
to the Holders under the Trust and Servicing Agreement).
19. Management of the Trust Estate.
(a) For purposes hereof, a "Qualifying Manager" shall mean any
property manager, other than an affiliate, as to which the Rating Agency
issues the affirmation described below. Grantor shall notify Beneficiary
and the Rating Agency in writing (and shall deliver a copy of the proposed
management agreement) of any entity proposed to be designated as a
Qualifying Manager of all or any of the Properties no less than 30 days
before such Qualifying Manager begins to manage such Property(ies) and shall
obtain prior to any appointment of a Qualifying Manager a written
affirmation from the Rating Agency that the rating of the Certificates
immediately prior to retention of any such Qualifying Manager will not cause
the ratings of the Certificates to be qualified, downgraded or withdrawn as
a result of such change.
(b) It is acknowledged and agreed that a Qualifying Manager may
be retained at Beneficiary's direction at any time following the occurrence
and during the continuance of an Event of Default.
(c) Grantor shall provide a copy of any new management agreement
and subordination agreement with an existing Qualifying Manager to the
Rating Agency.
(d) Notwithstanding the foregoing provisions of this Section 19,
if the aggregate Net Operating Income of all of the Properties owned by
Grantor and subject to the lien of this Mortgage on the date of
determination for the preceding four (4) calendar quarters decreases by an
amount greater than 25% of the aggregate Net Operating Income of such
Properties for the calendar year 1995 (except if such reduction is as a
result of market conditions or the event described in clause (e) below),
Beneficiary may instruct the Grantor to remove any manager of the Properties
and designate a replacement property manager willing to discharge such
duties for total annual fees not to exceed 4% of the annual base and
percentage rents, for management, and fees for leasing at the prevailing
market rates, and the Grantor shall so remove the manager and appoint such
replacement. If such option is exercised by Beneficiary, the replacement
property management company shall be selected by Beneficiary, and the senior
manager(s) thereof shall have had not less than ten (10) years' experience
in the management of properties in the nature of the Properties, shall be
reasonably acceptable to the Grantor and shall be a Qualifying Manager.
(e) In the event that the Net Operating Income of the Properties
decreases for a period of four (4) consecutive calendar quarters as
contemplated by clause (d) above directly as a result of the loss of one or
more tenants leasing in excess of 10,000 square feet of space at a Property
(by reason of the termination of such tenant's Lease, default by such tenant
in respect of its obligations under such Lease or otherwise), Beneficiary
may not instruct Grantor to remove the manager; provided that the applicable
Grantor, within twelve (12) months of such termination, shall have entered
into a bona fide letter of intent for a new Lease or Leases of the relevant
premises with a new tenant or tenants and the base rent under such Lease
would restore the Net Operating Income of the Properties owned by the
Grantor on the date of such determination and subject to the lien of this
Mortgage to the amount of such Net Operating Income immediately prior to
such four (4) consecutive calendar quarters.
20. Remedies. Upon the occurrence and during the continuation of
an Event of Default, Beneficiary may take such actions against Grantor,
subject to Section 33 hereof, and/or instruct Trustee to take such action
against the Trust Estate or any portion thereof as Beneficiary determines is
necessary to protect and enforce its rights hereunder, without notice or
demand except as set forth below or as required under applicable law. Any
such actions taken by Beneficiary shall be cumulative and concurrent and may
be pursued independently, singly, successively, together or otherwise, at
such time and in such order as Beneficiary may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Beneficiary permitted
by law, equity or contract or as set forth herein or in the other Loan
Documents. Beneficiary's determination of appropriate action may be based
on the advice of the Servicer or another appropriate real estate or other
consultant and/or counsel, and Beneficiary may rely conclusively on such
advice. If such consultant is not the Servicer, Grantor shall pay such
consultant's and reasonable attorney's fees and expenses incurred by
Beneficiary pursuant to this Section 20. Such actions may include the
following:
(a) Acceleration. Subject to any applicable provisions of the
Notes and the other Loan Documents, Beneficiary may declare all or any
portion of the unpaid principal balance under the Notes, together with all
accrued and unpaid interest thereon, and all other unpaid Indebtedness, to
be immediately due and payable.
(b) Entry. Subject to the provisions and restrictions of
applicable law, Beneficiary and/or Trustee, if applicable, personally, or by
its agents or attorneys, at Beneficiary's election, may enter into and upon
all or any part of the Trust Estate (including any Property and any part
thereof), and may exclude Grantor, its agents and servants therefrom (but
such entry shall be subject to any Nondisturbance Agreements then in
effect); and Beneficiary and/or Trustee, if applicable, having and holding
the same, may use, operate, manage and control the Trust Estate or any part
thereof and conduct the business thereof, either personally or by its
superintendents, managers, agents, servants, attorneys or receiver. Upon
every such entry, Beneficiary and/or Trustee, if applicable, may, at the
reasonable expense of the Trust Estate and/or Grantor, from time to time,
either by purchase, repair or construction, maintain and restore the Trust
Estate or any part thereof, and may insure and reinsure the same in such
amount and in such manner as may seem to them to be advisable. Similarly,
from time to time, Beneficiary and/or Trustee, if applicable, may, at the
expense of Grantor (which amounts may be disbursed by Beneficiary and/or
Trustee, if applicable, from the Trust Estate on behalf of Grantor), make
all necessary or proper repairs, renewals, replacements, alterations,
additions, betterments and improvements to and on the Trust Estate or any
part thereof as it may seem advisable. Beneficiary or its designee shall
also have the right to manage and operate the Trust Estate or any part
thereof and to carry on the business thereof and exercise all rights and
powers of Grantor with respect thereto, either in the name of Grantor or
otherwise, as may seem to them to be advisable. In confirmation of the
grant made in Granting Clause (E) hereof, in the case of the occurrence and
continuation of an Event of Default, Beneficiary shall be entitled to
collect and receive all earnings, revenues, rents, issues, profits and
income of the Trust Estate or any part thereof (i.e., the "Rents") to be
applied in the order of priorities and amounts as shall be provided for in
Section 21 hereof. Beneficiary shall be liable to account only for rents,
issues and profits and other proceeds actually received by Beneficiary and
for security deposits and payments made. All actions which may be taken by
Beneficiary pursuant to this Section 20(b) may be taken by the Trustee or
the Jurisdictional Trustee, upon the direction of Beneficiary. Beneficiary
or the Jurisdictional Trustee, as applicable, shall be liable to account
only for rents, issues and profits and other proceeds actually received by
Beneficiary or the Jurisdictional Trustee.
(c) Foreclosure. Prior to taking title to any Property (whether
by foreclosure, deed in lieu or otherwise), Beneficiary shall obtain, in
each instance, at Grantor's reasonable expense a new phase I environmental
report with respect to each Property, and such additional environmental
studies as may be recommended in such phase I reports.
(i) Beneficiary, with or without entry, personally or
by its agents or attorneys, insofar as applicable, and in addition to
any and every other remedy, may (A) sell or instruct the Trustee or the
Jurisdictional Trustee, if applicable, to sell, to the extent permitted
by law and pursuant to the power of sale granted herein, all and
singular the Trust Estate, and all estate, right, title and interest,
claim and demand therein, and right of redemption thereof, at one or
more sales, as an entirety or in parcels, and at such times and places
as required or permitted by law and as are customary in any county or
parish in which a Property is located and upon such terms as Benefi-
ciary, the Trustee or the Jurisdictional Trustee if applicable may fix
and specify in the notice of sale to be given to Grantor (and on such
other notice published or otherwise given as provided by law), or as
may be required by law; (B) institute (or instruct the Trustee or the
Jurisdictional Trustee to institute) proceedings for the complete or
partial foreclosure of this Mortgage under the provisions of the laws
of the jurisdiction or jurisdictions in which the Trust Estate or any
part thereof is located, or under any other applicable provision of
law; or (C) take all steps to protect and enforce the rights of
Beneficiary, whether by action, suit or proceeding in equity or at law
(for the specific performance of any covenant, condition or agreement
contained in this Mortgage, or in aid of the execution of any power
herein granted, or for any foreclosure hereunder, or for the
enforcement of any other appropriate legal or equitable remedy), or
otherwise, as Beneficiary, being advised by counsel and its financial
advisor, shall deem most advisable to protect and enforce any of their
rights or duties hereunder.
(ii) Beneficiary, the Trustee (or the Jurisdictional
Trustee, as applicable), may conduct any number of sales from time to
time. The power of sale shall not be exhausted by any one or more such
sales as to any part of the Trust Estate remaining unsold, but shall
continue unimpaired until the entire Trust Estate shall have been sold.
(iii) With respect to any Property, this Mortgage is
made upon any statutory conditions of the State in which such Property
is located, and, for any breach thereof or any breach of the terms of
this Mortgage, Beneficiary shall have the statutory power of sale, if
any, provided for by the laws of such State.
(d) Specific Performance. Beneficiary, in its sole and absolute
discretion, or the Jurisdictional Trustee, at Beneficiary's election, may
institute an action, suit or proceeding at law or in equity for the specific
performance of any covenant, condition or agreement contained herein or in
the Notes or any other Loan Document, or in aid of the execution of any
power granted hereunder or for the enforcement of any other appropriate
legal or equitable remedy.
(e) Enforcement of Notes. Subject to Section 33 hereof and to
the extent permitted under the provisions of applicable law, Beneficiary or
the Jurisdictional Trustee, at Beneficiary's election, may recover judgment
on the Notes (or any portion of the Indebtedness evidenced thereby), either
before, during or after any proceedings for the foreclosure (or partial
foreclosure) or enforcement of this Mortgage.
(f) Sale of Trust Estate; Application of Proceeds.
(i) Beneficiary, the Trustee (or the Jurisdictional
Trustee, if applicable), may postpone any sale of all or any part of
the Trust Estate to be made under or by virtue of this Section 20 by
public announcement at the time and place of such sale, or by
publication, if required by law, and, from time to time, thereafter,
may further postpone such sale by public announcement made at the time
of sale fixed by the preceding postponement.
(ii) Upon the completion of any sale made by Benefi-
ciary, the Trustee or the Jurisdictional Trustee under or by virtue of
this Section 20, Beneficiary, the Trustee or the Jurisdictional
Trustee, if applicable, shall execute and deliver to the accepted pur-
chaser or purchasers a good and sufficient deed or deeds or other
appropriate instruments, conveying, assigning and transferring all its
estate, right, title and interest in and to the property and rights so
sold. Beneficiary, the Trustee or the Jurisdictional Trustee, as
applicable, is hereby appointed the true and lawful irrevocable
attorney-in-fact of Grantor in its name and stead or in the name of
Beneficiary to make all necessary conveyances, assignments, transfers
and deliveries of the property and rights so sold, and, for that
purpose, Beneficiary, the Trustee or the Jurisdictional Trustee, as
applicable, may execute all necessary deeds and other instruments of
assignment and transfer, and may substitute one or more persons with
like power, Grantor hereby ratifying and confirming all that such
attorney or attorneys or such substitute or substitutes shall lawfully
do by virtue hereof. Grantor shall, nevertheless, if so requested in
writing by Beneficiary, ratify and confirm any such sale or sales by
executing and delivering to Beneficiary or to such purchaser or
purchasers all such instruments as may be advisable, in the judgment of
Beneficiary, for such purposes and as may be designated in such
request. Any such sale or sales made under or by virtue of this
Section 20 shall operate to divest all the estate, right, title,
interest, claim and demand, whether at law or in equity, of Grantor in
and to the property and rights so sold, and shall be a perpetual bar,
at law and in equity, against Grantor, its successors and assigns and
any Person claiming through or under Grantor and its successors and
assigns.
(iii) The receipt of Beneficiary, the Trustee or the
Jurisdictional Trustee, as applicable, for the purchase money paid as a
result of any such sale shall be a sufficient discharge therefor to any
purchaser of the property or rights, or any part thereof, so sold. No
such purchaser, after paying such purchase money and receiving such
receipt, shall be bound to see to the application of such purchase
money upon or for any trust or purpose of this Mortgage, or shall be
answerable, in any manner, for any loss, misapplication or non-
application of any such purchase money or any part thereof, nor shall
any such purchaser be bound to inquire as to the authorization,
necessity, expediency or regularity of such sale.
(iv) Upon any sale made under or by virtue of this
Section 20, Beneficiary may bid for and acquire the Trust Estate or any
part thereof and, in lieu of paying cash therefor, may make settlement
for the purchase price by crediting upon the Notes secured by this
Mortgage the net proceeds of sale, after deducting therefrom the
expense of the sale and the costs of the action and any other sums
which Beneficiary is authorized to deduct under this Mortgage. The
person making such sale shall accept such settlement without requiring
the production of the Notes or this Mortgage, and without such
production there shall be deemed credited to the Indebtedness and
Obligations under this Mortgage the net proceeds of such sale. Benefi-
ciary, upon acquiring the Trust Estate or any part thereof, shall be
entitled to own, hold, lease, rent, operate, manage or sell the same in
any manner permitted by applicable laws.
(g) Voluntary Appearance; Receivers. After the happening, and
during the continuance of, any Event of Default, and immediately upon
commencement of (i) any action, suit or other legal proceeding by
Beneficiary to obtain judgment for the principal and interest on the Notes
and any other sums required to be paid pursuant to this Mortgage, or (ii)
any action, suit or other legal proceeding by Beneficiary of any other
nature in aid of the enforcement of the Loan Documents or any of them,
Grantor will (A) enter their voluntary appearance in such action, suit or
proceeding, and (B) if required by Beneficiary, consent to the appointment
of one or more receivers of the Trust Estate and of the earnings, revenues,
rents, issues, profits and income thereof. After the happening of any Event
of Default, or upon the filing of a bill in equity to foreclose this
Mortgage or to enforce the specific performance hereof or in aid thereof, or
upon the commencement of any other judicial proceeding to enforce any right
of Beneficiary, Beneficiary shall be entitled, as a matter of right, if it
shall so elect, without notice to any other party and without regard to the
adequacy of the security of the Trust Estate, forthwith, either before or
after declaring the principal and interest on the Notes to be due and pay-
able, to the appointment of such a receiver or receivers. Any receiver or
receivers so appointed shall have such powers as a court or courts shall
confer, which may include, without limitation, any or all of the powers
which Beneficiary is authorized to exercise by the provisions of this
Section 20, and shall have the right to incur such obligations and to issue
such certificates therefor as the court shall authorize. Notwithstanding
the foregoing, Beneficiary as a matter of right may appoint or secure the
appointment of a receiver, trustee, liquidator or similar official of the
Trust Estate or any portion thereof, and Grantor hereby irrevocably consents
and agrees to such appointment, without notice to Grantor and without regard
to the value of the Trust Estate or adequacy of the security for the Indebt-
edness and without regard to the solvency of the Grantor or any other Person
liable for the payment of the Indebtedness, and such receiver or other
official shall have all rights and powers permitted by applicable law and
such other rights and powers as the court making such appointment may
confer, but the appointment of such receiver or other official shall not
impair or in any manner prejudice the rights of Beneficiary to receive the
Rents with respect to any of the Trust Estate pursuant to this Mortgage, the
Assignment of Leases or the Cash Collateral Agreement.
(h) UCC Remedies. Beneficiary may exercise any or all of the
remedies granted to a secured party under the UCC, specifically including,
without limitation, the right to recover the attorneys' fees and other
expenses incurred by Beneficiary in the enforcement of this Mortgage or in
connection with Grantor's redemption of the Improvements or Building
Equipment. Beneficiary may exercise its rights under this Mortgage
independently of any other collateral or guaranty that Grantor may have
granted or provided to Beneficiary in order to secure payment and
performance of the Obligations, and Beneficiary shall be under no obligation
or duty to initiate foreclosure or levy upon any other collateral given by
Grantor to secure any Obligation or to proceed against any guarantor before
enforcing its rights under this Mortgage.
(i) Leases. Beneficiary may, at its option, before any
proceeding for the foreclosure (or partial foreclosure) or enforcement of
this Mortgage, treat any Lease which is subordinate by its terms to the Lien
of this Mortgage, as either subordinate or superior to the Lien of this
Mortgage.
(j) Other Rights. Beneficiary may pursue against Grantor any
other rights and remedies of Beneficiary permitted by law, equity or
contract or as set forth herein or in the other Loan Documents.
(k) Retention of Possession. Notwithstanding the appointment of
any receiver, liquidator or trustee of Grantor, or any of its property, or
of the Trust Estate or any part thereof, Beneficiary or the Jurisdictional
Trustee, as applicable, to the extent permitted by law, shall be entitled to
retain possession and control of all property now or hereafter granted to or
held by Beneficiary or the Jurisdictional Trustee, as applicable, under this
Mortgage.
(l) Suits by Beneficiary. Any such suit or proceeding instituted
by Beneficiary shall be brought in the name of Beneficiary and any recovery
of judgment shall be subject to the rights of Beneficiary.
(m) Remedies Cumulative. Subject to Section 33 hereof, no remedy
herein conferred upon or reserved to the Trustee, the Jurisdictional Trustee
and/or the Beneficiary shall exclude any other remedy, and each such remedy
shall be cumulative and in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity. No delay or omission of
Beneficiary, the Trustee and/or the Jurisdictional Trustee to exercise any
right or power accruing upon any Event of Default shall impair any such
right or power, or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein. Every power and remedy given by this
Mortgage to the Trustee, the Jurisdictional Trustee and/or Beneficiary may
be exercised from time to time and as often as the Trustee, the
Jurisdictional Trustee (at Beneficiary's direction) and Beneficiary may deem
expedient. Nothing in this Mortgage shall affect Grantor's obligations to
pay the principal of, and interest on, the Notes in the manner and at the
time and place expressed in the Notes.
(n) Waiver of Rights. Grantor agrees that, to the fullest
extent permitted by law, it will not at any time, (1) insist upon, plead or
claim or take any benefit or advantage of any stay, extension or moratorium
law, wherever enacted, now or at any time hereafter in force, which may
affect the covenants and terms of performance of this Mortgage, (2) claim,
take or insist upon any benefit or advantage of any law, now or at any time
hereafter in force, providing for valuation or appraisal of the Trust
Estate, or any part thereof, prior to any sale or sales thereof which may be
made pursuant to any provision herein contained, or pursuant to the decree,
judgment or order of any court of competent jurisdiction, or (3) after any
such sale or sales, claim or exercise any right, under any statute
heretofore or hereafter enacted by the United States of America, any State
thereof or otherwise, to redeem the property and rights sold pursuant to
such sale or sales or any part hereof. Grantor hereby expressly waives all
benefits and advantages of such laws, and covenants, to the fullest extent
permitted by law, not to hinder, delay or impede the execution of any power
herein granted or delegated to Beneficiary or the Trustees, but will suffer
and permit the execution of every power as though no such laws had been made
or enacted. Grantor for itself and all who may claim through or under it,
waives, to the extent it lawfully may do so, any and all homestead rights
and, any and all rights to reinstatement, any and all right to have the
property comprising the Trust Estate marshaled upon any foreclosure of the
Lien hereof.
21. Application of Proceeds.
(a) Sale Proceeds. The proceeds of any sale or foreclosure of
the Trust Estate or any portion thereof shall be applied to the following in
the following order of priority the payment of: (i) the costs and expenses
of the foreclosure proceedings with respect to such Property (including
reasonable counsel fees and disbursements actually incurred and advertising
costs and expenses), liabilities and advances made or incurred under this
Mortgage, and reasonable receivers' and trustees' fees and commissions and
fees and expenses incurred by Beneficiary, together with interest at the
Default Rate to the extent payable, (ii) any other sums advanced by
Beneficiary (or any advancing agent on its behalf) in accordance with the
terms hereof and not repaid to it by Grantor, together with interest at the
Default Rate to the extent payable, (iii) all sums due under the Notes in
the order of priority set forth therein, and (iv) any surplus to Grantor or
other party legally entitled thereto.
(b) Other Proceeds. All Proceeds or other amounts collected by
Beneficiary and applied to pay interest or principal of the Notes or other
amounts due on this Mortgage following an Event of Default and acceleration
of the Notes shall be applied (1) first, to reimburse any expenses related
to such collection and (2) thereafter, as provided in Section 21(a) hereof.
If the Notes have not been accelerated, any amount available to make
payments or applied in lieu of such payments thereon shall be applied (i)
first, to interest due or overdue on the Notes, (ii) then, any amounts
applied to pay or applied in lieu of paying principal on the Notes then due
shall be applied to pay or applied in lieu of paying each Note in order of
priority, and (iii) thereafter, to Grantor.
22. CERTAIN WAIVERS. TO INDUCE BENEFICIARY TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THE NOTES AND THIS MORTGAGE, AND FOR OTHER GOOD
AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY
ACKNOWLEDGED, GRANTOR AND EACH OF THE PARTNERS IN ENTITIES COMPRISING
GRANTOR WHICH ARE PARTNERSHIPS, EXPRESSLY AND IRREVOCABLY HEREBY WAIVE THE
FOLLOWING RIGHTS, IN ADDITION TO AND NOT IN DEROGATION OF ALL OTHER WAIVERS
CONTAINED IN THE NOTES, THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS:
(a) WAIVER OF RIGHT TO TRIAL BY JURY. GRANTOR HEREBY WAIVES AND
SHALL WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY, OR
COUNTERCLAIM ASSERTED BY BENEFICIARY WHICH ACTION, PROCEEDING OR
COUNTERCLAIM ARISES OUT OF OR IS CONNECTED WITH THIS MORTGAGE, THE NOTES OR
ANY OTHER LOAN DOCUMENTS.
23. Notice of Certain Occurrences. In addition to all other
notices required to be given by Grantor hereunder, Grantor shall give notice
to Beneficiary and the Rating Agency promptly upon the occurrence of: (a)
any litigation or proceeding affecting Grantor or the Trust Estate or any
part thereof in which the amount involved is Five Hundred Thousand Dollars
($500,000) or more and not covered by insurance or in which injunctive or
similar relief is sought and likely to be obtained; and (b) together with
the quarterly financial statements required to be delivered hereunder, a
list of all litigation and proceedings affecting Grantor or the Trust Estate
or any part thereof in which the amount involved is Five Hundred Thousand
Dollars ($500,000) or more, whether or not covered by insurance and whether
or not relief is being sought, but information regarding a particular
litigation need not be given in subsequent reports if it has been given
previously and the information to be given in the litigation report
regarding that litigation has not changed since the last report describing
such litigation.
24. Trust Funds. To the extent required by applicable law, all
security deposits paid under the Leases shall be treated as trust funds and
not commingled with any other funds of Grantor. Within ten (10) days after
request by Beneficiary, Grantor shall furnish Beneficiary with satisfactory
evidence of compliance with this Section 24, together with a statement of
all security deposits by Tenants under the Leases, which statement shall be
certified by Grantor.
25. Taxation. In the event a law is passed after the date hereof
of the United States or of any state in which a Property is located either
(a) changing in any way the laws for the taxation of mortgages or debts
secured thereby for federal, state or local purposes, or the manner of
collection of any such taxes, or (b) imposing a tax, either directly or
indirectly, on mortgages or debts secured thereby, in each case other than
income taxes, franchise taxes, or withholding taxes, that materially
adversely affects Beneficiary, Beneficiary shall have the right to declare
the Notes due on a date to be specified by not less than thirty (30) days'
written notice to be given to Grantor unless within such thirty (30) day
period Grantor shall assume as an obligation hereunder the payment of any
tax so imposed until full payment of the Notes provided such assumption
shall be permitted by law.
26. Notices. Any notice, election, request or demand which by
any provision of this Mortgage is required or permitted to be given or
served hereunder shall be in writing and shall be given or served by hand
delivery against receipt, by any nationally recognized overnight courier
service providing evidence of the date of delivery or by certified mail
return receipt requested, postage prepaid, addressed to Grantor at: c/o
Kranzco Realty Trust, 128 Fayette Street, Conshohocken, Pennsylvania 19428,
with a copy to Robinson Silverman Pearce Aronsohn & Berman LLP, 1290 Avenue
of the Americas, New York, New York 10104, Attention: Alan S. Pearce, Esq.;
if to Trustee at: Ballard Spahr Andrews & Ingersoll, 300 East Lombard
Street, Baltimore, Maryland 21202, Attention: Ronald P. Fish and Thomas A.
Hauser; if to Beneficiary at c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428 with a copy to the Servicer under the Trust
and Servicing Agreement; if to the Rating Agency at: Fitch Investors
Service, L.P., One State Street Plaza, New York, New York 10004, Attention:
Commercial Mortgage Surveillance, or at such other address as shall be
designated from time to time by Grantor, Trustee, Beneficiary or the Rating
Agency by notice given in accordance with the provisions of this Section 26.
Any such notice or demand given hereunder shall be effective upon receipt.
All notices, elections, requests and demands required or permitted under
this Mortgage shall be in the English language.
27. No Oral Modification. This Mortgage may not be waived,
altered, amended, modified, changed, discharged or terminated orally but
only by a written agreement signed by the party against which enforcement is
sought.
&. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof,
but each shall be construed as if such invalid, illegal or unenforceable
provision had never been included hereunder.
29. Successors and Assigns. All covenants of Grantor contained
in this Mortgage are imposed solely and exclusively for the benefit of
Beneficiary and its successors and assigns, and no other Person shall have
standing to require compliance with such covenants or be deemed, under any
circumstances, to be a beneficiary of such covenants, any or all of which
may be freely waived in whole or in part by Beneficiary at any time if in
its sole discretion it deems it advisable to do so. All such covenants of
Grantor shall run with the land and bind Grantor, the successors and assigns
of Grantor (and each of them) and all subsequent owners, encumbrancers and
Tenants of the Trust Estate, and shall inure to the benefit of Beneficiary,
its successors and assigns.
30. Governing Law. This Mortgage 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 the
State of New York and any applicable laws of the United States of America
except that at all times the provisions for the creation, perfection and
enforcement of the Liens and security interest created pursuant to this
Mortgage with respect to any Property and pursuant to the Assignment of
Leases shall be governed by the laws of the State in which such Property is
located. Whenever possible, each provision of this Mortgage shall be inter-
preted in such a manner as to be effective and valid under applicable law,
but if any provision of this Mortgage 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 remaining provisions
of this Mortgage. Nothing contained in this Mortgage or in any Loan
Document shall require either Grantor to pay or Beneficiary to accept any
sum in any amount which would, under applicable law, subject Beneficiary,
any Trustee or any Holder to penalty or adversely affect the enforceability
of this Mortgage. In the event that the payment of any sum due hereunder or
under any Loan Document would have such result under applicable law, then,
ipso facto, the obligation of Grantor to make such payments shall be reduced
to the highest sum then permitted under applicable law and appropriate
adjustment shall be made by Grantor and Beneficiary.
31. Certain Representations, Warranties and Covenants.
(a) Recording Fees, Taxes, Etc. Grantor hereby agrees to take
all such further reasonable actions, and to pay all taxes, recording fees,
charges, costs and other expenses including, without limitation, reasonable
attorneys' and professional fees and disbursements which are currently or in
the future shall be imposed, and which may be required or necessary to
establish, preserve, protect or enforce the Lien of this Mortgage.
(b) No Offsets. Grantor warrants, covenants and represents to
Beneficiary that as of the date hereof there exists no cause of action at
law or in equity that would constitute any offset, counterclaim or deduction
against the Indebtedness or Obligations.
(c) Full and Accurate Disclosure. To the best of Grantor's
knowledge, no statement of fact made by or on behalf of Grantor in this
Mortgage 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 as of the date made.
(d) Tax Filings. Grantor has filed all federal, state and local
tax returns required to be filed prior to the date hereof and has paid or
made adequate provision for the payment of all federal, state and local
taxes, charges and assessments shown to be due from Grantor on such tax
returns.
(e) No Litigation. No litigation is pending or, to Grantor's
best knowledge, threatened against Grantor which, if determined adversely to
Grantor, would have a material adverse effect on any Property or the
security created hereby and no Taking has been commenced or, to Grantor's
best knowledge, is contemplated with respect to all or any portion of the
Trust Estate or for the relocation of roadways providing access to the Trust
Estate. Grantor has delivered to Beneficiary and the Rating Agency a
certificate setting forth all litigation affecting Grantor or any Property.
(f) Solvency. The fair saleable value of Grantor's assets
exceeds and will, immediately following the issuance and sale of the Notes
and the consummation of the other transactions contemplated to take place
simultaneously therewith, exceed Grantor's liabilities, including
subordinated, unliquidated, disputed and contingent liabilities. Grantor's
assets do not and, immediately following the issuance and sale of the Notes
and the consummation of the other transactions contemplated to take place
simultaneously therewith will not, constitute unreasonably insufficient
capital to carry out its business as conducted or as proposed to be
conducted. Grantor does not intend to, and does not believe that it will,
incur debts and liabilities (including, without limitation, contingent
liabilities) beyond its ability to pay such debts as they mature.
(g) ERISA. Grantor is not an "employee benefit plan" (within the
meaning of Section 3(3) of ERISA) to which ERISA applies and Grantor's
assets do not constitute plan assets. No actions, suits or claims under any
laws and regulations promulgated pursuant to ERISA are pending or, to
Grantor's knowledge, threatened against Grantor. Grantor has no knowledge
of any material liability incurred by Grantor which remains unsatisfied for
any taxes or penalties with respect to any employee benefit plan or any
Multiemployer Plan, or of any lien which has been imposed on Grantor's
assets pursuant to Section 412 of the Code or Sections 302 or 4068 of ERISA.
(h) Claims. No actions, suits, proceedings or governmental
investigations, whether judicial or otherwise are pending or, to the best
knowledge of Grantor, has been commenced against Grantor before any domestic
or foreign court or administrative, arbitral, governmental or regulatory
authority or agency which, if determined adversely to Grantor, would have a
material adverse effect on the security created hereby. Grantor has
delivered to Beneficiary and the Rating Agency a certificate setting forth
all such matters known to Grantor pending against Grantor as of the date
hereof.
(i) Liens. No Lien, other than Permitted Encumbrances, which
remains outstanding as of the date hereof, including, without limitation,
any tax lien, has been levied against the Trust Estate.
(j) Outstanding Liabilities. No outstanding liabilities of
Grantor exist which, individually or in the aggregate, would have a material
adverse effect on the security created hereby or would materially adversely
affect the condition (financial or otherwise) of Grantor. Grantor has
delivered to Beneficiary and the Rating Agency a certificate setting forth
all liabilities of Grantor as of the date hereof.
(k) Creditors' Claims. To Grantor's best knowledge, no claim of
any creditor of Grantor would have a material adverse effect on the security
created hereby or would materially adversely affect the condition (financial
or otherwise) of Grantor. Grantor has delivered to Beneficiary and the
Rating Agency a certificate setting forth all such claims of creditors of
Grantor as of the date hereof.
(l) Separate Business; Corporate Formalities.
(i) Grantor shall maintain its own deposit account or
accounts, separate from those of any Affiliate, with commercial banking
institutions. The funds of Grantor will not be diverted to any other
Person or for other than business uses of Grantor;
(ii) To the extent that Grantor shares the same officers or
other employees as any of its partners or Affiliates or any other
entity comprising Grantor or a partner in such entity, the salaries of
and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and each
such entity shall bear its fair share of the salary and benefit costs
associated with all such common officers and employees;
(iii) To the extent that Grantor jointly contracts with any
of its partners or Affiliates or any other entity comprising Grantor or
a partner in such entity to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so doing
shall be allocated fairly among such entities, and each such entity
shall bear its fair share of such costs. To the extent that Grantor
contracts or does business with vendors or service providers where the
goods and services provided are partially for the benefit of any other
Person, the costs incurred in so doing shall be fairly allocated to or
among such entities for whose benefit the goods and services are
provided, and each such entity shall bear its fair share of such costs.
All material transactions between Grantor and any of its Affiliates
shall be only on an arm's length basis.
(iv) To the extent that Grantor and any of its constituent
partners or Affiliates have offices in the same location, there shall
be a fair and appropriate allocation of overhead costs among them, and
each such entity shall bear its fair share of such expenses.
(v) Grantor shall conduct its affairs strictly in accordance
with its organizational documents, and observe all necessary,
appropriate and customary partnership or corporate formalities, as the
case may be, including, but not limited to, obtaining any and all
consents necessary to authorize actions taken or to be taken, and
maintaining accurate and separate books, records and accounts,
including, but not limited to, payroll and intercompany transaction
accounts.
(m) Director Consents. The General Partner of any entity
comprising Grantor which is a partnership, or if such entity is a limited
liability company, the managing member shall obtain the consent of all its
directors to (i) file a bankruptcy or insolvency petition or otherwise
institute insolvency proceedings or to authorize Grantor to do so, (ii)
dissolve, liquidate, consolidate, merge or sell all or substantially all of
Grantor's assets, (iii) engage in any other business activity, or (iv) amend
its organizational documents.
(n) No Default. As of the date hereof, Grantor is not in
material default under the terms and provisions of any Operating Agreement
or any Lease.
(o) Collateral As Entirety of Property. Each Property and the
Personalty located thereon constitutes all of the real property, equipment
and fixtures currently owned by Grantor or currently used in the operation
of the business located on such Property.
(p) No Property Damage. As of the date hereof, to Grantor's
knowledge, no portion of the Improvements at any Property has been
materially damaged, destroyed or injured by fire or other casualty which is
not now fully restored or in the process of being restored.
(q) Access. Each Property has adequate access to public streets,
roads or highways as reasonably necessary for the current use of the
Property.
(r) Separate Tax Parcels. Each Property constitutes one or more
separate tax lots, with a separate tax assessment, independent of any other
land or improvements.
(s) Utilities. All utility services necessary for the operation
of each Property have been connected and are available in adequate
capacities directly from utility lines and without the need for private
easements not presently existing.
32. No Waiver. No failure by Beneficiary to insist upon the
strict performance of any term hereof or to exercise any right, power or
remedy consequent upon a breach thereof shall constitute a waiver of any
such term or right, power or remedy or of any such breach. No waiver of any
breach shall affect or alter this Mortgage, which shall continue in full
force and effect, or shall affect or alter the rights of Beneficiary with
respect to any other then existing or subsequent breach.
33. Non-Recourse Obligations. Notwithstanding anything in this
Mortgage (other than as set forth in Section 41 hereof), the Notes or the
other Loan Documents, no personal liability shall be asserted or enforceable
against (i) Grantor, (ii) any Affiliate of Grantor, (iii) any Person owning
directly or indirectly, any legal or beneficial interest in Grantor or any
Affiliate of Grantor, or (iv) any partner, principal, officer, controlling
person, beneficiary, trustee, advisor, shareholder, employee, agent,
Affiliate or director of any Persons described in clauses (i) through (iii)
above (collectively, the "Exculpated Parties") by Beneficiary or Trustee in
respect of the Obligations, this Mortgage, any Notes or any other Loan
Document, or the making, issuance or transfer thereof, all such liability,
if any, being expressly waived by Beneficiary, Trustee, and each successive
holder of any Note and this Mortgage shall accept the Notes and this
Mortgage upon the express condition of this provision and limitation that in
the case of the occurrence and continuance of an Event of Default,
Beneficiary's remedies in its sole discretion shall be any or all of:
(i) Foreclosure of the lien of this Mortgage in accordance
with the terms and provisions set forth in this Mortgage;
(ii) Action against any other security at any time given to
secure the payment of the Notes and under the other Loan Documents; and
(iii) Exercise of any other remedy set forth in this
Mortgage or any other Loan Document.
The lien of any judgment against Grantor and any proceeding
instituted on, under or in connection with the Notes or this Mortgage, or
both, shall not extend to any property now or hereafter owned by Grantor or
any Exculpated Party other than the Net Operating Income from, and the
ownership interest of Grantor in, the Trust Estate and the other security
for the payment of the Notes or this Mortgage.
Notwithstanding anything in this Mortgage to the contrary, there
shall at no time be any limitation on Grantor's liability for the payment to
Beneficiary of: (1) condemnation proceeds or insurance proceeds which
Grantor has received and to which Beneficiary is entitled pursuant to the
terms of this Mortgage or any of the Loan Documents to the extent the same
have not been applied toward payment of sums due under the Notes or under
this Mortgage, or used for the repair or replacement of the Trust Estate
pursuant to this Mortgage, or (2) all loss, damage and expense as incurred
by Beneficiary and arising from any fraud, or intentional misrepresentation
of Grantor, or (3) any misappropriation of Rents or security deposits by
Grantor or any Affiliate of Grantor.
34. Further Assurances. Grantor, at its own expense, will
execute, acknowledge and deliver all such reasonable further acts, documents
or instruments including security agreements on any building equipment
included or to be included in the Trust Estate and a separate assignment of
each Lease and take all such actions as Beneficiary from time to time may
reasonably request to better assure, transfer and confirm unto Beneficiary
the rights now or hereafter intended to be granted to Beneficiary under this
Mortgage or the other Loan Documents. Grantor shall notify Beneficiary no
less than thirty (30) days prior to a change of address.
35. Estoppel Certificates. Grantor and Beneficiary each will,
from time to time, upon twenty (20) days' prior written request by the other
party, execute, acknowledge and deliver to the requesting party, in the case
of a request to Beneficiary, a certificate signed by an authorized officer
or officers and in the case of a request to Grantor, an Officer's
Certificate, stating that this Mortgage is unmodified and in full force and
effect (or, if there have been modifications, that this Mortgage is in full
force and effect as modified and setting forth such modifications) and
stating the amount of accrued and unpaid interest and the outstanding
principal amount of the Notes. The request for an estoppel certificate from
Beneficiary shall also state either that, to Grantor's best knowledge and
based on no independent investigation, no Default exists hereunder or, if
any Event of Default shall exist hereunder, specify any Event of Default of
which Grantor has actual knowledge and the steps being taken to cure such
Event of Default.
36. Intentionally Omitted.
37. Indemnification by Grantor.
Subject to the provisions of Section 33 hereof, Grantor will
protect, indemnify and save harmless Beneficiary, and all officers,
directors, stockholders, partners, employees, successors and assigns thereof
(collectively, the "Indemnified Parties") from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs and
expenses (including all reasonable attorneys' fees and expenses actually
incurred) imposed upon or incurred by or asserted against the Indemnified
Parties or the Trust Estate or any part of its interest therein, by reason
of the occurrence or existence of any of the following (to the extent
Insurance Proceeds payable on account of the following shall be inadequate,
it being understood that in no event will the Indemnified Parties be
required to actually pay or incur any costs or expenses as a condition to
the effectiveness of the foregoing indemnity) prior to (i) the acceptance by
Beneficiary of a deed-in-lieu of foreclosure with respect to the applicable
Property, or (ii) the Indemnified Parties taking possession or control of
the applicable Property, unless caused solely by the actual willful
misconduct or gross negligence of the Indemnified Parties (other than such
willful misconduct or gross negligence imputed to the Indemnified Parties
because of their interest in the Trust Estate): (1) ownership of Grantor's
interest in the Trust Estate, or any interest therein, or receipt of any
Rents or other sum therefrom, (2) any accident, injury to or death of any
persons or loss of or damage to property occurring on or about the Trust
Estate or any Appurtenances thereto, (3) any design, construction,
operation, repair, maintenance, use, non-use or condition of the Trust
Estate or Appurtenances thereto, including claims or penalties arising from
violation of any Legal Requirement or Insurance Requirement, as well as any
claim based on any patent or latent defect, whether or not discoverable by
Beneficiary, any claim the insurance as to which is inadequate, and any
Environmental Claim, (4) any Default under this Mortgage or any of the other
Loan Documents or any failure on the part of Grantor to perform or comply
with any of the material terms of any Lease or Operating Agreement within
the applicable notice or grace periods, (5) any performance of any labor or
services or the furnishing of any materials or other property in respect of
the Trust Estate or any part thereof, (6) any negligence or tortious act or
omission on the part of Grantor or any of its agents, contractors, servants,
employees, sublessees, licenses or invitees, (7) any contest referred to in
Section 7(c) hereof, (8) any obligation or undertaking relating to the
performance or discharge of any of the terms, covenants and conditions of
the landlord contained in the Leases or (9) the presence at, in or under any
Property or the Improvements thereon of any Hazardous Substance in violation
of any Legal Requirement. Any amounts the Indemnified Parties are legally
entitled to receive under this Section 37 which are not paid within ten (10)
Business Days after written demand therefor by the Indemnified Parties or
Beneficiary, setting forth in reasonable detail the amount of such demand
and the basis therefor, shall bear interest from the date of demand at the
Default Rate, and shall, together with such interest, be part of the
Indebtedness and secured by this Mortgage. In case any action, suit or
proceeding is brought against the Indemnified Parties by reason of any such
occurrence, Grantor shall at Grantor's expense resist and defend such
action, suit or proceeding or will cause the same to be resisted and
defended by counsel at Grantor's reasonable expense for the insurer of the
liability or by counsel designated by Grantor (unless reasonably disapproved
by Beneficiary promptly after Beneficiary has been notified of such
counsel); provided, however, that nothing herein shall compromise the right
of Beneficiary (or any Indemnified Party) to appoint its own counsel at
Grantor's expense for its defense with respect to any action which in its
reasonable opinion presents a conflict or potential conflict between
Beneficiary and Grantor that would make such separate representation
advisable; provided further that if Beneficiary shall have appointed
separate counsel pursuant to the foregoing, Grantor shall not be responsible
for the expense of additional separate counsel of any Indemnified Party
unless in the reasonable opinion of Beneficiary a conflict or potential
conflict exists between such Indemnified Party and Beneficiary. So long as
Grantor is resisting and defending such action, suit or proceeding as
provided above in a prudent and commercially reasonable manner, Beneficiary
and the Indemnified Parties shall not be entitled to settle such action,
suit or proceeding and claim the benefit of this Section 37 with respect to
such action, suit or proceeding and Beneficiary agrees that it will not
settle any such action, suit or proceeding without the consent of Grantor;
provided, however, that if Beneficiary reasonably determines that Grantor is
not diligently defending such action, suit or proceeding in a prudent and
commercially reasonable manner as provided above, and has provided Grantor
with thirty (30) days' prior written notice, or shorter period if mandated
by the requirements of applicable law, and opportunity to correct such
determination, Beneficiary may settle such action, suit or proceeding
subject only to Grantor's consent which shall not be unreasonably withheld
or delayed, and claim the benefit of this Section 37 with respect to
settlement of such action, suit or proceeding. Any Indemnified Party will
give Grantor prompt notice after such Indemnified Party obtains actual
knowledge of any potential claim by such Indemnified Party for
indemnification hereunder.
38. Release of Property. (a) If Grantor shall pay or cause to
be paid, the principal of and interest on the Notes in full at maturity or
as permitted in accordance with the terms thereof and all other Indebtedness
payable to Beneficiary hereunder by Grantor or secured hereby or by the
other Loan Documents and all of the payment Obligations shall have been
performed, then this Mortgage and all the other Loan Documents shall be
discharged and satisfied or assigned (to Grantor or to any other Person at
Grantor's direction and without representation or warranty by, or recourse
to, Beneficiary), at Grantor's option, without warranty (except that
Beneficiary shall be deemed to have represented that such release and
termination or reassignment has been duly authorized and that it has not
assigned or encumbered this Mortgage or the other Loan Documents), at the
expense of Grantor upon its written request. Concurrently with such release
and satisfaction or assignment of this Mortgage and all the other Loan
Documents, Beneficiary will return to Grantor the Notes and all insurance
policies relating to the Trust Estate which may be held by Beneficiary, any
amounts held in escrow pursuant to this Mortgage or the Cash Collateral
Agreement, if applicable, or otherwise, and any part of the Trust Estate or
other Collateral that may be in its possession and, on the written request
and at the expense of Grantor, will execute and deliver such instruments of
conveyance, assignment and release (including appropriate UCC-3 termination
statements) prepared by Grantor and as may reasonably be requested by
Grantor to evidence such release and satisfaction, or assignment, and any
such instrument, when duly executed by Beneficiary and, if appropriate, duly
recorded by Grantor in the places where this Mortgage and each other Loan
Document is recorded, shall conclusively evidence the release and
satisfaction or assignment of this Mortgage and the other Loan Documents.
(b) Grantor shall be entitled to have one (1) or more of the
Properties released from the Lien of this Mortgage from and after the date
which is two years from the date of this Mortgage, provided that all of the
conditions set forth below have been satisfied. The release of any Property
shall be subject to the satisfaction of the following conditions:
(i) Beneficiary shall have received from Grantor at least 30
days' prior written notice of the date proposed for such
release (the "Release Date");
(ii) No Event of Default shall have occurred and be continu-
ing as of the date of such notice and the Release Date;
(iii) Grantor shall deliver to Beneficiary (pursuant to and in
accordance with the provisions of Sections 46 and 47
hereof) on the Release Date, Defeasance Collateral in
such amount as shall satisfy (A) the Minimum Defeasance
Collateral Requirement for such Property with respect to
a release of less than all the Properties or (B) the
Total Defeasance Collateral Requirement with respect to
a release of all of the Properties; provided, however,
that in the event of a release of any of the Property
commonly known as (x) The Mall at Cross County located
in Yonkers, Westchester County, New York, (y) Whitehall
Square located in Whitehall, Lehigh County,
Pennsylvania, or (z) Bethlehem Square located in
Bethlehem, Northampton County, Pennsylvania (each a
"Specified Property"), the Release Price shall be equal
to 150% of the Allocated Loan Amount for each Specified
Property to be released, unless prior to the release of
such Specified Property the Rating Agency has delivered
its written affirmation to the Grantor that the ratings
of the Certificates immediately prior to such release
will not be qualified, downgraded or withdrawn as a
result of such release which affirmation may be granted
or withheld in the Rating Agency's sole and absolute
discretion; and provided, further, that if the Rating
Agency shall issue such an affirmation the Release Price
for such Specified Property shall be equal to 125% or
135% of the Allocated Loan Amount, as the case may be,
or such other percentage (not less than 125%) of the
Allocated Loan Amount as may be acceptable to the Rating
Agency;
(iv) Grantor shall have delivered to Beneficiary an Officer's
Certificate, dated the Release Date, confirming the
matters referred to in clause (ii) above, certifying
that the provisions of clause (iii) above have been
complied with and certifying that all conditions prece-
dent for such release contained in this Mortgage have
been complied with; and
(v) Grantor, at its sole cost and expense, shall have
delivered to Beneficiary, one or more endorsements to
the mortgagee policy of title insurance delivered to
Beneficiary on the date hereof in connection with this
Mortgage insuring that, after giving effect to such
release, (x) the Liens created hereby and insured
thereunder are first priority Liens on the respective
remaining Properties subject only to the Permitted
Encumbrances applicable to the remaining Properties and
(y) that such policy is in full force and effect and
unaffected by such release, provided that such
endorsements are available at a nominal cost (without
additional premium).
(vi) After giving effect to such proposed release, the Debt
Service Coverage Ratio would be not less than (A) the
greater of the Debt Service Coverage Ratio without
giving effect to such release and 1.60:1 with respect to
each of the first seven Properties which are released
and (B) the greater of the Debt Service Coverage Ratio
without giving effect to such release and 1.75:1 with
respect to each Property thereafter;
(vii) Beneficiary and the Rating Agency shall have received
from Grantor with respect to the matters referred to in
clause (vi), (x) statements of the Net Operating Income
and Debt Service (both on a consolidated basis and
separately for the applicable Property(ies) to be
released) for the applicable measuring period, (y) based
on the foregoing statements of Net Operating Income and
Debt Service, calculations of the Debt Service Coverage
Ratio both with and without giving effect to the
proposed release and (z) calculations of the ratios
referred to in such clause (vi), accompanied by an
Officers' Certificate stating that such statements,
calculations and information are true, correct, and
complete in all material respects; and
(viii) Grantor shall have reimbursed Beneficiary, Servicer and
Trustee for all reasonable costs and expenses actually
incurred (including reasonable attorneys' fees and
disbursements) in connection with a Property Release
pursuant to this Section 38.
Upon or after the delivery of Defeasance Collateral in
accordance with Section 38(b)(iii) hereof and in the case of clause (y), the
satisfaction of all other conditions provided for herein in Sections 46 and
47) the notice required pursuant to subsection (i) above, Beneficiary shall
effectuate the following (hereinafter referred to as a "Property Release"):
the security interest of Beneficiary in this Mortgage and other Loan Docu-
ments relating to the released Property shall be released from the Lien of
this Mortgage and Beneficiary will execute and deliver any agreements
reasonably requested by Grantor to release and terminate or reassign, at
Grantor's option, this Mortgage as to the released Property; provided, that
such release and termination or reassignment shall be without recourse to
Beneficiary (except as contemplated hereby) and without any representation
or warranty except that Beneficiary shall be deemed to have represented that
such release and termination or reassignment has been duly authorized and
that it has not assigned or encumbered this Mortgage or the other Loan
Documents relating to the released Property (except as contemplated hereby)
and Beneficiary shall return the originals of any Loan Documents that relate
solely to the released Property to Grantor; provided, further, that upon the
release and termination or reassignment of Beneficiary's security interest
in this Mortgage relating to the released Property all references herein to
this Mortgage relating to the released Property shall be deemed deleted,
except as otherwise provided herein with respect to indemnities.
39. Rating Agency Monitoring. Until the Obligations are paid in
full, Grantor shall provide the Rating Agency with all financial reports
required hereunder and such other information as it shall reasonably request
to enable it to continuously monitor the creditworthiness of Grantor and to
permit an annual surveillance of the implied credit rating of certain
securities secured by a pledge of the Notes and shall pay all Rating Agency
monitoring and review fees.
40. Environmental Matters.
(a) Representations. Grantor hereby represents and warrants that
except as set forth in the reports listed on Exhibit B hereto (the
"Environmental Reports"), (i) Grantor has not engaged in or knowingly
permitted any operations or activities upon, or any use or occupancy of any
Property, or any portion thereof, for the purpose of or in any way involving
the handling, manufacture, treatment, storage, use, generation, release,
discharge, refining, dumping or disposal of any Hazardous Substances on,
under, in or about the Property, or transported any Hazardous Substances to,
from or across the Property, except in all cases in material compliance with
Environmental Requirements and only in the course of legitimate business
operations at the Property; (ii) to Grantor's knowledge, no tenant, occupant
or user of any Property, nor any other person, has during Grantor's
ownership of such Property, engaged in or permitted any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any material way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Substances on, in or about
the Property, or transported any Hazardous Substances to, from or across the
Property, except in all cases in material compliance with Environmental
Requirements and only in the course of legitimate business operations at the
Property; (iii) to Grantor's knowledge, no Hazardous Substances are
presently constructed, deposited, stored, or otherwise located on, under, in
or about any Property except in material compliance with Environmental
Requirements; (iv) to Grantor's knowledge, no Hazardous Substances have
migrated from any Property upon or beneath other properties which would
reasonably be expected to result in material liability for Grantor; and (v)
to Grantor's knowledge, no Hazardous Substances have migrated or threaten to
migrate from other properties upon, about or beneath any Property which
would reasonably be expected to result in material liability for Grantor.
(b) Covenants. Subject to Grantor's right to contest under
Section 7(c) hereof, Grantor covenants and agrees with Beneficiary that it
shall comply with all Environmental Laws. If at any time during the
continuance of the Lien of this Mortgage, a Governmental Authority having
jurisdiction over the Trust Estate requires remedial action to correct the
presence of Hazardous Materials in, around, or under any Property (an
"Environmental Event"), Grantor shall deliver prompt notice of the
occurrence of such Environmental Event to Beneficiary and the Rating Agency.
Within (30) thirty days after Grantor has knowledge of the occurrence of an
Environmental Event, Grantor shall deliver to Beneficiary an Officer's
Certificate (an "Environmental Certificate") identifying the Environmental
Event in reasonable detail and setting forth the proposed remedial action,
if any.
(c) Environmental Indemnification. Grantor shall protect,
indemnify, save, defend and hold harmless Beneficiary and all officers,
directors, stockholders, partners, employees, successors and assigns thereof
(collectively, the "Indemnified Environmental Parties") from and against any
and all liability, loss, damage, actions, causes of action, costs or
expenses whatsoever (including reasonable attorneys' fees and expenses) and
any and all claims, suits and judgments which any Indemnified Environmental
Party may suffer, as a result of or with respect to: (a) any Environmental
Claim relating to or arising from such Property; (b) the violation of any
Environmental Law in connection with such Property; (c) any release, spill,
or the presence of any Hazardous Substances affecting such Property; and (d)
the presence at, in, on or under, or the release, escape, seepage, leakage,
discharge or migration at or from, such Property of any Hazardous
Substances, whether or not such condition was known or unknown to Grantor;
provided that, in each case, Grantor may be relieved of its obligation under
this subsection if any of the matters referred to in clauses (a) through (d)
above did not occur (but need not have been discovered) prior to (1) the
foreclosure of this Mortgage with respect to such Property, (2) the delivery
by Grantor to Beneficiary of a deed-in-lieu of foreclosure with respect to
such property, or (3) Beneficiary's taking possession and control of such
Property after the occurrence of an Event of Default hereunder and such
obligation is a result of the acts or omissions of any Indemnified Party.
If any such action or other proceeding shall be brought against Beneficiary,
upon written notice from Grantor to Beneficiary (given reasonably promptly
following Beneficiary's notice to Grantor of such action or proceeding),
Grantor shall be entitled to assume the defense thereof, at Grantor's
expense, with counsel reasonably acceptable to Beneficiary; provided,
however, Beneficiary may, at its own expense, retain separate counsel to
participate in such defense, but such participation shall not be deemed to
give Beneficiary a right to control such defense, which right Grantor
expressly retains. Notwithstanding the foregoing, each Indemnified
Environmental Party shall have the right to employ separate counsel at
Grantor's expense if, in the reasonable opinion of legal counsel, a conflict
or potential conflict exists between the Indemnified Environmental Party and
Grantor that would make such separate representation advisable.
41. Recourse Nature of Certain Indemnifications. Notwithstanding
anything to the contrary provided in this Mortgage or in any other Loan
Document, the indemnification provided in Section 40(c) hereof shall be
fully recourse to Grantor (but not to (i) any Affiliate of Grantor, (ii) any
Person owning directly or indirectly, any legal or beneficial interest in
Grantor or any Affiliate of Grantor, or (iii) any partner, principal,
officer, controlling person, beneficiary, trustee, advisor, shareholder,
employee, agent, Affiliate or director of Grantor or of any Persons
described in clauses (i) through (ii) above) and shall be independent of,
and shall survive, the discharge of the Indebtedness, the release of the
Lien created under this Mortgage, and/or the conveyance of title to any
Property to Beneficiary or any purchaser or designee in connection with a
foreclosure of this Mortgage or conveyance in lieu of foreclosure.
42. Counterparts. This Mortgage may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
43. Merger, Conversion, Consolidation or Succession to Business
of Beneficiary. Any corporation into which Beneficiary may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which Beneficiary shall be a
party, or any corporation succeeding to all or substantially all the
corporate trust business of Beneficiary, shall be the successor of
Beneficiary hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. Beneficiary shall
provide the Rating Agency with written notice of any merger or conversion to
be undertaken pursuant to this Section 43 no less than 30 days prior to such
merger or conversion.
44. No Endorsement. Beneficiary shall not become or be
considered to be an endorser, co-maker or co-obligor on any Notes or on any
obligation of Grantor secured by this Mortgage or otherwise.
45. Substitute Property.
(a) Generally. At any time and from time to time, Grantor may,
subject to the conditions in this Section 45, substitute a property (a
"Substitute Property") for an existing Property up to a maximum of five such
Properties (a "Replaced Property") or Defeasance Collateral. From and after
the substitution of a Substitute Property in accordance herewith, such
Substitute Property shall thereafter be deemed a Property under this
Mortgage, and the Allocated Loan Amount of such Substitute Property shall be
the same as the Allocated Loan Amount of the Replaced Property, except as
otherwise provided in Section 46(b) below. In the event of a substitution,
the Notes shall remain in full force and effect, and either a new Mortgage
encumbering the Substitute Property (the "Substitute Mortgage") shall be
executed and delivered by Grantor to Beneficiary or a counterpart original
of this Mortgage, modified as necessary, shall be executed and delivered by
Grantor to Beneficiary to encumber the Substitute Property and the remainder
of the Trust Estate. Concurrently with the completion of all steps
necessary to substitute a Substitute Property as provided herein,
Beneficiary shall execute or cause to be executed all such documents
requested by Grantor as are necessary or appropriate (i) to release all
Liens granted to Beneficiary and affecting the Replaced Property, and (ii)
to cause the Substitute Mortgage to be cross-collateralized and cross-
defaulted with this Mortgage. Grantor shall prepare at its expense all such
documents.
(b) Substitute Property Requirements. To qualify as a Substitute
Property, the property must, at the time of substitution:
(i) be a property as to which Grantor will hold good and
insurable fee or, subject to the Beneficiary's right to approve
the terms and provisions of any ground lease, leasehold title free
and clear of any lien or other encumbrance except for Permitted
Encumbrances and easements, restrictive covenants and other title
exceptions and Leases which do not have a material adverse effect
on the utility or value of such property for its current use;
(ii) be free and clear, as shall be demonstrated in an
environmental report issued by a recognized environmental
consultant at Grantor's expense and in form and substance
reasonably acceptable to Beneficiary, of Hazardous Substance
except for nominal amounts of any such substances commonly
incorporated in or used in the operation of properties similar to
the Properties (in either case in compliance with all
Environmental Laws), all as certified by such consultant;
(iii) be in reasonably good repair and condition, as shall
be certified by an Officer's Certificate of Grantor in form and
substance reasonably acceptable to Beneficiary;
(iv) be in compliance, in all material respects, with Legal
Requirements and Insurance Requirements, as shall be certified in
an Officer's Certificate in form and substance reasonably
acceptable to Beneficiary;
(v) (as evidenced by two appraisals prepared by Independent
Appraisers selected by Beneficiary performed at Grantor's expense)
have a fair market value and Net Operating Income per square foot
no less than the greater of
(1) the fair market value and Net Operating Income per
square foot of the Replaced Property as of the date
hereof, and
(2) the fair market value and Net Operating Income per
square foot of the Replaced Property immediately prior
to the Substitution.
(c) Conditions to Substitution. In addition to the conditions
in this Section 45 above, substitution of any Property pursuant to this
Section 45 shall be subject to the satisfaction of the following, all of
which shall be prepared or obtained at Grantor's expense:
(i) receipt by Beneficiary and the Rating Agency of written
notice thereof from Grantor at least thirty (30) days before the
date of the proposed substitution (the "Substitution Date"),
together with (1) written evidence that the property proposed to
be a Substitute Property complies with Section 45 above and (2)
such other information, including financial information, as
Beneficiary or the Rating Agency may request;
(ii) Beneficiary's receipt of written affirmation from the
Rating Agency that the credit ratings of the Certificates
immediately prior to such substitution will not be qualified,
downgraded or withdrawn as a result of such substitution, which
affirmation may be granted or withheld in the Rating Agency's sole
and absolute discretion;
(iii) delivery to Beneficiary of an Opinion of Counsel
opining as to the enforceability of the Substitute Mortgage with
respect to the Substitute Property in substantially the same form
and substance as the opinion concerning enforceability originally
delivered at the Closing Date in connection with the Replaced
Property, with reasonable allowance for variations in applicable
state law and a Nondisqualification Opinion and a Tax Opinion;
(iv) no Event of Default shall have occurred and be
continuing;
(v) the representations and warranties set forth in this
Mortgage and the Loan Documents applicable to the Replaced
Property shall be true and correct (except as to title exceptions)
as to the Substitute Property on the Substitution Date in all
material respects;
(vi) delivery to Beneficiary of a copy of the Partnership
Agreement or other organizational documentation of Grantor and all
amendments thereto, or in the case of any leasehold property a
copy of the ground lease, in each case certified as true, complete
and correct by the managing general partner; a certificate from
the Secretary of State or other applicable state official or
officer in Grantor's jurisdiction of formation certifying that it
is duly formed and in good standing (with tax clearance, if
applicable), if available, certificates from the Secretary of
State of the state in which the Substitute Property is located,
certifying as to Grantor's good standing as a limited partnership
in such state (with tax clearance, if applicable); delivery by the
managing general partner of Grantor of a certificate, dated the
Substitution Date and signed on behalf of its Secretary or
Assistant Secretary, certifying the names of the officers of the
managing general partner authorized to execute and deliver, in the
name and on behalf of Grantor, the Substitute Mortgage and the
other Loan Documents to which Grantor is a party, together with
the original (not photocopied) signatures of such officers;
(vii) delivery to Beneficiary of an Officer's Certificate
certifying to the veracity of the statements in Subsections
45(a)(ii)(B), 45(a)(ii)(C), 45(a)(ii)(D), 45(a)(iii)(E) and
45(a)(iii)(F) hereof;
(viii) delivery to Beneficiary in form and substance
satisfactory to Beneficiary of originals of the following:
(1) a Substitute Mortgage or an amendment to this
Mortgage, duly executed and acknowledged by Grantor;
(2) a substitute assignment of leases and rents with
respect to the Substitute Property or an amendment to
the Assignment of Leases, duly executed and acknowledged
by Grantor, assigning and transferring to Beneficiary a
first priority security interest in all rents, revenues,
issues, profits and proceeds arising under the Leases
relating to the Substitute Property, subject to the
Permitted Encumbrances;
(3) a title insurance policy issued by the Title
Company or another title insurance company reasonably
acceptable to Beneficiary in the amount equal to the
Allocated Loan Amount (so long as a "tie-in" endorsement
shall be available, otherwise in the amount of 125% of
the Allocated Loan Amount) containing such affirmative
coverage reasonably acceptable to Beneficiary available
at commercially reasonable rates insuring that the
Substitute Mortgage creates a valid first lien on
Grantor's fee title in the Substitute Property subject
to the Permitted Encumbrances, or if the substitution is
accomplished by modification of this Mortgage an
endorsement to the original title policy insuring this
Mortgage and an original title insurance policy
endorsement, if available at a nominal cost (without
additional premium), insuring that Beneficiary's
perfected first priority interest in and to the other
Properties in the Trust Estate is unaffected by such
modification;
(4) a current as-built land title survey and a
certificate from a professional licensed land surveyor
with respect to such Substitute Property, certified to
the Title Company and Beneficiary, and showing the
location, dimensions and area of each parcel of the
Substitute Property, including all existing buildings
and improvements, utilities, parking areas and spaces,
internal streets, if any, external streets, rights-of-
way, as well as any easements, setback violations or
encroachments on such Substitute Property and
identifying each item with its corresponding exception,
if any, in the title policy relating thereto and
otherwise reasonably acceptable to Beneficiary. Each
survey shall contain the original signature and seal of
the surveyor and any additional matter required by the
title companies. In addition, Grantor shall provide
with respect to each Substitute Property a certificate
of a professional land surveyor to the effect that the
Improvements located upon such Substitute Property are
not located in a flood plain area, or, if such
Substitute Property is in a flood plain area, Grantor
shall deliver on the Closing Date evidence of flood
insurance;
(5) Uniform Commercial Code financing statements (Form
UCC-1) (or other forms required in any jurisdiction),
duly executed by Grantor, covering all fixtures,
Building Equipment and other personal property collat-
eral and all proceeds thereof, naming Grantor as debtor
and Beneficiary as secured party;
(6) insurance certificates issued by insurance
companies reasonably satisfactory to Beneficiary
evidencing the insurance coverage required under Section
5 hereof; and
(7) payment of all costs and expenses anticipated to be
incurred in connection with such substitution, including
(x) reimbursement of Beneficiary's reasonable costs,
title premiums, mortgage recording taxes, transfer
taxes, recording fees, and reasonable attorneys' fees
and disbursements actually incurred, and (y)
reimbursement of Servicer's reasonable internal costs
and expenses; provided, that such costs and expenses
shall not exceed an amount equal to 1% of the Allocated
Loan Amount of the Substituted Property.
46. Defeasance.
(a) With respect to either (i) a Property Release with
respect to which Grantor proposes to deliver Defeasance Collateral pursuant
to Section 38(b) hereof or (ii) a release of the Lien of this Mortgage with
respect to all of the Properties pursuant to Section 38(b) hereof other than
in connection with a total prepayment or repayment on the Maturity Date
(each, a "Defeasance"), the Grantor shall deposit Defeasance Collateral in
accordance with subsection (b) below to the Defeasance Collateral Account.
In no event shall the deliverance of Defeasance Collateral cause the Grantor
to be released from its obligations to make payments of principal and
interest on the Notes.
(b) The Defeasance shall be permitted at such time as all of
the following events shall have occurred:
(i) the Defeasance Collateral Account shall have been
established pursuant to Section 47 hereof;
(ii) if the Mortgage Loan is held by a REMIC, a period
of more than two years shall have elapsed since the date on which the
Mortgage Loan is deposited into such REMIC;
(iii) Grantor shall have delivered or caused to have
been delivered to Beneficiary the Defeasance Collateral for deposit
into the Defeasance Collateral Account such that it will satisfy either
(A) the Minimum Defeasance Collateral Requirement with respect to a
release of less than all of the Properties or (B) the Total Defeasance
Collateral Requirement with respect to a release of all of the
Properties, as the case may be, at the time of delivery and all such
Defeasance Collateral, if in registered form, shall be registered in
the name of Beneficiary or its nominee for the benefit of the Holders
(and, if registered in nominee name endorsed to Beneficiary or in
blank) and, if issued in book-entry form, the name of Beneficiary or
its nominee shall appear as the owner of such securities for the
benefit of the Holders on the books of the Federal Reserve Bank or
other party maintaining such book-entry system;
(iv) Grantor shall have granted or caused to have been
granted to Beneficiary for the ratable benefit of the Holders a valid
perfected first priority security interest in the Defeasance Collateral
and all proceeds thereof;
(v) Grantor shall have delivered or caused to be
delivered to Beneficiary an Officers' Certificate, dated as of the date
of such delivery (x) that sets forth the aggregate face amount or
unpaid principal amount, interest rate and maturity of all such
Defeasance Collateral, a copy of the transaction journal, if any, or
such other notification, if any, published by or on behalf of the
Federal Reserve Bank or other party maintaining a book-entry system
advising that Beneficiary or its nominee is the owner of such
securities issued in book-entry form, and (y) to the following effect
that states that:
(A) Grantor owns the Defeasance Collateral being
delivered to Beneficiary free and clear of any and all Liens,
security interests or other encumbrances, and has not
assigned any interest or participation therein (or, if any
such interest or participation has been assigned, it has been
released), and Grantor has full power and authority to pledge
such Defeasance Collateral to Beneficiary;
(B) such Defeasance Collateral consists solely of
Defeasance Eligible Investments;
(C) such Defeasance Collateral satisfies the Minimum
Defeasance Collateral Requirement or the Total Defeasance
Collateral Requirement, as the case may be, determined as of
the date of delivery;
(D) the Defeasance contemplated hereby will not give
rise to an Event of Default; and
(E) the information set forth in the schedule attached
to such Officers' Certificate is correct and complete as of
the date of delivery (such schedule, which shall be attached
to and form a part of such Officers' Certificate, shall
demonstrate satisfaction of the requirement set forth in
clause (C) above, in a form reasonably acceptable to
Beneficiary);
(vi) Grantor shall have delivered or caused to be
delivered to Beneficiary (A) an Opinion of Counsel that Beneficiary has
been granted a perfected security interest in the Defeasance Col-
lateral, (B) a Tax Opinion, (C) if the Mortgage Loan at such time is
included in a REMIC, a Nondisqualification Opinion, and (D) in the
event the aggregate of amounts previously defeased and currently
subject to a Defeasance equals or exceeds in the aggregate an amount
equal to 40% of the Loan Amount, an additional Opinion of Counsel, to
the effect that Beneficiary will not be required to be registered under
the Investment Company Act as a result of such Defeasance; and
(vii) Grantor shall have delivered or cause to be
delivered to Beneficiary a statement confirming that the Defeasance
Collateral is sufficient to satisfy (A) the Minimum Defeasance
Collateral Requirement with respect to a release of less than all of
the Properties or (B) the Total Defeasance Collateral Requirement with
respect to a release of all the Properties, as the case may be, from
either an Independent Accountant, an investment banking firm, a
commercial bank, or other third party having expertise in buying,
selling or evaluating securities that would qualify as Defeasance
Eligible Investments; and
(viii) Grantor shall have delivered or caused to be
delivered to Beneficiary such other documents and certificates as
Beneficiary may reasonably request in connection with demonstrating that
Grantor has satisfied the provisions of this Section 46(b).
(c) For purposes of determining whether sufficient amounts
are on deposit in the Defeasance Collateral Account, there shall be included
only payments of principal and predetermined and certain income thereon
(determined without regard to any reinvestment of such amounts) that will
occur on a stated date for a stated payment on or before the dates when such
amounts may be required to be applied to pay the principal and interest when
due on the Notes.
(d) If at any time prior to the Defeasance of the Lien of
this Mortgage with respect to all of the Properties Grantor shall have
delivered Defeasance Collateral to Beneficiary, Grantor, at its sole option,
may elect to substitute one or more Substitute Properties for all or any
portion of the Defeasance Collateral. If Grantor shall so elect, Grantor
shall comply with the provisions of Section 45 hereof as to the Substitute
Property and, upon compliance with such Section 45, Beneficiary shall
deliver to Grantor Defeasance Collateral, free and clear of all Liens, in an
amount equal to the Minimum Defeasance Collateral Requirement that would
have been attributable to such Substitute Property as of the Substitution
Date.
(e) Grantor shall have the right to transfer its interest in
and to any Defeasance Collateral pledged to the Agent, together with its
obligations in respect of the Loan to any Person (a "Successor Grantor")
provided, that (i) Grantor shall have delivered a Tax Opinion to Beneficiary
in respect of such transfer; (ii) such Successor Grantor assumes the
obligations of Grantor under this Mortgage; (iii) such Successor Grantor
complies with the covenants set forth in Section 4 and Section 31(1) of this
Mortgage; and (iv) Grantor shall have delivered a Nonconsolidation Opinion
in respect of such Successor Grantor to the Rating Agency and the
Beneficiary.
47. Defeasance Collateral Account.
(a) On or before the date on which Grantor delivers
Defeasance Collateral to Beneficiary pursuant to Section 46 hereof, Grantor
shall open at any Approved Bank or Banks at the time and acting as custodian
for Beneficiary, a defeasance collateral account (the "Defeasance Collateral
Account") which shall at all times be an Eligible Account (as defined in the
Cash Collateral Agreement), in which Grantor shall grant to Beneficiary or
reconfirm the grant to Beneficiary of a security interest as part of the
Trust Estate hereunder. Should Grantor open the Defeasance Collateral
Account at a bank or banks other than an Approved Bank, such Defeasance
Collateral Account must be maintained as a segregated trust account. The
Defeasance Collateral Account shall contain (i) all Defeasance Collateral
delivered by Grantor pursuant to Sections 38, 46 and 47 hereof, (ii) all
payments received on Defeasance Collateral held in the Defeasance Collateral
Account and (iii) all income or other gains from investment of moneys or
other property deposited in the Defeasance Collateral Account, provided,
however, that (x) any sums earned on any Defeasance Collateral, which sums
were not included in the determination of the Minimum Defeasance Collateral
Requirement or the Total Defeasance Collateral, as the case may be, shall be
paid monthly by Beneficiary into the Collection Account to be held in accor-
dance with the Cash Collateral Agreement, and (y) any sums earned on any
Defeasance Collateral representing the difference between the assumed
interest on the Notes at the Default Rate and the lesser, if applicable, of
the actual interest on the Notes for the quarter prior to the preceding Due
Date shall be paid quarterly to the Collection Account. All such amounts,
including all income from the investment or reinvestment thereof, shall be
held by Beneficiary as part of the Trust Estate, subject to withdrawal by
Beneficiary for the purposes set forth in this Section 47. Grantor shall be
the owner of the Defeasance Collateral Account and shall report all income
accrued on Defeasance Collateral for federal, state and local income tax
purposes in its income tax return.
(b) Beneficiary shall withdraw, draw on or collect and apply
the amounts that are on deposit in the Defeasance Collateral Account to pay
when due the principal and all installments of interest and principal on the
Notes and other amounts due under the Loan Documents.
(c) Funds and other property in the Defeasance Collateral
Account shall not be commingled with any other monies or property of Grantor
or any Affiliate of Grantor.
(d) Beneficiary shall not in any way be held liable by
reason of any insufficiency in the Defeasance Collateral Account.
48. Reserves. (a) On the 20th day of July, 1996 and on the 20th
day of every month thereafter Beneficiary will instruct Agent to withdraw
from the Collection Account to the extent funds are available therefor and
deposit into the Capital and TI Reserve Account, a sum equal to the result
obtained after dividing (i) an amount equal to $0.25 per square foot of the
gross leasable area of the Mortgaged Property by (ii) twelve (such funds,
together with all investment income earned thereon, are referred to herein
as the "Monthly Capital and TI Reserve Amount"); provided, that to the
extent funds are not available in a given month to deposit such amount in
the Capital and TI Reserve Account, to the extent funds are available on
deposit in the Collection Account, the amount of such monthly shortfall
shall be deposited in the next succeeding month or any month thereafter
until such time as the monthly shortfall has been reduced to zero. Portions
of the Capital and TI Reserve Account shall be disbursed by Agent to Grantor
pursuant to instructions from Beneficiary not more frequently than once per
month, provided no Event of Default shall have occurred and be continuing,
upon delivery by Grantor to Beneficiary of an Officer's Certificate stating
that Grantor has incurred costs associated with capital improvements,
repairs, alterations, tenant improvements and leasing commissions as
described therein, and pursuant to invoices attached thereto, other than
those set forth on Schedule 3. Within five (5) Business Days of receipt of
such certification, Beneficiary shall instruct Agent to disburse to Grantor
an amount equal to that requested by Grantor.
(b) The monthly amount to be deposited each month in the
Capital and TI Reserve Account has been initially determined based upon a
gross leasable area (the "GLA") for all of the Properties of 3,925,301
square feet. If the GLA decreases or increases by an amount greater than
1%, as indicated in the leasing reports delivered by the Grantor to the
Beneficiary and the Rating Agency pursuant to Section 14(c), the monthly
amount to be deposited in the Capital and TI Reserve Account pursuant to
Section 48(a) shall be recalculated to reflect the increase or decrease in
GLA and the recalculated amount shall be deposited in the Capital and TI
Reserve Account commencing with the monthly deposit to be made on the 20th
day of the first month occurring after the delivery of such leasing report.
(c) On the 20th day of July, 1996 and on the 20th day of
every month thereafter, Beneficiary will instruct Agent to withdraw from the
Collection Account to the extent funds are available therefor and deposit
into the Sinking Fund Account established pursuant to the Cash Collateral
Agreement, the sum of $11,000, until such time as the aggregate amount in
the Sinking Fund Account, together with all investment income earned thereon
equals or exceeds the sum of $786,000. Amounts on deposit in the Sinking
Fund Account shall, unless an Event of Default has occurred and is
continuing, be returned to the Grantor on the earlier of (i) the date of the
release or substitution of the Mortgaged Property located in Orange,
Connecticut in accordance with the provisions of this Mortgage and (ii)
repayment in full of the Loan. If an Event of Default shall have occurred
and be continuing, amounts deposited in the Sinking Fund should be applied
as provided in the Cash Collateral Agreement.
49. Modification of Operating Agreements. Grantor shall be
permitted to enter into amendments and modifications to any Operating
Agreement without Beneficiary's consent provided that (a) no Event of
Default has occurred and is then continuing, and (b) the execution of such
amendment or modification will not have a material adverse effect on the
operation or value of the subject Property (each as certified in an
Officer's Certificate delivered to Beneficiary).
50. Substitute or Successor Trustee. Trustee may resign by an
instrument in writing addressed to Beneficiary, or Trustee may be removed at
any time with or without cause by Beneficiary. In case of death,
resignation, removal or disqualification of Trustee or if for any reason
Beneficiary shall deem it desirable to appoint a substitute or successor
trustee to act instead of the herein named trustee or any substitute or
successor trustee, then Beneficiary shall have the right and is hereby
authorized and empowered to appoint a successor trustee, or a substitute
trustee, without other formality than appointment and designation in writing
executed and acknowledged by Beneficiary and, if required by applicable law
to provide constructive notice, recorded in the county or counties where the
Properties are located, and the authority hereby conferred shall extend to
the appointment of other successor and substitute trustees successively
until the indebtedness secured hereby has been paid in full or until the
Properties are sold hereunder. In the event the indebtedness secured hereby
is owned by more than one person or entity, the holder or holders of not
less than a majority in the amount of such indebtedness shall have the right
and authority to make the appointment of a successor or substitute trustee
provided for in the preceding sentence. Such appointment and designation by
Beneficiary or by the holder or holders of not less than a majority of the
indebtedness secured hereby shall be full evidence of the right and
authority to make the same and of all facts therein recited. If Beneficiary
is a corporation or a nationally chartered bank and such appointment is
executed in its behalf by an officer of such corporation or nationally
chartered bank, such appointment shall be conclusively presumed to be
executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the
corporation. Upon the making of any such appointment and designation, all
of the estate and title of Trustee in the Properties shall vest in the named
successor or substitute trustee and he shall thereupon succeed to and shall
hold, possess and execute all the rights, powers, privileges, immunities and
duties herein conferred upon Trustee; but nevertheless, upon the written
request of Beneficiary or of the successor or substitute trustee, Trustee
ceasing to act shall execute and deliver an instrument transferring to such
successor or substitute trustee all of the estate and title in the
Properties of Trustee so ceasing to act, together with all rights, powers,
privileges, immunities and duties herein conferred upon Trustee, and shall
duly assign, transfer and deliver any of the properties and monies held by
said Trustee hereunder to said successor or substitute trustee. All
references herein to Trustee shall be deemed to refer to Trustee (including
any successor or substitute appointed and designated as herein provided)
from time to time acting hereunder. Grantor hereby ratifies and confirms
any and all acts which the herein named Trustee or his successor or
successors, substitute or substitutes, in this trust, shall do lawfully by
virtue hereof.
51. Liability of Trustee. Trustee shall not be liable for any
error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or willful misconduct. Trustee shall have the
right to rely on any instrument, document or signature authorizing or
supporting any action taken or proposed to be taken by him hereunder,
believed by him in good faith to be genuine. All monies received by Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, and shall be segregated from all
other monies, and Trustee shall be under no liability for interest on any
monies received by him hereunder. Grantor will reimburse Trustee for, and
indemnify and save him harmless against, any and all liability and expenses
which may be incurred by him in the performance of his duties hereunder.
52. Beneficiary and Trustee.
(a) The Trustees accept the trusts hereby created and agree to
perform the duties herein required of them upon the terms and conditions
hereof.
The duties and obligations of the Trustees in respect of this
Mortgage shall be as set forth in this Section 52.
(i) Except upon the occurrence and during the continu-
ance of an Event of Default actually known to Beneficiary:
(A) The Trustees shall undertake to perform such duties
and obligations and only such duties and obligations as are
specifically set forth in this Mortgage and the other Loan Documents or
as otherwise directed by a letter of direction from Beneficiary, and no
implied covenants or obligations shall be read into this Mortgage or
the other Loan Documents against the Trustees; and
(B) In the absence of bad faith, the Trustees may con-
clusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustees and conforming to the requirements of this
Mortgage and the other Loan Documents; but in the case of any such
certificates or opinions which by any provision hereof or thereof are
specifically required to be furnished to Beneficiary, the Trustees
shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Mortgage and the other Loan
Documents.
(ii) In case an Event of Default known to Beneficiary
has occurred and is continuing, the Trustees shall exercise the rights
and powers vested in the Trustees by this Mortgage and the other Loan
Documents, with reasonable care.
(iii) No provision of this Mortgage shall be construed
to relieve the Trustees from liability for their own negligence or
willful misconduct, except that:
(A) Section 52(a) hereof shall not be construed to
limit the effect of Section 52(b) hereof;
(B) The Trustees shall not be liable for any error of
judgment made in good faith by an officer of the Trustees, unless it
shall be proved that the Trustees were negligent in ascertaining the
pertinent facts; and
(C) The Trustees shall not be liable with respect to
any action taken or omitted to be taken in good faith in accordance
with the direction of the Holders relating to the time, method and
place of conducting any proceeding for any remedy available to the
Trustees, or exercising any trust or power conferred upon the Trustees
under this Mortgage.
(iv) Whether or not therein expressly so provided,
every provision of this Mortgage relating to the conduct or affecting
the liability of or affording protection to the Trustees shall be sub-
ject to the provisions of this Section 52(b).
(v) No provision of this Mortgage shall require the
Trustees to expend or risk their own funds or otherwise incur any
personal financial liability in the performance of any of their duties
hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to them.
(b) At any time or times for the purpose of meeting the
Legal Requirements of any jurisdiction in which any part of a Trust Estate
may at the time be located, Beneficiary shall have the power to appoint and,
upon the written request of Beneficiary, Grantor shall for such purpose join
with Beneficiary in the execution, delivery and performance of all
instruments and agreements reasonably necessary or proper to appoint one or
more Persons reasonably approved by Beneficiary to act as trustee pursuant
to this Mortgage in such jurisdiction for such portion of the Trust Estate
located in such jurisdiction (the "Jurisdictional Trustee") with such powers
as are provided in the instrument of appointment which shall expressly
designate the Property affected and the capacity of the appointee as a
Jurisdictional Trustee, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section 52. If Grantor
does not join in such appointment within fifteen (15) days after the receipt
by it of a request so to do, or in case an Event of Default has occurred and
is continuing, Beneficiary alone shall make such appointment. Should any
written instrument from Grantor be reasonably required by any Jurisdictional
Trustee so appointed for more fully confirming to such Jurisdictional
Trustee such property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by Grantor.
(i) Every Jurisdictional Trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
terms set forth in Section 52(b)(iii) hereof.
(ii) To the extent permitted by law, but to such extent
only, the Jurisdictional Trustee is appointed herein subject to the
following terms, namely:
(A) Subject to the terms hereof and to the extent per-
mitted by law, all rights, powers, duties and obligations under this
Mortgage granted to or imposed upon Beneficiary and the Jurisdictional
Trustee shall be exercised solely by Beneficiary.
(B) The rights, powers, duties and obligations hereby
conferred or imposed upon Beneficiary and the Jurisdictional Trustee in
respect of any Property covered by such appointment shall be exercised
or performed by Beneficiary separately, or at the election of Benefi-
ciary by Beneficiary and the Jurisdictional Trustee jointly, except to
the extent that (i) under any law of any jurisdiction in which any
particular act is to be performed by Beneficiary and/or the Juris-
dictional Trustee, Beneficiary shall be incompetent or unqualified to
perform such act or (ii) Beneficiary shall deem it inconvenient or
undesirable to perform such act, then in any such event such rights,
powers, duties and obligations shall be exercised and performed by the
Jurisdictional Trustee at the written direction of Beneficiary.
(C) Beneficiary at any time, by an instrument in writ-
ing executed by it, may accept the resignation of or remove any
Jurisdictional Trustee. Upon the written request of Beneficiary,
Grantor shall join with Beneficiary in the execution, delivery and
performance of all instruments and agreements reasonably necessary or
proper to effectuate such resignation or removal. A successor to the
Jurisdictional Trustee so resigned or removed may be appointed in the
manner provided in this Section 52.
(D) Upon the resignation or removal of any Jurisdic-
tional Trustee, Beneficiary shall have the power to appoint and, upon
the written request of Beneficiary, Grantor shall, for such purpose,
join with Beneficiary in the execution, delivery and performance of all
instruments and agreements reasonably necessary or proper to appoint
one or more Persons reasonably approved by Beneficiary to act as suc-
cessor Jurisdictional Trustee together with Beneficiary of all or any
part of the Trust Estate so designated, with such power as provided for
in this Section 52, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section
52. If Grantor does not join in such appointment, within fifteen (15)
days after the receipt by it of a request so to do, or in case an Event
of Default has occurred and is continuing, Beneficiary acting alone
shall make such appointment. Should any written instrument from
Grantor be required by any successor Jurisdictional Trustee so
appointed for more fully confirming to such trustee such property,
title, right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by Grantor.
(E) No Jurisdictional Trustee hereunder shall be
personally liable by reason of any act or omission of Beneficiary or
any other trustee hereunder and Beneficiary shall not be personally
liable by reason of any act or omission of the Jurisdictional Trustee;
neither shall knowledge of Beneficiary be imputed to the Jurisdictional
Trustee nor shall knowledge of the Jurisdictional Trustee be imputed to
Beneficiary.
(F) Any notice delivered to Beneficiary shall be deemed
to have been sufficiently delivered without any delivery to the
Jurisdictional Trustee.
(G) Any obligation of Grantor to file or give notices,
reports or information to Beneficiary hereunder shall be satisfied by
the delivery thereof to Beneficiary.
(H) Any successor to the Jurisdictional Trustee
(herein, called the "Successor Jurisdictional Trustee") shall execute,
acknowledge and deliver to its predecessor (herein called the "Prede-
cessor Jurisdictional Trustee"), Beneficiary and Grantor, an instrument
accepting such appointment. Thereupon, the Successor Jurisdictional
Trustee shall, without any further act, deed or conveyance, become
vested with the estates, properties, rights, powers, duties and trusts
of the Predecessor Jurisdictional Trustee in the trusts created by this
Mortgage, with the same effect as if originally named as Jurisdictional
Trustee. At the written request of Grantor, Beneficiary or the
Successor Jurisdictional Trustee, the Predecessor Jurisdictional
Trustee shall execute and deliver an instrument, in recordable form,
transferring to the Successor Jurisdictional Trustee, upon the trusts
herein expressed, the Trust Estate and shall duly assign transfer,
deliver and pay over to the Successor Jurisdictional Trustee, any
property and money subject to the Lien hereof held by it. If any
written instrument from Grantor or Beneficiary be required by the
Successor Jurisdictional Trustee for more fully and certainly vesting
in and confirming to the Successor Jurisdictional Trustee such estates,
properties, rights, powers and trusts, then, at the request of the
Successor Jurisdictional Trustee, all such instruments shall be made,
executed, acknowledged and delivered by Grantor or Beneficiary to the
Successor Jurisdictional Trustee.
(c) Grantor covenants and agrees:
(i) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder;
(ii) to reimburse the Trustees upon request for all
reasonable expenses, disbursements and advances incurred or made by it
or them in accordance with any provision of this Mortgage (including
reasonable compensation, expenses and disbursements of agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(iii) to indemnify the Trustees for, and to hold each
harmless against, any loss, liability or expense incurred without
negligence, willful misconduct or bad faith on its part, arising out of
or in connection with the acceptance or administration of the trust or
trusts hereunder or the enforcement of remedies hereunder including the
costs and expenses of defending against any claim or liability in
connection with the exercise or performance of any of the powers or
duties hereunder or thereunder (except any liability incurred by
Trustee and the Jurisdictional Trustee with negligence, willful
misconduct or bad faith on its or their part).
The obligations of Grantor under this Section 52(c) to compensate or
indemnify the Trustees and to pay or reimburse the Trustees for expenses,
disbursements and advances shall constitute additional Indebtedness
hereunder and shall survive the satisfaction and discharge of this Mortgage.
When the Trustees or Beneficiary incur expenses or render services after an
occurrence of an Event of Default hereunder, the expenses and compensation
for services are intended to constitute expenses of administration under any
bankruptcy law.
(d) To the extent permitted by law, but to such extent only,
the Individual Trustee is appointed herein by Beneficiary subject to the
following terms, namely:
(i) Subject to the terms hereof and to the extent per-
mitted by law, all the rights, powers, duties and obligations under
this Mortgage granted to or imposed upon the Individual Trustee shall
be exercised solely by Beneficiary except as herein provided.
(ii) The rights, powers, duties and obligations hereby
conferred or imposed upon the Individual Trustee in respect of any
property covered by such appointment shall be exercised or performed by
Beneficiary separately, or at the election of Beneficiary by
Beneficiary and the Individual Trustee jointly, except to the extent
that (i) under any law of any jurisdiction in which any particular act
is to be performed by the Individual Trustee, Beneficiary shall be
incompetent or unqualified to perform such act or (ii) Beneficiary
shall deem it inconvenient or undesirable to perform such act, then in
any such event such rights, powers, duties and obligations shall be
exercised and performed by the Individual Trustee at the written
direction of Beneficiary.
(iii) Beneficiary at any time, by an instrument in
writing executed by it, may accept the resignation of or remove any
Individual Trustee. Upon the written request of Beneficiary, Grantor
shall join with Beneficiary in the execution, delivery and performance
of all instruments and agreements reasonably necessary or proper to
effectuate such resignation or removal. A successor to the Individual
Trustee so resigned or removed may be appointed in the manner provided
in this Section 52.
(iv) Upon the death, resignation or removal of any
Individual Trustee, Beneficiary shall have power to appoint and, upon
the written request of Beneficiary, Grantor shall, for such purpose,
join with Beneficiary in the execution, delivery and performance of all
instruments and agreements reasonably necessary or proper to appoint,
one or more persons approved by Beneficiary to act as Successor
Individual Trustee together with Beneficiary of all or any part of the
Trust Estate, with such powers as provided for in this Section 52, and
to vest in such person or persons in the capacity aforesaid, any
property, title, right or power deemed necessary or desirable, subject
to the other provisions of this Section 52. If Grantor does not join
in such appointment, within fifteen (15) days after the receipt by it
of a request so to do, or in case an Event of Default has occurred and
is continuing, Beneficiary acting alone shall make such appointment.
(v) Should any written instrument from Grantor be
reasonably required by any successor Individual Trustee so appointed
for more fully confirming to such trustee such property, title, right
or power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by Grantor.
(vi) No Individual Trustee hereunder shall be
personally liable by reason of any act or omission of Beneficiary or
any other Trustee hereunder and Beneficiary shall not be personally
liable by reason of any act or omission of the Individual Trustee;
neither shall knowledge of Beneficiary be imputed to the Individual
Trustee nor shall knowledge of the Individual Trustee be imputed to
Beneficiary.
(vii) Any notice delivered to Beneficiary shall be
deemed to have been sufficiently delivered without any delivery to the
Individual Trustee.
(viii) Any obligation of Grantor to file or give
notices, reports or information to the Trustees hereunder shall be
satisfied by the delivery thereof to Beneficiary.
Any successor to the Individual Trustee (herein, in this
subsection called the "Successor Individual Trustee") shall execute,
acknowledge and deliver to his predecessor (herein, in this subsection,
called the "Predecessor Individual Trustee"), Beneficiary and Grantor, an
instrument accepting such appointment. Thereupon, the Successor Individual
Trustee shall, without any further act, deed or conveyance, become vested
with the estates, properties, rights, powers, duties and trusts of the
Predecessor Individual Trustee in the trusts created by this Mortgage, with
the same effect as if originally named as Individual Trustee. At the writ-
ten request of Grantor, Beneficiary or the Successor Individual Trustee, the
Predecessor Individual Trustee shall execute and deliver an instrument
transferring to the Successor Individual Trustee, upon the trusts herein
expressed, the Trust Estate and shall duly assign, transfer, deliver and pay
over to the Successor Individual Trustee, any property and money subject to
the Lien hereof held by him. If any written instrument from Grantor or
Beneficiary be reasonably required by the Successor Individual Trustee for
more fully and certainly vesting in and confirming to the Successor
Individual Trustee such estates, properties, rights, powers and trusts,
then, at the request of the Successor Individual Trustee, all such
instruments shall be made, executed, acknowledged and delivered by Grantor
or Beneficiary to the Successor Individual Trustee.
(e) At any time or times, (i) for the purpose of meeting the
Legal Requirements of any jurisdiction in which any part of a Trust Estate
may at the time be located or (ii) if Beneficiary deems it to be necessary
or desirable for the protection of the interests of the Holders, Beneficiary
shall have the power to appoint, and upon written request of Beneficiary,
Grantor shall for such purpose join with Beneficiary in the execution,
delivery and performance of all instruments and agreements reasonably
necessary or proper to appoint, one or more Persons approved by Beneficiary
either to act as co-trustee, jointly with Beneficiary, of all or any part of
the Trust Estate, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment which shall expressly designate the property affected and the
capacity of the appointee as either a co-trustee or separate trustee, and to
vest in such person or persons in the capacity aforesaid, any property,
title, right or power deemed necessary or desirable, subject to the other
provisions of this Section 52. If Grantor does not join in such appointment
within 15 days after the receipt by it of a request so to do, or in case an
Event of Default has occurred and is continuing, Beneficiary alone shall
make such appointment.
Should any written instrument from Grantor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right or power, any and
all such instruments shall, by request, be executed, acknowledged and
delivered by Grantor.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the same
terms as hereinabove set forth for the Individual Trustee.
53. Miscellaneous; Servicer Cure.
(a) Grantor and Beneficiary intend that the relationship created
under this Mortgage be solely that of mortgagor and mortgagee. Nothing
herein is intended to create a joint venture, partnership, tenancy-in-common
or joint tenancy relationship between Grantor and Beneficiary.
(b) Notwithstanding anything contained herein to the contrary,
Servicer shall have the right to cure, and Beneficiary shall accept any such
cure by Servicer of any monetary Event of Default hereunder in accordance
with Section 3.17 of the Trust and Servicing Agreement.
(c) The Servicer shall have the power and authority to exercise
all of the rights and remedies, and be entitled to all of the benefits, of
the Beneficiary and to act as agent of the Beneficiary hereunder.
54. As to Property in Maryland.
Notwithstanding anything herein to the contrary, as to any
property of the Trust Estate located in the State of Maryland and encumbered
by this Mortgage:
1. Deed of Trust. This instrument shall be deemed a "Deed
of Trust" under Maryland law and shall not be deemed to
be a mortgage.
2. Assent of Decree. The Grantor hereby declares its
assent to the passing of a decree for the sale of any or
all of the Trust Estate located in the State of Maryland
upon the occurrence of an Event of Default. The Trustee
may pursue any number of proceedings from time to time.
The assent to decree shall not be exhausted if such
proceeding is dismissed or canceled before the
Indebtedness is paid in full.
3. Commercial Loan. The loan evidenced by the Notes is a
commercial loan as that term is used in the provisions
of Title 12 of the Commercial Law Article of the
Annotated Code of Maryland.
55. As to Property in Connecticut. Notwithstanding anything to
the contrary herein, as to any Property comprising part(s) of the Trust
Estate and located in the State of Connecticut (the "Connecticut Property"):
(a) This instrument is intended to be a realty mortgage, and
shall be enforceable as such. Grantor shall be deemed a "mortgagor,"
Beneficiary shall be deemed a "mortgagee," Trustee shall have no capacity
and all references to "Trustee" shall be deemed to refer to the "mortgagee"
to the extent not inconsistent with interpreting this instrument as a
mortgage of Connecticut realty. As a realty mortgage, Grantor, as
mortgagor, hereby gives, grants, bargains, sells and confirms all
Connecticut Property to Beneficiary, its successors and assigns, as
mortgagee.
(b) Each of the remedies set forth herein (including, without
limitation, any remedies involving a power of sale), as same may purport to
relate to the Connecticut Property, shall be exercisable only if, and only
to the extent, if any, permitted by the laws of the State of Connecticut in
force at the time of the exercise of such remedies, without regard to the
enforceability of such remedies at the time of the execution and delivery of
this Mortgage.
(c) Whenever reference is made herein to a recording or land
records office, such reference, with respect to the Connecticut Property,
shall be deemed to read "any one or more of the offices of the Town Clerks
of the Towns and Cities wherein any part of the Connecticut Property is
located."
(d) If Grantor, shall pay or discharge all of the Obligations,
then this deed shall be void, but otherwise shall remain in full force and
effect.
(e) (i) Grantor and Beneficiary agree: (A) that this Mortgage
shall constitute a Security Agreement within the meaning of the UCC, as
adopted in the State of Connecticut, with respect to all sums on deposit
pursuant to the Loan Documents and with respect to all personal property
described in Granting Clauses (D) through (L), inclusive of both, and all
parts of the Trust Estate which may not be deemed to form a part of the
Connecticut Property or may constitute a "fixture" (within the meaning of
the Connecticut UCC), and all property listed on any financing statement
filed with regard to the security agreement created hereunder, and all
replacements of such property, substitutions for such property, additions to
such property, and the proceeds thereof, and such personal property; (B)
that a security interest in and to such personal property and all sums on
deposit pursuant to the Loan Documents is hereby granted to Beneficiary; and
(C) that all sums on deposit pursuant to the Loan Documents and all of
Grantor's right, title and interest therein are hereby assigned to
Beneficiary; all to secure payment of the Indebtedness and to secure
performance by Grantor of the terms, covenants and provisions hereof.
(ii) Carbon copies, photographic copies or other
reproductions of this Mortgage, or of any financing statement relating to
this Mortgage, shall be sufficient as a financing statement. This Mortgage
is effective, and shall be effective, as a financing statement filed as a
fixture filing with respect to all goods which are or are to become fixtures
included within the Connecticut property, as is to be filed for record in
the real estate records of the offices of the town clerks where portions of
the Connecticut property are situated. The mailing address of Grantor and
the address of beneficiary from which information concerning the security
interest may be obtained are set forth in the notice section hereof.
(iii) In addition to any other rights and remedies available
to Beneficiary hereunder, Beneficiary shall have all the rights of a secured
party under the Connecticut UCC. Grantor covenants and agrees that it will
not further encumber or grant a security interest in any personal property,
or any sums on deposit pursuant to the Loan Documents, or any part thereof,
and that such personal property shall at all times be owned by Grantor and
shall not be leased or otherwise treated in any manner whereby the ownership
or any beneficiary interest in any of such personal property shall be held
by any person or entity other than Grantor. Furthermore, to the extent
permitted by law, Grantor hereby authorizes Beneficiary to sign and file
financing statements at any time in respect of any of such personal property
and any sums on deposit pursuant to the Loan Documents, without such
financing statements being executed by, or on behalf of, Grantor, but
Grantor shall, however, at any time, on request of Beneficiary, execute, or
cause to be executed, financing statements in respect of any personal
property and any sums on deposit pursuant to the Loan Documents. Grantor
agrees to pay all filing fees, including fees for filing continuation
statements in connection with such financing statements, and to reimburse
Beneficiary for all costs and expenses of any kind incurred in connection
therewith.
(iv) Grantee shall have any and all rights and remedies
provided for in the Connecticut UCC as amended from time to time, in
addition to those provided in the Loan Documents. Upon the request of
Beneficiary, Grantor shall assemble all personal property and make it
available to Grantor at such location as Beneficiary shall reasonably
desire. Beneficiary may at its option sell any personal property, for cash
or on credit, to a wholesaler, retailer or user of such property at a public
or private sale, or at auction, or may sell any personal property, together
with all or any part of the balance of the Trust Estate, at the same time
as, and in connection with, any foreclosure or other sale, all of which
shall be deemed to be commercially reasonable, and the proceeds of such sale
or other disposition of any personal property may be first applied by
Beneficiary to its reasonable expenses incurred in connection with its
retaking, maintenance, sale or disposition of such personal property,
including, but not limited to, reasonable attorneys' fees, and the balance
of such proceeds may be applied to the Indebtedness. Beneficiary shall give
Grantor written notice of the time and place of any disposition of any
personal property at least ten (10) days prior to the disposition of same,
which notice shall be sent to Grantor in accordance with the notice
provisions hereof. The taking of possession of any personal property shall
not prevent concurrent or later proceedings for the foreclosure and/or sale
of other portions of the Trust Estate as provided elsewhere herein.
(f) At the option of Beneficiary, and irrespective of whether or
not Beneficiary shall actually elect to declare the Indebtedness due and
payable, Grantee shall be entitled, at its option, to the appointment of a
receiver of the Connecticut Property or the rents and profits of the
Connecticut Property, and such receiver shall be appointed, with or without
notice, and without regard to the adequacy of any security held for the
payment of the Indebtedness and other sums secured hereby, or the solvency
of any Person or Persons liable for the payment of such amounts. Such
receiver may also be granted such extended powers, duties and authority as
would be necessary or useful in the management and operation of the
Connecticut Property, including, without limitation, the power to enter
into, modify, terminate and enforce leases; pay Impositions and operating
expenses; employ property managers; make payments of principal and interest
on the Notes and sums secured by this Mortgage as the same becomes due; and
expend reasonable sums in repair and maintenance of the Connecticut
Property.
(g) GRANTOR ACKNOWLEDGES THAT THE INDEBTEDNESS AND OBLIGATIONS
ARE FOR COMMERCIAL PURPOSES, AND WAIVES ANY RIGHT TO NOTICE AND HEARING
UNDER SECTIONS 52-278A THROUGH 52-278N OF THE CONNECTICUT GENERAL STATUTES,
AS NOW OR HEREAFTER AMENDED, AND AUTHORIZES THE ATTORNEY OF BENEFICIARY, OR
ANY SUCCESSOR THEREOF, TO ISSUE A WRIT OF PREJUDGMENT REMEDY WITHOUT COURT
ORDER; GRANTOR ACKNOWLEDGES THAT IT MAKES THESE WAIVERS KNOWINGLY AND
VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF
THESE WAIVERS WITH ITS ATTORNEYS.
(h) The provisions of this paragraph (h) are included herein to
provide more details as to the Notes. Each Note is dated June 18, 1996, and
the maximum principal amounts of the Notes and the Maturity Date for all
amounts remaining unpaid under the Notes is as stated in the recitals
hereof.
(i) Grantor hereby agrees that any legal action or proceeding
with respect to this Mortgage or the Loan Documents may be brought in the
courts of the State of Connecticut or in the United States District Court
for the District of Connecticut, as Beneficiary may elect, and, by the
execution and delivery of this Mortgage, Grantor hereby accepts, with regard
to any such action or proceeding, for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
Nothing herein shall affect the right to service of process in any other
manner permitted by law. Grantor further agrees that a final, non-
appealable judgment against it in any such action or proceeding shall be
conclusive and may be enforced in any other jurisdiction within or outside
the United States of America by suit on the judgment, a certified or
exemplified copy of which shall be conclusive evidence of the fact and of
the amount of its indebtedness.
(j) This Mortgage does not constitute an "Open-End Mortgage" that
can secure future advances pursuant to Connecticut law.
(k) To the extent permitted by law, any sums not paid by Grantor
hereunder when due (after any applicable grace periods) shall bear interest,
both before and after judgment and until collection on any action brought by
Beneficiary against Grantor for payment thereof or foreclosure of this
Mortgage, at an annual rate to be applicable during any period when the
holder of the Notes may accelerate payment of the Indebtedness evidenced
thereby set forth in the Notes, and the payment of such interest by Grantor
shall be secured by this Mortgage to the extent permitted by law.
(l) If, pursuant to the Notes, accrued interest may be added to
the principal amount secured by this Mortgage, interest will accrue on any
such interest added to the principal amount secured by this Mortgage.
Interest on any accrued interest that is added to the principal amount
secured by this Mortgage shall be secured by this Mortgage to the same
extent as interest on the original principal amount secured by this
Mortgage.
56. As to Property in New Jersey. Notwithstanding anything to
the contrary elsewhere in this Mortgage, as to any property of the Trust
Estate located in the State of New Jersey (the "New Jersey Property") and
encumbered by this Mortgage:
(a) Instrument a Mortgage. This instrument and the creation,
validity, perfection, priority and enforceability of the lien and security
interest created hereby, all warranties of title contained herein with
respect to the New Jersey Property, and all provisions hereof relating to
the realization of the security covered hereby with respect to the New
Jersey Property shall be governed by the law of the State of New Jersey.
(b) This instrument is not a "deed of trust" under New Jersey
law. This document constitutes a Mortgage on real estate and a security
agreement covering personal property under the laws of the State of New
Jersey, and Grantor shall be deemed to be the Mortgagor, and Beneficiary
shall be deemed to be the Mortgagee. Trustee shall have no capacity, and
all references to the Trustee shall be deemed to be references to the
Mortgagee.
(c) Beneficiary shall be entitled to all rights and remedies that
a mortgagee would have under the law or in equity in addition to all rights
and remedies it may have hereunder.
(d) In addition to the other Granting Clauses of this Mortgage,
the Mortgagor hereby MORTGAGES and WARRANTS unto the Mortgagee the Trust
Estate.
(e) References in this Mortgage to "Environmental Laws" shall be
deemed to include but not be limited to the Industrial Site Recovery Act,
N.J.S.A. 13:1K-6 et seq., the Spill Compensation and Control Act, N.J.S.A.
58:10-23.11 et seq., the Water Pollution Control Act, N.J.S.A. 58:10A-1 et
seq., the New Jersey Air Pollution Control Act, N.J.S.A. 26:2C-1 et seq.,
the Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq., the New Jersey
Hazardous Discharges Law, N.J.S.A. 13:1k-15 et seq., the Fresh Water
Wetlands Act, N.J.S.A. 13:9B-1 et seq., the Waterfront Improvements Act,
N.J.S.A. 40:68-1 et seq., the Coastal Facilities Review Act, N.J.S.A. 13:19-
1 et seq., the Safe Drinking Water Act, N.J.S.A. 58:12A-1 et seq., the
Pollution Prevention Act, N.J.S.A. 13:1D-35 et seq. and the Toxic
Catastrophe Prevention Act, N.J.S.A 58:10A-21 et seq.
57. As to Property in New York.
(a) This instrument shall be deemed a mortgage and not a deed of
trust. Beneficiary shall be entitled to all rights and remedies that a
mortgagee would have under the law or in equity in addition to all rights
and remedies it may have hereunder.
(b) Lien Law. (i) This Mortgage is made subject to Section 13
of the New York Lien Law and, in compliance with Section 13 of the New
York Lien Law, Grantor will receive the loan secured by this Mortgage
and the right to receive such advances as a trust fund to be applied
first for the purpose of paying any unpaid costs of the Improvements;
and Grantor has applied and will apply the same first to the payment of
any unpaid costs of the Improvements before using any part of the total
of the same for any other purpose.
(ii) Grantor will indemnify and hold Beneficiary
harmless against any loss, liability, cost or expense, including
any judgments, attorneys' fees, costs of appeal bonds or printing
costs, arising out of or relating to any proceedings instituted by
any claimant alleging a violation by Grantor of Article 3-A of the
New York Lien Law.
& Real Property Law. (i) Sections 5 and 6 hereof shall be
construed according to subdivision 4 of Section 254 of the New York
Real Property Law as amended by Chapter 886 of the Laws of 1945 but not
as amended by Chapter 830 of the Laws of 1965 or as otherwise
thereafter amended.
(ii) For purposes of Section 291-f of the New York
Real Property Law, Tenant and every tenant or subtenant who after
the recording of this Mortgage, enters into a Lease upon the
premises of any of the Properties or who acquires by instrument of
assignment or by operation of law a leasehold estate upon the
premises located in the State of New York in existence on the date
of recording of this Mortgage is hereby notified that Grantor
shall not, without obtaining Beneficiary's prior consent in each
instance, cancel, abridge or otherwise modify any Leases upon the
premises located in the State of New York or accept prepayments
for more than thirty (30) days of installments of rent to become
due with respect to any Lease thereof having an unexpired term on
the date of this Mortgage of five years or more, except as ex-
pressly permitted under this Mortgage or the Assignment of Leases,
and that any such cancellation, abridgement, modification or
prepayment made by any such tenant or subtenant without either
being expressly permitted under this Mortgage or receiving
Beneficiary's prior consent shall be voidable by Beneficiary at
its option.
(d) RPAPL. If an Event of Default shall occur and be continuing,
Beneficiary may elect to sell (and, in the case of any default of any
purchaser, resell) any Property or any part of any Property by exercise
of the power of foreclosure or of sale granted to Beneficiary by
Articles 13 or 14 of the New York Real Property Actions and Proceedings
Law (the "RPAPL"). In such case, Beneficiary may commence a civil
action to foreclose this Mortgage pursuant to Article 13 of the RPAPL,
or it may proceed and sell the Property pursuant to Article 14 of the
RPAPL to satisfy the Notes and all other amounts secured hereby.
(e) Maximum Principal Indebtedness. The amount of principal
indebtedness this Mortgage secures against the Property located in the
State of New York and, for purposes of Sections 253, 256 and 260 of the
Tax Law of the State of New York (relating to the taxation of
mortgages), the maximum amount of the principal indebtedness secured by
this Mortgage, or which by any contingency may be secured by this
Mortgage, and for which this Mortgage may be foreclosed or otherwise
enforced against, the Property located in the State of New York, is
$37,086,793.05 principal amount of this Mortgage.
(f) No Residential Units. This Mortgage does not encumber real
property principally improved or to be improved by one or more
structures containing in the aggregate six or fewer residential
dwelling units having their own separate cooking facilities.
58. As to Property in Pennsylvania. Notwithstanding anything to
the contrary elsewhere in this Mortgage, as to any property of the Trust
Estate located in the Commonwealth of Pennsylvania:
(a) This instrument is intended to be a realty mortgage and shall
be enforceable as such. Grantor shall be deemed a "mortgagor," Beneficiary
shall be deemed a "mortgagee" and Trustee shall have no capacity (but shall
be disregarded and all references to "Trustee" shall be deemed to refer to
the "mortgagee" to the extent not inconsistent with interpreting this
instrument as a realty mortgage). As a realty mortgage, Grantor, as
mortgagor, shall convey all Pennsylvania Property ab initio to Beneficiary,
as mortgagee and the provisions of the paragraph immediately preceding
Section 1 of this Mortgage beginning with the words "In Trust Forever ...,"
shall be deleted and of no force and effect.
(b) Each of the remedies set forth herein, including without
limitation the remedies involving a power of sale of the Pennsylvania
Property in connection with the enforcement of the terms of this Mortgage,
shall be exercisable if, and to the extent, permitted by the laws of the
Commonwealth of Pennsylvania in force at the time of the exercise of such
remedies without regard to the enforceability of such remedies at the time
of the execution and delivery of this Mortgage.
(c) Upon the occurrence and during the continuation of an Event
of Default, Beneficiary may institute any one or more actions of mortgage
foreclosure against all or any part of the Pennsylvania Property, or take
such other action at law or in equity for the enforcement of this Mortgage
and realization on the security herein or elsewhere provided for, as law may
allow, and may proceed therein to final judgment and execution for the
entire amount of the outstanding Indebtedness. Beneficiary shall have the
option to proceed with foreclosure of the lien and security interests
evidenced by this Mortgage in satisfaction of the Loan through the courts,
all without declaring the Indebtedness due, and provided that if a sale of
the Pennsylvania Property is because of default in the payment of part of
the Indebtedness, such sale may be made subject to the unmatured part of the
Indebtedness; and such sale, if so made, shall not in any manner affect the
unmatured part of the Indebtedness, but as to such unmatured part of the
Indebtedness, this Mortgage shall remain in full force and effect just as
though no sale had been made.
(d) If, as provided in Section 38(a) hereof, Grantor shall pay or
cause to be paid, the principal of and interest on the Notes in full at
maturity or as permitted in accordance with the terms thereof and all other
Indebtedness payable to Beneficiary hereunder by Grantor or secured hereby
or by the other Loan Documents and all of the payment Obligations shall have
been performed, then in addition to the provisions of Section 38(a), the
estate hereby granted, transferred and assigned shall cease, terminate and
become void.
(e) The references to the UCC in the Granting Clauses of this
Mortgage shall be deemed to be references to the Pennsylvania Uniform
Commercial Code in 13 Pa. C.S.A. 1101 et seq.
(f) This instrument shall constitute a security agreement and
continuously perfected fixture filing and financing statement. Grantor
hereby authorizes Beneficiary, after ten (10) days' notice to Grantor and
Grantor's failure to execute such financing statements, to execute, deliver,
file or refile as Secured Party, without joinder of Grantor, as Debtor, any
financing statement, continuation statement, or other instruments
Beneficiary may reasonably require from time to time to perfect or renew
such security interest under the UCC. Grantor is, for the purposes of this
agreement, deemed to be the Debtor, and Beneficiary is deemed to be the
Secured Party, as those terms are used in the UCC. The addresses of secured
party and debtor from which information concerning the security agreement
may be obtained are set forth in the initial paragraph of this Mortgage.
(g) Subject to any Nondisturbance Agreements then in effect, if
Beneficiary exercises its right of entry under Section 20(b) hereof and the
tenant fails to surrender possession of the
Pennsylvania Property, Beneficiary shall be entitled to institute and
maintain an action of ejectment with respect to the Pennsylvania Property in
the county or counties in which such property, or any part thereof, is
situated.
This Mortgage is intended to be an "Open-End Mortgage" that
secures future advances pursuant to the provisions of 42 Pa.C.S.A. 8143.
It is the intent of the parties that the lien of such future advances
relates back to the date of this Mortgage subject to compliance with the
provisions of such section.
59. Liability of Assignees of Beneficiary. No assignee of
Beneficiary (an "Assignee") shall have any personal liability, directly or
indirectly, under or in connection with this Mortgage or any amendment or
amendments hereto made at any time or times, heretofore or hereafter, any
liability being limited to the assets pledged as security pursuant to this
Mortgage and Grantor hereby forever and irrevocably waives and releases any
and all such personal liability. In addition, no Assignee shall have at any
time or times hereafter any personal liability, directly or indirectly,
under or in connection with or secured by any agreement, lease, instrument,
encumbrance, claim or right affecting or relating to the Properties or to
which the Properties are now or hereafter subject. The limitation of
liability provided in this Section 59 is (i) in addition to, and not in
limitation of, any limitation of liability applicable to the assignee
provided by law or by any other contract, agreement or instrument, and (ii)
shall not apply to any Assignee's negligence or willful misconduct.
60. One of a Number of Mortgages. This Mortgage is given as
security together with certain other mortgages and deeds of trust which
collectively cover the Properties and secure the Obligations. A copy of all
such mortgages and deeds of trust (including this Mortgage) are available
from the Beneficiary during normal business hours upon reasonable advance
request therefor. A default with respect to any such mortgage or deed of
trust (including this Mortgage) shall constitute a default under all such
mortgages and deeds of trust (including this Mortgage).
IN WITNESS WHEREOF, this Mortgage has been duly executed by
Grantor under seal on the date first hereinabove written.
All of the following KRT PROPERTY HOLDINGS, INC.
signed, sealed and
acknowledged in the
presence of: By: /s/ Robert Dennis (SEAL)
------------------------------------
Name: Robert Dennis
/s/ Michael Markman Title: Vice President
- -----------------------------
Michael Markman, Secretary
/s/ Jeffrey M. Calcagni
- -----------------------------
Jeffrey M. Calcagni, Esq.
HILLCREST PLAZA LIMITED PARTNERSHIP
By: KR Hillcrest, Inc.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR SUBURBAN, L.P.
By: KR Suburban, Inc.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
FOX RUN, LIMITED PARTNERSHIP
By: KR Fox Run, Inc.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR MacARTHUR ASSOCIATES, L.P.
By: KR MacArthur, Inc.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR BEST ASSOCIATES, L.P.
By: KR Best Associates, Inc.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR 69TH STREET, L.P.
By: KR 69th Street, Inc.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR TRUST ONE, INC.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR MANCHESTER, INC.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR STREET ASSOCIATES, L.P.
By: KR Street, Inc.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR ORANGE, INC.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR COLLEGETOWN, INC.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR HILLCREST MALL, INC.
By: /s/ Robert Dennis (SEAL)
---------------------------------
Name: Robert Dennis
Title: Vice President
KR PILGRIM, L.P.
By: KR Pilgrim, Inc.
By: /s/ Robert Dennis (SEAL)
-------------------------------
Name: Robert Dennis
Title: Vice President
PENNSYLVANIA
------------
CERTIFICATE OF RESIDENCE
------------------------
The address of Mortgagee is:
KRT Origination Corp.
c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, PA 19428
------------------------------
On Behalf of Mortgagee
Norman Kranzdorf, President
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
The undersigned hereby certifies that the above instrument has
been prepared under the supervision of an attorney admitted to practice
before the Court of Appeals of New York.
------------------------------
Thomas E. Charbonneau, Esq.
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known, who, being by me duly sworn, did depose and say that he
resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania 19403; that
he is the Vice President of KRT PROPERTY HOLDINGS, INC., the corporation
described in and which executed the foregoing instrument; and that he signed
his/her name thereto by authority of the Board of Directors of said
corporation.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR HILLCREST, INC., a corporation
duly organized under the laws of the State of Maryland, having its principal
place of business c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428; that said corporation is a general
partner of HILLCREST PLAZA, LIMITED PARTNERSHIP, a Maryland limited
partnership, the partnership described in and which executed the foregoing
instrument; that he signed his name to the said instrument by authority of
the Board of Directors of said corporation; and he acknowledges to me that
the said instrument was executed by said corporation as its voluntary act
and deed by virtue of authority from its Board of Directors for and on
behalf of said partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR SUBURBAN, INC., a corporation
duly organized under the laws of the State of New Jersey, having its
principal place of business c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428; that said corporation is a general
partner of KR SUBURBAN, L.P., a New Jersey limited partnership, the
partnership described in and which executed the foregoing instrument; that
he signed his name to the said instrument by authority of the Board of
Directors of said corporation; and he acknowledges to me that the said
instrument was executed by said corporation as its voluntary act and deed by
virtue of authority from its Board of Directors for and on behalf of said
partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR FOX RUN, INC., a corporation duly
organized under the laws of the State of Maryland, having its principal
place of business c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428; that said corporation is a general
partner of FOX RUN, LIMITED PARTNERSHIP, an Alabama limited partnership, the
partnership described in and which executed the foregoing instrument; that
he signed his name to the said instrument by authority of the Board of
Directors of said corporation; and he acknowledges to me that the said
instrument was executed by said corporation as its voluntary act and deed by
virtue of authority from its Board of Directors for and on behalf of said
partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR MacARTHUR, INC., a corporation
duly organized under the laws of the State of Pennsylvania having its
principal place of business c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428; that said corporation is a general
partner of KR MacARTHUR ASSOCIATES, L.P., a Pennsylvania limited
partnership, the partnership described in and which executed the foregoing
instrument; that he signed his name to the said instrument by authority of
the Board of Directors of said corporation; and he acknowledges to me that
the said instrument was executed by said corporation as its voluntary act
and deed by virtue of authority from its Board of Directors for and on
behalf of said partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR BEST ASSOCIATES, INC., a
corporation duly organized under the laws of the State of Pennsylvania,
having its principal place of business c/o Kranzco Realty Trust, 128 Fayette
Street, Conshohocken, Pennsylvania 19428; that said corporation is a
general partner of KR BEST ASSOCIATES, L.P., a Pennsylvania limited
partnership, the partnership described in and which executed the foregoing
instrument; that he signed his name to the said instrument by authority of
the Board of Directors of said corporation; and he acknowledges to me that
the said instrument was executed by said corporation as its voluntary act
and deed by virtue of authority from its Board of Directors for and on
behalf of said partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR 69TH STREET, INC., a corporation
duly organized under the laws of the State of Pennsylvania, having its
principal place of business c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428; that said corporation is a general
partner of KR 69TH STREET, L.P., a Pennsylvania limited partnership, the
partnership described in and which executed the foregoing instrument; that
he signed his name to the said instrument by authority of the Board of
Directors of said corporation; and he acknowledges to me that the said
instrument was executed by said corporation as its voluntary act and deed by
virtue of authority from its Board of Directors for and on behalf of said
partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known, who, being by me duly sworn, did depose and say that he
resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania 19403; that
he is the Vice President of KR TRUST ONE, INC., the corporation described in
and which executed the foregoing instrument; and that he signed his/her name
thereto by authority of the Board of Directors of said corporation.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known, who, being by me duly sworn, did depose and say that he
resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania 19403; that
he is the Vice President of KR MANCHESTER, INC., the corporation described
in and which executed the foregoing instrument; and that he signed his/her
name thereto by authority of the Board of Directors of said corporation.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR STREET, INC., a corporation duly
organized under the laws of the State of Pennsylvania, having its principal
place of business c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428; that said corporation is a general
partner of KR STREET ASSOCIATES, L.P., a Pennsylvania limited partnership,
the partnership described in and which executed the foregoing instrument;
that he signed his name to the said instrument by authority of the Board of
Directors of said corporation; and he acknowledges to me that the said
instrument was executed by said corporation as its voluntary act and deed by
virtue of authority from its Board of Directors for and on behalf of said
partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary PublicSTATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known, who, being by me duly sworn, did depose and say that he
resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania 19403; that
he is the Vice President of KR ORANGE, INC., the corporation described in
and which executed the foregoing instrument; and that he signed his/her name
thereto by authority of the Board of Directors of said corporation.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known, who, being by me duly sworn, did depose and say that he
resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania 19403; that
he is the Vice President of KR COLLEGETOWN, INC., the corporation described
in and which executed the foregoing instrument; and that he signed his/her
name thereto by authority of the Board of Directors of said corporation.
------------------------------
NOTARIAL SEAL Notary Public
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On the ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known, who, being by me duly sworn, did depose and say that he
resides 2917 Clyston Road, RD #2, Norristown, Pennsylvania 19403; that he
is the Vice President of KR HILLCREST MALL, INC., the corporation described
in and which executed the foregoing instrument; and that he signed his/her
name thereto by authority of the Board of Directors of said corporation.
------------------------------
NOTARIAL SEAL Notary PublicSTATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
On this ---- day of June, 1996, before me personally came ROBERT
DENNIS to me known and known by me to be the person who executed the
foregoing instrument, and who being by me duly sworn, did depose and say
that he resides at 2917 Clyston Road, RD #2, Norristown, Pennsylvania
19403; that he is the Vice President of KR PILGRIM, INC., a corporation duly
organized under the laws of the State of Pennsylvania, having its principal
place of business c/o Kranzco Realty Trust, 128 Fayette Street,
Conshohocken, Pennsylvania 19428; that said corporation is a general
partner of KR PILGRIM, L.P., a Pennsylvania limited partnership, the
partnership described in and which executed the foregoing instrument; that
he signed his name to the said instrument by authority of the Board of
Directors of said corporation; and he acknowledges to me that the said
instrument was executed by said corporation as its voluntary act and deed by
virtue of authority from its Board of Directors for and on behalf of said
partnership for the use and purposes therein mentioned.
------------------------------
NOTARIAL SEAL Notary Public
EXHIBIT A
---------
Legal Descriptions of Properties
EXHIBIT B
---------
Environmental Reports
DATE OF FINAL
REPORT
STATE PROPERTY NAME (AS SHOWN ON COVER)
Connecticut Groton Square May 17, 1996
Connecticut Manchester Kmart Plaza May 8, 1996
Connecticut Milford Center May 16, 1996
Connecticut Orange Site May 8, 1996
Maryland Anneslie Shopping Center May 2, 1996
Maryland Fox Run Shopping Center May 17, 1996
Maryland Hillcrest Plaza May 17, 1995
New Jersey Collegetown Shopping Center April 25, 1996
New Jersey Hillcrest Mall April 30, 1996
New Jersey Suburban Plaza April 25, 1996
New York A&P Mamaroneck April 23, 199
New York Highbridge Plaza May 16, 1996
New York The Mall at Cross County May 9, 1996
New York North Ridge Shopping Center May 16, 1996
New York Port Washington Center May 17, 1996
New York Village Square May 16, 1996
Pennsylvania Barn Plaza April 19, 1996
Pennsylvania Bensalem Square May 3, 1996
Pennsylvania Best Plaza April 23, 1996
Pennsylvania Bethlehem Square April 19, 1996
Pennsylvania Bristol Commerce Park April 30, 1996
Pennsylvania Loehmann's Plaza at Pilgrim Gardens April 29, 1996
Pennsylvania MacArthur Road Plaza May 2, 1996
Pennsylvania Park Hills Plaza May 16, 1996
Pennsylvania 69th Street Drug Emporium Plaza April 25, 1996
Pennsylvania Street Road Plaza May 14, 1996
Pennsylvania Whitehall Square April 25, 1996
EXHIBIT C
---------
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the ----- day of
- ----------, 1996, by and among ----------------------------- ("Lender"),
- ---------------- ("Tenant"), and ---------------
- -------------------------------- ("Landlord").
RECITALS
--------
Landlord is the owner and holder of fee simple title in and to
certain real property which is described on Exhibit A attached hereto and
made a part hereof ("Property").
Lender is the owner and holder of a Mortgage dated ---------- --,
1996 made by Landlord to Lender and encumbering the Property in the original
principal amount of --------------- ---------------------- ($-------------)
Dollars, which Mortgage was heretofore recorded (the "Mortgage").
Tenant is the holder of a leasehold estate in a portion of the
Property (the "Leased Premises") pursuant to the terms of that certain Lease
between Landlord and Tenant dated as of -------------, 19-- (the "Lease").
[A Memorandum of Lease with respect to the Lease was recorded on
- -----------, 19-- in the office of the ---------------- in and for
- -------------- County, --------------------- as Document No. ------------.]
*Delete if inapplicable.
Tenant, Landlord and Lender desire to confirm their understanding
with respect to the Lease and the Mortgage.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the sum of One Dollar ($1.00)
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. SUBORDINATION. Subject to the terms of this Agreement, the Lease
and all rights of Tenant under the Lease and to the Property, including but
not limited to any rights to insurance proceeds and condemnation awards, are
now and shall at all times continue to be subject and subordinate in each
and every respect to the Mortgage, any and all documents executed in
connection therewith, and all rights of Lender as mortgagee thereunder. The
term "Mortgage", as used herein shall include the Mortgage and any and all
amendments, supplements, modifications, extensions and renewals thereof.
2. TENANT NOT TO BE DISTURBED. At any time that the Mortgage shall
be in effect, Lender agrees that so long as Tenant is not in default (beyond
any period given Tenant under the Lease to cure such default) in the payment
of rent or additional rent or in the performance of any of the other terms,
covenants or conditions of the Lease on Tenant's part to be performed,
Lender will not join Tenant as a party defendant in any action or proceeding
foreclosing the Mortgage unless required to foreclose the Mortgage and then
only for such purpose and not for the purpose of terminating the Lease, and
further, that Tenant's possession of the Leased Premises and Tenant's rights
and privileges under the Lease, or any extensions or renewals thereof which
may be effected in accordance with the Lease, shall not be diminished or
interfered with by Lender, and Tenant's occupancy of the Leased Premises
shall not be disturbed by Lender, except in accordance with the terms of the
Lease.
3. TENANT TO ATTORN TO LENDER. If Landlord's interest in the Lease
shall be transferred to and/or owned by Lender by reason of foreclosure of
the Mortgage, acceptance of a deed in lieu of foreclosure or by any other
manner, and Lender succeeds to the interest of Landlord under the Lease,
Tenant shall be bound to Lender under all of the terms, covenants and
conditions of the Lease for the balance of the remaining term thereof and
any extension thereof duly made by Tenant pursuant to the terms of the Lease
with the same force and effect as if Lender were the landlord under the
Lease, and Tenant does hereby attorn to Lender as its landlord, said
attornment to be effective and self-operative without the execution of any
further instruments on the part of any of the parties hereto immediately
upon Lender's succeeding to the interest of Landlord under the Lease;
provided, however, that Tenant shall have no obligation to pay rent to
Lender until Tenant receives written notice from Lender that it has
succeeded to the interest of Landlord under the Lease or that it is entitled
to collect rents pursuant to the Mortgage or any separate assignment of
leases and rents. Except as provided in paragraph 4 hereof, and except that
recourse against Lender or any of its successors and assigns for any breach
of the Lease shall be limited to its interest in the Property, the
respective rights and obligations of Tenant and Lender upon such attornment
shall be the same as are now set forth in the Lease, it being the intention
of the parties hereto for this purpose to incorporate the Lease in this
Agreement by reference with the same force and effect as if set forth at
length herein.
4. LENDER NOT BOUND BY CERTAIN ACTS OF LANDLORD. If Lender shall
succeed to the interest of Landlord under the Lease, Lender shall be bound
to the extent provided by the terms and conditions of the Lease for all
obligations of Landlord arising or occurring during the time that Lender is
the owner of the interest of Landlord under the Lease; except that Lender
shall not be:
(a) liable for any act or omission of any prior landlord
(including Landlord);
(b) subject to any offsets, claims, counterclaims or defenses
that Tenant might have against any prior landlord (including
Landlord);
(c) bound by any rent or additional rent or advance rent that Tenant
might have paid for more than the current month to any prior
landlord (including Landlord), and all such rent shall remain due
and owing notwithstanding such advance payment;
(d) liable for reimbursement to Tenant for any overpayment of Tenant's
proportionate share of taxes and other operating costs of the
Property, unless all payments of such costs for the year to which
reimbursement relates were paid by Tenant to Lender;
(e) bound by any provision of the Lease which obligates Landlord
to make improvements to the Leased Premises or the Property
or which provides for warranties of construction from the
landlord to the tenant;
(f) liable for any payment to Tenant of any sums, or the granting to
Tenant of any credit, in the nature of a contribution towards
credit, in the nature of a contribution towards the cost of
preparing, furnishing or moving into the Leasehold Premises, or
any portion thereof;
(g) bound by any amendment or modification of the Lease or by any
waiver of any term of the Lease made without Lender's written
consent if such amendment, modification or waiver requires
the consent of Lender under the terms of the Mortgage; or
(h) be required to account for any security deposit other than any
security deposit actually delivered to Lender.
5. ACKNOWLEDGEMENT AND WAIVER. Tenant agrees upon demand of Lender
to make payments under the Lease to Lender in accordance with the Mortgage,
and Tenant waives the provisions of any statute or rule of law now or
hereafter in effect which may give or purport to give Tenant any right or
election to terminate or otherwise adversely affect the Lease and the
obligations of Tenant thereunder by reason of any foreclosure proceeding
with respect to the Mortgage.
6. SUCCESSORS AND ASSIGNS. This Agreement and each and every
covenant, agreement and other provision hereof shall be binding upon the
parties hereto and their respective heirs, administrators, representatives,
successors and assigns.
7. NOTICE TO LENDER. In the event of any alleged default by Landlord
under the Lease, Tenant shall give written notice thereof to Lender, and
Tenant and Lender agree that Lender shall have the right (but no obligation)
to cure such default before Tenant invokes any of its remedies under the
Lease.
8. AMENDMENT. This Agreement may not be modified orally or in any
other manner than by an agreement in writing signed by the parties hereto or
their respective successors in interest.
9. COUNTERPARTS. This Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement, binding on
all parties hereto, notwithstanding that all parties are not signatories to
the same counterpart.
10. NOTICES. All notices or other communications required or
permitted to be given pursuant to the provisions hereof shall be in writing
and shall be given by first class United States mail, postage prepaid,
registered or certified with return receipt requested, and addressed as
herein provided. Notice so given shall be effective two (2) days after
deposit in the United States mail. For purposes of notice, the addresses of
the parties shall be:
Landlord: c/o Kranzco Realty Trust
128 Fayette Street
Conshohocken, Pennsylvania 19428
Tenant: ----------------------------------
----------------------------------
----------------------------------
Lender: ----------------------------------
----------------------------------
----------------------------------
----------------------------------
provided, however, that any party shall have the right to change its address
for notice hereunder to any other location within the continental United
States by thirty (30) days' prior written notice to the other parties in the
manner set forth hereinabove.
11. CAPTIONS AND HEADINGS. The captions and headings of this
Agreement are for convenience only and are not to be construed as confining
or limiting in any way the scope or intent of the provisions hereof.
Whenever the context requires or permits, the singular shall include the
plural, the plural shall include the singular and the masculine, feminine
and neuter shall be freely interchangeable.
12. GOVERNING LAW. This agreement shall be governed by the law of the
jurisdiction in which the Property is located.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LENDER:
By:----------------------------
Name:
Title:
TENANT:
-------------------------------
By:-----------------------------
Name:
Title:
LANDLORD:
By:-----------------------------
Name: Norman M. Kranzdorf
Title: President
STATE OF )
: ss.:
COUNTY OF )
On this ---- day of --------------, 1996, before me,
- --------------------------, the undersigned officer, personally appeared
- ------------------------, who acknowledged for himself that he is the
- ----------------- of -------------------- and that he being authorized to do
so executed the foregoing instrument for the purposes therein contained by
signing the name of the Corporation by himself as ------------------.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
Notary Public
My Commission Expires:
STATE OF )
: ss.:
COUNTY OF )
On this ---- day of --------------, 1996, before me,
- -----------------------, the undersigned officer, personally appeared NORMAN
M. KRANZDORF, who acknowledged himself to be the President of
- ----------------------, a ---------------- corporation and that he as such
President being authorized to do so, executed the foregoing instrument for
the purposes therein contained by signing the name of the Corporation by
himself as President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
Notary Public
My Commission Expires:
STATE OF )
: ss.:
COUNTY OF )
On this ---- day of -----------, 1996, before me,
- -----------------------, the undersigned officer, personally appeared
- ------------------------, who acknowledged himself to be the
- --------------------- of ------------------------------------
- ------------------------, that he as such ---------- being authorized to do
so, executed the foregoing instrument for the purposes therein contained by
signing the name of the trust by himself as ----------------.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
Notary Public
My Commission Expires:
SNDA Certification
[Borrower's Name and Address]
---------- --, 1996
Trustee Name and Address
Re: [Property Name]
---------------
Gentlemen:
Reference is made to Section --- (the "Mortgage") between [KRT
Origination Corp.] and [Borrower] with respect to the above mentioned
property. [Borrower] has entered into or is about to enter into a lease of
a portion of the above mention property with [Tenant]. [Tenant] has
requested that [Trustee] enter into a non-disturbance agreement in the form
enclosed herewith. Said form is either on the form of non-disturbance
agreement attached as Exhibit C to the Mortgage, with such changes as do not
materially adversely affect the [Trustee] or is on the Tenant's standard
form, provided, however, that the protections afforded to the [Trustee] by
said agreement are not materially less than the protections that would have
been afforded had the Tenant entered into the form of non-disturbance
agreement attached to the Mortgage.
Please execute and return to us the enclosed agreements.
Very truly yours,
[BORROWER]
By: ------------------------
[Authorized Signatory]
SCHEDULE 1
----------
Allocated Loan Amounts
Allocated Loan Amounts
The chart below sets forth the original Allocated Loan Amount with
respect to each of the Mortgaged Properties provided for in the Mortgage.
As a % of
Total
Allocated Allocated
Location of Loan Loan
Mortgaged Property Mortgaged Property Amount Amount
- ------------------ ------------------ --------- ---------
The Mall at Cross County Yonkers, NY $ 20,283,000 11.16%
Bethlehem Square Bethlehem, PA 16,249,000 8.94%
Whitehall Square Whitehall, PA 15,176,000 8.35%
Fox Run Prince Frederick, MD 14,069,000 7.74%
Bristol Commerce Park Bristol, PA 12,994,000 7.15%
Groton Square Groton, CT 12,174,000 6.70%
Suburban Plaza Hamilton, NJ 10,453,000 5.75%
Park Hills Plaza Altoona, PA 9,602,000 5.29%
Barn Plaza Doylestown, PA 9,164,000 5.04%
Highridge Plaza Yonkers, NY 7,242,000 3.99%
Anneslie Baltimore, MD 5,859,000 3.22%
Best Plaza Tredyffrin, PA 5,747,000 3.16%
Collegetown Glassboro, NJ 5,487,000 3.03%
Hillcrest Mall Phillipsburg, NJ 5,384,000 2.96%
Bensalem Square Bensalem, PA 4,281,000 2.36%
Street Road Bensalem, PA 4,127,000 2.27%
Pilgrim Gardens Drexel Hill, PA 4,058,000 2.23%
Hillcrest Plaza Frederick, MD 3,832,000 2.11%
North Ridge New Rochelle, NY 2,597,000 1.43%
Manchester Kmart Manchester, CT 2,522,000 1.39%
69th Street Plaza Upper Darby, PA 2,479,000 1.37%
MacArthur Road Whitehall, PA 2,308,000 1.27%
Village Square Larchmont, NY 1,850,000 1.02%
Milford Milford, CT 1,470,000 0.81%
A&P Mamaroneck Mamaroneck, NY 1,061,000 0.58%
Orange Orange, CT 786,000 0.43%
Port Washington Port Washington, NY 446,000 0.25%
------------ ------
TOTAL $181,700,000 100.00%
============ ======
SCHEDULE 2
----------
Grantor Properties
Grantor Property
------- --------
1. KRT Property Holdings, Inc. ("KRT") The Mall at Cross County
2. KRT Bethlehem Square
3. KRT Whitehall Square
4. Fox Run, Limited Partnership Fox Run
5. KRT Bristol Commerce Park
6. KRT Groton Square
7. KR Suburban, L.P. Suburban Plaza
8. KRT Park Hills Plaza
9. KRT Barn Plaza
10. KRT Highridge Plaza
11. KR Trust One, Inc. Anneslie
12. KR Best Associates, L.P. Best Plaza
13. KR Collegetown, Inc. Collegetown
14. KR Hillcrest Mall, Inc. Hillcrest Mall
15. KRT Bensalem Square
16. KR Street Associates, L.P. Street Road
17. KR Pilgrim, L.P. Pilgrim Gardens
18. Hillcrest Plaza Limited Partnership Hillcrest Plaza
19. KRT North Ridge
20. KR Manchester, Inc. Manchester Kmart
21. KR 69th Street, L.P. 69th Street Plaza
22. KR MacArthur Associates, L.P. MacArthur Road
23. KRT Village Square
24. KRT Milford
25. KRT A&P Mamaroneck
26. KR Orange, Inc. Orange
27. KRT Port Washington
SCHEDULE 3
Short-Term Repairs
Environmental & Engineering Reports
Major CAM Breakdowns
Center Current Description 2-5 Years Description
- -------- -------- ------------------------ --------- ---------------
Anneslie $46,750.00 Re-roof north retails $1,000.00 Mortar pointing
$5,000.00 Replace east
facade coating
Fox Run $25,000.00 Stormwater management
system rehabilitation
required due to erosion
damage. The rehab
program has commenced.
Collegetown $21,350.00 Replace room above
Marianne Store and
from Rent-A-Center to
Gold Connection II.
Tenants complaining of
leakage where overhang
connects to main roof and
at rear of roofs. Also,
replace roof from
Collegetown Speedwash to
H & H Appliance.
Hillcrest $65,400.00 Re-roof areas above stores
Mall #9, 10, 11, 18 and 19.
Reshingle and seal peaked
roof above Super Fresh
(Store #35). Ownership
plans to re-roof Store
18-19 in the next few
months and to reshingle
and seal the peaked Super
Fresh roof soon.
$49,000.00 Repair flat roofs above
stores 17 and 20 through
25. Ownership plans to
re-roof store 17 (old
section of Rickels) in
the next few months.
Note that store 20
(Woolworth's) has roof
warranty in effect which
may cover roof repair costs
for that store. Find the
source of leakage from
canopies of buildings with
the following store numbers
2 through 7, 8 through 15
and 16 through 24. Seal
and repair.
A & P $48,000.00 Re-roof one-story $24,000.00 Re-roof
Mamaroneck section of building. two-story
section of
building
$5,000.00 Power wash and
repaint
exterior CMU
walls.
Highridge $15,000.00 Resurface
McDonald's &
Pizza Express
roofs.
$12,600.00 Complete the
resurfacing of
north building
roof.
Northridge $18,000.00 Replace two
HVAC units over
the vacant
stores.
Bensalem $24,000.00 Replace broken paving
on north side of
building, service area
and overflow parking
areas.
Bristol $3,000.00 Paving repairs
Commerce - circular
Park drive.
$1,500.00 Replace
sidewalk of
Boston Market.
$3,000.00 Stucco Facade
reserve for
repairs
Cross County 1. Correction of all
existing Building Code
violations disclosed in
the Notice of Violation
dated April 2, 1996
forwarded to KRT Property
Holdings, Inc. relating
to Cross County Square
Shopping Center.
2. Final certificate of
completion for all work
undertaken in connection
with Building Permit #
71229 issued March 24,
1988 for walkways, stairs
and retaining walls,
relating to Cross County
Square Shopping Center.
- ------ ----------- ----------------------- ----------
TOTALS $279,500.00 TOTALS $88,100.00
SECOND MORTGAGE
ESCROW AGREEMENT
This Agreement dated as of June 18, 1996 made among KRT
ORIGINATION CORP., a Delaware corporation, having an address c/o
Kranzco Realty Trust, 128 Fayette Street, Conshohocken, PA 19428
(together with its successors and assigns, "Mortgagee"), each of
the entities listed on Schedule I hereto, having an address at
128 Fayette Street, Conshohocken, Pennsylvania 19428 (the
"Mortgagor") and ROBINSON SILVERMAN PEARCE ARONSOHN & BERMAN LLP,
a New York general partnership, as escrow agent, having an
address at 1290 Avenue of the Americas, New York, New York 10104
(the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Mortgagee and Mortgagor are parties to an
Indenture of Mortgage, Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment of Leases,
Rents and Security Deposits which secures a loan in the principal
amount of $181,700,000 by Mortgagee to Mortgagor and pursuant to
which (i) an Amended and Restated Consolidated Mortgage securing
a portion of the Loan in the amount of $37,086,793.05 was
recorded against certain property of Mortgagor located in the
State of New York (the "NY Mortgage") and (ii) a Consolidated,
Amended and Restated Deed of Trust securing an aggregate
principal amount of $33,650,000 was recorded against certain
property of Mortgagor located in the State of Maryland (the
"Maryland Mortgage");
WHEREAS, Mortgagor has agreed to (i) execute a second
mortgage securing an aggregate amount equal to $33,643,000 and
covering certain property of Mortgagor located in the State of
New York (the "NY Second Mortgage"), (ii) to execute a Second
Deed of Trust securing an aggregate amount equal to $11,725,000
in respect of the property known as the Fox Run Shopping Center
and $5,230,000 in respect of the property known as the Anneslie
Shopping Center (the "Maryland Second Mortgage"; and together
with the NY Second Mortgage, collectively, the "Second
Mortgages") and (iii) to deliver same to Escrow Agent pursuant to
the terms hereof; and
WHEREAS, Mortgagee and Mortgagor desire to appoint
Escrow Agent to serve as escrow agent hereunder, and Escrow Agent
has agreed to serve as such.
NOW, THEREFORE, in consideration of Ten ($10.00)
Dollars and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
Section 1. Designation of Escrow Agent. Mortgagee and
Mortgagor hereby designate Escrow Agent to hold, subject to the
provisions of this Agreement, the Second Mortgages, and Escrow
Agent, by its signature at the end of this Agreement, agrees to
act as such, subject to the provisions hereof.
Section 2. Rights and Obligations of Escrow Agent.
(a) Simultaneously herewith, Mortgagor has
delivered to Escrow Agent, in escrow, six executed originals of
the NY Second Mortgage, three of which are suitable for recording
in Nassau County and three (3) of which are suitable for
recording in Westchester County and four executed originals of
the Maryland Second Mortgage.
(b) Mortgagee and Mortgagor acknowledge that (i)
Escrow Agent is acting solely as a stakeholder at their request
and for their convenience; (ii) Escrow Agent shall not be deemed
to be the agent of either Mortgagee or Mortgagor; and (iii)
Escrow Agent shall not be liable to either Mortgagee or Mortgagor
for any act or omission on Escrow Agent's part unless taken or
suffered in bad faith, in willful disregard of this Agreement or
involving gross negligence. Escrow Agent may assume the
genuineness of all documents or signatures whether original or
photocopied and that any person purporting to give any notice or
instructions in accordance with the provisions hereof has been
authorized to do so.
(c) In the event that Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive
instructions, claims or demands from any of the parties hereto
with respect to the Second Mortgages held hereunder which, in
Escrow Agent's opinion, are in conflict with any provisions of
this Agreement, Escrow Agent shall be entitled to refrain from
taking any action (other than to keep safely said Second
Mortgages) until Escrow Agent shall be directed otherwise in
writing by the other parties hereto or by a final order or
judgment of a court of competent jurisdiction.
(d) Escrow Agent shall not be bound by any
modification, cancellation or rescission of this Agreement unless
in writing and signed by the other parties hereto. In no event,
however, shall any modification of this Agreement which shall
affect the rights or duties of Escrow Agent be binding on Escrow
Agent unless Escrow Agent shall have given its prior written
consent.
(e) Escrow Agent shall not charge the parties for
Escrow Agent's services in acting as Escrow Agent; provided,
however, that if there is any dispute relating to the Second
Mortgages or its disposition, Mortgagee and Mortgagor shall be
jointly and severally obligated to reimburse Escrow Agent for all
of Escrow Agent's costs and expenses in connection therewith,
including reasonable attorneys' fees (including the value of any
time expended by partners or employees of Escrow Agent) and to
indemnify Escrow Agent and hold Escrow Agent harmless against any
claim asserted against Escrow Agent or any liability, loss or
damage, including reasonable attorneys' fees, incurred in
connection therewith.
(f) In any dispute involving this Agreement
and/or the disposition of the Second Mortgages, Mortgagee
acknowledges that Escrow Agent may represent Mortgagor.
Section 3. Release of Second Mortgage. Upon the
receipt by Escrow Agent of (a) a certificate (the "Certificate")
purportedly signed by an officer of State Street Bank and Trust
Company as Trustee (the "Trustee") pursuant to the Trust and
Servicing Agreement (the "Trust and Servicing Agreement") of even
date herewith (a copy of which Certificate will be delivered by
Trustee to the Mortgagor simultaneously therewith) to the effect
that the Net Operating Income (as defined in the NY Mortgage) for
the Properties (as defined in the NY Mortgage) owned by Mortgagor
and subject to the lien of the mortgage on the date of
determination for the preceding four (4) calendar quarters
decreases by an amount greater than 25% of the aggregate Net
Operating Income of such Properties for the calendar year 1995,
and (b) a bank or certified check (the "Check") delivered by the
Mortgagor or Mortgagee payable to the appropriate recording
office in the aggregate amount of all mortgage recording taxes,
recording taxes, recording charges and other fees required to be
paid in order to record the Second Mortgages, Escrow Agent shall
release the Second Mortgage and said check to Mortgagee. The
Mortgagor shall so deliver the Check promptly after determination
that there has been such a decrease in Net Operating Income, and
in any event within five (5) Business Days (as defined in the
Second Mortgages) after delivery of a copy of the Certificate to
the Mortgagor. Upon the receipt by Escrow Agent of a statement
purportedly signed by Mortgagee and Mortgagor to the effect that
the obligations under the Loan Agreement have been satisfied in
full at any time prior to release of the Second Mortgages, Escrow
Agent shall mark the Second Mortgages "cancelled" and deliver
photocopies thereof to both Mortgagee and Mortgagor.
Section 4. Captions. The headings and captions in
this Agreement are for convenience only and shall not affect the
construction of this Agreement.
Section 5. Severability. If any provision of this
Agreement is determined to be invalid by any court of competent
jurisdiction or to be in violation of any applicable law, or if
the parties hereto agree that any such provision is invalid or in
violation of applicable law, the invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any other manner affect such
clause or provision in any other jurisdiction, or any other
clause or provision in this Agreement in any other jurisdiction.
Section 6. Further Assurances. (a) Mortgagee and
Mortgagor hereby agree to execute and deliver to Escrow Agent
such additional documents and instruments, or any modifications
to the Second Mortgages, as may be necessary or required to
consummate the transactions contemplated by the Loan Agreement.
(b) Mortgagee, Mortgagor and Escrow Agent hereby
agree to execute and deliver to one another such documents and
instruments, or any modifications to this Agreement, as may be
necessary or required to consummate the transactions contemplated
by this Agreement.
Section 7. Miscellaneous. (a) This Agreement may not
be altered, modified, terminated or discharged except by a
writing signed by the party against whom such alteration,
modification, termination or discharge is sought.
(b) This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the parties
hereto.
(c) This Agreement shall be construed in
accordance with the laws of the State of New York.
(d) Mortgagee and Mortgagor expressly agree that
the Second Mortgages shall not be deemed to have been delivered
to Mortgagee and shall be deemed to be null and void and of no
effect until the Second Mortgages are released from escrow in
accordance herewith.
(e) The parties hereto hereby acknowledge that
the rights of Mortgagee simultaneously herewith being assigned to
State Street Bank and Trust Company, as trustee under the Trust
and Servicing Agreement and who shall thereafter be deemed to be
"Mortgagee" for the purposes of this Agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the date and year first above
written.
MORTGAGEE:
KRT ORIGINATION CORP.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
MORTGAGOR:
KRT PROPERTY HOLDINGS, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
HILLCREST PLAZA LIMITED PARTNERSHIP
By: KR Hillcrest, Inc.
By: /s/ Robert Dennis
------------------------
Name: Robert Dennis
Title: Vice President
KR SUBURBAN, L.P.
By: KR Suburban, Inc.
By: /s/ Robert Dennis
------------------------
Name: Robert Dennis
Title: Vice President
FOX RUN, LIMITED PARTNERSHIP
By: KR Fox Run, Inc.
By: /s/ Robert Dennis
-------------------------
Name: Robert Dennis
Title: Vice President
KR MacARTHUR ASSOCIATES, L.P.
By: KR MacArthur, Inc.
By: /s/ Robert Dennis
------------------------
Name: Robert Dennis
Title: Vice President
KR BEST ASSOCIATES, L.P.
By: KR Best Associates, Inc.
By: /s/ Robert Dennis
------------------------
Name: Robert Dennis
Title: Vice President
KR 69TH STREET, L.P.
By: KR 69th Street, Inc.
By: /s/ Robert Dennis
------------------------
Name: Robert Dennis
Title: Vice President
KR TRUST ONE, INC.
By: /s/ Robert Dennis
--------------------------
Name: Robert Dennis
Title: Vice President
KR MANCHESTER, INC.
By: /s/ Robert Dennis
----------------------------
Name: Robert Dennis
Title: Vice President
KR STREET ASSOCIATES, L.P.
By: KR Street, Inc.
By: /s/ Robert Dennis
----------------------
Name: Robert Dennis
Title: Vice President
KR ORANGE, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR COLLEGETOWN, INC.
By: /s/ Robert Dennis
----------------------
Name: Robert Dennis
Title: Vice President
KR HILLCREST MALL, INC.
By: /s/ Robert Dennis
---------------------
Name: Robert Dennis
Title: Vice President
KR PILGRIM, L.P.
By: KR Pilgrim, Inc.
By: /s/ Robert Dennis
------------------------
Name: Robert Dennis
Title: Vice President
ROBINSON SILVERMAN PEARCE
ARONSOHN & BERMAN, LLP
Escrow Agent
By: /s/ Jonathan S. Margolis
--------------------------
Jonathan S. Margolis, Partner
SCHEDULE I
Grantor Properties
Grantor Property
------- ---------
1. KRT Property Holdings, Inc. ("KRT") The Mall at Cross County
2. KRT Bethlehem Square
3. KRT Whitehall Square
4. Fox Run, Limited Partnership Fox Run
5. KRT Bristol Commerce Park
6. KRT Groton Square
7. KR Suburban, L.P. Suburban Plaza
8. KRT Park Hills Plaza
9. KRT Barn Plaza
10. KRT Highridge Plaza
11. KR Trust One, Inc. Anneslie
12. KR Best Associates, L.P. Best Plaza
13. KR Collegetown, Inc. Collegetown
14. KR Hillcrest Mall, Inc. Hillcrest Mall
15. KRT Bensalem Square
16. KR Street Associates, L.P. Street Road
17. KR Pilgrim, L.P. Pilgrim Gardens
18. Hillcrest Plaza Limited Partnership Hillcrest Plaza
19. KRT North Ridge
20. KR Manchester, Inc. Manchester Kmart
21. KR 69th Street, L.P. 69th Street Plaza
22. KR MacArthur Associates, L.P. MacArthur Road
23. KRT Village Square
24. KRT Milford
25. KRT A&P Mamaroneck
26. KR Orange, Inc. Orange
27. KRT Port Washington
<TABLE> <S> <C>
<ARTICLE> 5
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> 12-MOS
<CASH> 5,301,000
<SECURITIES> 0
<RECEIVABLES> 10,906,000
<ALLOWANCES> 1,245,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,729,000
<PP&E> 370,491,000
<DEPRECIATION> 35,287,000
<TOTAL-ASSETS> 359,157,000
<CURRENT-LIABILITIES> 8,418,000
<BONDS> 212,590,000
<COMMON> 128,823,000
0
8,190,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 359,157,000
<SALES> 0
<TOTAL-REVENUES> 55,180,000
<CGS> 0
<TOTAL-COSTS> 30,271,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,069,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 11,115,000
<CHANGES> 0
<NET-INCOME> (3,275,000)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> (.32)
</TABLE>
