<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: June 30, 1999
Commission File No. 1-11530
Taubman Centers, Inc.
______________________________________________________
(Exact name of registrant as specified in its charter)
Michigan 38-2033632
______________________________ ________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 East Long Lake Road, Suite 300, P.O. Box 200, Bloomfield Hills,
____________________________________________________________________
Michigan 48303-0200
____________________________________________________________________
(Address of principal executive offices) (Zip Code)
(248) 258-6800
____________________________________________________________________
(Registrant's telephone number, including area code)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
___ ___
As of August 9, 1999, there were outstanding 53,277,693 shares of the
Company's common stock, par value $0.01 per share.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements.
The following consolidated financial statements of Taubman Centers, Inc. (the
Company) are provided pursuant to the requirements of this item.
Consolidated Balance Sheet as of June 30, 1999 and December 31, 1998...........2
Consolidated Statement of Operations for the three months ended
June 30, 1999 and 1998....................................................3
Consolidated Statement of Operations for the six months ended
June 30, 1999 and 1998....................................................4
Consolidated Statement of Cash Flows for the six months ended
June 30, 1999 and 1998....................................................5
Notes to Consolidated Financial Statements.....................................6
-1-
<PAGE>
TAUBMAN CENTERS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
June 30 December 31
------- -----------
1999 1998
------- -----------
Assets:
Properties, net $1,365,396 $1,308,642
Investment in Unconsolidated Joint Ventures 99,997 98,350
Cash and cash equivalents 15,706 19,045
Accounts and notes receivable, less allowance
for doubtful accounts of $1,192 and $333 in
1999 and 1998 27,137 20,595
Accounts receivable from related parties 4,352 7,092
Deferred charges and other assets 41,943 27,139
---------- ----------
$1,554,531 $1,480,863
========== ==========
Liabilities:
Mortgage notes payable $ 911,937 $ 243,352
Unsecured notes payable 20,415 531,946
Accounts payable and accrued liabilities 105,996 171,669
Dividends payable 12,787 12,719
---------- ----------
$1,051,135 $ 959,686
Commitments and Contingencies (Note 5)
Minority Interests (Note 1)
Shareowners' Equity:
Series A Cumulative Redeemable Preferred
Stock, $0.01 par value, 50,000,000
shares authorized, $200 million liquidation
preference, 8,000,000 shares issued and
outstanding at June 30, 1999 and December
31, 1998 $ 80 $ 80
Series B Non-Participating Convertible Preferred
Stock, $0.001 par and liquidation value,
40,000,000 shares authorized and 31,399,913
shares issued and outstanding at June 30, 1999
and December 31, 1998 31 28
Common Stock, $0.01 par value, 250,000,000 shares
authorized, 53,277,693 and 52,995,904 issued
and outstanding at June 30, 1999 and December
31, 1998 533 530
Additional paid-in capital 701,006 697,965
Dividends in excess of net income (198,254) (177,426)
---------- ----------
$ 503,396 $ 521,177
---------- ----------
$1,554,531 $1,480,863
========== ==========
See notes to consolidated financial statements.
-2-
<PAGE>
TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share data)
Three Months Ended June 30
--------------------------
1999 1998
---- ----
Income:
Minimum rents $ 35,285 $ 25,682
Percentage rents 1,793 845
Expense recoveries 21,392 14,768
Revenues from management, leasing and
development services 5,943 2,000
Other 5,193 2,737
Revenues - transferred centers (Note 1) 46,071
-------- --------
$ 69,606 $ 92,103
-------- --------
Operating Expenses:
Recoverable expenses $ 18,957 $ 13,260
Other operating 11,043 7,872
Management, leasing and development services 4,464 1,248
General and administrative 4,421 7,323
Expenses other than interest, depreciation and
amortization - transferred centers (Note 1) 15,353
Interest expense 13,823 21,949
Depreciation and amortization (including $7.6
million in 1998 relating to the transferred
centers) 12,889 15,530
-------- --------
$ 65,597 $ 82,535
-------- --------
Income before equity in net income of Unconsolidated
Joint Ventures, extraordinary items, and minority
interest $ 4,009 $ 9,568
Equity in net income of Unconsolidated Joint Ventures 10,111 10,946
-------- --------
Income before extraordinary items and minority interest $ 14,120 $ 20,514
Extraordinary items (Note 3) (301)
Minority interest:
Minority share of income (4,390) (11,468)
Distributions in excess of earnings (3,118)
-------- --------
Net income $ 6,311 $ 9,046
Series A preferred dividends (4,150) (4,150)
-------- --------
Net income available to common shareowners $ 2,161 $ 4,896
======== ========
Basic and diluted earnings per common share:
Income before extraordinary items $ .04 $ .09
======== ========
Net income $ .04 $ .09
======== ========
Cash dividends declared per common share $ .24 $ .235
======== ========
Weighted average number of common shares
outstanding 53,192,213 52,240,765
========== ==========
See notes to consolidated financial statements.
-3-
<PAGE>
TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share data)
Six Months Ended June 30
------------------------
1999 1998
---- ----
Income:
Minimum rents $ 68,299 $ 51,035
Percentage rents 2,778 1,800
Expense recoveries 38,977 28,413
Revenues from management, leasing and
development services 11,676 3,777
Other 8,307 6,177
Revenues - transferred centers (Note 1) 88,103
-------- --------
$130,037 $179,305
-------- --------
Operating Expenses:
Recoverable expenses $ 34,426 $ 25,491
Other operating 19,248 13,843
Management, leasing and development services 8,855 2,281
General and administrative 9,149 14,149
Expenses other than interest, depreciation and
amortization - transferred centers (Note 1) 29,453
Interest expense 24,688 44,586
Depreciation and amortization (including $14.8
million in 1998 relating to the transferred
centers) 25,092 30,577
-------- --------
$121,458 $160,380
-------- --------
Income before equity in income before extraordinary
item of Unconsolidated Joint Ventures,
extraordinary items, and minority interest $ 8,579 $ 18,925
Equity in income before extraordinary item of
Unconsolidated Joint Ventures 19,734 22,676
-------- --------
Income before extraordinary items and minority interest $ 28,313 $ 41,601
Extraordinary items (Notes 2 and 3) (301) (957)
Minority interest:
Minority share of income (8,927) (22,698)
Distributions in excess of earnings (6,088)
-------- --------
Net income $ 12,997 $ 17,946
Series A preferred dividends (8,300) (8,300)
-------- --------
Net income available to common shareowners $ 4,697 $ 9,646
======== ========
Basic earnings per common share:
Income before extraordinary items $ .09 $ .19
======== ========
Net income $ .09 $ .19
======== ========
Diluted earnings per common share:
Income before extraordinary items $ .09 $ .19
======== ========
Net income $ .09 $ .18
======== ========
Cash dividends declared per common share $ .48 $ .47
======== ========
Weighted average number of common shares outstanding 53,104,922 51,512,514
========== ==========
See notes to consolidated financial statements.
-4-
<PAGE>
TAUBMAN CENTERS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Six Months Ended June 30
------------------------
1999 1998
---- ----
Cash Flows from Operating Activities:
Income before extraordinary items and minority
interest $ 28,313 $ 41,601
Adjustments to reconcile income before
extraordinary items and minority interest
to net cash provided by operating activities:
Depreciation and amortization 25,092 30,577
Provision for losses on accounts receivable 1,508 817
Amortization of deferred financing costs 2,726 1,422
Other 167 415
Gains on sales of land (850)
Increase (decrease) in cash attributable to
changes in assets and liabilities:
Receivables, deferred charges and other assets (8,670) (743)
Accounts payable and other liabilities (11,119) 4,799
--------- ---------
Net Cash Provided By Operating Activities $ 37,167 $ 78,888
--------- ---------
Cash Flows from Investing Activities:
Additions to properties $(119,684) $(116,349)
Proceeds from sales of land 692
Purchase of interest in Fashionmall.com, Inc.
(Note 7) (7,417)
Contributions to Unconsolidated Joint Ventures (8,812) (18,839)
Distributions from Unconsolidated Joint Ventures
in excess of income before extraordinary
item 2,865 47,636
--------- ----------
Net Cash Used In Investing Activities $(132,356) $ (87,552)
--------- ----------
Cash Flows from Financing Activities:
Debt proceeds $ 671,355 $ 178,594
Debt payments (514,301) (49,568)
Debt issuance costs (9,742)
Redemption of partnership units (77,698)
GMPT Exchange (9,737)
Distributions to minority interest (15,015) (38,937)
Issuance of stock 3,047 26,308
Cash dividends to common shareowners (25,457) (23,873)
Cash dividends to Series A preferred shareowners (8,300) (8,300)
--------- ----------
Net Cash Provided By Financing Activities $ 91,850 $ 6,526
--------- ----------
Net Decrease In Cash $ (3,339) $ (2,138)
Cash and Cash Equivalents at Beginning of Period 19,045 8,965
Effect of consolidating TRG in connection with the
GMPT Exchange (TRG's cash balance at Beginning
of Period) (Note 1) 3,250
--------- ----------
Cash and Cash Equivalents at End of Period $ 15,706 $ 10,077
========= ==========
Interest on mortgage notes and other loans paid during the six months ended
June 30, 1999 and 1998, net of amounts capitalized of $7,313 and $7,456, was
$21,737 and $41,918, respectively.
See notes to consolidated financial statements.
-5-
<PAGE>
TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six months ended June 30, 1999
Note 1 - Interim Financial Statements
Taubman Centers, Inc. (the Company or TCO), a real estate investment trust, or
REIT, is the managing general partner of The Taubman Realty Group Limited
Partnership (the Operating Partnership or TRG). The Operating Partnership is an
operating subsidiary that engages in the ownership, management, leasing,
acquisition, development, and expansion of regional retail shopping centers and
interests therein. The Operating Partnership's portfolio as of June 30, 1999
includes 17 urban and suburban shopping centers in seven states. Three
additional centers are under construction in Florida and Texas.
On September 30, 1998, the Company obtained a majority and controlling
interest in the Operating Partnership as a result of a transaction in which the
Operating Partnership transferred interests in 10 shopping centers, together
with $990 million of its debt, for all of the partnership units owned by two
General Motors pension trusts (GMPT), representing approximately 37% of the
Operating Partnership's equity (the GMPT Exchange).
The consolidated financial statements of the Company include all accounts of
the Company, the Operating Partnership and its consolidated subsidiaries; all
intercompany balances have been eliminated. Investments in entities not
unilaterally controlled by ownership or contractual obligation (Unconsolidated
Joint Ventures) are accounted for under the equity method.
The Company's ownership in the Operating Partnership at June 30, 1999
consisted of a 62.9% managing general partnership interest (53,277,693 of the
84,677,606 units of partnership interest outstanding), as well as a preferred
equity interest. Net income and distributions are allocable first to the
preferred equity interest, and the remaining amounts to the general and limited
partners in the Operating Partnership in accordance with their percentage
ownership. The Company's average ownership percentage in the Operating
Partnership for the three months ended June 30, 1999 and 1998 was 62.9% and
39.1%, respectively. The Company's average ownership percentage in the Operating
Partnership for the six months ended June 30, 1999 and 1998 was 62.8% and 38.7%,
respectively.
Because the net equity of the Operating Partnership is less than zero, the
ownership interest of the Operating Partnership's noncontrolling partners (the
Minority Interest) is presented as a zero balance in the balance sheet as of
June 30, 1999 and December 31, 1998, and subsequent to the GMPT Exchange, the
income allocated to the Minority Interest is equal to the Minority Interest's
share of distributions. The Operating Partnership's net equity is less than zero
because of accumulated distributions in excess of net income and not as a result
of operating losses. Distributions to partners are usually greater than net
income because net income includes non-cash charges for depreciation and
amortization.
The unaudited interim financial statements should be read in conjunction with
the audited financial statements and related notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998. In the opinion
of management, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial statements for the interim
periods have been made. The results of interim periods are not necessarily
indicative of the results for a full year.
-6-
<PAGE>
TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 2 - Investments in Unconsolidated Joint Ventures
Following are the Company's investments in various real estate
Unconsolidated Joint Ventures which own regional retail shopping centers. The
Operating Partnership is generally the managing general partner of these
Unconsolidated Joint Ventures. The Operating Partnership's interest in each
Unconsolidated Joint Venture is as follows:
Ownership
as of
Unconsolidated Joint Venture Shopping Center June 30, 1999
---------------------------- --------------- -------------
Arizona Mills, L.L.C. Arizona Mills 37%
Fairfax Company of Virginia L.L.C. Fair Oaks 50
Lakeside Mall Limited
Partnership Lakeside 50
Rich-Taubman Associates Stamford Town Center 50
Taubman-Cherry Creek
Limited Partnership Cherry Creek 50
Twelve Oaks Mall Limited
Partnership Twelve Oaks Mall 50
West Farms Associates Westfarms 79
Woodland Woodland 50
The Company's carrying value of its Investment in Unconsolidated Joint
Ventures differs from its share of the deficiency in assets reported in the
combined balance sheet of the Unconsolidated Joint Ventures due to (i) the
Company's cost of its investment in excess of the historical net book values of
the Unconsolidated Joint Ventures and (ii) intercompany profits on sales of
services that are capitalized by the Unconsolidated Joint Ventures. The Company
reduces its investment in Unconsolidated Joint Ventures to eliminate the
intercompany profits and amortizes such amounts over the useful lives of the
related assets. The Company's additional basis allocated to depreciable assets
is recognized on a straight-line basis over 40 years.
During the three months ended March 31, 1998, an Unconsolidated Joint Venture
incurred an extraordinary charge related to the extinguishment of debt,
primarily consisting of a prepayment premium.
Combined balance sheet and results of operations information are presented
below (in thousands) for all Unconsolidated Joint Ventures, followed by the
Operating Partnership's beneficial interest in the combined information.
Beneficial interest is calculated based on the Operating Partnership's ownership
interest in each of the Unconsolidated Joint Ventures. The accounts of Woodfield
Associates, formerly a 50% Unconsolidated Joint Venture transferred to GMPT
(Note 1), are included in these results for the three and six months ended June
30, 1998.
-7-
<PAGE>
TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
June 30 December 31
------- -----------
1999 1998
---- ----
Assets:
Properties, net $ 579,466 $ 572,149
Other assets 72,926 73,046
---------- --------
$ 652,392 $ 645,195
========== =========
Liabilities and partners' accumulated deficiency
in assets:
Debt $ 825,888 $ 825,927
Capital lease obligations 4,509 5,187
Other liabilities 37,753 47,622
TRG's accumulated deficiency in assets (94,666) (103,545)
Unconsolidated Joint Venture Partners'
accumulated deficiency in assets (121,092) (129,996)
---------- --------
$ 652,392 $ 645,195
========== =========
TRG's accumulated deficiency in assets (above) $ (94,666) $(103,545)
Elimination of intercompany profit (5,414) (4,846)
TCO's additional basis 200,077 206,741
---------- ---------
Investment in Unconsolidated Joint Ventures $ 99,997 $ 98,350
========== =========
Three Months Ended Six Months Ended
June 30 June 30
------------------- -----------------
1999 1998 1999 1998
---- ---- ---- ----
Revenues $ 62,358 $ 72,337 $122,652 $144,458
-------- -------- -------- --------
Recoverable and other
operating expenses $ 21,656 $ 26,279 $ 42,594 $ 51,247
Interest expense 15,155 18,224 30,447 35,357
Depreciation and amortization 7,669 8,215 14,930 16,660
-------- -------- -------- --------
Total operating costs $ 44,480 $ 52,718 $ 87,971 $103,264
-------- -------- -------- --------
Income before extraordinary
item $ 17,878 $ 19,619 $ 34,681 $ 41,194
Extraordinary item (1,913)
-------- -------- -------- --------
Net income $ 17,878 $ 19,619 $ 34,681 $ 39,281
======== ======== ======== ========
Net income allocable to TRG $ 9,957 $ 10,308 $ 19,497 $ 20,481
Extraordinary item allocable
to TRG 957
Realized intercompany profit 1,336 1,620 2,601 3,093
Depreciation of TCO's additional
basis (1,182) (982) (2,364) (1,855)
------- -------- -------- --------
Equity in income before
extraordinary item of
Unconsolidated Joint
Ventures $ 10,111 $ 10,946 $ 19,734 $ 22,676
======== ========= ======== ========
Beneficial interest in
Unconsolidated Joint
Ventures' operations:
Revenues less recoverable
and other operating
expenses $ 23,452 $ 25,814 $ 46,303 $ 51,866
Interest expense (8,189) (9,706) (16,432) (18,911)
Depreciation and
amortization (5,152) (5,162) (10,137) (10,279)
-------- --------- -------- --------
Income before
extraordinary item $ 10,111 $ 10,946 $ 19,734 $ 22,676
========= ========= ======== ========
-8-
<PAGE>
TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 3 - Beneficial Interest in Debt and Interest Expense
During the three months ended June 30, 1999, the following debt transactions
occurred:
A ten-year financing of $270 million with an all-in rate of approximately
6.9% secured by The Mall at Short Hills was completed in April 1999. Also, a
ten-year financing of $80 million with an all-in rate of approximately 7.8% on
Biltmore Fashion Park was completed in June 1999. The Company used the net
proceeds from these financings to pay off the balance on its $340 million bridge
loan.
A three-year $170 million loan, secured by Great Lakes Crossing, was
finalized. The loan agreement provides for an option to extend the maturity date
one year. The loan bears interest at one month LIBOR plus 1.50%. Proceeds from
the loan were used to repay the balance of the existing construction facility.
Payment of principal and interest are guaranteed by the Operating Partnership.
The loan agreement provides for a reduction of the interest rate and the amount
guaranteed as certain center performance and valuation criteria are met. In
addition, the Company finalized an amendment to the MacArthur Center
construction facility. The total availability under the facility is $120 million
with interest at one month LIBOR plus 1.35%. The balance at June 30, 1999 was
$108.2 million.
In June 1999, the Operating Partnership's $200 million line of credit facility
was securitized, with interests in Fairlane, LaCumbre, Paseo Nuevo, and Regency
Square serving as collateral. The rate on the line was decreased to LIBOR plus
0.90%.
During the three months ended June 30, 1999, extraordinary charges to income
of $0.3 million were recognized in connection with the extinguishment of debt.
The Operating Partnership's beneficial interest in the debt, capital lease
obligations, capitalized interest, and interest expense of its consolidated
subsidiaries and its Unconsolidated Joint Ventures is summarized in the
following table. The Operating Partnership's beneficial interest excludes debt
and interest relating to the 30% minority interest in MacArthur Center, and
subsequent to the refinancing relating to Great Lakes Crossing, the 20% minority
interest in that center.
<TABLE>
<CAPTION>
Unconsolidated Share
Joint of Unconsolidated Consolidated Beneficial
Ventures Joint Ventures Subsidiaries Interest
---------- --------------- ------------ ----------
<S> <C> <C> <C> <C>
Debt as of:
June 30, 1999 $ 825,888 $ 439,088 $ 932,352 $ 1,304,988
December 31, 1998 825,927 439,271 775,298 1,186,192
Capital lease obligations:
June 30, 1999 $ 4,509 $ 2,481 -- $ 2,481
December 31, 1998 5,187 2,858 -- 2,858
Capitalized interest:
Six months ended June 30, 1999 $ 713 $ 356 $ 7,313 $ 7,669
Six months ended June 30, 1998 1,130 558 7,456 7,345
Interest expense
(Net of capitalized interest):
Six months ended June 30, 1999 $ 30,447 $ 16,432 $ 24,688 $ 39,935
Six months ended June 30, 1998 35,357 18,911 44,586 63,497
</TABLE>
-9-
<PAGE>
TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4 - Incentive Option Plan
The Operating Partnership may issue options for up to 7.7 million units of
partnership interest under its incentive option plan for employees of its
subsidiary partnership, The Taubman Company Limited Partnership (the Manager).
The per unit exercise price of an option is the fair market value of a unit on
the date of grant. Incentive options generally vest in one-third increments on
the third, fourth, and fifth anniversaries (and expire on the tenth anniversary)
of the grant date. Options for 281,789 units and 103,368 units were exercised
during the first six months of 1999 and 1998 at weighted average exercise prices
of $10.80 and $11.11, respectively. During the six months ended June 30, 1999,
the Operating Partnership granted options for 1.0 million units at $12.25 per
unit and canceled options for 87,568 units at a weighted average exercise price
of $12.95 per unit. As of June 30, 1999, there were vested options for 6.1
million units with a weighted exercise price of $11.24 per unit and outstanding
options (including unvested options) for a total of 7.4 million units with a
weighted average exercise price of $11.36 per unit.
Note 5 - Commitments and Contingencies
At the time of the Company's initial public offering (IPO) and acquisition of
its partnership interest in the Operating Partnership, the Company entered into
an agreement (the Cash Tender Agreement) with A. Alfred Taubman, who is the
Company's chairman and owns an interest in the Operating Partnership, whereby he
has the annual right to tender to the Company units of partnership interest in
the Operating Partnership (provided that the aggregate value is at least $50
million) and cause the Company to purchase the tendered interests at a purchase
price based on a market valuation of the Company on the trading date immediately
preceding the date of the tender. The Company will have the option to pay for
these interests from available cash, borrowed funds or from the proceeds of an
offering of the Company's common stock. Generally, the Company expects to
finance these purchases through the sale of new shares of its stock. The
tendering partner will bear all market risk if the market price at closing is
less than the purchase price and will bear the costs of sale. Any proceeds of
the offering in excess of the purchase price will be for the sole benefit of the
Company. At A. Alfred Taubman's election, his family and Robert C. Larson and
his family may participate in tenders.
Based on a market value at June 30, 1999 of $13.1875 per common share, the
aggregate value of interests in the Operating Partnership that may be tendered
under the Cash Tender Agreement was approximately $318.2 million. The purchase
of these interests at June 30, 1999 would have resulted in the Company owning an
additional 28% interest in the Operating Partnership.
The Company has made a continuing, irrevocable offer to all present holders
(other than certain excluded holders, including A. Alfred Taubman), assignees of
all present holders, those future holders of partnership interests in the
Operating Partnership as the Company may, in its sole discretion, agree to
include in the continuing offer, and all existing and future optionees under the
Operating Partnership's incentive option plan to exchange shares of common stock
for partnership interests in the Operating Partnership (the Continuing Offer).
Under the Continuing Offer agreement, one unit of partnership interest is
exchangeable for one share of the Company's common stock.
Shares of common stock that were acquired by GMPT and the AT&T Master Pension
Trust in connection with the IPO may be sold through a registered offering.
Pursuant to a registration rights agreement with the Company, the owners of each
of these shares have the annual right to cause the Company to register and
publicly sell their shares of common stock (provided that the shares have an
aggregate value of at least $50 million and subject to certain other
restrictions). All expenses of such a registration are to be borne by the
Company, other than the underwriting discounts or selling commissions, which
will be borne by the exercising party.
-10-
<PAGE>
TAUBMAN CENTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 6 - Earnings Per Share
Basic earnings per common share are calculated by dividing earnings available
to common shareowners by the average number of common shares outstanding during
each period. For diluted earnings per common share, the Company's ownership
interest in the Operating Partnership (and therefore earnings) are adjusted
assuming the exercise of all options for units of partnership interest under the
Operating Partnership's incentive option plan having exercise prices less than
the average market value of the units using the treasury stock method. Options
for 0.2 million units of partnership interest with a weighted average price of
$13.89 per unit were excluded from the computation of diluted earnings per
share, for each of the three months ended June 30, 1999 and 1998, because the
exercise prices were greater than the average market price for the period
calculated. Options for 0.3 million units of partnership interest with a
weighted average price of $13.74 per unit were excluded from the computation of
diluted earnings per share, for each of the six months ended June 30, 1999 and
1998, because the exercise prices were greater than the average market price for
the period calculated.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
----------------- ---------------
1999 1998 1999 1998
---- ---- ---- ----
(in thousands, except share data)
<S> <C> <C> <C> <C>
Income before extraordinary items allocable
to common shareowners (Numerator):
Net income available to common
shareowners $ 2,161 $ 4,896 $ 4,697 $ 9,646
Common shareowners' share of extraordinary
items 189 189 366
---------- ---------- ---------- ----------
Basic income before extraordinary items $ 2,350 $ 4,896 $ 4,886 $ 10,012
Effect of dilutive options (97) (67) (167) (120)
---------- ---------- ---------- ----------
Diluted income before extraordinary items $ 2,253 $ 4,829 $ 4,719 $ 9,892
========== ========== ========== ==========
Shares (Denominator) - basic and diluted 53,192,213 52,240,765 53,104,922 51,512,514
========== ========== ========== ==========
Income before extraordinary items
per common share - basic and diluted $ .04 $ .09 $ .09 $ .19
========== ========== ========== ==========
</TABLE>
Note 7 - Investment in Fashionmall.com, Inc.
In June 1999, the Company made an investment in an e-commerce company that
markets and sells fashion apparel, footwear, and beauty products over the
Internet. The Company obtained 824,084 convertible preferred shares of
Fashionmall.com, Inc., a 9.9 percent interest in the company, for $7.4 million.
In connection with this investment, the Company received an option, exercisable
during a 60-day period commencing March 2000, to purchase an additional 924,898
shares of common stock at the initial public offering price of $13.00 per share.
The investment in Fashionmall.com, Inc. is accounted for under the cost method.
-11-
<PAGE>
Note 8 - Subsequent Events
In July 1999, the Company entered into a partnership agreement with Swerdlow
Real Estate Group to jointly develop Dolphin Mall, a 1.4 million square foot
value regional center located in Miami, Florida. The agreement is subject to
completion of financing arrangements for construction of the project. The
Company expects that the necessary financing will be in place by the end of the
third quarter.
In August 1999, the 50% owned Unconsolidated Joint Venture that owns Cherry
Creek completed a $177 million, secured financing. The financing has an all-in
rate of 7.8% and matures in August 2006. The proceeds were used to repay the
existing $130 million mortgage and transaction costs. The remaining net proceeds
of approximately $45.2 million were distributed to the Operating Partnership,
which had contributed all of the funding for the 1998 expansion of Cherry Creek.
The Operating Partnership used the distribution to pay down its line of credit.
-12-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
The following discussion should be read in conjunction with the accompanying
Financial Statements of Taubman Centers, Inc. and the Notes thereto.
General Background and Performance Measurement
The Company owns a managing general partner's interest in The Taubman Realty
Group Limited Partnership (the Operating Partnership), through which the Company
conducts all of its operations. The Operating Partnership owns, develops,
acquires and operates regional shopping centers nationally. The Consolidated
Businesses consist of shopping centers that are controlled by ownership or
contractual agreement, development projects for future regional shopping centers
and The Taubman Company Limited Partnership (the Manager). Shopping centers that
are not controlled and that are owned through joint ventures with third parties
(Unconsolidated Joint Ventures) are accounted for under the equity method.
The operations of the shopping centers are best understood by measuring their
performance as a whole, without regard to the Company's ownership interest.
Consequently, in addition to the discussion of the operations of the
Consolidated Businesses, the operations of the Unconsolidated Joint Ventures are
presented and discussed as a whole.
On September 30, 1998, the Operating Partnership exchanged interests in 10
shopping centers (nine Consolidated Businesses and one Unconsolidated Joint
Venture) and a share of the Operating Partnership's debt for all of the
partnership units owned by two General Motors pension trusts (GMPT) (the GMPT
Exchange). See Results of Operations -- GMPT Exchange and Related Transactions
below. Performance statistics presented below exclude these ten centers
(transferred centers). Because the Company's portfolio changed significantly as
a result of the GMPT Exchange, the results of operations of the transferred
centers have been separately classified within the Consolidated Businesses and
Unconsolidated Joint Ventures for purposes of analyzing and understanding the
historical results of the current portfolio.
Since the Company's interest in the Operating Partnership has been its sole
material asset throughout all periods presented, references in the following
discussion to "the Company" include the Operating Partnership, except where
intercompany transactions are discussed or as otherwise noted, even though the
Operating Partnership did not become a consolidated subsidiary until September
30, 1998.
Seasonality
The regional shopping center industry is seasonal in nature, with mall tenant
sales highest in the fourth quarter due to the Christmas season, and with
lesser, though still significant, sales fluctuations associated with the Easter
holiday and back-to-school events. While minimum rents and recoveries are
generally not subject to seasonal factors, most leases are scheduled to expire
in the first quarter, and the majority of new stores open in the second half of
the year in anticipation of the Christmas selling season. Accordingly, revenues
and occupancy levels are generally highest in the fourth quarter.
-13-
<PAGE>
The following table summarizes certain quarterly operating data for 1998 and the
first and second quarters of 1999:
<TABLE>
<CAPTION>
1st 2nd 3rd 4th 1st 2nd
Quarter Quarter Quarter Quarter Total Quarter Quarter
1998 1998 1998 1998 1998 1999 1999
--------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Mall tenant sales $467,698 $505,732 $507,098 $852,198 $2,332,726 $533,730 $598,956
Revenues 98,960 99,993 106,250 126,424 431,627 117,901 129,235
Occupancy:
Average (1) 88.7% 89.3% 89.5% 90.0% 89.4% 88.5% 88.1%
Ending 88.6% 89.3% 89.6% 90.2% 90.2% 87.5% 88.0%
Leased Space 91.7% 92.0% 92.4% 92.3% 92.3% 91.3% 91.7%
(1)Average occupancy for centers that were owned and open for all of 1998 and
1999 was 89.8% and 88.7% for the first quarter of 1999 and 1998, respectively
and 89.3% for both the second quarters of 1999 and 1998.
</TABLE>
Because the seasonality of sales contrasts with the generally fixed nature of
minimum rents and recoveries, mall tenant occupancy costs (the sum of minimum
rents, percentage rents and expense recoveries) relative to sales are
considerably higher in the first three quarters than they are in the fourth
quarter. The following table summarizes occupancy costs, excluding utilities,
for mall tenants as a percentage of sales for 1998 and the first and second
quarters of 1999:
1st 2nd 3rd 4th 1st 2nd
Quarter Quarter Quarter Quarter Total Quarter Quarter
1998 1998 1998 1998 1998 1999 1999
-----------------------------------------------------------
Minimum rents 11.6% 10.9% 11.0% 7.2% 9.7% 11.8% 10.8%
Percentage rents 0.2 0.2 0.3 0.4 0.3 0.2 0.4
Expense recoveries 4.5 4.5 4.7 3.4 4.1 4.7 4.9
---- ---- ---- ---- ---- ---- ----
Mall tenant occupancy
costs 16.3% 15.6% 16.0% 11.0% 14.1% 16.7% 16.1%
==== ==== ==== ==== ==== ==== ====
Rental Rates
Average base rent per square foot for all mall tenants at the 10 centers
owned and open for at least five years was $43.55 for the twelve months ended
June 30, 1999, compared to $41.74 for the twelve months ended June 30, 1998. As
leases have expired in the shopping centers, the Company has generally been able
to rent the available space, either to the existing tenant or a new tenant, at
rental rates that are higher than those of the expired leases. In a period of
increasing sales, rents on new leases will tend to rise as tenants' expectations
of future growth become more optimistic. In periods of slower growth or
declining sales, rents on new leases will grow more slowly or will decline for
the opposite reason. However, center revenues nevertheless increase as older
leases roll over or are terminated early and replaced with new leases negotiated
at current rental rates that are usually higher than the average rates for
existing leases.
-14-
<PAGE>
Results of Operations
The following represent significant debt and equity transactions, new center
openings and expansions which affect the operating results described under
Comparison of Three Months Ended June 30, 1999 to the Three Months Ended June
30, 1998 and Comparison of Six Months Ended June 30, 1999 to the Six Months
Ended June 30, 1998.
GMPT Exchange and Related Transactions
On September 30, 1998, the Operating Partnership exchanged interests in 10
shopping centers (nine wholly owned and one Unconsolidated Joint Venture),
together with $990 million of debt, for all of GMPT's partnership units
(approximately 50 million units with a fair value of $675 million), providing
the Company with a majority and controlling interest in the Operating
Partnership. The Operating Partnership continues to manage the centers exchanged
under management agreements with GMPT that expire December 31, 1999. The
management agreements are cancelable with 90 days notice. Certain costs of
providing services under these agreements, including administrative and certain
other fixed costs, would not necessarily be eliminated if the contracts were to
be canceled or not renewed. The actual reduction of costs would be affected by
whether all or a portion of the contracts were canceled or not renewed, timing
of the cancellation or non-renewal, and actual or anticipated changes in the
Operating Partnership's owned or managed portfolio.
In anticipation of the GMPT Exchange, the Operating Partnership used the $1.2
billion proceeds from two bridge loans bearing interest at one-month LIBOR plus
1.30% to extinguish $1.1 billion of debt, including substantially all of the
Operating Partnership's public unsecured debt, its outstanding commercial paper,
and borrowings on its existing line of credit. The remaining proceeds were used
primarily to pay prepayment premiums and transaction costs. GMPT's share of debt
received in the exchange included the $902 million balance on the first bridge
loan, $86 million representing 50% of the debt on the Joint Venture owned
shopping center, and $1.6 million of assessment bond obligations.
Concurrently with the GMPT Exchange, the Operating Partnership committed to a
restructuring of its operations. The Company expects to reduce its annual
general and administrative expense to approximately $19 million in 1999. This is
a forward looking statement, and certain significant factors could cause the
actual reductions in general and administrative expense to differ materially,
including but not limited to: 1) actual payroll reductions achieved; 2) actual
results of negotiations; 3) use of outside consultants; and 4) changes in the
Company's owned or managed portfolio.
Other Debt Transactions
In April 1999, a ten year financing of $270 million with an all-in rate of
approximately 6.9% secured by The Mall at Short Hills was completed. Also, in
June 1999, a ten year financing of $80 million with an all-in rate of
approximately 7.8% secured by Biltmore Fashion Park was completed. The net
proceeds of these financings were used to pay off the entire $340 million
balance on the bridge loan.
In April 1999, a three year $170 million loan secured by Great Lakes Crossing
was finalized, with proceeds used to repay the balance of the existing
construction facility. The loan bears interest at one month LIBOR plus 1.50%. In
addition, the Company finalized an amendment to the MacArthur Center
construction facility, with total availability under the facility being $120
million at an interest rate of one-month LIBOR plus 1.35%.
In June 1999, the Operating Partnership's $200 million line of credit facility
was securitized, with interests in Fairlane, LaCumbre, Paseo Nuevo, and Regency
Square serving as collateral. The rate on the line was decreased to LIBOR plus
0.90%.
-15-
<PAGE>
Openings and Expansions
In March 1999, MacArthur Center, a 70% owned enclosed super-regional mall,
opened in Norfolk, Virginia. In November 1998, Great Lakes Crossing, an 80%
owned enclosed value super-regional mall, opened in Auburn Hills, Michigan. Both
Great Lakes Crossing and MacArthur Center are owned by joint ventures in which
the Operating Partnership has a controlling interest, and consequently the
results of these centers are consolidated in the Company's financial statements.
The Company is entitled to a preferred return on its equity contributions to
these centers. The contributed capital was used to fund construction costs. The
income effect of the cumulative preferred return net of the interest on the
Operating Partnership's associated borrowings was approximately $0.5 million and
$1.0 million for the three and six months ended June 30, 1999, respectively, and
is expected to total approximately $2 million in 1999. The net effect in 2000 of
any recurring preference is expected to be minimal. At Cherry Creek, a 132,000
square foot expansion opened in stages throughout the fall of 1998.
Presentation of Operating Results
In order to facilitate the analysis of the ongoing business for periods prior
to the GMPT Exchange, the following tables contain the combined operating
results of the Company and the Operating Partnership and also present separately
the revenues and expenses, other than interest, depreciation and amortization,
of the transferred centers. The following discussions include analysis of the
Consolidated Businesses and the Unconsolidated Joint Ventures, with the interest
of the noncontrolling partners of the Operating Partnership (the Minority
Interest) deducted to arrive at the results allocable to the Company's
shareowners. Because the Operating Partnership's net equity is less than zero,
for periods subsequent to the GMPT Exchange the income allocated to the Minority
Interest is equal to the Minority Interest's share of distributions. The
Operating Partnership's net equity is less than zero due to accumulated
distributions in excess of net income and not as a result of operating losses.
Distributions to partners are usually greater than net income because net income
includes non-cash charges for depreciation and amortization. The Company's
average ownership percentage of the Operating Partnership was 62.88% and 62.84%
for the three and six months ended June 30, 1999 and 39.08% and 38.69% for the
three and six months ended June 30, 1998.
-16-
<PAGE>
Comparison of the Three Months Ended June 30, 1999 to the Three Months Ended
June 30, 1998
The following table sets forth operating results for the three months ended
June 30, 1999 and June 30, 1998, showing the results of the Consolidated
Businesses and Unconsolidated Joint Ventures:
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999 Three Months Ended June 30, 1998
------------------------------------------ -----------------------------------------------
UNCONSOLIDATED UNCONSOLIDATED
CONSOLIDATED JOINT CONSOLIDATED JOINT
BUSINESSES(1) VENTURES(2) TOTAL BUSINESSES(1) VENTURES(2) TOTAL
------------------------------------------ -----------------------------------------------
(in millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Minimum rents 33.5 38.7 72.2 23.8 36.0 59.8
Percentage rents 1.6 1.2 2.8 0.7 0.7 1.5
Expense recoveries 20.7 20.8 41.5 14.0 19.0 33.0
Management, leasing and development 6.0 6.0 2.0 2.0
Other 5.1 1.6 6.7 2.7 1.0 3.7
Revenues - transferred centers 46.1 15.6 61.6
---- ---- ---- ---- ---- ----
Total revenues 66.9 62.3 129.2 89.3 72.3 161.6
OPERATING COSTS:
Recoverable expenses 17.9 16.9 34.8 12.3 15.5 27.7
Other operating 9.2 3.4 12.6 5.8 3.5 9.3
Management, leasing and development 4.5 4.5 1.2 1.2
Expenses other than interest,
Depreciation and amortization
- transferred centers 15.4 5.9 21.2
General and administrative 4.4 4.4 7.3 7.3
Interest expense 13.8 15.2 29.1 21.9 18.3 40.2
Depreciation and amortization 12.8 7.5 20.3 15.4 8.0 23.4
---- ---- ----- ---- ---- -----
Total operating costs 62.7 43.0 105.7 79.4 51.0 130.4
Net results of Memorial City (1) (0.2) (0.2) (0.3) (0.3)
---- ---- ---- ---- ---- ----
4.0 19.3 23.3 9.6 21.3 30.9
==== ==== ==== ====
Equity in net income of
Unconsolidated Joint Ventures 10.1 10.9
---- ----
Income before extraordinary
items and minority interest 14.1 20.5
Extraordinary items (0.3)
Minority interest (7.5) (11.5)
---- -----
Net income 6.3 9.0
Series A prefered dividends (4.2) (4.2)
---- -----
Net income available to common
shareowners 2.2 4.9
==== =====
SUPPLEMENTAL INFORMATION (3):
EBITDA contribution 29.7 23.5 53.1 47.2 25.8 73.0
Beneficial Interest Expense (12.8) (8.2) (20.9) (21.9) (9.7) (31.7)
Non-real estate depreciation (0.6) (0.6) (0.5) (0.5)
Series A preferred dividends (4.2) (4.2) (4.2) (4.2)
---- ---- ---- ---- ---- ----
Funds from Operations contribution 12.1 15.3 27.4 20.6 16.1 36.7
==== ==== ==== ==== ==== ====
</TABLE>
(1) The results of operations of Memorial City are presented net in this
table. The Company expects that Memorial City's net operating income
will approximate the ground rent payable under the lease for the
immediate future.
(2) With the exception of the Supplemental Information, amounts represent
100% of the Unconsolidated Joint Ventures. Amounts are net of
intercompany profits.
(3) EBITDA represents earnings before interest and depreciation and
amortization. Funds from Operations is defined and discussed in
Liquidity and Capital Resources.
(4) Amounts in the table may not add due to rounding.
(5) Certain 1998 amounts have been reclassified to conform to 1999
classifications.
-17-
<PAGE>
Consolidated Businesses
- -----------------------
Total revenues for the three months ended June 30, 1999 were $66.9 million,
a $23.7 million, or 54.9%, increase over the comparable period in 1998,
excluding revenues of the transferred centers. Minimum rents increased $9.7
million of which $8.6 million was caused by the opening of MacArthur Center and
Great Lakes Crossing. Minimum rents also increased due to tenant rollovers.
Percentage rent increased because of an increase in tenant sales. Expense
recoveries increased primarily due to the new centers. Revenues from management,
leasing, and development services increased primarily due to the management
agreements with GMPT. Other revenue increased primarily due to increases in
lease cancellation and garage revenues, and a gain on the sale of peripheral
land.
Total operating costs were $62.7 million, a $1.3 million, or 2.0% decrease
over the comparable period in 1998, excluding expenses other than depreciation,
amortization and interest of the transferred centers. Recoverable expenses
increased primarily due to Great Lakes Crossing and MacArthur Center. Other
operating expense increased because of the writeoff of pre-development costs
related to certain projects and the new centers. Costs of management, leasing
and development services increased primarily due to the management agreements
with GMPT. General and administrative expense decreased $2.9 million primarily
due to decreases in payroll costs, travel and professional fees. Interest
expense decreased primarily due to the assumption of debt by GMPT as part of the
GMPT Exchange, partially offset by an increase in debt used to finance Great
Lakes Crossing and MacArthur Center and a decrease in capitalized interest
related to these centers. Depreciation and amortization expense decreased due to
the exclusion of the transferred centers in 1999, offset by an increase due to
the new centers.
Unconsolidated Joint Ventures
- -----------------------------
Total revenues for the three months ended June 30, 1999 were $62.3 million, a
$5.6 million, or 9.9%, increase from the comparable period of 1998, excluding
revenues of the transferred center. Minimum rents increased due to the expansion
at Cherry Creek and to tenant rollovers. Expense recoveries also increased
because of the Cherry Creek expansion. Other revenue increased by $0.6 million
primarily due to an increase in lease cancellation revenue.
Total operating costs decreased by $8.0 million (of which $5.9 million
represented the expenses other than interest, depreciation, and amortization of
the transferred center), to $43.0 million for the three months ended June 30,
1999. Recoverable expenses increased primarily due to the Cherry Creek
expansion. Interest expense decreased due to the assumption of debt by GMPT as
part of the GMPT Exchange.
As a result of the foregoing, net income of the Unconsolidated Joint Ventures
decreased by $2.0 million, or 9.4%, to $19.3 million. The Company's equity in
net income of the Unconsolidated Joint Ventures was $10.1 million, a 7.3%
decrease from the comparable period in 1998.
Net Income
- ----------
As a result of the foregoing, the Company's income before extraordinary items
and minority interest decreased $6.4 million, or 31.2%, to $14.1 million for the
three months ended June 30, 1999. The Company recognized a $0.3 extraordinary
loss related to the extinguishment of debt. The minority interest in the
Company's results decreased to $7.5 million, from $11.5 million in 1998,
primarily reflecting the Company's increased ownership in the Operating
Partnership due to the GMPT Exchange. After payment of $4.2 million in Series A
preferred dividends, net income available to common shareowners for 1999 was
$2.2 million compared to $4.9 million in 1998.
-18-
<PAGE>
Comparison of the Six Months Ended June 30, 1999 to the Six Months Ended June
30, 1998
The following table sets forth operating results for the six months ended June
30, 1999 and June 30, 1998, showing the results of the Consolidated Businesses
and Unconsolidated Joint Ventures:
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999 Six Months Ended June 30, 1998
--------------------------------------- ---------------------------------------
UNCONSOLIDATED UNCONSOLIDATED
CONSOLIDATED JOINT CONSOLIDATED JOINT
BUSINESSES(1) VENTURES(2) TOTAL BUSINESSES(1) VENTURES(2) TOTAL
--------------------------------------- ---------------------------------------
(in millions of dollars)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Minimum rents 64.5 77.3 141.8 47.2 71.6 118.8
Percentage rents 2.6 1.8 4.3 1.6 1.4 3.0
Expense recoveries 37.5 40.3 77.8 27.0 36.7 63.7
Management, leasing and development 11.7 11.7 3.8 3.8
Other 8.1 3.3 11.4 5.9 3.8 9.7
Revenues - transferred centers 88.1 31.0 119.1
----- ----- ----- ----- ----- -----
Total revenues 124.5 122.6 247.1 173.6 144.4 318.1
OPERATING COSTS:
Recoverable expenses 32.3 33.1 65.4 23.5 30.2 53.8
Other operating 15.3 6.6 21.9 9.8 6.5 16.3
Management, leasing and development 8.9 8.9 2.3 2.3
Expenses other than interest,
Depreciation and amortization
- transferred centers 29.5 11.7 41.1
General and administrative 9.1 9.1 14.1 14.1
Interest expense 24.7 30.6 55.3 44.6 35.5 80.1
Depreciation and amortization 24.9 14.7 39.6 30.4 16.0 46.4
----- ---- ----- ----- ---- -----
Total operating costs 115.3 85.0 200.3 154.2 99.9 254.1
Net results of Memorial City (1) (0.6) (0.6) (0.5) (0.5)
----- ---- ----- ----- ---- -----
8.6 37.6 46.2 18.9 44.6 63.5
==== ===== ==== =====
Equity in income before extraordinary
item of Unconsolidated Joint Ventures 19.7 22.7
----- ----
Income before extraordinary items
and minority interest 28.3 41.6
Extraordinary items (0.3) (1.0)
Minority interest (15.0) (22.7)
----- -----
Net income 13.0 17.9
Series A preferred dividends (8.3) (8.3)
----- ----
Net income available to common
shareowners 4.7 9.6
===== ====
SUPPLEMENTAL INFORMATION (3):
EBITDA contribution 57.2 46.3 103.5 94.4 51.9 146.3
Beneficial Interest Expense (23.5) (16.4) (39.9) (44.6) (18.9) (63.5)
Non-real estate depreciation (1.2) (1.2) (1.0) (1.0)
Series A preferred dividends (8.3) (8.3) (8.3) (8.3)
----- ----- ----- ----- ----- -----
Funds from Operations contribution 24.1 29.9 54.0 40.5 33.0 73.4
===== ===== ===== ===== ===== =====
</TABLE>
(1) The results of operations of Memorial City are presented net in this
table. The Company expects that Memorial City's net operating income
will approximate the ground rent payable under the lease for the
immediate future.
(2) With the exception of the Supplemental Information, amounts represent
100% of the Unconsolidated Joint Ventures. Amounts are net of
intercompany profits.
(3) EBITDA represents earnings before interest and depreciation and
amortization. Funds from Operations is defined and discussed in
Liquidity and Capital Resources.
(4) Amounts in the table may not add due to rounding.
(5) Certain 1998 amounts have been reclassified to conform to 1999
classifications.
-19-
<PAGE>
Consolidated Businesses
- -----------------------
Total revenues for the six months ended June 30, 1999 were $124.5 million, a
$39.0 million, or 45.6%, increase over the comparable period in 1998, excluding
revenues of the transferred centers. Minimum rents increased $17.3 million of
which $14.5 million was caused by the opening of MacArthur Center and Great
Lakes Crossing. Minimum rents also increased due to tenant rollovers. Percentage
rent increased because of an increase in tenant sales. Expense recoveries
increased primarily due to the new centers. Revenues from management, leasing,
and development services increased primarily due to the management agreements
with GMPT. Other revenue increased primarily due to increases in lease
cancellation and garage revenues, and gains on sales of peripheral land.
Total operating costs were $115.3 million, a $9.4 million, or 7.5% decrease
over the comparable period in 1998, excluding expenses other than depreciation,
amortization and interest of the transferred centers. Recoverable expenses
increased primarily due to Great Lakes Crossing and MacArthur Center. Other
operating expense increased due to an increase in the charge to operations for
costs of unsuccessful and potentially unsuccessful pre-development activities,
the new centers, and bad debt expense. Costs of management, leasing and
development services increased primarily due to the management agreements with
GMPT. General and administrative expense decreased $5.0 million primarily due to
decreases in payroll, travel and professional costs. Interest expense decreased
primarily due to the assumption of debt by GMPT as part of the GMPT Exchange,
partially offset by an increase in debt used to finance Great Lakes Crossing and
MacArthur Center and a decrease in capitalized interest related to these
centers. Depreciation and amortization expenses decreased due to the exclusion
of the transferred centers in 1999, partially offset by an increase due to the
new centers.
Unconsolidated Joint Ventures
- -----------------------------
Total revenues for the six months ended June 30, 1999 were $122.6 million, a
$9.2 million, or 8.1%, increase from the comparable period of 1998, excluding
revenues of the transferred center. Minimum rents increased due to the expansion
at Cherry Creek and tenant rollovers. Expense recoveries also increased because
of the Cherry Creek expansion. Other revenue decreased by $0.5 million primarily
due to a decrease in gains on sales of peripheral land.
Total operating costs decreased by $14.9 million (of which $11.7 million
represented the expenses other than interest, depreciation, and amortization of
the transferred center), to $85.0 million for the six months ended June 30,
1999. Recoverable expenses increased primarily due to the Cherry Creek
expansion. Interest expense decreased due to the assumption of debt by GMPT as
part of the GMPT Exchange.
As a result of the foregoing, income before extraordinary item of the
Unconsolidated Joint Ventures decreased by $7.0 million, or 15.7%, to $37.6
million. The Company's equity in income before extraordinary item of the
Unconsolidated Joint Ventures was $19.7 million, a 13.2% decrease from the
comparable period in 1998.
Net Income
- ----------
As a result of the foregoing, the Company's income before extraordinary items
and minority interest decreased $13.3 million, or 32.0%, to $28.3 million for
the six months ended June 30, 1999. The Company recognized a $0.3 extraordinary
loss related to the extinguishment of debt. The minority interest in the
Company's results decreased to $15.0 million, from $22.7 million in 1998,
primarily reflecting the Company's increased ownership in the Operating
Partnership due to the GMPT Exchange. After payment of $8.3 million in Series A
preferred dividends, net income available to common shareowners for 1999 was
$4.7 million compared to $9.6 million in 1998.
-20-
<PAGE>
Liquidity and Capital Resources
On September 30, 1998, the Company obtained a majority and controlling
interest in the Operating Partnership as a result of the GMPT Exchange (See
Results of Operations - GMPT Exchange and Related Transactions above). As of
that date the Company consolidated the accounts of the Operating Partnership in
the Company's financial statements. Prior to that date the Company accounted for
its investment in the Operating Partnership under the equity method. In the
following discussion, references to beneficial interest represent the Operating
Partnership's share of the results of its consolidated and unconsolidated
businesses. The Company does not have and has not had any parent company
indebtedness; all debt discussed represents obligations of the Operating
Partnership or its subsidiaries and joint ventures.
The Company believes that its net cash provided by operating activities,
distributions from its joint ventures, the unutilized portion of its credit
facilities, and its ability to access the capital markets, assures adequate
liquidity to conduct its operations in accordance with its dividend and
financing policies.
As of June 30, 1999, the Company had a consolidated cash balance of $15.7
million. Additionally, the Company has a secured $200 million line of credit.
The line had $135 million of borrowings as of June 30, 1999 and expires in
September 2001. The Company also has available an unsecured bank line of credit
of up to $40 million. The line had $18.2 million of borrowings as of June 30,
1999 and expires August 31, 1999. The Company is currently finalizing an
agreement to extend the maturity to August 2000.
In August 1999, the 50% owned Unconsolidated Joint Venture that owns Cherry
Creek completed a $177 million, secured financing. The financing has an all-in
rate of 7.8% and matures in August 2006. The proceeds were used to repay the
existing $130 million mortgage and transaction costs. The remaining net proceeds
of approximately $45.2 million were distributed to the Operating Partnership,
which had contributed the funding for the 1998 expansion of Cherry Creek. The
Operating Partnership used the distribution to pay down its line of credit,
resulting in availability of approximately $120 million under the lines of
credit.
Debt
In April 1999, a ten-year financing of $270 million with an all-in rate of
approximately 6.9% secured by The Mall at Short Hills was completed. Also, a
ten-year financing of $80 million with an all-in rate of approximately 7.8%
secured by Biltmore Fashion Park was completed in June 1999. The net proceeds
from these financings were used to pay off the $340 million bridge loan that was
established in September of 1998 to facilitate the GMPT transaction.
In April 1999, a three-year $170 million loan secured by Great Lakes Crossing
was finalized. The loan agreement provides for an option to extend the maturity
date one year. The loan bears interest at one month LIBOR plus 1.50%. Proceeds
from the loan were used to repay the balance of the existing construction
facility. Payment of principal and interest are guaranteed by the Operating
Partnership. The loan agreement provides for a reduction of the interest rate
and the amount guaranteed as certain center performance and valuation criteria
are met. In addition, the Company finalized an amendment to the MacArthur Center
construction facility. The total availability under the facility is $120 million
with interest at one month LIBOR plus 1.35%. The balance at June 30, 1999 was
$108.2 million.
In June 1999, the Operating Partnership's $200 million line of credit facility
was securitized, with interests in Fairlane, LaCumbre, Paseo Nuevo, and Regency
Square serving as collateral. The rate on the line was decreased to LIBOR plus
0.90%.
Proceeds from additional borrowings provided funding of $137.8 million for the
first six months of 1999 compared to $204.9 million of borrowings and equity
issuances in the comparable period of 1998 (including $77.7 million for the
redemption of 6.1 million units of partnership interest in January 1998).
Additionally, the proceeds were used to fund capital expenditures for the
Consolidated Businesses and contributions to Unconsolidated Joint Ventures for
construction costs.
-21-
<PAGE>
At June 30, 1999, the Operating Partnership's debt and its beneficial
interest in the debt of its Consolidated and Unconsolidated Joint Ventures
totaled $1,305.0 million. As shown in the following table, $164.0 million of
this debt was floating rate debt that remained unhedged at June 30, 1999.
Interest rates shown do not include amortization of debt issuance costs and
interest rate hedging costs. These items are reported as interest expense in the
results of operations. In the aggregate, these costs added 0.38% to the
effective rate of interest on beneficial interest in debt at June 30, 1999.
Included in beneficial interest in debt is debt used to fund development and
expansion costs. Beneficial interest in assets on which interest is being
capitalized totaled $187.1 million as of June 30, 1999. Beneficial interest in
capitalized interest was $3.3 million and $7.7 million for the three and six
months ended June 30, 1999.
Beneficial Interest in Debt
------------------------------------------------
Amount Interest LIBOR Frequency LIBOR
(in millions Rate at Cap of Rate at
of dollars) 6/30/99 Rate Resets 6/30/99
------------- ------- ----- ------ -------
Total beneficial interest
in fixed rate debt $ 754.2 7.51%(1)
Floating rate debt hedged via
interest rate caps:
Through July 1999 65.0 5.68 7.00% Monthly 5.24 %
Through December 1999 200.0 6.15 (1) 7.00 Monthly 5.24
Through October 2001 25.0 5.44 8.55 Monthly 5.24
Through January 2002 53.4 6.36 (1) 9.50 Monthly 5.24
Through July 2002 43.4 6.32 6.50 Monthly 5.24
Other floating rate debt 164.0 6.15 (1)
-----
Total beneficial interest in
debt $1,305.0 6.91 (1)
========
(1)Denotes weighted average interest rate.
Certain loan agreements contain various restrictive covenants, including
limitations on net worth, minimum debt service and fixed charges coverage
ratios, a maximum payout ratio on distributions, and a minimum debt yield ratio,
the latter being the most restrictive. The Operating Partnership is in
compliance with all of such covenants.
Sensitivity Analysis
The Company has exposure to interest rate risk on its debt obligations and
interest rate instruments. Based on the Operating Partnership's beneficial
interest in debt and interest rates in effect at June 30, 1999, a one percent
increase or decrease in interest rates would decrease or increase annual
earnings and cash flows by approximately $4.8 million. Based on the Company's
consolidated debt and interest rates in effect at June 30, 1999, a one percent
increase or decrease in interest rates would decrease or increase the fair value
of debt by approximately $30 million.
Funds from Operations
A principal factor that the Company considers in determining dividends to
shareowners is Funds from Operations, which is defined as income before
extraordinary and unusual items, real estate depreciation and amortization, and
the allocation to the minority interest in the Operating Partnership, less
preferred dividends.
Funds from Operations does not represent cash flows from operations, as
defined by generally accepted accounting principles, and should not be
considered to be an alternative to net income as an indicator of operating
performance or to cash flows from operations as a measure of liquidity. However,
the National Association of Real Estate Investment Trusts suggests that Funds
from Operations is a useful supplemental measure of operating performance for
REITs.
-22-
<PAGE>
Reconciliation of Net Income to Funds from Operations
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
------------------ ------------------
(in millions of dollars)
Income before extraordinary items
and minority interest (1) 14.1 20.5
Depreciation and amortization (2) 12.9 15.5
Share of Unconsolidated Joint Ventures'
depreciation and amortization (3) 5.2 5.2
Other income/expenses, net 0.2
Non-real estate depreciation (0.6) (0.5)
Preferred dividends (4.2) (4.2)
---- ----
Funds from Operations 27.4 36.7
==== ====
Funds from Operations allocable to
the Company 17.2 14.2
==== ====
(1) Includes gains on peripheral land sales of $0.4 million for the three
months ended June 30, 1999. There were no land sales for the three months
ended June 30, 1998.
(2) Includes $0.5 million and $1.1 million of mall tenant allowance
amortization for the three months ended June 30, 1999 and June 30, 1998,
respectively.
(3) Includes $0.2 million and $0.9 million of mall tenant allowance
amortization for the three months ended June 30, 1999 and June 30, 1998,
respectively.
(4) Amounts in the tables may not add due to rounding.
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
----------------- ----------------
(in millions of dollars)
Income before extraordinary items and
minority interest (1) 28.3 41.6
Depreciation and amortization (2) 25.1 30.6
Share of Unconsolidated Joint Ventures'
depreciation and amortization (3) 10.1 10.3
Other income/expenses, net 0.3
Non-real estate depreciation (1.2) (1.0)
Preferred dividends (8.3) (8.3)
---- ----
Funds from Operations 54.0 73.4
==== ====
Funds from Operations allocable to
the Company 33.9 28.1
==== ====
(1) Includes gains on peripheral land sales of $0.9 million and $0.4 million
for the six months ended June 30, 1999 and June 30, 1998, respectively.
(2) Includes $1.0 million and $2.2 million of mall tenant allowance
amortization for the six months ended June 30, 1999 and June 30, 1998,
respectively.
(3) Includes $0.5 million and $1.2 million of mall tenant allowance
amortization for the six months ended June 30, 1999 and June 30, 1998,
respectively.
(4) Amounts in the table may not add due to rounding.
Dividends
The Company pays regular quarterly dividends to its common and Series A
preferred shareowners. Dividends to its common shareowners are at the discretion
of the Board of Directors and depend on the cash available to the Company, its
financial condition, capital and other requirements, and such other factors as
the Board of Directors deems relevant. Preferred dividends accrue regardless of
whether earnings, cash availability, or contractual obligations were to prohibit
the current payment of dividends.
-23-
<PAGE>
On June 3, 1999, the Company declared a quarterly dividend of $0.24 per common
share payable July 20, 1999 to shareowners of record on June 30, 1999. The Board
of Directors also declared a quarterly dividend of $0.51875 per share on the
Company's 8.3% Series A Preferred Stock for the quarterly dividend period ended
June 30, 1999, which was paid on June 30, 1999 to shareowners of record on June
15, 1999. The tax status of total 1999 common dividends declared and to be
declared, assuming continuation of a $0.24 per common share quarterly dividend,
is estimated to be approximately 50% return of capital, and approximately 50% of
ordinary income. The tax status of total 1999 dividends to be paid on Series A
Preferred Stock is estimated to be 100% ordinary income. These are
forward-looking statements and certain significant factors could cause the
actual results to differ materially, including: 1) the amount of dividends
declared; 2) changes in the Company's share of anticipated taxable income of the
Operating Partnership due to the actual results of the Operating Partnership; 3)
changes in the number of the Company's outstanding shares; 4) property
acquisitions or dispositions; 5) financing transactions, including refinancing
of existing debt; and 6) changes in the Internal Revenue Code or its
application.
The annual determination of the Company's common dividends is based on
anticipated Funds from Operations available after preferred dividends, as well
as financing considerations and other appropriate factors. Further, the Company
has decided that the growth in common dividends will be less than the growth in
Funds from Operations for the immediate future.
Any inability of the Operating Partnership or its Joint Ventures to obtain
financing as required to fund maturing debts, capital expenditures and changes
in working capital, including development activities and expansions, may require
the utilization of cash to satisfy such obligations, thereby possibly reducing
distributions to partners of the Operating Partnership and funds available to
the Company for the payment of dividends.
Capital Spending
Capital spending for routine maintenance of the shopping centers is generally
recovered from tenants. The following table summarizes planned capital spending,
which is not recovered from tenants and assuming no acquisitions during 1999:
<TABLE>
<CAPTION>
1999
------------------------------------------------------------------
Beneficial Interest in
Unconsolidated Consolidated Businesses
Consolidated Joint and Unconsolidated
Businesses Ventures (1) Joint Ventures (1) (2)
------------------------------------------------------------------
(in millions of dollars)
<S> <C> <C> <C>
Development, renovation, and
expansion 223.4 (3) 25.4 (4) 190.0
Mall tenant allowances 4.3 5.6 7.4
Pre-construction development and
other 21.5 4.0 23.5
----- ---- -----
Total 249.2 35.0 220.9
===== ==== =====
(1) Costs are net of intercompany profits.
(2) Includes the Operating Partnership's share of construction costs for MacArthur
Center (a 70% owned consolidated joint venture), The Mall at Wellington Green
(a 90% owned consolidated joint venture) and International Plaza (a 50.1%
owned consolidated joint venture).
(3) Includes costs related to MacArthur Center, The Shops at Willow Bend, The Mall
at Wellington Green, and International Plaza.
(4) Excludes costs related to Dolphin Mall.
</TABLE>
MacArthur Center, a new center in Norfolk, Virginia, opened in March 1999. The
930,000 square foot center is anchored by Nordstrom and Dillard's. This center
is owned by a joint venture in which the Operating Partnership has a 70%
controlling interest and cost approximately $157 million.
-24-
<PAGE>
International Plaza, a new 1.3 million square foot center under
construction in Tampa, Florida, will be anchored by Nordstrom, Lord & Taylor,
Dillard's and Neiman Marcus. This project is owned by a joint venture in which
the Operating Partnership has a controlling 50.1% interest. In 1999, the Company
held ground-breaking ceremonies for The Shops at Willow Bend, a new 1.5 million
square foot center in Plano, Texas. Anchors will be Neiman Marcus, Saks Fifth
Avenue, Lord & Taylor, Foley's and Dillard's. The Mall at Wellington Green, a
1.3 million square foot center under construction in West Palm Beach County,
Florida, will be anchored by Lord & Taylor, Burdine's, Dillard's and JCPenney.
The center will be owned by a joint venture in which the Operating Partnership
has a 90% controlling interest. All three of these centers are expected to open
in 2001.
In July 1999, the Company entered into a partnership agreement with Swerdlow
Real Estate Group to jointly develop Dolphin Mall, a 1.4 million square foot
value regional center located in Miami, Florida. The agreement is subject to
completion of financing arrangements for construction of the project. The
Company expects that the necessary financing will be in place by the end of the
third quarter.
The total cost of these four projects is anticipated to be approximately $1
billion. The Company's beneficial investment in the projects will be
approximately $650 million, as three of these projects are joint ventures. While
the Company intends to finance approximately 75 percent of each new center with
construction debt, the Company will have a greater responsibility for the
project equity (approximately $200 million). Approximately 50% of this amount
has been funded under the Company's lines of credit. Additional sources of
funding are additional borrowings under the Company's lines of credit, proceeds
from the refinancings of certain centers, contributions from a potential new
joint venture partner, or other equity offerings. With respect to the
construction loan financing, the Company expects that it will have three of the
projects committed by year-end.
New food courts are currently under construction at Lakeside and Fairlane
Town Center in the Detroit metropolitan area. Both are expected to open in the
fall of 1999. Additionally, a 30-screen theater will be added at Fairlane and is
anticipated to open in the spring of 2000. At Fair Oaks in the Washington, D.C.
area, Hecht's expansion will open in the fall of 1999, and a JCPenney expansion
and a newly constructed Macy's store will open in the fall of 2000. The
Operating Partnership's share of the cost of these projects is expected to be
approximately $35 million.
In 1996, the Operating Partnership entered into an agreement to lease
Memorial City Mall, a 1.4 million square foot shopping center located in
Houston, Texas. Memorial City is anchored by Sears, Foley's, Montgomery Ward and
Mervyn's. In November 1999, the Operating Partnership has the option to
terminate the lease by paying $2 million to the lessor. The Operating
Partnership is using this option period to evaluate the redevelopment
opportunities of the center. Under the terms of the lease, the Operating
Partnership has agreed to invest a minimum of $3 million during the three-year
option period. If the redevelopment proceeds, the Operating Partnership is
required to invest an additional $22 million in property expenditures not
recoverable from tenants during the first 10 years of the lease term.
The Operating Partnership and The Mills Corporation have formed an alliance to
develop value super-regional projects in major metropolitan markets. The
ten-year agreement calls for the two companies to jointly develop and own at
least seven of these centers, each representing approximately $200 million of
capital investment. A number of locations across the nation are targeted for
future initiatives.
The Operating Partnership anticipates that its share of costs for
development projects, excluding Dolphin Mall, scheduled to be completed in 2001
will be as much as $185 million in 2000. The Operating Partnership's estimates
of 1999 and 2000 capital spending include only projects approved by the
Company's Board of Directors and, consequently, estimates will change as new
projects are approved. Estimates regarding capital expenditures presented above
are forward-looking statements and certain significant factors could cause the
actual results to differ materially, including but not limited to: 1) actual
results of negotiations with anchors, tenants and contractors; 2) changes in the
scope and number of projects; 3) cost overruns; 4) timing of expenditures; 5)
financing considerations; and 6) actual time to complete projects.
-25-
<PAGE>
Year 2000 Matters
The approach of the calendar year 2000 (Year 2000) presents issues for many
financial, information, and operational systems that may not properly recognize
the Year 2000. The Company is implementing a plan to address the risks posed by
the Year 2000 issue covering affected application and infrastructure systems.
Affected systems include both informational (such as accounting and payroll) and
operational (such as elevators, security and lighting). The Company's plan also
addresses the effect of Year 2000 on third parties with which it conducts
business, including tenants, vendors, contractors, creditors, and others. The
Company has completed the assessment, inventory, planning and testing phases of
its plan and has determined that the majority of the Company's internal systems
and all of its mission critical systems are Year 2000 compliant. The Company has
requested information and has obtained commitments from tenants, vendors,
suppliers and business partners and has developed contingency plans to minimize
the impact on the Company in the event they do not meet their Year 2000
commitments. The Company's contingency plans include arrangements to have
personnel available at its home office and each of the centers to respond to any
operational needs as the year changes.
The Company performed a full system test during the first quarter of 1999 and
continues to remediate any remaining minor operational issues encountered with
application and infrastructure systems through repair and/or replacement. The
estimated costs of addressing this issue are not expected to be material to 1999
operations. The Company will also continue monitoring the progress of material
third parties' responses to the Year 2000 issue. The Company believes that its
most likely exposure will be the failure of third parties in comprehensively
addressing the issue. For example, failure of utility companies to meet their
commitments might result in temporary business interruption at centers. The
Company is continuing to develop contingency plans in response to such exposure,
as appropriate. Failure of third parties with which the Company conducts
business to successfully respond to the Year 2000 issue may have a material
adverse effect on the Company.
Cash Tender Agreement
A. Alfred Taubman has the annual right to tender to the Company units of
partnership interest in the Operating Partnership (provided that the aggregate
value is at least $50 million) and cause the Company to purchase the tendered
interests at a purchase price based on a market valuation of the Company on the
trading date immediately preceding the date of the tender (the Cash Tender
Agreement). At A. Alfred Taubman's election, his family, and Robert C. Larson
and his family may participate in tenders. The Company will have the option to
pay for these interests from available cash, borrowed funds, or from the
proceeds of an offering of the Company's common stock. Generally, the Company
expects to finance these purchases through the sale of new shares of its stock.
The tendering partner will bear all market risk if the market price at closing
is less than the purchase price and will bear the costs of sale. Any proceeds of
the offering in excess of the purchase price will be for the sole benefit of the
Company.
Based on a market value at June 30, 1999 of $13.1875 per common share, the
aggregate value of interests in the Operating Partnership that may be tendered
under the Cash Tender Agreement was approximately $318.2 million. The purchase
of these interests at June 30, 1999 would have resulted in the Company owning an
additional 28% interest in the Operating Partnership.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
requires companies to record derivatives on the balance sheet as assets and
liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivatives and whether it qualifies for hedge accounting. This statement is
not expected to have a material impact on the Company's consolidated financial
statements. This statement is effective for fiscal years beginning after June
15, 2000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The information required by this item is included in this report at Item 2
under the caption "Liquidity and Capital Resources - Sensitivity Analysis".
-26-
<PAGE>
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
On May 12, 1999, the Company held its annual meeting of
shareholders. The matters on which shareholders voted were: the
election of one director to serve a one year term, the election of
three directors to serve a three year term and the ratification of the
Board's selection of Deloitte & Touche LLP as the Company's
independent auditors for the year ended December 31, 1999. Robert C.
Larson, Lisa A. Payne, A. Alfred Taubman, and Robert S. Taubman were
re-elected at the meeting, and the five remaining incumbent directors
continued to hold office after the meeting. The shareholders ratified
the selection of the independent auditors. The results of the voting
are shown below:
ELECTION OF DIRECTORS
NOMINEES VOTES FOR VOTES WITHHELD
-------- --------- --------------
Robert C. Larson 70,341,993 31,661
Lisa A. Payne 70,245,414 128,240
A. Alfred Taubman 70,335,771 37,883
Robert S. Taubman 70,340,232 33,122
RATIFICATION OF AUDITORS
69,898,881 Votes were cast for ratification;
155,725 Votes were cast against ratification; and
319,048 Votes abstained (including broker non-votes).
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
4 (a)-- Loan Agreement dated as of March 29, 1999 among
Taubman Auburn Hills Associates Limited Partnership, as
Borrower, Fleet National Bank , as a Bank, PNC Bank,
National Association, as a Bank, the other Banks signatory
hereto, each as a Bank, and PNC Bank, National
Association, as Administrative Agent.
4 (b)-- Mortgage, Assignment of Leases and Rents and Security
Agreement from Taubman Auburn Hills Associates Limited
Partnership, a Delaware limited partnership ("Mortgagor")
to PNC Bank, National Association, as Administrative Agent
for the Banks, dated as of March 29, 1999.
-27-
<PAGE>
4 (c)-- First Amendment to Construction Loan Agreement dated as
of April 23, 1999 among Taubman MacArthur Associates
Limited Partnership, a Delaware limited partnership, as
Borrower, Bayerische Hypo - Und Vereinsbank AG, a New
York Branch (successor in interest to Bayerische
Hypotheken - Und Weschel - Bank Aktiengesellschaft, New
York Branch), the New York branch of a German banking
corporation, as administrative agent.
4 (d)-- Mortgage, Security Agreement and Fixture Filing by Short
Hills Associates, as Mortgagor, to Metropolitan Life
Insurance Company, as Mortgagee, dated April 15, 1999.
4 (e)-- Assignment of Leases, Short Hills Associates (Assignor)
and Metropolitan Life Insurance Company (Assignee) dated
as of April 15, 1999.
4 (f)-- Secured Revolving Credit Agreement dated as of June 24,
1999 among The Taubman Realty Group Limited Partnership,
as Borrower, The Banks Signatory Hereto, each as a bank
and UBS AG, Stamford Branch, as Administrative Agent.
10 -- Consolidated Agreement: Notice of Retirement and Release
and Covenant Not to Compete, between Robert C. Larson and
The Taubman Company Limited Partnership.
12 -- Statement Re: Computation of Taubman Centers, Inc. Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
27 -- Financial Data Schedule.
b) Current Reports on Form 8-K.
None
-28-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly
authorized.
TAUBMAN CENTERS, INC.
Date: August 11, 1999 By: /s/ Lisa A. Payne
----------------------------
Lisa A. Payne
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number
-------
4 (a) -- Loan Agreement dated as of March 29, 1999 among Taubman
Auburn Hills Associates Limited Partnership, as Borrower,
Fleet National Association, as a Bank, PNC Bank,
National Association, as a Bank, the other Banks
signatory hereto, each as a Bank, and PNC Bank, National
Association, as Administrative Agent.
4 (b) -- Mortgage, Assignment of Leases and Rents and Security
Agreement from Taubman Auburn Hills Associates Limited
Partnership, a Delaware limited partnership ("Mortgagor")
to PNC Bank, National Association, as Administrative
Agent for the Banks, dated as of March 29, 1999.
4 (c) -- First Amendment to Construction Loan Agreement dated as
of April 23, 1999 among Taubman MacArthur Associates
Limited Partnership, a Delaware limited partnership, as
Borrower, Bayerische Hypo - Und Vereinsbank AG, a New
York Branch (successor in interest to Bayerische
Hypotheken - Und Weschel - Bank Aktiengesellschaft, New
York Branch), the New York branch of a German banking
corporation, as administrative agent.
4 (d) -- Mortgage, Security Agreement and Fixture Filing by Short
Hills Associates, as Mortgagor, to Metropolitan Life
Insurance Company, as Mortgagee, dated April 15, 1999.
4 (e) -- Assignment of Leases, Short Hills Associates (Assignor)
and Metropolitan Life Insurance Company (Assignee) dated
as of April 15, 1999.
4 (f) -- Secured Revolving Credit Agreement dated as of June 24,
1999 among The Taubman Realty Group Limited Partnership,
as Borrower, The Banks Signatory Hereto, each as a bank
and UBS AG, Stamford Branch, as Administrative Agent.
10 -- Consolidated Agreement: Notice of Retirement and Release
and Covenant Not to Compete, between Robert C. Larson and
The Taubman Company Limited Partnership.
12 -- Statement Re: Computation of Taubman Centers, Inc. Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.
27 -- Financial Data Schedule.
<PAGE>
- --------------------------------------------------------------------------------
LOAN AGREEMENT
dated as of March 29, 1999
among
TAUBMAN AUBURN HILLS ASSOCIATES LIMITED PARTNERSHIP,
as Borrower,
FLEET NATIONAL BANK,
as a Bank,
PNC BANK, NATIONAL ASSOCIATION,
as a Bank,
the other Banks signatory hereto, each as a Bank,
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS; ETC...................................................1
Section 1.01 Definitions...............................................1
Section 1.02 Accounting Terms.........................................11
Section 1.03 Computation of Time Periods..............................11
Section 1.04 Rules of Construction....................................11
ARTICLE II THE LOANS........................................................12
Section 2.01 The Loans; Advances Generally............................12
Section 2.02 Nature of Banks' Obligations.............................12
Section 2.03 Purpose..................................................12
Section 2.04 Procedures for Advance...................................12
Section 2.05 Extension of Maturity Date...............................13
Section 2.06 Interest Periods; Renewals...............................13
Section 2.07 Interest.................................................14
Section 2.08 Fees.....................................................14
Section 2.09 Notes....................................................14
Section 2.10 Prepayments..............................................15
Section 2.11 Method of Payment........................................15
Section 2.12 Elections, Conversions or Continuation of Loans..........15
Section 2.13 Minimum Amounts..........................................16
Section 2.14 Certain Notices Regarding Elections, Conversions and
Continuations of Loans...................................16
Section 2.15 Late Payment Premium.....................................16
Section 2.16 Amortization Payments....................................16
Section 2.17 Interest Rate Reduction..................................17
Section 2.18 Mandatory Prepayment.....................................17
ARTICLE III YIELD PROTECTION; ILLEGALITY; ETC...............................17
Section 3.01 Additional Costs.........................................17
Section 3.02 Limitation on Types of Loans.............................19
Section 3.03 Illegality...............................................19
Section 3.04 Treatment of Affected Loans..............................19
Section 3.05 Certain Compensation.....................................20
Section 3.06 Capital Adequacy.........................................20
Section 3.07 Substitution of Banks....................................21
ARTICLE IV CONDITIONS PRECEDENT.............................................22
Section 4.01 Conditions Precedent to Initial Advance..................22
Section 4.02 Conditions Precedent to Advances After the Initial
Advance..................................................26
Section 4.03 Deemed Representations...................................27
ARTICLE V REPRESENTATIONS AND WARRANTIES....................................27
Section 5.01 Due Organization.........................................27
Section 5.02 Power and Authority; No Conflicts; Compliance With
Laws.....................................................27
i
<PAGE>
Section 5.03 Legally Enforceable Agreements...........................28
Section 5.04 Litigation...............................................28
Section 5.05 Good Title to Properties.................................28
Section 5.06 Taxes....................................................28
Section 5.07 ERISA....................................................28
Section 5.08 No Default on Outstanding Judgments or Orders............29
Section 5.09 No Defaults on Other Agreements..........................29
Section 5.10 Government Regulation....................................29
Section 5.11 Environmental Protection.................................29
Section 5.12 Solvency.................................................29
Section 5.13 Financial Statements.....................................30
Section 5.14 Valid Existence of Affiliates............................30
Section 5.15 Insurance................................................30
Section 5.16 Separate Tax and Zoning Lot..............................30
Section 5.17 Zoning and other Laws; Covenants and Restrictions........30
Section 5.18 Utilities Available......................................30
Section 5.19 Creation of Liens........................................30
Section 5.20 Roads....................................................31
Section 5.21 REAs and Leases..........................................31
Section 5.22 Accuracy of Information; Full Disclosure.................31
ARTICLE VI AFFIRMATIVE COVENANTS............................................31
Section 6.01 Maintenance of Existence.................................31
Section 6.02 Maintenance of Records...................................31
Section 6.03 Maintenance of Insurance.................................31
Section 6.04 Compliance with Laws; Payment of Taxes...................32
Section 6.05 Inspection and Cooperation...............................32
Section 6.06 Compliance With Environmental Laws.......................32
Section 6.07 Completion of Improvements; Payment of Costs.............32
Section 6.08 Maintenance of Properties................................33
Section 6.09 Reporting and Miscellaneous Document Requirements........33
Section 6.10 REAs; Leases.............................................35
Section 6.11 Compliance with Covenants, Restrictions and Easements....36
Section 6.12 Management, Leasing and Service Contracts................36
Section 6.13 Correction of Defects....................................36
Section 6.14 Additional Equity........................................36
Section 6.15 Additional Indebtedness..................................37
ARTICLE VII PROPERTY COVENANTS..............................................38
Section 7.01 Required Debt Service Coverage...........................38
ARTICLE VIII EVENTS OF DEFAULT..............................................39
Section 8.01 Events of Default........................................39
Section 8.02 Remedies.................................................42
ARTICLE IX ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS......................42
Section 9.01 Appointment, Powers and Immunities of Administrative
Agent....................................................42
Section 9.02 Reliance by Administrative Agent.........................42
Section 9.03 Defaults.................................................43
Section 9.04 Rights of Administrative Agent as a Bank.................43
Section 9.05 Sharing of Costs; Indemnification of Administrative
Agent....................................................43
ii
<PAGE>
Section 9.06 Non-Reliance on Administrative Agent and Other Banks.....44
Section 9.07 Failure of Administrative Agent to Act...................44
Section 9.08 Resignation or Removal of Administrative Agent...........44
Section 9.09 Amendments Concerning Agency Function....................45
Section 9.10 Liability of Administrative Agent........................45
Section 9.11 Transfer of Agency Function..............................45
Section 9.12 Non-Receipt of Funds by Administrative Agent.............45
Section 9.13 Withholding Taxes........................................46
Section 9.14 Minimum Commitment by Fleet and PNC......................46
Section 9.15 Pro Rata Treatment.......................................46
Section 9.16 Sharing of Payments Among Banks..........................46
Section 9.17 Possession of Documents..................................47
ARTICLE X NATURE OF OBLIGATIONS.............................................47
Section 10.01 Absolute and Unconditional Obligations...................47
Section 10.02 Non-Recourse.............................................47
ARTICLE XI MISCELLANEOUS....................................................49
Section 11.01 Binding Effect of Request for Advance....................49
Section 11.02 Amendments and Waivers...................................49
Section 11.03 Usury....................................................50
Section 11.04 Expenses; Indemnification................................50
Section 11.05 Assignment; Participation................................50
Section 11.06 Documentation Satisfactory...............................52
Section 11.07 Notices..................................................52
Section 11.08 Year 2000................................................52
Section 11.09 Partial Releases.........................................53
Section 11.10 Table of Contents; Headings..............................53
Section 11.11 Severability.............................................53
Section 11.12 Counterparts.............................................53
Section 11.13 Integration..............................................53
Section 11.14 GOVERNING LAW............................................53
Section 11.15 Waivers..................................................54
Section 11.16 JURISDICTION; IMMUNITIES.................................54
EXHIBIT A - Authorization Letter
EXHIBIT B - Solvency Certificate
EXHIBIT C - Note
EXHIBIT D - List of Affiliates
EXHIBIT E - Assignment and Assumption Agreement
EXHIBIT F - Loan Commitments
EXHIBIT G - Notice of Assignment of Lease
EXHIBIT H - Pending Disbursements Clause
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LOAN AGREEMENT ("this Agreement") dated as of March 29, 1999 among
TAUBMAN AUBURN HILLS ASSOCIATES LIMITED PARTNERSHIP, a limited partnership
organized and existing under the laws of the State of Delaware ("Borrower"),
FLEET NATIONAL BANK ("Fleet"), PNC BANK, NATIONAL ASSOCIATION (in its individual
capacity and not as Administrative Agent, "PNC") and the other lenders signatory
hereto (Fleet, PNC, said other lenders signatory hereto, and the lenders who
from time to time become Banks pursuant to Section 3.07 or 11.05, each a "Bank"
and collectively, the "Banks") and PNC BANK, NATIONAL ASSOCIATION, as
administrative agent for the Banks (in such capacity, together with its
successors in such capacity, "Administrative Agent").
Borrower has requested that the Banks extend credit as provided
herein, and the Banks are prepared to extend such credit.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and conditions hereinafter set forth, Borrower,
Administrative Agent and each of the Banks agree as follows:
ARTICLE I
DEFINITIONS; ETC.
Section 1.01 Definitions.
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As used in this Agreement the following terms have the following
meanings (except as otherwise provided, terms defined in the singular to have a
correlative meaning when used in the plural and vice versa):
"Administrative Agent" has the meaning specified in the preamble.
"Administrative Agent's Office" means Administrative Agent's address
located at One PNC Plaza, 249 Fifth Avenue, P1-POPP-19-2, Pittsburgh,
Pennsylvania 15222, Attention: Real Estate Banking, or such other address in the
United States as Administrative Agent may designate by notice to Borrower and
the Banks.
"Affiliate" means, with respect to any Person (the "first Person"),
any other Person (1) which directly or indirectly controls, or is controlled by,
or is under common control with the first Person or (2) 10% or more of the
beneficial interest in which is directly or indirectly owned or held by the
first Person. The term "control" means the possession, directly or indirectly,
of the power, alone, to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time.
"Applicable Lending Office" means, for each Bank and for its LIBOR
Loan or Base Rate Loan, as applicable, the lending office of such Bank (or of an
Affiliate of such Bank) designated as such on its signature page hereof or in
the applicable Assignment and Assumption Agreement, or such other office of such
Bank (or of an Affiliate of such Bank) as such Bank may from time to time
specify to Administrative Agent and Borrower as the office by which its LIBOR
Loan or Base Rate Loan, as applicable, is to be made and maintained.
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"Assignee" has the meaning specified in Section 11.05.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of EXHIBIT E, pursuant to which
a Bank assigns and an Assignee assumes rights and obligations in accordance with
Section 11.05.
"Authorization Letter" means a letter agreement executed by Borrower
in the form of EXHIBIT A.
"Bank" and "Banks" have the respective meanings specified in the
preamble.
"Bank Parties" means Administrative Agent and the Banks.
"Banking Day" means (1) any day on which commercial banks are not
authorized or required to close in Pittsburgh, Boston and New York and (2)
whenever such day relates to a LIBOR Loan, an Interest Period with respect to a
LIBOR Loan or notice with respect to a LIBOR Loan, a day on which dealings in
Dollar deposits are also carried out in the London interbank market and banks
are open for business in London.
"Base Rate" means, for any day, the higher of (1) the Federal Funds
Rate for such day plus .50% or (2) the Prime Rate for such day.
"Base Rate Loan" means all or any portion (as the context requires)
of a Bank's Loan which shall accrue interest at a rate determined in relation to
the Base Rate.
"Borrower" has the meaning specified in the preamble.
"Borrower's Accountants" means Deloitte & Touche, or such other
accounting firm(s) selected by Borrower and reasonably acceptable to the
Required Banks.
"Borrower's Share of Total Project Costs" means, from time to time,
the excess of the amount of Total Project Costs over $170,000,000.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Closing Date" means the date this Agreement has been executed by
all parties.
"Co-Agents" means Dresdner Bank AG and Commerzbank AG.
"Code" means the Internal Revenue Code of 1986.
"Commitment Amount" means, at any time, the sum of the Principal
Amount plus the remaining amount, if any, of the Total Loan Commitment available
to be disbursed hereunder.
"Completion Costs Guaranty" means the Completion Costs Guaranty,
dated the date hereof, from Guarantor to the Banks.
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"Construction Consultant" means Eckland Consultants Inc. or other
engineering/architectural firm designated by Administrative Agent from time
to time on behalf of the Banks.
"Continue", "Continuation" and "Continued" refer to the continuation
pursuant to Section 2.12 of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.
"Convert", "Conversion" and "Converted" refer to a conversion
pursuant to Section 2.12 of a Base Rate Loan into a LIBOR Loan or a LIBOR Loan
into a Base Rate Loan, each of which may be accompanied by the transfer by a
Bank (at its sole discretion) of all or a portion of its Loan from one
Applicable Lending Office to another.
"Debt" means (1) indebtedness or liability for borrowed money, or
for the deferred purchase price of property or services (including trade
obligations), (2) obligations as lessee under Capital Leases, (3) current
liabilities in respect of unfunded vested benefits under any Plan, (4)
obligations under letters of credit issued for the account of any Person, (5)
all obligations arising under bankers' or trade acceptance facilities, (6) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase any of the
items included in this definition, to provide funds for payment, to supply funds
to invest in any Person, or otherwise to assure a creditor against loss, (7) all
obligations secured by any Lien on property owned by the Person whose Debt is
being measured, whether or not the obligations have been assumed and (8) all
obligations under any agreement providing for contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described above in this definition.
"Debt Service Coverage" means, for any calendar quarter, Net
Operating Income, annualized (i.e., multiplied by four (4)), divided by
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Hypothetical Annual Debt Service.
"Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.
"Default Rate" means a rate per annum equal to (1) with respect to
Base Rate Loans, a variable rate 2% above the rate of interest then in effect
thereon and (2) with respect to LIBOR Loans, a fixed rate 2% above the rate(s)
of interest in effect thereon (including the LIBOR Margin) at the time of
Default until the end of the then current Interest Period therefor and,
thereafter, a variable rate 2% above the rate of interest for a Base Rate Loan.
"Disposition" means a sale (whether by assignment, transfer or
Capital Lease) of an asset.
"Dollars" and the sign "$" mean lawful money of the United States
of America.
"Elect", "Election" and "Elected" refer to election, if any, by
Borrower pursuant to Section 2.12 to have all or a portion of an advance of the
Loans be outstanding as LIBOR Loans.
"Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.
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"Environmental Law" means any Law relating to pollution or the
environment, including Laws relating to noise or to emissions, discharges,
releases or threatened releases of Hazardous Materials into the work place, the
community or the environment, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"Environmental Notice" means any written complaint, order, citation,
letter, inquiry, notice or other written communication from any Person (1)
affecting or relating to Borrower's compliance with any Environmental Law in
connection with any activity or operations at any time conducted by Borrower,
(2) relating to the occurrence or presence of or exposure to or possible or
threatened or alleged occurrence or presence of or exposure to Environmental
Discharges or Hazardous Materials at the Premises, including, without limitation
(a) the existence of any contamination or possible or threatened contamination
at the Premises and (b) remediation of any Environmental Discharge or Hazardous
Materials at the Premises or any part thereof and (3) relating to any violation
or alleged violation of any relevant Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including any rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of organizations (within the meaning of
Section 414(b) of the Code) as Borrower or Guarantor or is under common control
(within the meaning of Section 414(c) of the Code) with Borrower or Guarantor or
is required to be treated as a single employer with Borrower or Guarantor under
Section 414(m) or (o) of the Code.
"Event of Default" has the meaning specified in Section 8.01.
"Federal Funds Rate" means, for any day, the rate per annum (based
on a year of 360 days) announced by the Federal Reserve Bank of New York (or any
successor) on such day as being the weighted average of the rates on overnight
Federal funds transactions arranged by Federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or any
successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate" as of the date of this Agreement; provided, however, that if
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such Federal Reserve Bank (or its successor) does not announce such rate on any
day, the "Federal Funds Rate" for such day shall be the Federal Funds Effective
Rate for the last day on which such rate was announced.
"Fiscal Year" means each period from January 1 to December 31.
"Fleet" has the meaning specified in the preamble.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.13 (except for changes concurred in by Borrower's Accountants).
"Good Faith Contest" means the contest of an item if (1) the item is
diligently contested in good faith, and, if appropriate, by proceedings timely
instituted, (2) adequate
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reserves are established with respect to the contested item, (3) during the
period of such contest, the enforcement of any contested item is effectively
stayed and (4) the failure to pay or comply with the contested item during the
period of the contest is not likely to (x) to have an adverse effect on the
Mortgaged Property or any part thereof or on the Banks' interest therein or (y)
result in a Material Adverse Change.
"Governmental Approvals" means any authorization, consent, approval,
license, permit, certification, or exemption of, registration or filing with or
report or notice to, any Governmental Authority.
"Governmental Authority" means any nation or government, any state,
or any political subdivision of any thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantor" means The Taubman Realty Group Limited Partnership, a
Delaware limited partnership, Borrower's managing general partner and the owner
of an 80% general partnership interest therein.
"Guaranty" means, collectively, the Completion Costs Guaranty and
the Payment Guaranty.
"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any relevant Environmental
Law, including asbestos fibers and friable asbestos, polychlorinated biphenyls,
and any petroleum or hydrocarbon-based products or derivatives.
"Hypothetical Annual Debt Service" means, for any calendar quarter
(the date of the end of such calendar quarter being herein referred to as a
"Determination Date"), an amount equal to the greater of (1) the constant annual
payment of principal plus interest required to fully amortize, over a term of
twenty-five (25) years, a hypothetical loan in an amount equal to the Commitment
Amount as of such Determination Date, assuming such loan were to bear interest
at a rate equal to 2% per annum in excess of the percentage yield to maturity of
the then "on-the-run" ten (10)-year United States Treasury Note or (2) 8.5% of
the Commitment Amount as of such Determination Date.
"Improvements" means the existing single-level, enclosed,
super-regional value shopping center containing approximately 1,141,500 SFGLA
operated by Borrower on the Premises.
"Indemnity" means an agreement from Borrower and Guarantor whereby,
among other things, the Bank Parties are indemnified regarding Hazardous
Materials in respect of the Premises.
"Initial Advance" means the first advance of proceeds of the
Loans.
"Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date the same is advanced, converted from a Base Rate Loan or
Continued, as the case may be, and ending, as Borrower may select pursuant to
Section 2.06, on the
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numerically corresponding day in the first, second, third or sixth calendar
month thereafter, provided that each such Interest Period which commences on the
last Banking Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Banking Day of the appropriate calendar month.
"Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, or rule of common law, now or hereafter in
effect, and any judicial or administrative interpretation thereof by a
Governmental Authority or otherwise, including any judicial or administrative
order, consent decree or judgment.
"LIBOR Base Rate" means, with respect to any Interest Period
therefor, the rate per annum for the first day of the Interest Period ("the
Reset Date") for deposits in Dollars for a period of the number of months
contained in the Interest Period (the "Designated Maturity") which appears on
Dow Jones Page 3750 (or such other display page on the Dow Jones System as may
replace such Page 3750) as of 11:00 a.m. (London time) on the day that is two
(2) Banking Days prior to that Reset Date for a period, and in an amount,
comparable to such Interest Period and principal amount of the LIBOR Loan in
question outstanding during such Interest Period. If such rate does not appear
on Dow Jones Page 3750 (or such replacement page), the rate for a Reset Date
will be determined on the basis of the rates at which deposits in Dollars are
offered by four (4) major banks in the London interbank market as selected by
Administrative Agent and agreed to by Borrower (the "Reference Banks") at
approximately 11:00 a.m. (London time) on the day that is two (2) Banking Days
preceding that Reset Date to prime banks in the London interbank market for a
period of the Designated Maturity commencing on that Reset Date and in an amount
comparable to the amount of the LIBOR Loan to be outstanding during such
Interest Period (the "Representative Amount"). Administrative Agent will request
the principal London office of each of the Reference Banks to provide a
quotation of its rate. If at least two (2) such quotations are provided, the
rate for that Interest Period will be the arithmetic mean of the quotations. If
fewer than two (2) quotations are provided as requested, the rate for that Reset
Date will the arithmetic mean of the rates quoted by major banks in New York
City, selected by Administrative Agent and agreed to by Borrower, at
approximately 11:00 a.m. (New York time) on that Reset Date for loans in Dollars
to leading European banks for a period of the Designated Maturity commencing on
that Reset Date and in a Representative Amount.
"LIBOR Interest Rate" means, for any LIBOR Loan, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
Administrative Agent to be equal to the quotient of (1) the LIBOR Base Rate for
such LIBOR Loan for the Interest Period therefor divided by (2) one minus the
LIBOR Reserve Requirement for such LIBOR Loan for such Interest Period.
"LIBOR Loan" means all or any portion (as the context requires) of
any Bank's Loan which shall accrue interest at rate(s) determined in relation to
LIBOR Interest Rate(s).
"LIBOR Margin" means, with respect to LIBOR Loans, 1.50% per annum,
as the same may be reduced in accordance with Section 2.17.
"LIBOR Reserve Requirement" means, for any LIBOR Loan, the rate at
which reserves (including any marginal, supplemental or emergency reserves) are
actually required to
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be maintained during the Interest Period for such LIBOR Loan under Regulation D
by the applicable Bank against "Eurocurrency liabilities" (as such term is used
in Regulation D). Without limiting the effect of the foregoing, the LIBOR
Reserve Requirement shall also reflect any other reserves actually required to
be maintained by any Bank by reason of any Regulatory Change against (1) any
category of liabilities which includes deposits by reference to which the LIBOR
Base Rate is to be determined as provided in the definition of "LIBOR Base Rate"
in this Section 1.01 or (2) any category of extensions of credit or other assets
which include loans the interest rate on which is determined on the basis of
rates referred to in said definition of "LIBOR Base Rate".
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment for collateral purposes, deposit arrangement, lien
(statutory or other), or other security agreement or charge of any kind or
nature whatsoever of any third party (excluding any right of setoff but
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, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction to evidence any of
the foregoing).
"Loan" and "Loans" have the respective meanings specified in
Section 2.01.
"Loan Commitment" means, with respect to each Bank, the obligation
to make a Loan in the principal amount set forth on EXHIBIT F, as such amounts
may be changed from time to time in accordance with the terms of this Agreement.
"Loan Documents" means this Agreement, the Notes, the Mortgage and
related Uniform Commercial Code financing statements, the Guaranty, the
Indemnity, the Authorization Letter and the Solvency Certificate.
"Major Lease" means any lease demising 20,000 SFGLA or more of
the Improvements.
"Master Declaration" means that certain Master Declaration of
Easements and Restrictions, dated as of June 11, 1997, made by Borrower, as
Developer, as amended by that certain First Amendment to Master Declaration of
Easements and Restrictions, dated as of January 20, 1998, both recorded in the
land records of Oakland County, Michigan, which Master Declaration encumbers the
Premises and certain other property previously owned by Borrower and conveyed by
it subsequent to the date of such Master Declaration to (1) the Owner Anchors
and (2) certain other Persons, and on which, in the case of the property
conveyed to the Owner Anchors, the respective Owner Anchor Stores are located.
"Material Adverse Change" means either (1) a material adverse change
in the status of the business, results of operations, financial condition,
property or prospects of Borrower or Guarantor or (2) any event or occurrence of
whatever nature which is likely to (x) have a material adverse effect on the
ability of Borrower or Guarantor to perform their respective obligations under
the Loan Documents or (y) create, in the sole and absolute judgment (reasonably
exercised) of Administrative Agent, a material risk of sale or forfeiture of any
of the Mortgaged Property (other than an immaterial portion thereof) or
otherwise materially impair the Mortgaged Property or the Banks' rights therein.
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"Maturity Date" means April 1, 2002, subject to extension in
accordance with Section 2.05.
"Mortgage" means the Mortgage, Assignment of Leases and Rents and
Security Agreement, dated the date hereof, of the Premises and Improvements made
by Borrower to Administrative Agent to secure the payment and performance of
Borrower's obligations hereunder, under the Notes and otherwise in respect of
the Loans.
"Mortgaged Property" means the Premises, Improvements and other
property constituting the "Mortgaged Property", as said quoted term is defined
in the Mortgage.
"Multiemployer Plan" means a Plan defined as such in Section 3(37)
of ERISA to which contributions have been made by Borrower, Guarantor or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Cash Flow" means, for any period, net cash from operations of
Borrower at the Premises.
"Net Operating Income" means, for any calendar quarter, an amount
equal to:
(1) the sum, determined in accordance with GAAP (but adjusted
for non-cash revenues attributable to straight-lining of rents), of (a)
rental income and common area and other expense reimbursements from
tenants in occupancy in the Improvements plus (b) other income from
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operating the Premises (excluding income from sales of property)
less
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(2) the sum, determined in accordance with GAAP, of (a) actual
operating expenses of the Premises (including a management fee of 4% of
gross rentals), real estate taxes and bad debt expense plus (b) tenant
----
improvement and capital expense reserves in an aggregate amount equal to
$0.15 per square foot,
all determined by Administrative Agent in its sole but reasonable judgment.
"Note" and "Notes" have the respective meanings specified in
Section 2.09.
"Obligations" means each and every obligation, covenant and
agreement of Borrower, now or hereafter existing, contained in this Agreement,
and any of the other Loan Documents, whether for principal, reimbursement
obligations, interest, fees, expenses, indemnities or otherwise, and any
amendments or supplements thereto, extensions or renewals thereof or
replacements therefor, including but not limited to, all indebtedness,
obligations and liabilities of Borrower to Administrative Agent and any Bank now
existing or hereafter incurred under or arising out of or in connection with the
Notes, this Agreement, the other Loan Documents, and any documents or
instruments executed in connection therewith; in each case whether direct or
indirect, joint or several, absolute or contingent, liquidated or unliquidated,
now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, and
including all indebtedness of Borrower, under any instrument now or hereafter
evidencing or securing any of the foregoing.
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"Owner Anchor Stores" means those stores containing approximately
110,878 (Loeks-Star) and 124, 270 (Bass Pro) SFGLA, respectively, located on
parcels contiguous to portions of the Premises, which portions are owned,
occupied and operated by the respective Owner Anchors, and which, together with
the Improvements, are being operated as an integrated shopping center pursuant
to the REAs.
"Owner Anchors" means, respectively, Loeks-Star Partners, a
Michigan Co-Partnership, and Bass Pro Outdoor World, L.P., a Missouri limited
partnership.
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Payment Guaranty" means the Guaranty of Payment, dated the date
hereof, from Guarantor to the Banks.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower, Guarantor or
any ERISA Affiliate and which is covered by Title IV of ERISA or to which
Section 412 of the Code applies.
"PNC" has the meaning specified in the preamble.
"Premises" means the real property located in Auburn Hills, Michigan
containing approximately 266 acres on which the Improvements are situated and
which is more particularly described on Schedule A to the Mortgage.
"presence", when used in connection with any Environmental Discharge
or Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.
"Prime Rate" means that rate of interest from time to time announced
by PNC at its principal office (presently located at One PNC Plaza, 249 Fifth
Avenue, Pittsburgh, Pennsylvania 15222) as its then prime rate, which rate may
not be the lowest rate then being charged to commercial borrowers by PNC.
"Principal Amount" means, at any time, the aggregate outstanding
principal amount of the Notes.
"Pro Rata Share" means, for purposes of this Agreement and with
respect to each Bank, a fraction, the numerator of which is the amount of such
Bank's Loan Commitment and the denominator of which is the Total Loan
Commitment.
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"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
"REAs" means those certain Agreements of Easements and Restrictions,
dated April 7, 1998 (Bass Pro) and May 1, 1998 (Loeks-Star), between Borrower
and the respective Owner Anchors, both of which were recorded in the land
records of Oakland County, Michigan (together with any and all agreements
incidental or supplemental thereto) pursuant to which the Improvements and the
Owner Anchor Stores are being operated as an integrated super-regional value
shopping center commonly known as Great Lakes Crossing.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time, or any similar Law from time to time in effect.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time, or any similar Law from time to time in effect.
"Regulatory Change" means, with respect to any Bank, any change
after the date of this Agreement in United States federal, state, municipal or
foreign laws or regulations (including Regulation D) or the adoption or making
after such date of any interpretations, directives or requests applying to a
class of banks including such Bank of or under any United States, federal,
state, municipal or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA.
"Required Banks" means, at any time, the Banks holding at least
66-2/3% of the then Principal Amount.
"SFGLA" means square feet of gross leasable area.
"Solvency Certificate" means a certificate in substantially the form
of EXHIBIT B, to be delivered by Borrower pursuant to the terms of this
Agreement.
"Solvent" means, when used with respect to any Person, that (1) the
fair value of the property of such Person, on a going concern basis, is greater
than the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person, (2) the present fair saleable value of the assets
of such Person, on a going concern basis, is not less than the amount that will
be required to pay the probable liabilities of such Person on its debts as they
become absolute and matured, (3) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, (4) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged and (5) such Person has sufficient
resources, provided that such resources are prudently utilized, to satisfy all
of such Person's obligations. Contingent liabilities will be computed at the
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amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"Supplemental Fee Letter" means that certain letter agreement, dated
the date hereof, among Fleet, PNC, Administrative Agent, Syndication Agent and
Borrower.
"Syndication Agent" means Fleet.
"TCI" means Taubman Centers, Inc., a Michigan corporation,
Guarantor's managing general partner.
"Title Insurer" means the issuer(s) of the title insurance
policy(ies) insuring the Mortgage.
"Total Loan Commitment" means $170,000,000.
"Total Project Costs" means all costs of construction and
development of the Improvements, as reflected in the project budget delivered
pursuant to paragraph (29) of Section 4.01, subject to change from time to time
in accordance with amendments to or replacements of said budget approved by
Administrative Agent.
"TRG Consolidated Financial Statements" means the consolidated
balance sheet and related consolidated statement of operations, accumulated
deficiency in assets and cash flows, and footnotes thereto, of Guarantor,
prepared in accordance with GAAP.
Section 1.02 Accounting Terms. All accounting terms not specifically
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defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
Section 1.03 Computation of Time Periods. Except as otherwise
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provided herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
Section 1.04 Rules of Construction. When used in this Agreement
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(1) "or" is not exclusive, (2) a reference to a Law includes any amendment or
modification to, or replacement of, such Law, (3) a reference to a Person
includes its permitted successors and permitted assigns, (4) except as provided
otherwise, all references to the singular shall include the plural and vice
----
versa, (5) except as provided in this Agreement, a reference to an agreement,
- ----- instrument or document shall include such agreement, instrument or
document as the same may be amended, modified or supplemented from time to time
in accordance with its terms and as permitted by the Loan Documents, (6) all
references to Articles or Sections shall be to Articles and Sections of this
Agreement unless otherwise indicated and (7) all Exhibits to this Agreement
shall be incorporated into this Agreement.
11
<PAGE>
ARTICLE II
THE LOANS
Section 2.01 The Loans; Advances Generally. Subject to the terms and
-----------------------------
conditions of this Agreement, each of the Banks severally agrees to make a loan
to Borrower (each such loan by a Bank, a "Loan"; such loans, collectively, the
"Loans") pursuant to which the Bank shall from time to time advance to Borrower
up to an amount equal to such Bank's Loan Commitment. The Initial Advance shall
be in the amount of approximately $156,000,000 and shall be made upon Borrower's
satisfaction of the conditions set forth in Section 4.01. Subject to the
provisions of Section 6.14, subsequent advances shall be made no more frequently
than monthly thereafter, upon satisfaction of the conditions set forth in
Section 4.02 and the amount of each advance subsequent to the Initial Advance
shall be equal to 80% of the Total Project Costs which were incurred by Borrower
during the period since the date of the previous request for advance. In
addition, the amount of each such subsequent advance shall be (x) in the case of
advances of Base Rate Loans, in the minimum amount of $100,000 and in integral
multiples of $100,000 above such amount and (y) in the case of advances of LIBOR
Loans, in the minimum amount of $1,000,000 and in integral multiples of $100,000
above such amount. The Loans may be outstanding as (i) Base Rate Loans, (ii)
LIBOR Loans or (iii) a combination of the foregoing, as Borrower shall elect and
notify Administrative Agent in accordance with Section 2.14. The LIBOR Loan and
Base Rate Loan of each Bank shall be maintained at such Bank's Applicable
Lending Office for its LIBOR Loan and Base Rate Loan, respectively.
Section 2.02 Nature of Banks' Obligations. The obligations of the Banks
----------------------------
under this Agreement are several, and no Bank shall be responsible for the
failure of any other Bank to make any advance of a Loan to be made by such other
Bank. However, the failure of any Bank to make any advance of the Loan to be
made by it hereunder on the date specified therefor shall not relieve any other
Bank of its obligation to make any advance of its Loan specified hereby to be
made on such date.
Section 2.03 Purpose. Borrower shall use the proceeds of the Loans
-------
solely to pay Total Project Costs, including, without limitation, to (i) pay
Borrower's costs in connection with the closing of the Loans, as reasonably
approved by Administrative Agent and (ii) repay the existing loan made to
Guarantor by some or all of the Banks signatory hereto, which loan is referred
to in paragraph (31) of Section 4.01 and the proceeds of which were used to
finance the construction of the Improvements.
Section 2.04 Procedures for Advance. Borrower shall submit to
--------------------------
Administrative Agent a request for each advance of proceeds of the Loans
hereunder no later than 10:00 a.m. (Pittsburgh time) on the date, in the case of
advances of requested Base Rate Loans, which is two (2) Banking Days, and, in
the case of advances of requested LIBOR Loans, which is three (3) Banking Days,
prior to the date the advance is to be made. In addition to stating the amount
requested, each request for advance shall certify (w) that no Default or Event
of Default then exists or, to the best knowledge of the individual executing
such request for advance, would exist as a result of such advance, (x) that the
advance will be, and all prior advances have been, used solely for the purposes
described in Section 2.03, (y) that none of the costs covered by said request
for advance were the subject of any previous request for advance and (z) the
amount of Total Project Costs which Borrower has incurred during the period
since the date of the previous
12
<PAGE>
request for advance and that Borrower has actually paid, as an equity investment
in the Improvements, 20% of such amount. Administrative Agent, upon its receipt
and approval of the request for advance, will so notify the Banks either by
telephone or by facsimile. Not later than 10:00 a.m. (Pittsburgh time) on the
date of each advance, each Bank shall, through its Applicable Lending Office and
subject to the conditions of this Agreement, make the amount to be advanced by
it on such day available to Administrative Agent, at Administrative Agent's
Office and in immediately available funds, for the account of Borrower. The
amount so received by Administrative Agent shall, subject to the conditions of
this Agreement, be made available to Borrower, in immediately available funds,
by Administrative Agent's crediting an account of Borrower designated by
Borrower in the request for advance.
Section 2.05 Extension of Maturity Date. Provided there exists no Default
--------------------------
or Event of Default, Borrower shall have the option, exercisable once, to
extend the original Maturity Date for a period of one (1) year, subject to (i)
Administrative Agent's receipt of (x) a written request from Borrower for such
extension between sixty (60) and ninety (90) days prior to the original Maturity
Date, (y) an extension fee, for the account of the Banks, in the amount of .15%
of the Principal Amount as of the original Maturity Date and (z) such note
extension agreement(s) as Administrative Agent may reasonably require and (ii)
Administrative Agent's determination (which shall be conclusive so long as made
on a reasonable basis) that, as of the original Maturity Date, (1) Guarantor is
in compliance with the covenants set forth in paragraphs 14 and 15 of the
Payment Guaranty, (2) the Improvements (other than unleased tenant space and
minor "punch-list" items) have been satisfactorily completed, lien-free, (3) at
least 85% of the total SFGLA in the Improvements is covered by executed leases
pursuant to which the tenants thereunder are in occupancy and which have an
unexpired term of one (1) year or more, (4) the Principal Amount does not exceed
70% of the "as-is" value of the Premises (as reflected in an update to the
appraisal delivered pursuant to Section 4.01(8), which updated appraisal shall
be commissioned by Administrative Agent at Borrower's expense) and (5) Debt
Service Coverage is at least 1.4, on average, for the four (4) full calendar
quarters immediately preceding the date of Borrower's written request for the
extension; provided, however, that the foregoing loan-to-value and Debt Service
-------- -------
Coverage conditions set forth in clauses (4) and (5) above shall be deemed
satisfied if Borrower makes a partial prepayment of the Principal Amount on or
before the original Maturity Date in an amount such that the requisite
loan-to-value or Debt Service Coverage, each recomputed based on the reduced
Principal Amount, is attained.
Section 2.06 Interest Periods; Renewals. In the case of the LIBOR Loans,
--------------------------
Borrower shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.01, subject to the following
limitations: (i) no Interest Period may extend beyond the Maturity Date, (ii) if
an Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless such Banking Day would
fall in the next calendar month, in which event such Interest Period shall end
on the immediately preceding Banking Day and (iii) only five (5) (or four (4) if
any portion of the Principal Amount is bearing interest at the Base Rate)
discrete segments of a Bank's Loan bearing interest at a LIBOR Interest Rate,
for a designated Interest Period, pursuant to a particular Election, Conversion
or Continuation, may be outstanding at any one time (each such segment of each
Bank's Loan corresponding to a proportionate segment of each of the other Banks'
Loans).
13
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Upon notice to Administrative Agent as provided in Section 2.14,
Borrower may Continue any LIBOR Loan on the last day of the Interest Period of
the same or different duration in accordance with the limitations provided
above. If Borrower shall fail to give notice to Administrative Agent of such a
Continuation, such LIBOR Loan shall automatically become a Base Rate Loan on the
last day of the current Interest Period.
Section 2.07 Interest. Borrower shall pay interest to Administrative
--------
Agent for the account of the applicable Bank on the outstanding and unpaid
principal amount of the Loans, at a rate per annum as follows: (i) for Base Rate
Loans at a rate equal to the Base Rate and (ii) for LIBOR Loans at a rate equal
to the applicable LIBOR Interest Rate plus the LIBOR Margin. Any principal
amount not paid when due (when scheduled, at acceleration or otherwise) shall
bear interest thereafter, payable on demand, at the Default Rate.
The interest rate on Base Rate Loans shall change when the Base Rate
changes. Interest on Base Rate Loans and LIBOR Loans shall not exceed the
maximum amount permitted under applicable law. Interest shall be calculated for
the actual number of days elapsed on the basis of, in the case of both Base Rate
Loans and LIBOR Loans, three hundred sixty (360) days.
Accrued interest shall be due and payable in arrears, in the case of
both Base Rate Loans and LIBOR Loans, on the first Banking Day of each calendar
month; provided, however, that interest accruing at the Default Rate shall be
-------- -------
due and payable on demand.
Section 2.08 Fees. Borrower shall pay, for the accounts of the
----
parties specified therein, the fees provided for, on the dates specified,
in the Supplemental Fee Letter.
Section 2.09 Notes. The Loan made by each Bank under this Agreement
-----
shall be evidenced by, and repaid with interest in accordance with, a promissory
note of Borrower in the form of EXHIBIT C duly completed and executed by
Borrower, in the principal amount equal to such Bank's Loan Commitment, payable
to such Bank for the account of its Applicable Lending Office (each such note,
as the same may hereafter be amended, modified, extended, severed, assigned,
substituted, renewed or restated from time to time, including any substitute
note pursuant to Section 3.07 or 11.05, a "Note"; all such notes, as so amended,
modified, extended, severed, assigned, substituted, renewed or restated from
time to time, collectively, the "Notes"). Each Note shall mature, and all
outstanding principal and accrued interest and other sums thereunder shall be
paid in full, on the Maturity Date, as the same may be accelerated or extended.
Each Bank is hereby authorized by Borrower to endorse on a schedule
attached to the Note held by it, the amount of each advance, and each payment of
principal received by such Bank for the account of its Applicable Lending
Office(s) on account of its Loan, which endorsements, if made, shall, in the
absence of manifest error, be conclusive as to the outstanding balance of the
Loan made by such Bank; provided, however, that the failure to make such
-------- -------
notations with respect to the Loans or each advance or each payment shall not
limit or otherwise affect the obligations of Borrower under this Agreement or
the Note held by such Bank.
In case of any loss, theft, destruction or mutilation of any Bank's
Note, Borrower shall, upon its receipt of an affidavit of an officer of such
Bank as to such loss, theft, destruction
14
<PAGE>
or mutilation and an appropriate indemnification, execute and deliver a
replacement Note to such Bank in the same principal amount and otherwise of like
tenor as the lost, stolen, destroyed or mutilated Note.
Section 2.10 Prepayments. Borrower may, upon at least one (1) Banking
-----------
Day's notice to Administrative Agent in the case of the Base Rate Loans, and at
least two (2) Banking Days' notice to Administrative Agent in the case of LIBOR
Loans (in each case to be received by Administrative Agent no later than 1:00
p.m., Pittsburgh time), prepay the Loans, in whole or in part, provided that (i)
--------
any partial prepayment under this Section shall be in integral multiples of
$1,000,000, (ii) a LIBOR Loan may be prepaid only on the last day of the
Applicable Interest Period for such LIBOR Loan and (iii) each prepayment under
this Section shall include all interest accrued on the amount of principal
prepaid through the date of prepayment. Any prepayment shall effect a permanent
reduction in the Total Loan Commitment by the amount prepaid.
Section 2.11 Method of Payment. Borrower shall make each payment
-----------------
under this Agreement and under the Notes not later than 11:00 a.m. (Pittsburgh
time) on the date when due in Dollars to Administrative Agent at Administrative
Agent's Office in immediately available funds. Administrative Agent will
thereafter, on the day of its receipt of each such payment (assuming receipt by
11:00 a.m.), cause to be distributed to each Bank (i) such Bank's appropriate
share (based upon the respective outstanding principal amounts and rate(s) of
interest under the Notes of the Banks) of the payments of principal and interest
in like funds for the account of such Bank's Applicable Lending Office and (ii)
fees payable to such Bank in accordance with the terms of this Agreement.
Borrower hereby authorizes Administrative Agent and the Banks, if and to the
extent payment by Borrower is not made when due under this Agreement or under
the Notes, to charge from time to time against any account Borrower maintains
with Administrative Agent or any Bank any amount so due to Administrative Agent
and/or the Banks.
Except to the extent provided in this Agreement, whenever any
payment to be made under this Agreement or under the Notes is due on any day
other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of the payment of interest and other fees, as the case may be.
Section 2.12 Elections, Conversions or Continuation of Loans. Subject
------------------------------------------------
to the provisions of Article III and Sections 2.06 and 2.13, Borrower shall have
the right to Elect to have all or a portion of any advance of the Loans be LIBOR
Loans, to Convert Base Rate Loans into LIBOR Loans, to Convert LIBOR Loans into
Base Rate Loans, or to Continue LIBOR Loans as LIBOR Loans, at any time or from
time to time, provided that (i) Borrower shall give Administrative Agent notice
--------
of each such Election, Conversion or Continuation as provided in Section 2.14
and (ii) a LIBOR Loan may be Converted or Continued only on the last day of the
applicable Interest Period for such LIBOR Loan. Except as otherwise provided in
this Agreement, each Election, Continuation and Conversion shall be applicable
to each Bank's Loan in accordance with its Pro Rata Share.
15
<PAGE>
Section 2.13 Minimum Amounts. With respect to the Loans as a whole, each
Election of, and each Conversion to, LIBOR Loans shall be in an amount at
least equal to $1,000,000 and in integral multiples of $100,000.
Section 2.14 Certain Notices Regarding Elections, Conversions and
------------------------------------------------------------
Continuations of Loans . Notices by Borrower to Administrative Agent of
- ------------------------
Elections, Conversions and Continuations of LIBOR Loans shall be irrevocable and
shall be effective only if received by Administrative Agent not later than 10:00
a.m. (Pittsburgh time) on the number of Banking Days prior to the date of the
relevant Election, Conversion or Continuation specified below:
Number of
Notice Banking Days Prior
------ ------------------
Conversions into Base Rate Loans three (3)
Election of, Conversions into or three (3)
Continuations as, LIBOR Loans
Promptly following its receipt of any such notice, Administrative Agent shall so
advise the Banks either by telephone or by facsimile. Each such notice of
Election shall specify the portion of the amount of the advance that is to be
LIBOR Loans (subject to Section 2.13) and the duration of the Interest Period
applicable thereto (subject to Section 2.06); each such notice of Conversion
shall specify the LIBOR Loans or Base Rate Loans to be Converted; and each such
notice of Conversion or Continuation shall specify the date of Conversion or
Continuation (which shall be a Banking Day), the amount thereof (subject to
Section 2.13) and the duration of the Interest Period applicable thereto
(subject to Section 2.06). In the event that Borrower fails to Elect to have any
portion of an advance of the Loans be LIBOR Loans, the entire amount of such
advance shall constitute Base Rate Loans. In the event that Borrower fails to
Continue LIBOR Loans within the time period and as otherwise provided in this
Section, such LIBOR Loans will be automatically Converted into Base Rate Loans
on the last day of the then current applicable Interest Period for such LIBOR
Loans.
Section 2.15 Late Payment Premium. Borrower shall, at Administrative
---------------------
Agent's option, pay to Administrative Agent for the account of the Banks a late
payment premium in the amount of 4% of any payments of interest under the Loans
made more than fifteen (15) days after the due date thereof, which shall be due
with any such late payment. Such late charge represents the reasonable estimate
of Borrower and the Banks of a fair average compensation for the loss that may
be sustained by the Banks due to the failure of Borrower to make timely
payments. Such late charge shall be paid without prejudice to the right of the
Banks to collect any other amounts provided herein or in the other Loan
Documents to be paid or to exercise any other remedies under the Loan Documents.
Section 2.16 Amortization Payments . Commencing on the first day of
----------------------
the first month following the second anniversary of the Closing Date, and on the
first day of each month thereafter until the Maturity Date, Borrower shall, and
hereby covenants and promises to, make monthly payments in reduction of the
Principal Amount. The amount of the first twelve (12) such principal payments
shall be computed in accordance with a twenty-five (25)-year fully
16
<PAGE>
amortizing, constant payment mortgage schedule based on the Principal Amount at
the time of the first such payment date and an assumed per annum interest rate
of 2% in excess of the percentage yield to maturity of the then "on-the-run" ten
(10)-year United States Treasury Note. If the Maturity Date is extended in
accordance with the provisions of Section 2.05, then, at the time of the
thirteenth (13th) payment, the amount of the monthly payment shall be
recalculated, such that the amount of the thirteenth (13th) payment and all
payments thereafter shall be computed in accordance with a twenty-four
(24)-year, fully-amortizing, constant payment mortgage schedule based on the
Principal Amount as of the date of said thirteenth (13th) payment and an assumed
per annum interest rate of 2% in excess of the percentage yield to maturity of
the then "on-the-run" ten (10)-year United States Treasury Note.
Section 2.17 Interest Rate Reduction . At any time following the first
-------------------------
anniversary of the Closing Date, the LIBOR Margin shall be reduced to 1.40% per
annum provided that (i) Borrower shall have satisfied the requirements for and
conditions to its entitlement to an extension of the Maturity Date set forth in
Section 2.05 (except that (A) condition (4) thereof need not be satisfied for
such rate reduction and (B) the required Debt Service Coverage in condition (5)
thereof must be for the four (4) full calendar quarters immediately preceding
the rate reduction) and (ii) Administrative Agent shall have received evidence
that (x) the tenants under Major Leases have achieved "Tenant Sales" (as
hereinafter defined) of at least $275 per square foot and (y) the tenants under
non-Major Leases have achieved Tenant Sales of at least $300 per square foot. As
used in this Section, the term "Tenant Sales" means the average sales per square
foot of tenants in occupancy (exclusive of tenants not required to report sales)
at any time during the most recently ended twelve (12)-month period for which
sales results are available.
Section 2.18 Mandatory Prepayment. If at any time during the term of
---------------------
the Loans the Principal Amount exceeds 80% of the then Total Project Costs,
Borrower shall, and hereby covenants and promises to, within ten (10) days of
Administrative Agent's demand therefor, make a payment in reduction of the
Principal Amount in an amount equal to such excess.
ARTICLE III
YIELD PROTECTION; ILLEGALITY; ETC.
Section 3.01 Additional Costs. Borrower shall pay directly to each Bank
-----------------
from time to time on demand such amounts as such Bank may determine to be
necessary to compensate it for any increased costs which such Bank determines
are attributable to its making or maintaining a LIBOR Loan, or its obligation to
make or maintain a LIBOR Loan, or its obligation to Convert a Base Rate Loan to
a LIBOR Loan hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of its LIBOR Loan or such obligations (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs"), in each case resulting from any Regulatory Change which:
(1) changes the basis of taxation of any amounts payable to such Bank
under this Agreement or the Notes in respect of any such LIBOR Loan (other
than changes in the rate of general corporate, franchise, branch profit,
net income or other income tax
17
<PAGE>
imposed on such Bank or its Applicable Lending Office by the jurisdiction
in which such Bank has its principal office or such Applicable Lending
Office); or
(2) (other than to the extent the LIBOR Reserve Requirement is taken
into account in determining the LIBOR Rate at the commencement of the
applicable Interest Period) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital ratio or
similar requirements relating to any extensions of credit or other assets
of, or any deposits with or other liabilities of, such Bank (including
any LIBOR Loan or any deposits referred to in the definition of "LIBOR
Interest Rate" in Section 1.01), or any commitment of such Bank (including
such Bank's Loan Commitment hereunder); or
(3) imposes any other condition affecting this Agreement or the Notes
(or any of such extensions of credit or liabilities). Notwithstanding the
foregoing, in the event that any Bank determines that it shall incur
Additional Costs in maintaining a LIBOR Loan, such Bank shall provide
written notice thereof to Borrower (with a copy to Administrative Agent),
which notice shall include the dollar amount of the Additional Costs, and
Borrower shall have the option, which option must be exercised within five
(5) Banking Days of Borrower's receipt of such notice, to prepay such
LIBOR Loan or to Convert such LIBOR Loan into a Base Rate Loan, subject,
however, to the provisions of Section 3.05.
Without limiting the effect of the provisions of the first paragraph
of this Section, in the event that, by reason of any Regulatory Change, any Bank
either (1) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits of other liabilities of
such Bank which includes deposits by reference to which the LIBOR Interest Rate
is determined as provided in this Agreement or a category of extensions of
credit or other assets of such Bank which includes loans based on the LIBOR
Interest Rate or (2) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Bank so
elects by notice to Borrower (with a copy to Administrative Agent), the
obligation of such Bank to permit Elections of, to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended (in which case the provisions of
Section 3.04 shall be applicable) until such Regulatory Change ceases to be in
effect.
Determinations and allocations by a Bank for purposes of this
Section of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section, on its costs or rate of return of making or
maintaining its Loan or portions thereof or on amounts receivable by it in
respect of its Loan or portions thereof, and the amounts required to compensate
such Bank under this Section, shall be conclusive absent manifest error.
To the extent that changing the jurisdiction of a Bank's Applicable
Lending Office would have the effect of minimizing Additional Costs, each such
Bank shall use reasonable efforts to make such a change, provided that same
would not otherwise be disadvantageous to each such Bank.
18
<PAGE>
No Bank shall be entitled to any compensation pursuant to this Section
relating to any period more than ninety (90) days prior to the date notice
thereof is given to Borrower by such Bank.
Section 3.02 Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if, on or prior to the determination of the LIBOR Interest Rate
for any Interest Period:
(1) Administrative Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits referred
to in the definition of "LIBOR Interest Rate" in Section 1.01 are not being
provided in the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for the LIBOR Loans as provided in this Agreement;
or
(2) a Bank determines (which determination shall be conclusive) and
promptly notifies Administrative Agent that the relevant rates of interest
referred to in the definition of "LIBOR Interest Rate" in Section 1.01 upon the
basis of which the rate of interest for LIBOR Loans for such Interest Period is
to be determined do not adequately cover the cost to such Bank of making or
maintaining such LIBOR Loan for such Interest Period; then Administrative Agent
shall give Borrower prompt notice thereof, and so long as such condition remains
in effect, the Banks (or, in the case of the circumstances described in clause
(2) above, the affected Bank) shall be under no obligation to permit Elections
of LIBOR Loans, to Convert Base Rate Loans into LIBOR Loans or to Continue LIBOR
Loans and Borrower shall, on the last day(s) of the then current Interest
Period(s) for the affected outstanding LIBOR Loans, either (x) prepay the
affected LIBOR Loans or (y) Convert the affected LIBOR Loans into Base Rate
Loans in accordance with Section 2.12.
Section 3.03 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain a LIBOR Loan
hereunder, to allow Elections of a LIBOR Loan or to Convert a Base Rate Loan
into a LIBOR Loan, then such Bank shall promptly notify Administrative Agent and
Borrower thereof and such Bank's obligation to make or maintain a LIBOR Loan, or
to permit Elections of, to Continue, or to Convert its Base Rate Loan into, a
LIBOR Loan shall be suspended (in which case the provisions of Section 3.04
shall be applicable) until such time as such Bank may again make and maintain a
LIBOR Loan.
Section 3.04 Treatment of Affected Loans. If the obligations of any Bank
---------------------------
to make or maintain a LIBOR Loan, or to permit an Election of a LIBOR Loan, to
Continue its LIBOR Loan, or to Convert its Base Rate Loan into a LIBOR Loan,
are suspended pursuant to Sections 3.01 or 3.03 (each LIBOR Loan so affected
being herein called an "Affected Loan"), such Bank's Affected Loan shall be
automatically Converted into a Base Rate Loan on the last day of the then
current Interest Period for the Affected Loan (or, in the case of a Conversion
required by Sections 3.01 or 3.03, on such earlier date as such Bank may specify
to Borrower).
To the extent that such Bank's Affected Loan has been so Converted, all
payments and prepayments of principal which would otherwise be applied to such
Bank's Affected Loan
19
<PAGE>
shall be applied instead to its Base Rate Loan and such Bank shall have no
obligation to Convert its Base Rate Loan into a LIBOR Loan.
In the event that the conditions giving rise to the suspension of any
Bank's obligations to permit an Election of a LIBOR Loan, to Continue its LIBOR
Loan, or to Convert its Base Rate Loan into a LIBOR Loan shall cease to exist,
such Bank shall provide Borrower with prompt written notice of same (with a copy
to Administrative Agent), and such Bank shall again be obligated to permit an
Election of a LIBOR Loan, to Continue its LIBOR Loan, or to Convert its Base
Rate Loan into a LIBOR Loan in accordance with this Agreement.
Section 3.05 Certain Compensation. Borrower shall pay to Administrative
--------------------
Agent for the account of the applicable Bank, upon the request of such Bank
through Administrative Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Bank) to compensate it for any loss,
cost or expense which such Bank determines is attributable to:
(1) any payment, prepayment, Conversion or Continuation of a LIBOR Loan
made by such Bank on a date other than the last day of an applicable Interest
Period for such LIBOR Loan, whether by reason of acceleration or otherwise;
or
(2) any failure by Borrower for any reason to Convert or Continue a LIBOR
Loan to be Converted or Continued by such Bank on the date specified
therefor in the relevant notice under Section 2.14; or
(3) any failure by Borrower to borrow (or to qualify for a borrowing of) a
LIBOR Loan which would otherwise be made hereunder on the date specified
in the relevant Election notice under Section 2.14 given or submitted by
Borrower.
Without limiting the foregoing, such compensation shall include an amount
equal to the present value (using as the discount rate an interest rate equal to
the rate determined under (2) below) of the excess, if any, of (1) the amount of
interest which otherwise would have accrued on the principal amount so paid,
prepaid, Converted or Continued (or not Converted, Continued or borrowed) for
the period from the date of such payment, prepayment, Conversion or Continuation
(or failure to Convert, Continue or borrow) to the last day of the then current
applicable Interest Period (or, in the case of a failure to Convert, Continue or
borrow, to the last day of the applicable Interest Period which would have
commenced on the date specified therefor in the relevant notice) at the
applicable rate of interest for the LIBOR Loan provided for herein, over (2) the
amount of interest (as reasonably determined by such Bank) based upon the
interest rate which such Bank would have bid in the London interbank market for
Dollar deposits, for amounts comparable to such principal amount and maturities
comparable to such period. A determination of any Bank as to the amounts payable
pursuant to this Section shall be conclusive absent manifest error.
Section 3.06 Capital Adequacy. If any Bank shall have determined that,
----------------
after the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not
20
<PAGE>
having the force of law) of any such Governmental Authority, central bank
or comparable agency, has or would have the effect of reducing the rate of
return on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within fifteen (15)
days after demand by such Bank (with a copy to Administrative Agent), Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction. A certificate of any Bank claiming
compensation under this Section, setting forth in reasonable detail the basis
therefor, shall be conclusive absent manifest error.
Section 3.07 Substitution of Banks. If any Bank (an "Affected Bank")
-----------------------
(i) makes demand upon Borrower for (or if Borrower is otherwise required to pay)
Additional Costs pursuant to Section 3.01 or (ii) gives notice to Borrower
that such Bank is unable to make or maintain a LIBOR Loan as a result of a
condition described in Section 3.03 or clause (2) of Section 3.02, Borrower may,
within ninety (90) days of receipt of such demand or notice (or the occurrence
of such other event causing Borrower to be required to pay Additional Costs or
causing said Section 3.03 or clause (2) of Section 3.02 to be applicable), as
the case may be, give notice (a "Replacement Notice") to Administrative Agent
(which will promptly forward a copy of such notice to each Bank) of Borrower's
intention either (x) to prepay in full the Affected Bank's Note and to terminate
the Affected Bank's entire Loan Commitment or (y) to replace the Affected Bank
with another financial institution (the "Replacement Bank") designated in such
Replacement Notice.
In the event Borrower opts to give the notice provided for in clause
(x) above, and if the Affected Bank shall not agree within thirty (30) days of
its receipt thereof to waive the payment of the Additional Costs in question or
the effect of the circumstances described in Section 3.03 or clause (2) of
Section 3.02, then, so long as no Default or Event of Default shall exist,
Borrower may terminate the Affected Bank's entire Loan Commitment, provided that
in connection therewith it pays to the Affected Bank all outstanding principal
and accrued and unpaid interest under the Affected Bank's Note, together with
all other amounts, if any, due from Borrower to the Affected Bank, including all
amounts properly demanded and unreimbursed under Sections 3.01 and 3.05.
In the event Borrower opts to give the notice provided for in clause
(y) above, and if (i) Administrative Agent shall, within thirty (30) days of its
receipt of the Replacement Notice, notify Borrower and each Bank in writing that
the Replacement Bank is reasonably satisfactory to Administrative Agent and (ii)
the Affected Bank shall not, prior to the end of such thirty (30)-day period,
agree to waive the payment of the Additional Costs in question or the effect of
the circumstances described in Section 3.03 or clause (2) of Section 3.02, then
the Affected Bank shall, so long as no Default or Event of Default shall exist,
assign its Note and all of its rights and obligations under this Agreement to
the Replacement Bank, and the Replacement Bank shall assume all of the Affected
Bank's rights and obligations, pursuant to an agreement, substantially in the
form of an Assignment and Assumption Agreement, executed by the Affected Bank
and the Replacement Bank. In connection with such assignment and assumption, the
Replacement Bank shall pay to the Affected Bank an amount equal to the
outstanding principal amount under the Affected Bank's Note plus all interest
accrued thereon, plus all other amounts, if any (other than the Additional Costs
in question), then due and payable to the Affected Bank; provided,
--------
21
<PAGE>
however, that prior to or simultaneously with any such assignment and assumption
- -------
Borrower shall have paid to such Affected Bank all amounts properly demanded and
unreimbursed under Sections 3.01 and 3.05. Upon the effective date of such
assignment and assumption, the Replacement Bank shall become a Bank Party to
this Agreement and shall have all the rights and obligations of a Bank as set
forth in such Assignment and Assumption Agreement, and the Affected Bank shall
be released from its obligations hereunder, and no further consent or action by
any party shall be required. Upon the consummation of any assignment pursuant to
this Section, a substitute Note shall be issued to the Replacement Bank by
Borrower, in exchange for the return of the Affected Bank's Note. The
obligations evidenced by such substitute note shall constitute "Obligations" for
all purposes of this Agreement and the other Loan Documents. If the Replacement
Bank is not incorporated under the laws of the United States of America or a
state thereof, it shall, prior to the first date on which interest or fees are
payable hereunder for its account, deliver to Borrower and Administrative Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 9.13.
Borrower, Administrative Agent and the Banks shall execute such
modifications to the Loan Documents as shall be reasonably required in
connection with and to effectuate the foregoing.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01 Conditions Precedent to Initial Advance. The obligations of
---------------------------------------
the Banks hereunder and the obligation of each Bank to make the Initial Advance
are subject to the condition precedent that Administrative Agent shall have
received on or before the Closing Date (other than with respect to paragraph
(26) below, which shall be required prior to the Initial Advance) each of the
following documents, and each of the following requirements shall have been
fulfilled:
(1) Fees and Expenses. The payment of (i) all fees and expenses
-------------------
incurred by Administrative Agent and Syndication Agent (including, without
limitation, the reasonable fees and expenses of legal counsel, the
Construction Consultant and any appraiser or environmental or insurance
consultants) and (ii) those fees specified in the Supplemental Fee Letter
to be paid on or before the Closing Date;
(2) Notes. The Notes for Fleet, PNC and each of the other Banks signatory
-----
hereto, duly executed by Borrower;
(3) Mortgage and UCCs. The Mortgage, duly executed by Borrower and recorded
-----------------
(or delivered for recording) in the appropriate land records, together with
duly executed UCC-1 financing statements filed (or delivered for filing)
under the Uniform Commercial Code of all jurisdictions necessary or, in the
reasonable opinion of Administrative Agent, desirable to perfect the lien
created by the Mortgage;
(4) Guaranty. The Guaranty, duly executed by Guarantor;
--------
22
<PAGE>
(5) Indemnity. The Indemnity, duly executed by Borrower and Guarantor;
---------
(6) Title Policy. A paid title insurance policy in the amount of the
-------------
Mortgage, in form approved by Administrative Agent and issued by the Title
Insurer, which shall insure the Mortgage to be a valid first lien on Borrower's
interests in the Premises and Improvements, free and clear of all liens,
defects, encumbrances and exceptions other than those previously approved by
Administrative Agent, and shall contain (i) a reference to the survey but no
survey exceptions other than those approved by Administrative Agent, (ii) a
Pending Disbursements Clause in the form of EXHIBIT H, (iii) if such policy is
dated earlier than the date of the Initial Advance, an endorsement to such
policy, in a form approved by Administrative Agent, conforming to the pending
disbursements requirements set forth above and setting forth no additional
exceptions other than those approved by Administrative Agent and (iv) such
affirmative insurance and endorsements as Administrative Agent may require; and
shall be accompanied by such reinsurance agreements between the Title Insurer
and title companies approved by Administrative Agent, in ALTA facultative form
approved by Administrative Agent and with direct access provisions, as
Administrative Agent may require;
(7) Survey. A current ALTA/ACSM survey, certified to Administrative Agent
------
and the Title Insurer, showing (i) the location of the perimeter of the Premises
by courses and distances, (ii) all easements, rights-of-way, and utility lines
referred to in the title policy required by this Agreement or which actually
service or cross the Premises (with instrument, book and page number indicated),
(iii) the lines of the streets abutting the Premises and the width thereof, and
any established building lines (and that such roads have been dedicated for
public use and are completed and have been accepted by all required Governmental
Authorities), (iv) any encroachments and the extent thereof upon the Premises,
(v) locations of all portions (with the acreage thereof also identified) of the
Premises, if any, which are located in an area designated as a "flood prone
area" as defined by U.S. Department of Housing and Urban Development pursuant to
the Flood Disaster Protection Act of 1973 and (vi) the Improvements, and the
relationship thereof by distances to the perimeter of the Premises, established
building lines and street lines;
(8) Appraisal. An independent M.A.I. appraisal, commissioned by
---------
Administrative Agent, of the value of the Premises, which appraisal shall
indicate a stabilized value of $242,857,150 or more and shall comply in all
respects with the standards for real estate appraisals established pursuant to
the Financial Institutions Reform, Recovery, and Enforcement Act of 1989;
(9) Insurance Policies. The policies and certificates of hazard and other
------------------
insurance required by the Mortgage, together with evidence of the payment of
the premiums therefor;
(10) Hazardous Materials Report/Reliance Letter. A detailed report
---------------------------------------------
(accompanied by a reliance letter acceptable to Administrative Agent) by a
properly qualified engineer with regard to Hazardous Materials affecting the
Premises, which shall include, inter alia, a certification that such engineer
----- ----
has examined a list of prior owners, tenants and other users of the Premises,
and has made an on-site physical examination of the Premises and Improvements,
and a visual observation of the surrounding areas, and
23
<PAGE>
disclosing the extent of past or present Hazardous Materials activities or of
the presence of Hazardous Materials;
(11) Plans, Etc.. A complete set of the plans and specifications for the
------------
Improvements and copies of a soil-engineer's report, a site plan (showing
all necessary approvals, utility connections and site improvements) and all
inspection and test records and reports made by or for Borrower or its
architects;
(12) Consultant's Report. A detailed report from the Construction
--------------------
Consultant to the effect that (i) the Improvements are in satisfactory condition
and have been constructed in accordance with the plans and specifications
therefor approved by all Governmental Authorities, (ii) the Improvements comply
with all applicable zoning and other Laws, (iii) all roads and utilities
necessary for the full utilization of the Improvements for their intended
purposes have been completed, (iv) there exists a sufficient number of parking
spaces necessary to satisfy the requirements of all zoning and other applicable
Laws with respect to the Premises, and all required landscaping, sidewalks and
other amenities, and all off-site improvements, related to the Improvements have
been completed and (v) it has received and approved the project budget required
by paragraph (29) of this Section;
(13) Permits and Other Approvals. Copies of any and all authorizations,
----------------------------
including plot plan and subdivision approvals, zoning variances, sewer, building
and other permits, required by all Governmental Authorities for the use,
occupancy and operation of the Premises and/or Improvements in accordance with
all applicable building, environmental, ecological, landmark, subdivision and
zoning Laws;
(14) Leases. (i) Notices of assignment in the form of EXHIBIT G, duly
------
executed by Borrower, in respect of all executed leases of portions of the
Improvements, (ii) a certified copy of the standard form of lease Borrower is
using in connection with the leasing of space in the Improvements, (iii) the
most recent rent roll and leasing report of the sort required by paragraph (15)
of Section 6.09 (which most recent rent roll and leasing report must indicate
that at least 856,125 SFGLA of the Improvements are covered by fully
executed leases) and (iv) such of the following as Administrative Agent may
request: (w) certified copies of executed leases, (x) tenant estoppel
certificates, (y) subordination non-disturbance and attornment agreements and
(z) to the extent available, current financial statements of the tenants (and
guarantors of the tenants' obligations, if applicable);
(15) Master Declaratin and REAs. Copies, certified to be true and complete,
--------------------------
of the Master Declaration and REAs, together with estoppel certificates with
respect to the REAs from each of the Owner Anchors and, if available,
current financial statements of such parties;
(16) Management and Leasing Contract. A copy, certified to be true and
---------------------------------
complete, of its contract with The Taubman Company Limited Partnership providing
for the management, maintenance, operation and leasing of the Premises and
Improvements, together with such collateral assignment or "will-serve" letter
as Administrative Agent may require;
24
<PAGE>
(17) UCC Searches. Uniform Commercial Code searches with respect to
-------------
Borrower and advice from the Title Insurer to the effect that searches of the
proper public records disclose no leases of personalty or financing statements
filed or recorded against Borrower or the Mortgaged Property;
(18) Financial Statements. (i) Unaudited financial statements of Borrower
---------------------
and audited TRG Consolidated Financial Statements, each as of and for the year
ended December 31, 1997 and (ii) unaudited financial statements of Borrower and
unaudited TRG Consolidated Financial Statements each as of and for the quarter
ended September 30, 1998, in each case certified by the chief financial officer
or Treasurer;
(19) Evidence of Formation and Existence. For each of Borrower and
---------------------------------------
Guarantor, certified (as of the Closing Date) copies of its certificate and
agreement of limited partnership, with all amendments thereto, and certificates
of the Secretary of State of Michigan and of Delaware as to its good standing in
such jurisdictions;
(20) Evidence of All Partnership Action. For each of Borrower and
--------------------------------------
Guarantor, certified (as of the Closing Date) copies of all documents evidencing
partnership action taken by it authorizing the execution, delivery and
performance of the Loan Documents and each other document to be delivered by it
or on its behalf pursuant to this Agreement;
(21) Incumbency and Signature Certificates. For each of Borrower and
----------------------------------------
Guarantor, a certificate (dated as of the Closing Date) of the Secretary of the
managing general partner of Guarantor certifying the names and true signatures
of each person authorized to sign on its behalf;
(22) Solvency Certificate. A duly executed Solvency Certificate;
---------------------
(23) Compliance Certificate. A certificate of the sort required by
-----------------------
paragraph (3) of Section 6.09;
(24) Opinion of Counsel. A favorable opinion, dated the Closing Date, of
------------------
Miro Weiner & Kramer, counsel for Borrower and Guarantor, as to such
matters as Administrative Agent may reasonably request;
(25) Authorization Letter. The Authorization Letter, duly executed by
---------------------
Borrower;
(26) Request for Advance. A request for advance in accordance with Section
-------------------
2.04;
(27) Certificate. The following statements shall be true and
-----------
Administrative Agent shall have received a certificate dated the Closing Date
signed by a duly authorized signatory of Borrower stating, to the best of the
certifying party's knowledge, the following:
(a) All representations and warranties contained in this Agreement
and in each of the other Loan Documents are true and correct on
and as of the Closing Date as though made on and as of such date,
25
<PAGE>
(b) No Default or Event of Default has occurred and is continuing,
or could result from the transactions contemplated by this Agreement
and the other Loan Documents, and
(c) None of the Improvements has been injured or damaged by fire or
other casualty, or, if they have, such injury or damage does not exceed
$5,000,000 and is fully covered by insurance;
(28) Supplemental Fee Letter. The Supplemental Fee Letter, duly executed
-----------------------
by Borrower;
(29) Project Budget. A budget setting forth, on an item-by-item basis,
--------------
all hard and soft costs incurred, and estimated by Borrower to be incurred, by
Borrower in connection with its development and construction of the
Improvements;
(30) Equity Investment. A certificate from Borrower demonstrating that
------------------
it has invested equity in the Premises (i.e., its payment of Total Project
Costs) in an amount equal to at least $25,000,000, which certificate shall be
accompanied by such evidence of such investment as Administrative Agent may
reasonably request;
(31) Termination of Existing Loan. Evidence that that certain $210,000,000
----------------------------
unsecured loan made pursuant to a Loan Agreement, dated as of November 25, 1997,
among Guarantor (as Borrower), Fleet, PNC and other lenders (as Banks) and PNC
(as Administrative Agent) will be repaid in full and terminated upon
disbursement of the Initial Advance; and
(32) Additional Items. Such other approvals, opinions, documents or
----------------
information as Administrative Agent or any Bank may reasonably request.
Section 4.02 Conditions Precedent to Advances After the Initial Advance.
------------------------------------------------------------
The obligation of each Bank to make advances of the Loans subsequent to the
Initial Advance shall be subject to satisfaction of the following conditions
precedent:
(1) All conditions of Section 4.01 shall have been and remain satisfied as
of the date of the advance;
(2) No Default or Event of Default shall have occurred and be continuing
as of the date of the advance;
(3) Each of the representations and warranties contained in this Agreement
and in each of the other Loan Documents shall be true and correct in all
material respects as of the date of the advance;
(4) Administrative Agent shall have received and approved a request for an
advance in accordance with Section 2.04;
(5) Administrative Agent shall have received a continuation report and
endorsement to the title policy insuring the Mortgage to the date of such
advance, in the form approved by Administrative Agent, conforming to the
pending disbursements clause
26
<PAGE>
contained in said policy and setting forth no additional exceptions (including
survey exceptions) except those approved by Administrative Agent, such
approval not to be unreasonably withheld; and
(6) At the option of Administrative Agent, Administrative Agent shall have
received a progress report from the Construction Consultant verifying, among
other things, the Total Project Costs incurred by Borrower to date in
connection with the completion of the Improvements and the estimated remaining
Total Project Costs necessary for such completion.
Section 4.03 Deemed Representations. Each request by Borrower for, and
-----------------------
acceptance by Borrower of, an advance of proceeds of the Loans shall constitute
a representation and warranty by Borrower and Guarantor that as of both the date
of such request and the date of the advance (i) no Default or Event of Default
has occurred and is continuing and (ii) if any representation or warranty
contained in this Agreement or the other Loan Documents is untrue or incorrect,
the condition giving rise to such untruthfulness or incorrectness is not likely
to result in a Material Adverse Change.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each
Bank as follows:
Section 5.01 Due Organization. Each of Borrower and Guarantor is duly
-----------------
organized, validly existing and in good standing under the Laws of the State of
Delaware has the partnership power and authority to own its assets and to
transact the business in which it is now engaged, and, if applicable, is duly
qualified as a foreign partnership and in good standing under the laws of each
other jurisdiction in which such qualification is required.
Section 5.02 Power and Authority; No Conflicts; Compliance With Laws . As
---------------------------------------------------------
to each of Borrower and Guarantor, the execution and delivery of, and the
performance of the obligations required to be performed by it under, the Loan
Documents does not and will not (i) require the consent or approval of its
partners or such consent or approval has been obtained, (ii) contravene its
partnership agreement, (iii) violate any provision of, or require any filing,
registration, consent or approval under, any Law (including, without limitation,
Regulation U), order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it, (iv) result in a breach of or
constitute a default under or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which it may be
a party or by which it or its properties may be bound or affected except for
consents which have been obtained, (v) result in, or require, the creation or
imposition of any Lien (other than the Mortgage) upon or with respect to any of
its properties now owned or hereafter acquired or (vi) cause it to be in default
under any such Law, order, writ, judgment, injunction, decree, determination or
award or any such indenture, agreement, lease or instrument; to the best of
Borrower's knowledge, Borrower and Guarantor are in compliance with all Laws
27
<PAGE>
applicable to them where the failure to be in compliance would cause a Material
Adverse Change to occur.
Section 5.03 Legally Enforceable Agreements. Each Loan Document is a
--------------------------------
legal, valid and binding obligation of Borrower and/or Guarantor, as the case
may be, enforceable in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
Section 5.04 Litigation. There are no actions, suits or proceedings pending
----------
or, to Borrower's knowledge, threatened against Borrower, Guarantor or any of
their Affiliates, the Premises or Improvements, the validity or enforceability
of the Mortgage or the priority of the Lien thereof, at law or in equity, before
any court or arbitrator or any Governmental Authority except actions, suits or
proceedings which have been disclosed to the Bank Parties in writing and which
are fully covered by insurance or which would, if adversely determined, not
substantially impair the ability of Borrower or Guarantor to pay when due any
amounts which may become payable under the Notes or other Loan Documents or to
otherwise pay and perform their respective obligations in connection with the
Loans.
Section 5.05 Good Title to Properties. Borrower, Guarantor and each of
-------------------------
their Affiliates have good, marketable and legal title to all of the properties
and assets each of them purports to own (including, without limitation, those
reflected in the September 30, 1998 financial statements of Borrower and
Guarantor referred to in Section 5.13) and, in the case of all of Guarantor's
shopping center properties, only with exceptions which do not materially detract
from the value of such property or assets or the use thereof in Guarantor's and
such Affiliate's business, and except to the extent that any such properties and
assets have been encumbered or disposed of since the date of such financial
statements without violating any of the covenants contained in paragraph 14 of
the Payment Guaranty or elsewhere in the Loan Documents. Borrower, Guarantor and
their Affiliates enjoy peaceful and undisturbed possession of all leased
property necessary in any material respect in the conduct of their respective
businesses. All such leases are valid and subsisting and are in full force and
effect.
Section 5.06 Taxes. Each of Borrower and Guarantor has filed (or duly
-----
obtained an extension to file) all tax returns (federal, state and local)
required to be filed and has paid all taxes, assessments and governmental
charges and levies due and payable without the imposition of a penalty,
including interest and penalties, except to the extent they are the subject of a
Good Faith Contest.
Section 5.07 ERISA. Each of Borrower and Guarantor is in compliance in all
-----
material respects with all applicable provisions of ERISA. Neither a Reportable
Event nor a Prohibited Transaction has occurred with respect to any Plan; no
notice of intent to terminate a Plan has been filed nor has any Plan been
terminated within the past five (5) years; no circumstance exists which
constitutes grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; Borrower, Guarantor and the ERISA
Affiliates have not completely or partially withdrawn under Sections 4201 or
4204 of ERISA from a Multiemployer Plan; Borrower, Guarantor and the ERISA
Affiliates have met the minimum funding requirements of each under ERISA with
respect to the Plans of each and there are no unfunded vested liabilities with
respect to any Plan established or maintained by each; and neither
28
<PAGE>
Borrower, Guarantor nor the ERISA Affiliates has incurred any liability to
the PBGC under ERISA.
Section 5.08 No Default on Outstanding Judgments or Orders . Each of
---------------------------------------------------
Borrower and Guarantor has satisfied all judgments which are not being appealed
and is not in default with respect to any judgment, order, writ, injunction,
decree, rule or regulation binding on it of any court, arbitrator or federal,
state, municipal or other Governmental Authority, commission, board, bureau,
agency or instrumentality, domestic or foreign.
Section 5.09 No Defaults on Other Agreements. Except as disclosed to the
--------------------------------
Bank Parties in writing, including anything disclosed on financial statements,
neither Borrower nor Guarantor, to the best of Borrower's knowledge, is a party
to any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any partnership, trust or other restriction which is
likely to result in a Material Adverse Change. To the best of Borrower's
knowledge, neither Borrower nor Guarantor is in default in any respect in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument binding on it which is
likely to result in a Material Adverse Change.
Section 5.10 Government Regulation. Neither Borrower nor Guarantor is
----------------------
subject to regulation under the Investment Company Act of 1940, the Interstate
Commerce Act, the Federal Powers Act or any statute or regulation limiting any
such Person's ability to incur indebtedness for money borrowed as contemplated
hereby.
Section 5.11 Environmental Protection. To the best of Borrower's knowledge,
------------------------
none of Borrower's, Guarantor's or their Affiliates' properties (including the
Premises) contains any Hazardous Materials that, under any Environmental Law
currently in effect (x) would impose liability on Borrower or Guarantor that is
likely to result in a Material Adverse Change or (y) is likely to result in the
imposition of a Lien on any assets (including the Premises) of Borrower or
Guarantor, in each case if not properly handled in accordance with applicable
Law. To the best of Borrower's knowledge, neither it, Guarantor nor any of their
Affiliates, nor any portion of the Premises or Improvements, is in violation of,
or subject to any existing, pending or threatened investigation or proceeding by
any Governmental Authority under, any Environmental Law. Borrower is not aware
of any matter, claim, condition or circumstance which would reasonably cause a
Person to make further inquiry with respect to such matters in order to
ascertain whether any Hazardous Materials or their effects have been disposed of
or released on or to any portion of the Premises or Improvements or any
surrounding areas; to the best of Borrower's knowledge, it is not required by
any Environmental Law to obtain any permits or license to construct or use any
improvements, fixtures, or equipment with respect to the Premises or
Improvements, or if such permit or license is required it has been obtained;
and, to Borrower's actual knowledge, the prior use of the Premises and
Improvements has not resulted in the disposal or release of any Hazardous
Materials on or to any portion of the Premises or any surrounding areas in
violation of applicable Law.
Section 5.12 Solvency. Each of Borrower and Guarantor is, and upon
--------
consummation of the transactions contemplated by this Agreement, the other Loan
Documents and any other documents, instruments or agreements relating thereto,
will be, Solvent.
29
<PAGE>
Section 5.13 Financial Statements. Borrower's financial statements and the
--------------------
TRG Consolidated Financial Statements most recently delivered to the Banks
pursuant to the terms of this Agreement are in all material respects complete
and correct and fairly present the financial condition of the subjects thereof
as of the dates of and for the periods covered by such statements, all in
accordance with GAAP. There has been no Material Adverse Change since the date
of such most recently delivered Borrower's financial statements and TRG
Consolidated Financial Statements, and no borrowings which might give rise to a
Lien or claim against the Mortgaged Property or against the proceeds of the
Loans have been made by Borrower or others since the dates of such most recently
delivered Borrower's financial statements and TRG Consolidated Financial
Statements.
Section 5.14 Valid Existence of Affiliates. As of the Closing Date, the
-------------------------------
only material Affiliates of Borrower or Guarantor which own or lease operating
shopping centers or shopping centers under construction are listed on EXHIBIT D.
Each such Affiliate is a partnership, limited liability company or joint venture
duly organized and existing in good standing under the laws of the jurisdiction
of its formation. As to each such Affiliate, its correct name, the jurisdiction
of its formation and Borrower's and/or Guarantor's percentage of beneficial
interest therein are set forth on said EXHIBIT D. Borrower, Guarantor and each
of such Affiliates have the power to own their respective properties and to
carry on their respective businesses now being conducted. Each of Borrower,
Guarantor and such Affiliates is duly qualified as a foreign partnership,
company or venture to do business and is in good standing in every jurisdiction
in which the nature of the respective businesses conducted by it or its
respective properties, owned or held under lease, make such qualification
necessary.
Section 5.15 Insurance. Borrower has in force paid insurance as required by
---------
the Mortgage and, generally, Borrower, Guarantor and each of their Affiliates
has in force paid insurance with financially sound and reputable insurance
companies or associations in such amounts and covering such risks as are usually
carried by companies engaged in the same or a similar business and similarly
situated.
Section 5.16 Separate Tax and Zoning Lot. The Premises constitutes a
----------------------------
distinct parcel for purposes of zoning and of taxes, assessments and impositions
(public or private) and is not otherwise considered as part of a larger single
lot for purposes of zoning or of taxes, assessments or impositions (public or
private).
Section 5.17 Zoning and other Laws; Covenants and Restrictions. (i) The
----------------------------------------------------
Improvements and the uses thereof comply with all applicable zoning and other
Laws, and all requirements for such uses have been satisfied and (ii) Borrower
and the Premises are in compliance with all applicable restrictions and
covenants.
Section 5.18 Utilities Available. All utility services necessary for the
--------------------
operation of the Improvements for their intended purposes are available and
servicing the Premises, including water supply, storm and sanitary sewer, gas,
electric power and telephone facilities.
Section 5.19 Creation of Liens. It has entered into no contract or
-------------------
arrangement of any kind the performance of which by the other party thereto
would give rise to a Lien on all or part of the Mortgaged Property prior to the
Mortgage, other than its contracts with contractors performing work on the
Improvements.
30
<PAGE>
Section 5.20 Roads. All roads (other than Lake Angelus Road, which is
-----
currently in the process of being dedicated to public use) necessary for the
full utilization of the Improvements for their intended purposes have been
completed and dedicated to public use and accepted by all appropriate
Governmental Authorities.
Section 5.21 REAs and Leases. The REAs and all leases in respect of the
----------------
Premises are unmodified and in full force and effect; to the best of Borrower's
knowledge, there are no defaults under any thereof except as disclosed to
Administrative Agent in writing, and all conditions to the effectiveness and
continuing effectiveness thereof required to be satisfied as of the date hereof
have been satisfied. There exists a sufficient number of parking spaces
necessary to satisfy the requirements of the REAs and all leases.
Section 5.22 Accuracy of Information; Full Disclosure. Neither this
--------------------------------------------
Agreement nor any documents, financial statements, reports, notices, schedules,
certificates, statements or other writings furnished by or on behalf of Borrower
or Guarantor to any Bank Party in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated hereby, or
required herein to be furnished by or on behalf of Borrower or Guarantor,
contains any untrue or misleading statement of a material fact or omits a
material fact necessary to make the statements herein or therein not misleading.
There is no fact which Borrower has not disclosed to the Bank Parties in writing
which materially affects adversely nor, so far as Borrower can now foresee, will
materially affect adversely any of the Mortgaged Property or the business,
prospects, profits or financial condition of Borrower or Guarantor or the
ability of Borrower or Guarantor to perform this Agreement and the other Loan
Documents.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to any
Bank Party hereunder or under any other Loan Document, Borrower (as to itself)
shall, and shall cause Guarantor (as to Guarantor) to:
Section 6.01 Maintenance of Existence. Preserve and maintain its legal
--------------------------
existence and good standing in the state of Michigan and, if applicable, qualify
and remain qualified as a foreign partnership in each jurisdiction in which such
qualification is required, except to the extent that failure to so qualify is
not likely to result in a Material Adverse Change.
Section 6.02 Maintenance of Records. Keep adequate records and books of
-----------------------
account, in which complete entries will be made in accordance with GAAP,
reflecting all of its financial transactions.
Section 6.03 Maintenance of Insurance. At all times, (i) maintain and keep
------------------------
in force the insurance required by the Mortgage and (ii) maintain and keep in
force, and cause each of its Affiliates to maintain and keep in force, insurance
with financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated, which insurance may
provide for reasonable deductibility from coverage thereof.
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Section 6.04 Compliance with Laws; Payment of Taxes. Comply in all
--------------------------------------
respects with all Laws applicable to it or to any of its properties (including
the Premises) or any part thereof, such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its property, except to the extent
they are the subject of a Good Faith Contest.
Section 6.05 Inspection and Cooperation . (a) At any reasonable
--------------------------
time and from time to time upon reasonable notice, permit Administrative Agent
or any Bank or any agent or representative thereof (provided that a
representative of any Bank must, at Borrower's or Guarantor's request, be
accompanied by a representative of Borrower or Guarantor, as the case may be),
to examine and make copies and abstracts from the records and books of account
of, and visit the properties (including the Premises) of, Borrower and Guarantor
and to discuss the affairs, finances and accounts of Borrower and Guarantor with
the chief financial officers or Treasurers thereof and with Borrower's
Accountants.
(b) Permit Administrative Agent, its representatives and the
Construction Consultant to enter upon the Premises, inspect the Mortgaged
Property, including the Improvements and all materials to be used in the
construction thereof, and examine all detailed plans and shop drawings which are
or may be kept at the construction site, provided that the foregoing rights
--------
shall not be exercised in a manner so as to interfere unduly with the conduct of
business and operations of Borrower; cooperate and cause its contractors and
subcontractors to cooperate with the Construction Consultant to enable it to
perform its functions hereunder.
(c) Each Bank and Administrative Agent agree that it shall maintain
confidentiality with respect to the materials referred to in paragraph (a) of
this Section, provided that the Banks and Administrative Agent shall not be
--------
precluded from making disclosure regarding such information: (i) to the Banks'
and Administrative Agent's respective counsel, accountants and other
professional advisors (who are, in each case, subject to this confidentiality
agreement), (ii) to officers, directors, employees, agents and partners of each
Bank and Administrative Agent who need to know such information (who are, in
each case, subject to this confidentiality agreement), (iii) in response to a
subpoena or order of a court or Governmental Authority, (iv) to any Assignee or
Participant or prospective Assignee or Participant, provided that any such
--------
entity shall be subject to this paragraph (however, the Banks and Administrative
Agent shall have no duty to monitor any Assignee or Participant or prospective
Assignee or Participant and shall have no liability in the event that any
Assignee or Participant or prospective Assignee or Participant violates this
paragraph) or (v) as required by Law or by GAAP.
Section 6.06 Compliance With Environmental Laws. Comply in all
-------------------------------------
material respects with all applicable Environmental Laws and immediately pay
or cause to be paid all costs and expenses incurred in connection with such
compliance, except to the extent there is a Good Faith Contest; and at its sole
cost and expense, promptly remove, or cause removal of, any and all Hazardous
Materials or the effects thereof at any time identified as being on, in, under
or affecting the Premises or the Improvements in violation of applicable
Environmental Law.
Section 6.07 Completion of Improvements; Payment of Costs. Complete
--------------------------------------------
the construction of the Improvements (including all punch-list items and tenant
improvements), lien free, in a timely manner in accordance with the plans and
specifications therefor, all applicable Laws, the REAs and all leases; and pay
all costs and expenses required for such completion and
32
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for the satisfaction of the conditions of this Agreement, including, without
limitation, (i) all document and stamp taxes, recording and filing expenses and
fees and commissions lawfully due to brokers in connection with the transactions
contemplated hereby and (ii) subject to Borrower's right to contest the same as
provided in Section 1.07(c) of the Mortgage, any taxes, assessments, impositions
(public or private), insurance premiums, Liens (except for Liens for real estate
taxes not yet due and payable), security interests or other claims or charges
against the Premises or Improvements.
Section 6.08 Maintenance of Properties. Do all things reasonably
-------------------------
necessary to maintain, preserve, protect and keep its properties (including the
Premises) in good repair, working order and condition.
Section 6.09 Reporting and Miscellaneous Document Requirements.
-----------------------------------------------------
Furnish directly to each of the Banks:
(1) Annual Financial Statements. As soon as available and in any
-----------------------------
event within ninety (90)days after the end of each Fiscal Year, Borrower's
financial statements and the TRG Consolidated Financial Statements, in
each case as of the end of and for such Fiscal Year, in reasonable detail
and stating in comparative form the respective figures for the
corresponding date and period in the prior Fiscal Year and audited by
Borrower's Accountants;
(2) Quarterly Financial Statements. As soon as available and in any
--------------------------------
event within forty-five (45) days after the end of each calendar
quarter, unaudited Borrower's financial statements and unaudited TRG
Consolidated Financial Statements, in each case as of the end of and for
such calendar quarter, in reasonable detail and stating in comparative
form the respective figures for the corresponding date and period in the
prior Fiscal Year and certified by the chief financial officer or
Treasurer;
(3) Certificate of No Default and Guarantor Financial Compliance.
-----------------------------------------------------------------
Within forty-five (45) days after the end of each of the first
three quarters of each Fiscal Year and within ninety (90) days after the
end of each Fiscal Year, a certificate of Guarantor's chief financial
officer or Treasurer (a) stating that, to the best of his or her
knowledge, no Default or Event of Default has occurred and is continuing,
or if a Default or Event of Default has occurred and is continuing,
specifying the nature thereof and the action which is proposed to be taken
with respect thereto, (b) stating that the covenants contained in
paragraphs 14 and 15 of the Payment Guaranty have been complied with (or
specifying those that have not been complied with) and including
computations demonstrating such compliance (or non-compliance) and (c)
setting forth the details of all items comprising "Total Outstanding
Indebtedness" (including amount, maturity, interest rate and amortization
requirements) as of the end of such quarter, and "Combined EBITDA",
"Interest Expense" and "Fixed Charges", each for the twelve (12)-month
period ending with such quarter(as all of such quoted terms are defined in
the Payment Guaranty);
(4) Certificate of No Default and Property Financial Compliance.
----------------------------------------------------------------
Within forty-five (45) days after the end of each calendar quarter
subsequent to the first anniversary of the Closing Date, a certificate
of Borrower's general partner's chief financial officer or Treasurer (a)
stating that, to the best of his or her knowledge, no
33
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Default or Event of Default has occurred and is continuing, or if a
Default or Event of Default has occurred and is continuing, specifying the
nature thereof and the action which is proposed to be taken with respect
thereto and (b) stating that the covenants contained in Article VII have
been complied with (or specifying those that have not been complied with)
and including computations, in reasonable detail, demonstrating such
compliance (or non-compliance);
(5) Certificate of Borrower's Accountants. Simultaneously with the
---------------------------------------
delivery of the annual financial statements required by paragraph (1) of
this Section, a statement of Borrower's Accountants who audited such
financial statements comparing the computations set forth in the financial
compliance certificate required by paragraph (3) of this Section to the
audited financial statements required by paragraph (1) of this Section
(where such information appears in such financial statements);
(6) Dispositions or Acquisitions of Assets by Guarantor. Within thirty
---------------------------------------------------
(30) days after the occurrence thereof, written notice of any Disposition
or acquisition of assets (other than acquisitions or Dispositions of
investments such as certificates of deposit, Treasury securities and money
market deposits in the ordinary course of Guarantor's cash management) in
excess of $25,000,000, together with, in the case of any acquisition of
such an asset, (a) a certificate, of the sort required by paragraph (3)(b)
of this Section, containing covenant compliance calculations that include
the pro-forma adjustments set forth in paragraph 16 of the Payment
Guaranty, which calculations shall demonstrate Guarantor's compliance,
on a pro-forma basis, as of the end of the most recently ended calendar
quarter for which financial results are required hereunder to have been
reported by Guarantor, with all covenants enumerated in said paragraph (3)
(b) and (b) such other information relating to the acquisition as
Administrative Agent may reasonably request,including, without limitation,
(x) copies of the agreements governing the acquisition and (y) historical
balance sheets (to the extent available) and statements of income and cash
flows with respect to the property acquired for at least the preceding
three (3) years (to the extent available) and Guarantor's revenue and
expense projections for the property acquired for at least the next five
(5) years (all of the foregoing to be in form and detail satisfactory to
Administrative Agent);
(7) Notice of Litigation. Promptly after the commencement and
----------------------
knowledge thereof, notice of all actions, suits, and proceedings before
any Governmental Authority, court or arbitrator, affecting Borrower,
Guarantor or all or any portion of the Mortgaged Property which, if
determined adversely, is likely to result in a Material Adverse Change;
(8) Notices of Defaults and Events of Default. As soon as possible
--------------------------------------------
and in any event within ten (10) days after Borrower becomes aware of the
occurrence of a material Default or any Event of Default, a written notice
setting forth the details of such Default or Event of Default and the
action which is proposed to be taken with respect thereto;
(9) Material Adverse Change. As soon as is practicable and in any
------------------------
event within five (5) days after knowledge of the occurrence of any
event or circumstance which is likely to result in or has resulted in a
Material Adverse Change, written notice thereof;
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(10) Bankruptcy of Tenants. Promptly after becoming aware of the
----------------------
same, written notice of the bankruptcy, insolvency or cessation of
operations of (a) any of the Owner Anchors, (b) any tenant in the
Improvements to which 5% or more of the aggregate minimum rent from the
Improvements is attributable or (c) except to the extent such information
is (or will be) disclosed in the TRG Consolidated Financial Statements
delivered pursuant to paragraphs (1) and (2) above, any tenant in any
property of Guarantor or in which Guarantor has an interest to which 5% or
more of the aggregate minimum rent payable, directly or indirectly, to
Guarantor is attributable;
(11) Offices. Thirty (30) days' prior written notice of any change
-------
in the chief executive office or principal place of business of Borrower
or Guarantor;
(12) Environmental and Other Notices. As soon as possible and in any
-------------------------------
event within five (5) days after receipt, copies of (a) all Environmental
Notices received by Borrower or Guarantor which are not received in the
ordinary course of business and which relate to the Premises or to a
situation which is likely to result in a Material Adverse Change and (b)
all reports of any official searches made by any Governmental Authority
having jurisdiction over the Premises or the Improvements, and of any
claims of violations thereof;
(13) Insurance Coverage. Promptly, such information concerning
-------------------
Borrower's or Guarantor's insurance coverage as Administrative Agent may
reasonably request;
(14) SEC Filings, Etc. As soon as possible and in any event within ten
----------------
(10) days of the sending or filing thereof, copies of all annual reports
on Form 10-K (without exhibits)and quarterly reports on Form 10-Q (without
exhibits); and as soon as possible following Administrative Agent's
request therefor, copies of all proxy statements, financial statements,
registration statements and reports which TCI sends to its shareholders
or files with the Securities and Exchange Commission or any Governmental
Authority which may be substituted therefor;
(15) Leasing Reports and Operating Statements. As soon as available
------------------------------------------
and in any event within thirty (30) days after the end of each calendar
quarter, a rent roll, leasing report and operating and cash statements for
the Premises, in each case certified by Borrower to be true and complete;
(16) Other Property Information. As soon as available and in any
--------------------------
event within ninety (90) days after the end of each Fiscal Year, a tenant
sales report for the Premises for such Fiscal Year and a budget for the
Premises (including projections) for the next Fiscal Year; and
(17) General Information. Promptly, such other information respecting
-------------------
the condition or operations, financial or otherwise, of Borrower or
Guarantor or any of their properties (including the Premises) as
Administrative Agent or any Bank may from time to time reasonably request.
Section 6.10 REAs; Leases. Keep the REAs and all leases in full
------------
force and effect (except as may be permitted by this Agreement or by the
Mortgage) and at all times use commercially reasonable efforts to compel
performance by the parties to the REAs or the tenants
35
<PAGE>
under such leases, as the case may be, of all obligations, covenants and
agreements by such parties or tenants, as the case may be, to be performed
thereunder; deliver to Administrative Agent, (i) promptly following the
execution thereof, certified copies of all amendments or supplements to the
Master Declaration or the REAs and (ii) promptly following Administrative
Agent's request therefor, certified copies of any or all leases of portions of
the Improvements (together with abstracts of such leases), any or all amendments
or supplements to any thereof, current financial statements (to the extent
available) of the tenants thereunder (and of any guarantors of such tenants'
obligations), estoppel certificates (on a best efforts basis) from any or all of
said tenants and notices of assignment in the form of EXHIBIT G; and not enter
into any Major Lease or modify (other than de minimus modifications) the Master
-- -------
Declaration, the REAs or any Major Lease, without, in any such case, the prior
written consent of Administrative Agent, such consent not to be unreasonably
withheld or delayed.
Section 6.11 Compliance with Covenants, Restrictions and Easements.
-----------------------------------------------------
Comply with all restrictions, covenants and easements affecting the Premises or
the Improvements.
Section 6.12 Management, Leasing and Service Contracts. Deliver to
-----------------------------------------
Administrative Agent, (i) as and when executed, certified copies of all
management and leasing contracts and (ii) as and when requested by
Administrative Agent, copies of all service contracts, in any case entered into
with respect to the Premises or Improvements, each of which management or
leasing contracts shall be entered into with a party, and on terms and
conditions, reasonably acceptable to Administrative Agent; contemporaneously
with entering into each such management or leasing contract, at Administrative
Agent's option, cause the same to be collaterally assigned to Administrative
Agent for the benefit of the Banks as additional security for the Loans and/or
cause the manager or leasing agent under each such management or leasing
contract to undertake, inter alia, to continue performance on the Banks' behalf
----- ----
without additional cost in the event of a Default; cause each service contract
to contain a provision allowing for the as-of-right cancellation thereof on
thirty (30) days' notice from Borrower or its successors as owners of the
Premises; and keep in full force and effect and not materially modify the
management and leasing agreement(s) approved pursuant to paragraph (16) of
Section 4.01 without Administrative Agent's prior written consent, such consent
not to be unreasonably withheld.
Section 6.13 Correction of Defects. Upon demand of Administrative
---------------------
Agent or the Construction Consultant, correct any defects (including structural)
in the Improvements.
Section 6.14 Additional Equity. (a) Subject to paragraph (b) below,
-----------------
make equity investments in the Premises, in addition to that required by
paragraph (30) of Section 4.01, in amounts such that Borrower's aggregate equity
investment in the Premises will be equal to at least 100% of Borrower's Share of
Total Project Costs by the date which is one hundred eighty (180) days from the
date hereof (the "Final Equity Determination Date"), it being understood that in
such event the unused Loan Commitments of the Banks, if any, shall automatically
terminate.
(b) In the event Borrower's equity investments in the Premises on
the Final Equity Determination Date aggregate less than 100% of Borrower's Share
of Total Project Costs, as reasonably determined by Administrative Agent, the
following procedure shall apply. Borrower shall, within five (5) days of
Administrative Agent's demand therefor, deposit into a "blocked"
36
<PAGE>
cash collateral account to be established with Administrative Agent (the
"Project Costs Cash Collateral Account") (and held by Administrative Agent for
the benefit of the Banks as hereinafter provided) an amount equal to the excess
of (x) 100% of Borrower's Share of Total Project Costs over (y) the amount of
equity actually invested by Borrower in the Premises as of the Final Equity
Determination Date, as reasonably determined by Administrative Agent and
specified by it in its demand to Borrower referred to above. Following
Borrower's deposit into the Project Costs Cash Collateral Account as aforesaid,
the Banks shall advance to Administrative Agent for deposit into the Project
Costs Cash Collateral Account all remaining undisbursed proceeds of the Loans,
if any, irrespective of whether or not Borrower has submitted a request for such
advance to Administrative Agent as provided herein, such advance not to exceed,
however, 80% of the then remaining Total Project Costs. Upon such advance, the
unused Loan Commitments of the Banks, if any, in excess of 80% of the then
remaining Total Project Costs shall automatically terminate.
(c) Amounts deposited into the Project Costs Cash Collateral Account as
aforesaid shall be invested by Administrative Agent in certificates of deposit
or other money market instruments (each such certificate of deposit or money
market instrument, a "MM Instrument") issued (and to be held) by Administrative
Agent, the amounts and terms of which shall be acceptable to Administrative
Agent. Borrower hereby assigns the Project Costs Cash Collateral Account and all
sums therein, and all MM Instruments, including earnings thereon, to
Administrative Agent, for the benefit of the Banks, as security for the payment
and performance of Borrower's obligations under the Loan Documents and
acknowledges that Borrower shall have no right to such sums or such MM
Instruments except to the extent specifically provided for herein. Borrower
further acknowledges that Administrative Agent shall retain possession of all
documents evidencing the Project Costs Cash Collateral Account and any MM
Instrument to perfect its security interests therein. Provided there exists no
Default or Event of Default, Borrower shall be entitled to advances of sums in
the Project Costs Cash Collateral Account, or invested in MM Instruments, for
the payment of Total Project Costs upon its submission of a request therefor to
Administrative Agent, which request shall certify (and demonstrate) that
Borrower has incurred such Total Project Costs and shall be accompanied by such
evidence of such incurrence as Administrative Agent may reasonably request.
Notwithstanding the foregoing, upon the occurrence of an Event of Default,
Administrative Agent may, upon the direction of the Required Banks, apply any
and all sums in the Project Costs Cash Collateral Account and all sums invested
in MM Instruments, including earnings thereon, to the immediate reduction of the
Principal Amount and/or accrued and unpaid interest and/or other sums payable
hereunder or under the Notes or other Loan Documents, in such order and amounts
as the Required Banks shall elect. Administrative Agent is hereby appointed
Borrower's attorney-in-fact for the purpose of withdrawing any and all sums from
the Project Costs Cash Collateral Account and all sums invested in MM
Instruments. Borrower agrees to execute such further documents (including
security agreements and UCC-1 financing statements) and do such further acts as
Administrative Agent may reasonably request to confirm or perfect the assignment
and security interests provided for in this Section.
Section 6.15 Additional Indebtedness. Not incur Debt (other than the
-----------------------
Loans) in excess of $5,000,000 without the prior written consent of the Required
Banks.
37
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ARTICLE VII
PROPERTY COVENANTS
Section 7.01 Required Debt Service Coverage. (a) If (x) as of the
------------------------------
end of any calendar quarter ending after the first anniversary of the Closing
Date, Debt Service Coverage shall be less than 1.25 or (y) as of the end of any
calendar quarter ending during the extended term of the Loans (assuming an
effective exercise of Borrower's option to extend the Maturity Date pursuant to
Section 2.05), Debt Service Coverage shall be less than 1.40, then, (i) within
forty-five (45) days after the end of any such quarter, Borrower shall, and
hereby covenants to, make a payment to Administrative Agent in an amount equal
to Net Cash Flow for such quarter and (ii) within forty-five (45) days after the
end of each subsequent calendar quarter until Administrative Agent is required
to release sums as provided in paragraph (b) below, Borrower shall, and hereby
covenants to (subject to paragraph (c) below), make a payment to Administrative
Agent in an amount equal to Net Cash Flow for such quarter, irrespective of
whether the requisite Debt Service Coverage was attained as of the end of such
quarter. Said amounts shall be deposited by Administrative Agent into an
interest-bearing, "blocked" cash collateral account to be established with
Administrative Agent (the "Cash Flow Collateral Account") and held by
Administrative Agent for the benefit of the Banks as hereinafter provided.
Borrower hereby assigns the Cash Flow Collateral Account and all sums therein,
including interest thereon, to Administrative Agent, for the benefit of the
Banks, as security for the payment and performance of Borrower's obligations
under the Loan Documents and acknowledges that Borrower shall have no right to
such sums except to the extent specifically provided for herein. Borrower
further acknowledges that Administrative Agent shall retain possession of all
documents evidencing the Cash Flow Collateral Account to perfect its security
interest therein. Provided there exists no Default or Event of Default, Borrower
shall be entitled to advances of sums in the Cash Flow Collateral Account to (x)
prepay the Loans in accordance with Section 2.10, (y) pay real estate taxes and
insurance premiums in respect of the Premises, but only to the extent that funds
in any reserve accounts established for such purposes are insufficient for such
payment or (z) pay such operating expenses in respect of the Improvements as may
be approved by the Required Banks. Notwithstanding the foregoing, upon the
occurrence of an Event of Default, Administrative Agent may, at its option,
apply any and all sums in the Cash Flow Collateral Account (including interest)
to the immediate reduction of the Principal Amount and/or accrued and unpaid
interest and/or other sums payable hereunder or under the Notes or other Loan
Documents, in such order and amounts as Administrative Agent shall elect.
Administrative Agent is hereby appointed Borrower's attorney-in-fact for the
purpose of withdrawing any and all sums from the Cash Flow Collateral Account.
Borrower agrees to execute such further documents (including security agreements
and UCC-1 financing statements) and do such further acts as Administrative Agent
may reasonably request to confirm or perfect the assignment and security
interest provided for in this Section.
(b) If, as of the end of two (2) consecutive calendar quarters
following an event giving rise to Borrower's obligation to make payments to
Administrative Agent for deposit into the Cash Flow Collateral Account, as set
forth in paragraph (a) above, Debt Service Coverage shall equal or exceed 1.25
or 1.40, as the case may be as required by paragraph (a) above, then, if there
exists no Default or Event of Default, on the forty-fifth (45th) day following
the end of such second quarter, Administrative Agent shall release all sums
(including interest), if any, then on deposit in the Cash Flow Collateral
Account to Borrower and such sums shall be
38
<PAGE>
deemed free of the assignment and security interest created pursuant to this
Section, and Administrative Agent shall execute such further documents
(including UCC termination statements) to confirm the foregoing as Borrower
shall reasonably request; provided, however, that if the requisite Debt Service
-------- -------
Coverage specified in paragraph (a) of this Section shall not be attained as of
the end of any succeeding quarter, Borrower shall again be required to make
payments for deposit in the Cash Flow Collateral Account as provided in said
paragraph (a) and the other provisions of said paragraph (a) and this paragraph
(b) shall be applicable.
(c) Notwithstanding the foregoing provisions of this Section, if the
Debt Service Coverage required by paragraph (a) above is not attained, Borrower
may, in lieu of making the requisite payments of Net Cash Flow provided for
above, make, prior to the first payment date of such Net Cash Flow, a partial
prepayment of the Principal Amount in an amount such that the required Debt
Service Coverage would have been attained had the reduced Principal Amount been
the Principal Amount as of the end of the calendar quarter in respect of which
payments of Net Cash Flow were determined to be required.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01 Events of Default. Any of the following events shall be
-----------------
an "Event of Default":
(1) If Borrower shall fail to pay the principal of any Notes
(including, without limitation, any principal payments required by Section
2.16) as and when due; or fail to pay interest accruing on any Notes as and
when due and such failure to pay shall continue unremedied for five (5)
days after the due date of such amount; or fail to pay any fee or any
other amount under this Agreement or any other Loan Document or under the
Supplemental Fee Letter as and when due and such failure to pay shall
continue unremedied for two (2) Banking Days after notice by Administrative
Agent of such failure to pay; or
(2) If any representation or warranty made by Borrower or Guarantor
in this Agreement or in any other Loan Document or which is contained
in any certificate, document, opinion, financial or other statement
furnished at any time under or in connection with a Loan Document shall
prove to have been incorrect in any material respect on or as of the date
made; or
(3) If Guarantor shall fail to perform or observe any term,
covenant or agreement contained in paragraphs 14 or 15 of the Payment
Guaranty, or if Borrower shall fail to perform or observe any term,
covenant or agreement contained in Article VII; or
(4) If Borrower or Guarantor shall fail to perform or observe any
term, covenant or agreement contained in Article VI or otherwise contained
in this Agreement or any Loan Document (other than obligations specifically
referred to elsewhere in this Section) or any other document executed by
Borrower or Guarantor and delivered to Administrative Agent and/or the
Banks in connection with the transactions contemplated
39
<PAGE>
hereby and such failure shall remain unremedied for thirty (30) consecutive
calendar days after notice of the occurrence thereof from Administrative
Agent (or such shorter cure period as may be expressly prescribed in the
applicable Loan Document); provided, however, that if any such default
-------- -------
cannot by its nature be cured within such thirty (30) day, or shorter, as
the case may be, grace period and so long as Borrower shall have commenced
cure within such thirty (30) day, or shorter, as the case may be, grace
period and shall, at all times thereafter, diligently prosecute the same to
completion, Borrower shall have an additional period, not to exceed ninety
(90) days, to cure such default; in no event, however, is the foregoing
intended to effect an extension of the Maturity Date; or
(5) If Borrower, Guarantor or TCI shall fail(a) to pay any Debt (other
than the payment obligations described in paragraph (1) of this Section) in
an amount equal to or greater than $10,000,000 when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or
otherwise) or (b) to perform or observe any material term, covenant, or
condition under any agreement or instrument relating to any such Debt, when
required to be performed or observed, if the effect of such failure to
perform or observe is to accelerate, or to permit the acceleration of,
after the giving of notice or the lapse of time, or both (other than in
cases where, in the judgment of the Required Banks, meaningful discussions
likely to result in (i) a waiver or cure of the failure to perform or
observe or (ii) otherwise averting such acceleration are in progress
between Borrower, Guarantor or TCI, as the case may be, and the obligee of
such Debt), the maturity of such Debt, or any such Debt shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled or otherwise required prepayment), prior to the stated maturity
thereof; or
(6) If Borrower, Guarantor, TCI or any Affiliate of any of them to
which $150,000,000 or more of "Capitalization Value" (as such quoted term
is defined in the Payment Guaranty) is attributable, shall: (a) generally
not, or be unable to, or shall admit in writing its inability to, pay its
debts as such debts become due; or (b) make an assignment for the benefit
of creditors, petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it, the Premises or a substantial part
of its other assets; or (c) commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (d) have had any such petition or application filed or any such
proceeding shall have been commenced, against it or the Premises, in which
an adjudication or appointment is made or order for relief is entered, or
which petition, application or proceeding remains undismissed or unstayed
for a period of ninety (90) days or more; or (e) be the subject of any
proceeding under which the Premises or all or a substantial part of its
other assets may be subject to seizure, forfeiture or divestiture; or (f)
by any act or omission indicate its consent to, approval of or acquiescence
in any such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or trustee for the Premises or all or
any subst-antial part of its other property; or (g) suffer any such
custodianship, receivership or trusteeship for the Premises or all or any
substantial part of its other property, to continue undischarged for a
period of ninety (90) days or more; or
(7) If one or more judgments, decrees or orders for the payment
of money in excess of $10,000,000 in the aggregate shall be rendered
against Borrower, Guarantor or
40
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TCI, and any such judgments, decrees or orders shall continue unsatisfied
and in effect for a period of thirty (30) consecutive days without being
vacated, discharged, satisfied or stayed or bonded pending appeal; or
(8) If any of the following events shall occur or exist with respect
to Borrower, Guarantor or any ERISA Affiliate: (a) any non-exempt
Prohibited Transaction involving any Plan; (b) any Reportable Event with
respect to any Plan; (c) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (d) any
event or circumstance which might constitute grounds entitling the PBGC to
institute proceedings under Section 4042 of ERISA for the termination of,
or for the appointment of a trustee to administer, any Plan, or the
institution by the PBGC of any such proceedings; or (e) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or
the reorganization, insolvency, or termination of any Multiemployer Plan;
and in each case above, if such event or conditions, if any, could in the
opinion of any Bank reasonably be expected to result in liability of
Borrower, Guarantor or any ERISA Affiliate for any tax, penalty, or other
liability to or in respect of a Plan, Multiemployer Plan, the PBGC or
otherwise (or any combination thereof) which materially and adversely
affects the financial condition of (x) Borrower or Guarantor with respect
to clause (a) above or (y) Borrower, Guarantor or any ERISA Affiliate with
respect to clauses (b) through (e) above; or
(9) If at any time TCI is not a qualified real estate investment
trust under Sections 856 through 860 of the Code or is not listed on
the New York Stock Exchange or the American Stock Exchange; or
(10) If at any time Borrower fails to
operate as a real estate operating company for ERISA purposes (within the
meaning of C.F.R. ss.2510.3-101); or
(11) If at any time Guarantor fails to operate as either a real estate
operating company or a venture capital operating company for ERISA purposes
(within the meaning of C.F.R. ss.2510.3-101); or
(12) If The Taubman Company Limited Partnership, the entity presently
providing property management and leasing services for all the regional
shopping center properties in which Guarantor has an ownership interest
(other than the "value center" property known as Arizona Mills located in
Tempe, Arizona), shall discontinue providing such services for 25% or more
of the regional shopping center properties (other than "value center"
properties) then owned in whole or in part by Guarantor and no substitute
property manager acceptable to Administrative Agent shall have been engaged
prior to such discontinuance; or
(13) If the Mortgage shall at any time and for any reason cease (a) to
create a valid and perfected first priority Lien in and to the Mortgaged
Property purported to be subject thereto or (b) to be in full force and
effect or shall be declared null and void; or the validity or
enforceability thereof shall be contested by any party thereto, or any
party thereto shall deny any further liability or obligation thereunder; or
41
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(14) If an "Event of Default" shall occur under the Mortgage (as such
quoted term is defined therein).
Section 8.02 Remedies. If any Event of Default shall occur and be
--------
continuing, Administrative Agent shall, upon request of the Required Banks,
by notice to Borrower, (i) declare the outstanding Notes, all interest
thereon, and all other amounts payable under this Agreement and any
other Loan Documents to be forthwith due and payable, whereupon the Notes,
all such interest, and all such amounts due under this Agreement and under
any other Loan Document shall become and be forthwith due and payable,
without presentment, demand, protest, or further notice of any kind, all of
which are hereby expressly waived by Borrower; and/or (ii) exercise any
remedies provided in any of the Loan Documents or by Law.
ARTICLE IX
ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS
Section 9.01 Appointment, Powers and Immunities of Administrative Agent.
----------------------------------------------------------
Each Bank hereby irrevocably appoints and authorizes Administrative Agent to act
as its agent hereunder and under any other Loan Document with such powers as are
specifically delegated to Administrative Agent by the terms of this Agreement
and any other Loan Document, together with such other powers as are reasonably
incidental thereto. Administrative Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and any
other Loan Document or required by law, and shall not by reason of this
Agreement be a fiduciary or trustee for any Bank except to the extent that
Administrative Agent acts as an agent with respect to the receipt or payment of
funds (nor shall Administrative Agent have any fiduciary duty to Borrower nor
shall any Bank have any fiduciary duty to Borrower or to any other Bank).
Administrative Agent shall not be responsible to the Banks for any recitals,
statements, representations or warranties made by Borrower or Guarantor or any
officer, partner or official of Borrower or any other Person contained in this
Agreement or any other Loan Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any of them under,
this Agreement or any other Loan Document, or for the value, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document or instrument referred to or
provided for herein or therein, for the perfection or priority of any Lien
securing the Obligations or for any failure by Borrower to perform any of its
obligations hereunder or thereunder. Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible, except as to money or securities
received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Neither
Administrative Agent nor any of its directors, officers, employees or agents
shall be liable or responsible for any action taken or omitted to be taken by it
or them hereunder or under any other Loan Document or in connection herewith or
therewith, except for its or their own gross negligence or willful misconduct.
Borrower shall pay any fee agreed to by Borrower and Administrative Agent with
respect to Administrative Agent's services hereunder, as set forth in the
Supplemental Fee Letter.
Section 9.02 Reliance by Administrative Agent. Administrative Agent
--------------------------------
shall be entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telex, telegram or cable) believed by it
to be genuine and correct and to have been
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signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by Administrative Agent. Administrative Agent may deem and treat each
Bank as the holder of the Loan made by it for all purposes hereof and shall not
be required to deal with any Person who has acquired a participation in any Loan
or participation from a Bank. As to any matters not expressly provided for by
this Agreement or any other Loan Document, Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instructions signed by the Required Banks, and such instructions
of the Required Banks and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks and any other holder of all or any portion
of any Loan or Participation.
Section 9.03 Defaults. Administrative Agent shall not be deemed to
--------
have knowledge of the occurrence of a Default or Event of Default unless
Administrative Agent has received notice from a Bank or Borrower specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default." In the event that Administrative Agent receives such a notice of the
occurrence of a Default or Event of Default, Administrative Agent shall give
prompt notice thereof to the Banks. Administrative Agent, following consultation
with the Banks, shall (subject to Section 9.07) take such action with respect to
such Default or Event of Default which is continuing as shall be directed by the
Required Banks; provided that, unless and until Administrative Agent shall have
--------
received such directions, Administrative Agent may take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interest of the Banks; and provided further
that Administrative Agent shall not send a notice of Default or acceleration to
Borrower without the approval of the Required Banks. In no event shall
Administrative Agent be required to take any such action which it determines to
be contrary to the Loan Documents or to Law.
Section 9.04 Rights of Administrative Agent as a Bank. With respect
----------------------------------------
to its Loan Commitment and the Loan provided by it, Administrative Agent in its
capacity as a Bank hereunder shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not acting as
Administrative Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include Administrative Agent in its capacity as a Bank.
Administrative Agent and its Affiliates may (without having to account therefor
to any Bank) accept deposits from, lend money to (on a secured or unsecured
basis), and generally engage in any kind of banking, trust or other business
with Borrower (and any Affiliates of Borrower) as if it were not acting as
Administrative Agent.
Section 9.05 Sharing of Costs; Indemnification of Administrative Agent.
---------------------------------------------------------
Each Bank agrees to pay its Pro Rata Share of any expenses incurred (and not
paid or reimbursed by Borrower after demand for payment is made by
Administrative Agent) by or on behalf of the Banks in connection with any
Default or Event of Default, including, without limitation, costs of enforcement
of the Loan Documents and any advances to pay taxes or insurance premiums or
otherwise to preserve the Lien of the Mortgage or to preserve or protect the
Mortgaged Property. In the event a Bank fails to pay its Pro Rata Share of
expenses as aforesaid, and all or a portion of such unpaid amount is paid by
Administrative Agent and/or one (1) or more of the other Banks, then the
defaulting Bank shall reimburse Administrative Agent and/or the other Bank(s)
for the portion of such unpaid amount paid by it or them, as the case may be,
together with interest thereon at the Base Rate from the date of payment by
Administrative Agent and/or the other Bank(s). Each Bank agrees to indemnify
Administrative Agent (to the extent not
43
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reimbursed under Section 11.04 or under the applicable provisions of any other
Loan Document, but without limiting the obligations of Borrower under Section
11.04 or such provisions), for its Pro Rata Share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against Administrative Agent in any way relating to
or arising out of this Agreement, any other Loan Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses which Borrower is
obligated to pay under Section 11.04 or under the applicable provisions of any
other Loan Document) or the enforcement of any of the terms hereof or thereof or
of any such other documents or instruments; provided that no Bank shall be
liable for (1) any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified, (2) any loss of
principal or interest with respect to Administrative Agent's Loan or (3) any
loss suffered by Administrative Agent in connection with a swap or other
interest rate hedging arrangement entered into by Administrative Agent with
Borrower.
Section 9.06 Non-Reliance on Administrative Agent and Other Banks.
------------------------------------------------------
Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrower and Guarantor and the decision to enter into this Agreement and that it
will, independently and without reliance upon Administrative Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement or any other Loan Document. Administrative
Agent shall not be required to keep itself informed as to the performance or
observance by Borrower or Guarantor of this Agreement or any other Loan Document
or any other document referred to or provided for herein or therein or to
inspect the properties (including the Premises) or books of Borrower or
Guarantor. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by Administrative Agent
hereunder, Administrative Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning the affairs,
financial condition or business of Borrower, Guarantor or any Affiliate of
either of them which may come into the possession of Administrative Agent or any
of its Affiliates. Administrative Agent shall not be required to file this
Agreement, any other Loan Document or any document or instrument referred to
herein or therein, for record or give notice of this Agreement, any other Loan
Document or any document or instrument referred to herein or therein, to anyone.
Section 9.07 Failure of Administrative Agent to Act. Except for action
--------------------------------------
expressly required of Administrative Agent hereunder, Administrative Agent shall
in all cases be fully justified in failing or refusing to act hereunder unless
it shall have received further assurances (which may include cash collateral) of
the indemnification obligations of the Banks under Section 9.05 in respect of
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
Section 9.08 Resignation or Removal of Administrative Agent. Provided
----------------------------------------------
there exists no Event of Default, Administrative Agent hereby agrees not to
unilaterally resign except in the event it becomes an Affected Bank and is
removed or replaced as a Bank pursuant to Section 3.07, in which event it shall
have the right to resign. Administrative Agent may be removed at any time with
or without cause by the Required Banks, provided that Borrower and
44
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the other Banks shall be promptly notified thereof. Upon any such resignation or
removal, the successor Administrative Agent shall, at Fleet's option, be Fleet
provided Fleet's then Loan Commitment equals or exceeds $20,000,000. If Fleet
elects not to, or cannot, become the successor Administrative Agent as provided
above, the Required Banks shall have the right to appoint a successor
Administrative Agent which, provided there exists no Event of Default, shall be
subject to Borrower's consent, which consent shall not be unreasonably withheld
or delayed. If no successor Administrative Agent shall have been so appointed by
the Required Banks and shall have accepted such appointment (and, if required,
been consented to by Borrower) within thirty (30) days after the Required Banks'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent,
which shall be one of the Banks. The Required Banks or the retiring
Administrative Agent, as the case may be, shall upon the appointment of a
successor Administrative Agent promptly so notify Borrower and the other Banks.
Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's removal hereunder as Administrative Agent, the
provisions of this Article IX shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
Section 9.09 Amendments Concerning Agency Function. Notwithstanding
-------------------------------------
anything to the contrary contained in this Agreement, Administrative Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Loan Document which affects its duties, rights, and/or
function hereunder or thereunder unless it shall have given its prior written
consent thereto.
Section 9.10 Liability of Administrative Agent. Administrative Agent
---------------------------------
shall not have any liabilities or responsibilities to Borrower or Guarantor on
account of the failure of any Bank to perform its obligations hereunder or to
any Bank on account of the failure of Borrower or Guarantor to perform their
obligations hereunder or under any other Loan Document.
Section 9.11 Transfer of Agency Function. Without the consent of
----------------------------
Borrower or any Bank, Administrative Agent may at any time or from time to time
transfer its functions as Administrative Agent hereunder to any of its offices
wherever located in the United States, provided that Administrative Agent shall
promptly notify Borrower and the Banks thereof.
Section 9.12 Non-Receipt of Funds by Administrative Agent. Unless
---------------------------------------------
Administrative Agent shall have received notice from a Bank or Borrower
(either one as appropriate being the "Payor") prior to the date on which such
Bank is to make payment hereunder to Administrative Agent of the proceeds of a
Loan or Borrower is to make payment to Administrative Agent, as the case may be
(either such payment being a "Required Payment"), which notice shall be
effective upon receipt, that the Payor will not make the Required Payment in
full to Administrative Agent, Administrative Agent may assume that the Required
Payment has been made in full to Administrative Agent on such date, and
Administrative Agent in its sole discretion may, but shall not be obligated to,
in reliance upon such assumption, make the amount thereof available to the
intended recipient on such date. If and to the extent the Payor shall not have
in fact so made the Required Payment in full to Administrative Agent, the
recipient of such
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<PAGE>
payment shall repay to Administrative Agent forthwith on demand such amount made
available to it together with interest thereon, for each day from the date such
amount was so made available by Administrative Agent until the date
Administrative Agent recovers such amount, at the customary rate set by
Administrative Agent for the correction of errors among Banks for three (3)
Banking Days and thereafter at the Base Rate.
Section 9.13 Withholding Taxes. Each Bank represents that it is
-----------------
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to Administrative Agent such forms,
certifications, statements and other documents as Administrative Agent or
Borrower may request from time to time to evidence such Bank's exemption from
the withholding of any tax imposed by any jurisdiction or to enable
Administrative Agent to comply with any applicable Laws or regulations relating
thereto. Without limiting the effect of the foregoing, if any Bank is not
created or organized under the laws of the United States of America or any state
thereof, such Bank will furnish to Administrative Agent Form 4224 or Form 1001
of the Internal Revenue Service, or such other forms, certifications, statements
or documents, duly executed and completed by such Bank as evidence of such
Bank's exemption from the withholding of U.S. tax with respect thereto.
Administrative Agent shall not be obligated to make any payments hereunder to
such Bank in respect of any Loan or participation or such Bank's Loan Commitment
or obligation to purchase participations until such Bank shall have furnished to
Administrative Agent the requested form, certification, statement or document.
Section 9.14 Minimum Commitment by Fleet and PNC. Subsequent to the
-----------------------------------
Closing Date, each of Fleet and PNC agree to maintain a Loan Commitment in an
amount no less than $10,000,000, provided there exists no Event of Default, and
each of them further agrees to hold and not to participate or assign any of such
amount other than an assignment to a Federal Reserve Bank or to their respective
Parent or respective majority-owned subsidiary.
Section 9.15 Pro Rata Treatment. Except to the extent otherwise
--------------------
provided, (1) the advance of proceeds of the Loans shall be made by the Banks
and (2) each reduction of the amount of the Total Loan Commitment under Section
2.10 or under other provisions of this Agreement shall be applied to the Loan
Commitments of the Banks, ratably according to the amounts of their respective
Loan Commitments.
Section 9.16 Sharing of Payments Among Banks. If a Bank shall obtain
-------------------------------
payment of any principal of or interest on any Loan made by it through the
exercise of any right of setoff, banker's lien, counterclaim, or by any other
means (including direct payment), and such payment results in such Bank
receiving a greater payment than it would have been entitled to had such payment
been paid directly to Administrative Agent for disbursement to the Banks, then
such Bank shall promptly purchase for cash from the other Banks participations
in the Loans made by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share ratably the benefit of such payment. To such end the Banks
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. Borrower agrees that any Bank so purchasing a participation in the
Loans made by other Banks may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
46
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affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness of Borrower.
Section 9.17 Possession of Documents. Each Bank shall keep possession
-----------------------
of its own Note. Administrative Agent shall hold all the other Loan Documents
and related documents in its possession and maintain separate records and
accounts with respect thereto, and shall permit the Banks and their
representatives access at all reasonable times to inspect such Loan Documents,
related documents, records and accounts.
ARTICLE X
NATURE OF OBLIGATIONS
Section 10.01 Absolute and Unconditional Obligations. Borrower
------------------------------------------
acknowledges and agrees that its obligations and liabilities under this
Agreement and under the other Loan Documents shall be absolute and unconditional
irrespective of (1) any lack of validity or enforceability of any of the
Obligations, any Loan Documents, or any agreement or instrument relating
thereto, (2) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from any Loan Documents or any other
documents or instruments executed in connection with or related to the
Obligations, (3) any exchange or release of any collateral, or of any other
Person from all or any of the Obligations or (4) any other circumstances which
might otherwise constitute a defense available to, or a discharge of, Borrower
or any other Person in respect of the Obligations.
The obligations and liabilities of Borrower under this Agreement and
other Loan Documents shall not be conditioned or contingent upon the pursuit by
any Bank or any other Person at any time of any right or remedy against Borrower
or any other Person which may be or become liable in respect of all or any part
of the Obligations or against any collateral or security or guarantee therefor
or right of setoff with respect thereto.
Section 10.02 Non-Recourse. (a) Notwithstanding anything to the
------------
contrary contained in this Agreement, in any of the other Loan Documents (other
than the Indemnity and the Guaranty), or in any other instruments, certificates,
documents or agreements executed in connection with the Loans (all of the
foregoing, with the exception of the Indemnity and the Guaranty, for purposes of
this Section, hereinafter referred to, individually and collectively, as the
"Relevant Documents"), no recourse under or upon any Obligation, representation,
warranty, promise or other matter whatsoever under or in respect of the Relevant
Documents shall be had against Borrower or any of the constituent partners of
Borrower or their successors or assigns (said constituent partners and their
successors and assigns, for purposes of this Section, hereinafter referred to,
individually and collectively, as the "Borrower Partners") except to the extent
of realization upon the Mortgaged Property or any other collateral now or
hereafter given for the Loans, and each Bank expressly waives and releases, on
behalf of itself and its successors and assigns, all right to assert any
liability whatsoever under or with respect to the Relevant Documents against, or
to satisfy any claim or obligation arising thereunder against, any of the
Borrower Partners or out of any assets of the Borrower Partners, provided,
--------
however, that nothing in this Section shall be deemed to (1) constitute a waiver
- -------
of any obligation evidenced or secured
47
<PAGE>
by, or contained in, the Relevant Documents or affect in any way the validity or
enforceability of the Relevant Documents; or (2) limit the right of
Administrative Agent and/or the Banks to proceed against or realize upon all or
part of the Mortgaged Property or any other collateral now or hereafter given
for the Loans or to name Borrower (or, to the extent that the same are required
by applicable Law or are determined by a court to be necessary parties in
connection with an action or suit against Borrower or all or part of the
Mortgaged Property or any other collateral now or hereafter given for the Loans,
any of the Borrower Partners) as a party defendant in any action or suit for
judicial foreclosure and sale under the Mortgage or any other security document
so long as no judgment or order in the nature of a personal monetary judgment or
order or deficiency judgment or order shall be asked for or taken against
Borrower or the Borrower Partners; or (3) affect in any way the validity or
enforceability of any guaranty (whether of payment and/or performance)
(including the Guaranty) or indemnity agreement (including the Indemnity) now or
hereafter given to or for the benefit of the Banks in connection with the Loans;
or (4) constitute a waiver by the Banks of any rights to reimbursement for
actual, out-of-pocket losses, costs or expenses, or any other remedy at law or
equity against Borrower or its constituent general partner(s) by reason of (i)
fraudulent acts or omissions of Borrower or its constituent general partner(s),
(ii) after an Event of Default has occurred, willful misapplication of any
insurance proceeds, condemnation awards or tenant security deposits, or of any
rental or other income, in each case to the extent of the amount misapplied and
any reasonable out-of-pocket expense caused thereby, which was expressly
required by the Mortgage or other Loan Documents to be paid or applied in a
specified manner, arising in any such case, with respect to the Mortgaged
Property or other collateral now or hereafter given for the Loans or (iii) after
the occurrence of an Event of Default, the reasonable out-of-pocket legal and
related expenses caused by the failure to deliver, promptly upon demand, tenant
and other project files and original executed leases and other agreements
relating to occupancy, construction or operation in respect of the Premises in
Borrower's possession or control which have been reasonably requested by
Administrative Agent or any Bank.
(b) Notwithstanding anything to the contrary contained in the
Relevant Documents, the Indemnity or the Guaranty, no recourse under or upon any
Obligation, representation, warranty, promise or other matter whatsoever under
the Relevant Documents, the Indemnity or the Guaranty shall be had against any
of the constituent partners of Guarantor or their successors or assigns (said
constituent partners and their successors and assigns, for purposes of this
Section, hereinafter referred to, individually and collectively, as the "TRG
Partners") and Administrative Agent and each Bank expressly waive and release,
on behalf of themselves and their successors and assigns, all right to assert
any liability whatsoever under or with respect to the Relevant Documents, the
Indemnity or the Guaranty against, or to satisfy any claim or obligation arising
thereunder against, any of the TRG Partners or out of any assets of the TRG
Partners; provided, however, that nothing in this Section shall be deemed to:
-------- -------
(1) release Borrower or its constituent general partner(s) from any personal
liability pursuant to, or from any of its obligations under, the Indemnity, or
release Guarantor from any personal liability pursuant to, or from any of its
obligations under, the Indemnity or the Guaranty; (2) release any TRG Partner
from personal liability for its or his own fraudulent actions or fraudulent
omissions; (3) constitute a waiver of any obligation evidenced or secured by, or
contained in, the Relevant Documents, the Indemnity or the Guaranty, or affect
in any way the validity or enforceability of any of the Relevant Documents, the
Indemnity or the Guaranty; (4) limit the right of Administrative Agent and/or
the Banks to proceed against or realize upon the Mortgaged Property or any other
collateral now or hereafter given for the Loans or to name Guarantor or (to
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the extent that the same are required by applicable Law or are determined by a
court to be necessary parties in connection with an action or suit against
Borrower, Guarantor or the Mortgaged Property or any other collateral now or
hereafter given for the Loans) any of the TRG Partners as a party defendant in,
and to enforce against the Mortgaged Property or any other collateral now or
hereafter given for the Loans any judgment obtained by Administrative Agent
and/or the Banks with respect to, any action or suit under the Relevant
Documents so long as no judgment shall be enforced or taken (except to the
extent taking a judgment is required by applicable Law or determined by a court
to be necessary to preserve Administrative Agent's and/or the Banks' rights
against the Mortgaged Property or any other collateral now or hereafter given
for the Loans or Borrower or Guarantor, but not otherwise) against the TRG
Partners, their successors and assigns, or their assets; or (5) limit the right
of Administrative Agent and/or Lenders to proceed against or realize upon any
and all of the assets of Borrower or Guarantor (notwithstanding the fact that
the TRG Partners have an ownership interest in Guarantor and, thereby, an
interest in the assets of Guarantor) or to name Borrower or Guarantor (or, to
the extent that the same are required by applicable Law or are determined by a
court to be necessary parties in connection with an action or suit against
Borrower or Guarantor, any of the TRG Partners) as a party defendant in, and to
enforce against the assets of Borrower or Guarantor any judgment obtained by
Administrative Agent and/or the Banks with respect to, any action or suit under
the Indemnity or the Guaranty so long as no judgment shall be enforced or taken
(except to the extent taking a judgment is required by applicable Law or
determined by a court to be necessary to preserve Administrative Agent's and/or
the Banks rights against Borrower or Guarantor, but not otherwise) against the
TRG Partners, their successors and assigns, or their assets.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Binding Effect of Request for Advance. Borrower agrees
-------------------------------------
that, by its acceptance of any advance of proceeds of the Loans under this
Agreement, it shall be bound in all respects by the request for advance
submitted on its behalf in connection therewith with the same force and effect
as if Borrower had itself executed and submitted the request for advance and
whether or not the request for advance is executed and/or submitted by an
authorized person.
Section 11.02 Amendments and Waivers. No amendment or material
------------------------
waiver of any provision of this Agreement or any other Loan Document nor consent
to any material departure by Borrower or Guarantor therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Required
Banks and, solely for purposes of its acknowledgment thereof, Administrative
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given, provided, however, that
-------- -------
no amendment, waiver or consent shall, unless in writing and signed by all the
Banks do any of the following: (1) reduce the principal of, or interest on, the
Notes or any fees due hereunder or any other amount due hereunder or under any
Loan Document; (2) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees due hereunder or under any Loan Document, or
waive any default in the payment of principal, interest or any other amount due
hereunder or under any Loan Documents; (3) change the definition of Required
Banks; (4) amend this Section or any other provision requiring the consent of
all the Banks or of the Required Banks; (5) waive any default under paragraph
(6) of Section
49
<PAGE>
8.01; (6) increase the Loan Commitment of any Bank; (7) amend Section 9.15 or
Section 9.16; (8) release Guarantor from its obligations, in whole or in part,
in respect of the Loans other than in accordance with the Loan Documents; or (9)
release any material portion of the Mortgaged Property or other collateral
now or hereafter given for the Loans other than in accordance with the Loan
Documents. Any advance of proceeds of the Loans made prior to or without the
fulfillment by Borrower of all of the conditions precedent thereto, whether or
not known to Administrative Agent and the Banks, shall not constitute a waiver
of the requirement that all conditions, including the non-performed conditions,
shall be required with respect to all future advances, if any. No failure on the
part of Administrative Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by Law.
Section 11.03 Usury. Anything herein to the contrary notwithstanding,
-----
the obligations of Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of Law applicable to a Bank
limiting rates of interest which may be charged or collected by such Bank.
Section 11.04 Expenses; Indemnification. Borrower agrees to reimburse
-------------------------
Administrative Agent on demand for all reasonable costs, expenses, and charges
(including, without limitation, all reasonable fees and charges of engineers,
appraisers, consultants and external legal counsel) incurred by Administrative
Agent in connection with the Loans and to reimburse each of the Banks for
reasonable legal costs, expenses and charges incurred by each of the Banks in
connection with the performance or enforcement of this Agreement, the Notes, or
any other Loan Documents; provided, however, that Borrower is not responsible
-------- -------
for costs, expenses and charges incurred by the Bank Parties in connection with
the administration or syndication of the Loans (other than the syndication
expenses and administration fee required by the Supplemental Fee Letter).
Borrower agrees to indemnify Administrative Agent and each Bank and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages or expenses
incurred by any of them arising out of or by reason of (x) any claims by brokers
due to acts or omissions by Borrower or (y) any investigation or litigation or
other proceedings (including any threatened investigation or litigation or other
proceedings) relating to any actual or proposed use by Borrower of the proceeds
of the Loans, including without limitation, the reasonable fees and
disbursements of counsel incurred in connection with any such investigation or
litigation or other proceedings (but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).
The obligations of Borrower under this Section shall survive the
repayment of all amounts due under or in connection with any of the Loan
Documents and the termination of the Loans.
Section 11.05 Assignment; Participation. This Agreement shall be
-------------------------
binding upon, and shall inure to the benefit of, Borrower, Administrative Agent,
the Banks and their respective successors and permitted assigns. Borrower may
not assign or transfer its rights or obligations hereunder.
50
<PAGE>
Subject to the provisions of Section 9.14, any Bank may at any time
grant to one or more banks or other institutions (each a "Participant")
participating interests in its Loan (each a "Participation"), at no cost to
Borrower, subject to the consent of Fleet and PNC, which consents shall not be
unreasonably withheld or delayed, and provided that any such Participation shall
be in the minimum amount of $10,000,000. In the event of any such grant by a
Bank of a Participation to a Participant, whether or not Borrower or
Administrative Agent was given notice, such Bank shall remain responsible for
the performance of its obligations hereunder, and Borrower and Administrative
Agent shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations hereunder. Any agreement pursuant to
which any Bank may grant a Participation shall provide that such Bank shall
retain the sole right and responsibility to enforce the obligations of Borrower
hereunder and under any other Loan Document including, without limitation, the
right to approve any amendment, modification or waiver of any provision of this
Agreement or any other Loan Document; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement enumerated in Section 11.02 without the consent of the
Participant.
Subject to the provisions of Section 9.14, any Bank may at any time
assign to any bank or other institution, with the acknowledgment of
Administrative Agent and the consent of Fleet, PNC and, provided there exists no
Event of Default, of Borrower, which consents shall not be unreasonably withheld
or delayed (such assignee, a "Consented Assignee"), or to one or more banks or
other institutions which are majority owned subsidiaries of a Bank or of the
Parent of a Bank (each Consented Assignee or subsidiary bank or institution, an
"Assignee") all, or a proportionate part of all, of its rights and obligations
under this Agreement and its Note, and such Assignee shall assume rights and
obligations, pursuant to an Assignment and Assumption Agreement executed by such
Assignee and the assigning Bank, provided that, in each case, after giving
--------
effect to such assignment, the Assignee's Loan Commitment, and, in the case of a
partial assignment, the assigning Bank's Loan Commitment, each will be equal to
or greater than $10,000,000. Upon (i) execution and delivery of such instrument,
(ii) payment by such Assignee to the Bank of an amount equal to the purchase
price agreed between the Bank and such Assignee and (iii) payment by such
Assignee to Administrative Agent of a fee, for Administrative Agent's own
account, in the amount of $2,500, on account of Administrative Agent's fees and
expenses in connection with such assignment, such Assignee shall be a Bank Party
to this Agreement and shall have all the rights and obligations of a Bank as set
forth in such Assignment and Assumption Agreement, and the assigning Bank shall
be released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this paragraph, substitute Notes shall be issued
to the assigning Bank and Assignee by Borrower, in exchange for the return of
the original Note. The obligations evidenced by such substitute notes shall
constitute "Obligations" for all purposes of this Agreement and the other Loan
Documents. If the Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the first date on which
interest or fees are payable hereunder for its account, deliver to Borrower and
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 9.13.
51
<PAGE>
Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
Borrower recognizes that in connection with a Bank's selling of
Participations or making of assignments, any or all documentation, financial
statements, appraisals and other data, or copies thereof, relevant to Borrower
or the Loans may be exhibited to and retained by any such Participant or
assignee or prospective Participant or assignee. In addition, such documentation
etc. may be exhibited to and retained by Affiliates of a Bank. In connection
with a Bank's delivery of any financial statements and appraisals to any such
Participant or assignee or prospective Participant or assignee, such Bank shall
also deliver its standard confidentiality statement indicating that the same are
delivered on a confidential basis. Borrower agrees to provide, at no cost to
Borrower, all assistance reasonably requested by a Bank to enable such Bank to
sell Participations or make assignments of its Loan as permitted by this
Section. Each Bank agrees to provide Borrower with notice of all Participations
sold by such Bank.
Section 11.06 Documentation Satisfactory. All documentation required
---------------------------
from or to be submitted on behalf of Borrower or Guarantor in connection with
this Agreement and the documents relating hereto shall be subject to the
prior approval of, and be satisfactory in form and substance to, Administrative
Agent, its counsel and, where specifically provided herein, the Banks. In
addition, the persons or parties responsible for the execution and delivery
of, and signatories to, all of such documentation, shall be acceptable to, and
subject to the approval of, Administrative Agent and its counsel and the Banks.
Section 11.07 Notices. Unless the party to be notified otherwise
-------
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to Administrative
Agent by telephone, confirmed by writing, and to the Banks and to Borrower by
ordinary mail or overnight courier addressed to such party at its address on the
signature page of this Agreement. Notices shall be effective (1) if by
telephone, at the time of such telephone conversation, (2) if given by mail,
three (3)days after mailing and (3) if given by overnight courier, upon receipt.
Section 11.08 Year 2000. Borrower represents, warrants and covenants
---------
that each of Borrower and Guarantor has taken and shall take all action
reasonably necessary to assure that its data processing and information
technology systems are capable of effectively processing data and information,
including dates on and after January 1, 2000, and shall not cease to perform, or
provide, or cause any software and/or system which is material to its operations
of any interface therewith to provide, invalid or incorrect result of date
functionality and/or data, or otherwise experience any material degradation of
performance of functionality arising from, relating to or including date
functionality and/or data which represents or references different centuries or
more than one century or leap years, and that all such systems shall be
reasonably effective and accurate in managing and manipulating data derived
from, involving or relating in any way to dates (including single century
formulas and multi-century or leap year formulas), and will not cause a material
abnormally ending scenario within such systems or in any software and/or system
with which such systems interface, or generate materially incorrect values or
invalid results involving such date. At the request of Administrative Agent,
Borrower shall provide, and cause Guarantor to provide, Administrative Agent
with reasonably acceptable assurance of Borrower's and Guarantor's year 2000
capability.
52
<PAGE>
Section 11.09 Partial Releases. Provided there exists no Default or
----------------
Event of Default, Administrative Agent shall release, within seven (7) Banking
Days of Borrower's delivery to it of the items required by this paragraph, the
lien of the Mortgage from portions of the Premises outside of the "ring road"
of the shopping center of which the Improvements are a part (each such
portion of the Premises, a "Release Parcel") in connection with Borrower's
simultaneous conveyance thereof to other Persons for the construction and
operation on said Release Parcels by such Persons of retail stores or other
facilities compatible with the shopping center. All such releases shall be
subject to Administrative Agent's determination that the same will not have a
materially adverse effect on the value of the balance of the Premises not so
released. Such releases shall be further subject, in each case, to
Administrative Agent's receipt of (i) evidence that the balance of the Premises
constitutes a separate tax lot and an endorsement to the title insurance policy
for the Mortgage insuring that the lien of the Mortgage will not be impaired by
virtue of the release of the Release Parcel, (ii) a copy, certified by Borrower
to be true and complete, of the executed contract of sale for the Release
Parcel, (iii) a current survey of the Premises, specifically delineating the
Release Parcel, certified to Administrative Agent and the Title Insurer, (iv)
evidence that the portion of the Premises remaining subject to the Mortgage has
adequate pedestrian and vehicular access for the contemplated uses thereof to
publicly dedicated roads, (v) such other documents, opinions and assurances as
Administrative Agent may reasonably request (all of the foregoing items (i)
through (v) to be in form and substance reasonably satisfactory to
Administrative Agent) and (vi) payment of Administrative Agent's out-of-pocket
expenses, including the fees and expenses of counsel, in connection with the
foregoing transactions.
Section 11.10 Table of Contents; Headings. Any table of contents
---------------------------
and the headings and captions hereunder are for convenience only and shall not
affect the interpretation or construction of this Agreement.
Section 11.11 Severability. The provisions of this Agreement are
------------
intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 11.12 Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one
and the same instrument, and any party hereto may execute this Agreement by
signing any such counterpart.
Section 11.13 Integration. The Loan Documents and Supplemental Fee
-----------
Letter set forth the entire agreement among the parties hereto relating to the
transactions contemplated thereby and supersede any prior oral or written
statements or agreements with respect to such transactions.
Section 11.14 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
-------------
AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO NEW YORK'S PRINCIPLES OF CONFLICTS OF LAWS).
53
<PAGE>
Section 11.15 Waivers. In connection with the obligations and
-------
liabilities as aforesaid, Borrower hereby waives (1) promptness and diligence,
(2) notice of any actions taken by any Bank Party under this Agreement, any
other Loan Document or any other agreement or instrument relating thereto except
to the extent otherwise provided herein, (3) all other notices, demands and
protests, and all other formalities of every kind in connection with the
enforcement of the Obligations, the omission of or delay in which, but for the
provisions of this Section, might constitute grounds for relieving Borrower of
its obligations hereunder or under any of the other Loan Documents, (4) any
requirement that any Bank Party protect, secure, perfect or insure any Lien on
or against any of the Mortgaged Property or on or against any other collateral
or exhaust any right or take any action against Borrower, Guarantor or any other
Person or against any of the Mortgaged Property or any other collateral, (5) any
right or claim of right to cause a marshalling of the assets of Borrower or
Guarantor and (6) all rights of subrogation or contribution, whether arising by
contract or operation of law (including, without limitation, any such right
arising under the Federal Bankruptcy Code) or otherwise by reason of payment by
Borrower pursuant to this Agreement or other Loan Documents.
Section 11.16 JURISDICTION; IMMUNITIES. BORROWER, ADMINISTRATIVE AGENT
------------------------
AND EACH BANK HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK
STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK CITY OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
LOAN DOCUMENT. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK IRREVOCABLY AGREE
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE OR UNITED STATES FEDERAL COURT. BORROWER,
ADMINISTRATIVE AGENT AND EACH BANK IRREVOCABLY CONSENT TO THE SERVICE OF ANY AND
ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO BORROWER, ADMINISTRATIVE AGENT OR EACH BANK, AS THE CASE MAY BE, AT
THE ADDRESSES SPECIFIED HEREIN. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK
FURTHER WAIVE ANY OBJECTION TO VENUE IN THE STATE OF NEW YORK AND ANY OBJECTION
TO AN ACTION OR PROCEEDING IN THE STATE OF NEW YORK ON THE BASIS OF FORUM NON
CONVENIENS. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK AGREE THAT ANY ACTION
OR PROCEEDING BROUGHT AGAINST BORROWER, ADMINISTRATIVE AGENT OR ANY BANK, AS THE
CASE MAY BE, SHALL BE BROUGHT ONLY IN A NEW YORK STATE COURT SITTING IN NEW YORK
CITY OR A UNITED STATES FEDERAL COURT SITTING IN NEW YORK CITY.
Nothing in this Section shall affect the right of Borrower,
Administrative Agent or any Bank to serve legal process in any other manner
permitted by Law.
To the extent that Borrower, Administrative Agent or any Bank have
or hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether from service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, Borrower, Administrative Agent and each Bank hereby irrevocably
waive such immunity in respect of its obligations under this Agreement, the
Notes and any other Loan Document.
54
<PAGE>
BORROWER, ADMINISTRATIVE AGENT AND EACH BANK WAIVE ANY RIGHT EACH
SUCH PARTY MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE LOANS. IN
ADDITION, BORROWER HEREBY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS WITH RESPECT TO THE
NOTES, ANY RIGHT BORROWER MAY HAVE TO (1) INTERPOSE ANY COUNTERCLAIM THEREIN
(OTHER THAN A COUNTERCLAIM THAT IF NOT BROUGHT IN THE SUIT, ACTION OR PROCEEDING
BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS COULD NOT BE BROUGHT IN A SEPARATE
SUIT, ACTION OR PROCEEDING OR WOULD BE SUBJECT TO DISMISSAL OR SIMILAR
DISPOSITION FOR FAILURE TO HAVE BEEN ASSERTED IN SUCH SUIT, ACTION OR PROCEEDING
BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS) OR (2) HAVE THE SAME CONSOLIDATED
WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING HEREIN CONTAINED
SHALL PREVENT OR PROHIBIT BORROWER FROM INSTITUTING OR MAINTAINING A SEPARATE
ACTION AGAINST ADMINISTRATIVE AGENT OR THE BANKS WITH RESPECT TO ANY ASSERTED
CLAIM.
55
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound, have caused this Agreement to be duly executed and delivered as of the
day and year first above written.
TAUBMAN AUBURN HILLS ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership
By: The Taubman Realty Group Limited
Partnership, a Delaware limited
partnership, its managing general partner
By: /s/ Steven E. Eder
------------------
Steven E. Eder,
an authorized signatory
Address for Notices:
c/o The Taubman Company
Limited Partnership
200 East Long Lake Road - Suite 300
Bloomfield Hills, Michigan 48304
Attention: Mr. Steven E. Eder
with copy to:
Miro Weiner & Kramer
500 North Woodward Avenue
Suite 100 - P.O. Box 908
Bloomfield Hills, Michigan 48303-0908
Attention: Martin L. Katz, Esq.
56
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
(as Bank and Administrative Agent)
By: /s/ Dina S. Muth
--------------------
Name: Dina S. Muth
Title: Assistant Vice President
PNC Bank National Association
One PNC Plaza
249 Fifth Avenue
P1-POPP-19-2
Pittsburgh, Pennsylvania 15222
Attention: Ms. Dina Muth
Telephone: (412) 762-9118
Telecopy: (412) 762-6500
with a copy to:
One PNC Plaza
249 Fifth Avenue
P1-POPP-03-2
Pittsburgh, Pennsylvania 15222
Attention: Ms. Arlene Ohler
Telephone: (412) 762-3627
Telecopy: (412) 762-8672
FLEET NATIONAL BANK
(as Bank and Syndication Agent)
By: /s/ Margaret A. Mulcahy
--------------------------
Name: Margaret A. Mulcahy
Title: Senior Vice President
Address for notices and Applicable Lending
Office:
Fleet National Bank
75 State Street
MA BOF 11-C
Boston, Massachusetts 02109
Attention: Ms. Margaret Mulcahy
Telephone: (617) 346-4291
Telecopy: (617) 346-3220
57
<PAGE>
DRESDNER BANK AG, New York and
Grand Cayman Branches
(as Bank and Co-Agent)
By /s/ John W. Sweeney
-------------------------
Name: John W. Sweeney
Title: Vice President
By /s/ Brigitte Sacin
-------------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
Address for notices:
Dresdner Bank AG, New York and
Grand Cayman Branches
c/o Dresdner Bank AG, Chicago Branch
190 South LaSalle Street, Suite 2700
Chicago, Illinois 60603
Attention: Ms. Maureen M. Slentz
Telephone: (312) 444-1316
Telecopy: (312) 444-1301 or 1305
Applicable Lending Office:
Dresdner Bank AG, New York and
Grand Cayman Branches
75 Wall Street
New York, New York 10005-2889
Attention: Ms. Rosanna Caminiti
Telephone: (212) 429-2285
Telecopy: (212) 429-2130
58
<PAGE>
COMMERZBANK AG, Chicago Branch
(as Bank and Co-Agent)
By /s/ Douglas P. Traynor
-------------------------
Name: Douglas P. Traynor
Title: Vice President
By /s/ Christian Berry
-------------------------
Name: Christian Berry
Title: Assistant Treasurer
Address for notices and Applicable Lending
Office:
Commerzbank AG, Chicago Branch
c/o Commerzbank AG, New York Branch
2 World Financial Center
New York, New York 10281-1050
Attention: Mr. Douglas P. Traynor
Telephone: (212) 266-7569
Telecopy: (212) 266-7530
BAYERISCHE HYPO- UND
VEREINSBANK AG (as Bank)
By /s/ Stephen G. Melidones
---------------------------
Name: Stephen G. Melidones
Title: Director
By /s/ Meggan W. Walsh
-----------------------
Name: Meggan W. Walsh
Title: Managing Director
Address for notices and Applicable Lending
Office:
Bayerische Hypo- und Vereinsbank AG
Real Estate Lending
150 East 42nd Street
New York, New York 10017-4679
Attention: Mr. Stephen G. Melidones
Telephone: (212) 672-5750
Telecopy: (212) 672-5527
59
<PAGE>
COMERICA BANK (as Bank)
By /s/ Kristine L. Andersen
------------------------
Name: Kristine L. Andersen
Title: Assistant Vice President
Address for notices and Applicable Lending
Office:
Comerica Bank
U.S. Banking-East
Comerica Tower at Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226
Attention: Ms. Kristine L. Andersen
Telephone: (313) 222-3648
Telecopy: (313) 222-3330
BAYERISCHE LANDESBANK GIROZENTRALE
(Cayman Islands Branch) (as Bank)
By /s/ John A. Wain
-----------------------
Name: John A. Wain
Title: First Vice President
By /s/ A. Kohnert
-------------------------
Name: A. Kohnert
Title: First Vice President
Address for notices and Applicable Lending
Office:
Bayerische Landesbank
560 Lexington Avenue
New York, NY 10022
Attention: Mr. John Wain
Telephone: (212) 310-9829
Telecopy: (212) 310-9868
60
<PAGE>
================================================================================
Date: March 29, 1999
MORTGAGE, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
("this Mortgage")
FROM
TAUBMAN AUBURN HILLS ASSOCIATES LIMITED PARTNERSHIP,
a Delaware limited partnership
("Mortgagor")
Address of Mortgagor: c/o The Taubman Company Limited Partnership
200 East Long Lake Road - Suite 300
Bloomfield Hills, Michigan 48304
TO
PNC BANK, NATIONAL ASSOCIATION
as Administrative Agent for the Banks (as hereinafter defined)
(together with its successors in such capacity, "Mortgagee")
Address of Mortgagee: One PNC Plaza
249 Fifth Avenue
P1-POPP-19-2
Pittsburgh, Pennsylvania 15222
Mortgage Amount: $170,000,000
================================================================================
This instrument prepared by, and after recording please return to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Attention: George C. Weiss, Esq.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
RECITAL.............................................................1
CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION.......................1
GRANTING CLAUSE.....................................................3
ARTICLE I COVENANTS OF MORTGAGOR............................4
Section 1.01. (a) Warranty of Title; Power and Authority.........4
(b) Flood Hazard Area..............................4
Section 1.02. (a) Further Assurances.............................5
(b) Information Reporting and Back-up Withholding..5
Section 1.03. (a) Filing and Recording of Documents..............5
(b) Filing and Recording Fees and Other Charges....5
Section 1.04. Payment and Performance of Loan Documents..........6
Section 1.05. Maintenance of Existence; Compliance with Laws.....6
Section 1.06. After-Acquired Property............................6
Section 1.07. (a) Payment of Taxes and Other Charges...........6
(b) Payment of Mechanics and Materialmen.........7
(c) Good Faith Contests..........................7
Section 1.08. Taxes on Mortgagee or the Banks....................8
Section 1.09. Insurance..........................................8
Section 1.10. Protective Advances by Mortgagee..................12
Section 1.11. Estoppel Certificates.............................12
Section 1.12. Maintenance of Premises and Improvements..........12
Section 1.13. Condemnation......................................13
Section 1.14. Leases............................................14
Section 1.15. Premises Documents................................15
Section 1.16. Trust Fund; Lien Laws.............................15
Section 1.17. Non-Disturbance and Attornment Agreements.........15
ARTICLE II EVENTS OF DEFAULT AND REMEDIES...................16
Section 2.01. Events of Default and Certain Remedies...........16
Section 2.02. Other Matters Concerning Sales...................19
Section 2.03. Payment of Amounts Due...........................21
Section 2.04. Actions; Receivers...............................22
Section 2.05. Mortgagee's Right to Possession..................23
Section 2.06. Remedies Cumulative..............................23
Section 2.07. Moratorium Laws; Right of Redemption.............23
Section 2.08. Mortgagor's Use and Occupancy after Default......24
(i)
<PAGE>
Page
----
Section 2.09. Mortgagee's Rights Concerning Application of
Amounts Collected................................24
Section 2.10. Regarding Defenses...............................24
Section 2.11. Expenses as Indebtedness.........................24
ARTICLE III MISCELLANEOUS....................................25
Section 3.01. Assignment of Leases and Rents...................25
Section 3.02. Security Agreement...............................25
Section 3.03. Application of Certain Payments..................26
Section 3.04. Severability.....................................26
Section 3.05. Modifications and Waivers........................26
Section 3.06. Notices..........................................26
Section 3.07. Successors and Assigns...........................26
Section 3.08. Limitation on Interest...........................27
Section 3.09. Counterparts.....................................27
Section 3.10. Substitute Mortgages.............................27
Section 3.11. Governing Law....................................27
Section 3.12. No Merger of Interests...........................27
Section 3.13. No Credit For Taxes..............................27
Section 3.14. No Consent to Contracts..........................27
Section 3.15. Termination of Mortgage..........................28
Section 3.16. Business Loan....................................28
Section 3.17. CERTAIN WAIVERS..................................28
Section 3.18. Non-Recourse.....................................28
Section 3.19. Partial Releases.................................28
(ii)
<PAGE>
THE AMOUNT OF THIS MORTGAGE IS $170,000,000.
THIS MORTGAGE SECURES FUTURE ADVANCES AND IS A FUTURE ADVANCE MORTGAGE UNDER ACT
NO. 348 OF THE PUBLIC ACT OF 1990, AS AMENDED (MICHIGAN COMPILED LAWS ANNOTATED
ss.565.901 ET SEQ.)
------
RECITAL
Mortgagor is the owner of the premises described in SCHEDULE A and of the
improvements thereon. Mortgagor will borrow the Mortgage Amount from the Banks
pursuant to the Loan Agreement identified below. Mortgagor has executed and
delivered its notes, each dated the date hereof, in the respective amounts of
$27,500,000 to PNC Bank, National Association (in its individual capacity as a
Bank and not as Mortgagee, "PNC"), $27,500,000 to Fleet National Bank ("Fleet"),
$25,000,000 to Dresdner Bank AG, New York and Grand Cayman Branches
("Dresdner"), $25,000,000 to Commerzbank AG, Chicago Branch ("Commerzbank"),
$25,000,000 to Bayerische Landesbank Girozentrale, Cayman Islands Branch
("Landesbank"), $20,000,000 to Bayerische Hypo- und Vereinsbank AG ("Hypo") and
$20,000,000 to Comerica Bank ("Comerica"), which notes obligate Mortgagor to
pay, in the aggregate, the Mortgage Amount or so much thereof as may be advanced
from time to time under the Loan Agreement. Said notes, as the same may
hereafter be amended, modified, extended, severed, assigned, renewed, replaced
or restated, and including any substitute or replacement notes executed pursuant
to Sections 3.07 or 11.05 of the Loan Agreement, are hereinafter referred to
individually and collectively as the "Note".
CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION
Mortgagor and Mortgagee agree that, unless the context otherwise specifies
or requires, the following terms shall have the meanings herein specified.
"Banks" means, collectively, PNC, Fleet, Dresdner, Commerzbank, Hypo,
Comerica and Landesbank, and such other lending institutions who become "Banks"
pursuant to the Loan Agreement, together with their successors and permitted
assigns in accordance with the terms of the Loan Agreement.
"Chattels" means all fixtures, furnishings, fittings, appliances,
apparatus, equipment, building materials and components, machinery and articles
of personal property, of whatever kind or nature, including any replacements,
proceeds or products thereof and additions thereto, other than those owned by
lessees, now or at any time hereafter intended to be or actually affixed to,
attached to, placed upon, or used in any way in connection with the complete and
comfortable use, enjoyment, development, occupancy or operation of the Premises,
and whether located on or off the Premises.
"Construction Consultant" has the meaning given to such term in the
Loan Agreement.
"Default Rate" and "Base Rate Loans" have the respective meanings given to
such terms in the Loan Agreement.
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"Events of Default" means the events and circumstances described as such in
Section 2.01.
"Guarantor" means the party or parties identified as such in the Loan
Agreement.
"Improvements" means all structures or buildings, and replacements
thereof, to be erected or now or hereafter located upon the Premises, including
all plant equipment, apparatus, machinery and fixtures of every kind and nature
whatsoever forming part of said structures or buildings.
"Loan" means the loan made by the Banks to Mortgagor pursuant to the Loan
Agreement and secured hereby.
"Loan Agreement" means that certain Loan Agreement, dated as of the date
hereof, among Mortgagor, as Borrower, PNC, Fleet and the other lenders signatory
thereto, as Banks, and Mortgagee, as Administrative Agent, as the same may
hereafter be amended, modified or supplemented from time to time.
"Master Declaration" means that certain Master Declaration of Easements
and Restrictions, dated as of June 11, 1997, made by Mortgagor, as Developer, as
amended by First Amendment to Master Declaration of Easements and Restrictions,
dated as of January 20, 1998, both recorded in the office of the Clerk/Register
of Oakland County, Michigan, in, respectively, Liber 17340 at page 136 and Liber
18559 at page 572, which Master Declaration encumbers the Premises and certain
other property.
"Premises" means the premises described in SCHEDULE A including all of the
easements, rights, privileges and appurtenances (including air or development
rights) thereunto belonging or in anywise appertaining, and all of the estate,
right, title, interest, claim or demand whatsoever of Mortgagor therein and in
the streets and ways adjacent thereto, either in law or in equity, in possession
or expectancy, now or hereafter acquired, and as used herein shall, unless the
context otherwise requires, be deemed to include the Improvements.
"Premises Documents" means all reciprocal easement or operating agreements
(including the REAs), declarations of covenants, conditions or restrictions
(including the Master Declaration), declarations of condominium, developer's or
utility agreements with any village, town, county or other governmental
authority, and any similar such agreements or declarations now or hereafter
affecting the Premises or any part thereof.
"REAs" means, collectively, (i) that certain Agreement of Easements and
Restrictions, dated April 7, 1998, between Mortgagor and Bass Pro Outdoor World,
L.P., which was recorded in the office of the Clerk/Register of Oakland County,
Michigan in Liber 18384 at page 63 and (ii) that certain Agreement of Easements
and Restrictions, between Mortgagor and Loeks-Star Partners, which was recorded
in the office of the Clerk/Register of Oakland County, Michigan in Liber 18488
at page 145, together with, in each case, any and all agreements incidental or
supplemental thereto.
"Required Banks" has the meaning given to such term in the Loan Agreement.
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All terms of this Mortgage which are not defined above shall have the
meaning set forth elsewhere in this Mortgage.
Except as expressly indicated otherwise, when used in this Mortgage (i)
"or" is not exclusive, (ii) "hereunder", "herein", "hereof" and the like refer
to this Mortgage as a whole, (iii) "Article", "Section" and "Schedule" refer to
Articles, Sections and Schedules of this Mortgage, (iv) terms defined in the
singular have a correlative meaning when used in the plural and vice versa, (v)
a reference to a law or statute includes any amendment or modification to, or
replacement of, such law or statute and (vi) a reference to an agreement,
instrument or document means such agreement, instrument or document as the same
may be amended, modified or supplemented from time to time in accordance with
its terms and as permitted by the Loan Agreement and other documents executed or
delivered to Mortgagee or the Banks in connection with the Loan. The cover page
and all Schedules hereto are incorporated herein and made a part hereof. Any
table of contents and the headings and captions herein are for convenience only
and shall not affect the interpretation or construction hereof.
GRANTING CLAUSE
NOW, THEREFORE, Mortgagor, in consideration of the premises and in order
to secure the payment of both the principal of, and the interest and any other
sums payable on or under, the Note, this Mortgage or the Loan Agreement and the
performance and observance of all the provisions hereof and of the Note and the
Loan Agreement, hereby gives, grants, bargains, sells, warrants, aliens,
remises, releases, conveys, assigns, transfers, mortgages, hypothecates,
deposits, pledges, sets over and confirms unto Mortgagee, all its estate, right,
title and interest in, to and under any and all of the following described
property (hereinafter, the "Mortgaged Property") whether now owned or held or
hereafter acquired:
(i) the Premises;
(ii) the Improvements;
(iii) the Chattels;
(iv) the Premises Documents;
(v) all rents, royalties, issues, profits, revenue, income,
recoveries, reimbursements and other benefits of the Mortgaged Property
(hereinafter, the "Rents") and all leases of the Mortgaged Property or
portions thereof now or hereafter entered into and all right, title and
interest of Mortgagor thereunder, including, without limitation, cash or
securities deposited thereunder to secure performance by the lessees of
their obligations thereunder, whether such cash or securities are to be
held until the expiration of the terms of such leases or applied to one or
more of the installments of rent coming due immediately prior to the
expiration of such terms, and including any guaranties of such leases and
any
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lease cancellation, surrender or termination fees in respect thereof,
all subject, however, to the provisions of Section 3.01;
(vi) all (a) development work product prepared in connection with
the Premises, including, but not limited to, engineering, drainage,
traffic, soil and other studies and tests; water, sewer, gas, electrical
and telephone approvals, taps and connections; surveys, drawings, plans
and specifications; and subdivision, zoning and platting materials; (b)
building and other permits, rights, licenses and approvals relating to the
Premises; (c) contracts and agreements (including, without limitation,
contracts with architects and engineers, construction contracts and
contracts for the maintenance or management of the Premises), contract
rights, logos, trademarks, trade names, copyrights and other general
intangibles used or useful in connection with the ownership, operation or
occupancy of the Premises or any part thereof; (d) financing commitments
(debt or equity) issued to Mortgagor in respect of the Premises and all
amounts payable to Mortgagor thereunder; and (e) all bank accounts, and
monies therein, of Mortgagor relating to the Premises, including, without
limitation, any accounts relating to real estate taxes; and
(vii) all proceeds of the conversion, voluntary or involuntary,
of any of the foregoing into cash or liquidated claims, including, without
limitation, proceeds of insurance and condemnation awards, and all rights
of Mortgagor to refunds of real estate taxes and assessments.
TO HAVE AND TO HOLD unto Mortgagee, its successors and assigns forever.
ARTICLE I
COVENANTS OF MORTGAGOR
Mortgagor covenants and agrees as follows:
Section 1.01(a) Warranty of Title; Power and Authority. Mortgagor
--------------------------------------
warrants that it has a good and marketable title to an indefeasible fee estate
in the Premises subject to no lien, charge or encumbrance except such as
are listed as exceptions to title in the title policy insuring the lien hereof;
that it owns the Chattels, all leases and the Rents in respect of the Mortgaged
Property and all other personal property encumbered hereby free and clear
of liens and claims; and that this Mortgage is and will remain a valid and
enforceable lien on the Mortgaged Property subject only to the exceptions
referred to above. Mortgagor has full power and lawful authority to mortgage the
Mortgaged Property in the manner and form herein done or intended hereafter
to be done. Mortgagor will preserve such title, and will forever warrant
and defend the same to Mortgagee and will forever warrant and defend the
validity and priority of the lien hereof against the claims of all persons and
parties whomsoever.
(b) Flood Hazard Area. Mortgagor represents that neither the Premises
-----------------
nor any part thereof is located in an area identified by the Secretary of the
United States
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Department of Housing and Urban Development or by any applicable federal agency
as having special flood hazards or, if it is, Mortgagor has obtained the
insurance required by Section 1.09.
Section 1.02(a) Further Assurances. Mortgagor will, at its sole
-------------------
cost and expense, do,execute, acknowledge and deliver all and every such further
acts, deeds, conveyances, mortgages, assignments, notices of assignment,
transfers and assurances as Mortgagee shall from time to time reasonably
require, for the better assuring, conveying, assigning, transferring and
confirming unto Mortgagee the property and rights hereby conveyed or assigned or
intended now or hereafter so to be, or which Mortgagor may be or may hereafter
become bound to convey or assign to Mortgagee, or for carrying out the intention
or facilitating the performance of the terms hereof, or for filing, registering
or recording this Mortgage and, on demand, will execute and deliver, and hereby
authorizes Mortgagee to execute and file in Mortgagor's name, to the extent it
may lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments, to evidence or perfect more effectively
Mortgagee's security interest in and the lien hereof upon the Chattels and other
personal property encumbered hereby.
(b) Information Reporting and Back-up Withholding. Mortgagor will, at its
---------------------------------------------
sole cost and expense, do, execute, acknowledge and deliver all and every such
acts, information reports, returns and withholding of monies as shall be
necessary or appropriate to comply fully, or to cause full compliance, with all
applicable information reporting and back-up withholding requirements of the
Internal Revenue Code of 1986 (including all regulations now or hereafter
promulgated thereunder) in respect of the Premises and all transactions related
to the Premises, and will at all times, upon Mortgagee's request, provide
Mortgagee with satisfactory evidence of such compliance and notify Mortgagee of
the information reported in connection with such compliance.
Section 1.03(a) Filing and Recording of Documents. Mortgagor forthwith
---------------------------------
upon the execution and delivery hereof, and thereafter from time to time, will
cause this Mortgage, the Loan Agreement and any security instrument creating a
lien or evidencing the lien hereof upon the Chattels and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully to protect the lien hereof upon, and the interest of
Mortgagee in, the Mortgaged Property.
(b) Filing and Recording Fees and Other Charges. Mortgagor will pay all
---------------------------------------------
filing, registration or recording fees, and all expenses incident to the
execution and acknowledgment hereof, any mortgage supplemental hereto, any
security instrument with respect to the Chattels, and any instrument of further
assurance, and any reasonable expenses (including attorneys' fees and
disbursements) incurred by Mortgagee in connection with the Loan, and will pay
all federal, state, county and municipal stamp taxes and other taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of the Note, this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Chattels or any instrument
of further assurance.
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Section 1.04 Payment and Performance of Loan Documents. Mortgagor
----------------------------------------------
will punctually pay the principal and interest and all other sums to become due
in respect hereof and of the Note and the Loan Agreement at the time and place
and in the manner specified therein, according to the true intent and meaning
thereof, all in currency of the United States of America which at the time of
such payment shall be legal tender for the payment of public and private debts.
Mortgagor will duly and timely comply with and perform all of the terms,
provisions, covenants and agreements contained in said documents and in all
other documents or instruments executed or delivered by Mortgagor to Mortgagee
or the Banks in connection with the Loan.
Section 1.05 Maintenance of Existence; Compliance with Laws. Mortgagor, if
----------------------------------------------
other than a natural person, will, so long as it is owner of all or part
of the Mortgaged Property, do all things necessary to preserve and keep in full
force and effect its existence, franchises, rights and privileges as a business
or stock corporation, partnership, limited liability company, trust or other
entity under the laws of the state of its formation. Mortgagor will duly and
timely comply with all laws, regulations, rules, statutes, orders and decrees of
any governmental authority or court applicable to it or to the Mortgaged
Property or any part thereof.
Section 1.06 After-Acquired Property. All right, title and interest of
-----------------------
Mortgagor in and to all extensions, improvements, betterments, renewals,
substitutes and replacements of, and all additions and appurtenances to, the
Mortgaged Property, hereafter acquired by, or released to, Mortgagor or
constructed, assembled or placed by Mortgagor on the Premises, 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, without any further mortgage, conveyance,
assignment or other act by Mortgagor, shall become subject to the lien hereof as
fully and completely, and with the same effect, as though now owned by Mortgagor
and specifically described in the Granting Clause hereof, but at any and all
times Mortgagor will execute and deliver to Mortgagee any and all such further
assurances, mortgages, conveyances or assignments thereof as Mortgagee may
reasonably require for the purpose of expressly and specifically subjecting the
same to the lien hereof.
Section 1.07(a) Payment of Taxes and Other Charges. Mortgagor, from time to
----------------------------------
time when the same shall become due and payable, prior to delinquency or penalty
for non-payment, will pay and discharge all taxes of every kind and nature
(including real and personal property taxes and income, franchise, withholding,
profits and gross receipts taxes), all general and special assessments (which
may, to the extent allowed by law, be paid in installments), levies, permits,
inspection and license fees, all water and sewer rents and charges, and all
other public charges whether of a like or different nature, imposed upon or
assessed against it or the Mortgaged Property or any part thereof or upon the
revenues, rents, issues, income and profits of the Mortgaged Property or arising
in respect of the occupancy, use or possession thereof. Mortgagor will, upon
Mortgagee's request, deliver to Mortgagee receipts evidencing the payment of all
such taxes, assessments, levies, fees, rents and other public charges imposed
upon or assessed against it or the Mortgaged Property or any portion thereof.
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Following the occurrence of an Event of Default, Mortgagee may, at its
option, to be exercised by three (3) business days' notice to Mortgagor, require
the deposit by Mortgagor, at the time of each payment of an installment of
interest or principal under the Note (but no less often than monthly), of an
additional amount sufficient to discharge the obligations under this clause (a)
relating to real estate taxes and assessments and any other charges imposed upon
or assessed against the Mortgaged Property or any part thereof when they become
due. The determination of the amount so payable and of the fractional part
thereof to be deposited with Mortgagee, so that the aggregate of such deposits
shall be sufficient for this purpose, shall be made by Mortgagee in its sole
discretion. Such amounts shall be held by Mortgagee without interest and applied
to the payment of the obligations in respect of which such amounts were
deposited or, at Mortgagee's option, to the payment of said obligations in such
order or priority as Mortgagee shall determine, on or before the respective
dates on which the same or any of them would become delinquent. If one (1) month
prior to the due date of any of the aforementioned obligations the amounts then
on deposit therefor shall be insufficient for the payment of such obligation in
full, Mortgagor within ten (10) days after demand shall deposit the amount of
the deficiency with Mortgagee. Nothing herein contained shall be deemed to
affect any right or remedy of Mortgagee under any provisions hereof or of any
statute or rule of law to pay any such amount and to add the amount so paid,
together with interest at the Default Rate for Base Rate Loans, to the
indebtedness hereby secured. Upon Mortgagor's written request, Mortgagee shall
not pay any taxes which Mortgagor is contesting as permitted by this Mortgage,
provided that, and only so long as, (i) there is not occurring any default under
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this Mortgage or under any other Loan document, (ii) Mortgagor is otherwise
complying with the requirements of Section 1.07(c) (it being understood that
Mortgagee's agreement not to pay taxes as aforesaid is further limited by the
provisions of said Section 1.07(c)) and (iii) Mortgagee determines, in its sole
and absolute discretion, that the lien of this Mortgage on the Mortgaged
Property would not otherwise be adversely affected thereby.
(b) Payment of Mechanics and Materialmen. Mortgagor will pay, or cause to
------------------------------------
be paid, from time to time when the same shall become due, all lawful claims and
demands of mechanics, materialmen, laborers, and others which, if unpaid, might
result in, or permit the creation of, a lien on the Mortgaged Property or any
part thereof, or on the revenues, rents, issues, income and profits arising
therefrom (or promptly bond off, or cause to be bonded off (or, in the case of
any such liens aggregating less than $500,000, insured over), any such liens)
and in general will do or cause to be done everything necessary so that the lien
hereof shall be fully preserved, at the cost of Mortgagor and without expense to
Mortgagee.
(c) Good Faith Contests. Nothing in this Section 1.07 shall require the
--------------------
payment or discharge of any obligation imposed upon Mortgagor by this Section so
long as such obligation is the subject of a "Good Faith Contest" (as such quoted
term is defined in the Loan Agreement) by Mortgagor; provided, however, that if
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at any time payment of any obligation imposed upon Mortgagor by clause (a) above
shall become necessary to prevent the delivery of a tax deed or other instrument
conveying the Mortgaged Property or any portion thereof because of non-payment,
then Mortgagor shall pay the same in sufficient time to prevent the delivery of
such tax deed or other instrument.
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Section 1.08 Taxes on Mortgagee or the Banks. Mortgagor will pay any
----------------------------------
taxes (except income, profits, gross revenue or similar taxes) imposed on
Mortgagee or any Bank by reason of their interests in the Note or this Mortgage.
Section 1.09 Insurance. Mortgagor will at all times (unless otherwise
---------
indicated) provide, maintain and keep in force:
(i) policies of insurance insuring the Premises, Improvements and
Chattels against loss or damage by fire and lightning; against loss or
damage by other risks embraced by coverage of the type now known as All
Risk Replacement Cost Insurance with agreed amount endorsement, including
but not limited to riot and civil commotion, vandalism, malicious mischief
and theft; and against such other risks or hazards as Mortgagee from time
to time reasonably may designate in an amount sufficient to prevent
Mortgagee or Mortgagor from becoming a co-insurer under the terms of the
applicable policies, but in any event in an amount not less than 100% of
the then full replacement cost of the Improvements (exclusive of the cost
of excavations, foundations and footings below the lowest basement floor)
without deduction for physical depreciation;
(ii) policies of insurance insuring the Premises against the loss
of "rental value" of the buildings which constitute a part of the
Improvements on a "rented or vacant basis" arising out of the perils
insured against pursuant to clause (i) above in an amount equal to not
less than one (1) year's gross "rental value" of the Improvements. "Rental
value" as used herein is defined as the sum of (A) the total anticipated
gross rental income from tenant occupancy of such buildings as furnished
and equipped, (B) the amount of all charges which are the legal obligation
of tenants and which would otherwise be the obligation of Mortgagor and
(C) the fair rental value of any portion of such buildings which is
occupied by Mortgagor. Mortgagor hereby assigns the proceeds of such
insurance to Mortgagee, to be applied by Mortgagee in payment of the
interest and principal on the Note, insurance premiums, taxes, assessments
and private impositions until such time as the Improvements shall have
been restored and placed in full operation, at which time, provided
Mortgagor is not then in default hereunder, the balance of such insurance
proceeds, if any, held by Mortgagee shall be paid over to Mortgagor;
(iii) if all or part of the Premises are located in an area
identified by the Secretary of the United States Department of Housing and
Urban Development or by any applicable federal agency as a flood hazard
area, flood insurance in an amount at least equal to the maximum limit of
coverage available under the National Flood Insurance Act of 1968,
provided, however, that Mortgagee reserves the right to require flood
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insurance in excess of said limit if such insurance is commercially
available up to the amount provided in clause (i) above;
(iv) throughout the course of construction of the "Improvements"
to be constructed pursuant to the Loan Agreement, and during any period of
restoration
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under this Section 1.09 or Section 1.13, a policy or policies of builder's "all
risk" insurance, written on a Standard Builder's Risk Completed Value Form (100%
non-reporting), in an amount not less than the full insurable value of the
Premises against such risks (including, without limitation, fire and extended
coverage, collapse and earthquake coverage to agreed limits) as Mortgagee may
reasonably request, in form and substance acceptable to Mortgagee;
(v) a policy or policies of workers' compensation insurance as
required by workers' compensation insurance laws (including employer's
liability insurance, if requested by Mortgagee) covering all employees of
Mortgagor;
(vi) comprehensive liability insurance on an "occurrence" basis
against claims for "personal injury" liability, including, without
limitation, bodily injury, death or property damage liability, with a
limit of not less than $15,000,000 in the event of "personal injury" to
any number of persons or of damage to property arising out of one
"occurrence". Such policies shall name Mortgagee as additional insured by
an endorsement, and shall contain cross-liability and severability of
interest clauses, all satisfactory to Mortgagee; and
(vii) such other insurance (including, but not limited to,
earthquake insurance), and in such amounts, as may from time to time be
reasonably required by Mortgagee against the same or other insurable
hazards which at the time are commonly insured against in the case of
premises similarly situated, due regard being given to the height and type
of buildings thereon and their construction, use and occupancy.
(b) All policies of insurance required under this Section 1.09 shall be
issued by companies having Best's ratings and being otherwise acceptable to
Mortgagee, shall be subject to the reasonable approval of Mortgagee as to
amount, content, form and expiration date and, except for the liability policies
described in clauses (a)(v) and (vi) above, shall contain a Non-Contributory
Standard Mortgagee Clause and Lender's Loss Payable Endorsement, or their
equivalents, in favor of Mortgagee, and shall provide that the proceeds thereof
shall be payable to Mortgagee. Mortgagee shall be furnished with the original of
each policy required hereunder (or a certificate of such insurance and, if
required by Mortgagee, a copy of such policy), which policies shall provide that
they shall not lapse, nor be modified or cancelled, without thirty (30) days'
written notice to Mortgagee. At least thirty (30) days prior to expiration of
any policy required hereunder, Mortgagor shall furnish Mortgagee appropriate
proof of issuance of a policy continuing in force the insurance covered by the
policy so expiring. Mortgagor shall furnish to Mortgagee, promptly upon request,
receipts or other satisfactory evidence of the payment of the premiums on such
insurance policies. In the event that Mortgagor does not deposit with Mortgagee
a new certificate or policy of insurance with evidence of payment of premiums
thereon at least thirty (30) days prior to the expiration of any expiring
policy, then Mortgagee may, but shall not be obligated to, procure such
insurance and pay the premiums therefor, and Mortgagor agrees to repay to
Mortgagee the premiums thereon promptly on demand, together with interest
thereon at the Default Rate for Base Rate Loans.
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(c) Mortgagor hereby assigns to Mortgagee all proceeds of any insurance
required to be maintained by this Section 1.09 which Mortgagor may be entitled
to receive for loss or damage to the Premises, Improvements or Chattels. All
such insurance proceeds shall be payable to Mortgagee, and Mortgagor hereby
authorizes and directs any affected insurance company to make payment thereof
directly to Mortgagee. Mortgagor shall give prompt notice to Mortgagee of any
casualty in the amount of $100,000 or more, whether or not of a kind required to
be insured against under the policies to be provided by Mortgagor hereunder,
such notice to generally describe the nature and cause of such casualty and the
extent of the damage or destruction. Mortgagor may settle, adjust or compromise
any claims for loss, damage or destruction, regardless of whether or not there
are insurance proceeds available or whether any such insurance proceeds are
sufficient in amount to fully compensate for such loss or damage, subject, in
the case of claims in the amount of $100,000 or more, to Mortgagee's prior
consent, such consent not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, Mortgagee shall have the right to join Mortgagor
in settling, adjusting or compromising any loss of $100,000 or more. Mortgagor
hereby authorizes the application or release by Mortgagee of any insurance
proceeds under any policy of insurance, subject to the other provisions hereof.
The application or release by Mortgagee of any insurance proceeds shall not cure
or waive any default or notice of default hereunder or invalidate any act done
pursuant to such notice.
(d) In the event of the foreclosure hereof or other transfer of the
title to the Mortgaged Property in extinguishment, in whole or in part, of the
indebtedness secured hereby, all right, title and interest of Mortgagor in and
to any insurance policy, or premiums or payments in satisfaction of claims or
any other rights thereunder then in force, shall pass to the purchaser or
grantee notwithstanding the amount of any bid at such foreclosure sale. Nothing
contained herein shall prevent the accrual of interest as provided in the Note
on any portion of the principal balance due under the Note until such time as
insurance proceeds are actually received and applied to reduce the principal
balance outstanding.
(e) Mortgagor shall not take out separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section 1.09 unless Mortgagee is included thereon as a named insured with
loss payable to Mortgagee under standard mortgage endorsements of the character
and to the extent above described. Mortgagor shall promptly notify Mortgagee
whenever any such separate insurance is taken out and shall promptly deliver to
Mortgagee the policy or policies of such insurance.
(f) Any and all monies received as payment which Mortgagor may be
entitled to receive for loss or damage to the Premises, Improvements or Chattels
under any insurance maintained pursuant to this Section 1.09 (other than
proceeds under the policies required by clause (a)(ii) above) shall be paid over
to Mortgagee and, provided no Event of Default shall exist and subject to the
conditions set forth below, said monies (less Mortgagee's reasonable expenses
for collecting and disbursing the insurance proceeds, or otherwise incurred in
connection therewith) shall be applied by Mortgagee to the payment of, or the
reimbursement of Mortgagor for, the costs and expenses incurred by
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Mortgagor in the restoration of the Improvements on the Premises. Advances of
insurance proceeds shall be made to Mortgagor in accordance with Mortgagee's
standard construction lending practices, terms and conditions. Notwithstanding
the foregoing, in any case where the extent of the damage or destruction is such
that the insurance proceeds paid in respect thereof are $1,000,000 or less, and
provided no default shall exist hereunder or under the Loan Agreement, so long
as Mortgagor shall promptly undertake, and thereafter diligently prosecute to
completion, such restoration, such proceeds shall be paid directly to Mortgagor,
to be applied by Mortgagor for expenses incurred in connection with such
restoration. Insurance proceeds not needed for restoration, or not in fact so
applied, shall, at the option of the Required Banks, be applied either to the
prepayment of the Note and interest accrued and unpaid thereon in such order and
proportions as the Required Banks shall elect, or shall be paid over to
Mortgagor. It is understood that any insurance proceeds (less Mortgagee's
reasonable expenses in connection therewith as set forth above) received by
Mortgagee and not disbursed to Mortgagor due to the existence of a default
hereunder or under the Loan Agreement, and any such insurance proceeds, or
portions thereof, being held by Mortgagee for periodic disbursement during the
course of restoration as set forth above, shall be held in an interest-bearing
account and not applied to the repayment of the Loan unless and until an Event
of Default shall occur hereunder, provided, however, that upon such an Event of
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Default any such proceeds then held by Mortgagee, and any interest earned
thereon, shall, at the option of the Required Banks, be applied by Mortgagee to
the outstanding principal of and accrued and unpaid interest on the Note in such
order and proportions as the Required Banks shall elect. It shall be a condition
to any restoration that Mortgagee and the Construction Consultant shall have
determined, in their reasonable judgment, that the amount of available insurance
proceeds are sufficient to restore the Premises and Improvements, to the same
condition, character and at least equal value and general utility as nearly as
possible to that existing prior to the damage or destruction, no later than (x)
in cases where the damage and available insurance proceeds are in the amount of
$10,000,000 or more, twelve (12) months prior to the Maturity Date of the Loan
or (y) in cases where the damage and available insurance proceeds are in the
amount of less than $10,000,000, the Maturity Date of the Loan. In the event
such insurance proceeds are inadequate for such restoration, Mortgagor shall
deposit with Mortgagee an amount (the "Casualty Excess Amount") equal to the
excess of the estimated cost of restoration, as determined by Mortgagee after
consultation with the Construction Consultant, over the amount of such insurance
proceeds. Notwithstanding the foregoing, Mortgagee shall accept, in lieu of such
deposit, an unconditional, irrevocable letter of credit in the Casualty Excess
Amount issued to Mortgagee by a financial institution, and otherwise in form and
substance, acceptable to Mortgagee in all respects. If Mortgagor shall not have
deposited the Casualty Excess Amount with Mortgagee or if Mortgagee shall not
have received such letter of credit, as the case may be, within thirty (30) days
following Mortgagee's receipt of the insurance proceeds, or if restoration work
shall not have been commenced and the other conditions therefor satisfied by
Mortgagor within sixty (60) days following Mortgagee's receipt of the insurance
proceeds and, thereafter, not diligently pursued in accordance with this Section
and all legal requirements, Mortgagee may apply such insurance proceeds to the
prepayment of the Note and interest accrued and unpaid thereon and in the Loan
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Agreement in such order and proportions as the Required Banks shall elect. If,
following restoration in accordance with this Section 1.09(f) there are any
excess insurance proceeds, such excess insurance proceeds shall, provided there
exists no default hereunder or under the Loan Agreement, be paid over to
Mortgagor.
Section 1.10 Protective Advances by Mortgagee. If Mortgagor shall
----------------------------------
fail to perform any of the covenants contained herein, Mortgagee may, upon
five (5) business days' prior notice (unless, in the good faith judgment of
Mortgagee, such performance must take place sooner due to an emergency or the
imminent loss of, or impairment to, any of the security otherwise afforded to
Mortgagee by this Mortgage, including, without limitation, by virtue of the
imminent sale or forfeiture of the Mortgaged Property or any part thereof, in
which events no prior notice shall be required) make advances to perform the
same on its behalf and all sums so advanced shall be a lien upon the Mortgaged
Property and shall be secured hereby. Mortgagor will repay on demand all sums so
advanced on its behalf together with interest thereon at the Default Rate for
Base Rate Loans. The provisions of this Section shall not prevent any default in
the observance of any covenant contained herein from constituting an Event of
Default.
Section 1.11 Estoppel Certificates. Mortgagor, within three (3) days
----------------------
upon request in person or within five (5) days upon request by mail, will
furnish a statement, duly acknowledged, of the amount due whether for principal
or interest on this Mortgage and whether, to the best of its knowledge, any
offsets, counterclaims or defenses exist against the indebtedness secured
hereby.
Section 1.12 Maintenance of Premises and Improvements. Mortgagor will not
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commit any waste on the Premises or make any change in the use of the Premises
which will in any way increase any ordinary fire or other hazard arising out of
construction or operation. Mortgagor will, at all times, maintain, or cause to
be maintained, the Improvements and Chattels in good operating order and
condition and will promptly make, or cause to be made, from time to time, all
repairs, renewals, replacements, additions and improvements in connection
therewith which are needful or desirable to such end. The Improvements shall not
be demolished or substantially altered, nor shall any Chattels be removed
without Mortgagee's prior consent except where appropriate replacements free of
superior title, liens and claims are promptly made of value at least equal to
the value of the removed Chattels.
Section 1.13 Condemnation. Mortgagor, promptly upon obtaining knowledge of
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the institution or pending institution of any proceedings for the condemnation
of the Premises or any portion thereof, will notify Mortgagee thereof. Mortgagee
may participate in any such proceedings and may be represented therein by
counsel of Mortgagee's selection. Mortgagor from time to time will deliver to
Mortgagee all instruments requested by it to permit or facilitate such
participation. In the event of such condemnation proceedings, the award or
compensation payable is hereby assigned to and shall be paid to Mortgagee.
Mortgagee shall be under no obligation to question the amount of any such award
or compensation and may accept the same in the amount in which the same shall be
paid. The proceeds of any award or compensation so received shall, at the option
of the Required Banks, either be applied to the prepayment of the Note
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and all interest and other sums accrued and unpaid in respect thereof at the
rate of interest provided therein and in the Loan Agreement regardless of the
rate of interest payable on the award by the condemning authority, or be
disbursed to Mortgagor from time to time for restoration of the Improvements.
Notwithstanding the provisions of the immediately preceding sentence, provided
no default shall exist hereunder or under the Loan Agreement and subject to the
conditions set forth below, any such condemnation award proceeds received by
Mortgagee (less Mortgagee's reasonable expenses for collecting and disbursing
the same, or otherwise incurred in connection therewith) shall be applied by
Mortgagee to the payment of, or the reimbursement of Mortgagor for, the costs
and expenses incurred by Mortgagor in the restoration of the Improvements on the
Premises. Advances of condemnation award proceeds shall be made to Mortgagor in
accordance with Mortgagee's standard construction lending practices, terms and
conditions. Notwithstanding the foregoing, in any case where the extent of the
condemnation award proceeds paid in respect thereof are $1,000,000 or less, and
provided no default shall exist hereunder or under the Loan Agreement, so long
as Mortgagor shall promptly undertake, and thereafter diligently prosecute to
completion, such restoration, such proceeds shall be paid directly to Mortgagor,
to be applied by Mortgagor for expenses incurred in connection with such
restoration. Condemnation award proceeds not required for restoration, or not in
fact so applied, shall, at the option of the Required Banks, be applied either
to the prepayment of the Note and interest accrued and unpaid thereon (at the
rate of interest provided therein and in the Loan Agreement regardless of the
rate of interest payable on the award by the condemning authority) in such order
and proportions as the Required Banks shall elect, or shall be paid over to
Mortgagor. It is understood that any condemnation award proceeds (less
Mortgagee's reasonable expenses in connection therewith as set forth above)
received by Mortgagee and not disbursed to Mortgagor due to the existence of a
default hereunder or under the Loan Agreement, and any such condemnation award
proceeds, or portions thereof, being held by Mortgagee for periodic disbursement
during the course of restoration as set forth above, shall be held by Mortgagee
in an interest-bearing account and not applied to the repayment of the Loan
unless and until an Event of Default shall occur hereunder, provided, however,
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that upon such an Event of Default any such proceeds then held by Mortgagee, and
any interest earned thereon, shall, at the option of the Required Banks, be
applied by Mortgagee to the outstanding principal of and accrued and unpaid
interest on the Note in such order and proportions as the Required Banks shall
elect. It shall be a condition to any restoration that Mortgagee and the
Construction Consultant shall have determined, in their reasonable judgment,
that the amount of available condemnation award proceeds are sufficient to
restore the Premises and Improvements, to the same condition, character and at
least equal value and general utility as nearly as possible to that existing
prior to the condemnation, no later than (x) in cases where the taking and
available condemnation award proceeds are in the amount of $10,000,000 or more,
twelve (12) months prior to the Maturity Date of the Loan or (y) in cases where
the taking and available condemnation award proceeds are in the amount of less
than $10,000,000, the Maturity Date of the Loan. In the event such condemnation
award proceeds are inadequate for such restoration, Mortgagor shall deposit with
Mortgagee an amount (the "Condemnation Excess Amount") equal to the excess of
the estimated cost of restoration, as determined by Mortgagee, over the amount
of such condemnation award proceeds. Notwithstanding
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the foregoing, Mortgagee shall accept, in lieu of such deposit, an
unconditional, irrevocable letter of credit in the Condemnation Excess Amount
issued to Mortgagee by a financial institution, and otherwise in form and
substance, acceptable to Mortgagee in all respects. If Mortgagor shall not have
deposited the Condemnation Excess Amount with Mortgagee or if Mortgagee shall
not have received such letter of credit, as the case may be, within thirty (30)
days following Mortgagee's receipt of the condemnation award proceeds, or if
restoration work shall not have been commenced and the other conditions therefor
satisfied by Mortgagor within sixty (60) days following Mortgagee's receipt of
the condemnation award proceeds and, thereafter, not diligently pursued in
accordance with this Section and all legal requirements, Mortgagee may apply
such condemnation award proceeds to the prepayment of the Note and interest
accrued and unpaid thereon (at the rate of interest provided therein and in the
Loan Agreement regardless of the rate of interest payable on the award by the
condemning authority) in such order and proportions as the Required Banks shall
elect. If, following restoration in accordance with this Section 1.13, there are
any excess condemnation award proceeds, such excess proceeds shall, provided
there exists no default hereunder or under the Loan Agreement, be paid over to
Mortgagor.
Section 1.14 Leases. Mortgagor will not (i) execute an assignment of the
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rents or any part thereof from the Premises without Mortgagee's prior consent,
(ii) modify, terminate or consent to the cancellation or surrender of any lease
of the Premises or of any part thereof, now existing or hereafter to be made, in
a manner which is not commercially reasonable, (iii) accept prepayments of any
installments of rents in excess of one (1) month's rent to become due under such
leases, except prepayments in the nature of security for the performance of the
lessees thereunder and lease cancellation or buy-out fees, (iv) modify, release
or terminate any guaranties of any such lease or (v) in any manner impair the
value of the Mortgaged Property or the security hereof. In addition, Mortgagor
will comply with the leasing requirements set forth in Section 6.10 of the Loan
Agreement.
(b) Mortgagor will not execute any lease of all or a substantial portion
of the Premises except for actual occupancy by the lessee thereunder, and will
at all times promptly and faithfully perform, or cause to be performed, in a
commercially reasonable manner, all of the covenants, conditions and agreements
contained in all leases of the Premises or portions thereof now or hereafter
existing, on the part of the lessor thereunder to be kept and performed and will
at all times use commercially reasonable efforts to compel performance by the
lessee under each lease of all obligations, covenants and agreements by such
lessee to be performed thereunder. If any of such leases provide for the giving
by the lessee of certificates with respect to the status of such leases,
Mortgagor shall exercise its right to request such certificates within five (5)
days of any demand therefor by Mortgagee and shall deliver copies thereof to
Mortgagee promptly upon receipt.
(c) Each lease of the Premises, or of any part thereof, shall provide
that, in the event of the enforcement by Mortgagee of the remedies provided for
hereby or by law, the lessee thereunder will, upon request of any person
succeeding to the interest of Mortgagor as a result of such enforcement,
automatically become the lessee of said
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successor in interest, without change in the terms or other provisions of such
lease, provided, however, that said successor in interest shall not be bound by
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(i) any payment of rent or additional rent for more than one (1) month in
advance, except prepayments in the nature of security for the performance by
said lessee of its obligations under said lease or (ii) any amendment or
modification of the lease made without the consent of Mortgagee or such
successor in interest. Each lease shall also provide that, upon request by said
successor in interest, such lessee shall execute and deliver an instrument or
instruments confirming such attornment.
(d) Mortgagor shall, promptly upon Mortgagee's request following an
Event of Default, deposit all tenant security deposits in respect of the
Premises into an account with Mortgagee or as designated by Mortgagee, which
deposits shall be held and disbursed to tenants as required under the terms of
their respective leases.
Section 1.15 Premises Documents. Mortgagor shall (a) use
--------------------
reasonable efforts to cause the due compliance and faithful performance by
the other parties to the Premises Documents with and of all obligations and
agreements by such other parties to be complied with and performed thereunder
and (b) deliver promptly to Mortgagee copies of any notices which it gives or
receives under any of the Premises Documents.
Section 1.16 Trust Fund; Lien Laws. Mortgagor will receive
----------------------
the advances secured hereby and will hold the right to receive such advances as
a trust fund to be applied first for the purpose of paying the costs of
improvements on the Premises and will apply the same first to the payment of
such costs before using any part of the total of the same for any other purpose.
Mortgagor will indemnify and hold Mortgagee and the Banks harmless against any
loss or liability, cost or expense, including, without limitation, any
judgments, attorney's fees, costs of appeal bonds and printing costs, arising
out of or relating to any proceeding instituted by any claimant alleging a
violation by Mortgagor of any applicable lien law.
Section 1.17 Non-Disturbance and Attornment Agreements. Subject
------------------------------------------
to the conditions specified in the next paragraph of this Section, Mortgagee
will, upon Mortgagor's request, execute non-disturbance, attornment and
subordination agreements, in Mortgagee's then standard form (with modifications
reasonably satisfactory to Mortgagee), with lessees of space in the Improvements
which shall provide, inter alia, that in the event Mortgagee or any purchaser at
foreclosure shall succeed to Mortgagor's interest in the Premises, the leases of
such lessees will remain in full force and effect and be binding upon Mortgagee
or such purchaser and such lessee as though each were the original parties
thereto.
Mortgagee's obligation to execute such agreements shall be subject to the
following conditions: (i) the credit of the lessee and the terms of the lease
shall be satisfactory to Mortgagee, (ii) Mortgagee shall have received and
approved the standard form of lease to be used in connection with the leasing of
the Improvements, (iii) upon each request for such an agreement, Mortgagee shall
receive a photocopy of the executed lease, certified to be true and complete by
the responsible officer of Mortgagor or by its counsel and (iv) Mortgagee shall
receive a letter, in the form specified in the Loan
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Agreement, signed by Mortgagor and addressed to the lessee, to be forwarded to
the lessee by Mortgagee, giving notice of the assignment of each lease
provided for herein.
ARTICLE II
EVENTS OF DEFAULT AND REMEDIES
Section 2.01 Events of Default and Certain Remedies. If one or
---------------------------------------
more of the following Events of Default shall happen, that is to say:
(a) if an "Event of Default" shall occur under the Loan Agreement
(as such quoted term is defined therein); or
(b) if default shall be made in the payment of any tax or other
charge required by Section 1.07 to be paid and said default shall have
continued for a period of twenty (20) days; or
(c) if it shall be illegal for Mortgagor to pay any tax referred
to in Section 1.08 or if the payment of such tax by Mortgagor would result
in the violation of applicable usury laws; or
(d) if there shall occur a default which is not cured within the
applicable grace period, if any, under any mortgage, deed of trust or
other security instrument covering all or part of the Mortgaged Property
regardless of whether any such mortgage, deed of trust or other security
instrument is prior or subordinate hereto; it being further agreed by
Mortgagor that an Event of Default hereunder shall constitute an Event of
Default under any such mortgage, deed of trust or other security
instrument held by Mortgagee; or
(e) if there shall occur a default which is not cured within the
applicable grace period, if any, under any of the Premises Documents; or
if any of the Premises Documents is amended, modified, supplemented or
terminated (other than as may be permitted by the Loan Agreement) without
Mortgagee's prior consent; or
(f) except as and to the extent permitted by Section 11.09 of the
Loan Agreement, if Mortgagor shall transfer, or agree to transfer (or
suffer or permit the transfer or agreement to transfer), in any manner,
either voluntarily or involuntarily, by operation of law or otherwise, all
or any portion of the Mortgaged Property, or any interest or rights
therein (including air or development rights) without, in any such case,
the prior written consent of the Required Banks. As used in this clause,
"transfer" shall include, without limitation, any sale, assignment, lease
or conveyance except leases for occupancy subordinate hereto and to all
advances made and to be made hereunder or, in the event Mortgagor or
Guarantor (or a general partner or co-venturer of either of them) is a
partnership, joint venture, limited liability company, trust or
closely-held corporation, the sale, conveyance, transfer or other
disposition of more than
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10%, in the aggregate, of any class of the issued and outstanding capital
stock of such closely-held corporation or of the beneficial interest of
such partnership, venture, limited liability company or trust, or a change
of any general partner, joint venturer, member or beneficiary, as the case
may be, or, in the event Mortgagor or Guarantor (or a general partner,
co-venturer, member or beneficiary, as the case may be, of either of them)
is a publicly-held corporation, the sale, conveyance, transfer or other
disposition of more than 10%, in the aggregate, of the stock-holdings of
any of the five (5) individuals or entities that own the greatest number of
shares of each class of issued and outstanding stock. In the event
Mortgagor or Guarantor is a limited partnership, and so long as a limited
partner has contributed to (or remains personally liable for) the present
and future partnership capital contributions required of such limited
partner by the partnership agreement, such partner may sell, convey,
devise, transfer or dispose of all or a part of his limited partnership
interest to his spouse, children, grandchildren or a family trust in which
his spouse, children or grandchildren are sole beneficiaries.
Notwithstanding the foregoing provisions of this clause (f), consent shall
not be required for transfers of partnership interests in Mortgagor so long
as, following any such transfer, The Taubman Realty Group Limited
Partnership remains the managing general partner of Mortgagor and the owner
of at least a 50% beneficial interest therein; or
(g) if Mortgagor shall encumber, or agree to encumber, in any
manner, either voluntarily or involuntarily, by operation of law or
otherwise, all or any portion of the Mortgaged Property, or any interest
or rights therein, including air or development rights (other than the
granting of leases in accordance with the provisions hereof and of the
Loan Agreement and the granting of easements designed to service the
Premises) without, in any such case, the prior written consent of the
Required Banks. As used in this clause, "encumber" shall include, without
limitation, the placing or permitting the placing of any mortgage, deed of
trust, assignment of rents or other security device. (The Required Banks
may grant or deny their consent under this clause and the immediately
preceding clause in their sole discretion and, if consent should be given,
any such transfer or encumbrance shall be subject hereto and to any other
documents which evidence or secure the Loan, and, if a transfer, any such
transferee shall assume all of Mortgagor's obligations hereunder and
thereunder and agree to be bound by all provisions and perform all
obligations contained herein and therein; consent to one such transfer or
encumbrance shall not be deemed to be a waiver of the right to require
consent to future or successive transfers or encumbrances).
then and in every such case:
I. During the continuance of any such Event of Default,
Mortgagee, by notice to Mortgagor, may declare the entire principal of the
Note then outstanding (if not then due and payable), and all accrued and
unpaid interest and other sums in respect thereof, to be due and payable
immediately, and upon any such declaration the principal of the Note and
said accrued and unpaid interest
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and other sums shall become and be immediately due and payable, anything
herein or in the Note or the Loan Agreement to the contrary
notwithstanding.
II. During the continuance of any such Event of Default,
Mortgagee personally, or by its agents or attorneys, may enter into and
upon all or any part of the Premises, and each and every part thereof, and
is hereby given a right and license and appointed Mortgagor's
attorney-in-fact and exclusive agent to do so, and may exclude Mortgagor,
its agents and servants wholly therefrom; and having and holding the same,
may use, operate, manage and control the Premises and conduct the business
thereof, either personally or by its superintendents, managers, agents,
servants, attorneys or receivers; and upon every such entry, Mortgagee, at
the expense of the Mortgaged Property, from time to time, either by
purchase, repairs or construction, may maintain and restore the Mortgaged
Property, whereof it shall become possessed as aforesaid, may complete the
construction of the Improvements and in the course of such completion may
make such changes in the contemplated Improvements as it may deem
desirable and may insure the same; and likewise, from time to time, at the
expense of the Mortgaged Property, Mortgagee may make all necessary or
proper repairs, renewals and replacements and such useful alterations,
additions, betterments and improvements thereto and thereon as to it may
seem advisable; and in every such case Mortgagee shall have the right to
manage and operate the Mortgaged Property and to carry on the business
thereof and exercise all rights and powers of Mortgagor with respect
thereto either in the name of Mortgagor or otherwise as it shall deem
best; and Mortgagee shall be entitled to collect and receive the Rents and
every part thereof, all of which shall for all purposes constitute
property of Mortgagor; and in furtherance of such right Mortgagee may
collect the rents payable under all leases of the Premises directly from
the lessees thereunder upon notice to each such lessee that an Event of
Default exists hereunder accompanied by a demand on such lessee for the
payment to Mortgagee of all rents due and to become due under its lease,
and Mortgagor FOR THE BENEFIT OF MORTGAGEE AND EACH SUCH LESSEE hereby
covenants and agrees that the lessee shall be under no duty to question
the accuracy of Mortgagee's statement of default and shall unequivocally
be authorized to pay said rents to Mortgagee without regard to the truth
of Mortgagee's statement of default and notwithstanding notices from
Mortgagor disputing the existence of an Event of Default such that the
payment of rent by the lessee to Mortgagee pursuant to such a demand shall
constitute performance in full of the lessee's obligation under the lease
for the payment of rents by the lessee to Mortgagor; and after deducting
the expenses of conducting the business thereof and of all maintenance,
repairs, renewals, replacements, alterations, additions, betterments and
improvements and amounts necessary to pay for taxes, assessments,
insurance and prior or other proper charges upon the Mortgaged Property or
any part thereof, as well as just and reasonable compensation for the
services of Mortgagee and for all attorneys, counsel, agents, clerks,
servants and other employees by it engaged and employed, Mortgagee shall
apply the moneys arising as aforesaid, first, to the payment of the
-----
principal of the Note and the interest thereon, when and as the same shall
become payable and in such order and proportions as Mortgagee shall
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elect and second, to the payment of any other sums required to be paid by
------
Mortgagor hereunder or under the Loan Agreement.
III. Mortgagee, with or without entry, personally or by its
agents or attorneys, insofar as applicable, may:
(1) sell the Mortgaged Property to the extent permitted and
pursuant to the procedures provided by law, and all estate, right,
title and interest, claim and demand therein, and right of
redemption thereof, at one (1) or more sales as an entity or in
parcels or parts, and at such time and place upon such terms and
after such notice thereof as may be required or permitted by law; or
(2) institute proceedings for the complete or partial
foreclosure hereof; or
(3) take such steps to protect and enforce its rights
whether by action, suit or proceeding in equity or at law for the
specific performance of any covenant, condition or agreement in the
Note, the Loan Agreement or herein, 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 Mortgagee shall elect.
Section 2.02 Other Matters Concerning Sales. Mortgagee may
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adjourn from time to time any sale by it to be made hereunder or by virtue
hereof by announcement at the time and place appointed for such sale or for such
adjourned sale or sales; and, except as otherwise provided by any applicable
provision of law, Mortgagee, without further notice or publication, may make
such sale at the time and place to which the same shall be so adjourned.
(b) Upon the completion of any sale or sales made by Mortgagee under or
by virtue of this Article II, Mortgagee, or an officer of any court empowered to
do so, shall execute and deliver to the accepted purchaser or purchasers a good
and sufficient instrument or instruments conveying, assigning and transferring
all estate, right, title and interest in and to the property and rights sold.
Mortgagee is hereby appointed the true and lawful attorney irrevocable of
Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Mortgaged Property and rights so
sold and for that purpose Mortgagee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Mortgagor hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, Mortgagor, if requested by Mortgagee, shall ratify and confirm any
such sale or sales by executing and delivering to Mortgagee or to such purchaser
or purchasers all such instruments as may be advisable, in the judgment of
Mortgagee, for the purpose, and as may be designated in such request. Any such
sale or sales made under or by virtue of this Article II, whether made under the
power of sale herein granted or under or by virtue of judicial proceedings or of
a judgment or decree of foreclosure and sale, shall operate to divest all the
estate,
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right, title, interest, claim and demand whatsoever, whether at law or in equity
of Mortgagor in and to the properties and rights so sold, and shall be a
perpetual bar both at law and in equity against Mortgagor and against any
and all persons claiming or who may claim the same, or any part thereof from,
through or under Mortgagor.
(c) In the event of any sale or sales made under or by virtue of this
Article II (whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale), the entire principal of, and interest and other sums on, the Note, if not
previously due and payable, and all other sums required to be paid by Mortgagor
pursuant hereto or to the Loan Agreement, immediately thereupon shall, anything
in any of said documents to the contrary notwithstanding, become due and
payable.
(d) The purchase money, proceeds or avails of any sale or sales made
under or by virtue of this Article II, together with any other sums which then
may be held by Mortgagee hereunder, whether under the provisions of this Article
II or otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of such sale,
-----
including reasonable compensation to Mortgagee, its agents and counsel,
and of any judicial proceedings wherein the same may be made, and of all
expenses, liabilities and advances made or incurred by Mortgagee
hereunder, together with interest at the Default Rate for Base Rate Loans
on all advances made by Mortgagee, and of all taxes, assessments or other
charges, except any taxes, assessments or other charges subject to which
the Mortgaged Property shall have been sold.
Second: To the payment of the whole amount then due, owing or unpaid
------
upon the Note for principal and interest, with interest on the unpaid
principal at the Default Rate from and after the happening of any Event of
Default described in Section 2.01 from the due date of any such payment of
principal until the same is paid, in such order and amounts as Mortgagee
may elect.
Third: To the payment of any other sums required to be paid by
-----
Mortgagor pursuant to any provision hereof or of the Note, the Loan
Agreement or any other document executed or delivered to Mortgagee or the
Banks in connection with the Loan, including all expenses, liabilities and
advances made or incurred by Mortgagee hereunder or in connection with the
enforcement hereof, together with interest at the Default Rate for Base
Rate Loans on all such advances.
Fourth: To the payment of the surplus, if any, to whomsoever may be
------
lawfully entitled to receive the same.
(e) Upon any sale or sales made under or by virtue of this Article II,
whether made under the power of sale herein granted or under or by virtue of
judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and
in lieu of paying cash therefor may make
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settlement for the purchase price by crediting upon the indebtedness secured
hereby the net sales price after deducting therefrom the expenses of the sale
and the costs of the action and any other sums which Mortgagee is authorized to
deduct hereunder.
Section 2.03 Payment of Amounts Due. In case an Event of Default described
` ----------------------
in Section 2.01 shall have happened and be continuing, then, upon demand of
Mortgagee, Mortgagor will pay to Mortgagee the whole amount which then shall
have become due and payable on the Note, for principal or interest or both, as
the case may be, and after the happening of said Event of Default will also pay
to Mortgagee interest at the Default Rate on the then unpaid principal of the
Note, and the sums required to be paid by Mortgagor pursuant to any provision
hereof or of the Loan Agreement, and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to Mortgagee, its agents and counsel and any expenses
incurred by Mortgagee hereunder. In the event Mortgagor shall fail forthwith to
pay all such amounts upon such demand, Mortgagee shall be entitled and empowered
to institute such action or proceedings at law or in equity as may be advised by
its counsel for the collection of the sums so due and unpaid, and may prosecute
any such action or proceedings to judgment or final decree, and may enforce any
such judgment or final decree against Mortgagor and collect, out of the property
of Mortgagor wherever situated, as well as out of the Mortgaged Property, in any
manner provided by law, moneys adjudged or decreed to be payable.
(b) Mortgagee shall be entitled to recover judgment as aforesaid either
before, after or during the pendency of any proceedings for the enforcement of
the provisions hereof; and the right of Mortgagee to recover such judgment shall
not be affected by any entry or sale hereunder, or by the exercise of any other
right, power or remedy for the enforcement of the provisions hereof, or the
foreclosure of the lien hereof; and in the event of a sale of the Mortgaged
Property, and of the application of the proceeds of sale, as herein provided, to
the payment of the debt hereby secured, Mortgagee shall be entitled to enforce
payment of, and to receive all amounts then remaining due and unpaid upon, the
Note, and to enforce payment of all other charges, payments and costs due
hereunder, under the Loan Agreement or otherwise in respect of the Loan, and
shall be entitled to recover judgment for any portion of the debt remaining
unpaid, with interest at the Default Rate. In case of proceedings against
Mortgagor in insolvency or bankruptcy or any proceedings for its reorganization
or involving the liquidation of its assets, then Mortgagee shall be entitled to
prove the whole amount of principal, interest and other sums due upon the Note
to the full amount thereof, and all other payments, charges and costs due
hereunder, under the Loan Agreement or otherwise in respect of the Loan, without
deducting therefrom any proceeds obtained from the sale of the whole or any part
of the Mortgaged Property, provided, however, that in no case shall Mortgagee
receive a greater amount than such principal and interest and such other
payments, charges and costs from the aggregate amount of the proceeds of the
sale of the Mortgaged Property and the distribution from the estate of
Mortgagor.
(c) No recovery of any judgment by Mortgagee and no levy of an execution
under any judgment upon the Mortgaged Property or upon any other property of
Mortgagor shall affect in any manner or to any extent, the lien hereof upon the
21
<PAGE>
Mortgaged Property or any part thereof, or any liens, rights, powers or remedies
of Mortgagee hereunder, but such liens, rights, powers and remedies of Mortgagee
shall continue unimpaired as before.
(d) Any moneys thus collected by Mortgagee under this Section 2.03 shall
be applied by Mortgagee in accordance with the provisions of clause (d) of
Section 2.02.
Section 2.04 Actions; Receivers. After the happening of any Event of
-------------------
Default and immediately upon the commencement of any action, suit or other legal
proceedings by Mortgagee to obtain judgment for the principal of, or interest
on, the Note and other sums required to be paid by Mortgagor pursuant to any
provision hereof or of the Loan Agreement, or of any other nature in aid of the
enforcement of the Note or hereof or of the Loan Agreement, Mortgagor will (a)
waive the issuance and service of process and enter its voluntary appearance in
such action, suit or proceeding and (b) if required by Mortgagee, consent to the
appointment of a receiver or receivers of all or part of the Mortgaged Property
and of any or all of the Rents in respect thereof. After the happening of any
Event of Default and during its continuance, or upon the commencement of any
proceedings 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 Mortgagee, Mortgagee shall be entitled, as a
matter of right, if it shall so elect, without the giving of notice to any other
party and without regard to the adequacy or inadequacy of any security for the
indebtedness secured hereby, forthwith either before or after declaring the
unpaid principal of the Note to be due and payable, to the appointment of such a
receiver or receivers. Such appointment may be made either before or after any
foreclosure sale without regard to the solvency or insolvency of Mortgagor at
the time of application for such receiver and without regard to the then value
of the Premises or whether the same shall be then occupied as a homestead or not
and Mortgagee may be appointed as such receiver. Such receiver shall have (i)
power to collect the rents, issues and profits of the Premises and, in case of a
foreclosure sale and a deficiency, during the full statutory period of
redemption, whether there be redemption or not, as well as during any further
times when Mortgagor, except for the intervention of such receiver, would be
entitled to collect such rents, issues and profits, (ii) power to extend or
modify any then existing leases and to make new leases, which extensions,
modifications and new leases may provide for terms to expire, or for options to
lessees to extend or renew terms to expire, beyond the maturity date of the
indebtedness secured hereby and beyond the date of the issuance of a deed or
deeds to a purchaser or purchasers at a foreclosure sale, it being understood
and agreed that any such leases, and the options or other such provisions to be
contained therein, shall be binding upon Mortgagor and all persons whose
interest in the Mortgaged Property are subject to the lien hereof and upon the
purchaser or purchasers at any foreclosure sale, notwithstanding any redemption
from sale, discharge of the indebtedness secured hereby, satisfaction of any
foreclosure decree, or issuance of any certificate of sale or deed to any
purchaser and (iii) all other powers which may be necessary or are usual in such
cases for the protection, possession, control, management and operation of the
Mortgaged Property during the whole of said period. The court from time to time
may authorize the receiver to apply the net income in his hands in payment, in
whole or in part, of (x) the indebtedness secured hereby, or by any decree
foreclosing this Mortgage, or any tax, special assessment or other
22
<PAGE>
lien which may be or become superior to the lien hereof or of such decree,
provided such application is made prior to foreclosure sale and (y) the
deficiency in case of a foreclosure sale and deficiency.
In connection with the foregoing it is understood and agreed that
Mortgagor's failure to pay taxes and/or assessments against the Premises, or any
installment thereof, or any insurance premiums upon the policies required by
this Mortgage, shall constitute waste as provided by Act 236 of the Public Acts
of 1961 of Michigan (Revised Judicature Act), Section 600.2927; and Mortgagor
agrees to and hereby consents to the appointment of a receiver under said
statute should Mortgagee elect to resort to its remedies thereunder.
Section 2.05 Mortgagee's Right to Possession. Notwithstanding the
-------------------------------
appointment of any receiver, liquidator or trustee of Mortgagor, or of any of
its property, or of the Mortgaged Property or any part thereof, Mortgagee shall
be entitled to retain possession and control of all property now or hereafter
held hereunder.
Section 2.06 Remedies Cumulative. No remedy herein conferred upon or
-------------------
reserved to Mortgagee is intended to be exclusive of any other remedy or
remedies, and each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law, in equity or by statute. No delay or omission of Mortgagee 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 any
acquiescence therein; and every power and remedy given hereby to Mortgagee may
be exercised from time to time as often as may be deemed expedient by Mortgagee.
Nothing herein or in the Note or the Loan Agreement shall affect the obligation
of Mortgagor to pay the principal of, and interest and other sums on, the Note
and the Loan Agreement in the manner and at the time and place therein
respectively expressed.
Section 2.07 Moratorium Laws;Right of Redemption. Mortgagor will not
-----------------------------------
at any time insist upon, or plead, or in any manner whatever claim or take any
benefit or advantage of any stay or extension or moratorium law, any exemption
from execution or sale of the Mortgaged Property or any part thereof, wherever
enacted, now or at any time hereafter in force, which may affect the covenants
and terms of performance hereof, nor claim, take or insist upon any benefit or
advantage of any law now or hereafter in force providing for the valuation or
appraisal of the Mortgaged Property, or any part thereof, prior to any sale or
sales thereof which may be made pursuant to any provision herein, or pursuant to
the decree, judgment or order of any court of competent jurisdiction; nor, after
any such sale or sales, claim or exercise any right under any statute heretofore
or hereafter enacted to redeem the property so sold or any part thereof and
Mortgagor hereby expressly waives all benefit or advantage of any such law or
laws, and covenants not to hinder, delay or impede the execution of any power
herein granted or delegated to Mortgagee, but to suffer and permit the execution
of every power as though no such law or laws had been made or enacted.
Mortgagor, for itself and all who may claim under it, waives, to the extent that
it lawfully may, all right to have the Mortgaged
23
<PAGE>
Property marshaled upon any foreclosure hereof. Mortgagor hereby waives any and
all rights of redemption from sale under any order or decree of foreclosure of
this Mortgage on behalf of Mortgagor and all persons beneficially interested
therein, and each and every person except decree or judgment creditors of
Mortgagor in its representative capacity acquiring any interest in or title to
the Premises subsequent to the date of this Mortgage.
Section 2.08 Mortgagor's Use and Occupancy after Default. During the
----------------------------------------------
continuance of any Event of Default and pending the exercise by Mortgagee
of its right to exclude Mortgagor from all or any part of the Premises,
Mortgagor agrees to pay the fair and reasonable rental value for the use and
occupancy of the Premises or any portion thereof which are in its possession
for such period and, upon default of any such payment, will vacate and
surrender possession of the Premises to Mortgagee or to a receiver, if any,
and in default thereof may be evicted by any summary action or proceeding
for the recovery of possession of premises for non-payment of rent, however
designated.
Section 2.09 Mortgagee's Rights Concerning Application of Amounts
-----------------------------------------------------------
Collected. Notwithstanding anything to the contrary contained herein, upon
- ---------
the occurrence of an Event of Default, Mortgagee may apply, to the extent
permitted by law, any amount collected hereunder to principal, interest or any
other sum due under the Note or the Loan Agreement or otherwise in respect of
the Loan in such order and amounts, and to such obligations, as the Required
Banks shall elect in their sole and absolute discretion.
Section 2.10 Regarding Defenses. No action for the enforcement of the
------------------
lien or any provision hereof shall be subject to any defense which would not
be good and available to the party interposing the same in an action at law upon
the Note.
Section 2.11 Expenses as Indebtedness. In any suit to foreclose the lien
------------------------
hereof (including any partial foreclosure) or to enforce any other remedy of
Mortgagee or the Banks under this Mortgage or the Note or other Loan
documents or otherwise in respect of the Loan, there shall be allowed and
included as additional indebtedness in the decree for sale or other judgment
or decree all expenditures and expenses which may be paid or incurred by or
on behalf of Mortgagee or the Banks for attorneys' fees, appraiser's fees,
outlays for documentary and expert evidence, stenographer's charges, publication
costs, and costs (which may be estimated as to items to be expended after
entry of the decree) of procuring all such abstracts of title, title
searches and examinations, title insurance policies, Torrens certificates,
and similar data and assurances with respect to title and value as Mortgagee
or the Banks may deem reasonably necessary either to prosecute such suit or
to evidence to bidders at any sale which may be had pursuant to such decree the
true condition of the title to or the value of the Premises.
24
<PAGE>
ARTICLE III
MISCELLANEOUS
Section 3.01 Assignment of Leases and Rents. This Mortgage is
-----------------------------------
intended to constitute a present, absolute and irrevocable assignment of all
leases now or hereafter existing and of all of the Rents now or hereafter
accruing, and Mortgagor, without limiting the generality of the Granting
Clause hereof, specifically hereby presently, absolutely and irrevocably assigns
all leases now or hereafter existing and all of the Rents now or hereafter
accruing to Mortgagee. The aforesaid assignment shall be effective immediately
upon the execution hereof and is not conditioned upon the occurrence of any
Event of Default hereunder or any other contingency or event, provided, however,
-------- -------
that Mortgagee hereby grants to Mortgagor the right and license to collect
and receive the Rents as they become due, and not in advance,so long as no Event
of Default exists hereunder. Immediately upon the occurrence of any such Event
of Default, the foregoing right and license shall be automatically terminated
and of no further force or effect. Nothing contained in this Section or
elsewhere herein shall be construed to make Mortgagee a mortgagee in possession
unless and until Mortgagee actually takes possession of the Mortgaged Property,
nor to obligate Mortgagee to take any action or incur any expense or discharge
any duty or liability under or in respect of any leases or other agreements
relating to the Mortgaged Property or any part thereof. The foregoing provisions
of this Section and Mortgagee's rights under this Mortgage generally, including,
without limitation, under clause (v) of the Granting Clause, are in addition to
and not in lieu of Mortgagee's rights and benefits under Act 210 of the Public
Acts of Michigan of 1953, as amended, and under Act 228 of the Public Acts of
Michigan of 1925, as amended.
Section 3.02 Security Agreement. This Mortgage constitutes a security
-------------------
agreement under the applicable Uniform Commercial Code with respect to the
Chattels and such other of the Mortgaged Property which is personal property.
In addition to the rights and remedies granted to Mortgagee by other applicable
law or hereby, Mortgagee shall have all of the rights and remedies with respect
to the Chattels and such other personal property as are granted to a secured
party under the applicable Uniform Commercial Code. Upon Mortgagee's request,
Mortgagor shall promptly and at its expense assemble the Chattels and such
other personal property and make the same available to Mortgagee at a
convenient place acceptable to Mortgagee. Mortgagor shall pay to Mortgagee
on demand, with interest at the Default Rate for Base Rate Loans, any
and all expenses, including attorneys' fees, incurred by Mortgagee in protecting
its interest in the Chattels and such other personal property and in enforcing
its rights with respect thereto. Any notice of sale, disposition or other
intended action by Mortgagee with respect to the Chattels and such other
personal property sent to Mortgagor in accordance with the provisions hereof at
least five (5) days prior to such action shall constitute reasonable notice to
Mortgagor. The proceeds of any such sale or disposition, or any part thereof,
may be applied by Mortgagee to the payment of the indebtedness secured hereby
in such order and proportions as Mortgagee in its discretion shall deem
appropriate.
25
<PAGE>
Section 3.03 Application of Certain Payments. In the event that all or
-------------------------------
any part of the Mortgaged Property is encumbered by one or more mortgages
held by Mortgagee, Mortgagor hereby irrevocably authorizes and directs Mortgagee
to apply any payment received by Mortgagee in respect of any note secured hereby
or by any other such mortgage to the payment of such of said notes as Mortgagee
shall elect in its sole and absolute discretion, and Mortgagee shall have the
right to apply any such payment in reduction of principal and/or interest and in
such order and amounts as Mortgagee shall elect in its sole and absolute
discretion without regard to the priority of the mortgage securing the note so
repaid or to contrary directions from Mortgagor or any other party.
Section 3.04 Severability. In the event any one or more of the provisions
------------
contained herein or in the Note or the Loan Agreement 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
this Mortgage shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein or therein.
Section 3.05 Modifications and Waivers. No provision hereof may be
---------------------------
changed, waived, discharged or terminated orally or by any other means except as
provided in Section 11.02 of the Loan Agreement. Any agreement hereafter
made by Mortgagor and Mortgagee relating hereto shall be superior to the rights
of the holder of any intervening or subordinate lien or encumbrance.
Section 3.06 Notices. All notices, demands, consents, approvals and
-------
statements required or permitted hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes when
presented personally, three (3) days after mailing by registered or certified
mail, postage prepaid, or one (1) day after delivery to a nationally
recognized overnight courier service providing evidence of the date of delivery,
if to Mortgagor at its address stated above,and if to Mortgagee to the attention
of its Real Estate Finance office at its address stated above, or at such other
address of which a party shall have notified the party giving such notice in
accordance with the provisions of this Section.
Section 3.07 Successors and Assigns. All of the grants, covenants,
------------------------
terms, provisions and conditions herein shall run with the land and shall
apply to, bind and inure to the benefit of, the respective successors
and assigns of Mortgagor and Mortgagee.
Section 3.08 Limitation on Interest. Anything herein or in the Note
------------------------
to the contrary notwithstanding, the obligations of Mortgagor hereunder and
under the Note shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt of any such payment by
Mortgagee and/or the Banks would be contrary to provisions of law applicable to
Mortgagee and/or the Banks limiting the maximum rate of interest that may be
charged or collected by Mortgagee and/or the Banks.
26
<PAGE>
Section 3.09 Counterparts. This Mortgage may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original; and all such counterparts shall together constitute
but one and the same mortgage.
Section 3.10 Substitute Mortgages. Mortgagor and Mortgagee shall, upon
---------------------
their mutual agreement to do so, execute such documents as may be necessary in
order to effectuate the modification hereof, including the execution of
substitute mortgages, so as to create two (2) or more liens on the Mortgaged
Property in such amounts as may be mutually agreed upon but in no event to
exceed, in the aggregate, the Mortgage Amount; in such event, Mortgagor
covenants and agrees to pay the reasonable fees and expenses of Mortgagee
and its counsel in connection with any such modification.
Section 3.11 Governing Law. This Mortgage shall be construed and
--------------
enforced in accordance with the laws of the State of Michigan.
Section 3.12 No Merger of Interests. Unless expressly provided otherwise,
----------------------
in the event that ownership hereof and title to the fee and/or leasehold estates
in the Premises encumbered hereby shall become vested in the same person or
entity, this Mortgage shall not merge in said title but shall continue to be and
remain a valid and subsisting lien on said estates in the Premises for the
amount secured hereby.
Section 3.13 No Credit For Taxes. Mortgagor shall not claim or demand
----------------------
or be entitled to receive any credit or credits on the principal indebtedness
to be secured by this Mortgage, or on the interest payable thereon, for any
part of the taxes assessed against the Premises and no deduction shall be
made or claimed from the taxable value of the Premises by reason of this
Mortgage.
Section 3.14 No Consent to Contracts. Neither Mortgagee nor the Banks
-----------------------
consents to any contract for labor or materials, and all contracts for
labor or materials that will be let by Mortgagor shall at all times be
subordinate to the lien of this Mortgage.
Section 3.15 Termination of Mortgage. If all of the indebtedness secured
------------------------
hereby shall be paid, then, and in that event only, all rights under this
Mortgage shall terminate and the Mortgaged Property shall become wholly
clear of the liens, security interests, conveyances and assignments
evidenced hereby. Notwithstanding the foregoing, no release of this Mortgage
or the lien thereof or assignment of this Mortgage, shall be valid unless
executed by Mortgagee.
Section 3.16 Business Loan. Mortgagor represents and agrees that the
-------------
obligations secured hereby (a) constitute a business loan and (b) are exempted
transactions under the federal Truth-in-Lending Act (15 U.S.C. Section 1601, et
seq.). None of the forgoing is intended, however, to vitiate or in any way
detract from the intention of Mortgagor and Mortgagee to have the laws of the
State of New York apply in all respects
27
<PAGE>
to the construction and enforcement of the Note and the Loan Agreement, as
said intention is expressly set forth therein.
Section 3.17 CERTAIN WAIVERS. MORTGAGOR HEREBY EXPRESSLY AND
----------------
UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY FORECLOSURE OR SIMILAR
ACTION OR PROCEDURE BROUGHT BY MORTGAGEE OR THE BANKS ASSERTING AN EVENT OF
DEFAULT HEREUNDER, ANY AND EVERY RIGHT IT MAY HAVE TO (I) INJUNCTIVE RELIEF,
(II) A TRIAL BY JURY, (III) INTERPOSE ANY COUNTERCLAIM THEREIN, OTHER THAN A
COMPULSORY COUNTERCLAIM AND (IV) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR
SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING IN THIS SECTION SHALL PREVENT OR
PROHIBIT MORTGAGOR FROM INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST
MORTGAGEE OR ANY BANK WITH RESPECT TO ANY ASSERTED CLAIM.
Section 3.18 Non-Recourse. No recourse shall be had under this Mortgage
------------
against Mortgagor or its constituent partners except as and to the extent set
forth in Section 10.02 of the Loan Agreement.
Section 3.19 Partial Releases. Portions of the Premises may be released
----------------
from time to time from the lien of this Mortgage, as provided in Section 11.09
of the Loan Agreement.
IN WITNESS WHEREOF, this Mortgage has been duly executed and delivered by
Mortgagor.
TAUBMAN AUBURN HILLS ASSOCIATES
LIMITED PARTNERSHIP,
a Delaware limited partnership
By: The Taubman Realty Group Limited
Partnership, a Delaware limited
partnership, its managing general
partner
By /s/ Steven E. Eder
-----------------------------
Steven E. Eder,
an authorized signatory
Witnesses:
/s/ Audrey Greenfield
- ------------------------
Name: Audrey Greenfield
/s/ Laura Siecienski
- ------------------------
Name: Laura Siecienski
28
<PAGE>
-----------------------------------------------------------------
FIRST AMENDMENT TO CONSTRUCTION LOAN AGREEMENT
among
TAUBMAN MACARTHUR ASSOCIATES LIMITED PARTNERSHIP,
as Borrower,
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, (successor in
interest to Bayerische Hypotheken- Und Wechsel-Bank Aktiengesellschaft, New
York Branch),
CIBC INC., HYPOVEREINSBANK - IRELAND,
BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN ISLANDS BRANCH,
COMERICA BANK and
THE OTHER BANKS AND FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO,
as Lenders,
and
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, (successor in
interest to Bayerische Hypotheken- Und
Wechsel-Bank Aktiengesellschaft, New York Branch),
as Agent
- --------------------------------------------------------------------------------
Dated as of April 23, 1999
<PAGE>
FIRST AMENDMENT TO CONSTRUCTION LOAN AGREEMENT
----------------------------------------------
THIS FIRST AMENDMENT TO CONSTRUCTION LOAN AGREEMENT (the
"Amendment") is made as of the 23rd day of April, 1999 among TAUBMAN MACARTHUR
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Borrower"),
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH (successor in interest to
Bayerische Hypotheken- Und Wechsel-Bank Aktiengesellschaft, New York Branch),
the New York branch of a German banking corporation, as administrative agent (in
such capacity, the "Agent") for itself and the other banks and financial
institutions from time to time parties to the Construction Loan Agreement and
CIBC INC., HYPOVEREINSBANK - IRELAND, BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN
ISLANDS BRANCH, COMERICA BANK. Capitalized terms used but not otherwise defined
in this Amendment shall have the meaning assigned thereto in the Construction
Loan Agreement (defined below).
RECITALS
--------
A. Pursuant to the Construction Loan Agreement, dated October 28,
1997, among Borrower, Agent and the Lenders a party thereto (the "Construction
Loan Agreement"), Lenders have agreed to make loans to Borrower in order to
provide the financing for (i) the construction of a regional shopping mall to be
known as MacArthur Center and (ii) certain other costs, as described in the
Budget referred to in the Construction Loan Agreement.
B. Borrower has requested, and Agent and the Lenders have agreed, to
modify the terms of the Construction Loan Agreement in the manner set forth
below.
NOW, THEREFORE, in consideration of the premises, the mutual
covenants herein, and other good and valuable consideration, the parties hereto,
Lenders, Borrower and Agent hereby agree as follows:
<PAGE>
2
AGREEMENT
---------
SECTION 1. Defined Terms. Section 1.1 of the Construction Loan
-------------
Agreement is hereby amended by amending and restating the following
definitions in their entirety as follows:
Agreement: This Agreement, as amended by the First Amendment to the
---------
Construction Loan Agreement, dated April 23, 1999, made among Borrower,
Lenders and Agent, as it may be further amended, supplemented or otherwise
modified from time to time.
Applicable Margin: with respect to each Type of Loan at any
-----------------
date, the applicable percentage per annum set forth below:
Eurodollar Loans 135 basis points
(1.35%)
Prime Rate Loans 50 basis points
(0.50%)
provided, with respect to the Second Extension Period, the then Applicable
--------
Margin shall be increased by 15 basis points (0.15%).
Commitment: As to any Lender, the obligations of such Lender to make
----------
Loans to Borrower hereunder in an aggregate principal amount not to exceed
the amount set forth next to such Lender's name on Schedule A attached.
Hypo: Bayerische Hypo- Und Vereinsbank AG, New York Branch
----
(successor in interest to Bayerische Hypotheken-Und Wechsel-Bank
Aktiengesellschaft, New York Branch).
Payment Guaranty: The Amended and Restated Payment Guaranty dated as
----------------
of the date hereof between The Taubman Realty Group and Agent, as the same
may be further amended, supplemented or otherwise modified from time to
time.
Responsible Officer: Lisa Payne, Steven Eder and Karen Moore
-------------------
or such other individual as shall be named a Responsible Officer by
notice to Agent.
<PAGE>
3
SECTION 2. Additional Borrower Equity
--------------------------
2.1 The following paragraphs are added to the end of Section 2.1:
"(c) Notwithstanding anything to the contrary in this Agreement, no
Lender shall be obligated to make additional Loans to the Borrower after the
date hereof until such time that Borrower has advanced from its own funds an
aggregate amount equal to $37,817,734 to pay for the costs of constructing and
equipping the Improvements included in the Budget, which advances shall be made
by Borrower strictly in accordance with the procedures for making Loan advances
set forth in Section 2.2(a) hereof."
SECTION 3. General Conditions.
------------------
3.1 Except as specifically amended herein, all of the terms,
covenants and conditions and stipulations contained in the Construction Loan
Agreement are ratified and confirmed in all respects and shall continue to apply
with full force and effect.
3.2 The Borrower acknowledges and confirms that $98,101,938 is
outstanding under the Construction Loan Agreement and that the Borrower has no
set-offs, counterclaims or defenses to its obligations under the Construction
Loan Agreement, the Notes or any of the other Loan Documents.
3.3 This Amendment shall become effective as of the date first above
written when the Agent has received counterparts of this Amendment duly executed
by the Borrower and all the Lenders.
3.4 This Amendment shall not constitute a waiver or an amendment of
any other provision of the Construction Loan Agreement not expressly referred to
herein and shall not be construed as a waiver or consent to any further or
future action on the part of the Borrower that would require a waiver or consent
of the Lenders and the Agent. Except as expressly amended hereby, the provisions
of the Construction Loan Agreement are and shall remain in full force and
effect.
<PAGE>
4
3.5 This Amendment may be executed by the parties hereto in any
number of separate counterparts, each of which shall be deemed to be an
original, and all of which taken together shall be deemed to constitute one and
the same instrument.
3.6 THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPALS OF CONFLICT OF LAWS.
<PAGE>
5
TO CONFIRM THEIR AGREEMENT, this Amendment has been duly executed by
Agent, Lenders and Borrower as of the date first written above.
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK
BRANCH
(successor in interest to Bayerische
Hypotheken- Und Wechsel-Bank
Aktiengesellschaft, New York Branch),
as Agent
By: /s/ Stephen G. Melidones
------------------------
Name: Stephen G. Melidones
Title: Director
By: /s/ Meggan W. Walsh
-------------------
Name: Meggan W. Walsh
Title: Managing Director
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK
BRANCH
(successor in interest to Bayerische
Hypotheken- Und Wechsel-Bank
Aktiengesellschaft, New York Branch),
as a Lender
By: /s/ Stephen G. Melidones
------------------------
Name: Stephen G. Melidones
Title: Director
By: /s/ Meggan W. Walsh
-------------------
Name: Meggan W. Walsh
Title: Managing Director
CIBC INC.
By: /s/ Joel Gershkon
-----------------
Joel Gershkon
Agent
<PAGE>
6
HYPOVEREINSBANK - IRELAND
By: /s/ D. Heusel
------------------
Name: D. Heusel
Title: Managing Director
By: /s/ Gerry Murphy
------------------
Name: Gerry Murphy
Title: Managing Director
BAYERISCHE LANDESBANK GIROZENTRALE, CAYMAN
ISLANDS BRANCH
By: /s/ John A. Wain
--------------------
Name: John A. Wain
Title: First Vice President
By: /s/ A. Kohnert
--------------------
Name: A. Kohnert
Title: First Vice President
COMERICA BANK
By: /s/ Kristine L. Andersen
------------------------
Name: Kristine L. Andersen
Title: Assistant Vice President
TAUBMAN MACARTHUR ASSOCIATES LIMITED
PARTNERSHIP
By: The Taubman Realty Group Limited
Partnership, its general partner
By: /s/ Steven Eder
-------------------
Name: Steven Eder
Title: Authorized Signatory
<PAGE>
SCHEDULE A
----------
Lender Commitment Amount
- ------ -----------------
HypoVereinsbank $48,000,000
CIBC 28,000,000
HypoVereinsbank - Ireland 20,000,000
Comerica 16,000,000
Bayerische Landesbank 8,000,000
<PAGE>
MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
BY
SHORT HILLS ASSOCIATES,
a New Jersey general partnership
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
as Mortgagor
TO
METROPOLITAN LIFE INSURANCE COMPANY,
a New York corporation,
One Madison Avenue
New York, New York 10010
as Mortgagee
April 15, 1999
<PAGE>
MORTGAGE, SECURITY AGREEMENT
AND FIXTURE FILING
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I.
GRANT OF SECURITY
Section 1.01 REAL PROPERTY GRANT.............................................3
Section 1.02 PERSONAL PROPERTY GRANT.........................................4
Section 1.03 SATISFACTION AND RELEASE........................................5
ARTICLE II. MORTGAGOR REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 DUE AUTHORIZATION, EXECUTION, AND DELIVERY......................6
Section 2.02 PERFORMANCE BY MORTGAGOR........................................6
Section 2.03 WARRANTY OF TITLE...............................................6
Section 2.04 TAXES, LIENS AND OTHER CHARGES..................................7
Section 2.05 ESCROW DEPOSITS.................................................7
Section 2.06 CARE AND USE OF THE PROPERTY....................................8
Section 2.07 COLLATERAL SECURITY INSTRUMENTS.................................9
Section 2.08 SUITS AND OTHER ACTS TO PROTECT THE PROPERTY....................9
Section 2.09 LIENS AND ENCUMBRANCES.........................................10
Section 2.10 SINGLE PURPOSE ENTITY..........................................10
ARTICLE III.
INSURANCE
Section 3.01 REQUIRED INSURANCE AND TERMS OF INSURANCE POLICIES.............10
Section 3.02 ADJUSTMENT OF CLAIMS...........................................13
Section 3.03 ASSIGNMENT TO MORTGAGEE........................................13
ARTICLE IV.
BOOKS, RECORDS AND ACCOUNTS
Section 4.01 BOOKS AND RECORDS..............................................14
Section 4.02 ADDITIONAL MATTERS.............................................14
i.
<PAGE>
ARTICLE V.
LEASES AND OTHER AGREEMENTS AFFECTING THE PROPERTY
Section 5.01 MORTGAGOR'S REPRESENTATIONS AND WARRANTIES.....................15
Section 5.02 ASSIGNMENT OF LEASES...........................................16
Section 5.03 PERFORMANCE OF OBLIGATIONS.....................................16
Section 5.04 SUBORDINATE LEASES AND NON-DISTURBANCE AGREEMENTS..............16
Section 5.05 LEASING COMMISSIONS............................................17
ARTICLE VI.
ENVIRONMENTAL HAZARDS
Section 6.01 REPRESENTATIONS AND WARRANTIES.................................17
Section 6.02 REMEDIAL WORK..................................................18
Section 6.03 ENVIRONMENTAL SITE ASSESSMENT..................................18
Section 6.04 UNSECURED OBLIGATIONS..........................................18
Section 6.05 HAZARDOUS MATERIALS............................................19
Section 6.06 REQUIREMENTS OF ENVIRONMENTAL LAWS.............................19
ARTICLE VII.
CASUALTY, CONDEMNATION AND RESTORATION
Section 7.01 MORTGAGOR'S REPRESENTATIONS....................................20
Section 7.02 RESTORATION....................................................20
Section 7.03 CONDEMNATION...................................................21
Section 7.04 REQUIREMENTS FOR RESTORATION...................................22
ARTICLE VIII.
REPRESENTATIONS OF MORTGAGOR
Section 8.01 ERISA..........................................................24
Section 8.02 NON-RELATIONSHIP...............................................24
Section 8.03 NO ADVERSE CHANGE..............................................24
Section 8.04 FIRPTA.........................................................24
ARTICLE IX.
EXCULPATION AND LIABILITY
Section 9.01 LIABILITY OF MORTGAGOR.........................................25
ARTICLE X.
CHANGE IN OWNERSHIP, CONVEYANCE OF PROPERTY
Section 10.01 CONVEYANCE OF PROPERTY, CHANGE IN OWNERSHIP AND
COMPOSITION....................................................25
ii
<PAGE>
Section 10.02 PROHIBITION ON SUBORDINATE FINANCING...........................27
Section 10.03 STATEMENTS REGARDING OWNERSHIP.................................27
ARTICLE XI.
DEFAULTS AND REMEDIES
Section 11.01 EVENTS OF DEFAULT..............................................27
Section 11.02 REMEDIES UPON DEFAULT..........................................29
Section 11.03 APPLICATION OF PROCEEDS OF SALE................................29
Section 11.04 WAIVER OF JURY TRIAL...........................................30
Section 11.05 MORTGAGEE'S RIGHT TO PERFORM MORTGAGOR'S OBLIGATIONS...........30
Section 11.06 MORTGAGEE REIMBURSEMENT........................................30
Section 11.07 FEES AND EXPENSES..............................................30
Section 11.08 WAIVER OF CONSEQUENTIAL DAMAGES................................31
Section 11.09 ATTORNEY-IN-FACT...............................................31
ARTICLE XII.
MORTGAGOR AGREEMENTS AND FURTHER ASSURANCES
Section 12.01 PARTICIPATION AND SALE OF LOAN.................................31
Section 12.02 REPLACEMENT OF NOTE............................................32
Section 12.03 MORTGAGOR'S ESTOPPEL...........................................32
Section 12.04 FURTHER ASSURANCES.............................................32
Section 12.05 SUBROGATION....................................................33
ARTICLE XIII.
SECURITY AGREEMENT
Section 13.01 SECURITY AGREEMENT.............................................33
Section 13.02 REPRESENTATIONS AND WARRANTIES.................................33
Section 13.03 CHARACTERIZATION OF PROPERTY...................................34
Section 13.04 PROTECTION AGAINST PURCHASE MONEY SECURITY INTERESTS...........34
ARTICLE XIV.
MISCELLANEOUS COVENANTS
Section 14.01 NO WAIVER......................................................35
Section 14.02 NOTICES........................................................35
Section 14.03 HEIRS AND ASSIGNS; TERMINOLOGY.................................35
Section 14.04 SEVERABILITY...................................................35
Section 14.05 APPLICABLE LAW.................................................35
Section 14.06 CAPTIONS.......................................................35
Section 14.07 TIME OF THE ESSENCE............................................35
iii
<PAGE>
Section 14.08 NO MERGER......................................................36
Section 14.09 NO MODIFICATIONS...............................................36
Section 14.10 ENTIRE AGREEMENT...............................................36
Section 14.11 COUNTERPARTS...................................................36
Section 14.12 NO THIRD PARTY BENEFICIARIES...................................36
ARTICLE XV.
SPECIAL NEW JERSEY PROVISIONS
Section 15.01 INCONSISTENCIES................................................36
Section 15.02 WARRANTY OF TITLE..............................................36
Section 15.03 NEW JERSEY SPILL ACT AND ISRA..................................36
Section 15.04 COPY OF MORTGAGE...............................................39
EXHIBITS
EXHIBIT "A": Property Description
EXHIBIT "B": Leasing Guidelines
iv
<PAGE>
MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING
DEFINED TERMS
===============================================================================
Execution Date: As of April 15, 1999
===============================================================================
Note: The promissory notes dated as of the Execution Date made by Mortgagor to
the order of Mortgagee in the respective principal amounts of $200,000,000.00
and $70,000,000.00, together with all renewals, amendments, modifications,
restatements and extensions thereof (individually, the "$200,000,000 Note" and
the "$70,000,000 Note" and collectively the "Note").
===============================================================================
Mortgagee & Address: Metropolitan Life Insurance Company, a New York corporation
200 Park Avenue, 12th Floor
New York, New York 10166
Attention: Senior Vice-President
Real Estate Investments
and: Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Vice-President and Investment Counsel,
Law Department, Real Estate Investments
===============================================================================
Mortgagor & Address: Short Hills Associates, a New Jersey general partnership
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
Attention: Treasurer
===============================================================================
Liable Party& Address: The Taubman Realty Group Limited Partnership,
a Delaware limited partnership
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
Attention: Treasurer
===============================================================================
County and State in which the Property is located: Essex County, State of New
Jersey.
===============================================================================
Use: Regional shopping center
===============================================================================
1
<PAGE>
- --------------------------------------------------------------------------------
Insurance:
Full Replacement Cost including $5,000,000.00 for Personal Property.
Boiler and Machinery $25,000,000.00
Business Income $50,000,000.00.
Commercial General Liability $25,000,000.00
Earthquake Insurance N/A
Address for Insurance Notification:
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010-3690
Attn: Risk Management Unit, Area: 3 D/E
===============================================================================
Loan Documents: The Note, this Mortgage and any other documents related to the
Note and/or Mortgage and all renewals, amendments, modifications, restatements
and extensions of these documents.
Guaranty: Guaranty Agreement dated as of the Execution Date and executed by
Liable Party, together with all amendments, modifications, replacements,
substitutions and restatements thereof.
Unsecured Indemnity Agreement: Unsecured Indemnity Agreement dated as of the
Execution Date and executed by Borrower and Liable Party in favor of Mortgagee,
together with all amendments, modifications and restatements thereof.
The Unsecured Indemnity Agreement and the Guaranty are not Loan Documents.
===============================================================================
THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING (this "Mortgage") is
made as of the Execution Date by Mortgagor to Mortgagee with reference to the
following Recitals:
2
<PAGE>
R E C I T A L S
A. This Mortgage secures: (1) the payment of the indebtedness evidenced by
the Note with interest at the rates set forth in the Note, together with all
renewals, modifications, consolidations and extensions of the Note, all
additional advances or fundings made by Mortgagee, and any other amounts
required to be paid by Mortgagor under any of the Loan Documents, (collectively,
the "Secured Indebtedness", and sometimes referred to as the "Loan") and (2) the
full performance by Mortgagor of all of the terms, covenants and obligations set
forth in any of the Loan Documents.
B. Mortgagor makes the following covenants and agreements for the benefit
of Mortgagee or any prospective purchaser of the Loan Documents or participant
in the Loan as contemplated in this Mortgage (all of which are collectively
referred to as, "Mortgagee").
NOW, THEREFORE, IN CONSIDERATION of the Recitals and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged,
Mortgagor agrees as follows:
ARTICLE I.
GRANT OF SECURITY
Section 1.01 REAL PROPERTY GRANT. Mortgagor irrevocably mortgages,
-------------------
grants, assigns and warrants to Mortgagee, its successors and assigns, with
power of sale and right of entry and possession, all of Mortgagor's present
and future estate, right, title and interest in and to the following which are
collectively referred to as the "Real Property":
(a) that certain real property located in the County and State which is
more particularly described in Exhibit "A" attached to this Mortgage or any
-----------
portion of the real property; all easements, rights-of-way, gaps, strips and
gores of land; streets and alleys; sewers and water rights; privileges,
licenses, tenements, and appurtenances appertaining to the real property,
and the reversion(s), remainder(s), and claims of Mortgagor with respect to
these items, and the benefits of any existing or future conditions,
covenants and restrictions affecting the real property (collectively, the
"Land");
(b) all things now or hereafter affixed to or placed on the Land, including
all buildings, structures and improvements, all fixtures and all machinery,
elevators, boilers, building service equipment (including, without limitation,
all equipment for the generation or distribution of air, water, heat,
electricity, light, fuel or for ventilating or air conditioning purposes or for
sanitary or drainage purposes or for the removal of dust, refuse or garbage),
partitions, appliances, furniture, furnishings, building materials, supplies,
computers and software, window coverings and floor coverings, lobby furnishings,
and other property now or in the future attached, or installed in the
improvements and all replacements, repairs, additions, or substitutions to these
items (collectively, the "Improvements");
(c) all present and future income, rents, revenue, profits, proceeds,
accounts receivable, security deposits, and other benefits from the Land
and/or Improvements and all deposits made with
3
<PAGE>
respect to the Land and/or Improvements, including, but not limited to, any
security given to utility companies by Mortgagor, any advance payment of real
estate taxes or assessments, or insurance premiums made by Mortgagor and all
claims or demands relating to such deposits and other security, including claims
for refunds of tax payments or assessments, and all insurance proceeds payable
to Mortgagor in connection with the Land and/or Improvements whether or not
such insurance coverage is specifically required under the terms of this
Mortgage ("Insurance Proceeds") (all of the items set forth in this paragraph
are referred to collectively as "Rents and Profits");
(d) all damages, payments and revenue of every kind that Mortgagor
may be entitled to receive, from any person owning or acquiring a right to the
oil, gas or mineral rights and reservations of the Land;
(e) all proceeds and claims arising on account of any damage to, or
Condemnation(as hereinafter defined)of any part of the Land and/or Improvements,
and all causes of action and recoveries for any diminution in the value of
the Land and/or Improvements;
(f) all licenses, contracts, management agreements, guaranties, warranties,
franchise agreements, permits, or certificates relating to the ownership, use,
operation or maintenance of the Land and/or Improvements; and
(g) all names by which the Land and/or Improvements may be operated or
known, and all rights to carry on business under those names, and all trademarks
trade names, and goodwill relating to the Land and/or Improvements.
TO HAVE AND TO HOLD the Real Property, unto and for the use and benefit of
Mortgagee, and its successors and assigns, forever subject to the terms,
covenants and conditions of this Mortgage.
Section 1.02 Personal Property Grant. Mortgagor irrevocably grants,
-----------------------
assigns and warrants to Mortgagee, its successors and assigns, a security
interest in Mortgagor's interest in all personal property in all of its forms
that Mortgagor now or hereafter owns or in which Mortgagor now or hereafter
acquires an interest or right, including, without limitation, those in which
Mortgagor has an interest in mass or a joint or other interest or right of any
kind, those which are now or hereafter located on or affixed to the Property,
and those in transit thereto or in any other location, or used or useful in the
operation, use or occupancy of the Property or the construction of any
improvements thereon, including, without limitation, all of Mortgagor's right,
title and interest in and to the following items (expressly excluding, however,
trade fixtures and other personal property of tenants of the Property), all of
which are collectively referred to as "Personal Property":
(a) any portion of the Real Property which may be personal property,
and all other personal property, whether now existing or acquired in the future
which is attached to, appurtenant to, or used in the construction or operation
of, or in connection with, the Real Property;
(b) all rights to the use of water, including water rights appurtenant to
the Real Property, pumping plants, ditches for irrigation, all water stock or
other evidence of ownership of any part of
4
<PAGE>
the Real Property that is owned by Mortgagor in common with others and all
documents of membership in any owner's association or similar group;
(c) all plans and specifications prepared for construction of the
Improvements, and all contracts and agreements of Mortgagor relating to
the plans and specifications or to the construction of the Improvements;
(d) all art work located on or used in connection with the Property
or its occupation or occupancy;
(e) all equipment, furniture, furnishings, appliances, machinery,
fixtures,
goods and other personal property, at any time located on or used in connection
with the Real Property;
(f) all sales agreements, deposits, escrow agreements, other documents
and agreements entered into with respect to the sale of any part of the
Property, and all proceeds of the sale;
(g) all leases, tenant security deposits, policies of insurance,
accounts (including, without limitation, any escrow account described in this
Mortgage and all sums on deposit therein), documents, instruments and chattel
paper, and other agreements and rights relating to the Real Property, and other
general intangibles, including but not limited to all rights under that certain
Construction, Operation and Reciprocal Easement Agreement dated as of June 11,
1993 among Mortgagor, The Neiman Marcus Group, Inc., Nordstrom, Inc. and Saks &
Company (the AREA@), all governmental permits relating to construction or other
activities on the Real Property, all names under or by which the Real Property
may at any time be operated or known, including, without limitation, the name
"The Mall at Short Hills" and any similar name, all rights to carry on business
under any such names, or any variant thereof, all trade names, trademarks and
franchises relating in any way to the Real Property, all good will in any way
relating to the Property, all licenses and permits relating in any way to, or to
the operation of, the Property, all contractual rights, all options, all
purchase orders, all manufacturers' warranties with respect to improvements, all
construction contracts, all maintenance contracts, all service contracts and all
of Mortgagor's claims and rights arising under or pursuant to Section 365 of the
Bankruptcy Code, 11 U.S.C. ' 365; and
(h) all proceeds from the voluntary or involuntary disposition or
claim respecting any of the foregoing items (including, without limitation,
judgments, condemnation awards or otherwise) and all substitutions, replacements
of, and additions to, any of the foregoing items.
All of the Real Property and the Personal Property are collectively
referred to as the "Property."
Section 1.03 SATISFACTION AND RELEASE. If Mortgagor shall pay to
------------------------
Mortgagee the Secured Indebtedness, at the times and in the manner stipulated in
the Loan Documents, then this Mortgage shall be satisfied and released of record
by Mortgagee in accordance with the laws of the State.
ARTICLE II.
5
<PAGE>
MORTGAGOR REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 DUE AUTHORIZATION, EXECUTION, AND DELIVERY.
------------------------------------------
(a) Mortgagor represents and warrants that the execution of the Loan
Documents and the Unsecured Indemnity Agreement have been duly authorized and
there is no provision in the organizational documents of Mortgagor requiring
further consent for such action by any other entity or person.
(b) Mortgagor represents and warrants that it is duly formed, validly
existing and is in good standing under the laws of the state of its formation
and in the State, that it has all necessary licenses, authorizations,
registrations, permits and/or approvals to own its properties and to carry on
its business as presently conducted.
(c) Mortgagor represents and warrants that the execution, delivery
and performance of the Loan Documents will not result in Mortgagor's being in
default under any provision of its organizational documents or of any deed of
trust, mortgage, lease, credit or other agreement to which it is a party or
which affects it or the Property.
(d) Mortgagor represents and warrants that the Loan Documents and the
Unsecured Indemnity Agreement have been duly authorized, executed and delivered
by Mortgagor and constitute valid and binding obligations of Mortgagor which are
enforceable in accordance with their terms.
Section 2.02 PERFORMANCE BY MORTGAGOR. Mortgagor shall pay the Secured
------------------------
Indebtedness to Mortgagee and shall keep and perform each and every other
obligation, covenant and agreement of the Loan Documents.
Section 2.03 WARRANTY OF TITLE.
-----------------
(a) Mortgagor warrants that it holds marketable and indefeasible fee
simple absolute title to the Real Property, and that it has the right and is
lawfully authorized to sell, convey or encumber the Property subject only to
those property specific exceptions to title recorded in the real estate records
of the County and contained in Schedule B of the title insurance policy or
policies which have been approved by Mortgagee (the "Permitted Exceptions"). The
Property is free from all due and unpaid taxes, assessments and mechanics' and
materialmen's liens. The warranties of Mortgagor contained in this paragraph (a)
are made solely for the benefit of Mortgagee and any prospective purchaser of
the Loan Documents and participant in the Loan as contemplated in this Mortgage.
(b) Mortgagor further covenants to warrant and forever defend Mortgagee
from and against all persons claiming any interest in the Property other than
interests specifically permitted hereunder.
6
<PAGE>
Section 2.04 TAXES, LIENS AND OTHER CHARGES
------------------------------
(a) Unless otherwise paid to Mortgagee as provided in Section 2.05
hereof, Mortgagor shall pay all real estate and other taxes, assessments,
water and sewer charges, vault and other license or permit fees, liens, fines,
penalties, interest, and other similar public and private claims which may
be payable, assessed, levied, imposed upon or become a lien on or against any
portion of the Property (all of the foregoing items are collectively referred to
as the "Imposition(s)"). The Impositions shall be paid not later than the dates
on which the particular Imposition would become delinquent and Mortgagor shall
produce to Mortgagee receipts of the imposing authority, or other evidence
reasonably satisfactory to Mortgagee, evidencing the payment of the Imposition
in full. If Mortgagor elects by appropriate legal action to contest any
Imposition, Mortgagor shall not be required to pay the Imposition provided that
the contest operates to prevent enforcement or collection of the Imposition, or
the sale or forfeiture of, the Property, and is prosecuted with due diligence
and continuity. Upon termination of any proceeding or contest, Mortgagor shall
pay the amount of the Imposition as finally determined in the proceeding or
contest.
(b) In the event of the passage, after the Execution Date, of any law
which deducts from the value of the Property, for the purposes of taxation,
any lien or security interest encumbering the Property, or changing in any way
the existing laws regarding the taxation of mortgages, deeds of trust and/or
security agreements or debts secured by these instruments, or changing the
manner for the collection of any such taxes, and the law has the effect of
imposing payment of any Impositions upon Mortgagee, at Mortgagee's option, the
Secured Indebtedness shall become due and payable upon 120 days= prior written
notice to Mortgagor. Notwithstanding the preceding sentence, Mortgagee's
election to accelerate the Loan shall not be effective if (1) Mortgagor is
permitted by law (including, without limitation, applicable interest rate laws)
to, and actually does, pay the Imposition or the increased portion of the
Imposition and (2) Mortgagor agrees in writing to pay or reimburse Mortgagee in
accordance with Section 11.06 hereof for the payment of any such Imposition
--------------
which becomes payable at any time when the Loan is outstanding.
Section 2.05 ESCROW DEPOSITS (a) Without limiting the effect of Section
---------------
2.04 and Section 3.01, Mortgagor shall pay to Mortgagee monthly on the same date
the monthly installment is payable under the Note, an amount equal to 1/12th of
the amounts Mortgagee reasonably estimates are necessary to pay, on an
annualized basis, (a) all Impositions and (b) the premiums for the insurance
policies required under this Mortgage (collectively the "Premiums") until such
time as Mortgagor has deposited an amount equal to the annual charges for these
items and on demand, from time to time, shall pay to Mortgagee any additional
amounts necessary to pay the Premiums and Impositions. Mortgagor will furnish to
Mortgagee bills for Impositions and Premiums thirty (30) days before Impositions
become delinquent and such Premiums become due for payment. No amounts paid as
Impositions or Premiums shall be deemed to be trust funds and these funds may be
commingled with the general funds of Mortgagee but shall be held by Mortgagee in
a non-segregated interest-bearing account, provided, however, that Mortgagee
shall not guarantee any particular rate of return. All amounts held under this
Section 2.05 shall be used only for the payment of the Premiums or Impositions
for which the amounts were deposited.
7
<PAGE>
(b) Notwithstanding the provisions of Section 2.05(a) to the contrary,
provided no Event of Default has occurred under the Loan Documents, the Guaranty
or the Unsecured Indemnity Agreement, Mortgagee shall not require an escrow for
the Impositions or the Premiums (collectively, the AEscrow Waivers@), provided,
with respect to the Premiums only, Mortgagor shall deliver to Mortgagee not less
than thirty (30) days prior to the date any Premium would become delinquent,
evidence acceptable to Mortgagee that said Premium has been paid in full,
including, without limitation, certified copies of all the insurance policies
required pursuant to Article III hereof marked Apremium paid@ or in the case of
a renewal of said policies, Mortgagor may furnish Mortgagee with binders thereof
to be followed by the original policies when issued or certified copies thereof.
(c) Notwithstanding the provisions of Section 2.05(b) to the contrary, in
the event Mortgagor shall cure the Event of Default referred to in Section
2.05(b) (provided Mortgagee has accepted said cure), Mortgagee shall reinstate
the Escrow Waivers, provided, however, the Escrow Waivers shall be permanently
terminated upon the occurrence of any future Event of Default.
Section 2.06 CARE AND USE OF THE PROPERTY
----------------------------
(a) Mortgagor represents and warrants to Mortgagee as follows:
(i) All authorizations, approvals, licenses, including without
limitation liquor licenses, if any, and operating permits required of
Mortgagor to allow the Improvements to be operated for the Use have been
obtained, paid for and are in full force and effect.
(ii) The Improvements, all plazas, parking facilities and landscaping
upon the described Land and their Use comply in all material respects with
(and no notices of violation have been received in connection with)
all Requirements (as defined in this Section) and Mortgagor shall at all
times comply in all material respects with all present or future
Requirements affecting or relating to the Property and/or the Use.
Mortgagor shall not use or knowingly permit the use of the Property, or any
part thereof, for any illegal purpose. "Requirements" shall mean all laws,
ordinances, orders, covenants, conditions and restrictions and other
requirements relating to land and building design and construction, use and
maintenance, that may now or hereafter pertain to or affect the Property or
any part of the Property or the Use, including, without limitation,
planning, zoning, subdivision, environmental, air quality, flood hazard,
fire safety, handicapped facilities, building, health, fire, traffic,
safety, wetlands, coastal and other governmental or regulatory rules, laws,
ordinances, statutes, codes and requirements applicable to the Property,
including permits, licenses, certificates of occupancy and/or other
certificates that may be necessary from time to time to comply with any of
the these requirements.
(iii) To the best of Mortgagor's knowledge, Mortgagor has complied
in all material respects with all requirements of all instruments and
agreements affecting the Property, whether or not of record, including
without limitation all covenants and agreements by and between Mortgagor
and any governmental or regulatory agency pertaining to the development,
use or operation of the Property. Mortgagor, at its sole cost and expense,
shall keep the Property in good order, condition, and repair.
8
<PAGE>
(iv) Mortgagor shall abstain from, and not permit, the commission of
waste to the Property and, subject to the rights of The Neiman Marcus Group
Inc., Nordstrom, Inc., Saks & Company, A&S Real Estate, Inc. and
Bloomingdale's Real Estate, Inc. under their respective leases of portions
of the Real Property, shall not alter in any substantial manner, the
structure or character of any Improvements (except for tenant improvements)
without the prior written consent of Mortgagee.
(v) The zoning approval for the Property is not dependent upon the
ownership or use of any property which is not encumbered by the Mortgage.
(b) Mortgagee shall have the right, at any time and from time to time
during normal business hours and upon reasonable prior notice, to enter the
Property in order to ascertain Mortgagor's compliance with the Loan Documents,
to examine the condition of the Property, to perform an appraisal, to undertake
surveying or engineering work, and to inspect premises occupied by tenants
subject to the rights of tenants under their leases. Mortgagor shall reasonably
cooperate with Mortgagee performing these inspections. Mortgagee shall reimburse
Mortgagor for any losses or damages caused by such inspections.
(c) Mortgagor shall use, or cause to be used, the Property continuously for
the Use. Mortgagor shall not use, or knowingly permit the use of, the Property
for any other use without the prior written consent of Mortgagee. To the extent
the Property is used as a residential apartment complex, (i) Mortgagor shall
not file or record a declaration of condominium, master deed of trust or
mortgage or any other similar document evidencing the imposition of a so-called
"condominium regime" whether superior or subordinate to this Mortgage and (ii)
Mortgagor shall not permit any part of the Property to be converted to, or
operated as, a "cooperative apartment house" whereby the tenants or occupants
participate in the ownership, management or control of any part of the Property.
(d) Without the prior written consent of Mortgagee, Mortgagor shall not
(i) initiate or acquiesce in a change in the zoning classification of, and/or
seek any variance under, existing zoning ordinances which would materially
adversely affect the value of the Property, (ii) use or permit the use of the
Property in a manner which may result in the Use becoming a non-conforming
use under applicable zoning ordinances, or (iii) subject the Property to
restrictive covenants that may impair the lien of this Mortgage or materially
impair the value of the Property.
Section 2.07 COLLATERAL SECURITY INSTRUMENTS. Mortgagor covenants and
-------------------------------
agrees that if Mortgagee at any time holds additional security for any
obligations secured by this Mortgage, it may, upon the occurrence of an Event
of Default, enforce its rights and remedies with respect to the security, at
its option, either before, concurrently or after a sale of the Property is made
pursuant to the terms of this Mortgage. Mortgagee may apply the proceeds of the
additional security to the Secured Indebtedness without affecting or waiving
any right to any other security, including the security under this Mortgage,
and without waiving any breach or default of Mortgagor under this Mortgage or
any other Loan Document.
Section 2.08 SUITS AND OTHER ACTS TO PROTECT THE PROPERTY.
--------------------------------------------
9
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(a) Mortgagor shall promptly notify Mortgagee of the commencement, or
receipt of written notice, of any and all material actions or proceedings or
other material claim affecting the Property or the Borrower and/or the interest
of Mortgagee under the Loan Documents (collectively, "Actions"). Mortgagor shall
appear in and defend any Actions.
(b) Mortgagee shall have the right, at the cost and expense of Mortgagor,
to institute, maintain and participate in Actions and take such other action, as
it may deem appropriate in the good faith exercise of its discretion to preserve
or protect the Property and/or the interest of Mortgagee under the Loan
Documents if Mortgagor has not instituted, maintained or participated in
Actions in an appropriate manner as reasonably determined by Mortgagee. Any
money paid by Mortgagee under this Section shall be reimbursed to Mortgagee in
accordance with Section 11.06 hereof.
-------------
Section 2.09 LIENS AND ENCUMRANCES. Except as expressly permitted
-----------------------
herein, without the prior written consent of Mortgagee, to be exercised in
Mortgagee's sole and absolute discretion, other than the Permitted Exceptions,
Mortgagor shall not create, place or allow to remain any lien or
encumbrance on the Property, including deeds of trust, mortgages, security
interests, conditional sales, mechanics' liens, tax liens or assessment liens
regardless of whether or not they are subordinate to the lien created by this
Mortgage (collectively, "Liens and Encumbrances"). If any Liens and Encumbrances
are recorded against the Property or any part of the Property, Mortgagor shall
obtain a discharge and release of any Liens and Encumbrances or obtain title
insurance over such liens and incumbrances within thirty (30) days after receipt
of notice of their existence.
Section 2.10 SINGLE PURPOSE ENTITY. Mortgagor covenants and agrees that it
---------------------
has not and shall not: (i) engage in business other than owning and operating
the Property; (ii) acquire or own a material asset other than the Property and
incidental personal property; (iii) maintain assets in a way difficult to
segregate and identify or commingle its assets with the assets of any other
person or entity; (iv) fail to hold itself out to the public as a legal entity
separate from any other: (v) fail to conduct business solely in its name or
fail to maintain records, accounts or bank accounts separate from any other
person or entity; (vi) file or consent to a petition pursuant to applicable
bankruptcy, insolvency, liquidation or reorganization statutes, or make an
assignment for benefit of creditors without the unanimous consent of its
partners or members, as applicable; (vii)incur additional indebtedness except
in the ordinary course of business of owning and operating the Property;
or (viii) modify, amend or revise its organizational documents in any manner
that would affect or be contrary to the above covenants.
ARTICLE III.
INSURANCE
Section 3.01 REQUIRED INSURANCE AND TERMS OF INSURANCE POLICIES.
--------------------------------------------------
10
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(a) During the term of this Mortgage, Mortgagor at its sole cost and
expense must provide insurance policies and certificates of insurance
satisfactory to Mortgagee as to amounts, types of coverage and the companies
underwriting these coverages. In no event will such policies be terminated or
otherwise allowed to lapse. Mortgagor shall be responsible for its own
deductibles. Mortgagor shall also pay for any insurance, or any increase
of policy limits, not described in the Mortgage which Mortgagor requires for
its own protection or for compliance with government statutes. Mortgagor's
insurance shall be primary and without contribution from any insurance procured
by Mortgagee.
Policies of insurance shall be delivered to Mortgagee in accordance with
the following requirements:
(1) All Risk Property insurance on the Improvements and the
Personal Property, including contingent liability from Operation of
Building Laws, Demolition Costs and Increased Cost of Construction
endorsements, in each case (i) in an amount equal to 100% of the "Full
Replacement Cost" of the Improvements and Personal Property, which for
purposes of this Article III shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation and with a Replacement Cost
Endorsement; (ii) containing an agreed amount endorsement with respect
to the Improvements and Personal Property waiving all co-insurance
provisions; (iii) providing for no deductible in excess of $25,000; and
(iv) containing an "Ordinance or Law Coverage" or "Enforcement" endorsement
if any of the Improvements or the use of the Property shall constitute
non-conforming structures or uses. The Full Replacement Cost shall be
determined from time to time by an appraiser or contractor designated and
paid by Mortgagor and approved by Mortgagee or by an engineer or appraiser
in the regular employ of the insurer.
(2) Commercial General Liability insurance against claims for personal
injury, bodily injury, death or property damage occurring upon, in or about
the Property, such insurance (i) to be on the so-called "occurrence" form
with a combined single limit of not less than the amount set forth in the
Defined Terms; (ii) to continue at not less than this limit until required
to be changed by Mortgagee in writing by reason of changed economic
conditions making such protection inadequate; and (iii) to cover at least
the following hazards: (a) premises and operations; (b) products and
completed operations on an "if any" basis; (c) independent contractors;
(d) blanket contractual liability for all written and oral contracts;
and (e) contractual liability covering the indemnities contained in this
Mortgage to the extent available.
(3) Business Income insurance in an amount sufficient to
prevent Mortgagor from becoming a co-insurer within the terms of the
applicable policies, and sufficient to recover one (1) year's "Business
Income" (as hereinafter defined). For the purposes of this paragraph (3),
"Business Income" shall be not less than $50,000,000. "Business Income"
shall mean the sum of (i) the total anticipated gross income from occupancy
of the Property, (ii) the amount of all charges (such as, but not limited
to, operating expenses, insurance premiums and taxes) which are the
obligation of tenants or occupants to Mortgagor, (iii) the fair market
11
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rental value of any portion of the Property which is occupied by Mortgagor,
and (iv) any other amounts payable to Mortgagor or to any affiliate of
Mortgagor pursuant to leases.
(4) If Mortgagee determines at any time that any part of the
Property is located in an area identified on a Flood Hazard Boundary
Map or Flood Insurance Rate Map issued by the Federal Emergency Management
Agency as having special flood hazards and flood insurance has been made
available, Mortgagor will maintain a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable insurance carrier, in an
amount not less than the lesser of (i) the outstanding principal balance
of the Loan or (ii) the maximum amount of insurance which is available
under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994,
as amended.
(5) During the period of any construction or renovation or
alteration of the Improvements, a so-called "Builder's All Risk"
insurance policy in non-reporting form for any Improvements under
construction, renovation or alteration including, without limitation,
for demolition and increased cost of construction or renovation, in an
amount approved by Mortgagee including an Occupancy endorsement and
Worker's Compensation Insurance covering all persons engaged in the
construction, renovation or alteration in an amount at least equal to the
minimum required by statutory limits of the State.
(6) Workers' Compensation insurance, subject to the statutory
limits of the State, and employer's liability insurance with a limit
of at least $1,000,000 per accident and per disease per employee, and
$1,000,000 for disease in the aggregate in respect of any work or
operations on or about the Property, or in connection with the Property
or its operations (if applicable).
(7) Boiler & Machinery insurance covering the major components of
the central heating, air conditioning and ventilating systems, boilers,
other pressure vessels, high pressure piping and machinery, elevators and
escalators, if any, and other similar equipment installed in the
Improvements, in an amount equal to one hundred percent (100%) of the full
replacement cost of all equipment installed in, on or at the Improvements.
These policies shall insure against physical damage to and loss of
occupancy and use of the Improvements arising out of an accident or
breakdown.
(8) Such other insurance as may from time to time be reasonably
required by Mortgagee against other insurable hazards, including, but not
limited to, vandalism, earthquake, sinkhole and mine subsidence.
(b) Mortgagee's interest must be clearly stated by endorsement in the
insurance policies described in this Section 3.01 as follows:
(1) The policies of insurance referenced in subsections (a)(1),
(a)(3), (a)(4), (a)(5) and (a)(7) of this Section 3.01 shall identify Mortgagee
under the New York Standard Mortgagee Clause (non-contributory)
endorsement.
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(2) The insurance policy referenced in subsection 3.01 (a) (2)
shall name Mortgagee as an additional insured.
(3) All of the policies referred to in Section 3.01 shall provide
for at least thirty (30) days' written notice to Mortgagee in the event
of policy cancellation and/or material change.
(c) All the insurance companies must be authorized to do business in New
York State and the State and be approved by Mortgagee. The insurance companies
must have a general policy rating of A or better and a financial class of X or
better by A.M. Best Company, Inc. and a claims paying ability of BBB or better
according to Standard & Poors. Mortgagee has reviewed the qualifications of
Mortgagor's present insurance companies and acknowledges that they are
satisfactory. Mortgagor shall deliver evidence satisfactory to Mortgagee of
payment of premiums due under the insurance policies.
(d) Certified copies of the policies, and any endorsements, shall be
made available for inspection by Mortgagee upon request. If any policy is
canceled before the Loan is satisfied, and Mortgagor fails to immediately
procure replacement insurance, Mortgagee reserves the right but shall not
have the obligation immediately to procure replacement insurance at Mortgagor's
cost.
(e) Mortgagor shall be required during the term of the Loan to continue
to provide Mortgagee with certified copies of renewal policies or replacements
of the insurance policies referenced in Section 3.01(a). Mortgagee may accept
Certificates of Insurance evidencing insurance policies referenced in
subsections (a)(2), (a)(4), and (a)(6) of this Section 3.01 instead of requiring
the actual policies. Mortgagee shall be provided with renewal Certificates of
Insurance, or Binders, not less than fifteen (15) days prior to each expiration.
The failure of Mortgagor to maintain the insurance required under this Article
III shall not constitute a waiver of Mortgagor's obligation to fulfill these
requirements.
(f) All binders, policies, endorsements, certificates, and cancellation
notices are to be sent to the Mortgagee's Address for Insurance Notification
as set forth in the Defined Terms until changed by notice from Mortgagee.
Section 3.02 ADJUSTMENT OF CLAIMS. Mortgagor hereby authorizes and
--------------------
empowers Mortgagee to join Mortgagor in settling, adjusting or compromising any
claim in excess of $5,000,000.00 for damage to, or loss or destruction of,
all or a portion of the Property, regardless of whether there are Insurance
Proceeds available or whether any such Insurance Proceeds are sufficient in
amount to fully compensate for such damage, loss or destruction. Mortgagor shall
not settle, adjust or compromise any claim in excess of $5,000,000.00 without
Mortgagee's consent, which consent shall notbe unreasonably withheld or delayed.
Section 3.03 ASSIGNMENT TO MORTGAGEE. In the event of the foreclosure
-----------------------
of this Mortgage or other transfer of the title to the Property in
extinguishment of the Secured Indebtedness, all right, title and interest of
Mortgagor in and to any insurance policy, or premiums or payments in
13
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satisfaction of claims or any other rights under these insurance policies and
any other insurance policies covering the Property shall pass to the transferee
of the Property.
ARTICLE IV.
BOOKS, RECORDS AND ACCOUNTS
Section 4.01 BOOKS AND RECORDS. Mortgagor shall keep adequate books and
-----------------
records of account in accordance with generally accepted accounting principles
("GAAP"), consistently applied and furnish to Mortgagee:
(a) on request of Mortgagee, quarterly certified rent rolls signed and
dated by Mortgagor, detailing the names of all tenants of the Improvements, the
portion of Improvements occupied by each tenant, the base rent and any other
charges payable under each Lease (as defined in Section 5.02 hereof), the
-------------
security deposit held for each tenant, including the name and identification
number of the account in which the security deposit is held and the name and
address of the financial institution in which the deposit is held, and the
term of each Lease, including the expiration date, and any other information as
is reasonably required by Mortgagee, within thirty (30) days after the end
of each fiscal quarter;
(b) on request of Mortgagee, a quarterly operating statement of the Property
and year to date operating statements detailing the total revenues received,
total expenses incurred, total cost of all capital improvements, total debt
service and total cash flow, to be prepared and certified by Mortgagor in
accordance with GAAP, and if available, any quarterly operating statement
prepared by an independent certified public accountant, within thirty to sixty
(30-60) days after the close of each fiscal quarter of Mortgagor;
(c) an annual balance sheet and profit and loss statement of Mortgagor
and of the Liable Party prepared and certified by Mortgagor or the Liable Party,
as the case may be, within ninety (90) days after the close of each fiscal
year of Mortgagor and the Liable Party, as the case may be, together with a
certified rent roll signed and dated by Mortgagor containing the information
set forth in subparagraph (a) of this Section 4.01; and
(d) an annual budget for the Property including cash flow projections
for the upcoming year and all proposed capital replacements and improvements
at least fifteen (15) days prior to the start of each calendar year.
Section 4.02 ADDITIONAL MATTERS.
------------------
(a) Mortgagor shall furnish Mortgagee with such other additional financial
or management information (including, without limitation, State and Federal
tax returns) as may, from time to time, be reasonably required by Mortgagee.
(b) Upon reasonable prior notice, Mortgagor shall furnish Mortgagee and
its agents convenient facilities at Mortgagor's main offices for the examination
and audit of any such books and records.
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ARTICLE V.
LEASES AND OTHER AGREEMENTS AFFECTING THE PROPERTY
Section 5.01 MORTGAGOR'S REPRESENTATIONS AND WARRANTIES.
------------------------------------------
Mortgagor represents and warrants to Mortgagee as follows:
(a) There are no leases or occupancy agreements affecting the Property
except the leases and amendments described in the certified rent roll dated
March 16, 1999 delivered by Mortgagor to Mortgagee, and Mortgagor has
delivered to Mortgagee true, correct and complete copies of all leases,
including amendments (collectively, "Existing Leases") and all guaranties and
amendments of guaranties given in connection with the Existing Leases (the
"Guaranties").
(b) all Existing Leases and Guaranties and the REA are in full force and
effect in all material respects without any oral or written modification except
as set forth in writing in the copies delivered to Mortgagee.
(c) Mortgagor has received no notices of defaults by Mortgagor under
the Existing Leases and Guaranties or the REA and, to the best knowledge
of Mortgagor, there are no defaults by any tenants under the Existing Leases or
the REA or any guarantors under the Guaranties, except as heretofore disclosed
in writing to Mortgagee by letter dated March 24, 1999 from Steven E. Eder,
Senior Vice President and Treasurer of The Taubman Company (the "Manager's
Letter").
(d) To the best knowledge of Mortgagor, none of the tenants now occupying
10% or more of the Property or having a current lease affecting 10% or more
of the Property is the subject of any bankruptcy, reorganization or insolvency
proceeding or any other debtor-creditor proceeding.
(e) Except only for rent and additional rent for the current month,
Mortgagor has not accepted under any of the Leases any payment of advance rent,
additional rent or security deposit in an amount that is more than one month's
rent and additional rent, except as heretofore disclosed in writing to
Mortgagee in the Manager's Letter.
(f) Mortgagor has deposited all security deposits delivered in connection
with the Existing Leases in accordance with applicable law.
(g) No tenant under any Existing Lease has asserted in writing any
defense, set-off or counterclaim with respect to its tenancy or its obligations
under its lease, and no such defense, set-off or counterclaim exists, except as
heretofore disclosed in writing to Mortgagee in the Manager's Letter.
(h) There are no material unfulfilled landlord obligations due to tenants
for tenant improvements, moving expenses or rental concessions or other matters,
and all material credits required to be paid or contributed by Mortgagor under
the Existing Leases have been paid or contributed in full, except as
heretofore disclosed in writing to Mortgagee in the Manager's Letter.
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(i) None of the Existing Leases or Rents and Profits have been
assigned, pledged, hypothecated or otherwise encumbered or transferred by
Mortgagor except to the extent provided in the Loan Documents.
Section 5.02 ASSIGNMENT OF LEASES. In order to further secure payment of
--------------------
the Secured Indebtedness and the performance of Mortgagor's obligations under
the Loan Documents, Mortgagor absolutely, presently and unconditionally grants
and assigns to Mortgagee all of Mortgagor's right, title, interest and estate
in, to and under (a) all of the Existing Leases and Guaranties affecting the
Property and (b) all of the future leases and guaranties affecting the Property
and (c) the Rents and Profits. Mortgagor acknowledges that it is permitted to
collect the Rents and Profits pursuant to a revocable license unless and until
an Event of Default occurs provided, however, if the Event of Default is cured
by Mortgagor, the license to receive the Rents and Profits shall be reinstated.
The Existing Leases and Guaranties and all future leases, lease amendments and
guaranties affecting the Property are collectively referred to as the "Leases".
Section 5.03 PERFORMANCE OF OBLIGATIONS.
--------------------------
(a) Mortgagor shall perform in all material respects all obligations under
any and all Leases and the REA.
(b) Mortgagor agrees to furnish Mortgagee executed copies of all future
Leases. Mortgagor shall not, without the express written consent of Mortgagee,
(i) enter into or extend any Lease unless the Lease complies with the Leasing
Guidelines which are attached to this Mortgage as Exhibit "B", or (ii) cancel or
terminate any Leases (except in the case of a default) unless Mortgagor has
entered into new Leases covering all of the premises of the Leases being
terminated or surrendered or unless such cancellation or termination otherwise
complies with the Leasing Guidelines, or (iii) modify or amend any Leases in any
material way or reduce the rent or additional rent or unless such modification
or amendment or reduction in rent or additional rent otherwise complies with the
Leasing Guidelines, or (iv) accept payment of advance rents or security deposits
in an amount in excess of one month's rent, or (v) any options to purchase the
Property, or (vi) cancel, terminate, or modify or amend in any material way the
REA, which consent shall not be unreasonably withheld or delayed with respect to
amendments or modifications to the REA.
Section 5.04 SUBORDINATE LEASES AND NON-DISTURBANCE AGREEMENTS.
-------------------------------------------------
(a) Mortgagee shall enter into non-disturbance agreements with tenants
under any Leases hereafter entered into and any Leases existing on the date of
execution of this Mortgage, the terms of which require delivery of
non-disturbance agreements. Mortgagee may, at its election, provide a
non-disturbance agreement to any other tenant. Any tenant to whom
non-disturbance is granted shall execute Mortgagee's standard form of
subordination, non-disturbance and attornment agreement with such changes as
Mortgagee shall approve in its judgment, reasonably exercised.
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(b) Notwithstanding Section 5.03 above, Mortgagee shall have approval
-------------
rights, not to be unreasonably withheld or delayed, with respect to any
Lease, including, without limitation, Leases which otherwise comply with the
Leasing Guidelines, in the event Mortgagee is asked to provide a non-disturbance
agreement in connection with such Lease. Mortgagor shall pay or, on demand,
reimburse Mortgagee for the payment of any reasonable costs or expenses
(including reasonable attorneys' fees and disbursements) incurred or expended in
connection with or incidental to (i) the review and approval of any Lease
requiring a non-disturbance agreement, and (ii) the preparation and negotiation
of a non-disturbance agreement in connection with any Lease.
Section 5.05 LEASING COMMISSIONS. Mortgagor covenants and agrees that
-------------------
all contracts and agreements relating to the Property requiring the payment of
leasing commissions, management fees or other similar compensation shall (a)
provide (whether in the agreement itself or a separate subordination agreement)
that the obligation will not be enforceable against Mortgagee, except for
management fees due for any period that Mortgagee is in possession of the
Property, and (b) be subordinate to the lien of this Mortgage. Mortgagee will be
provided evidence of Mortgagor's compliance with this Section upon request.
ARTICLE VI.
ENVIRONMENTAL HAZARDS
Section 6.01 REPRESENTATIONS AND WARRANTIES. Mortgagor hereby represents,
------------------------------
warrants, covenants and agrees to and with Mortgagee that, except as otherwise
disclosed in the Phase I Environmental Audit Report prepared by ATC Associates,
Inc., dated March 8, 1999, (a) neither Mortgagor nor, to Mortgagor's actual
knowledge, any tenant, subtenant or occupant of the Property, has at any
time placed, suffered or knowingly permitted, nor at any time will Mortgagor
place, suffer or knowingly permit the presence of any toxic waste or other
Hazardous Materials (as defined in Section 6.05 hereof) at, on, under, within or
about the Property in violation of applicable Environmental Laws except as
expressly approved by Mortgagee in writing, (b) neither Mortgagor nor any
portion of the Property is subject to any existing, or to Mortgagor=s actual
knowledge threatened, investigation by any governmental authority under any
Requirements of Environmental Laws (as defined in Section 6.06 hereof), (c)
Mortgagor has not and is not required by any Requirements of Environmental Laws
to obtain any permits or licenses to use any portion of the Improvements,
fixtures, or equipment on the Property which have not been obtained, (d) all
operations or activities upon the Property to the best of Mortgagor's knowledge,
and any use or occupancy of the Property by Mortgagor are currently and shall in
the future be in compliance with all Requirements of Environmental Laws, (e)
Mortgagor will use all commercially reasonable efforts to assure (i) that any
tenant, subtenant or occupant of the Property shall in the future be in
compliance with all Requirements of Environmental Laws and (ii) that no tenant,
subtenant or occupant places, suffers or permits any toxic waste or other
Hazardous Materials at, on, under, within or about the Property in violation of
applicable Environmental Laws, and (f) Mortgagor will comply with all of the
requirements and recommendations set forth in any environmental site assessment
performed with respect to the Property prior to the date hereof as a condition
of the Loan and will obtain and forward to Mortgagee revised environmental site
assessments, if reasonably requested by Mortgagee.
17
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Section 6.02 REMEDIAL WORK. In the event any investigation or monitoring
-------------
of site conditions or any clean-up, containment, restoration, removal or
other remedial work (collectively, the "Remedial Work") is reasonably
necessary under any Requirements of Environmental Laws (defined below),
Mortgagor shall within thirty (30) days after written demand by Mortgagee (or
such shorter period of time as may be required under Requirements of
Environmental Laws) perform or cause to be performed the Remedial Work in
compliance with the applicable law, regulation, order or agreement. All Remedial
Work shall be performed by one or more contractors, selected by Mortgagor and
approved in advance in writing by Mortgagee, which approval shall not be
unreasonably withheld or delayed, and under the supervision of a consulting
engineer, selected by Mortgagor and approved in advance in writing by Mortgagee,
which approval shall not be unreasonably withheld or delayed. All costs and
expenses of Remedial Work shall be paid by Mortgagor including, without
limitation, the charges of the contractor(s) and/or the consulting engineer, and
Mortgagee's reasonable attorneys', architects' and/or consultants' fees and
costs incurred in connection with monitoring or review of the Remedial Work. In
the event Mortgagor shall fail to timely commence, or cause to be commenced, or
fail to diligently prosecute to completion, the Remedial Work, Mortgagee may,
but shall not be required to, upon thirty (30) days= prior written notice to
Mortgagor, cause such Remedial Work to be performed, subject to the provisions
of Sections 11.05 and 11.06 hereof.
----- -----
Section 6.03 ENVIRONMENTAL SITE ASSESSMENT. Mortgagee shall have the right,
-----------------------------
if evidence exists, in its reasonable judgment, that there may be a violation
of applicable Environmental Laws, to undertake, at the expense of Mortgagor,
an environmental site assessment on the Property, including any testing that
Mortgagee may determine, in its reasonable discretion, is necessary or desirable
to ascertain the environmental condition of the Property and the compliance
of the Property with Requirements of Environmental Laws. Mortgagor shall
cooperate fully with Mortgagee and its consultants performing such assessments
and tests.
Section 6.04 UNSECURED OBLIGATIONS. No amounts which may become owing by
---------------------
Mortgagor to Mortgagee under this Article VI or under any other provision of
-----------
this Mortgage as a result of a breach of or violation of this Article VI shall
----------
be secured by this Mortgage. The obligations of Mortgagee under this Article VI
----------
shall nevertheless continue in full force and effect and any breach of this
Article VI shall constitute an Event of Default subject to the notice and cure
- ----------
periods provided in this Mortgage. The lien of this Mortgage shall not secure
(a) any obligations evidenced by or arising under the Unsecured Indemnity
Agreement ("Unsecured Obligations"), or (b) any other obligations to the extent
that they are the same or have the same effect as any of the Unsecured
Obligations. The Unsecured Obligations shall continue in full force, and any
breach or default of any such obligations shall constitute a breach or default
under this Mortgage but the proceeds of any foreclosure sale shall not be
applied against Unsecured Obligations. Nothing in this Section shall in any way
limit or otherwise affect the right of Mortgagee to obtain a judgment in
accordance with applicable law for any deficiency in recovery of all obligations
that are secured by this Mortgage following foreclosure, notwithstanding that
the deficiency judgment may result from diminution in the value of the Property
by reason of any event or occurrence pertaining to Hazardous Materials or any
Requirements of Environmental Laws.
18
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Section 6.05 HAZARDOUS MATERIALS. "Hazardous Materials" shall include
-------------------
without limitation:
(a) Those substances included within the definitions of "hazardous
substances," "hazardous materials," "toxic substances," or "solid waste" in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
as amended, 42 U.S.C. Sections 9601 et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq., and the Hazardous
Materials Transportation Act, 49 U.S.C. Sections 1801 et seq., and in the
regulations promulgated pursuant to said laws;
(b) Those substances defined as "hazardous wastes" or "hazardous substance"
in the New Jersey Spill Compensation and Control Act, the New Jersey Industrial
Site Recovery Act or the New Jersey Solid Waste Management Act of N.J.A.C.
7:26C-1.3 and in the regulations promulgated pursuant to such laws;
(c) Those chemicals known to cause cancer or reproductive toxicity, as
published pursuant to the New Jersey Spill Compensation and Control Act, the
New Jersey Industrial Site Recovery Act or the New Jersey Solid Waste Management
Act of N.J.A.C. 7:26C-1.3;
(d) Those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto);
(e) Any material, waste or substance which is (i) petroleum, (ii) asbestos,
(iii) polychlorinated biphenyls, (iv) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. '1251 et seq. (33
U.S.C. '1321) or listed pursuant to Section 307 of the Clean Water Act (33
U.S.C. '1317); (v) a chemical substance or mixture regulated under the Toxic
Substances Control Act of 1976, 15 U.S.C. " 2601 et seq.; (vi) flammable
explosives; or (vii) radioactive materials; and
(f) Such other substances, materials and wastes which are or become
regulated as hazardous or toxic under applicable local, state or federal law, or
the United States government, or which are classified as hazardous or toxic
under federal, state, or local laws or regulations during the Period in which
Mortgagor owns the Property.
Section 6.06 REQUIREMENTS OF ENVIRONMENTAL LAWS. "Requirements of
--------------------------------------
Environmental Laws" means all requirements related to the Property imposed by
any law, rule, order, or regulation of any federal, state, or local executive,
legislative, judicial, regulatory, or administrative agency, which relate to (a)
exposure to Hazardous Materials; (b) pollution or protection of the air, surface
water, ground water, land; (c) solid, gaseous, or liquid waste generation,
treatment, storage, disposal, or transportation; or (d) regulation of the
manufacture, processing, distribution and commerce, use, or storage of Hazardous
Materials.
ARTICLE VII.
CASUALTY, CONDEMNATION AND RESTORATION
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Section 7.01 MORTGAGOR'S REPRESENTATION Mortgagor represents and warrants
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as follows:
(a) Except as expressly approved by Mortgagee in writing, no casualty or
damage to any part of the Property which would cost more than $50,000 to restore
or replace has occurred which has not been fully restored or replaced.
(b) No part of the Property has been taken in condemnation or other similar
proceeding or transferred in lieu of condemnation, nor has Mortgagor received
written notice of any proposed condemnation or other similar proceeding
affecting the Property.
Section 7.02 RESTORATION
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(a) Mortgagor shall give prompt written notice of any material casualty to
the Property to Mortgagee whether or not required to be insured against. The
notice shall describe the nature and cause of the casualty and the extent of the
damage to the Property.
(b) In the event of any damage to or destruction of the Property, and
provided Net Insurance Proceeds (defined below) are made available therefor by
Mortgagee, Mortgagor shall commence and diligently pursue to completion the
Restoration of the Property. Mortgagor assigns to Mortgagee all Insurance
Proceeds which Mortgagor is entitled to receive in connection with a casualty
whether or not such insurance is required under this Mortgage. In the event of
any damage to or destruction of the Property, and provided that (1) an Event of
Default does not currently exist, and (2) Mortgagee has determined that (i)
there has not been an Impairment of the Security (as defined in subsection 7.02
(c) hereof), and (ii) the repair, restoration and rebuilding of any portion of
the Property that has been partially damaged or destroyed (the "Restoration")
can be accomplished in compliance in all material respects with all Requirements
to substantially the same general condition, character and general utility as
that existing prior to the casualty, then Mortgagee shall hold and disburse the
Insurance Proceeds, less (x) the cost, if any, to Mortgagee of recovering the
Insurance Proceeds including, without limitation, reasonable attorneys' fees and
expenses, and adjusters' fees, and (y) any Business Income Insurance Proceeds
received by Mortgagee (the "Net Insurance Proceeds"), to Mortgagor for the
Restoration of the Property. Notwithstanding anything to the contrary contained
herein, if the Net Insurance Proceeds shall be less than $5,000,000.00 and the
costs of completing the Restoration shall be less than $5,000,000, the Net
Insurance Proceeds will be disbursed by Mortgagee to Mortgagor upon receipt
provided that all the conditions set forth in subparagraphs (1) and (2) of this
paragraph (b) are met and Mortgagor delivers to Mortgagee a written undertaking
to commence expeditiously and to complete satisfactorily with due diligence the
Restoration in accordance with the terms of this Mortgage. Business Income
Insurance Proceeds received by Mortgagee shall be applied by Mortgagee first to
payment of monthly installments of interest or principal and interest due under
the Note and the balance shall be disbursed to Mortgagor for the payment of
Impositions, Premiums and other operating expenses of the Property.
(c) For the purpose of this Article VII, "Impairment of the Security" shall
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mean any or all of the following: (i) Leases providing more than 20% of the
gross income of the Property
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existing immediately prior to the damage, destruction, condemnation or casualty
shall have been cancelled, or (ii) Restoration of the Property is estimated to
require more than two years to complete from the date of the occurrence, or
(iii) Restoration cannot be completed before the Maturity Date or (iv) in the
case of "Condemnation" (hereinafter defined), the portion of the Property not
taken has, in Mortgagee's reasonable judgment, been rendered economically
unviable by the taking.
(d) If the Net Insurance Proceeds are to be used for the Restoration in
accordance with this Article VII, Mortgagor shall comply with Mortgagee's
------------
Requirements For Restoration as set forth in Section 7.04 below. Upon
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Mortgagor's satisfaction and completion of the Requirements For Restoration and
upon confirmation that there is no Event of Default then existing under the Loan
Documents, Mortgagee shall pay any remaining Restoration Funds (as defined in
Section 7.04 below) and any Business Income Insurance Proceeds remaining after
- ------------
application to the payment of principal and interest on the Note then held by
Mortgagee to Mortgagor.
(e) In the event that the conditions precedent to Mortgagee's disbursement
of the Net Insurance Proceeds for the Restoration set forth in this Section have
not been met, Mortgagee may, at its option, apply the Net Insurance Proceeds to
the reduction of the Secured Indebtedness without a prepayment premium or
penalty and Mortgagee may declare the entire Secured Indebtedness due and
payable upon four (4) months prior notice to Mortgagor. After payment in full of
the Secured Indebtedness, any remaining Restoration Funds shall be paid to
Mortgagor. Mortgagee=s right to Insurance Proceeds shall be subject to the
provisions of any Lease to which this Mortgage is subordinate, requiring
Mortgagor to repair or restore the premises demised thereunder, provided,
however, that unless prohibited by such Lease, Net Insurance Proceeds shall be
held by Mortgagee and disbursed to Mortgagor as provided in paragraph (b) of
this Section 7.02 upon written request of Mortgagor in increments from time to
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time as the Restoration progresses.
Section 7.03 CONDEMNATION
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(a) If the Property or any part of the Property is taken by reason of any
condemnation or similar eminent domain proceeding, or by a grant or conveyance
in lieu of condemnation or eminent domain ("Condemnation"), Mortgagee shall be
entitled to all compensation, awards, damages, proceeds and payments or relief
for the Condemnation in excess of $5,000,000.00 ("Condemnation Proceeds"). At
its option, Mortgagee shall be entitled to join Mortgagor in appearing in and
prosecuting any action or proceeding or to approve any compromise or settlement
in connection with such Condemnation in excess of $5,000,000.00. Mortgagor shall
not settle, adjust or compromise any claim in Condemnation in excess of
$5,000,000.00 without Mortgagee's consent, which consent shall not be
unreasonably withheld or delayed.
(b) In the event of any Condemnation of the Property, and provided Net
Condemnation Proceeds are made available therefor to Mortgagor by Mortgagee,
Mortgagor shall commence and diligently pursue to completion the Restoration
of the Property that has not been taken. Mortgagor assigns to Mortgagee all
Condemnation Proceeds which Mortgagor is entitled to receive. In the event of
any Condemnation, and provided that (1) an Event of Default does not currently
exist, and (2) Mortgagee has reasonably determined that (i) there has not been
an Impairment of the Security, and (ii) the Restoration of any portion of the
Property that has not been taken can be accomplished
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in compliance in all material aspects with all Requirements to substantially
the same general condition, character and general utility to that existing prior
to the taking, then Mortgagee shall hold and disburse the Condemnation Proceeds,
less the cost, if any, to Mortgagee of recovering the Condemnation Proceeds
including, without limitation, reasonable attorneys' fees and expenses, and
adjusters' fees (the "Net Condemnation Proceeds"), to Mortgagor for the
Restoration of the Property.
(c) In the event the Net Condemnation Proceeds are to be used for
the Restoration, Mortgagor shall comply with Mortgagee's Requirements For
Restoration as set forth in Section 7.04 below. Upon Mortgagor's satisfaction
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and completion of the Requirements For Restoration and upon confirmation that
there is no Event of Default then existing under the Loan Documents, Mortgagee
shall pay any remaining Restoration Funds (as defined in Section 7.04 below)
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then held by Mortgagee to Mortgagor.
(d) In the event that the conditions precedent to Mortgagee's disbursement
of the Net Condemnation Proceeds for the Restoration set forth in this
Section have not been met, Mortgagee may, at its option, apply the Net
Condemnation Proceeds to the reduction of the Secured Indebtedness without a
prepayment premium or penalty and Mortgagee may declare the entire Secured
Indebtedness due and payable upon four (4) months prior notice to Mortgagor.
After payment in full of the Secured Indebtedness, any remaining Restoration
Funds shall be paid to Mortgagor.
(e) Mortgagee's right to Net Condemnation Proceeds shall be subject
to the provisions of any Lease to which this Mortgage is subordinate requiring
Mortgagor to repair or restore the premises demised thereunder, provided,
however, that unless prohibited by such Lease, Net Condemnation Proceeds
shall be held by Mortgagee and disbursed to Mortgagor as provided in paragraph
(b) of Section 7.02 upon written request of Mortgagor in increments from time
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to time as the Restoration progresses.
Section 7.04 REQUIREMENTS FOR RESTORATION. Unless otherwise expressly
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agreed in a writing signed by Mortgagee and Mortgagor, the following are the
Requirements For Restoration:
(a) Prior to the commencement of any Restoration work (the "Work"),
Mortgagor shall provide Mortgagee for its review and written approval, not
to be unreasonably withheld or delayed (i) complete plans and specifications for
the Work which (A) have been approved by all required governmental authorities,
(B) have been approved by an architect reasonably satisfactory to Mortgagee
(the "Architect") and (C) are accompanied by Architect's signed statement of
the total estimated cost of the Work (the "Approved Plans and Specifications");
(ii)the amount of money which Mortgagee reasonably determines will be sufficient
when added to the Net Insurance Proceeds or Condemnation Proceeds to pay the
entire cost of the Restoration (collectively referred to as the "Restoration
Funds"); (iii) evidence that the Approved Plans and Specifications and the Work
are in compliance with all Requirements; and (iv) an executed contract for
construction with a contractor reasonably satisfactory to Mortgagee (the
"Contractor") in a form approved by Mortgagee in writing.
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(b) Mortgagor shall not commence the Work, other than temporary work to
protect the Property or prevent interference with business, until Mortgagor
shall have complied with the requirements of subsection (a)of this Section 7.04.
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So long as there does not currently exist an Event of Default and the following
conditions have been complied with or, in Mortgagee's discretion, waived,
Mortgagee shall disburse the Restoration Funds in increments to Mortgagor,
from time to time as the Work progresses upon request of Mortgagor (but not more
frequently than monthly):
(i) Architect shall be in charge of the Work;
(ii) Mortgagee shall disburse the Restoration Funds directly,
upon not less than ten (10) days' prior written notice from Mortgagor to
Mortgagee and Mortgagor's delivery to Mortgagee of (A) Mortgagor's written
request for payment (a "Request for Payment") accompanied by a certificate
by Architect in a form reasonably satisfactory to Mortgagee which states
that (1) all of the Work completed to that date has been completed in
compliance in all material respects with the Approved Plans and
Specifications and in accordance with all Requirements, (2) the amount
requested has been paid or is then due and payable and is properly a part
of the cost of the Work, and (3) when added to all sums previously paid by
Mortgagee, the requested amount does not exceed the value of the Work
completed to the date of such certificate; and (B) evidence reasonably
satisfactory to Mortgagee that the balance of the Restoration Funds
remaining after making the payments shall be sufficient to pay the balance
of the cost of the Work. Each Request for Payment shall be accompanied
by an endorsement to Mortgagee's title policy insuring that no construction
lien exists on or affects the Property;
(iii) The final Request for Payment shall be accompanied by
(A) a final certificate of occupancy or other evidence of approval of
appropriate governmental authorities for the use and occupancy of the
Improvements, (B) evidence that the Restoration has been completed in
accordance with the Approved Plans and Specifications in all material
respects and with all Requirements, (C) evidence that the costs of the
Restoration have been paid in full, and (D) an endorsement to Mortgagee's
title policy insuring that no construction lien exists on or affects the
Property.
(c) If there exists an Event of Default, then, in addition to all of the
rights herein set forth, Mortgagee may apply the Restoration Funds to reduce
the Secured Indebtedness in such order as Mortgagee may determine, and
at Mortgagee's option and in its sole discretion, Mortgagee may declare the
Secured Indebtedness immediately due and payable together with the Prepayment
Fee (as defined in the Note).
(d) If prior to the commencement of the Work or prior to completion thereof
the Restoration Funds or the undisbursed balance thereof shall not, in
Mortgagee's reasonable opinion, be sufficient to pay in full the balance of the
cost of the Work as estimated by the Architect, (the "Restoration Deficiency").
Mortgagee shall not make any disbursement of Restoration Funds until Mortgagor
shall have submitted to Mortgagee (A) a certificate of Architect in a form
reasonably
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satisfactory to Mortgagee which states that (1) Mortgagor has expended an amount
equal to the Restoration Deficiency toward the cost of the Work, (2) the Work
completed to that date has been completed in compliance in all material respects
with the Approved Plans and Specifications and in accordance with all
Requirements and (3) the amount expended by Mortgagor, when added to the
Restoration Funds, will be sufficient to pay the entire cost of the Work; and
(B) an endorsement to Mortgagee's title policy insuring that no construction
lien exists on or affects the Property.
ARTICLE VIII.
REPRESENTATIONS OF MORTGAGOR
Section 8.01 ERISA. Mortgagor hereby represents, warrants and
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covenants that:(a) it is acting on its own behalf and that it is not an employee
benefit plan as defined in Section 3 (3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"),which is subject to Title I of ERISA,
nor a plan as defined in Section 4975 (e) (1) of the Internal Revenue Code of
1986, as amended (each of the foregoing hereinafter referred to collectively as
a "Plan"); (b) Mortgagor's assets do not constitute "plan assets" of one or
more such Plans within the meaning of Department of Labor Regulation Section
2510.3-101; and (c) it will not be reconstituted as a Plan or as an entity
whose assets constitute "plan assets".
Section 8.02 NON-RELATIONSHIP. Neither Mortgagor nor any partner of
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Mortgagor is (a) a director or officer of Metropolitan Life Insurance Company
("MetLife"), (b) a parent, son or daughter of a director or officer of MetLife,
or a descendent of any of them, (c) a stepparent, adopted child, stepson or
stepdaughter of a director or officer of MetLife, or (d) a spouse of a director
or officer of MetLife.
Section 8.03 NO ADVERSE CHANGE. Mortgagor represents and warrants that:
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(a) there has been no material adverse change from the conditions shown
in the application, including the rental income of the Property, submitted for
the Loan by Mortgagor ("Application") or in the materials submitted by
Borrower in support of the Application in the financial condition of Mortgagor
or the Liable Party, respectively as the case may be (collectively,
"Mortgagor's Constituents").
(b) Mortgagor has delivered to Mortgagee true and correct copies of
all Mortgagor's organizational documents and except as expressly approved
by Mortgagee in writing, there have been no changes in Mortgagor's Constituents
since the date that the Application was executed by Mortgagor.
(c) Neither Mortgagor, nor any of the Mortgagor's Constituents, is involved
in any bankruptcy, reorganization, insolvency, dissolution or liquidation
proceeding, and to the best knowledge of Mortgagor, no such proceeding is
contemplated or threatened.
Section 8.04 FIRPTA. Mortgagor represents and warrants that Mortgagor is
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not a "foreign person" within the meaning of Sections 1445 and 7701 of the
Internal Revenue Code of 1986.
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ARTICLE IX.
EXCULPATION AND LIABILITY
Section 9.01 LIABILITY OF MORTGAGOR.
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Upon the occurrence of an Event of Default, except as provided in
this Section 9.01, Mortgagee will look solely to the Property and the security
------------
under the Loan Documents for the repayment of the Loan and will not enforce a
deficiency or other judgment, order or claim against Mortgagor or any of
Mortgagor=s Constituents or any partner, director, officer, trustee,
shareholder, member, employee or principal of any such partner, nor any of their
successors and assigns except as set forth in this Section 9.01. However,
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nothing contained in this Section 9.01 shall limit the rights of Mortgagee to
------------
proceed against Mortgagor and/or the Liable Party, (i) to enforce any leases
entered into by Mortgagor or its affiliates as tenant, guarantees, or other
agreements entered into by Mortgagor in a capacity other than as borrower or any
policies of insurance; (ii) to recover damages for fraud or intentional material
misrepresentation; (iii) to recover any Condemnation Proceeds or Insurance
Proceeds which have not been applied in accordance with the terms of the Loan
Documents by Mortgagor or which, under the terms of the Loan Documents, should
have been paid to Mortgagee; (iv) to recover any tenant security deposits,
tenant letters of credit or other deposits or fees paid to Mortgagor that are
part of the collateral for the Loan or prepaid rents for a period of more than
30 days which have not been delivered to Mortgagee upon foreclosure; (v) to
recover Rents and Profits received by Mortgagor after the first day of the month
in which an Event of Default occurs and prior to the earlier of (1) the date
such Event of Default is cured by Mortgagor or expressly waived in writing by
Mortgagee or (2) the date Mortgagee (or any other third party purchaser at a
foreclosure sale) acquires title to the Property, which have not been applied to
the Loan or in accordance with the Loan Documents to operating and maintenance
expenses of the Property; (vi) to recover damages, costs and expenses arising
from, or in connection with the provisions of this Mortgage pertaining to
Hazardous Materials or the Unsecured Indemnity Agreement; and/or (vii) to
recover damages arising from Mortgagor's wilful failure to comply with the
provisions of this Mortgage pertaining to ERISA. Notwithstanding anything to the
contrary contained herein, in no event shall any direct or indirect partner in
The Taubman Realty Group Limited Partnership have any personal liability
hereunder.
ARTICLE X.
CHANGE IN OWNERSHIP, CONVEYANCE OF PROPERTY
Section 10.01 CONVEYANCE OF PROPERTY, CHANGE IN OWNERSHIP AND COMPOSITION.
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(a) Mortgagor shall not cause or permit, without the prior written consent
of Mortgagee, in its sole discretion: (i) the Property or any interest in the
Property, to be conveyed, transferred, assigned, encumbered, sold or otherwise
disposed of (except that Mortgagor may (a) lease space in the Property to
tenants in accordance with the Leasing Guidelines and (b) enter into utility
easements for the Property, provided said easements are in the ordinary course
of Mortgagor=s business and do not materially and adversely affect the value of
the Property); or (ii) any change in the partners of
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Mortgagor or (iii) any merger, reorganization, dissolution or other change in
the ownership structure of Mortgagor, including, without limitation, any
conversion of Mortgagor from a general partnership to a limited partnership,
a limited liability partnership or a limited liability company (collectively,
"Transfers").
(b) The prohibitions on transfer shall not be applicable to (i) Transfers
as a result of the death of a natural person who is Mortgagor; or (ii) Transfers
in connection with estate planning by a natural person to a spouse, son or
daughter or descendant of either, a stepson or stepdaughter or descendant of
either.
(c) Notwithstanding anything to the contrary contained in this Section
10.01, Mortgagee's prior written consent shall not be required for the Liable
Party to reduce its ownership interest in Mortgagor provided (1) Liable Party
continues to own, directly or indirectly, at least fifty percent (50%) of the
beneficial ownership interests in Mortgagor, (2) Liable Party remains as the
managing general partner of Mortgagor, (3) the Taubman Company continues (x)
to be the property manager of the Property, and (y) to have substantially
the same operating and management experience with respect to first-class
regional and super-regional malls and shopping centers as it has on the date
hereof, and (4) Taubman Centers, Inc. ("TCI"), remains as the managing general
partner of Liable Party, and at all times TCI, TG Partners Limited Partnership,
a Delaware limited partnership, and TRA Partners, a Michigan co-partnership
(collectively, the "Taubman Entities") continue to own in the aggregate at
least a fifty and one-tenth percent (50.1%) ownership interest in Liable Party,
provided, however, that in the event such ownership interests of TCI and the
Taubman Entities in the aggregate drop below such 50.1% level, such event shall
not constitute an Event of Default if all the other conditions set forth in this
Section 10.01(c) are satisfied and Mortgagor pays to Mortgagee concurrently
with such reduction in ownership interest a transfer fee equal to one-half of
one percent (1/2%) of the then outstanding principal balance of the Loan.
(d) Notwithstanding anything to the contrary contained in this Section
10.01, Mortgagor shall have the right to convert itself into a limited partner-
ship, a limited liability company or a limited liability partnership (the "New
Borrower") provided that (1) Liable Party continues to own at least a fifty
percent (50%) ownership interest in the New Borrower, and Liable Party is the
managing general partner or managing member, as applicable, of the New Borrower,
(2) Mortgagor gives Mortgagee notice of the planned conversion along with copies
of all the prospective organizational documents of the New Borrower, including,
without limitation, its prospective limited partnership agreement and
certificate of partnership, articles of organization and operating agreement not
less than thirty (30) days prior to the conversion, (3) Mortgagee shall have
approved in writing such organizational documents, such approval not to be
unreasonably withheld or delayed, (4) Liable Party expressly agrees in writing
that the Guaranty shall remain in full force and effect after the conversion,
(5) an assumption agreement in form and substance reasonably acceptable to
Mortgagee in which the New Borrower assumes all Mortgagor=s obligations under
the Loan Documents and the Unsecured Indemnity Agreement shall be executed and
delivered by New Borrower to Mortgagee at the time of conversion, (6) New
Borrower shall deliver a new Non-Consolidation Opinion to Mortgagee, which new
opinion shall be in form and substance the same as the non-consolidation opinion
delivered by Mortgagor upon the execution of this Mortgage, and (7) Mortgagor
shall pay
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any reasonable out-of-pocket expenses incurred by Mortgagee in connection with
such conversion and assumption of the Loan Documents.
Section 10.02 PROHIBITION ON SUBORDINATE FINANCING. (a) Mortgagor shall
------------------------------------
not incur or permit the incurring of (a) any financing in addition to the Loan
that is secured by a lien, security interest or other encumbrance of any part
of the Property or (b) any pledge or encumbrance of a direct partnership
interest in Mortgagor.
(b) Notwithstanding the foregoing, Mortgagor will be permitted to enter
into personal property equipment/fixtures financing agreements provided that (i)
said financings do not exceed $5,000,000 outstanding in the aggregate at any one
time, and (ii) the mortgagee(s) or equipment/fixtures lenders under such
financing(s) agree to give Mortgagee notice of any default thereunder and
provide Mortgagee with a reasonable opportunity to cure such default.
Section 10.03 STATEMENTS REGARDING OWNERSHIP. Mortgagor agrees to submit
------------------------------
or cause to be submitted to Mortgagee within thirty (30) days after December
31st of each calendar year during the term of this Mortgage and twenty (20)days
after any written request by Mortgagee, a sworn, notarized certificate, signed
by an authorized (a) individual who is Mortgagor or one of the individuals
comprising Mortgagor, (b) member of Mortgagor, (c) partner of Mortgagor or
(d) officer of Mortgagor, as the case may be, stating whether (i) except for
Leases made pursuant to the Leasing Guidelines, any part of the Property, or
any interest in the Property, has been conveyed, transferred, assigned,
encumbered, or sold, and if so, to whom; (ii) any conveyance, transfer, pledge
or encumbrance of any interest in Mortgagor has been made by Mortgagor and if
so, to whom; or (iii) there has been any change in the partners comprising
Mortgagor from those on the Execution Date, and if so, a description of such
change or changes.
ARTICLE XI.
DEFAULTS AND REMEDIES
Section 11.01 EVENTS OF DEFAULT. Any of the following shall be deemed
-----------------
to be a material breach of Mortgagor's covenants in this Mortgage and shall
constitute an "Event of Default":
(a) The failure of Mortgagor to pay any installment of principal, interest
or principal and interest within seven (7) days of the due date of such payment;
(b) The failure of Mortgagor to perform or observe any other term,
provision, covenant, condition or agreement under any Loan Document for a period
of more than thirty (30) days after receipt of notice of such failure,
provided, however, that if such default is curable but cannot reasonably be
cured within such thirty (30) day period and Mortgagor shall have commenced
to cure such default within such thirty (30) day period and shall thereafter
diligently and expeditiously proceed to cure the same, such thirty (30) day
period shall be extended for so long as it shall require Mortgagor in the
exercise of due diligence to cure such default, but no such extension shall be
for a period in excess of one hundred twenty (120) days.;
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(c) The filing by Mortgagor or the Liable Party of a voluntary petition
or application for relief in bankruptcy, the filing against Mortgagor of
an involuntary petition or application for relief in bankruptcy which is
not dismissed within ninety (90) days, or Mortgagor's or Liable Party's
adjudication as a bankrupt or insolvent, or the filing by Mortgagor or Liable
Party's of any petition, application for relief or answer seeking or
acquiescing in any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief for itself under any present or
future federal, state or other statute, law, code or regulation relating to
bankruptcy, insolvency or other relief for debtors, or Mortgagor's seeking or
consenting to or acquiescing in the appointment of any trustee, custodian,
conservator, receiver or liquidator of Mortgagor or of all or any substantial
part of the Property or of any or all of the Rents and Profits, or the making of
any general assignment for the benefit of creditors, or the admission in writing
of its inability to pay its debts generally as they become due;
(d) If any warranty, representation, certification, financial statement or
other information made or furnished at any time pursuant to the terms of the
Loan Documents by Mortgagor, or the Liable Party shall be materially
false or misleading provided, however, that if such false or misleading
warranty, representation or certification shall have been made or
furnished unintentionally, Mortgagor shall have a period of thirty (30) days
after receipt of notice from Mortgagee to cure such default;
(e) If for a period of thirty (30) days after receipt of notice from
Mortgagee, Mortgagor shall suffer or permit the Property, or any part of the
Property, to be used in a manner that might (1) impair Mortgagor's title to the
Property, (2) create rights of adverse use or possession, or (3) constitute
an implied dedication of any part of the Property;
(f) If Liable Party shall default under the Guaranty executed by Liable
Party in favor of Mortgagee and such default remains uncured for a period of
thirty (30) days after notice to Liable Party of such default; or
(g) If the net worth, as hereinafter defined, of the Liable Party shall
fail to equal or exceed Two Hundred Fifty Million and 00/100 Dollars
($250,000,000.00) or the interest of Liable Party in Mortgagor is reduced
except as permitted in Section 10.01(c); or
----------------
(h) Mortgagor fails to furnish to Mortgagee the financial statements, rent
rolls and budgets required under Article IV within thirty (30) days after
----------
notice from Mortgagee.
"Net worth" as used in subparagraph (g) of this Section 11.01, shall mean
the excess of:
(1) the sum of (i) the value of all operating shopping centers
which are wholly owned by the Liable Party and the Liable Party's
percentage interest of the value of all operating shopping centers which
are partially owned by the Liable Party, calculated by capitalizing annual
net operating income at an annual rate equal to ninety percent (90%)of the
average of the "Average Overall Cap Rate for National Regional Malls" for
the preceding four (4) calendar quarters as published quarterly by Korpacz
Real Estate Investor Survey (or if Korpacz Real Estate Investor Survey
is no longer published, such annual rate will be eight and one-half
percent (8.5%), (ii) the cost basis of all shopping centers of the Liable
Party
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under development, and (iii) cash or cash equivalents over (2) the sum
of (x) all outstanding indebtedness of shopping centers which are wholly
owned by the Liable Party, (y) the Liable Party's share of outstanding
indebtedness of shopping centers which are partially owned by the Liable
Party, and (z) any direct indebtedness of the Liable Party.
Notwithstanding the foregoing, if Liable Party's net worth as determined
above shall fall below Two Hundred Fifty Million and 00/100 Dollars, it shall
not be a default hereunder or under any of the other Loan Documents if Liable
Party's net worth exceeds such amount when determined by either of the following
methods:
1. Calculate Liable Party=s net worth by multiplying (A) the average
closing price for a share of the common stock of Taubman Centers, Inc. on the
New York Stock Exchange for the ten (10) days prior to the date of calculation
and (B) the number of outstanding shares of common stock of Taubman Centers,
Inc. on the date of calculation and then dividing by (C) the percentage of
partnership units of Liable Party owned by Taubman Centers, Inc. on the date of
the calculation; or
2. Determine the net worth of Liable Party according to the definition of
net worth above, except that the value of all operating centers shall be
determined by appraisals conducted by an appraiser reasonably satisfactory to
Lender.
Section 11.02 REMEDIES UPON DEFAULT. Upon the happening of an Event of
---------------------
Default the Secured Indebtedness shall, at the option of Mortgagee, become
immediately due and payable, without further notice or demand, and Mortgagee
may undertake any one or more of the following remedies:
(a) Foreclosure. Institute a foreclosure action in accordance with the
-----------
law of the State, or take any other action as may be allowed, at law or
in equity, for the enforcement of the Loan Documents and realization on the
Property or any other security afforded by the Loan Documents. In the case
of a judicial proceeding, Mortgagee may proceed to final judgment and execution
for the amount of the Secured Indebtedness owed as of the date of the judgment,
together with all costs of suit, reasonable attorneys' fees and interest on the
judgment at the maximum rate permitted by law from the date of the judgment
until paid. If Mortgagee is the purchaser at the foreclosure sale of the
Property, the foreclosure sale price shall be applied against the total amount
due Mortgagee; and/or
(b) Power of Sale. Institute a non-judicial foreclosure proceeding in
-------------
compliance with applicable law in effect on the date foreclosure is commenced
for Mortgagee to sell the Property either as a whole or in separate parcels as
Mortgagee may determine at public sale or sales to the highest bidder for cash,
in order to pay the Secured Indebtedness. If the Property is sold as separate
parcels, Mortgagee may direct the order in which the parcels are sold. Mortgagee
shall deliver to the purchaser a Mortgagee's deed or deeds without covenant
or warranty, express or implied. Mortgagee may postpone the sale of all or
any portion of the Property by public announcement at the time and place of
sale, and from time to time may further postpone the sale by public announcement
in accordance with applicable law; and/or
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(c) Entry. Enter into possession of the Property, lease the Improvements,
-----
collect all Rents and Profits and, after deducting all costs of collection and
administration expenses, apply the remaining Rents and Profits in such order and
amounts as Mortgagee, in Mortgagee's sole discretion, may elect to the payment
of Impositions, operating costs, costs of maintenance, restoration and repairs,
Premiums and other charges, including, but not limited to, costs of leasing the
Property and fees and costs of counsel and receivers, and in reduction of the
Secured Indebtedness; and/or
(d) Receivership. Have a receiver appointed to enter into possession of
------------
the Property, lease the Property, collect the Rents and Profits and apply them
as the appropriate court may direct. Mortgagee shall be entitled to the
appointment of a receiver without the necessity of proving either the
inadequacy of the security or the insolvency of Mortgagor or any Liable Parties.
Mortgagor and Liable Parties shall be deemed to have consented to the
appointment of the receiver. The collection or receipt of any of the Rents and
Profits by Mortgagee or any receiver shall not affect or cure any Event of
Default.
Section 11.03 APPLICATION OF PROCEEDS OF SALE. In the event of a sale of
-------------------------------
the Property pursuant to Section 11.02 of this Mortgage, to the extent permitted
-------------
by law, the Mortgagee shall determine in its sole discretion the order in which
the proceeds from the sale shall be applied to the payment of the Secured
Indebtedness, including without limitation, the expenses of the sale and of
all proceedings in connection with the sale, including reasonable attorneys'
fees and expenses; Impositions, Premiums, liens, and other charges and expenses;
the outstanding principal balance of the Secured Indebtedness; any accrued
interest; any Prepayment Fee; and any other amounts owed under any of the Loan
Documents.
Section 11.04 WAIVER OF JURY TRIAL. To the fullest extent permitted by law,
--------------------
Mortgagor and Mortgagee HEREBY WAIVE THEIR RESPECTIVE RIGHT TO TRIAL BY JURY in
any action, proceeding and/or hearing on any matter whatsoever arising out of,
or in any way connected with, the Note, this Mortgage or any of the Loan
Documents, or the enforcement of any remedy under any law, statute, or
regulation. Neither party will seek to consolidate any such action in which a
jury has been waived, with any other action in which a jury trial cannot or has
not been waived. Each party has received the advice of counsel with respect to
this waiver.
Section 11.05 MORTGAGEE'S RIGHT TO PERFORM MORTGAGOR'S OBLIGATIONS.
---------------------------------------------------------
Mortgagor agrees that, if Mortgagor fails to perform any act or to pay any money
which Mortgagor is required to perform or pay under the Loan Documents,
Mortgagee may, after the occurrence of an Event of Default, make the payment or
perform the act at the cost and expense of Mortgagor and in Mortgagor's
name or in its own name. Any money paid by Mortgagee under this Section 11.05
-------------
shall be reimbursed to Mortgagee in accordance with Section 11.06.
-------------
Section 11.06 MORTGAGEE REIMBURSEMENT. All payments made, or funds
-----------------------
expended or advanced by Mortgagee pursuant to the provisions of any Loan
Document, shall (a) become a part of the Secured Indebtedness, (b) bear interest
at the Interest Rate (as defined in the Note) from the date such payments are
made or funds expended or advanced, (c) become due and payable by Mortgagor
within ten (10) days after demand by Mortgagee, and (d) bear interest at the
Default Rate
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(as defined in the Note) from ten (10) days after written notice of such
non-payment. Mortgagor shall reimburse Mortgagee within ten (10) days after
receipt of written demand for such amounts.
Section 11.07 FEES AND EXPENSES. Mortgagor shall pay or, within ten (10)
-----------------
days after demand, reimburse Mortgagee for the payment of, all recording
and filing fees, abstract fees, title insurance premiums and fees, U.C.C. search
fees, escrow fees, reasonable attorneys' fees, and disbursements and such other
fees and expenses as may be reasonably incurred by Mortgagor or Mortgagee in
connection with the granting, administration, closing and consummation
(including, without limitation, the preparation, negotiation, delivery and
execution of this Mortgage, the Note, any of the other Loan Documents, the
Guaranty and the Unsecured Indemnity Agreement) of the transactions contemplated
hereunder or under the other Loan Documents. If Mortgagee becomes a party (by
intervention or otherwise) to any action or proceeding affecting, directly or
indirectly, Mortgagor, the Property or the title thereto or Mortgagee's interest
under this Mortgage, or employs an attorney to collect any of the Secured
Indebtedness or to enforce performance of the obligations, covenants and
agreements of the Loan Documents, Mortgagor shall reimburse Mortgagee in
accordance with Section 11.06 for all expenses, costs, charges and reasonable
-------------
legal fees incurred by Mortgagee (including, without limitation, the fees and
expenses of experts and consultants), whether or not suit is commenced.
Section 11.08 WAIVER OF CONSEQUENTIAL DAMAGES. Mortgagor covenants and
-------------------------------
agrees that in no event shall Mortgagee be liable for consequential damages,
and to the fullest extent permitted by law, Mortgagor expressly waives all
existing and future claims that it may have against Mortgagee for consequential
damages, except with respect to claims arising from the gross negligence or
wilful misconduct of Mortgagee.
Section 11.09 ATTORNEY-IN-FACT. Mortgagor hereby irrevocably appoints
----------------
and constitutes Mortgagee as Mortgagor's true and lawful attorney-in-fact,
coupled with an interest and with full power of substitution, for the purpose
of, after the occurrence of an Event of Default, taking any of the actions
described herein and all acts incidental thereto including, without limitation,
the right to collect and receive the Rents and Profits and to preserve any
rights of Mortgagor whatsoever in respect of any part of the Property. The
exercise by Mortgagee of any of its options or rights pursuant to this Mortgage
shall not be considered a waiver by Mortgagee of any default or Event of Default
by Mortgagor under the Note or this Mortgage or any of the other Loan Documents.
ARTICLE XII.
MORTGAGOR AGREEMENTS AND FURTHER ASSURANCES
Section 12.01 PARTICIPATION AND SALE OF LOAN.
------------------------------
(a) Mortgagee may sell, transfer or assign its entire interest or one or
more participation interests in the Loan and the Loan Documents, the Unsecured
Indemnity Agreement and the Guaranty, at any time and from time to time,
including, without limitation, its rights and obligations as servicer of the
Loan and may issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement, including depositing the Loan Documents with a trust that may
issue securities (the "Securities"). Mortgagee
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may forward (on a confidential basis, except as required by law) to each
purchaser, transferee, assignee, servicer, participant, investor in such
Securities (collectively, the "Investor"), any prospective Investor or any
Rating Agency rating or assigning value to such Securities, all documents and
information which Mortgagee now has or may hereafter acquire relating to the
Secured Indebtedness and to Mortgagor or any Liable Parties and the Property,
whether furnished by Mortgagor, the Liable Party or otherwise, as Mortgagee
determines necessary or desirable. Mortgagee shall not sell, transfer or assign
an interest in the Loan to any participant unless and until such participant
shall have delivered to Mortgagor such evidence as Mortgagor may reasonably
request to evidence such participant's exemption from the withholding of any tax
imposed by an applicable jurisdiction in connection with the payment of interest
and other sums due to it under the Loan and the Loan Documents.
(b) In addition, Mortgagor acknowledges that Mortgagee may release or
disclose to potential purchasers or transferees of the Loan, or potential
participants in the Loan (on a confidential basis except as required by law),
originals or copies of the Loan Documents, title information, engineering
reports, financial statements, operating statements, appraisals, leases, rent
rolls, and all other materials, documents and information in Mortgagee's
possession or which Mortgagee is entitled to receive under the Loan Documents,
with respect to the Loan, Mortgagor, Liable Party or the Property. Mortgagor and
Liable Party shall provide estoppel certificates and reasonably requested
updates of prior information previously delivered to Mortgagee with respect to
the Loan to such Investor, such prospective Investors and/or such Rating Agency
as may reasonably be required by Mortgagee. Mortgagor shall execute such
non-material amendments to the Loan Documents as may be reasonably requested by
Mortgagee or the Rating Agencies to effect the securitization; provided however,
that Mortgagor shall not be required to modify or amend any Loan Documents if
such modification or amendment would (i) change the interest rate, the stated
maturity or the amortization of principal set forth in the Note, or (ii) modify
or amend any other material economic term of the Loan; provided, further,
however, that neither securitization nor anything else contained in this Section
12.01 shall diminish Mortgagor=s or Liable Party=s rights or increase its
obligations under the Loan Documents or require Mortgagor to make any additional
representations or warranties or incur any additional liabilities. All costs of
securitization and other transactions permitted under this Section 12.01 shall
be paid by Mortgagee, including reasonable out-of-pocket expenses of Mortgagor.
(c) Mortgagee shall have the right, at any time and from time to time, to
split or divide the $200,000,000 Note and/or the $70,000,000 Note into two or
more promissory notes, each of which shall be secured by this Mortgage. To that
end, Mortgagor shall execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered by the then owner of the Property, to Mortgagee
and/or its designee or designees substitute notes in such principal amounts
aggregating not more than the then unpaid amount of the Secured Indebtedness and
containing the same terms and provisions as those contained in the $200,000,000
Note and the $70,000,000 Note, and such other documents and instruments as may
be required by Mortgagee, provided, however, that nothing contained in this
paragraph (c) shall diminish Mortgagor=s or Liable Party=s rights or increase
its obligations under the Loan Documents or require Mortgagor to make any
additional representations or warranties or incur any additional liabilities.
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Section 12.02 REPLACEMENT OF NOTE. Upon notice to Mortgagor of the loss,
theft, destruction or mutilation of the Note, Mortgagor will execute and
deliver, in lieu of the original Note, a replacement note, identical in form and
substance to the Note and dated as of the Execution Date. Upon the execution and
delivery of the replacement note, all references in any of the Loan Documents to
the Note shall refer to the replacement note.
Section 12.03 MORTGAGOR'S ESTOPPEL. Within ten (10) days after a request
--------------------
by Mortgagee, Mortgagor shall furnish an acknowledged written statement in form
satisfactory to Mortgagee (a) setting forth the amount of the Secured
Indebtedness, (b) stating either that no known offsets or defenses exist against
the Secured Indebtedness, or if any offsets or defenses are alleged to exist,
their nature and extent, and (c) stating whether any known default then exists
under the Loan Documents or any known event has occurred and is continuing,
which, with the lapse of time, the giving of notice, or both, would constitute
such a default.
Section 12.04 FURTHER ASSISTANCE. Mortgagor shall, without expense to
------------------
Mortgagee, execute, acknowledge and deliver all further acts, deeds,
conveyances, mortgages, deeds of trust, assignments, security agreements, and
financing statements as Mortgagee shall from time to time reasonably require, to
assure, convey, assign, transfer and confirm unto Mortgagee the Property and
rights conveyed or assigned by this Mortgage or for carrying out the intention
of the terms of this Mortgage or any of the other Loan Documents, or for filing,
refiling, registering, reregistering, recording or rerecording this Mortgage. If
Mortgagor fails to comply with the terms of this Section, Mortgagee may, after
the occurrence of an Event of Default, at Mortgagor's expense, perform
Mortgagor's obligations for and in the name of Mortgagor, and Mortgagor hereby
irrevocably appoints Mortgagee as its attorney-in-fact to do so. The appointment
of Mortgagee as attorney-in-fact is coupled with an interest.
Section 12.05 SUBROGATION. Mortgagee shall be subrogated to the
-----------
lien of any and all encumbrances against the Property paid out of the proceeds
of the Loan and to all of the rights of the recipient of such payment.
ARTICLE XIII.
SECURITY AGREEMENT
Section 13.01 SECURITY AGREEMENT. THIS MORTGAGE CREATES A LIEN ON THE
------------------
PROPERTY. IN ADDITION, TO THE EXTENT THE PROPERTY IS PERSONAL PROPERTY OR
FIXTURES UNDER APPLICABLE LAW, THIS MORTGAGE CONSTITUTES A SECURITY AGREEMENT
UNDER THE NEW JERSEY UNIFORM COMMERCIAL CODE (THE "U.C.C.") AND ANY OTHER
APPLICABLE LAW AND IS FILED AS A FIXTURE FILING. UPON THE OCCURRENCE OF AN EVENT
OF DEFAULT, MORTGAGEE MAY, AT ITS OPTION, PURSUE ANY AND ALL RIGHTS AND REMEDIES
AVAILABLE TO A SECURED PARTY WITH RESPECT TO ANY PORTION OF THE PROPERTY, AND/OR
MORTGAGEE MAY, AT ITS OPTION, PROCEED AS TO ALL OR ANY PART OF THE PROPERTY IN
ACCORDANCE WITH MORTGAGEE'S RIGHTS AND REMEDIES WITH RESPECT TO THE LIEN CREATED
BY THIS MORTGAGE. THIS FINANCING STATEMENT
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<PAGE>
SHALL REMAIN IN EFFECT AS A FIXTURE FILING UNTIL THIS MORTGAGE IS RELEASED OR
SATISFIED OF RECORD.
Section 13.02 REPRESENTATIONS AND WARRANTIES. Mortgagor represents, warrants
------------------------------
and covenants as follows:
(a) Mortgagor owns the Personal Property free from any lien, security
interest, encumbrance or adverse claim, except as otherwise permitted hereunder
or expressly approved by Mortgagee in writing. Mortgagor will notify Mortgagee
of, and will protect, defend and indemnify Mortgagee against, all claims and
demands of all persons at any time claiming any rights or interest in the
Personal Property.
(b) The Personal Property has not been used and shall not be used or bought
for personal, family, or household purposes, but shall be bought and used solely
for the purpose of carrying on Mortgagor's business.
(c) Mortgagor will not remove the Personal Property without the prior
written consent of Mortgagee, not to be unreasonably withheld or delayed, except
in the ordinary course of Mortgagor's business. Any items removed which are
reasonably necessary for the operation of the Property shall be promptly
replaced by Mortgagor with other Personal Property of value equal to or greater
than the value of the replaced Personal Property.
Section 13.03 CHARACTERIZATION OF PROPERTY. The grant of a security
----------------------------
interest to Mortgagee in this Mortgage shall not be construed to limit or impair
the lien of this Mortgage or the rights of Mortgagee with respect to any
property which is real property or which the parties have agreed to treat as
real property. To the fullest extent permitted by law, everything used in
connection with the production of Rents and Profits is, and at all times and for
all purposes and in all proceedings, both legal and equitable, shall be regarded
as real property, irrespective of whether or not the same is physically attached
to the Land and/or Improvements.
Section 13.04 PROTECTION AGAINST PURCHASE MONEY SECURITY INTERESTS.
-----------------------------------------------------
It is understood and agreed that in order to protect Mortgagee from the effect
of U.C.C. Section 9-313, as amended from time to time and as enacted in the
State, in the event that Mortgagor intends to purchase any goods which may
become fixtures attached to the Property, or any part of the Property, and such
goods will be subject to a purchase money security interest held by a seller or
any other party:
(a) Except as permitted under Section 10.02, before executing any
--------------
security agreement or other document evidencing or perfecting the security
interest, Mortgagor shall obtain the prior written approval of Mortgagee. All
requests for such written approval shall be in writing and contain the following
information: (i) a description of the fixtures (ii) the address at which the
fixtures will be located; and (iii) the name and address of the proposed holder
and proposed amount of the security interest.
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(b) Mortgagor shall pay all sums and perform all obligations secured
by the security agreement. A default by Mortgagor under the security agreement
shall constitute a default under this Mortgage. If Mortgagor fails to make any
payment on an obligation secured by a purchase money security interest in the
Personal Property or any fixtures, Mortgagee, at its option, may pay the secured
amount and Mortgagee shall be subrogated to the rights of the holder of the
purchase money security interest.
(c) Except for the financing permitted under Section 10.02, Mortgagee shall
have the right to acquire by assignment from the holder of the security interest
for the Personal Property or fixtures, all contract rights, accounts receivable,
negotiable or non-negotiable instruments, or other evidence of indebtedness and
to enforce the security interest as assignee.
(d) The provisions of subparagraphs (b) and (c) of this Section 13.04 shall
----------------- --- -------------
not apply if the goods which may become fixtures are of at least equivalent
value and quality as the Personal Property being replaced and if the rights of
the party holding the security interest are expressly subordinated to the lien
and security interest of this Mortgage in a manner satisfactory to Mortgagee.
ARTICLE XIV.
MISCELLANEOUS COVENANTS
Section 14.01 NO WAIVER. No single or partial exercise by Mortgagee, or
---------
delay or omission in the exercise by Mortgagee, of any right or remedy under
the Loan Documents shall preclude, waive or limit the exercise of any other
right or remedy. Mortgagee shall at all times have the right to proceed against
any portion of, or interest in, the Property without waiving any other rights or
remedies with respect to any other portion of the Property. No right or remedy
under any of the Loan Documents is intended to be exclusive of any other right
or remedy but shall be cumulative and may be exercised concurrently with or
independently from any other right and remedy under any of the Loan Documents or
under applicable law.
Section 14.02 NOTICES. All notices, demands and requests given or
-------
required to be given by, pursuant to, or relating to, this Mortgage shall be in
writing. All notices shall be deemed to have been properly given if mailed by
United States registered or certified mail, with return receipt requested,
postage prepaid, or by United States Express Mail or other comparable overnight
courier service to the parties at the addresses set forth in the Defined Terms
(or at such other addresses as shall be given in writing by any party to the
others) and shall be deemed complete upon receipt or refusal to accept delivery
as indicated in the return receipt or in the receipt of such United States
Express Mail or courier service.
Section 14.03 HEIRS AND ASSIGNS; TERMINOLOGY
------------------------------
(a) This Mortgage applies to Mortgagee and Mortgagor, and their heirs,
legatees, devisees, administrators, executors, successors and assigns. The term
"Mortgagor" shall include both the original Mortgagor and any subsequent owner
or owners of any of the Property.
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(b) In this Mortgage, whenever the context so requires, the masculine
gender includes the feminine and/or neuter, and the singular number includes
the plural.
Section 14.04 SEVERABILITY. If any provision of this Mortgage should be
------------
held unenforceable or void, then that provision shall be separated from the
remaining provisions and shall not affect the validity of this Mortgage except
that if the unenforceable or void provision relates to the payment of any
monetary sum, then, Mortgagee may, at its option, declare the Secured
Indebtedness immediately due and payable.
Section 14.05 APPICABLE LAW. This Mortgage shall be construed and enforced
-------------
in accordance with the laws of the State.
Section 14.06 CAPTIONS. The captions are inserted only as a matter of
--------
convenience and for reference, and in no way define, limit, or describe the
scope or intent of any provisions of this Mortgage.
Section 14.07 TIME OF THE ESSENCE. Time shall be of the essence with
--------------------
respect to all of Mortgagor's obligations under this Mortgage and the other
Loan Documents.
Section 14.08 NO MERGER. In the event that Mortgagee should become the
---------
owner of the Property, there shall be no merger of the estate created by this
Mortgage with the fee estate in the Property.
Section 14.09 NO MODIFICATIONS. This Mortgage may not be changed,
----------------
amended or modified, except in a writing expressly intended for such purpose
and executed by Mortgagor and Mortgagee.
Section 14.10 ENTIRE AGREEMENT. This Mortgage, the Note, the other Loan
----------------
Documents, the Guaranty and the Unsecured Indemnity Agreement constitute the
entire agreement between Mortgagor and Mortgagee with respect to the subject
matter hereof and all understandings, oral representations and agreements
heretofore or simultaneously had among the parties are merged in, and are
contained in, such documents and instruments.
Section 14.11 COUNTERPARTS. This Mortgage may be executed in any number
------------
of counterparts, each of which shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument. Signature and
acknowledgment pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature and acknowledgment pages
are physically attached to the same instrument.
Section 14.12 NO THIRD PARTY BENEFICIARIES. Nothing contained herein is
----------------------------
intended or shall be deemed to create or confer any rights upon any third person
not a party hereto, whether as a third-party beneficiary or otherwise, except
as expressly provided herein.
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ARTICLE XV.
SPECIAL NEW JERSEY PROVISIONS
Section 15.01 INCONSISTENCIES. In the event of any inconsistencies
---------------
between the terms and conditions of this Article 15 and any other terms of this
Mortgage the terms and conditions of this Article 15 shall control and be
binding.
Section 15.02 WARRANTY OF TITLE. The words "and grant a security
------------------
interest in" are hereby inserted in Section 2.03 immediately after the words
"convey or encumber" and immediately prior to the words "the Property".
Section 15.03 NEW JERSEY SPILL ACT AND ISRA. The following is hereby
-----------------------------
added as Section 6.07:
A. Mortgagor represents and warrants, based upon an environmental
assessment of the Property and information that Mortgagor knows or should have
reasonably known, that: (a) no portion of the Property has ever been used by the
Mortgagor or any former owner, occupant or operator to generate, manufacture,
refine, produce, treat, store, handle, dispose of, transfer, process or
transport Hazardous Materials in violation of applicable Environmental Laws,
whether or not any of those parties has received notice or advice from any
governmental agency or other source with respect thereto; (b) no portion of the
Property is now nor at any time that Mortgagor has owned the Property, nor at
any time prior to Mortgagor acquiring title to the Property has ever been, used
as a "Major Facility," as that term is defined in the Spill Compensation and
Control Act, N.J.S.A. 58:10-23.11 et seq. (said Spill Compensation and Control
Act together with any amendments or revisions thereof and any regulations
promulgated pursuant thereto being hereinafter collectively called the "Spill
Act"), and that Mortgagor has not used, and does not intend to use, any portion
of the Property for that purpose; (c) at any time that Mortgagor has owned the
Property and at any time prior to Mortgagor acquiring title to the Property,
Hazardous Materials have not been transported from the Property to another
location which is not in compliance with all Environmental Laws; (d) there are
no environmental permits required for current or anticipated uses of the
Property that have not been obtained; (e) no lien has attached to the Property
under the Spill Act or any other Environmental Laws that have not been removed;
and (f) Mortgagor has not in the past, and does not now own, operate or control
any "Major Facility" (as such term is defined in the Spill Act) or any hazardous
or solid waste disposal facility.
B. If a lien is filed against the Property pursuant to the Spill Act or
any other Environmental Law, Mortgagor shall within thirty (30) days either: (i)
pay the claim and remove the lien from the Property, or (ii) furnish (a) a bond
reasonably satisfactory to Mortgagee and the title insurance company which
insures the priority of the lien of the Mortgage in the amount of the claim out
of which the lien arises, (b) a cash deposit in the amount of the claim out of
which the lien arises, or (c) other security reasonably satisfactory to
Mortgagee in an amount sufficient to discharge the claim out of which the lien
arises. In addition to the foregoing, Mortgagor hereby agrees to defend,
indemnify and to save Mortgagee harmless from and against all loss, damage,
liability and expense (including attorney's fees and expenses) which Mortgagee
may sustain by reason of any lien filed
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against the Property pursuant to the Spill Act or any other environmental
federal, state or local laws, ordinances, rules or regulations. Mortgagor shall
be personally liable to Mortgagee for the foregoing notwithstanding any
exculpatory provisions contained in the Mortgage, the Note, the other Loan
Documents, the Guaranty or the Unsecured Indemnity Agreement.
C. All references herein to executives, departments, funds, statutes, and
acts of the State of New Jersey are not intended to be exclusive and shall be
deemed to apply to any successors, replacements or amendments thereof and any
additional environmental statutes, rules, regulations, organizations and persons
of a similar nature, whether of the State of New Jersey or the United States of
America.
D. Upon Mortgagee's request, and in all events no later than sixty (60)
days prior to "closing, terminating or transferring operations" (as such term is
defined in the New Jersey Industrial Site Recovery Act, Senate No. 1070, N.J.
Laws 1993, c. 139 (effective June 16, 1993), N.J.S.A. 13:1K-6 et. seq., and the
-------
regulations promulgated pursuant thereto (said New Jersey Industrial Site
Recovery Act together with any amendments or revisions thereof and any
regulations promulgated pursuant thereto hereinafter collectively called
"ISRA")) by Mortgagor, Mortgagor, at its sole cost and expense, shall, to the
extent permitted by law, provide Mortgagee a certified true copy of the
following, as applicable:
(i) an opinion letter or a letter of non-applicability (accompanied
by the Applicant's supporting affidavit) from the New Jersey Department of
Environmental Protection (or such other agency or body as shall then have
jurisdiction over ISRA matters) ("DEP"), or an attorney's opinion letter
addressed to Mortgagee in a form reasonably satisfactory to Mortgagee's counsel,
stating that ISRA does not then apply to: (x) Mortgagor, (y) the use of and
occupancy of the Property and (z) the closing, terminating or transferring of
operations of all or any portion of the Property; or
(ii) a Negative Declaration (as such term is defined in ISRA) duly
and finally approved by DEP; or
(iii) a Remedial Action Workplan (as such term is defined in ISRA)
duly and finally approved by DEP; or
(iv) a De Minimis Quantity Exemption (as such term is defined in
-----------
ISRA) issued by DEP to Mortgagor; or
(v) a Remediation Agreement issued in accordance with ISRA by DEP to
Mortgagor, permitting the closing, terminating or transferring of operations; or
(vi) a No Further Action Letter issued in accordance with ISRA by
DEP to Mortgagor.
Nothing in this subsection D shall be construed as limiting
Mortgagor's obligation to otherwise comply with ISRA.
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E. If Mortgagor complies with subsection D by:
(i) obtaining an approved and final Remedial Action Workplan,
Mortgagor shall (x) promptly implement and prosecute to completion or cause to
be so implemented and prosecuted the Remedial Action Workplan or the
requirements of the Remediation Agreement, as the case may be, in accordance
with the schedules contained therein or as may be otherwise ordered or directed
by DEP or such other agency or body as shall then have jurisdiction over the
Remedial Action Workplan or the Remediation Agreement. Mortgagor expressly
understands and acknowledges that Mortgagor's compliance with the provisions of
subsections D and E may require Mortgagor to expend funds or do acts after the
expiration or termination of the term of one or more space leases ("Space
Leases") between Mortgagor and one or more tenants. Mortgagor shall expend such
funds and do such acts and shall not be excused therefrom even though the term
of the Space Lease shall have previously expired or been terminated and
notwithstanding any provisions in any such Space Lease or in ISRA placing the
burden of compliance on a tenant, and (y) provide an affidavit dated not more
than ten (10) days nor less than five (5) days prior to the closing, terminating
or transferring of operations that it is in full compliance with and has not
received any notice that it has violated the terms of the Remedial Action
Workplan or the Remediation Agreement, as the case may be, including without
limitation, the terms regarding the establishment and maintenance of a
remediation funding source, such affidavit to be provided to Mortgagee within
two (2) days after its execution;
(ii) providing an opinion letter or a letter of non-applicability
from DEP, or an attorney's opinion letter. Mortgagor shall reiterate, in
affidavit form, dated not more than ten (10) days nor less than five (5) days
prior to the closing, terminating or transferring of operations, that the facts
upon which the opinion letter, letter of non-applicability or attorney's letter
are based are and remain true as of that date, such affidavit to be provided to
Mortgagee within two (2) days after its execution.
F. The obligations and liabilities of Mortgagor under Section 15.03 of
this Mortgage shall survive any entry of a judgment of foreclosure or the
delivery of a deed in lieu of foreclosure of the Mortgage for a period of five
(5) years.
Section 15.04 COPY OF MORTGAGE. Mortgagor represents and warrants that
----------------
it has received a true copy of this Mortgage without charge.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
39
<PAGE>
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage, or has caused
this Mortgage to be executed by its duly authorized representative(s) as of the
Execution Date.
SHORT HILLS ASSOCIATES, a New
Jersey general partnership
By: The Taubman Realty Group Limited
Partnership, a Delaware limited
partnership, its general partner
By: /s/ Steven Eder
---------------------
Name: Steven Eder
Title: Authorized Signatory
================================================================================
ASSIGNMENT OF LEASES
SHORT HILLS ASSOCIATES
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
(Assignor)
and
METROPOLITAN LIFE INSURANCE COMPANY
One Madison Avenue
New York, New York 10010
(Assignee)
--------------------------------------
Dated: As of April 15, 1999
================================================================================
<PAGE>
ASSIGNMENT OF LEASES
DEFINED TERMS
================================================================================
Execution Date: As of April 15, 1999
================================================================================
Loan: A first mortgage loan in an amount of $270,000,000.00 from Assignee to
Assignor
===============================================================================
Assignor & Address: Short Hills Associates, a New Jersey general partnership
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
Attention: Treasurer
================================================================================
Assignee & Address: Metropolitan Life Insurance Company,
a New York corporation
200 Park Avenue, 12th Floor
New York, New York 10166
Attention: Senior Vice-President
Real Estate
and: Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010-3690
Attention: Vice-President and Investment Counsel
Real Estate Investments
================================================================================
Note: Two Promissory Notes executed by Assignor in favor of Assignee in the
respective principal amounts of $200,000,000.00 and $70,000,000.00 dated as of
the Execution Date, together with all extensions, renewals, modifications,
restatements and amendments thereof (collectively, the "Note").
================================================================================
Mortgage: Mortgage, Security Agreement and Fixture Filing dated as of the
Execution Date, executed by Assignor to secure repayment of the Note, together
with all extensions, renewals, modifications, restatements and amendments
thereof. The Mortgage will be recorded in the records of the County in which the
Property (defined below) is located.
===============================================================================
THIS ASSIGNMENT OF LEASES (this "Agreement") is entered into by Assignor
as of the Execution Date in favor of Assignee and affects the Land described in
Exhibit A attached to this Agreement. Capitalized terms which are not defined in
- ---------
this Agreement shall have the respective meanings set forth in the Mortgage.
<PAGE>
R E C I T A L S
A. Assignee has loaned or will loan to Assignor the Loan which is
evidenced by the Note. The payment of the Note is secured by the Mortgage which
encumbers Assignor's interest in the real property described in Exhibit A
---------
attached to this Agreement (the "Land") and Assignor's interest in the
improvements and personal property and equipment situated on the Land (the
"Improvements"; collectively with the Land, the "Property"); and
B. Assignor desires to absolutely, presently and unconditionally assign to
Assignee all of its right, title and interest in and to (i) all leases which now
exist that affect the Property, including, without limitation, the leases
referred to in Exhibit B attached to this Agreement and more particularly
---------
described in the certified rent roll of even date herewith delivered by Assignor
to Assignee (the "Rent Roll"), (ii) all leases entered into after the date of
this Agreement, (iii) all lease extensions, modifications, amendments,
expansions and renewals of the leases described in (i) and (ii), and (iv) all
guarantees of tenants' obligations and extensions, modifications, amendments and
renewals of any guarantees of any of the leases. The documents described in this
Recital B are collectively referred to as the "Leases".
- ---------
NOW THEREFORE, in consideration of the Recitals and for good and
valuable consideration, Assignor agrees with Assignee and its successors and
assigns as follows:
1. Payment of Note. Assignor desires to secure (a) the timely payment of
---------------
the principal of and interest on the Note and all other indebtedness secured by
the Mortgage; and (b) the full compliance with the terms, conditions, covenants
and agreements contained in the Note, the Mortgage and the other documents
executed by Assignor in connection with the Loan.
2. Present and Absolute Assignment of Leases. Assignor absolutely,
----------------------------------------------
presently and unconditionally grants and assigns to Assignee all of Assignor's
right, title and interest in and to the Leases. This grant includes without
limitation: (a) all rent payable under the Leases; (b) all tenant security
deposits held by Assignor pursuant to the Leases; (c) all additional rent
payable under the Leases; (d) all proceeds of insurance payable to Assignor
under the Leases and all awards and payments on account of any taking or
condemnation; and (e) all claims, damages and other amounts payable to Assignor
in the event of a default under or termination of any of the Leases, including
without limitation all of Assignor=s claims to the payment of damages arising
from any rejection by a tenant of any Lease under the Bankruptcy Code as amended
from time to time. All of the items referred to in this Section 2 are
----------
collectively referred to in this Agreement as the "Income".
3. No Cancellation or Modification of Leases. Assignor covenants and
---------------------------------------------
agrees that it shall not, without the express written consent of Assignee, (a)
enter into or extend any Lease unless the Lease complies with the Leasing
Guidelines which are attached to the Mortgage as Exhibit B, or (b) cancel or
---------
terminate any Leases (except in the case of a default) unless Assignor has
entered into new Leases covering all of the premises of the Leases being
terminated or surrendered, or unless in compliance with the Leasing Guidelines,
or (c) modify or amend any Leases in any material way or reduce the rent or
additional rent, unless in compliance with the Leasing Guidelines, or (d)
consent to an assignment of the tenant's interest or to a subletting of any
Lease unless the tenant
2
<PAGE>
remains liable under the Lease following the assignment or subletting, unless
in compliance with the Leasing Guidelines, or (e) accept payment of advance
rents or security deposits in an amount in excess of one month's rent, or (f)
enter into any options to purchase the Property.
If any of these acts described in this Section 3 are done without the
---------
consent of Assignee, at the option of Assignee, they shall constitute a breach
of the terms of this Agreement and of the Mortgage.
4. Specific Covenants of Assignor. Assignor covenants and agrees:
------------------------------
(a) To perform fully all material obligations, duties, and
agreements of landlord under the Leases;
(b) To deposit all security deposits delivered by tenants in
connection with the Leases in accordance with applicable law;
(c) At Assignor's sole cost and expense, to appear in and
defend any action or proceeding arising under the Leases or which is
connected with the obligations, duties or liabilities of landlord, tenant
or any guarantor and to pay all costs and expenses of Assignee, including
reasonable attorneys' fees, in any action or proceeding in which Assignee
may appear in connection with this Assignment;
(d) If Assignor fails to make any payment or to do any acts
required by this Agreement, then if an Event of Default exists Assignee
may in its sole discretion and without further notice to Assignor perform
Assignor's obligations under the Leases as Assignee may deem necessary, at
Assignor's cost and expense. These acts may include without limitation
appearing in and defending any proceeding connected with the Leases,
including without limitation any proceedings of any tenants under the
Bankruptcy Code. No action by Assignee shall release Assignor from its
obligation under this Agreement. Assignor irrevocably appoints Assignee
its true and lawful attorney to exercise it rights under this Agreement if
an Event of Default exists, which appointment is coupled with an interest
and with full power of substitution;
(e) To pay immediately upon demand all sums expended by
Assignee under this Agreement, together with interest at the Default Rate
(as defined in the Note). These expenditures shall be secured by the
Mortgage;
(f) If a petition under the Bankruptcy Code shall be filed by
or against Assignor and Assignor, as landlord, shall determine to reject
any lease pursuant to Bankruptcy Code section 365(a), then Assignee
shall have the right, but not the obligation, to demand that Assignor
assume and assign the lease to Assignee and Assignor shall provide
adequate assurance of future performance under the lease; and
3
<PAGE>
(g) Assignee's rights under this Agreement may be exercised
either independently of or concurrently with any other right in this
Agreement, the Mortgage or in any other document securing the Note. No
action taken by Assignee under this Agreement shall cure or waive any
default nor affect any notice under the Mortgage.
5. Leasing of Property. Assignor covenants and agrees upon request to
--------------------
confirm in writing the assignment to Assignee of all subsequent Leases of the
Property upon the terms set forth in this Agreement. Notwithstanding the
preceding sentence, the terms and provisions of this Agreement shall apply
automatically to any Leases entered into after the Execution Date.
6. Representations and Warranties. Assignor makes the following
----------------------------------
representations and warranties in connection with the Leases:
(a) There are no leases or occupancy agreements affecting the
Property except the leases and amendments listed on the Rent Roll and
Assignor has delivered to Assignee true, correct and complete copies of
all leases, including amendments (collectively, "Existing Leases") and all
guaranties and amendments of guaranties given in connection with the
Existing Leases (the "Guaranties").
(b) All Existing Leases and Guaranties are in full force and
effect in all material respects without any oral or written modification
except as set forth in writing in the copies delivered to Assignee.
(c) Assignor has received no notices of defaults by Assignor
under the Existing Leases and Guaranties and, to the best knowledge of
Assignor, there are no defaults by any tenants under the Existing Leases
or any guarantors under the Guaranties except as heretofore disclosed in
writing to Assignee by letter dated March 24, 1999 from Steven E. Eder,
Senior Vice President and Treasurer of The Taubman Company (the "Manager's
Letter").
(d) To the best knowledge of Assignor, none of the tenants now
occupying 10% or more of the Property or having a current lease affecting
10% or more of the Property is the subject of any bankruptcy,
reorganization or insolvency proceeding or any other debtor-creditor
proceeding.
(e) Except only for rent and additional rent for the current
month, Assignor has not accepted under any of the Leases any payment of
advance rent, additional rent or security deposit in an amount that is
more than one month's rent and additional rent, except as heretofore
disclosed in writing to Assignee in the Manager's Letter.
(f) Assignor has deposited all security deposits delivered in
connection with the Existing Leases in accordance with applicable law.
4
<PAGE>
(g) No tenant under any Existing Lease has asserted in writing
any defense, set-off or counterclaim with respect to its tenancy or its
obligations under its lease, and, to the best of Assignor's knowledge, no
such defense, set-off or counterclaim exists, except as heretofore
disclosed in writing to Assignee in the Manager's Letter.
(h) There are no material unfulfilled landlord obligations due
to tenants for tenant improvements, moving expenses or rental concessions
or other matters, and all material credits required to be paid or
contributed by Assignor under the Existing Leases have been paid or
contributed in full, except as heretofore disclosed in writing to Assignee
in the Manager's Letter.
(i) None of the Leases, Income or Rents and Profits have been
assigned, pledged, hypothecated or otherwise encumbered or transferred by
Assignor except to the extent provided in the Loan Documents.
(j) Intentionally Omitted.
(k) Assignor has not done any act which might prevent Assignee
from exercising its rights under this Agreement.
7. License to Collect Monies Until Default by Assignor. So long as no
------------------------------------------------------
Event of Default (as defined in the Mortgage) exists (a "Default"), Assignor
shall have a license to receive and use all Income. Upon the occurrence of a
Default, whether or not legal proceedings have commenced, and without regard to
waste, adequacy of security for the Secured Indebtedness or solvency of
Assignor, the license herein granted shall automatically expire and terminate,
without notice by Assignee (any such notice being hereby expressly waived by
Assignor). Assignee shall thereupon and thereafter have all right, power and
authority to exercise and enforce any and all of its rights and remedies as
provided herein, under any of the other Loan Documents or by law or in equity.
Such rights and remedies shall expressly include the right to exercise and
enjoy, in Assignee's sole and absolute discretion, all of the rights, powers and
benefits under the Leases assigned to Assignee hereunder, it being understood
and agreed that Assignee shall not be liable, and Assignor shall at all times
remain solely liable, to the tenants to perform any and all duties or
obligations owing to such tenants under the Leases, unless Assignee shall elect,
in its sole and absolute discretion, to undertake such duties or obligations. If
the Default is cured by Assignor, the license to receive and use all Income
shall be reinstated.
8. Entry by Assignee and Receiver. If a Default exists, Assignee is
---------------------------------
authorized either in person or by agent, with or without bringing any action or
proceeding or having a receiver appointed by a court, (a) to enter upon, take
possession of, manage and operate the Property and collect the Income, and (b)
to make, enforce, modify, and accept the surrender of the Leases. Assignee is
authorized to take these actions either with or without taking possession of the
Property. In connection with this entry, Assignor authorizes Assignee to perform
all acts necessary for the operation and maintenance of the Property. Assignee
may sue for or otherwise collect all Income, including those past due and
unpaid, and apply the Income, less costs and expenses of operation and
collection, including reasonable attorneys' fees, to the indebtedness secured by
the Mortgage in such
5
<PAGE>
order as Assignee may determine. Assignee's exercise of its rights under this
Section 8 shall not be deemed to cure or waive any Default.
- ---------
9. Indemnification. Assignor shall indemnify Assignee against and hold it
---------------
harmless from any and all liability, claims, loss or damage which it may incur
under the Leases or under this Agreement except for Assignee's negligence or
wilful misconduct.
10. Mortgagee in Possession. To the fullest extent permitted by law,
-------------------------
neither the assignment of Income to Assignee nor the exercise by Assignee of any
of its rights or remedies under this Agreement, including without limitation,
the entering into possession or the appointment of a receiver shall be deemed to
make Assignee a "mortgagee-in-possession" or otherwise liable with respect to
the Property. Although Assignee has the right to do so, it shall not be
obligated to perform any obligation under the Leases by reason of this
Agreement. To the fullest extent permitted by law, neither this Agreement nor
any action or inaction on the part of Assignee shall constitute an assumption on
the part of Assignee of any obligation or liability under any of the Leases.
11. Reconveyance and Termination. Upon the payment in full of the Loan, as
----------------------------
evidenced by the recording of an instrument of full reconveyance of the
Mortgage, this Agreement shall be void and of no effect.
12. Tenants Entitled to Rely on Assignee's Requests. Assignor irrevocably
-----------------------------------------------
authorizes and directs the tenants and their successors, upon receipt of any
written request of Assignee stating that a Default exists, to pay to Assignee
the Income due and to become due under the Leases. Assignor agrees that the
tenants shall have the right to rely upon any such statement without any
obligation to inquire as to whether a Default actually exists and regardless of
any claim of Assignor to the contrary. Assignor agrees that it shall have no
claim against the tenants for any Income paid by the tenants to Assignee. Upon
the curing of all Defaults, Assignee shall give written notice to the tenants to
recommence paying the rents to Assignor.
13. Successors and Assigns. This Agreement shall be binding upon the
------------------------
successors and assigns of Assignor and shall inure to the benefit of and be
enforceable by Assignee, its successors and assigns and any trustee appointed
for the benefit of the holder of the Note. If more than one person, corporation,
partnership or other entity shall execute this Agreement, then the obligations
of the parties executing the Agreement shall be joint and several.
14. Exculpation. The provisions of Section 9.01 of the Mortgage are
-----------
incorporated herein by this reference to the fullest extent as if the text of
such section were set forth in its entirety herein.
15. Notices. All notices pursuant to this Agreement shall be given in
-------
accordance with the Notice provision of the Mortgage, which is incorporated into
this Agreement by this reference.
16. Governing Law. This Agreement and the rights and obligations of the
-------------
parties under this Agreement shall in all respects be governed by, and construed
and enforced in accordance with, the laws of the State in which the Property is
located, without regard to conflict of laws principles.
6
<PAGE>
17. Miscellaneous. This Agreement may be modified, amended, waived, or
-------------
terminated only by an instrument in writing signed by the party against which
enforcement of such modification, amendment, waiver, or termination is sought.
No failure or delay in exercising any of these rights shall constitute a waiver
of any Default. Assignor, at its expense, will execute all documents and take
all action that Assignee from time to time may reasonably request to preserve
and protect the rights provided under this Agreement. The headings in this
Agreement are for convenience of reference only and shall not expand, limit or
otherwise affect the meanings of the provisions. This Agreement may be executed
in several counterparts, each of which shall be an original, but all of which
shall constitute one document.
7
<PAGE>
IN WITNESS WHEREOF, this Assignment of Leases is executed as of the
Execution Date.
SHORT HILLS ASSOCIATES, a New
Jersey general partnership
By: The Taubman Realty Group Limited
Partnership, a Delaware limited
partnership, its general partner
By: /s/ Steven Eder
______________________________
Name: Steven Eder
Title: Authorized Signatory
8
<PAGE>
- --------------------------------------------------------------------------------
SECURED REVOLVING CREDIT AGREEMENT
dated as of June 24, 1999
among
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP,
as Borrower,
THE BANKS SIGNATORY HERETO,
each as a Bank
and
UBS AG, STAMFORD BRANCH,
as Administrative Agent
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; ETC...............................1
SECTION 1.01. Definitions....................................1
SECTION 1.02. Accounting Terms..............................15
SECTION 1.03. Computation of Time Periods...................15
SECTION 1.04. Rules of Construction.........................15
ARTICLE II THE LOANS.....................................16
SECTION 2.01. The Loans.....................................16
SECTION 2.02. Purpose.......................................16
SECTION 2.03. Advances, Generally...........................16
SECTION 2.04. Procedures for Advances.......................17
SECTION 2.05. Additional Conditions to Advances.............17
SECTION 2.06. Interest Periods; Renewals....................17
SECTION 2.07. Interest......................................18
SECTION 2.08. Fees..........................................18
SECTION 2.09. Notes.........................................18
SECTION 2.10. Prepayments...................................19
SECTION 2.11. Termination of Commitments....................19
SECTION 2.12. Method of Payment.............................19
SECTION 2.13. Elections, Conversions or Continuation of
Loans.........................................20
SECTION 2.14. Minimum Amounts...............................20
SECTION 2.15. Certain Notices Regarding Elections,
Conversions and Continuations of Loans........20
SECTION 2.16. Late Payment Premium..........................20
SECTION 2.17. Letters of Credit.............................21
ARTICLE III YIELD PROTECTION; ILLEGALITY; ETC.............22
SECTION 3.01. Additional Costs..............................22
SECTION 3.02. Limitation on Types of Loans..................23
SECTION 3.03. Illegality....................................24
SECTION 3.04. Treatment of Affected Loans...................24
SECTION 3.05. Certain Compensation..........................25
SECTION 3.06. Capital Adequacy..............................25
SECTION 3.07. Substitution of Banks.........................26
ARTICLE IV CONDITIONS PRECEDENT..........................27
SECTION 4.01. Conditions Precedent to the Initial Advance...27
SECTION 4.02. Conditions Precedent to Advances After the
Initial Advance...............................31
SECTION 4.03. Deemed Representations........................32
ARTICLE V REPRESENTATIONS AND WARRANTIES................32
SECTION 5.01. Due Organization..............................32
SECTION 5.02. Power and Authority; No Conflicts; Compliance
With Laws.....................................32
SECTION 5.03. Legally Enforceable Agreements................32
SECTION 5.04. Litigation....................................33
SECTION 5.05. Good Title to Properties......................33
SECTION 5.06. Taxes.........................................33
SECTION 5.07. ERISA.........................................33
SECTION 5.08. No Default on Outstanding Judgments or Orders.34
SECTION 5.09. No Defaults on Other Agreements...............34
SECTION 5.10. Government Regulation.........................34
SECTION 5.11. Environmental Protection......................34
SECTION 5.12. Solvency......................................34
SECTION 5.13. Financial Statements..........................35
SECTION 5.14. Valid Existence of Affiliates.................35
SECTION 5.15. Insurance.....................................35
SECTION 5.16. Separate Tax and Zoning Lot...................35
SECTION 5.17. Zoning and other Laws; Covenants and
Restrictions..................................35
SECTION 5.18. Utilities Available...........................35
SECTION 5.19. Creation of Liens.............................36
SECTION 5.20. Roads.........................................36
SECTION 5.21. Premises Documents and Leases.................36
SECTION 5.22. Accuracy of Information; Full Disclosure......36
<PAGE>
ARTICLE VI AFFIRMATIVE COVENANTS.........................36
SECTION 6.01. Maintenance of Existence......................36
SECTION 6.02. Maintenance of Records........................37
SECTION 6.03. Maintenance of Insurance......................37
SECTION 6.04. Compliance with Laws; Payment of Taxes........37
SECTION 6.05. Right of Inspection...........................37
SECTION 6.06. Compliance With Environmental Laws............37
SECTION 6.07. Payment of Costs..............................37
SECTION 6.08. Maintenance of Properties.....................37
SECTION 6.09. Reporting and Miscellaneous Document
Requirements..................................37
SECTION 6.10. Premises Documents; Leases....................40
SECTION 6.11. Compliance with Covenants, Restrictions and
Easements.....................................40
SECTION 6.12. Management, Leasing and Service Contracts.....40
SECTION 6.13. Correction of Defects.........................41
SECTION 6.14. Estoppel Certificates.........................41
ARTICLE VII NEGATIVE COVENANTS............................41
SECTION 7.01. Mergers Etc...................................41
SECTION 7.02. Investments...................................41
SECTION 7.03. Sale of Assets................................41
SECTION 7.04. Interest Rate Hedging.........................42
SECTION 7.05. Control of Borrower...........................42
SECTION 7.06. Certain Restrictions on Activities of TCI.....42
ARTICLE VIII FINANCIAL COVENANTS AND ADJUSTMENTS...........42
SECTION 8.01. Covenants Subsequent to Certain Events........42
SECTION 8.02. Certain Pro-Forma Adjustments.................43
ARTICLE IX EVENTS OF DEFAULT.............................44
SECTION 9.01. Events of Default.............................44
SECTION 9.02. Remedies......................................46
ARTICLE X ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS...46
SECTION 10.01. Appointment, Powers and Immunities of
Administrative Agent..........................46
SECTION 10.02. Reliance by Administrative Agent..............47
SECTION 10.03. Defaults......................................47
SECTION 10.04. Rights of Administrative Agent as a Bank......48
SECTION 10.05. Sharing of Costs by Banks; Indemnification of
Administrative Agent..........................48
SECTION 10.06. Non-Reliance on Administrative Agent and
Other Banks...................................48
SECTION 10.07. Failure of Administrative Agent to Act........49
SECTION 10.08. Resignation or Removal of Administrative
Agent.........................................49
SECTION 10.09. Amendments Concerning Agency Function.........49
SECTION 10.10. Liability of Administrative Agent.............50
SECTION 10.11. Transfer of Agency Function...................50
SECTION 10.12. Non-Receipt of Funds by Administrative Agent..50
SECTION 10.13. Withholding Taxes.............................50
SECTION 10.14. Minimum Commitment by UBS.....................51
SECTION 10.15. Pro Rata Treatment............................51
SECTION 10.16. Sharing of Payments Among Banks...............51
SECTION 10.17. Possession of Documents.......................51
ARTICLE XI NATURE OF OBLIGATIONS.........................51
SECTION 11.01. Absolute and Unconditional Obligations........51
SECTION 11.02. Non-Recourse..................................52
<PAGE>
ARTICLE XII MISCELLANEOUS.................................53
SECTION 12.01. Binding Effect of Request for Advance.........53
SECTION 12.02. Amendments and Waivers........................53
SECTION 12.03. Usury.........................................54
SECTION 12.04. Expenses; Indemnification.....................54
SECTION 12.05. Assignment; Participation.....................56
SECTION 12.06. Documentation Satisfactory....................57
SECTION 12.07. Notices.......................................57
SECTION 12.08. Setoff........................................57
SECTION 12.09. Year 2000.....................................58
SECTION 12.10. Table of Contents; Headings...................58
SECTION 12.11. Severability..................................58
SECTION 12.12. Counterparts..................................58
SECTION 12.13. Integration...................................58
SECTION 12.14. GOVERNING LAW.................................58
SECTION 12.15. Waivers.......................................58
SECTION 12.16. JURISDICTION; IMMUNITIES......................59
SECTION 12.17. Termination of Prior Loan Agreement...........60
EXHIBIT A ......- Assignment and Assumption Agreement
EXHIBIT B ......- Authorization Letter
EXHIBIT C ......- Note
EXHIBIT D ......- List of Affiliates
EXHIBIT E ......- Solvency Certificate
EXHIBIT F ......- Notice of Assignment of Lease
<PAGE>
SECURED REVOLVING CREDIT AGREEMENT ("this Agreement") dated as of
June 24, 1999 among THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP, a limited
partnership organized and existing under the laws of the State of Delaware
("Borrower"), UBS AG, STAMFORD BRANCH, as agent for the Banks (in such capacity,
together with its successors in such capacity, "Administrative Agent"), and UBS
AG, STAMFORD BRANCH (in its individual capacity and not as Administrative Agent,
"UBS") and the other lenders signatory hereto (UBS, the other lenders signatory
hereto and such other lenders who from time to time become Banks pursuant to
Section 3.07 or 12.05, each a "Bank" and collectively, the "Banks").
Borrower, as borrower, UBS and the other Banks signatory hereto, as
lenders, and UBS, as administrative agent, are parties to a Revolving Credit
Agreement (the "Prior Loan Agreement"), dated as of September 21, 1998, as
amended, providing for an unsecured revolving loan to Borrower in a principal
amount of up to a maximum of $200,000,000 (the "Prior Loan"). Pursuant to
Section 2.17 of the Prior Loan Agreement, Borrower is required, upon the
occurrence of certain circumstances, to provide certain security for the Prior
Loan and, in connection therewith, to enter into certain new or amended loan
documents and to deliver certain other items to Administrative Agent. Such
circumstances have occurred. To effectuate the modification of the Prior Loan
Agreement and to provide for the required security for the Prior Loan, the
parties hereto have entered into this Agreement, which provides for the making
of a new loan by the Banks, in the same maximum principal amount as the Prior
Loan, and Borrower is causing the Mortgagors (as hereinafter defined) and the
Land Trusts (as hereinafter defined) to grant the Mortgages (as hereinafter
defined). The initial advance of the new loan to be made pursuant to this
Agreement shall be used to repay all amounts owing under the Prior Loan. In
connection with the making of said new loan, the Prior Loan Agreement and the
related loan documents are being terminated. Accordingly, Borrower, each Bank
and Administrative Agent agree as follows:
ARTICLE I
DEFINITIONS; ETC.
SECTION 1.01 Definitions. As used in this Agreement the following terms
-----------
have the following meanings:
"Administrative Agent" has the meaning specified in the preamble.
"Administrative Agent's Office" means Administrative Agent's office
located at 299 Park Avenue, New York, NY 10171, or such other address in the
United States as Administrative Agent may designate by written notice to
Borrower and the Banks.
"Affiliate" means, with respect to any Person (the "first Person"),
any other Person (1) which directly or indirectly controls, or is controlled by,
or is under common control with the first Person or (2) 10% or more of the
beneficial interest in which is directly or indirectly owned or held by the
first Person. The term "control" means the possession, directly or indirectly,
of the power, alone, to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
<PAGE>
"Agency" means the Redevelopment Agency of the City of Santa
Barbara, California.
"Agency Note" means that certain Promissory Note in the principal
amount of $2,000,000 dated September 16, 1988 from the Agency to Santa Barbara
Associates, the predecessor-in-interest to Paseo Nuevo Associates.
"Agency Note Assignment" has the meaning specified in paragraph
(24) of Section 4.01.
"Agreement" means this Secured Revolving Credit Agreement, as
amended, supplemented or modified from time to time.
"Anchors" means, for each Property, those department store companies
which own, occupy and/or operate the related Anchor Stores.
"Anchor Stores" means, for each Property, those department stores
located on parcels contiguous to such Property which, together with the
Improvements on such Property, are being operated as an integrated shopping
center pursuant to the REA.
"Applicable Commitment Fee Rate" means the respective rates per
annum determined, at any time, based on the Property Debt Yield at the time, in
accordance with the table below (any change in the Property Debt Yield,
including any change pursuant to Section 2.05, causing it to move to a different
range on said table shall effect an immediate change (as of the date that
financial results are or are required to be reported (whichever is earlier)
pursuant to this Agreement for the calendar quarter for which Property Debt
Yield is being determined or, in the case of an adjustment pursuant to Section
2.05, as of the date specified in said Section) in the Applicable Commitment Fee
Rate).
- -------------------------------------------------------------------------------
Property Debt Yield Applicable Commitment
Fee Rate - secured (% per annum)
- -------------------------------------------------------------------------------
Greater than 15% 0.20%
- -------------------------------------------------------------------------------
Less than or equal to 15% 0.25%
- -------------------------------------------------------------------------------
"Applicable Lending Office" means, for each Bank and for its LIBOR
Loan or Base Rate Loan, as applicable, the lending office of such Bank (or of an
Affiliate of such Bank) designated as such on its signature page hereof or in
the applicable Assignment and Assumption Agreement, or such other office of such
Bank (or of an Affiliate of such Bank) as such Bank may from time to time
specify to Administrative Agent and Borrower as the office by which its LIBOR
Loan or Base Rate Loan, as applicable, is to be made and maintained.
2
<PAGE>
"Applicable Margin" means with respect to Base Rate Loans and LIBOR
Loans, the respective rates per annum determined, at any time, based on the
Property Debt Yield at the time, in accordance with the table below (any change
in the Property Debt Yield, including any change pursuant to Section 2.05,
causing it to move to a different range on said table shall effect an immediate
change (as of the date that financial results are or are required to be reported
(whichever is earlier) pursuant to this Agreement for the calendar quarter for
which Property Debt Yield is being determined or, in the case of an adjustment
pursuant to Section 2.05, as of the date specified in said Section) in the
Applicable Margin).
- -------------------------------------------------------------------------------
Property Debt Yield Applicable Margin for Applicable Margin
Base Rate Loans for LIBOR Loans
(% per annum) (% per annum)
- -------------------------------------------------------------------------------
Greater than 15% -0- 0.90
- -------------------------------------------------------------------------------
Less than or equal to 15% -0- 1.05
- -------------------------------------------------------------------------------
"Assignee" has the meaning specified in Section 12.05.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of EXHIBIT A, pursuant to which
a Bank assigns and an Assignee assumes rights and obligations in accordance with
Section 12.05.
"Authorization Letter" means a letter agreement executed by Borrower
in the form of EXHIBIT B.
"Bank" and "Banks" have the respective meanings specified in the
preamble.
"Bank Parties" means Administrative Agent and the Banks.
"Banking Day" means (1) any day on which commercial banks are not
authorized or required to close in New York City and (2) whenever such day
relates to a LIBOR Loan, an Interest Period with respect to a LIBOR Loan, or
notice with respect to a LIBOR Loan, a day on which dealings in Dollar deposits
are also carried out in the London interbank market and banks are open for
business in London.
"Base Rate" means, for any day, the higher of (1) the Federal Funds
Rate for such day plus 0.50% or (2) the Prime Rate for such day.
"Base Rate Loan" means all or any portion (as the context requires)
of a Bank's Loan which shall accrue interest at a rate determined in relation to
the Base Rate.
"Borrower's Accountants" means Deloitte & Touche, or such other
accounting firm(s) selected by Borrower and reasonably acceptable to the
Required Banks.
"Borrower" has the meaning specified in the preamble.
3
<PAGE>
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Capitalization Value" means, at any time, the sum of (1) Combined
EBITDA for the twelve (12)-month period ending with the most recently ended
calendar quarter, capitalized at an annual rate equal to 8.00%, (2) Borrower's
beneficial share of unrestricted Cash and Cash Equivalents (i. e., Cash and Cash
Equivalents that are not pledged or the use of which is not restricted by the
terms of any document or agreement) of Borrower and its Consolidated Businesses
and UJVs and (3) without duplication, the cost basis of properties of Borrower
under development. For the purposes of this definition, in no event shall (x)
properties under development constitute in excess of 15% of Capitalization Value
or (y) leasing commissions payable by third parties and/or management and
development fees contribute to greater than 5% of Capitalization Value.
"Cash and Cash Equivalents" means (1) cash, (2) marketable direct
obligations issued or unconditionally guaranteed by the United States government
and backed by the full faith and credit of the United States government, (3)
domestic and Eurodollar certificates of deposit and time deposits, bankers'
acceptances and floating rate certificates of deposit issued by any commercial
bank organized under the Laws of the United States, any state thereof or the
District of Columbia, any foreign bank, or its branches or agencies (fully
protected against currency fluctuations), which, at the time of acquisition, are
rated A-1 or better by S&P or P-1 or better by Moody's, provided that the
maturities thereof shall not exceed one (1) year from the date of acquisition
and (4) shares of Fidelity Institutional Money Market Fund or comparable money
market funds.
"Closing Date" means the date this Agreement has been executed by
all parties.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" means the Mortgaged Property under each Mortgage and
any other collateral now or hereafter given for the Loans.
"Combined EBITDA" means, for any period of time, (1) revenues less
operating costs (including general and administrative expenses) before interest,
depreciation and amortization and unusual items for Borrower and its
Consolidated Businesses (including, without limitation, non-recurring items such
as gains or losses from asset sales) and adjusted to eliminate the effects of
straight lining of rents plus (2) Borrower's beneficial interest in revenues
less operating costs (including general and administrative expenses) before
interest, depreciation and amortization and unusual items (after eliminating
appropriate intercompany amounts) (including, without limitation, non-recurring
items such as gains or losses from asset sales) and adjusted to eliminate the
effects of straight lining of rents applicable to each of the UJVs. For purposes
of this definition, gains or losses from peripheral land sales, to the extent
such gains or losses total less than $5,000,000 in any twelve (12)-month period,
shall be treated in accordance with the accounting principles reflected in
Borrower's form 10-K for 1997.
"Consolidated Businesses" means, collectively (1) each Affiliate of
Borrower, all of the equity interests of which are, or, under GAAP, are deemed
to be, owned by Borrower and
4
<PAGE>
(2) Taub-Co Management Inc., The Taubman Company Limited Partnership and their
respective Affiliates so long as more than 90% of the equity interests in the
entities referred to in this clause (2) are owned directly or indirectly by
Borrower.
"Consolidated Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money (which shall be deemed to include
obligations as lessee under Capital Leases), secured or unsecured, of Borrower
and all indebtedness and liability for borrowed money (which shall be deemed to
include obligations as lessee under Capital Leases), secured or unsecured,
attributable to Borrower's beneficial interest in its Consolidated Businesses,
including mortgage and other notes payable but excluding any indebtedness which
is margin indebtedness secured by cash and cash equivalent securities, as
reflected in the TRG Consolidated Financial Statements.
"Contingent Liabilities" means the sum of (1) those liabilities, as
determined in accordance with GAAP, set forth and quantified as contingent
liabilities in the notes to the TRG Consolidated Financial Statements and (2)
contingent liabilities, other than those described in the foregoing clause (1),
which represent direct payment guaranties of Borrower; provided, however, that
-------- -------
Contingent Liabilities shall exclude contingent liabilities which represent the
"Other Party's Share" of "Duplicated Obligations" (as such quoted terms are
hereinafter defined). "Duplicated Obligations" means, collectively, all those
payment guaranties in respect of Debt of UJVs for which Borrower and another
party are jointly and severally liable, where the other party is, in the sole
judgment of the Required Banks, capable of satisfying the Other Party's Share of
such obligation; and "Other Party's Share" means such other party's fractional
beneficial interest in the UJV in question.
"Continue", "Continuation" and "Continued" refer to the continuation
pursuant to Section 2.13 of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.
"Convert", "Conversion" and "Converted" refer to a conversion
pursuant to Section 2.13 of a Base Rate Loan into a LIBOR Loan or a LIBOR Loan
into a Base Rate Loan, each of which may be accompanied by the transfer by a
Bank (at its sole discretion) of all or a portion of its Loan from one
Applicable Lending Office to another.
"Debt" means (1) indebtedness or liability for borrowed money, or
for the deferred purchase price of property or services (including trade
obligations), (2) obligations as lessee under Capital Leases, (3) current
liabilities in respect of unfunded vested benefits under any Plan, (4)
obligations under letters of credit issued for the account of any Person, (5)
all obligations arising under bankers' or trade acceptance facilities, (6) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase any of the
items included in this definition, to provide funds for payment, to supply funds
to invest in any Person, or otherwise to assure a creditor against loss, (7) all
obligations secured by any Lien on property owned by the Person whose Debt is
being measured, whether or not the obligations have been assumed and (8) all
obligations under any agreement providing for contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described above in this definition.
5
<PAGE>
"Default" means any event which with the giving of notice or lapse
of time, or both, would become an Event of Default.
"Default Rate" means a rate per annum equal to (1) with respect to
Base Rate Loans, a variable rate 3% above the rate of interest then in effect
thereon (including the Applicable Margin) and (2) with respect to LIBOR Loans, a
fixed rate 3% above the rate(s) of interest in effect thereon (including the
Applicable Margin) at the time of Default until the end of the then current
Interest Period therefor and, thereafter, a variable rate 3% above the rate of
interest for a Base Rate Loan (including the Applicable Margin).
"Disposition" means a sale (whether by assignment, transfer or
Capital Lease) of an asset.
"Distributable Cash Flow" means Funds From Operations.
"Dollars" and the sign "$" mean lawful money of the United States
of America.
"Elect", "Election" and "Elected" refer to election, if any, by
Borrower pursuant to Section 2.13 to have all or a portion of an advance of the
Loans be outstanding as LIBOR Loans.
"Engineering Consultant" means Merritt & Harris or other firm
designated by Administrative Agent from time to time for any Property.
"Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.
"Environmental Law" means any Law relating to pollution or the
environment, including Laws relating to noise or to emissions, discharges,
releases or threatened releases of Hazardous Materials into the work place, the
community or the environment, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"Environmental Notice" means any written complaint, order, citation,
letter, inquiry, notice or other written communication from any Person (1)
affecting or relating to Borrower's or any Mortgagor's compliance with any
Environmental Law in connection with any activity or operations at any time
conducted by Borrower or any Mortgagor, (2) relating to the occurrence or
presence of or exposure to or possible or threatened or alleged occurrence or
presence of or exposure to Environmental Discharges or Hazardous Materials at
any of Borrower's or any Mortgagor's locations or facilities (including each of
the Properties), including, without limitation, (a) the existence of any
contamination or possible or threatened contamination at any such location or
facility and (b) remediation of any Environmental Discharge or Hazardous
Materials at any such location or facility or any part thereof or (3) relating
to any violation or alleged violation of any relevant Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including any rules and regulation promulgated
thereunder.
6
<PAGE>
"ERISA Affiliate" means any corporation or trade or business which
is a member of the same controlled group of organizations (within the meaning of
Section 414(b) of the Code) as Borrower or is under common control (within the
meaning of Section 414(c) of the Code) with Borrower or any Mortgagor.
"Event of Default" has the meaning specified in Section 9.01.
"Fairlane" means the parcel(s) of real property owned by Fairlane
Partnership located in Dearborn, Michigan, together with the Improvements
thereon.
"Fairlane Partnership" means Fairlane Town Center, a Michigan
co-partnership of which Borrower is the managing general partner and the owner,
directly or indirectly, of a 100% beneficial interest.
"Federal Funds Rate" means, for any day, the rate per annum
(expressed on a 360-day basis of calculation) equal to the weighted average of
the rates on overnight federal funds transactions as published by the Federal
Reserve Bank of New York for such day provided that (1) if such day is not a
Banking Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the immediately preceding Banking Day as so published on the
next succeeding Banking Day and (2) if no such rate is so published on such next
succeeding Banking Day, the Federal Funds Rate for such day shall be the average
of the rates quoted by three (3) Federal Funds brokers to Administrative Agent
on such day on such transactions.
"Fiscal Year" means each period from January 1 to December 31.
"Fixed Charges" means, for any period of time, the sum of (1)
Interest Expense, (2) dividends payable on preferred equity interests and (3)
all scheduled principal payments made or required to be made during such period
on Debt of Borrower and that attributable to Borrower's beneficial interest in
its Consolidated Business and UJVs, excluding, however, balloon payments of
principal due upon the stated maturity of any such Debt.
"Funds From Operations" means, for any period of time, net income of
Borrower and its Consolidated Businesses, as determined in accordance with GAAP,
excluding gains (or losses) from debt restructuring and sales of property and
without taking into account straight-lining of rents, plus depreciation related
to real estate and amortization, less amounts distributed by Borrower as
preferred distributions, and after adjustments to reflect Borrower's pro rata
share of UJVs (which will be calculated to reflect Funds From Operations on the
same basis). For purposes of this definition, gains or losses from peripheral
land sales, to the extent such gains or losses total less than $5,000,000 in any
twelve (12)-month period, shall be treated in accordance with the accounting
principles reflected in Borrower's form 10-K for 1997.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.13 (except for changes concurred in by Borrower's Accountants).
"Good Faith Contest" means the contest of an item if (1) the item is
diligently contested in good faith, and, if appropriate, by proceedings timely
instituted, (2) adequate
7
<PAGE>
reserves are established with respect to the contested item, (3) during the
period of such contest, the enforcement of any contested item is effectively
stayed and (4) the failure to pay or comply with the contested item during the
period of the contest is not likely to result in a Material Adverse Change.
"Governmental Approvals" means any authorization, consent, approval,
license, permit, certification, or exemption of, registration or filing with or
report or notice to, any Governmental Authority.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any relevant Environmental
Law, including asbestos fibers and friable asbestos, polychlorinated biphenyls,
and any petroleum or hydrocarbon-based products or derivatives.
"Improvements" means, for each Property, all improvements now or
hereafter located thereon, other than improvements owned by tenants or utility
companies.
"Indemnity" means, for each Property, an agreement from Borrower and
the applicable Mortgagor whereby, among other things, the Banks and
Administrative Agent are indemnified regarding Hazardous Materials.
"Initial Advance" means the first advance of proceeds of the
Loans.
"Interest Expense" means, for any period of time, the consolidated
interest expense (without deduction of consolidated interest income) of Borrower
and its Consolidated Businesses, including, without limitation or duplication
(or, to the extent not so included, with the addition of), (1) the portion of
any rental obligation in respect of any Capital Lease obligation allocable to
interest expense in accordance with GAAP, (2) the amortization of Debt
discounts, (3) any payments or receipts (other than up-front fees) with respect
to interest rate swap or similar agreements, (4) any dividends attributable to
any equity security which may be converted into a debt security of Borrower at
any time or is mandatorily redeemable for cash within twenty (20) years from its
initial issuance and (5) the interest expense and items listed in clauses (1)
through (4) above applicable to each of the UJVs multiplied by Borrower's
respective beneficial interests in the UJVs (it being understood that the items
listed in clauses (1), (2) and (3) above shall be considered part of Interest
Expense even if, due to a change in GAAP, such items would no longer be
considered interest expense under GAAP).
"Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date the same is advanced, converted from a Base Rate Loan or
Continued, as the case may be, and ending, as Borrower may select pursuant to
Section 2.06, on the numerically corresponding day in the first, second or third
calendar month thereafter, provided that, in any case, each such Interest Period
which commences on the last Banking Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Banking Day of the appropriate calendar
month.
8
<PAGE>
"La Cumbre" means the parcel(s) of real property, a leasehold
interest in which is owned by La Cumbre Associates, located in Santa Barbara,
California, together with the Improvements thereon.
"La Cumbre Associates" means La Cumbre Shopping Center Associates, a
California general partnership of which Borrower is the managing general partner
and the owner, directly or indirectly, of a 100% beneficial interest.
"Land Trust" means, with respect to Regency Square, each of (i) the
trust created pursuant to Land Trust Agreement (Ground Landlord), dated as of
January 28, 1990, between Home Beneficial Life Insurance Company and Sovran
Bank, N.A., as trustee ("Sovran") and (ii) the trust created pursuant to Land
Trust Agreement (Ground Tenant), dated as of January 29, 1990, between
Quioccasin Limited Partnership and Sovran, under each of which trusts Regency
Square Associates is currently the sole beneficiary and First Union National
Bank is currently the trustee.
"Land Trust Assignment" means that certain Collateral Assignment
under Land Trusts, dated as of the date hereof, from Regency Square Associates
to Administrative Agent to secure the Loans, with regard to Regency Square
Associates' respective interests in the Land Trusts.
"Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, or rule of common law, now or hereafter in
effect, and any judicial or administrative interpretation thereof by a
Governmental Authority or otherwise, including any judicial or administrative
order, consent decree or judgment.
"Letter of Credit" has the meaning specified in Section 2.17(a).
"Leverage Ratio" means the ratio, expressed as a percentage, of
Total Outstanding Indebtedness to Capitalization Value.
"LIBOR Base Rate" means, with respect to any Interest Period
therefor, the rate per annum quoted at approximately 11:00 a.m., New York time,
by UBS two (2) Banking Days prior to the first day of such Interest Period for
the offering to leading banks in the London interbank market of Dollar deposits
in immediately available funds, for a period, and in an amount, comparable to
such Interest Period and principal amount of the LIBOR Loan in question
outstanding during such Interest Period.
"LIBOR Interest Rate" means, for any LIBOR Loan, a rate per annum
determined by Administrative Agent to be equal to the quotient of (1) the LIBOR
Base Rate for such LIBOR Loan for the Interest Period therefor divided by (2)
one minus the LIBOR Reserve Requirement for such LIBOR Loan for such Interest
Period.
"LIBOR Loan" means all or any portion (as the context requires) of
any Bank's Loan which shall accrue interest at rate(s) determined in relation to
LIBOR Interest Rate(s).
"LIBOR Reserve Requirement" means, for any LIBOR Loan, the rate at
which reserves (including any marginal, supplemental or emergency reserves) are
actually required to be maintained during the Interest Period for such LIBOR
Loan under Regulation D by the applicable Bank against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting
9
<PAGE>
the effect of the foregoing, the LIBOR Reserve Requirement shall also reflect
any other reserves actually required to be maintained by any Bank by reason of
any Regulatory Change against (1) any category of liabilities which includes
deposits by reference to which the LIBOR Base Rate is to be determined as
provided in the definition of "LIBOR Base Rate" in this Section 1.01 or (2) any
category of extensions of credit or other assets which include loans the
interest rate on which is determined on the basis of rates referred to in said
definition of "LIBOR Base Rate".
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment for collateral purposes, deposit arrangement, lien
(statutory or other), or other security agreement or charge of any kind or
nature whatsoever of any third party (excluding any right of setoff but
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, and the filing of any financing statement under the
Uniform Commercial Code or comparable Law of any jurisdiction to evidence any of
the foregoing).
"Loan" and "Loans" have the respective meanings specified in
Section 2.01.
"Loan Commitment" means, with respect to each Bank, the obligation
to make a Loan in the principal amount set forth below or in the applicable
Assignment and Assumption Agreement, as such amount may be modified from time to
time in accordance with the provisions of Section 2.11, 3.07 or 12.05:
Bank Loan Commitment
---- ---------------
UBS $35,000,000
Comerica Bank 25,000,000
PNC Bank, National Association 25,000,000
Fleet National Bank 25,000,000
The Chase Manhattan Bank 25,000,000
Bayerische Hypo- und Vereinsbank AG, New York 20,000,000
Branch
Commerzbank Aktiengesellschaft, Chicago Branch 15,000,000
Dresdner Bank AG, New York and Grand Cayman 15,000,000
Branches
Bayerische Landesbank 7,500,000
Landesbank Hessen-Thuringen Girozentrale 7,500,000
------------
$200,000,000
============
"Loan Documents" means this Agreement, the Notes, the Mortgage and
related Uniform Commercial Code financing statements for each Property, the
Indemnity for each Property, the Land Trust Assignment and related Uniform
Commercial Code financing
10
<PAGE>
statements, the Agency Note Assignment and related Uniform Commercial Code
financing statements and the Solvency Certificates.
"Major Lease" means a lease demising 5,000 square feet or more of
gross leasable area of the Improvements on any Property.
"Material Adverse Change" means either (1) a material adverse change
in the status of the business, results of operations, financial condition,
property or prospects of Borrower or any Mortgagor or (2) any event or
occurrence of whatever nature which is likely to (x) have a material adverse
effect on the ability of Borrower or any Mortgagor to perform its obligations
under the Loan Documents or (y) create, in the sole and absolute judgment
(reasonably exercised) of Administrative Agent, a material risk of sale or
forfeiture of any of the Mortgaged Property (other than an immaterial portion
thereof) under any Mortgage or otherwise materially impair any of the Mortgaged
Property under any Mortgage or the Banks' rights therein.
"Maturity Date" means September 21, 2001.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means, for each Property, the Mortgage (or Deed of
Trust), Assignment of Leases and Rents and Security Agreement in respect
thereof, dated the date hereof, from the applicable Mortgagor (and in the case
of Regency Square, the Land Trusts) for the benefit of Administrative Agent, as
agent for the Banks, to secure the payment and performance of the Obligations.
The principal amount of each Mortgage is $200,000,000, except for the Mortgage
of Paseo Nuevo, which is in the principal amount of $54,100,000.
"Mortgaged Property" means, for each Property, the applicable
Mortgagor's/Land Trust's interest in the Property, the Improvements thereon and
all other property constituting the "Mortgaged Property", as said quoted term is
defined in the applicable Mortgage.
"Mortgagor" means, with respect to Fairlane, Fairlane Partnership;
with respect to La Cumbre, La Cumbre Associates; with respect to Paseo Nuevo,
Paseo Nuevo Associates; and with respect to Regency Square, Regency Square
Associates.
"Mortgagor Financial Statement" means, for each Mortgagor, a balance
sheet and related statement of operations, accumulated deficiency in assets and
cash flows, and footnotes thereto, of such Mortgagor, prepared in accordance
with GAAP.
"Multiemployer Plan" means a Plan defined as such in Section 3(37)
of ERISA to which contributions have been made by Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Net Worth" means the excess of Capitalization Value over Total
Outstanding Indebtedness.
"Note" and "Notes" have the respective meanings specified in
Section 2.09.
11
<PAGE>
"Obligations" means each and every obligation, promise, covenant and
agreement of Borrower, now or hereafter existing, contained in this Agreement,
the Notes and any of the other Loan Documents, whether for principal,
reimbursement obligations, interest, fees, expenses, late charges, indemnities
or otherwise, and any amendments, supplements, extensions, renewals or
replacements of any of said documents, including but not limited to, all
indebtedness, obligations and liabilities (and all increases or additions
thereto) of Borrower or any Mortgagor or Land Trust to Administrative Agent or
any Bank now existing or hereafter incurred under or arising out of or in
connection with this Agreement, the Notes, the other Loan Documents, and any
documents or instruments executed in connection therewith; in each case whether
direct or indirect, joint or several, absolute or contingent, liquidated or
unliquidated, now or hereafter existing, renewed or restructured, whether or not
from time to time decreased or extinguished and later increased, created or
incurred, and including all indebtedness of Borrower or any Mortgagor or Land
Trust under any instrument now or hereafter evidencing or securing any of the
foregoing.
"Parent" means, with respect to any Bank, any Person controlling
such Bank.
"Paseo Nuevo" means the parcel(s) of real property, a leasehold
interest in which is owned by Paseo Nuevo Associates, located in Santa Barbara,
California, together with the Improvements thereon.
"Paseo Nuevo Associates" means Paseo Nuevo Associates, a California
general partnership of which Borrower is the managing general partner and the
owner, directly or indirectly, of a 100% beneficial interest.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower, any Mortgagor
or any ERISA Affiliate and which is covered by Title IV of ERISA or to which
Section 412 of the Code applies.
"Premises Documents" means, for each Property, the REA for such
Property and the other "Premises Documents," as such term is defined in the
Mortgage for such Property.
"presence", when used in connection with any Environmental Discharge
or Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.
"Prime Rate" means that rate of interest from time to time announced
by UBS at its Principal Office as its prime commercial lending rate.
12
<PAGE>
"Principal Office" means the principal office of UBS in Stamford,
Connecticut, presently located at 677 Washington Boulevard.
"Prior Loan" and "Prior Loan Agreement" have the respective meanings
specified in the preamble.
"Pro Rata Share" means, for purposes of this Agreement and with
respect to each Bank, a fraction, the numerator of which is the amount of such
Bank's Loan Commitment and the denominator of which is the Total Loan
Commitment.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
"Property" means, respectively, each of Fairlane, La Cumbre,
Paseo Nuevo and Regency Square.
"Property Debt Yield" means, for any calendar quarter, the ratio
(expressed as a percentage) of (1) Property EBITDA for the twelve (12)-month
period ending with such calendar quarter to (2) the outstanding principal
balance under the Notes plus the total outstanding amount of Letters of Credit
as of the end of such calendar quarter.
"Property EBITDA" means that portion of Combined EBITDA
attributable to the Properties.
"REA" means, for each Property, any reciprocal easement and
operating or similar agreement by and among the Mortgagor or Land Trust and the
Anchors (together with any agreements supplemental or incidental thereto)
pursuant to which the Improvements and the related Anchor Stores are being
operated as an integrated regional shopping center. The REA for each Property is
more particularly described in the Mortgage for such Property.
"Regency Square" means the parcel(s) of real property, located in
Richmond, Virginia, the legal fee interest in which is held by one of the Land
Trusts, a legal leasehold interest in a portion of which is owned by the other
Land Trust, and the beneficial interest in which is owned by Regency Square
Associates, together with the Improvements thereon.
"Regency Square Associates" means TRG-Regency Square Associates, a
Virginia general partnership of which Borrower is the managing general partner
and the owner, directly or indirectly, of a 100% beneficial interest.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time, or any similar Law from time to time in effect.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Bank, any change
after the date of this Agreement in United States federal, state, municipal or
foreign laws or regulations
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(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
such Bank of or under any United States, federal, state, municipal or foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA.
"Required Banks" means at any time the Banks having Loan Commitments
aggregating at least 66-2/3% of the aggregate amount of all Loan Commitments;
provided, however, that during the existence of an Event of Default, the
- -------- -------
"Required Banks" shall be the Banks holding at least 66-2/3% of the then
aggregate unpaid principal amount of the Loans.
"Restricted Payment" has the meaning specified in Section 8.01(5).
"Secured Indebtedness" means that portion of Total Outstanding
Indebtedness that is secured.
"SFGLA" means square feet of gross leaseable area.
"Solvency Certificate" means a certificate in substantially the form
of EXHIBIT E, to be delivered by Borrower and each Mortgagor pursuant to the
terms of this Agreement.
"Solvent" means, when used with respect to any Person, that (1) the
fair value of the property of such Person, on a going concern basis, is greater
than the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person, (2) the present fair saleable value of the assets
of such Person, on a going concern basis, is not less than the amount that will
be required to pay the probable liabilities of such Person on its debts as they
become absolute and matured, (3) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, (4) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged and (5) such Person has sufficient
resources, provided that such resources are prudently utilized, to satisfy all
of such Person's obligations. Contingent liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies.
"Supplemental Fee Letter" means that certain letter agreement, dated
the date hereof, between UBS and Borrower.
"TCI" means Taubman Centers, Inc., a Michigan corporation,
Borrower's managing general partner.
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"TCI Financial Statements" means the consolidated balance sheet and
related consolidated statement of operations, accumulated deficiency in assets
and cash flows, and footnotes thereto, of TCI, prepared in accordance with GAAP.
"Title Insurer" means, for each Property, the issuer(s) of the title
insurance policy(ies) insuring the Mortgage thereon.
"Total Loan Commitment" means the sum of the Loan Commitments of
all the Banks.
"Total Outstanding Indebtedness" means the sum, without duplication,
of (1) Consolidated Outstanding Indebtedness, (2) TRG's Share of UJV Combined
Outstanding Indebtedness and (3) Contingent Liabilities.
"TRG Consolidated Financial Statements" means the consolidated
balance sheet and related consolidated statement of operations, accumulated
deficiency in assets and cash flows, and footnotes thereto, of Borrower,
prepared in accordance with GAAP.
"TRG's Share of UJV Combined Outstanding Indebtedness" means the sum
of the indebtedness of each of the UJVs contributing to UJV Combined Outstanding
Indebtedness multiplied by Borrower's respective beneficial interests in each
such UJV.
"UBS" has the meaning specified in the preamble.
"UJV Combined Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money (which shall be deemed to include
obligations as lessee under Capital Leases), secured or unsecured, of the UJVs,
including mortgage and other notes payable but excluding any indebtedness which
is margin indebtedness secured by cash and cash equivalent securities, as
reflected in the balance sheets of each of the UJVs, prepared in accordance with
GAAP.
"UJVs" means the unconsolidated joint ventures in which Borrower
owns a beneficial interest and which are accounted for under the equity method
in the TRG Consolidated Financial Statements.
SECTION 1.02 Accounting Terms. All accounting terms not specifically
----------------
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
SECTION 1.03 Computation of Time Periods. Except as otherwise provided
---------------------------
herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
SECTION 1.04 Rules of Construction. Except as otherwise provided or
---------------------
indicated, when used in this Agreement (1) "or" is not exclusive, (2) a
reference to a Law includes any amendment or modification to such Law, (3) a
reference to a Person includes its permitted successors and permitted assigns,
(4) all references to the singular shall include the
15
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plural and vice versa, (5) a reference to an agreement, instrument or document
---- -----
shall include such agreement, instrument or document as the same may be amended,
modified or supplemented from time to time in accordance with its terms and as
permitted by the Loan Documents, (6) all references to Articles, Sections,
Exhibits or Schedules shall be to Articles and Sections of, and Exhibits and
Schedules to, this Agreement, (7) "hereunder", "herein", "hereof" and the like
refer to this Agreement as a whole and (8) all Exhibits and Schedules to this
Agreement shall be incorporated into this Agreement.
ARTICLE II
THE LOANS
SECTION 2.01 The Loans. Subject to the terms and conditions of this
---------
Agreement, each of the Banks severally agrees to make a loan to Borrower (each
such loan by a Bank, a "Loan"; such loans, collectively, the "Loans") pursuant
to which each Bank shall from time to time advance and re-advance to Borrower an
amount equal to the excess of the amount of such Bank's Loan Commitment over the
amount of all previous advances made by such Bank under its Loan Commitment
which remain unpaid. For purposes of the immediately preceding sentence, a
Bank's Pro Rata Share of the amount of outstanding Letters of Credit shall be
deemed to be advanced. Within the limits set forth herein, Borrower may borrow
from time to time under this Section 2.01 and prepay from time to time pursuant
to Section 2.10 (subject, however, to the restrictions on prepayment set forth
in such Section) and thereafter re-borrow pursuant to this Section 2.01.
The Loans may be outstanding as (1) Base Rate Loans, (2) LIBOR Loans
or (3) a combination of the foregoing, as Borrower shall elect and notify
Administrative Agent in accordance with Section 2.15. The LIBOR Loan and Base
Rate Loan of each Bank shall be maintained at such Bank's Applicable Lending
Office for its LIBOR Loan and Base Rate Loan, respectively.
The obligations of the Banks under this Agreement are several, and
no Bank shall be responsible for the failure of any other Bank to make any
advance of a Loan to be made by such other Bank. However, the failure of any
Bank to make any advance of the Loan to be made by it hereunder on the date
specified therefor shall not relieve any other Bank of its obligation to make
any advance of its Loan specified hereby to be made on such date.
SECTION 2.02 Purpose. Borrower shall use the proceeds of the Loans for
-------
general partnership purposes of Borrower and its Consolidated Businesses and
UJVs, including costs incurred in connection with acquisitions. All or part of
the Initial Advance shall be used to repay all sums owing under the Prior Loan.
In no event shall proceeds of the Loans be used for any illegal purpose or for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
"margin stock" within the meaning of Regulation U.
SECTION 2.03 Advances, Generally. The Initial Advance shall be made
---------------------
upon satisfaction of the conditions set forth in Section 4.01. Subsequent
advances shall be made no more frequently than weekly upon satisfaction of the
conditions set forth in Section 4.02. The amount of each advance subsequent to
the Initial Advance shall be in the minimum amount of
16
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$2,000,000 (unless less than $2,000,000 is available for disbursement pursuant
to the terms hereof at the time of any subsequent advance, in which case the
amount of such subsequent advance shall be equal to such remaining availability)
and in integral multiples of $100,000 above such amount.
SECTION 2.04 Procedures for Advances. Borrower shall submit to
---------------------------
Administrative Agent a request for each advance hereunder, stating the amount
requested and certifying the purpose for which such advance is to be used, no
later than 10:00 a.m. (New York time) on the date three (3) Banking Days prior
to the date the advance is to be made. Administrative Agent, upon its receipt
and approval of the requisite documents for the advance, will so notify the
Banks either by telephone or by facsimile. Not later than 10:00 a.m. (New York
time) on the date of each advance, each Bank shall, through its Applicable
Lending Office and subject to the conditions of this Agreement, make the amount
to be advanced by it on such day available to Administrative Agent, at
Administrative Agent's Office and in immediately available funds for the account
of Borrower. The amount so received by Administrative Agent shall, subject to
the conditions of this Agreement, be made available to Borrower, in immediately
available funds, by Administrative Agent's crediting an account of Borrower
designated by Borrower and maintained with Administrative Agent at
Administrative Agent's Office.
SECTION 2.05 Additional Conditions to Advances. Each advance of the
---------------------------------
Loans shall be subject, in addition to the other limitations and conditions set
forth herein, to, at Administrative Agent's request, Administrative Agent's
receipt of a certificate, of the sort required by paragraph (3)(b) of Section
6.09, which shall demonstrate Borrower's compliance, as of the end of the most
recently ended calendar quarter for which financial results are required
hereunder to have been reported by Borrower (and taking into account pro-forma
adjustments for all acquisitions and Dispositions subsequent to the end of such
quarter required to be reported pursuant to paragraph (7) of Section 6.09), with
all covenants enumerated in said paragraph (3)(b), assuming that the amount that
will be outstanding under the Loans following the making of the advance that is
being requested was outstanding as of the end of such most recently ended
calendar quarter.
For purposes of the definitions of the "Applicable Commitment Fee
Rate" and "Applicable Margin" in Section 1.01, the Property Debt Yield shall be
adjusted in accordance with the foregoing covenant compliance calculations as of
the date of each advance of the Loans and upon each acquisition and Disposition
required to be reported pursuant to paragraph (7) of Section 6.09.
SECTION 2.06 Interest Periods; Renewals. In the case of the LIBOR Loans,
----------------
Borrower shall select an Interest Period of any duration in accordance with the
definition of Interest Period in Section 1.01, subject to the following
limitations: (1) no Interest Period may extend beyond the Maturity Date, (2) if
an Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless such Banking Day would
fall in the next calendar month, in which event such Interest Period shall end
on the immediately preceding Banking Day and (3) only five (5) discrete segments
of a Bank's Loan bearing interest at a LIBOR Interest Rate, for a designated
Interest Period, pursuant to a particular Election, Conversion or Continuation,
may be outstanding at any one time (each such
17
<PAGE>
segment of each Bank's Loan corresponding to a proportionate segment of each of
the other Banks' Loans).
Upon notice to Administrative Agent as provided in Section 2.15,
Borrower may Continue any LIBOR Loan on the last day of the Interest Period of
the same or different duration in accordance with the limitations provided
above. If Borrower shall fail to give notice to Administrative Agent of such a
Continuation, such LIBOR Loan shall automatically become a Base Rate Loan on the
last day of the current Interest Period.
SECTION 2.07 Interest. Borrower shall pay interest to Administrative
--------
Agent for the account of the applicable Bank on the outstanding and unpaid
principal amount of the Loans, at a rate per annum as follows: (1) for Base Rate
Loans at a rate equal to the Base Rate plus the Applicable Margin and (2) for
LIBOR Loans at a rate equal to the applicable LIBOR Interest Rate plus the
Applicable Margin. Any principal amount not paid when due (when scheduled, at
acceleration or otherwise) shall bear interest thereafter, payable on demand, at
the Default Rate.
The interest rate on Base Rate Loans shall change when the Base Rate
changes. Interest on Base Rate Loans and LIBOR Loans shall not exceed the
maximum amount permitted under applicable law. Interest shall be calculated for
the actual number of days elapsed on the basis of, in the case of Base Rate
Loans and LIBOR Loans, three hundred sixty (360) days.
Accrued interest shall be due and payable in arrears upon and with
respect to any prepayment of principal and on the first Banking Day of each
calendar month; provided, however, that interest accruing at the Default Rate
-------- -------
shall be due and payable on demand.
SECTION 2.08 Fees. (a) Borrower shall during the term of the Loans,
----
pay to Administrative Agent for the account of each Bank a commitment fee
computed on the daily unused Loan Commitment of such Bank (it being understood
that the amount of outstanding Letters of Credit shall be considered "used" for
this purpose), at a rate per annum equal to the daily Applicable Commitment Fee
Rate, calculated on the basis of a year of three hundred sixty (360) days for
the actual number of days elapsed. The accrued commitment fees shall be due and
payable in arrears on the first Banking Day of each month after the Closing
Date, and upon the Maturity Date or earlier termination of the Loan Commitments.
(b) Borrower shall pay to Administrative Agent, for the accounts of
the parties specified therein, the fees provided for, on the dates specified, in
the Supplemental Fee Letter.
SECTION 2.09 Notes. The Loan made by each Bank under this Agreement
-----
shall be evidenced by, and repaid with interest in accordance with, a promissory
note of Borrower in the form of EXHIBIT C duly completed and executed by
Borrower, in a principal amount equal to such Bank's Loan Commitment, payable to
such Bank for the account of its Applicable Lending Office (each such note, as
the same may hereafter be amended, modified, extended, severed, assigned,
substituted, renewed or restated from time to time, including any substitute
note pursuant to Section 3.07 or 12.05, a "Note"; all such notes, collectively,
the "Notes"). The Notes shall mature, and all outstanding principal and accrued
interest and other sums thereunder shall be paid in full, on the Maturity Date,
as the same may be accelerated.
18
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Each Bank is hereby authorized by Borrower to endorse on the
schedule attached to the Notes held by it, the amount of each advance, and each
payment of principal received by such Bank for the account of its Applicable
Lending Office(s) on account of its Loan, which endorsement shall, in the
absence of manifest error, be conclusive as to the outstanding balance of the
Loan made by such Bank. The failure by any Bank to make such notations with
respect to its Loan or each advance or payment shall not limit or otherwise
affect the obligations of Borrower under this Agreement or the Notes.
SECTION 2.10 Prepayments. Borrower may, upon at least one (1) Banking
-----------
Day's notice to Administrative Agent in the case of the Base Rate Loans, and at
least two (2) Banking Days' notice to Administrative Agent in the case of LIBOR
Loans, prepay the Loans, provided that (1) any partial prepayment under this
Section shall be in integral multiples of $1,000,000, (2) a LIBOR Loan may be
prepaid only on the last day of the Applicable Interest Period for such LIBOR
Loan and (3) each prepayment under this Section shall include all interest
accrued on the amount of principal prepaid through the date of prepayment.
SECTION 2.11 Termination of Commitments. (a) At any time, Borrower shall
--------------------------
have the right, without premium or penalty, to terminate the unused Loan
Commitments, in whole or in part, from time to time, provided that (1) Borrower
shall give notice of each such termination to Administrative Agent, specifying
the amount of the termination, no later then 10:00 a.m. (New York time) on the
date which is fifteen (15) days prior to the effectiveness of such termination,
(2) the Loan Commitments of each of the Banks must be terminated ratably and
simultaneously with those of the other Banks and (3) each partial termination of
the Loan Commitments as a whole (and corresponding reduction of the Total Loan
Commitment) shall be in an integral multiple of $1,000,000.
(b) The Loan Commitments, to the extent terminated, may not be
reinstated.
SECTION 2.12 Method of Payment. Borrower shall make each payment under
------------------
this Agreement and under the Notes not later than 11:00 a.m. (New York time) on
the date when due in Dollars to Administrative Agent at Administrative Agent's
Office in immediately available funds. Administrative Agent will thereafter, on
the day of its receipt of each such payment, cause to be distributed to each
Bank (1) such Bank's appropriate share (based upon the respective outstanding
principal amounts and rate(s) of interest under the Notes of the Banks) of the
payments of principal and interest in like funds for the account of such Bank's
Applicable Lending Office and (2) fees payable to such Bank in accordance with
the terms of this Agreement. Borrower hereby authorizes Administrative Agent and
the Banks, if and to the extent payment by Borrower is not made when due under
this Agreement or under the Notes, to charge from time to time against any
account Borrower maintains with Administrative Agent or any Bank any amount so
due to Administrative Agent and/or the Banks.
Except to the extent provided in this Agreement, whenever any
payment to be made under this Agreement or under the Notes is due on any day
other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of the payment of interest and other fees, as the case may be.
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SECTION 2.13 Elections, Conversions or Continuation of Loans. Subject
--------------------------------------------------
to the provisions of Article III and Sections 2.06 and 2.14, Borrower shall
have the right to Elect to have all or a portion of any advance of the Loans
be LIBOR Loans, to Convert Base Rate Loans into LIBOR Loans, to Convert LIBOR
Loans into Base Rate Loans, or to Continue LIBOR Loans as LIBOR Loans, at any
time or from time to time, provided that (1) Borrower shall give Administrative
Agent notice of each such Election, Conversion or Continuation as provided in
Section 2.15 and (2) a LIBOR Loan may be Converted or Continued only on the last
day of the applicable Interest Period for such LIBOR Loan. Except as otherwise
provided in this Agreement, each Election, Continuation and Conversion shall be
applicable to each Bank's Loan in accordance with its Pro Rata Share.
SECTION 2.14 Minimum Amounts. With respect to the Loans as a whole, each
---------------
Election and each Conversion shall be in an amount at least equal to $2,000,000
and in integral multiples of $100,000.
SECTION 2.15 Certain Notices Regarding Elections, Conversions and
-----------------------------------------------------------
Continuations of Loans. Notices by Borrower to Administrative Agent of
- ------------------------
Elections, Conversions and Continuations of LIBOR Loans shall be irrevocable and
shall be effective only if received by Administrative Agent not later than 10:00
a.m. (New York time) on the number of Banking Days prior to the date of the
relevant Election, Conversion or Continuation specified below:
Number of
Notice Banking Days Prior
------ ------------------
Conversions into Base Rate Loans two (2)
Election of, Conversions into or Continuations as, LIBOR Loans three (3)
Promptly following its receipt of any such notice, Administrative Agent shall so
advise the Banks either by telephone or by facsimile. Each such notice of
Election shall specify the portion of the amount of the advance that is to be
LIBOR Loans (subject to Section 2.14) and the duration of the Interest Period
applicable thereto (subject to Section 2.06); each such notice of Conversion
shall specify the LIBOR Loans or Base Rate Loans to be Converted; and each such
notice of Conversion or Continuation shall specify the date of Conversion or
Continuation (which shall be a Banking Day), the amount thereof (subject to
Section 2.14) and the duration of the Interest Period applicable thereto
(subject to Section 2.06). In the event that Borrower fails to Elect to have any
portion of an advance be LIBOR Loans, the entire amount of such advance shall
constitute Base Rate Loans. In the event that Borrower fails to Continue LIBOR
Loans within the time period and as otherwise provided in this Section, such
LIBOR Loans will be automatically Converted into Base Rate Loans on the last day
of the then current applicable Interest Period for such LIBOR Loans.
SECTION 2.16 Late Payment Premium. Borrower shall, at Administrative
----------------------
Agent's option, pay to Administrative Agent for the account of the Banks a late
payment premium in the amount of 4% of any payments of interest under the Loans
made more than fifteen (15) days after the due date thereof, which shall be due
with any such late payment.
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SECTION 2.17 Letters of Credit. (a) Borrower may request, in lieu of
-------------------
advances of proceeds of the Loans, that the Administrative Agent issue
unconditional, irrevocable standby letters of credit (each, a "Letter of
Credit") for the account of Borrower, payable by sight drafts, for such
beneficiaries and with such other terms as Borrower shall specify.
(b) The amount of any such Letter of Credit shall not exceed the
lesser of (1) $50,000,000 less the amount of all other Letters of Credit then
issued and outstanding or (2) the amount available for disbursement to Borrower
hereunder, it being understood that the amount of each Letter of Credit issued
and outstanding shall effect a reduction, by an equal amount, of the amount
available for disbursement hereunder as provided in Section 2.01.
(c) The amount of each Letter of Credit shall be further subject to
the limitations applicable to amounts of advances set forth in Section 2.03 and
the procedures for the issuance of each Letter of Credit shall be the same as
the procedures applicable to the making of advances as set forth in the first
sentence of Section 2.04. Upon the Administrative Agent's receipt of a request
for the issuance of, and upon its issuance of, each Letter of Credit, it shall
promptly notify each of the Banks.
(d) The Administrative Agent's issuance of each Letter of Credit
shall be subject to Borrower's satisfaction of all conditions precedent to its
entitlement to an advance of proceeds of the Loans.
(e) Each Letter of Credit shall expire no later than the earlier of
the Maturity Date or one (1) year after the date of its issuance.
(f) In connection with, and as a further condition to the issuance
of, each Letter of Credit, Borrower shall execute and deliver to the
Administrative Agent an application for the Letter of Credit on the
Administrative Agent's standard form therefor, together with such other
documents, opinions and assurances as the Administrative Agent shall reasonably
require.
(g) In connection with each Letter of Credit, Borrower hereby
covenants to pay to the Administrative Agent the following fees, each payable
quarterly in arrears (on the first Banking Day of each calendar quarter
following the issuance of the Letter of Credit): (i) a fee, payable to the
Administrative Agent for the account of the Banks, computed daily on the amount
of the Letter of Credit issued and outstanding at a rate per annum equal to the
"Banks' L/C Fee Rate" (as hereinafter defined) and (ii) a fee, payable to the
Administrative Agent for its own account, computed daily on the amount of the
Letter of Credit issued and outstanding at a rate per annum of 0.125%. For
purposes of this Agreement, the "Banks' L/C Fee Rate" shall mean, at any time, a
rate per annum equal to the Applicable Margin for LIBOR Loans. It is understood
and agreed that the last installment of the fees provided for in this paragraph
(g) with respect to any particular Letter of Credit shall be due and payable on
the first day of the calendar quarter following the return, undrawn, or
cancellation of such Letter of Credit.
(h) The parties hereto acknowledge and agree that, immediately upon
notice from the Administrative Agent of any drawing under a Letter of Credit,
each Bank shall, notwithstanding the existence of a Default or Event of Default
or the non-satisfaction of any conditions precedent to the making of an advance
of the Loans, advance proceeds of its Loan, in
21
<PAGE>
an amount equal to its Pro Rata Share of such drawing, which advance shall be
made to the Administrative Agent to reimburse the Administrative Agent, for its
own account, for such drawing. Each of the Banks further acknowledges that its
obligation to fund its Pro Rata Share of drawings under Letters of Credit as
aforesaid shall survive the Banks' termination of this Agreement or enforcement
of remedies hereunder or under the other Loan Documents.
(i) Borrower agrees, upon the occurrence of an Event of Default and
at the request of the Administrative Agent, (i) to deposit with the
Administrative Agent cash collateral in the amount of all the outstanding
Letters of Credit, which cash collateral shall be held by the Administrative
Agent as security for Borrower's obligations in connection with the Letters of
Credit and (ii) to execute and deliver to the Administrative Agent such
documents as the Administrative Agent requests to confirm and perfect the
assignment of such cash collateral to the Administrative Agent.
ARTICLE III
YIELD PROTECTION; ILLEGALITY; ETC.
SECTION 3.01 Additional Costs. Borrower shall pay directly to each Bank
----------------
from time to time on demand such amounts as such Bank may determine to be
necessary to compensate it for any increased costs which such Bank determines
are attributable to its making or maintaining a LIBOR Loan, or its obligation to
make or maintain a LIBOR Loan, or its obligation to Convert a Base Rate Loan to
a LIBOR Loan hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of its LIBOR Loan or such obligations (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs"), in each case resulting from any Regulatory Change which:
(1) changes the basis of taxation of any amounts payable to such
Bank under this Agreement or the Notes in respect of any such LIBOR Loan
(other than changes in the rate of general corporate, franchise, branch
profit, net income or other income tax imposed on such Bank or its
Applicable Lending Office by the jurisdiction in which such Bank has its
principal office or such Applicable Lending Office); or
(2) (other than to the extent the LIBOR Reserve Requirement is
taken into account in determining the LIBOR Rate at the commencement of
the applicable Interest Period) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital ratio
or similar requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, such Bank
(including any LIBOR Loan or any deposits referred to in the definition of
"LIBOR Interest Rate" in Section 1.01), or any commitment of such Bank
(including such Bank's Loan Commitment hereunder); or
(3) imposes any other condition affecting this Agreement or the
Notes (or any of such extensions of credit or liabilities).
Notwithstanding the foregoing, in the event that any Bank determines that it
shall incur Additional Costs in maintaining a LIBOR Loan, such Bank shall
provide written notice thereof
22
<PAGE>
to Borrower (with a copy to Administrative Agent), which notice shall include
the dollar amount of the Additional Costs, and Borrower shall have the option,
which option must be exercised within five (5) Banking Days of Borrower's
receipt of such notice, to prepay such LIBOR Loan or to Convert such LIBOR Loan
into a Base Rate Loan, subject, however, to the provisions of Section 3.05.
Without limiting the effect of the provisions of the first paragraph
of this Section, in the event that, by reason of any Regulatory Change, any Bank
either (1) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits of other liabilities of
such Bank which includes deposits by reference to which the LIBOR Interest Rate
is determined as provided in this Agreement or a category of extensions of
credit or other assets of such Bank which includes loans based on the LIBOR
Interest Rate or (2) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if such Bank so
elects by notice to Borrower (with a copy to Administrative Agent), the
obligation of such Bank to permit Elections of, to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended (in which case the provisions of
Section 3.04 shall be applicable) until such Regulatory Change ceases to be in
effect.
Determinations and allocations by a Bank for purposes of this
Section of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section, on its costs or rate of return of making or
maintaining its Loan or portions thereof or on amounts receivable by it in
respect of its Loan or portions thereof, and the amounts required to compensate
such Bank under this Section, shall be conclusive absent manifest error.
To the extent that changing the jurisdiction of a Bank's Applicable
Lending Office would have the effect of minimizing Additional Costs, each such
Bank shall use reasonable efforts to make such a change, provided that same
would not otherwise be disadvantageous to each such Bank.
No Bank shall be entitled to any compensation pursuant to this
Section relating to any period more than ninety (90) days prior to the date
notice thereof is given to Borrower by such Bank.
SECTION 3.02 Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if, on or prior to the determination of the LIBOR Interest Rate
for any Interest Period:
(1) Administrative Agent determines (which determination shall be
conclusive) that quotations of interest rates for the relevant deposits
referred to in the definition of "LIBOR Interest Rate" in Section 1.01 are
not being provided in the relevant amounts or for the relevant maturities
for purposes of determining rates of interest for the LIBOR Loans as
provided in this Agreement; or
(2) a Bank determines (which determination shall be conclusive)
and promptly notifies Administrative Agent that the relevant rates of
interest referred to in the definition of "LIBOR Interest Rate" in Section
1.01 upon the basis of which the rate of interest for
23
<PAGE>
LIBOR Loans for such Interest Period is to be determined do not adequately
cover the cost to such Bank of making or maintaining such LIBOR Loan
for such Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof, and so long
as such condition remains in effect, the Banks (or, in the case of the
circumstances described in clause (2) above, the affected Bank) shall be under
no obligation to permit Elections of LIBOR Loans, to Convert Base Rate Loans
into LIBOR Loans or to Continue LIBOR Loans and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the affected outstanding LIBOR
Loans, either (x) prepay the affected LIBOR Loans or (y) Convert the affected
LIBOR Loans into Base Rate Loans in accordance with Section 2.13.
SECTION 3.03 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain a LIBOR Loan
hereunder, to allow Elections of a LIBOR Loan or to Convert a Base Rate Loan
into a LIBOR Loan, then such Bank shall promptly notify Administrative Agent and
Borrower thereof and such Bank's obligation to make or maintain a LIBOR Loan, or
to permit Elections of, to Continue, or to Convert its Base Rate Loan into, a
LIBOR Loan shall be suspended (in which case the provisions of Section 3.04
shall be applicable) until such time as such Bank may again make and maintain a
LIBOR Loan.
SECTION 3.04 Treatment of Affected Loans. If the obligations of any
------------------------------
Bank to permit an Election of a LIBOR Loan, to Continue its LIBOR Loan, or to
Convert its Base Rate Loan into a LIBOR Loan, are suspended pursuant to Sections
3.01 or 3.03 (each LIBOR Loan so affected being herein called an "Affected
Loan"), such Bank's Affected Loan shall be automatically Converted into a Base
Rate Loan on the last day of the then current Interest Period for the Affected
Loan (or, in the case of a Conversion required by Sections 3.01 or 3.03, on such
earlier date as such Bank may specify to Borrower).
To the extent that such Bank's Affected Loan has been so Converted,
all payments and prepayments of principal which would otherwise be applied to
such Bank's Affected Loan shall be applied instead to its Base Rate Loan and
such Bank shall have no obligation to Convert its Base Rate Loan into a LIBOR
Loan.
In the event that the conditions giving rise to the suspension of
any Bank's obligations to permit an Election of a LIBOR Loan, to Continue its
LIBOR Loan, or to Convert its Base Rate Loan into a LIBOR Loan shall cease to
exist, such Bank shall provide Borrower with prompt written notice of same (with
a copy to Administrative Agent), and such Bank shall again be obligated to
permit an Election of a LIBOR Loan, to Continue its LIBOR Loan, or to Convert
its Base Rate Loan into a LIBOR Loan in accordance with this Agreement.
24
<PAGE>
SECTION 3.05 Certain Compensation. Borrower shall pay to Administrative
---------------------
Agent for the account of the applicable Bank, upon the request of such Bank
through Administrative Agent, such amount or amounts as shall be sufficient (in
the reasonable opinion of such Bank) to compensate it for any loss, cost or
expense which such Bank determines is attributable to:
(1) any payment, prepayment, Conversion or Continuation of a
LIBOR Loan made by such Bank on a date other than the last day of an
applicable Interest Period, whether by reason of acceleration or
otherwise; or
(2) any failure by Borrower for any reason to Convert or Continue
a LIBOR Loan to be Converted or Continued by such Bank on the date
specified therefor in the relevant notice under Section 2.15; or
(3) any failure by Borrower to borrow (or to qualify for a
borrowing of) a LIBOR Loan which would otherwise be made hereunder on the
date specified in the relevant Election notice under Section 2.15 given or
submitted by Borrower.
Without limiting the foregoing, such compensation shall include an
amount equal to the present value (using as the discount rate an interest rate
equal to the rate determined under (2) below) of the excess, if any, of (1) the
amount of interest which otherwise would have accrued on the principal amount so
paid, prepaid, Converted or Continued (or not Converted, Continued or borrowed)
for the period from the date of such payment, prepayment, Conversion or
Continuation (or failure to Convert, Continue or borrow) to the last day of the
then current applicable Interest Period (or, in the case of a failure to
Convert, Continue or borrow, to the last day of the applicable Interest Period
which would have commenced on the date specified therefor in the relevant
notice) at the applicable rate of interest for the LIBOR Loan provided for
herein, over (2) the amount of interest (as reasonably determined by such Bank)
based upon the interest rate which such Bank would have bid in the London
interbank market for Dollar deposits, for amounts comparable to such principal
amount and maturities comparable to such period. A determination of any Bank as
to the amounts payable pursuant to this Section shall be conclusive absent
manifest error.
SECTION 3.06 Capital Adequacy. If any Bank shall have determined that,
-----------------
after the date hereof, the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within fifteen (15)
days after demand by such Bank (with a copy to Administrative Agent), Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction. A
25
<PAGE>
certificate of any Bank claiming compensation under this Section, setting forth
in reasonable detail the basis therefor, shall be conclusive absent manifest
error.
SECTION 3.07 Substitution of Banks. If any Bank (an "Affected Bank")
-----------------------
(i) makes demand upon Borrower for (or if Borrower is otherwise required to pay)
Additional Costs pursuant to Section 3.01 or (ii) is unable to make or maintain
a LIBOR Loan as a result of a condition described in Section 3.03 or clause (2)
of Section 3.02, Borrower may, within ninety (90) days of receipt of such demand
or notice (or the occurrence of such other event causing Borrower to be required
to pay Additional Costs or causing said Section 3.03 or clause (2) of Section
3.02 to be applicable), as the case may be, give notice (a "Replacement Notice")
to Administrative Agent (which will promptly forward a copy of such notice to
each Bank) of Borrower's intention either (x) to prepay in full the Affected
Bank's Note and to terminate the Affected Bank's entire Loan Commitment or (y)
to replace the Affected Bank with another financial institution (the
"Replacement Bank") designated in such Replacement Notice.
In the event Borrower opts to give the notice provided for in clause
(x) above, and if the Affected Bank shall not agree within thirty (30) days of
its receipt thereof to waive the payment of the Additional Costs in question or
the effect of the circumstances described in Section 3.03 or clause (2) of
Section 3.02, then, so long as no Default or Event of Default shall exist,
Borrower may (notwithstanding the provisions of clause (2) of Section 2.11(a))
terminate the Affected Bank's entire Loan Commitment, provided that in
connection therewith it pays to the Affected Bank all outstanding principal and
accrued and unpaid interest under the Affected Bank's Note, together with all
other amounts, if any, due from Borrower to the Affected Bank, including all
amounts properly demanded and unreimbursed under Sections 3.01 and 3.05.
In the event Borrower opts to give the notice provided for in clause
(y) above, and if (i) Administrative Agent shall, within thirty (30) days of its
receipt of the Replacement Notice, notify Borrower and each Bank in writing that
the Replacement Bank is reasonably satisfactory to Administrative Agent and (ii)
the Affected Bank shall not, prior to the end of such thirty (30)-day period,
agree to waive the payment of the Additional Costs in question or the effect of
the circumstances described in Section 3.03 or clause (2) of Section 3.02, then
the Affected Bank shall, so long as no Default or Event of Default shall exist,
assign its Note and all of its rights and obligations under this Agreement to
the Replacement Bank, and the Replacement Bank shall assume all of the Affected
Bank's rights and obligations, pursuant to an agreement, substantially in the
form of an Assignment and Assumption Agreement, executed by the Affected Bank
and the Replacement Bank. In connection with such assignment and assumption, the
Replacement Bank shall pay to the Affected Bank an amount equal to the
outstanding principal amount under the Affected Bank's Note plus all interest
accrued thereon, plus all other amounts, if any (other than the Additional Costs
in question), then due and payable to the Affected Bank; provided, however, that
-------- -------
prior to or simultaneously with any such assignment and assumption, Borrower
shall have paid to such Affected Bank all amounts properly demanded and
unreimbursed under Sections 3.01 and 3.05. Upon the effective date of such
assignment and assumption, the Replacement Bank shall become a Bank Party to
this Agreement and shall have all the rights and obligations of a Bank as set
forth in such Assignment and Assumption Agreement, and the Affected Bank shall
be released from its obligations hereunder, and no further consent or action by
any party shall be required. Upon the consummation of any assignment pursuant to
this Section, a substitute Note shall be issued to the Replacement Bank by
Borrower, in exchange for
26
<PAGE>
the return of the Affected Bank's Note. The obligations evidenced by such
substitute Notes shall constitute "Obligations" for all purposes of this
Agreement and the other Loan Documents and shall be secured by the Mortgages. If
the Replacement Bank is not incorporated under the Laws of the United States of
America or a state thereof, it shall, prior to the first date on which interest
or fees are payable hereunder for its account, deliver to Borrower and
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 10.13.
Borrower, Administrative Agent and the Banks shall execute such
modifications to the Loan Documents as shall be reasonably required in
connection with and to effectuate the foregoing.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to the Initial Advance. The obligations
-------------------------------------------
of the Banks hereunder and the obligation of each Bank to make Initial Advance
are subject to the condition precedent that Administrative Agent shall have
received on or before the Closing Date each of the following documents (it being
understood that the documents set forth in paragraphs (3) through (16) below are
required for each Property), and each of the following requirements shall have
been fulfilled:
(1) Fees and Expenses. The payment of all fees and expenses
------------------
incurred by Administrative Agent (including, without limitation, the
reasonable fees and expenses of legal counsel);
(2) Notes. The Notes for UBS and the other Banks signatory
-----
hereto, duly executed by Borrower;
(3) Mortgage and UCCs. The Mortgage, duly executed by the
------------------
applicable Mortgagor (and, in the case of Regency Square, the Land Trusts)
and recorded (or delivered for recording) in the appropriate land records,
together with duly executed financing statements filed (or delivered for
filing) under the Uniform Commercial Code of all jurisdictions necessary
or, in the reasonable opinion of Administrative Agent, desirable to
perfect the lien created by each Mortgage;
(4) Land Trust Assignment and UCCs. The Land Trust Assignment,
-------------------------------
duly executed by Regency Square Associates, and duly endorsed by the
trustees under the respective Land Trusts, together with duly executed
financing statements filed (or delivered for filing) under the Uniform
Commercial Code of all jurisdictions necessary or, in the reasonable
opinion of Administrative Agent, desirable to perfect the security
interests created by the Land Trust Assignment;
(5) Indemnity. The Indemnity, duly executed by Borrower and the
---------
applicable Mortgagor;
27
<PAGE>
(6) Title Policy. A paid title insurance policy in the amount of
------------
the Mortgage, in form approved by Administrative Agent and issued by the
Title Insurer, which shall insure the Mortgage to be a valid first lien on
the Mortgagor's/Land Trust's interests in the Property and Improvements,
free and clear of all liens, defects, encumbrances and exceptions other
than those previously approved by Administrative Agent, and shall contain
(i) a reference to the survey but no survey exceptions and (ii) such
affirmative insurance and endorsements as Administrative Agent may
require; and shall be accompanied by such reinsurance agreements between
the Title Insurer and title companies approved by Administrative Agent, in
ALTA facultative form approved by Administrative Agent and with direct
access provisions, as Administrative Agent may require;
(7) Survey. A current ALTA/ACSM survey, certified to
------
Administrative Agent and the Title Insurer, showing (i) the location of
the perimeter of the Property by courses and distances, (ii) all
easements, rights-of-way, and utility lines referred to in the title
policy required by this Agreement or which actually service or cross the
Property (with instrument, book and page number indicated), (iii) the
lines of the streets abutting the Property and the width thereof, and any
established building lines (and that such roads have been dedicated for
public use and are completed and have been accepted by all required
Governmental Authorities), (iv) any encroachments and the extent thereof
upon the Property, (v) locations of all portions (with the acreage thereof
also identified) of the Property, if any, which are located in an area
designated as a "flood prone area" as defined by U.S. Department of
Housing and Urban Development pursuant to the Flood Disaster Protection
Act of 1973 and (vi) the Improvements, and the relationship thereof by
distances to the perimeter of the Property, established building lines and
street lines;
(8) Appraisal. An independent M.A.I. appraisal, commissioned by
---------
Administrative Agent, of the value of the Mortgagor's/Land Trust's
interest in the Property, which appraisal shall comply in all respects
with the standards for real estate appraisals established pursuant to the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989;
(9) Insurance Policies. Copies of the policies and the original
------------------
certificates of hazard and other insurance required by the Mortgage,
together with evidence of the payment of the premiums therefor;
(10) Hazardous Materials Report. A detailed report by a properly
--------------------------
qualified engineer with regard to Hazardous Materials affecting the
Property, which shall include, inter alia, a certification that such
engineer has examined a list of prior owners, tenants and other users of
the Property, and has made an on-site physical examination of the Property
and Improvements, and a visual observation of the surrounding areas, and
disclosing the extent of past or present Hazardous Materials activities or
of the presence of Hazardous Materials;
(11) Consultant's Report. A detailed report from the Engineering
-------------------
Consultant to the effect that the Improvements are in satisfactory
condition and enumerating any maintenance or governmental compliance items
necessary or expected to be incurred
28
<PAGE>
over the term of the Loans and stating the approximate cost thereof;
notwithstanding the foregoing, it is understood that this condition will
not be satisfied on the date of the Initial Advance, inasmuch as
Administrative Agent has ordered such reports and the same shall not
be available on such date; in consideration of the Banks' making the
Initial Advance without having received such reports, Borrower covenants
and agrees that if such reports disclose the need for repairs or
maintenance regarding any Property, Borrower will (i) within thirty (30)
days of its receipt of a copy of such report from Administrative Agent,
develop and submit to Administrative Agent a plan, reasonably acceptable
to Administrative Agent, to address the recommendations of the Engineering
Consultant with respect thereto and (ii) implement such plan diligently;
(12) Permits and Other Approvals. Copies of any and all
------------------------------
certificates of occupancy and similar authorizations required by all
Governmental Authorities for the use, occupancy and operation of the
Property and/or Improvements in accordance with all applicable building,
environmental, ecological, landmark, subdivision and zoning Laws;
(13) Leases. Copies, certified to be true and complete, of all
------
executed leases of the Improvements, accompanied by notices of assignment
in the form of EXHIBIT F, and, in the case of such leases as are required
by Administrative Agent, (i) estoppel certificates from the tenants
thereunder (to the extent such estoppel certificates are obtainable with
Borrower's commercially reasonable efforts) and (ii) subordination,
non-disturbance and attornment agreements; together with a certified copy
of the standard form of lease being used in connection with the leasing of
space in the Improvements and the first rent roll and leasing report
required by paragraph (13) of Section 6.09;
(14) Premises Documents and Ground Leases. A copy, certified to
------------------------------------
be true and complete, of the REA and other Premises Documents, together
with estoppel certificates with respect thereto (to the extent such
estoppel certificates are obtainable with Borrower's commercially
reasonable efforts) from each of the Anchors and the other parties thereto
and, if in Borrower's possession or otherwise obtainable with reasonable
effort, current financial statements of such parties (to the extent
requested by Administrative Agent); and, in the case of La Cumbre, Paseo
Nuevo and Regency Square, copies, certified by Borrower to be true and
complete, of the ground lease(s) of the Property, together with an
estoppel certificate with respect thereto from each ground lessor (to the
extent such estoppel certificates are obtainable with Borrower's
commercially reasonable efforts);
(15) Management and Leasing Contracts. Copies, certified to be
--------------------------------
true and complete, of all existing contracts providing for the management
or leasing of the Property and Improvements, together with, in each case,
such collateral assignments or "will-serve" letters as Administrative
Agent may require;
(16) UCC Searches. Uniform Commercial Code searches with respect
------------
to Borrower and the applicable Mortgagor (and in the case of Regency
Square, the Land Trusts) and advice from the Title Insurer to the effect
that searches of the proper public records disclose no leases of
personalty or financing statements filed or recorded against Borrower, the
applicable Mortgagor (or the Land Trusts) or the Mortgaged Property;
29
<PAGE>
(17) Financial Statements. Audited TRG Consolidated Financial
---------------------
Statements and TCI Financial Statements as of and for the year ended
December 31, 1998; unaudited Mortgagor Financial Statements for each
Mortgagor as of and for the year ended December 31, 1998; unaudited TRG
Consolidated Financial Statements and TCI Financial Statements as of and
for the quarter ended March 31, 1999; and unaudited Mortgagor Financial
Statements for each Mortgagor as of and for the quarter ended March 31,
1999; each of the foregoing acceptable to the Banks;
(18) Evidence of Formation. With respect to Borrower and each
----------------------
Mortgagor, certified (as of the Closing Date) copies of (i) its
certificate (if applicable) and agreement of partnership, with all
amendments thereto, (ii) if applicable, a certificate of the Secretary of
State of its jurisdiction of formation as to its good standing therein and
(iii) if required, foreign qualification certificates from the
jurisdictions where the Properties are located;
(19) Evidence of Partnership Action. With respect to Borrower
--------------------------------
and each Mortgagor, certified (as of the Closing Date) copies of all
documents evidencing partnership action taken by it authorizing the
execution, delivery and performance of the Loan Documents and each other
document to be delivered by it or on its behalf pursuant to this
Agreement;
(20) Incumbency and Signature Certificate. A certificate (dated
------------------------------------
as of the Closing Date) certifying the names and true signatures of each
individual authorized to sign on behalf of Borrower (in its individual
capacity and as managing general partner of each Mortgagor);
(21) Solvency Certificates. A Solvency Certificate, duly
---------------------
executed, from Borrower and each Mortgagor;
(22) Opinion of Counsel for Borrower. A favorable opinion, dated
-------------------------------
the Closing Date, of Miro Weiner & Kramer, counsel for Borrower and
Mortgagors, as to such matters as Administrative Agent may reasonably
request;
(23) Authorization Letter. The Authorization Letter,
--------------------
duly executed by Borrower;
(24) Agency Note. The original, executed Agency Note and an
------------
original executed counterpart of the related Assignment of Agency's
Interest in Participation Rent and a collateral assignment (the "Agency
Note Assignment") by Paseo Nuevo Associates of all of its right, title and
interest therein (together with related UCC Financing Statements) to
Administrative Agent, for the benefit of the Banks, as security for the
Loans, together with an acknowledgement of such assignment by the Agency
(it being understood that all payments actually made to Paseo Nuevo
Associates under the Agency Note shall be remitted directly to
Administrative Agent and shall be applied by Administrative Agent to the
repayment of outstanding principal and accrued and unpaid interest under
the Notes, or other sums due in respect of the Loans, all in such order
and amounts as Administrative Agent shall elect);
30
<PAGE>
(25) Certificate. The following statements shall be true and
-----------
Administrative Agent shall have received a certificate dated the Closing
Date signed by a duly authorized signatory of Borrower stating, to the
best of the certifying party's knowledge, the following:
(a) All representations and warranties contained in this
Agreement and in each of the other Loan Documents are true and
correct on and as of the Closing Date as though made on and as of
such date, and
(b) No Default or Event of Default has occurred and is
continuing, or could result from the transactions contemplated by
this Agreement and the other Loan Documents; and
(c) None of the Improvements on any Property has been
injured or damaged by fire or other casualty;
(26) Covenant Compliance Certificate. A certificate, of the sort
-------------------------------
required by paragraph 3(b) of Section 6.09, containing calculations
demonstrating Borrower's compliance, as of the end of the most recently
ended calendar quarter prior to the Closing Date, with the covenants set
forth in Section 8.01(6) and (7);
(27) Land Trust Documents. A certified (as of the Closing Date)
--------------------
copy of the trust agreement creating each Land Trust, and all amendments
thereto; a "Trustee's Certificate" in customary form from the trustee
under each Land Trust; and a direction letter from Regency Square
Associates to such trustee authorizing such trustee to execute the
Mortgage of Regency Square and related documents;
(28) Repayment of Prior Loan. All sums owing under the Prior
-------------------------
Loan shall have been repaid in full (it being understood that such sums
shall be repaid from the proceeds of the Initial Advance); and
(29) Additional Documentation. Such other approvals, opinions
------------------------
or documents as Administrative Agent or any Bank may reasonably request.
SECTION 4.02 Conditions Precedent to Advances After the Initial
--------------------------------------------------
Advance. The obligation of each Bank to make advances of the Loans subsequent
- -------
to the Initial Advance shall be subject to satisfaction of the following
conditions precedent:
(1) All conditions of Section 4.01 shall have been and remain
satisfied as of the date of the advance;
(2) No Default or Event of Default shall have occurred and be
continuing as of the date of the advance; and
(3) Administrative Agent shall have received a request for an
advance in accordance with Section 2.04.
31
<PAGE>
SECTION 4.03 Deemed Representations. Each request by Borrower for, and
----------------------
acceptance by Borrower of, an advance of proceeds of the Loans shall constitute
a representation and warranty by Borrower and each Mortgagor that, as of both
the date of such request and the date of the advance (1) no Default or Event of
Default has occurred and is continuing and (2) if any representation or warranty
contained in this Agreement or the other Loan Documents is untrue or incorrect,
the condition giving rise to such untruthfulness or incorrectness is not likely
to result in a Material Adverse Change.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Administrative Agent and each
Bank as follows:
SECTION 5.01 Due Organization. Borrower and each Mortgagor are duly
-----------------
organized, validly existing and (if applicable) in good standing under the laws
of the respective jurisdictions of their organization, have the partnership
power and authority to own their assets and to transact the business in which
they are now engaged, and are duly qualified as foreign partnerships and in good
standing under the laws of each other jurisdiction in which such qualification
is required (including, if required, the jurisdictions in which the Properties
are located).
SECTION 5.02 Power and Authority; No Conflicts; Compliance With Laws.
---------------------
The execution and delivery of, and the performance of the obligations required
to be performed by Borrower and each Mortgagor under, the Loan Documents do not
and will not, in the case of Borrower or any Mortgagor, (1) require the consent
or approval of its partners or such consent or approval has been obtained, (2)
contravene its partnership agreement, (3) violate any provision of, or require
any filing, registration, consent or approval under, any Law (including, without
limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to it, (4)
result in a breach of or constitute a default under or require any consent under
any indenture or loan or credit agreement or any other agreement, lease or
instrument to which it may be a party or by which it or its properties may be
bound or affected except for consents which have been obtained, (5) result in,
or require, the creation or imposition of any Lien (other than the Lien of the
Mortgages), upon or with respect to any of its properties now owned or hereafter
acquired or (6) cause it to be in default under any such Law, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument; to the best of Borrower's knowledge, Borrower
and each Mortgagor are in compliance with all Laws applicable to them where the
failure to be in compliance would cause a Material Adverse Change to occur.
SECTION 5.03 Legally Enforceable Agreements. Each Loan Document is a
-------------------------------
legal, valid and binding obligation of Borrower and/or the applicable Mortgagor
or Land Trust, as the case may be, enforceable in accordance with its terms,
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally.
32
<PAGE>
SECTION 5.04 Litigation. There are no actions, suits or proceedings
----------
pending or against Borrower or any of its Affiliates (including any Mortgagor),
the Mortgagor's/Land Trust's interest in any Property or the Improvements
thereon, or challenging the validity and enforceability of the Mortgage or the
priority of the Lien thereof, at law or in equity, before any court or
arbitrator or any Governmental Authority (such actions, suits or proceedings,
collectively, "Actions"), except Actions (1) which, in the case of each Action
where the likely exposure of Borrower or its Affiliate exceeds $100,000, have
been disclosed to Administrative Agent and the Banks in writing and (2) which
(a) are fully covered by insurance or (b) would, if adversely determined, not
substantially impair the ability of Borrower or any Mortgagor to pay when due
any amounts which may become payable under the Notes or other Loan Documents or
to otherwise pay and perform their respective obligations in connection with the
Loans; nor, to Borrower's knowledge, are any Actions threatened which would, if
adversely determined, substantially impair the ability of Borrower or any
Mortgagor to pay when due any amounts which may become payable under the Notes
or other Loan Documents or to otherwise pay and perform their respective
obligations in connection with the Loans.
SECTION 5.05 Good Title to Properties. Borrower and each of its
----------------------------
Affiliates (including each Mortgagor) have good, marketable and legal title to
all of the properties and assets each of them purports to own (including,
without limitation, those reflected in the financial statements referred to in
Section 5.13) and, in the case of all of Borrower's shopping center properties,
only with exceptions which do not materially detract from the value of such
property or assets or the use thereof in Borrower's and such Affiliate's
business, and except to the extent that any such properties and assets (other
than the Properties) have been encumbered or disposed of since the date of such
financial statements without violating any of the covenants contained in Article
VII or VIII or elsewhere in this Agreement. Borrower and its Affiliates enjoy
peaceful and undisturbed possession of all leased property necessary in any
material respect in the conduct of their respective businesses. All such leases
are valid and subsisting and are in full force and effect.
SECTION 5.06 Taxes. Borrower and each Mortgagor have filed all tax
-----
returns (federal, state and local) required to be filed and have paid all taxes,
assessments and governmental charges and levies shown as due and payable thereon
without the imposition of a penalty, including interest and penalties, except to
the extent they are the subject of a Good Faith Contest.
SECTION 5.07 ERISA. Borrower and each Mortgagor are in compliance in all
-----
material respects with all applicable provisions of ERISA. Neither a Reportable
Event nor a Prohibited Transaction has occurred with respect to any Plan; no
notice of intent to terminate a Plan has been filed nor has any Plan been
terminated within the past five (5) years; no circumstance exists which
constitutes grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; Borrower, each Mortgagor and the ERISA
Affiliates have not completely or partially withdrawn under Sections 4201 or
4204 of ERISA from a Multiemployer Plan; Borrower, each Mortgagor and the ERISA
Affiliates have met the minimum funding requirements of each under ERISA with
respect to the Plans of each and there are no unfunded vested liabilities with
respect to any Plan established or maintained by each; and Borrower, each
Mortgagor and the ERISA Affiliates have not incurred any liability to the PBGC
under ERISA.
33
<PAGE>
SECTION 5.08 No Default on Outstanding Judgments or Orders. Borrower
-------------------------------------------------
and each Mortgagor have satisfied all judgments which are not being appealed and
are not in default with respect to any judgment, order, writ, injunction,
decree, rule or regulation of any court, arbitrator or federal, state, municipal
or other Governmental Authority, commission, board, bureau, agency or
instrumentality, domestic or foreign.
SECTION 5.09 No Defaults on Other Agreements. Except as disclosed to
-----------------------------------
the Bank Parties in writing, including anything disclosed on financial
statements, to the best of Borrower's knowledge, neither Borrower nor any
Mortgagor is a party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any partnership, trust or other
restriction which is likely to result in a Material Adverse Change. To the best
of Borrower's knowledge, neither Borrower nor any Mortgagor is in default in any
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument which is likely
to result in a Material Adverse Change.
SECTION 5.10 Government Regulation. Neither Borrower nor any Mortgagor is
---------------------
subject to regulation under the Investment Company Act of 1940, the Interstate
Commerce Act, the Federal Powers Act or any statute or regulation limiting any
such Person's ability to incur indebtedness for money borrowed as contemplated
hereby.
SECTION 5.11 Environmental Protection. To the best of Borrower's
-------------------------
knowledge, none of Borrower's or its Affiliates' properties contains any
Hazardous Materials that, under any Environmental Law currently in effect, (1)
would impose liability on Borrower or any Mortgagor that is likely to result in
a Material Adverse Change or (2) is likely to result in the imposition of a Lien
on any assets of Borrower or its Affiliates, in each case if not properly
handled in accordance with applicable Law. To the best of Borrower's knowledge,
neither it nor any of its Affiliates nor any portion of any Property or the
Improvements thereon is in violation of, or subject to any existing, pending or
threatened investigation or proceeding by any Governmental Authority under, any
Environmental Law. Except for matters, claims, conditions or circumstances as
may be disclosed in the reports delivered pursuant to paragraph (10) of Section
4.01, Borrower is not aware of any matter, claim, condition or circumstance
which would reasonably cause a Person to make further inquiry with respect to
such matters in order to ascertain whether any Hazardous Materials or their
effects have been disposed of or released on or to any portion of any Property,
the Improvements thereon or any surrounding areas; neither Borrower nor any
Mortgagor is required by any Environmental Law to obtain any permits or license
to construct or use any improvements, fixtures, or equipment with respect to any
Property, or if such permit or license is required it has been obtained; and,
except as may be disclosed in the reports delivered pursuant to paragraph (10)
of Section 4.01, to the best of Borrower's knowledge, the prior use of each
Property has not resulted in the disposal or release of any Hazardous Materials
on or to any portion of the Property or any surrounding areas in violation of
applicable Law.
SECTION 5.12 Solvency. Borrower and each Mortgagor are, and upon
--------
consummation of the transactions contemplated by this Agreement, the other Loan
Documents and any other documents, instruments or agreements relating thereto,
will be, Solvent.
34
<PAGE>
SECTION 5.13 Financial Statements. The TRG Consolidated Financial
----------------------
Statements, TCI Financial Statements and Mortgagor Financial Statements most
recently delivered to the Banks pursuant to the terms of this Agreement are in
all material respects complete and correct and fairly present the financial
condition of the subjects thereof as of the dates of and for the periods covered
by such statements, all in accordance with GAAP, and there has been no Material
Adverse Change since the date of such most recently delivered TRG Consolidated
Financial Statements, TCI Financial Statements or Mortgagor Financial
Statements, as the case may be, and no borrowings which might give rise to a
Lien or claim against all or any portion of the Mortgaged Property under any
Mortgage or against the proceeds of the Loans have been made by Borrower or
others since the dates of such most recently delivered financial statements.
SECTION 5.14 Valid Existence of Affiliates. As of the Closing Date, the
------------------------
only material Affiliates of Borrower which own or lease operating shopping
centers or shopping centers under construction are listed on EXHIBIT D. Each
such Affiliate is a partnership, limited liability company or joint venture duly
organized and existing in good standing under the laws of the jurisdiction of
its formation. As to each such Affiliate, its correct name, the jurisdiction of
its formation and Borrower's percentage of beneficial interest therein are set
forth on said EXHIBIT D. Borrower and each of such Affiliates have the power to
own their respective properties and to carry on their respective businesses now
being conducted. Each of Borrower and such Affiliates is duly qualified as a
foreign partnership, company or venture to do business and is in good standing
in every jurisdiction in which the nature of the respective businesses conducted
by it or its respective properties, owned or held under lease, make such
qualification necessary.
SECTION 5.15 Insurance. Each Mortgagor has in force paid insurance as
---------
required by the respective Mortgages and, generally, Borrower and each of its
Affiliates has in force paid insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated.
SECTION 5.16 Separate Tax and Zoning Lot. To the best of Borrower's
-------------------------------
knowledge, each Property constitutes a distinct parcel or parcels for purposes
of taxes, assessments and impositions (public or private) and is not otherwise
considered as part of a larger lot not included in the Property for purposes of
taxes, assessments or impositions (public or private).
SECTION 5.17 Zoning and other Laws; Covenants and Restrictions. As
-------------------------------------------------------
to each Property, (i) the Improvements and the uses thereof comply in all
material respects with applicable zoning, environmental, ecological, landmark
and other applicable Laws, and all requirements for such uses have been
satisfied in all material respects and (ii) the applicable Mortgagor and the
Property are in compliance in all material respects with all applicable
restrictions and covenants.
SECTION 5.18 Utilities Available. As to each Property, all utility
--------------------
services necessary for the operation of the Improvements for their intended
purposes are available and servicing the Property, including water supply, storm
and sanitary sewer, gas, electric power and telephone facilities.
35
<PAGE>
SECTION 5.19 Creation of Liens. Neither Borrower nor any Mortgagor has
-----------------
entered into any contract or arrangement of any kind the performance of which by
the other party thereto would give rise to a Lien on all or part of the
Mortgaged Property under any Mortgage prior to such Mortgage, other than, (i)
with respect to each Property, Liens pursuant to the documents that are listed
as exceptions in the title policy insuring the applicable Mortgage and (ii) with
respect to Fairlane, the five (5) personal property financings disclosed by the
UCC search by the Michigan Department of State dated May 20, 1999.
SECTION 5.20 Roads. Each Property has access to a publicly dedicated
-----
road or roads sufficient for the full utilization of the Improvements for their
intended purposes.
SECTION 5.21 Premises Documents and Leases. As to each Property, the
--------------------------------
Premises Documents are unmodified and in full force and effect; to the best
of Borrower's knowledge, there are no defaults under any Major Lease or any
Premises Document except as disclosed to Administrative Agent in writing, and
all conditions to the effectiveness and continuing effectiveness of each lease
and Premises Document required to be satisfied as of the date hereof have been
satisfied.
SECTION 5.22 Accuracy of Information; Full Disclosure. To the best of
--------------------------------------------
Borrower's knowledge, neither this Agreement nor any documents, financial
statements, reports, notices, schedules, certificates, statements or other
writings furnished by or on behalf of Borrower or any Mortgagor to
Administrative Agent or any Bank in connection with the negotiation of this
Agreement or the consummation of the transactions contemplated hereby, or
required herein to be furnished by or on behalf of Borrower or any Mortgagor,
contains any untrue or misleading statement of a material fact or omits a
material fact necessary to make the statements herein or therein not misleading.
To the best of Borrower's knowledge, there is no fact which Borrower has not
disclosed to Administrative Agent and the Banks in writing which materially
affects adversely nor, so far as Borrower can now foresee, will materially
affect adversely the business, prospects, profits or financial condition of
Borrower or any Mortgagor or the ability of Borrower or any Mortgagor to perform
this Agreement and the other Loan Documents.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or the Loan
Commitments remain in effect, or any other amount is owing by Borrower or any
Mortgagor to Administrative Agent or any Bank hereunder or under any other Loan
Document, Borrower shall (and shall cause each Mortgagor to):
SECTION 6.01 Maintenance of Existence. Preserve and maintain its legal
--------------------------
existence and, if applicable, good standing in the jurisdiction of organization
and, if applicable, qualify and remain qualified as a foreign partnership in
each jurisdiction in which such qualification is required, except to the extent
that failure to so qualify is not likely to result in a Material Adverse Change.
36
<PAGE>
SECTION 6.02 Maintenance of Records. Keep adequate records and books of
------------------------
account, in which complete entries will be made in accordance with GAAP,
reflecting all of its financial transactions.
SECTION 6.03 Maintenance of Insurance. At all times, (i) in the case of
--------------------------
Borrower, maintain and keep in force, and cause each of its Affiliates to
maintain and keep in force, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same or a similar business and
similarly situated, which insurance may provide for reasonable deductibility
from coverage thereof and (ii) in the case of each Mortgagor, maintain and keep
in force the insurance required by the respective Mortgages.
SECTION 6.04 Compliance with Laws; Payment of Taxes. Comply in all
-------------------------------------------
respects with all Laws applicable to it or to any of its properties or any part
thereof, such compliance to include, without limitation, paying before the same
become delinquent all taxes, assessments and governmental charges imposed upon
it or upon its property, except to the extent they are the subject of a Good
Faith Contest.
SECTION 6.05 Right of Inspection. At any reasonable time and from time
--------------------
to time upon reasonable notice, permit Administrative Agent or any Bank or any
agent or representative thereof (provided that a representative of any Bank
must, at Borrower's request, be accompanied by a representative of Borrower) to
examine and make copies and abstracts from its records and books of account,
visit and inspect its properties, and discuss its affairs, finances and accounts
with its independent accountants; and cooperate with the Engineering Consultant
to enable it to perform its functions hereunder.
SECTION 6.06 Compliance With Environmental Laws. Comply in all material
------------------------------------
respects with all applicable Environmental Laws and immediately pay or cause to
be paid all costs and expenses incurred in connection with such compliance,
except to the extent there is a Good Faith Contest; and at its sole cost and
expense, promptly remove, or cause the removal of, any and all Hazardous
Materials or the effects thereof at any time identified as being on, in, under
or affecting any Property or the Improvements thereon in violation of applicable
Environmental Law.
SECTION 6.07 Payment of Costs. Pay all costs and expenses required for
----------------
the satisfaction of the conditions of this Agreement.
SECTION 6.08 Maintenance of Properties. Do all things reasonably necessary
-------------------------
to maintain, preserve, protect and keep its (and, in the case of Borrower, its
Affiliates') properties in good repair, working order and condition.
SECTION 6.09 Reporting and Miscellaneous Document Requirements. Furnish
--------------------------------------------------
directly to each of the Banks:
(1) Annual Financial Statements. As soon as available and in any
---------------------------
event within ninety (90) days after the end of each Fiscal Year, the TRG
Consolidated Financial Statements, the TCI Financial Statements and
Mortgagor Financial Statements for each Mortgagor, in each case as of the
end of and for such Fiscal Year, in reasonable
37
<PAGE>
detail and stating in comparative form the respective figures for
the corresponding date and period in the prior Fiscal Year and audited by
Borrower's Accountants;
(2) Quarterly Financial Statements. As soon as available and in
------------------------------
any event within forty-five (45) days after the end of each calendar
quarter (other than, in the case of the TRG Consolidated Financial
Statements and TCI Financial Statements, the last quarter of the Fiscal
Year), the unaudited TRG Consolidated Financial Statements, TCI Financial
Statements and Mortgagor Financial Statements for each Mortgagor, in each
case as of the end of and for such calendar quarter, in reasonable detail,
certified by the entity's chief financial officer or Treasurer and stating
in comparative form the respective figures for the corresponding date and
period in the prior Fiscal Year;
(3) Certificate of No Default and Financial Compliance. Within
---------------------------------------------------
forty five (45) days after the end of each of the first three quarters of
each Fiscal Year and within ninety (90) days after the end of each Fiscal
Year, a certificate of Borrower's chief financial officer or Treasurer (a)
stating that, to the best of his or her knowledge, no Default or Event of
Default has occurred and is continuing, or if a Default or Event of
Default has occurred and is continuing, specifying the nature thereof and
the action which is proposed to be taken with respect thereto, (b) stating
that the covenants contained in Sections 7.02, 7.03 and 7.04 and in
Article VIII have been complied with (or specifying those that have not
been complied with) and including computations demonstrating such
compliance (or non-compliance) and (c) setting forth the details of all
items comprising Total Outstanding Indebtedness (including amount,
maturity, interest rate and amortization requirements) and Unsecured
Indebtedness, each as of the end of such quarter, and Combined EBITDA,
Interest Expense and Fixed Charges, each for the twelve (12)-month period
ending with such quarter;
(4) Certificate of Borrower's Accountants. Simultaneously with
--------------------------------------
the delivery of the annual financial statements required by paragraph (1)
of this Section, a statement of Borrower's Accountants who audited such
financial statements comparing the computations set forth in the financial
compliance certificate required by paragraph (3)(b) of this Section to the
audited financial statements required by paragraph (1) of this Section
(where such information appears in such financial statements);
(5) Notice of Litigation. Promptly after the commencement and
--------------------
knowledge thereof, notice of all actions, suits, and proceedings before
any court or arbitrator, affecting (i) Borrower which, if determined
adversely to Borrower are likely to result in a Material Adverse Change;
or (ii) any Mortgagor or all or any portion of the Mortgaged Property
under any Mortgage which, if determined adversely to the Mortgagor are
likely to result in a Material Adverse Change;
(6) Notices of Defaults and Events of Default. As soon as
----------------------------------------------
possible and in any event within ten (10) days after Borrower becomes
aware of the occurrence of a material Default or any Event of Default a
written notice setting forth the details of such Default or Event of
Default and the action which is proposed to be taken with respect thereto;
38
<PAGE>
(7) Dispositions or Acquisitions of Assets. Within thirty (30)
--------------------------------------
days after the occurrence thereof, written notice of any Disposition or
acquisition of assets (other than acquisitions or Dispositions of
investments such as certificates of deposit, Treasury securities and money
market deposits in the ordinary course of Borrower's cash management) in
excess of $25,000,000, together with, in the case of any acquisition of
such an asset, (i) copies of the agreements governing the acquisition,
(ii) historical balance sheets (to the extent available) and statements of
income and cash flows with respect to the property acquired for at least
the preceding three (3) years (to the extent available) and Borrower's
revenue and expense projections for the property acquired for at least the
next five (5) years (all of the foregoing to be in form and detail
satisfactory to Administrative Agent), (iii) a certificate, of the sort
required by paragraph (3)(b) of this Section, containing covenant
compliance calculations that include the pro-forma adjustments set forth
in Section 8.02, which calculations shall demonstrate Borrower's
compliance, on a pro-forma basis, as of the end of the most recently ended
calendar quarter for which financial results are required hereunder to
have been reported by Borrower, with all covenants enumerated in said
paragraph (3)(b) and (iv) such other information relating to the
acquisition as Administrative Agent may reasonably request;
(8) Material Adverse Change. As soon as is practicable and in
-------------------------
any event within five (5) days after knowledge of the occurrence of any
event or circumstance which is likely to result in or has resulted in a
Material Adverse Change, written notice thereof;
(9) Bankruptcy of Tenants. Promptly after becoming aware of the
---------------------
same, written notice of the bankruptcy, insolvency or cessation of
operations of (i) any of the Anchors, (ii) any tenant in the Improvements
on any Property to which 5% or more of the aggregate minimum rent from
such Improvements is attributable or (iii) any tenant in any property of
Borrower or in which Borrower has an interest to which 5% or more of
minimum rent payable to Borrower directly or through its Consolidated
Businesses or UJVs is attributable;
(10) Offices. Thirty (30) days' prior written notice of any
-------
change in the chief executive office or principal place of business of
Borrower;
(11) Environmental and Other Notices. As soon as possible and in
-------------------------------
any event within five (5) days after receipt, copies of (i) all
Environmental Notices received by Borrower or any Mortgagor which are not
received in the ordinary course of business and which relate to any
Property or any situation which is likely to result in a Material Adverse
Change and (ii) all reports of any official searches made by any
Governmental Authority having jurisdiction over any Property or the
Improvements thereon, and of any claims of violations thereof;
(12) Insurance Coverage. Promptly, such information
------------------
concerning Borrower's insurance coverage as Administrative Agent may
reasonably request;
(13) Leasing Reports and Other Property Information. As soon as
----------------------------------------------
available and in any event within thirty (30) days after the end of each
calendar quarter, a rent roll,
39
<PAGE>
leasing report and tenant sales report for each Property, in each case
certified by Borrower to be true and complete; and
(14) General Information. Promptly, such other information
--------------------
respecting the condition or operations, financial or otherwise, of
Borrower, any Mortgagor or any properties of Borrower as Administrative
Agent may from time to time reasonably request.
SECTION 6.10 Premises Documents; Leases. As to each Property,
--------------------------
keep the Premises Documents and all leases in full force and effect (except
as may be permitted by this Agreement or by the applicable Mortgage) and at
all times use commercially reasonable efforts to compel performance by the
parties to the Premises Documents or the tenants under such leases, as the case
may be, of all obligations, covenants and agreements by such parties or tenants,
as the case may be, to be performed thereunder; deliver to Administrative Agent,
(i) promptly following the execution thereof, certified copies of all amendments
or supplements to the Premises Documents and (ii) promptly following
Administrative Agent's request therefor, certified copies of any or all leases
of portions of the Improvements (together with abstracts of such leases), any or
all amendments or supplements to any such leases, estoppel certificates (on a
best efforts basis) from any or all of the tenants thereunder and notices of
assignment in the form of EXHIBIT F to said tenants; not enter into any lease or
modification thereof (x) without Administrative Agent's prior written consent
during the existence of any Event of Default or (y) that is not commercially
reasonable; and not modify (other than de minimus modifications) the Premises
-- -------
Documents without the prior written consent of Administrative Agent, such
consent not to be unreasonably withheld or delayed; to the extent Borrower is
unable, with commercially reasonable efforts, to obtain, prior to the date of
the Initial Advance, estoppel certificates from ground lessors, tenants or
parties to the Premises Documents as required by paragraphs (13) and (14) of
Section 4.01, Borrower shall continue to use such efforts to obtain such
estoppel certificates after the date of the Initial Advance.
SECTION 6.11 Compliance with Covenants, Restrictions and Easements.
------------------------------------------------------
Comply with all restrictions, covenants and easements affecting any Property or
the Improvements thereon.
SECTION 6.12 Management, Leasing and Service Contracts.
----------------------------------------------
Deliver to Administrative Agent, with respect to each Property, (i) as and
when executed, certified copies of all management and leasing contracts, each of
which shall be entered into with a party, and on terms and conditions,
reasonably acceptable to Administrative Agent, and (ii) as and when requested by
Administrative Agent, copies of all service contracts; contemporaneously with
entering into each such management or leasing contract, at Administrative
Agent's option, cause the same to be collaterally assigned to Administrative
Agent for the benefit of the Banks as additional security for the Loans and/or
cause the manager or leasing agent under each such management or leasing
contract to undertake, inter alia, to continue performance on the Banks' behalf
----- ----
without additional cost in the event of a Default; cause each service contract
to contain a provision allowing for the as-of-right cancellation thereof on
thirty (30) days' notice from the applicable Mortgagor or its successors as
owners of the Property; and keep in full force and effect and not materially
modify the management and leasing agreement(s) approved pursuant to paragraph
(15) of Section 4.01 without Administrative Agent's prior written consent, such
consent not to be unreasonably withheld.
40
<PAGE>
SECTION 6.13 Correction of Defects. Upon demand of Administrative Agent
---------------------
or the Engineering Consultant, correct any material defects (including
structural) in the Improvements on any Property.
SECTION 6.14 Estoppel Certificates. Within three (3) days upon request in
---------------------
person or within five (5) days upon request by mail, furnish to Administration
Agent or such other Persons as Administrative Agent may designate, a statement,
duly acknowledged, of the amount due, whether for principal or interest, under
the Notes, and whether any offsets, counterclaims or defenses exist against the
Obligations.
ARTICLE VII
NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid, or the Loan Commitments
remain in effect, or any other amount is owing by Borrower or any Mortgagor to
Administrative Agent or any Bank hereunder or under any other Loan Document,
Borrower shall not do any or all of the following:
SECTION 7.01 Mergers Etc. Merge or consolidate with any Person (except
------------
where Borrower or a Person wholly-owned by Borrower is the surviving entity), or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) (or enter into any agreement to do any of the
foregoing).
SECTION 7.02 Investments. Make any loan or advance to any Person or
-----------
purchase or otherwise acquire any capital stock, assets, obligations or other
securities of, make any capital contribution to, or otherwise invest in, or
acquire any interest in, any Person (any such transaction, an "Investment")
if (1) the Investment is in connection with something other than a retail
shopping center and the amount of any single such Investment (or the aggregate
amount of any single such Investment together with all related Investments),
would exceed 20% of Net Worth, (2) except to the extent permitted by clause
(3) below, such Investment constitutes the acquisition of a minority interest in
a Person (a "Minority Interest") and the amount of such Investment, together
with the value of all other Minority Interests acquired after the Closing Date
contributing to Capitalization Value, would exceed 10% of Net Worth or (3) such
Investment constitutes the acquisition of a Minority Interest in a regional
shopping center or portfolio of regional shopping centers and the amount of such
Investment, together with the value of all other such Minority Interests, would
exceed 20% of Net Worth. A 50% beneficial interest in a Person, in connection
with which the holder thereof exercises joint control over such Person with the
holder(s) of the other 50% beneficial interest, shall not constitute a "Minority
Interest" for purposes of this Section.
SECTION 7.03 Sale of Assets. Effect a Disposition of any of its now owned
--------------
or hereafter acquired assets, including assets in which Borrower owns a
beneficial interest through its ownership of interests in joint ventures,
aggregating more than 20% of Capitalization Value.
41
<PAGE>
SECTION 7.04 Interest Rate Hedging. At any time following the date ninety
---------------------
(90) days after the date hereof, permit or suffer more than 25% of Total
Outstanding Indebtedness not to be "hedged"; for purposes of this Section,
"hedged" shall mean bearing interest at an effective fixed rate, either pursuant
to the debt instrument itself or through the operation of a "cap", "collar",
"swap" or comparable interest rate protection contract, such debt instrument, or
instrument creating the "cap", "collar", "swap" or comparable interest rate
protection contract, as the case may be, having an original term of at least
twelve (12) months.
SECTION 7.05 Control of Borrower. At any time permit or suffer the failure
-------------------
or inability of TCI to be the managing general partner of Borrower.
SECTION 7.06 Certain Restrictions on Activities of TCI. At any time,
----------------------------------------------
suffer or permit TCI to incur any Debt in its own name or to own any material
assets other than its interests in Borrower and incidental assets and assets
which, for legitimate business purposes, must be owned by TCI on a temporary
basis prior to being transferred to Borrower, or engage in any business other
than the ownership of such interests.
ARTICLE VIII
FINANCIAL COVENANTS AND ADJUSTMENTS
SECTION 8.01 Covenants Subsequent to Certain Events. So long as any of
---------------------------------------
the Notes shall remain unpaid, or the Loan Commitments shall remain in effect,
or any other amount is owing to Administrative Agent or any Bank under this
Agreement or under any other Loan Document, Borrower shall not permit or suffer:
(1) Net Worth. At any time, Net Worth to be less than $1,000,000,000; or
---------
(2) Leverage Ratio. At any time, Leverage Ratio to exceed 65%; or
--------------
(3) Relationship of Combined EBITDA to Fixed Charges. As of the end of
------------------------------------------------
any calendar quarter, the ratio of (i) Combined EBITDA to (ii) Fixed
Charges, each for the twelve (12)-month period then ended and taken as a
whole, to be less than 1.40 to 1.00; or
(4) Relationship of Combined EBITDA to Total Outstanding Indebtedness.
-----------------------------------------------------------------
As of the end of any calendar quarter, the ratio (expressed as a
percentage) of (i) Combined EBITDA for the twelve (12)-month period then
ended and taken as a whole to (ii) Total Outstanding Indebtedness as of
the end of such calendar quarter, to be less than 11.5%; or
(5) Payout Ratio. Any Restricted Payment to be made during any of its
------------
fiscal quarters, which, when added to all Restricted Payments made during
the three (3) immediately preceding fiscal quarters, exceeds 95% of
Distributable Cash Flow; provided, however, that Borrower shall be
-------- -------
permitted, provided there exists no Event of Default, to make Restricted
Payments in excess of 95% of Distributable Cash Flow as may be necessary
under Section 857(a) of the Code to maintain TCI's tax status as a real
estate investment trust. For purposes of this Article, "Restricted
Payment" means any distribution or other payment made by Borrower to its
partners, other than distributions pursuant to Section 5.3 of Borrower's
agreement of limited partnership; or
42
<PAGE>
(6) Property Debt Yield. As of the end of any calendar quarter, Property
-------------------
Debt Yield for such calendar quarter to be less than 13%; or
(7) Relationship of Property EBITDA to Interest Expense on Loans. As of
the end of any calendar quarter, the ratio of (i) Property EBITDA to (ii)
that portion of Interest Expense attributable to the Loans, each for the
prior twelve (12)-month period then ended and taken as a whole, to be less
than 1.75 to 1.00.
SECTION 8.02 Certain Pro-Forma Adjustments. For purposes of the
-----------------------------
calculation of the financial covenants set forth in Section 8.01, the following
adjustments shall be made in the case of each property acquired, or each
"property put into service", or each property disposed of, by Borrower during
the applicable test period:
(1) In the case of each property acquired or put into service, the
contribution of said property to Capitalization Value shall be the lesser
of (a) such property's contribution to Combined EBITDA, annualized based
on Borrower's period of ownership or operation, divided by 8.00% or (b)
the acquisition cost or cost of the property. In the case of each
property disposed of by Borrower during the applicable test period, such
property shall be deemed to have made no contribution to Capitalization
Value for the applicable twelve (12)-month period.
(2) In the case of each property acquired or put into service, the
contribution of said property to Combined EBITDA shall be an annualized
amount based upon the period of Borrower's ownership or operation. In the
case of each property disposed of by Borrower during the applicable test
period, such property shall be deemed to have made no contribution to
Combined EBITDA for the applicable twelve (12)-month period.
(3) In the case of each property acquired or put into service, the
contribution of said property to Interest Expense for the applicable
twelve (12)-month period shall be equal to actual interest expense with
respect to the Debt incurred or assumed in connection with the
acquisition, from the date of the acquisition or the date the asset is
put into service until the end of such twelve (12)-month period,
annualized. In the case of each property disposed of during the applicable
test period, such property shall be deemed to have made no contribution to
Interest Expense for such period.
In addition, if any Debt of Borrower is refinanced during an applicable test
period, the calculation of Interest Expense shall be adjusted as follows. The
contribution of the Debt that was refinanced to Interest Expense for the
applicable twelve (12)-month period shall be equal to actual interest expense on
the refinanced Debt from the date of the refinancing to the end of such twelve
(12)-month period, annualized.
As used in this Section 8.02, the term "property put into service" means any
property that has been opened to the public for business and which has generated
revenues for a period of at least thirty (30) days.
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ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.01 Events of Default. Any of the following events shall
-----------------
be an "Event of Default":
(1) If Borrower shall: fail to pay the principal of any Notes as
and when due; or fail to pay interest accruing on any Notes as and when
due and such failure to pay shall continue unremedied for five (5) days
after the due date of such amount; or fail to pay any fee or interest or
any other amount due under this Agreement or any other Loan Document or
the Supplemental Fee Letter as and when due and such failure to pay shall
continue unremedied for two (2) days after notice by Administrative Agent
of such failure to pay; or
(2) If any representation or warranty made by Borrower or any
Mortgagor or Land Trust in any Loan Document or which is contained in any
certificate, document, opinion, financial or other statement furnished at
any time under or in connection with a Loan Document shall prove to have
been incorrect in any material respect on or as of the date made; or
(3) If (a) Borrower shall fail to perform or observe any term,
covenant or agreement contained in Article VII or Article VIII or (b)
Borrower or any Mortgagor or Land Trust shall fail to perform or observe
any term, covenant or agreement contained in Article VI or otherwise
contained in this Agreement (other than obligations specifically referred
to elsewhere in this Section) or in any other Loan Document, or in the
Supplemental Fee Letter or in any other document executed by Borrower or
any Mortgagor or Land Trust and delivered to Administrative Agent and/or
the Banks in connection with the transactions contemplated hereby and such
failure shall remain unremedied for thirty (30) consecutive calendar days
after notice by Administrative Agent to Borrower thereof (or such shorter
cure period as may be expressly prescribed in the applicable Loan
Document); provided, however, that if any such default under clause (b)
-------- -------
above cannot by its nature be cured within such thirty (30) day, or
shorter, as the case may be, grace period and so long as Borrower or the
applicable Mortgagor or Land Trust, as the case may be, shall have
commenced cure within such thirty (30) day, or shorter, as the case may
be, grace period and shall, at all times thereafter, diligently prosecute
the same to completion, Borrower or the applicable Mortgagor or Land
Trust, as the case may be, shall have an additional period, not to exceed
sixty (60) days, to cure such default; in no event, however, is the
foregoing intended to effect an extension of the Maturity Date; or
(4) If either Borrower or TCI shall fail (a) to pay any Debt
(other than the payment obligations described in paragraph (1) of this
Section) in an amount equal to or greater than $10,000,000 when due
(whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) or (b) to perform or observe any material term, covenant, or
condition under any agreement or instrument relating to any such Debt,
when required to be performed or observed, if the effect of such failure
to perform or observe is to accelerate, or to permit the acceleration of,
after the giving of
44
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notice or the lapse of time, or both (other than in cases where, in the
judgment of the Required Banks, meaningful discussions likely to result in
(i)a waiver or cure of the failure to perform or observe or (ii) otherwise
averting such acceleration are in progress between Borrower and the obligee
of such Debt), the maturity of such Debt, or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled or otherwise required prepayment), prior to the stated
maturity thereof; or
(5) If any Mortgagor, the trustee under any Land Trust, TCI,
Borrower, or any Affiliate(s) (other than any Mortgagor) of Borrower to
which $100,000,000 or more in the aggregate of Capitalization Value is
attributable, shall: (a) generally not, or be unable to, or shall admit in
writing its inability to, pay its debts as such debts become due; or (b)
make an assignment for the benefit of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for it or
a substantial part of its assets; or (c) commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or (d) have had any such petition or application
filed or any such proceeding shall have been commenced, against it, in
which an adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains undismissed
or unstayed for a period of sixty (60) days or more; or (e) be the subject
of any proceeding under which all or a substantial part of its assets may
be subject to seizure, forfeiture or divestiture; or (f) by any act or
omission indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or order for relief or the appointment
of a custodian, receiver or trustee for all or any substantial part of its
property; or (g) suffer any such custodianship, receivership or
trusteeship for all or any substantial part of its property, to continue
undischarged for a period of sixty (60) days or more; or
(6) If one or more judgments, decrees or orders for the payment
of money in excess of $10,000,000 in the aggregate shall be rendered
against Borrower, TCI, any Mortgagor or any Land Trust, and any such
judgments, decrees or orders shall continue unsatisfied and in effect for
a period of thirty (30) consecutive days without being vacated,
discharged, satisfied or stayed or bonded pending appeal; or
(7) If any of the following events shall occur or exist with
respect to Borrower, any Mortgagor or any ERISA Affiliate: (a) any
Prohibited Transaction involving any Plan; (b) any Reportable Event with
respect to any Plan; (c) the filing under Section 4041 of ERISA of a
notice of intent to terminate any Plan or the termination of any Plan; (d)
any event or circumstance which might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (e)
complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or termination of
any Multiemployer Plan; and in each case above, if such event or
conditions, if any, could in the opinion of any Bank subject Borrower, any
Mortgagor or any ERISA Affiliate to any tax, penalty, or other liability
to a Plan,
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Multiemployer Plan, the PBGC or otherwise (or any combination thereof)
which in the aggregate exceeds or may exceed $50,000; or
(8) If at any time TCI is not a qualified real estate investment
trust under Sections 856 through 860 of the Code or is not listed on the
New York Stock Exchange or the American Stock Exchange; or
(9) If at any time Borrower or any Mortgagor fails to operate as
a real estate operating company for ERISA purposes (within the meaning of
C.F.R. ss.2510.3-101); or
(10) If The Taubman Company Limited Partnership, the entity
presently providing property management and leasing services for all the
regional shopping center properties in which Borrower has an ownership
interest (other than the "value center" property known as Arizona Mills
located in Tempe, Arizona), shall discontinue providing such services for
25% or more of the regional shopping center properties then owned in whole
or in part by Borrower; or
(11) If any Mortgage shall at any time and for any reason cease
to create a valid and perfected first priority Lien on the Mortgaged
Property purported to be subject thereto or to be in full force and
effect; or shall be declared null and void; or any party thereto shall
deny any further liability or obligation thereunder; or
(12) If there shall occur an "Event of Default" under any
Mortgage or under the Agency Note Assignment (as such quoted term is
defined in such Mortgage or the Agency Assignment, as the case may be).
SECTION 9.02 Remedies. If any Event of Default shall
--------
occur and be continuing, Administrative Agent shall, upon request of the
Required Banks, by notice to Borrower, (1) declare the outstanding Notes,
all interest thereon, and all other amounts payable under this Agreement,
and any other Loan Documents to be forthwith due and payable, whereupon the
Notes, all such interest, and all such amounts due under this Agreement and
under any other Loan Document shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice of any
kind, all of which are hereby expressly waived by Borrower; and/or (2)
exercise any remedies provided in any of the Loan Documents or by law.
ARTICLE X
ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS
SECTION 10.01 Appointment, Powers and Immunities of
---------------------------------------------
Administrative Agent. Each Bank hereby irrevocably appoints and authorizes
---------------------
Administrative Agent to act as its agent hereunder and under any other Loan
Document with such powers as are specifically delegated to Administrative
Agent by the terms of this Agreement and any other Loan Document, together
with such other powers as are reasonably incidental thereto. Administrative
Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document or required by law, and
shall not by reason of this Agreement be a fiduciary or trustee for any
Bank except to the extent that Administrative Agent acts as an agent with
respect to the receipt or payment of funds (nor shall Administrative Agent
have any
46
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fiduciary duty to Borrower nor shall any Bank have any fiduciary duty to
Borrower or to any other Bank). Administrative Agent shall not be
responsible to the Banks for any recitals, statements, representations or
warranties made by Borrower or any officer, partner or official of Borrower or
any other Person contained in this Agreement or any other Loan Document, or in
any certificate or other document or instrument referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document, or
for the value, legality, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or any other document
or instrument referred to or provided for herein or therein, for the perfection
or priority of any Lien securing the Obligations or for any failure by Borrower
or any other obligor to perform any of its obligations hereunder or thereunder.
Administrative Agent may employ agents and attorneys-in-fact and shall not be
responsible, except as to money or securities received by it or its authorized
agents, for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither Administrative Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for any
action taken or omitted to be taken by it or them hereunder or under any other
Loan Document or in connection herewith or therewith, except for its or their
own gross negligence or willful misconduct. Borrower shall pay any fee agreed to
by Borrower and Administrative Agent with respect to Administrative Agent's
services hereunder.
SECTION 10.02. Reliance by Administrative Agent. Administrative Agent
----------------------------------
shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by
Administrative Agent. Administrative Agent may deem and treat each Bank as the
holder of the Loan made by it for all purposes hereof and shall not be required
to deal with any Person who has acquired a participation in any Loan or
participation from a Bank. As to any matters not expressly provided for by this
Agreement or any other Loan Document, Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by the Required Banks, and such instructions of the
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks and any other holder of all or any portion of any
Loan or participation.
SECTION 10.03. Defaults. Administrative Agent shall not be deemed to have
--------
knowledge of the occurrence of a Default or Event of Default unless
Administrative Agent has received notice from a Bank or Borrower specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default." In the event that Administrative Agent receives such a notice of the
occurrence of a Default or Event of Default, Administrative Agent shall give
prompt notice thereof to the Banks. Administrative Agent, following consultation
with the Banks, shall (subject to Section 10.07) take such action with respect
to such Default or Event of Default which is continuing, or with respect to the
exercise of remedies, including with respect to realization on, or operation or
disposition of, any Collateral, as shall be directed by the Required Banks;
provided that, unless and until Administrative Agent shall have received such
directions, Administrative Agent may take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Banks; and provided further that
Administrative Agent shall not send a notice of Default or acceleration to
47
<PAGE>
Borrower without the approval of the Required Banks. In no event shall
Administrative Agent be required to take any such action which it determines to
be contrary to law.
SECTION 10.04 Rights of Administrative Agent as a Bank. With respect to its
----------------------------------------
Loan Commitment and the Loan provided by it, Administrative Agent in its
capacity as a Bank hereunder shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not acting as
Administrative Agent, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include Administrative Agent in its capacity as a Bank.
Administrative Agent and its Affiliates may (without having to account therefor
to any Bank) accept deposits from, lend money to (on a secured or unsecured
basis), and generally engage in any kind of banking, trust or other business
with Borrower (and any Affiliates of Borrower) as if it were not acting as
Administrative Agent.
SECTION 10.05 Sharing of Costs by Banks; Indemnification of Administrative
------------------------------------------------------------
Agent. Each Bank agrees to pay its ratable share, based on the respective
- -----
outstanding principal balances under its Note and the other Notes, of any
expenses incurred (and not paid or reimbursed by Borrower after demand for
payment is made by Administrative Agent) by or on behalf of the Banks in
connection with any Default or Event of Default, including, without limitation,
costs of enforcement of the Loan Documents and any advances to pay taxes or
insurance premiums or otherwise to preserve the Lien of any Mortgage or to
preserve or protect any Mortgaged Property. In the event a Bank fails to pay its
share of expenses as aforesaid, and all or a portion of such unpaid amount is
paid by Administrative Agent and/or one or more of the other Banks, then the
defaulting Bank shall reimburse Administrative Agent and/or the other Bank(s)
for the portion of such unpaid amount paid by it or them, as the case may be,
together with interest thereon at the Base Rate from the date of payment by
Administrative Agent and/or the other Bank(s). In addition, each Bank agrees to
indemnify Administrative Agent (to the extent not reimbursed under Section 12.04
or under the other applicable provisions of any Loan Document, but without
limiting the obligations of Borrower under Section 12.04 or such other
provisions), for its Pro Rata Share of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against Administrative Agent in any way relating to or
arising out of this Agreement, any other Loan Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses which Borrower is
obligated to pay under Section 12.04 or under any other applicable provisions of
any Loan Document) or the enforcement of any of the terms hereof or thereof or
of any such other documents or instruments; provided that no Bank shall be
liable for (1) any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified, (2) any loss of
principal or interest with respect to Administrative Agent's Loan or (3) any
loss suffered by Administrative Agent in connection with a swap or other
interest rate hedging arrangement entered into with Borrower.
SECTION 10.06. Non-Reliance on Administrative Agent and Other Banks.
-------------------------------------------------------
Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own analysis of the
Collateral and of the credit of Borrower, and its own decision to enter into
this Agreement and that it will, independently and without reliance upon
Administrative Agent or any
48
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other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any other Loan Document.
Administrative Agent shall not be required to keep itself informed as to the
performance or observance by Borrower of this Agreement or any other Loan
Document or any other document referred to or provided for herein or therein or
to inspect the properties (including, without limitation, any Property) or books
of Borrower or any Mortgagor. Except for notices, reports and other documents
and information expressly required to be furnished to the Banks by
Administrative Agent hereunder, Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of Borrower, any
Mortgagor or any other Affiliate of Borrower which may come into the possession
of Administrative Agent or any of its Affiliates. Administrative Agent shall not
be required to file this Agreement, any other Loan Document or any document or
instrument referred to herein or therein, for record or give notice of this
Agreement, any other Loan Document or any document or instrument referred to
herein or therein, to anyone.
SECTION 10.07. Failure of Administrative Agent to Act. Except for action
-----------------------------------------
expressly required of Administrative Agent hereunder, Administrative Agent
shall in all cases be fully justified in failing or refusing to act hereunder
unless it shall have received further assurances (which may include cash
collateral) of the indemnification obligations of the Banks under Section 10.05
in respect of any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action.
SECTION 10.08 Resignation or Removal of Administrative Agent.
--------------------------------------------------------
Administrative Agent hereby agrees not to unilaterally resign except in the
event it becomes an Affected Bank and is removed or replaced as a Bank
pursuant to Section 3.07, in which event it shall have the right to resign.
Administrative Agent may be removed at any time with or without cause by the
Required Banks, provided that Borrower and the other Banks shall be promptly
notified thereof. Upon any such removal, the Required Banks shall have the right
to appoint a successor Administrative Agent which successor Administrative
Agent, so long as it is reasonably acceptable to the Required Banks, shall be
that Bank then having the greatest Loan Commitment. If no successor
Administrative Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within thirty (30) days after the Required
Banks' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Banks, appoint a successor
Administrative Agent, which shall be one of the Banks. The Required Banks or the
retiring Administrative Agent, as the case may be, shall upon the appointment of
a successor Administrative Agent promptly so notify Borrower and the other
Banks. Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's removal hereunder as Administrative Agent, the
provisions of this Article X shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
SECTION 10.09. Amendments Concerning Agency Function. Notwithstanding
----------------------------------------
anything to the contrary contained in this Agreement, Administrative Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or
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any other Loan Document which affects its duties, rights, and/or function
hereunder or thereunder unless it shall have given its prior written consent
thereto.
SECTION 10.10 Liability of Administrative Agent. Administrative Agent shall
---------------------------------
not have any liabilities or responsibilities to Borrower on account of the
failure of any Bank to perform its obligations hereunder or to any Bank on
account of the failure of Borrower to perform its obligations hereunder or under
any other Loan Document.
SECTION 10.11. Transfer of Agency Function. Without the consent of Borrower
---------------------------
or any Bank, Administrative Agent may at any time or from time to time transfer
its functions as Administrative Agent hereunder to any of its offices wherever
located in the United States, provided that Administrative Agent shall promptly
notify Borrower and the Banks thereof.
SECTION 10.12 Non-Receipt of Funds by Administrative Agent. Unless
--------------------------------------------------
Administrative Agent shall have received notice from a Bank or Borrower (either
one as appropriate being the "Payor") prior to the date on which such Bank is to
make payment hereunder to Administrative Agent of the proceeds of a Loan or
Borrower is to make payment to Administrative Agent, as the case may be (either
such payment being a "Required Payment"), which notice shall be effective upon
receipt, that the Payor will not make the Required Payment in full to
Administrative Agent, Administrative Agent may assume that the Required Payment
has been made in full to Administrative Agent on such date, and Administrative
Agent in its sole discretion may, but shall not be obligated to, in reliance
upon such assumption, make the amount thereof available to the intended
recipient on such date. If and to the extent the Payor shall not have in fact so
made the Required Payment in full to Administrative Agent, the recipient of such
payment shall repay to Administrative Agent forthwith on demand such amount made
available to it together with interest thereon, for each day from the date such
amount was so made available by Administrative Agent until the date
Administrative Agent recovers such amount, at the customary rate set by
Administrative Agent for the correction of errors among Banks for three (3)
Banking Days and thereafter at the Base Rate.
SECTION 10.13. Withholding Taxes. Each Bank represents that it is entitled
-----------------
to receive any payments to be made to it hereunder without the withholding of
any tax and will furnish to Administrative Agent such forms, certifications,
statements and other documents as Administrative Agent or Borrower may request
from time to time to evidence such Bank's exemption from the withholding of any
tax imposed by any jurisdiction or to enable Administrative Agent to comply with
any applicable Laws or regulations relating thereto. Without limiting the effect
of the foregoing, if any Bank is not created or organized under the laws of the
United States of America or any state thereof, such Bank will furnish to
Administrative Agent Form 4224 or Form 1001 of the Internal Revenue Service, or
such other forms, certifications, statements or documents, duly executed and
completed by such Bank as evidence of such Bank's exemption from the withholding
of U.S. tax with respect thereto. Administrative Agent shall not be obligated to
make any payments hereunder to such Bank in respect of any Loan or participation
or such Bank's Loan Commitment or obligation to purchase participations until
such Bank shall have furnished to Administrative Agent the requested form,
certification, statement or document.
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SECTION 10.14 Minimum Commitment by UBS. Notwithstanding the provisions
-------------------------
of Section 12.05, subsequent to the Closing Date, UBS hereby agrees to
maintain a Loan Commitment in an amount no less than $15,000,000, and further
agrees to hold and not to participate or assign any of such amount other than an
assignment to a Federal Reserve Bank or to the Parent or a majority-owned
subsidiary of UBS.
SECTION 10.15. Pro Rata Treatment. Except to the extent otherwise provided,
------------------
each advance of proceeds of the Loans shall be made by the Banks ratably
according to the amounts of their respective Loan Commitments.
SECTION 10.16 Sharing of Payments Among Banks. If a Bank shall obtain
----------------------------------
payment of any principal of or interest on any Loan made by it through the
exercise of any right of setoff, banker's lien, counterclaim, or by any other
means (including direct payment), and such payment results in such Bank
receiving a greater payment than it would have been entitled to had such payment
been paid directly to Administrative Agent for disbursement to the Banks, then
such Bank shall promptly purchase for cash from the other Banks participations
in the Loans made by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share ratably the benefit of such payment. To such end the Banks
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such payment is rescinded or must otherwise
be restored. Borrower agrees that any Bank so purchasing a participation in the
Loans made by other Banks may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of exercising,
any such right with respect to any other indebtedness of Borrower.
SECTION 10.17. Possession of Documents. Each Bank shall keep possession
-----------------------
of its own Notes. Administrative Agent shall hold all the other Loan Documents
and related documents in its possession and maintain separate records and
accounts with respect thereto, and shall permit the Banks and their
representatives access at all reasonable times to inspect such Loan Documents,
related documents, records and accounts.
ARTICLE XI
NATURE OF OBLIGATIONS
SECTION 11.01. Absolute and Unconditional Obligations. Borrower
--------------------------------------------
acknowledges and agrees that its obligations and liabilities under this
Agreement and under the other Loan Documents shall be absolute and unconditional
irrespective of (1) any lack of validity or enforceability of any of the
Obligations, any Loan Documents, or any agreement or instrument relating
thereto, (2) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from any Loan Documents or any other
documents or instruments executed in connection with or related to the
Obligations, (3) any exchange or release of any Collateral, or any release of
any other Person from all or any of the Obligations or (4) any other
circumstances which might otherwise constitute a defense available to, or a
discharge of, Borrower or any other Person in respect of the Obligations.
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The obligations and liabilities of Borrower under this Agreement and
other Loan Documents shall not be conditioned or contingent upon the pursuit by
any Bank or any other Person at any time of any right or remedy against Borrower
or any other Person which may be or become liable in respect of all or any part
of the Obligations or against any Collateral or guarantee therefor or right of
setoff with respect thereto.
SECTION 11.02. Non-Recourse. (a) Notwithstanding anything to the
------------
contrary contained in this Agreement, in any of the other Loan Documents,
or in any other instruments, certificates, documents or agreements executed
in connection with the Loans (all of the foregoing, for purposes of this
Section, hereinafter referred to, individually and collectively, as the
"Relevant Documents"), no recourse under or upon any Obligation, representation,
warranty, promise or other matter whatsoever shall be had against any of the
constituent partners of Borrower or their successors or assigns (said
constituent partners and their successors and assigns, for purposes of this
Section, hereinafter referred to, individually and collectively, as the "TRG
Partners"), and each Bank expressly waives and releases, on behalf of itself and
its successors and assigns, all right to assert any liability whatsoever under
or with respect to the Relevant Documents against, or to satisfy any claim or
obligation arising thereunder against, any of the TRG Partners or out of any
assets of the TRG Partners, provided, however, that nothing in this Section
-------- -------
shall be deemed to (1) release Borrower from any personal liability
pursuant to, or from any of its respective obligations under, the Relevant
Documents, or from personal liability for its fraudulent actions or fraudulent
omissions, (2) release any TRG Partner from personal liability for its or his
own fraudulent actions or fraudulent omissions, (3) constitute a waiver of any
obligation evidenced or secured by, or contained in, the Relevant Documents or
affect in any way the validity or enforceability of the Relevant Documents or
(4) limit the right of Administrative Agent and/or the Banks to proceed against
or realize upon all or any part of the Collateral or any and all of the assets
of Borrower (notwithstanding the fact that the TRG Partners have an ownership
interest in Borrower and, thereby, an interest in the assets of Borrower) or to
name Borrower (or, to the extent that the same are required by applicable law or
are determined by a court to be necessary parties in connection with an action
or suit against Borrower or all or any part of the Collateral, any of the TRG
Partners) as a party defendant in, and to enforce against all or any part of the
Collateral and/or assets of Borrower any judgment obtained by Administrative
Agent and/or the Banks with respect to, any action or suit under the Relevant
Documents so long as no judgment shall be taken (except to the extent taking a
judgment is required by applicable law or determined by a court to be necessary
to preserve Administrative Agent's and/or Banks' rights against Borrower or all
or any part of the Collateral, but not otherwise) or shall be enforced against
the TRG Partners, their successors and assigns, or their assets.
(b) Notwithstanding anything to the contrary contained in the
Relevant Documents, no recourse under or upon any Obligation, representation,
warranty, promise or other matter whatsoever shall be had against any of the
constituent partners (other than Borrower and, in such case, only to the extent
provided in paragraph (a) above) of any Mortgagor or their respective successors
or assigns (said constituent partners (other than Borrower) and their respective
successors and assigns, for purposes of this Section, hereinafter referred to,
individually and collectively, as the "Mortgagor Partners") and each Bank
expressly waives and releases, on behalf of itself and its successors and
assigns, all right to assert any liability whatsoever under or with respect to
the Relevant Documents against, or to satisfy any claim or obligation arising
thereunder against, any of the Mortgagor Partners or out of any assets of the
52
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Mortgagor Partners, provided, however, that nothing in this Section shall be
-------- -------
deemed to (1) release any Mortgagor from any personal liability pursuant to, or
from any of its respective obligations under, the Relevant Documents, or from
personal liability for its fraudulent actions or fraudulent omissions, (2)
release any Mortgagor Partner from personal liability for its or his own
fraudulent actions or fraudulent omissions, (3) constitute a waiver of any
obligation evidenced or secured by, or contained in, the Relevant Documents or
affect in any way the validity or enforceability of the Relevant Documents or
(4) limit the right of Administrative Agent and/or the Banks to proceed against
or realize upon all or any part of the Collateral or any and all of the assets
of any Mortgagor (notwithstanding the fact that the Mortgagor Partners have an
ownership interest in such Mortgagor and, thereby, an interest in the assets of
such Mortgagor) or to name any Mortgagor (or, to the extent that the same are
required by applicable law or are determined by a court to be necessary parties
in connection with an action or suit against Borrower, Mortgagor or all or any
part of the Collateral, any of the Mortgagor Partners) as a party defendant in,
and to enforce against all or any part of the Collateral and/or assets of any
Mortgagor any judgment obtained by Administrative Agent and/or the Banks with
respect to, any action or suit under the Relevant Documents so long as no
judgment shall be taken (except to the extent taking a judgment is required by
applicable law or determined by a court to be necessary to preserve
Administrative Agent's and/or Banks' rights against Borrower, any Mortgagor or
all or any part of the Collateral, but not otherwise) or shall be enforced
against the Mortgagor Partners, their successors and assigns, or their assets.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Binding Effect of Request for Advance. Borrower agrees that,
-------------------------------------
by its acceptance of any advance of proceeds of the Loans under this Agreement,
it shall be bound in all respects by the request for advance submitted on its
behalf in connection therewith with the same force and effect as if Borrower had
itself executed and submitted the request for advance and whether or not the
request for advance is executed and/or submitted by an authorized person.
SECTION 12.02. Amendments and Waivers. No amendment or material waiver
----------------------
of any provision of this Agreement or any other Loan Document nor consent
to any material departure by Borrower, any Mortgagor or any other obligor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Banks and, solely for purposes of its acknowledgment
thereof, Administrative Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given, provided, however, that no amendment, waiver or consent shall, unless in
-------- -------
writing and signed by all the Banks do any of the following: (1) reduce the
principal of, or interest on, the Notes or any fees due hereunder or any other
amount due hereunder or under any Loan Document; (2) postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees due hereunder
or under any Loan Document, or waive any default in the payment of principal,
interest or any other amount due hereunder or under any Loan Documents; (3)
change the definition of Required Banks; (4) amend this Section or any other
provision requiring the consent of all the Banks; (5) waive any default under
paragraph (5) of Section 9.01; or (6) release any material portion of the
Collateral, or subordinate the Banks' Lien on any material portion of the
Collateral to a Lien to secure any Debt other than the Loans, other than, in
either case, in
53
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accordance with the provisions of Loan Documents. Any advance of proceeds
of the Loans made prior to or without the fulfillment by Borrower of all of the
conditions precedent thereto, whether or not known to Administrative Agent and
the Banks, shall not constitute a waiver of the requirement that all conditions,
including the non-performed conditions, shall be required with respect to all
future advances. No failure on the part of Administrative Agent or any Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof or preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 12.03. Usury. Anything herein to the contrary notwithstanding,
-----
the obligations of Borrower under this Agreement and the Notes shall be subject
to the limitation that payments of interest shall not be required to the
extent that receipt thereof would be contrary to provisions of law applicable to
a Bank limiting rates of interest which may be charged or collected by such
Bank.
SECTION 12.04. Expenses; Indemnification. Borrower agrees to reimburse
--------------------------
Administrative Agent on demand for all reasonable costs, expenses, and charges
including, without limitation, all reasonable fees and charges of engineers,
appraisers and other consultants (provided such other consultants have been
engaged with Borrower's consent, not to be unreasonably withheld or delayed; it
being understood, however, that Borrower shall have no such right of consent
during the existence of an Event of Default) and external legal counsel incurred
by Administrative Agent in connection with the Loans and to reimburse each of
the Banks for reasonable legal costs, expenses and charges incurred by each of
the Banks in connection with the performance or enforcement of this Agreement,
the Notes, or any other Loan Documents; provided, however, that Borrower is not
-------- -------
responsible for costs, expenses and charges incurred by the Bank Parties in
connection with the day-to-day administration or the syndication of the Loans
(except as otherwise provided in the Supplemental Fee Letter). Borrower agrees
to indemnify Administrative Agent and each Bank and their respective Affiliates,
controlling Persons, directors, officers, employees and agents (each, an
"Indemnified Party) from, and hold each of them harmless against, any and all
losses, liabilities, claims, damages or expenses, joint or several, incurred by
any of them arising out of or by reason of (x) any claims by brokers due to acts
or omissions by Borrower or (y) any third-party claims relating to this
Agreement, the Loans, the use of proceeds of the Loans, and the performance by
UBS (including as Administrative Agent) or any of its Affiliates of the services
contemplated by this Agreement or the Supplemental Fee Letter, and Borrower will
reimburse any Indemnified Party for any and all reasonable expenses (including
reasonable counsel fees and expenses) as they are incurred in connection with
the investigation of or preparation for or defense of any pending or threatened
claim or any action or proceeding arising therefrom, whether or not such
Indemnified Party is a party and whether or not such claim, action or proceeding
is initiated or brought to be by or on behalf of Borrower or any of its
Affiliates and whether or not any of the transactions contemplated hereby or by
the Supplemental Fee Letter are consummated or this Agreement or the Loan
Commitments are terminated. Borrower will not be liable under the foregoing
indemnification provision to an Indemnified Party to the extent that any loss,
claim, damage, liability or expense is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from such Indemnified
Party's bad faith or gross negligence or breach of this Agreement.
54
<PAGE>
In any such action or proceeding Borrower shall have the right to
assume the defense thereof and select counsel reasonably acceptable to UBS;
however, in no event will such counsel, without the prior written consent of
UBS, not to be unreasonably withheld, be counsel to Borrower or to any of its
Affiliates.
Borrower also agrees that no Indemnified Party shall have any
liability (whether direct or indirect, in contract or tort or otherwise) to
Borrower or its creditors related to or arising out of or in connection with
this Agreement, the Supplemental Fee Letter, the Loans, the use of proceeds of
the Loans, any of the transactions contemplated hereby or by the Supplemental
Fee Letter or any related transaction or the performance by UBS (including as
Administrative Agent) or any of its Affiliates of the services contemplated by
this Agreement or the Supplemental Fee Letter, except to the extent that any
loss, claim, damage or liability is found in a final non-appealable judgment by
a court of competent jurisdiction to have resulted from such Indemnified Party's
bad faith or gross negligence or breach of this Agreement.
Borrower agrees that, without UBS's prior written consent, which
shall not be unreasonably withheld, Borrower will not settle, compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding in respect of which indemnification has been or could be sought
under the indemnification provisions of this Agreement (whether or not UBS or
any other Indemnified Party is an actual or potential party to such claim,
action or proceeding), unless such settlement, compromise or consent (i)
includes an unconditional written release, in form and substance reasonably
satisfactory to the Indemnified Parties, of each Indemnified Party from all
liability arising out of such claim, action or proceeding and (ii) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Indemnified Party.
No Indemnified Party shall, without the prior consent of Borrower
(not to be unreasonably withheld or delayed) settle or compromise any action or
claim for which indemnity has been or could be sought hereunder.
If (a) an Indemnified Party is requested to appear as a witness in
any action brought by or on behalf of Borrower or any of its Affiliates or (b)
an Indemnified Party is required to appear as a witness in any action brought
against Borrower or any of Affiliates, in either case, in which such Indemnified
Party is not named as a defendant, Borrower agrees to reimburse such Indemnified
Party for all reasonable expenses incurred by it in connection with such
Indemnified Party's appearing and preparing to appear as such a witness,
including, without limitation, the reasonable fees and disbursements of its
legal counsel, and to compensate such Indemnified Party in an amount to be
reasonable and mutually agreed upon.
The obligations of Borrower under this Section shall survive the
repayment of all amounts due under or in connection with any of the Loan
Documents and the termination of the Loans.
55
<PAGE>
SECTION 12.05. Assignment; Participation. This Agreement shall be
-------------------------
binding upon, and shall inure to the benefit of, Borrower, Administrative
Agent, the Banks and their respective successors and permitted assigns. Borrower
may not assign or transfer its rights or obligations hereunder.
Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Loan (the
"Participations") subject to Borrower's consent, provided there exists no Event
of Default, which consent shall not be unreasonably withheld or delayed. In the
event of any such grant by a Bank of a participating interest to a Participant,
whether or not Borrower or Administrative Agent was given notice, such Bank
shall remain responsible for the performance of its obligations hereunder, and
Borrower and Administrative Agent shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations hereunder.
Any agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of Borrower hereunder and under any other Loan Document
including, without limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement or any other Loan Document;
provided that such participation agreement may provide that such Bank will not
agree to any modification, amendment or waiver of this Agreement described in
Section 12.02 without the consent of the Participant.
Any Bank may at any time assign to any bank or other institution
with the acknowledgment of Administrative Agent and, provided there exists no
Event of Default, the consent of Borrower, which consent shall not be
unreasonably withheld or delayed (such assignee, a "Consented Assignee"), or to
one or more banks or other institutions which are majority owned subsidiaries of
a Bank or to the Parent of a Bank (each Consented Assignee or subsidiary bank or
institution, an "Assignee") all, or a proportionate part of all, of its rights
and obligations under this Agreement and its Notes, and such Assignee shall
assume rights and obligations, pursuant to an Assignment and Assumption
Agreement executed by such Assignee and the assigning Bank, provided that, in
each case, after giving effect to such assignment, the Assignee's Loan
Commitment, and, in the case of a partial assignment, the assigning Bank's Loan
Commitment, each will be equal to or greater than $5,000,000. Upon (i) execution
and delivery of such instrument, (ii) payment by such Assignee to the Bank of an
amount equal to the purchase price agreed between the Bank and such Assignee and
(iii) at Administrative Agent's option, payment by such Assignee to
Administrative Agent of a fee, for Administrative Agent's own account, in the
amount of $2,500, on account of Administrative Agent's fees and expenses in
connection with such assignment, such Assignee shall be a Bank Party to this
Agreement and shall have all the rights and obligations of a Bank as set forth
in such Assignment and Assumption Agreement, and the assigning Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this paragraph, substitute Notes shall be issued
to the assigning Bank (in the case of a partial assignment) and Assignee by
Borrower, in exchange for the return of the original Notes. The obligations
evidenced by such substitute notes shall constitute "Obligations" for all
purposes of this Agreement and the other Loan Documents and shall be secured by
the Mortgages. If the Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the first date on which
interest or fees are payable hereunder for its account, deliver to Borrower and
Administrative Agent
56
<PAGE>
certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 10.13.
Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
Borrower recognizes that in connection with a Bank's selling of
Participations or making of assignments, any or all documentation, financial
statements, appraisals and other data, or copies thereof, relevant to Borrower
or the Loans may be exhibited to and retained by any such Participant or
assignee or prospective Participant or assignee. In addition, such documentation
etc. may be exhibited to and retained by Affiliates of a Bank. In connection
with a Bank's delivery of any financial statements and appraisals to any such
Participant or assignee or prospective Participant or assignee, such Bank shall
also deliver its standard confidentiality statement indicating that the same are
delivered on a confidential basis. Borrower agrees to provide all assistance
reasonably requested by a Bank to enable such Bank to sell Participations or
make assignments of its Loan as permitted by this Section. Each Bank agrees to
provide Borrower with notice of all Participations sold by such Bank.
SECTION 12.06. Documentation Satisfactory. All documentation
---------------------------
required from or to be submitted on behalf of Borrower in connection with
this Agreement and the documents relating hereto shall be subject to the prior
approval of, and be satisfactory in form and substance to, Administrative Agent,
its counsel and, where specifically provided herein, the Banks. In addition, the
persons or parties responsible for the execution and delivery of, and
signatories to, all of such documentation, shall be acceptable to, and subject
to the approval of, Administrative Agent and its counsel and the Banks.
SECTION 12.07. Notices. Unless the party to be notified otherwise
-------
notifies the other party in writing as provided in this Section, and except as
otherwise provided in this Agreement, notices shall be given to
Administrative Agent by telephone, confirmed by writing, and to the Banks and to
Borrower by ordinary mail or overnight courier addressed to such party at its
address on the signature page of this Agreement. Notices shall be effective (1)
if by telephone, at the time of such telephone conversation, (2) if given by
mail, three (3) days after mailing and (3) if given by overnight courier, upon
receipt.
SECTION 12.08. Setoff. Borrower agrees that, in addition to (and
------
without limitation of) any right of setoff, bankers' lien or counterclaim a
Bank may otherwise have, each Bank shall be entitled, but only with the prior
consent of the Required Banks, to offset balances (general or special, time or
demand, provisional or final) held by it for the account of Borrower at any of
such Bank's offices, in Dollars or in any other currency, against any amount
payable by Borrower to such Bank under this Agreement or such Bank's Notes, or
any other Loan Document which is not paid when due (regardless of whether such
balances are then due to Borrower), in which case it shall promptly notify
Borrower and Administrative Agent thereof; provided that such Bank's failure to
give such notice shall not affect the validity thereof. Payments by Borrower
hereunder or under the other Loan Documents shall be made without setoff or
counterclaim.
57
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SECTION 12.09. Year 2000. Borrower represents, warrants and covenants that
---------
Borrower and each Mortgagor have taken and shall take all action reasonably
necessary to assure that its data processing and information technology and
building systems are capable of effectively processing data and information,
including dates on and after January 1, 2000, and shall not cease to perform, or
provide, or cause any software and/or system which is material to its operations
or any interface therewith to provide, invalid or incorrect results as a result
of date functionality and/or data, or otherwise experience any material
degradation of performance or functionality arising from, relating to or
including date functionality and/or data which represents or references
different centuries or more than one century or leap years, and that all such
systems shall be reasonably effective and accurate in managing and manipulating
data derived from, involving or relating in any way to dates (including single
century formulas and multi-century or leap year formulas), and will not cause a
material abnormally ending scenario within such systems or in any software
and/or system with which such systems interface, or generate materially
incorrect values or invalid results involving such dates. At the request of
Administrative Agent, Borrower shall provide, and cause each Mortgagor to
provide, Administrative Agent with reasonably acceptable assurance of Borrower's
and each Mortgagor's year 2000 capability.
SECTION 12.10. Table of Contents; Headings. Any table of contents and the
----------------------------
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
SECTION 12.11. Severability. The provisions of this Agreement are intended
------------
to be severable. If for any reason any provision of this Agreement shall be
held invalid or unenforceable in whole or in part in any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
SECTION 12.12. Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by signing
any such counterpart.
SECTION 12.13. Integration. The Loan Documents and Supplemental Fee
-----------
Letter set forth the entire agreement among the parties hereto relating to the
transactions contemplated thereby and supersede any prior oral or written
statements or agreements with respect to such transactions.
SECTION 12.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 12.15. Waivers. In connection with the obligations and liabilities
-------
as aforesaid, Borrower hereby waives: (1) promptness and diligence; (2) notice
of any actions taken by any Bank Party under this Agreement, any other Loan
Document or any other agreement or instrument relating thereto except to the
extent otherwise provided herein; (3) all other notices, demands and protests,
and all other formalities of every kind in connection with
58
<PAGE>
the enforcement of the Obligations, the omission of or delay in which, but
for the provisions of this Section, might constitute grounds for relieving
Borrower of its obligations hereunder; (4) any requirement that any Bank Party
protect, secure, perfect or insure any Lien on any Collateral or exhaust any
right or take any action against Borrower or any other Person or against any
Collateral; (5) any right or claim of right to cause a marshalling of the assets
of Borrower; and (6) all rights of subrogation or contribution, whether arising
by contract or operation of law (including, without limitation, any such right
arising under the Federal Bankruptcy Code) or otherwise by reason of payment by
Borrower, either jointly or severally, pursuant to this Agreement or other Loan
Documents.
SECTION 12.16. JURISDICTION; IMMUNITIES. BORROWER, ADMINISTRATIVE AGENT
-------------------------
AND EACH BANK HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK
STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK CITY OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
LOAN DOCUMENT. BORROWER, ADMINISTRATIVE AGENT, AND EACH BANK IRREVOCABLY AGREE
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE OR UNITED STATES FEDERAL COURT. BORROWER,
ADMINISTRATIVE AGENT, AND EACH BANK IRREVOCABLY CONSENT TO THE SERVICE OF ANY
AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF
SUCH PROCESS TO BORROWER, ADMINISTRATIVE AGENT OR EACH BANK, AS THE CASE MAY BE,
AT THE ADDRESSES SPECIFIED HEREIN. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK
AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK
FURTHER WAIVE ANY OBJECTION TO VENUE IN THE STATE OF NEW YORK AND ANY OBJECTION
TO AN ACTION OR PROCEEDING IN THE STATE OF NEW YORK ON THE BASIS OF FORUM NON
CONVENIENS. BORROWER, ADMINISTRATIVE AGENT AND EACH BANK AGREE THAT ANY ACTION
OR PROCEEDING BROUGHT AGAINST BORROWER, ADMINISTRATIVE AGENT OR ANY BANK, AS THE
CASE MAY BE, SHALL BE BROUGHT ONLY IN A NEW YORK STATE COURT SITTING IN NEW YORK
CITY OR A UNITED STATES FEDERAL COURT SITTING IN NEW YORK CITY.
Nothing in this Section shall affect the right of Borrower,
Administrative Agent or any Bank to serve legal process in any other manner
permitted by law.
To the extent that Borrower, Administrative Agent or any Bank have
or hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether from service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, Borrower, Administrative Agent and each Bank hereby irrevocably
waive such immunity in respect of its obligations under this Agreement, the
Notes and any other Loan Document.
59
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BORROWER, ADMINISTRATIVE AGENT AND EACH BANK WAIVE ANY RIGHT EACH
SUCH PARTY MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE LOANS. IN
ADDITION, BORROWER HEREBY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS WITH RESPECT TO THE
NOTES, ANY RIGHT BORROWER MAY HAVE TO (1) INTERPOSE ANY COUNTERCLAIM THEREIN
(OTHER THAN A COUNTERCLAIM THAT IF NOT BROUGHT IN THE SUIT, ACTION OR PROCEEDING
BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS COULD NOT BE BROUGHT IN A SEPARATE
SUIT, ACTION OR PROCEEDING OR WOULD BE SUBJECT TO DISMISSAL OR SIMILAR
DISPOSITION FOR FAILURE TO HAVE BEEN ASSERTED IN SUCH SUIT, ACTION OR PROCEEDING
BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS) OR (2) HAVE THE SAME CONSOLIDATED
WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING HEREIN CONTAINED
SHALL PREVENT OR PROHIBIT BORROWER FROM INSTITUTING OR MAINTAINING A SEPARATE
ACTION AGAINST ADMINISTRATIVE AGENT OR THE BANKS WITH RESPECT TO ANY ASSERTED
CLAIM.
SECTION 12.17. Termination of Prior Loan Agreement. The parties hereto
------------------------------------
acknowledge and agree that the Prior Loan Agreement, and the "Loan Documents"
and "Supplemental Fee Letter" thereunder, are terminated and of no further force
or effect, and that the "Loan Commitment" of each of the Banks thereunder is
terminated.
60
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
THE TAUBMAN REALTY GROUP LIMITED
PARTNERSHIP, a Delaware limited partnership
By /s/ Steven E. Eder
--------------------------------
Steven E. Eder,
its authorized signatory
Address for notices:
c/o The Taubman Company Limited Partnership
200 East Long Lake Road - Suite 300
Bloomfield Hills, Michigan 48304
Attention: Mr. Steven E. Eder
with copy to:
Miro Weiner & Kramer
500 North Woodward Avenue
Suite 100
P.O. Box 908
Bloomfield Hills, Michigan 48303-0908
Attention: Martin L. Katz, Esq.
61
<PAGE>
UBS AG, STAMFORD BRANCH
(as Bank and Administrative Agent)
By /s/ Tiffanie Fisher
-----------------------------
Name: Tiffanie Fisher
Title: Director
By /s/ David Goldman
-----------------------------
Name: David Goldman
Title: Director
Address for notices and Applicable Lending
Office:
UBS AG, Stamford Branch
c/o UBS AG
299 Park Avenue
New York, New York 10171
Attention: Ms. Xiomara Martez
Telephone: (212) 821-3872
Facsimile: (212) 821-4138
with copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Attention: George C. Weiss, Esq.
COMERICA BANK
By /s/ Kristine L. Andersen
-----------------------------
Name: Kristine L. Andersen
Title: Assistant Vice President
Address for notices and Applicable Lending
Office:
Comerica Bank
Comerica Tower at Detroit Center
500 Woodward Avenue - 9th Floor
MC 3280
Detroit, Michigan 48275-3280
Attention: Ms. Kristine L. Andersen
Telephone: (313) 222-3647
Facsimile: (313) 222-3330
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PNC BANK, NATIONAL ASSOCIATION
By /s/ David Martens
-----------------------------
Name: David Martens
Title: Vice President
Address for notices and Applicable
Lending Office:
PNC Bank, National Association
1 PNC Plaza
249 Fifth Avenue
P1-POPP-19-2
Pittsburgh, Pennsylvania 15222
Attention: Mr. David Martens
Telephone: (412) 762-8597
Facsimile: (412) 762-6500
FLEET NATIONAL BANK
By /s/ Jane E. McGrath
----------------------------
Name: Jane E. McGrath
Title: Vice President
Address for notices and Applicable
Lending Office:
Fleet National Bank
75 State Street
Mail Stop: MABOF11C
Boston, Massachusetts 02019
Attention: Ms. Margaret A. Mulcahy
Telephone: (617) 346-4291
Facsimile: (617) 346-3220
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BAYERISCHE HYPO- UND
VEREINSBANK AG, NEW YORK BRANCH
By /s/ Stephen G. Melidones
------------------------------
Name: Stephen G. Melidones
Title: Director
By /s/ Meggan W. Walsh
------------------------------
Name: Meggan W. Walsh
Title: Managing Director
Address for notices and Applicable
Lending Office:
Bayerische Hypo- und Vereinsbank AG,
New York Branch
150 East 42nd Street
New York, New York 10017-4679
Attention: Mr. Stephen Melidones
Telephone: (212) 672-5750
Facsimile: (212) 672-5527
THE CHASE MANHATTAN BANK
By /s/ John F. Mix
---------------------------
Name: John F. Mix
Title: Vice President
Address for notices and Applicable
Lending Office:
The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Mr. John Mix
Telephone: (212) 270-9562
Facsimile: (212) 270-3513
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COMMERZBANK AKTIENGESELLCHAFT,
CHICAGO BRANCH
By /s/ Douglas P. Traynor
---------------------------
Name: Douglas P. Traynor
Title: Vice President
By /s/ Christian Berry
----------------------------
Name: Christian Berry
Title: Assistant Treasurer
Address for notices:
Commerzbank Aktiengesellschaft
2 World Financial Center - 34th Floor
New York, New York 10281
Attention: Mr. Douglas Traynor
Telephone: (212) 266-7569
Facsimile: (212) 266-7565
Applicable Lending Office for Base Rate Loans:
Commerzbank Aktiengesellschaft,
Chicago Branch
311 South Wacker Drive
Chicago, Illinois 60606
Applicable Lending Office for LIBOR Loans:
Commerzbank Aktiengesellschaft,
Grand Cayman Branch
c/o Commerzbank Aktiengesellschaft,
Chicago Branch
311 South Wacker Drive
Chicago, Illinois 60606
65
<PAGE>
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
By /s/ Beverly G. Cason
------------------------------
Name: Beverly G. Cason
Title: Vice President
By /s/ John W. Sweeney
------------------------------
Name: John W. Sweeney
Title: Vice President
Address for notices:
Dresdner Bank AG
190 S. LaSalle Street - Suite 2700
Chicago, Illinois 60603
Attention: Ms. Maureen Slentz
Telephone: (312) 444-1316
Facsimile: (312) 444-1301
Applicable Lending Office for Base Rate
Loan and LIBOR Loan:
DRESDNER BANK AG, NEW YORK
AND GRAND CAYMAN BRANCHES
75 Wall Street
New York, New York 10005
66
<PAGE>
BAYERISCHE LANDESBANK
By /s/ John A. Wain
---------------------------
Name: John A. Wain
Title: First Vice President
By /s/ Alexander Kohnert
---------------------------
Name: Alexander Kohnert
Title: First Vice President
Address for notices and Applicable Lending
Office:
Bayerische Landesbank
560 Lexington Avenue
New York, New York 10022
Attention: Mr. John Wain
Telephone: (212) 310-9829
Facsimile: (212) 310-9868
LANDESBANK HESSEN-THURINGEN
GIROZENTRALE
By /s/ Thomas R. Crowley
--------------------------
Name: Thomas R. Crowley
Title: Vice President
Real Estate Finance
By /s/ Robert W. Becker
--------------------------
Name: Robert W. Becker
Title: Vice President
Address for notices and Applicable Lending
Office:
Landesbank Hessen-Thuringen Girozentrale
420 Fifth Avenue - 24th Floor
New York, New York 10018
Attention: Mr. Thomas Crowley
Telephone: (212) 703-5245
Facsimile: (212) 703-5296
67
<PAGE>
- --------------------------------------------------------------------------------
CONSOLIDATED AGREEMENT:
NOTICE OF RETIREMENT AND RELEASE
AND COVENANT NOT TO COMPETE
- --------------------------------------------------------------------------------
This Consolidated Agreement ("Agreement") made this first day of January,
1999 by and between Robert C. Larson, individually (hereinafter referred to as
"Larson") and The Taubman Company Limited Partnership, (hereinafter referred to
as "TTC"), which, for purposes of this Agreement, will include its officers,
directors, employees, representatives, partners, attorneys, successors, assigns,
affiliates, and related entities.
WITNESSETH:
-----------
In consideration of the mutual covenants and promises contained in this
Agreement, and as consideration for past services rendered by Larson, TTC and
Larson agree as follows:
1. Effective January 1, 1999 and pursuant to prior notice, Larson retires
from his employment with TTC. Larson agrees and acknowledges his final day of
employment with TTC was December 31, 1998.
2. As consideration for entering into this Agreement, TTC shall grant
Larson an option or options to purchase a designated number of mutual fund
shares with an initial aggregate value on the date of the grant(s) in the amount
of Two Million Six Hundred Sixty-Six Thousand Six
1
<PAGE>
Hundred Sixty-Seven Dollars ($2,666,667.00) under The Taubman Company Limited
Partnership Key Employee Security Option Program (the "KeySOPTM"). A copy of
said "KeySOP" is attached hereto as Exhibit "A" and is incorporated by this
reference. The exercise price payable on exercise of any such option(s) shall be
equal to 25% of the initial fair market value of the mutual fund shares subject
to such option(s), determined as of the option(s) date of grant. Larson shall
have ten (10) years from the date of grant of each such option in which to
exercise the option. Larson's right to exercise any such option shall be
determined based on the terms and conditions set forth in the program. If all
options are exercised, the aggregate exercise price will equal Six Hundred
Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($666,667.00) plus any
option(s) payment on dividends reinvested in the mutual fund shares.
3. As additional consideration for entering into this Agreement, TTC
agrees to provide Larson identical medical and dental insurance coverage as it
applies to its senior executive employees for the period January 1, 1999 through
December 31, 2004. It is mutually acknowledged and agreed that the medical and
dental coverage contemplated under this paragraph is subject to good faith
changes or amendments which may occur under TTC's benefit plans and that Larson
will be provided identical coverage whenever TTC's regular senior executive
medical or dental insurance coverage is changed or amended. It is further agreed
the insurance coverage provided under this Agreement is to be secondary to any
other coverage Larson may acquire or become eligible to receive, such as
Medicare, unless otherwise required by law.
4. In exchange for the consideration set forth in this Agreement, Larson
agrees to release, waive, and discharge TTC from any causes of action, claims,
damages, attorneys fees, or any other liabilities or claims as more fully set
forth in Exhibit "B," attached hereto and incorporated by this reference. It is
mutually agreed that nothing in this Agreement or in Larson's
2
<PAGE>
Release contained in Exhibit "B" will impact or otherwise affect TTC's
indemnification of Larson while he was employed or associated with TTC.
Accordingly, TTC specifically undertakes to indemnify, defend and hold Larson
harmless from and against all claims, actions, damages, liabilities, judgments,
costs, expenses (including attorneys' fees), incurred by Larson which arise out
of or are related to Larson's employment with TTC.
5. It is mutually agreed that TTC will be responsible for and undertake
the completion of the relocation of Larson's office from its current location to
a suitable space in the building now occupied by the firm of Miro, Weiner, and
Kramer, a professional corporation, at 500 North Woodward Avenue, Bloomfield
Hills, MI 48303-0908. TTC's obligations under this paragraph shall include costs
for the space buildout, as well as operating expenses, including rent and the
cost of a person serving as assistant/secretarial support, through December 31,
1999.
6. TTC further agrees to reimburse Larson for expenses such as travel,
hotel, and other business and entertainment expenses incurred by Larson for TTC
related business activity.
7. Larson agrees for the period January 1, 1999 through December 31, 2003,
inclusive, that he will not render services to, be employed by, serve on the
Board of Directors of, or directly own any business entity which is primarily
engaged in the development, management, or ownership of regional shopping
centers.
8. TTC specifically advises Larson, by this paragraph, to consult with an
attorney of Larson's choice, at Larson's expense, before signing this Agreement.
Larson understands there is a sufficient amount of time totaling at least
twenty-one (21) days from the date of receipt of this Agreement to consider the
terms of this Agreement and to decide whether to accept the terms therein.
3
<PAGE>
9. The parties agree not to disclose the terms of this Agreement to any
third party, except as required by law or as necessary for the purposes of
receiving counsel from the parties' families, attorneys, accountants, or other
advisors.
10. This Agreement is binding on and shall inure to the benefit of Larson
and TTC, their heirs, officers, directors, representatives, partners,
successors, and assigns.
11. Larson acknowledges being entitled to revoke this Agreement within
seven (7) days after signing it, and that the Agreement shall not become
effective or enforceable until this revocation period has expired. If Larson
timely revokes this Agreement, Larson agrees to immediately return to TTC any
consideration received as provided under this Agreement. A revocation must be in
writing and either postmarked and addressed to TTC or hand delivered to TTC
within seven (7) days after Larson signed this Agreement.
12. By signing this Agreement, Larson acknowledges having had a full and
fair opportunity to discuss all aspects of this Agreement with Larson's
attorney, if Larson chooses to do so; and has carefully read this Agreement,
understands it, and is entering into it voluntarily and knowingly, which means
no one is forcing or pressuring Larson to sign it.
13. This Agreement, including references to incorporated Exhibits,
constitute the entire Agreement between Larson and TTC. Any modification to this
Agreement must be made in writing and signed by Larson and a duly authorized
representative of TTC.
14. If any provision of this Agreement is ruled to be invalid,
unenforceable, or illegal, TTC and Larson agree that the rest of this Agreement
will remain enforceable and that the Agreement will be construed as if it never
contained the invalid, unenforceable, or illegal provision.
4
<PAGE>
15. This Agreement is to be interpreted, construed and applied in
accordance with the laws of the State of Michigan, except if applicable federal
law provides differently.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed.
THE TAUBMAN COMPANY LIMITED ROBERT C. LARSON
PARTNERSHIP
/s/ Robert S. Taubman /s/ Robert C. Larson
--------------------- --------------------
By: Robert S. Taubman
Date: July 27, 1999 Date: June 28, 1999
------------- -------------
<PAGE>
EXHIBIT B
RELEASE
Pursuant to Paragraph 4, Larson agrees to the following as it pertains to
his employment with TTC:
In exchange for the consideration set forth in this Agreement, Larson
agrees to release, waive, and discharge TTC from any causes of action, claims,
damages, attorneys fees, or any other liabilities or claims whatsoever in
nature, whether in law or in equity, known or unknown, that Larson has, may
have, or may have had against TTC. These waivers, releases, and discharges
constitute a general release, extinguish any claims and preclude any litigation
by Larson against TTC based on anything that occurred on or before the date on
which Larson signs this Agreement, and are effective to the fullest extent
permitted by law. This means that Larson gives up, to the fullest extent
permitted by law, any right to file any lawsuit or any complaint with any
government agency or court of law against TTC about anything arising in the
course of Larson's employment under any local, state, or federal statute, law,
or regulation, including but not limited to the Age Discrimination in Employment
Act, the Older Workers' Benefits Protection Act, Title VII of the Civil Rights
Act of 1964, The Americans with Disabilities Act, the Elliot-Larsen Civil Rights
Act (State of Michigan), the Michigan Persons with Disabilities Civil Rights
Act, as amended, and any other local, state, or federal statue or any cause of
action under common law. Larson understands that the only claims he is not
waiving and releasing are claims that, as a matter of law, cannot be released
and waived, including, but not limited to any fully vested benefits under TTC's
retirement plans and any other fully vested benefits to which Larson would be
entitled under TTC's current benefit plans.
1
<PAGE>
This Release will not be construed to prohibit Larson from filing a Charge
of Discrimination with the Equal Employment Opportunity Commission ("EEOC").
This Release, however, includes a release of Larson's rights to file a court
action or to seek individual remedies or damages in any EEOC-filed court action,
and that release will also apply to any proceedings arising from or relating to
a Charge of Discrimination with the EEOC.
<PAGE>
Exhibit 12
TAUBMAN CENTERS, INC.
Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends
(in thousands, except ratios)
Six Months Ended June 30
------------------------
1999 1998
---- ----
Net Earnings from Continuing Operations $ 28,313 $ 41,601
Add back:
Fixed charges 50,977 75,525
Amortization of previously capitalized
interest (1) 1,067 1,238
Equity in net income in excess of distributions of
less than 50% owned Unconsolidated Joint
Ventures (689) (957)
Deduct:
Capitalized interest (1) (7,669) (8,014)
-------- --------
Earnings Available for Fixed Charges
and Preferred Dividends $ 71,999 $109,393
======== ========
Fixed Charges
Interest expense $ 24,688 $ 44,586
Capitalized interest 7,313 7,456
Interest portion of rent expense 2,064 3,518
Proportionate share of Unconsolidated Joint
Ventures' fixed charges 16,912 19,965
-------- --------
Total Fixed Charges $ 50,977 $ 75,525
-------- --------
Series A Preferred Stock Dividends 8,300 8,300
-------- --------
Total Fixed Charges and Preferred
Stock Dividends $ 59,277 $ 83,825
======== ========
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends 1.2 1.3
- ----------------
(1) Amounts include TRG's pro rata share of capitalized interest and
amortization of previously capitalized interest.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TAUBMAN
CENTERS, INC.(TCO) CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1999 AND THE
TAUBMAN CENTERS, INC. CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000890319
<NAME> TAUBMAN CENTERS, INC.
<MULTIPLIER> 1,000 <F1>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 15,706
<SECURITIES> 0
<RECEIVABLES> 32,681
<ALLOWANCES> 1,192
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F2>
<PP&E> 1,552,081
<DEPRECIATION> 186,685
<TOTAL-ASSETS> 1,554,531
<CURRENT-LIABILITIES> 0 <F2>
<BONDS> 932,352
0
111
<COMMON> 533
<OTHER-SE> 502,752
<TOTAL-LIABILITY-AND-EQUITY> 1,554,531
<SALES> 0
<TOTAL-REVENUES> 130,037
<CGS> 0
<TOTAL-COSTS> 87,621
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,688
<INCOME-PRETAX> 28,313 <F3>
<INCOME-TAX> 0
<INCOME-CONTINUING> 28,313 <F3>
<DISCONTINUED> 0
<EXTRAORDINARY> (301)
<CHANGES> 0
<NET-INCOME> 12,997
<EPS-BASIC> .09
<EPS-DILUTED> .09
<FN>
<F1> EXCEPT FOR PER SHARE DATA.
<F2> TCO HAS AN UNCLASSIFIED BALANCE SHEET.
<F3> REPRESENTS INCOME BEFORE EXTRAORDINARY ITEM AND MINORITY INTEREST.
THE MINORITY INTEREST'S SHARE OF INCOME WAS $15.015 MILLION.
</FN>
</TABLE>
